Rachid Sefrioui on Venture Capital

Are We in a Tech Bubble? A Recap of a Jefferies Discussion with Lou Kerner

noreply@blogger.com (Anonymous) — Mon, 09 Mar 2015 12:07:00 +0000

Key Takeaway

The current state of tech valuations (private & public) is always hotly debated, with a particularly sharper focus recently. To this end, we hosted Lou Kerner for a discussion on the state of the industry and asked him to weigh in on the bubble debate. Lou's opinion is that while valuations in the sector may be high, they appear reasonable in the context of the broader mkt, and we are not in a bubble comparable to what was seen in '99-'00.

Some key takeaways:

Lou's full presentation is available at http://bit.ly/TechBubble

The amount of people online is staggeringly higher than during the 2000 bubble. Between 1995 and 2000, the number of people online jumped from ~40MM to just above 400MM. However, between 2000 and 2014, that number skyrocketed to ~3B (with ~2B smartphones accessing the Internet). This growth is driving up valuations.

Multiple disruptive technologies are growing rapidly, and the convergence of this tech is enabling new business models. These technologies include mobile tech, social media, cloud, big data and crowd sourcing. Some examples of disruptive business models are Uber (mobile tech + crowd sourcing), WhatsApp (mobile tech + social media) and LendingClub (big data + crowd sourcing). The next wave of emerging tech (Internet of things, wearables, virtual reality, etc...) is poised to continue the wealth creation.

A look at some data:
·         When comparing NASDAQ growth CAGRs, we do not see the sustained outsized market gains present in the '00 bubble. Between Jan '90 and Jan '00, the NASDAQ experienced a CAGR of 26.5%, compared to only 9.1% between Mar. '05 and Mar. '15 (in line with the 44 year historical CAGR of 9.3%)
·         Tech co. market value as a percentage of the S&P 500 is actually currently below the LT trend. Currently, tech cos. comprise ~20% of the S&P, while they peaked at 35% in '00.
·         Day 1 IPO pops were massive between '98-'00, with the top nine IPO pops averaging a day 1 return of 505.2%. At the close on 4/5/01, those prices had dropped on average 96.1%. The top nine Day 1 IPO pops in '13-'14 averaged a return of 101.3%. The average first day pop of all IPOs in 2014 was 13%.
·         Additionally, the number of Tech IPOs by year has decreased significantly from the peak of 350+ in 1999. During 2013, there were less than 50.

Companies are taking a significantly longer time to IPO, with the average age at IPO of 8 years in 2013 more than double the average age of 3 years during 1998-1999. Companies are realizing that being public is painful, and that needed capital is available in the private markets. While Traditional VCs and Hedge Funds are ramping their private shares investing, traditional public share investors, like T. Rowe Price, Fidelity and Wellington, have also joined them in investing in the private markets. In conclusion, considering the puts and takes, Lou does not necessarily see the current landscape in a comparable light of the '99-'00 tech bubble. Tech valuations seem to be reasonable within the scope of the broader market, and the current opportunities for value creation from disruptive tech companies remain at all time highs.

Lou Kerner is the founder of the Social Internet Fund, investing in primary and secondary shares of private social media, mobile, big data, online video and ad tech companies. Lou was the first social media analyst on Wall Street at Wedbush Securities, where he started the first trading desk for private shares on Wall Street. Lou was also previously an equity analyst following media companies at Goldman Sachs.

Courtesy of Jefferies US Internet Team *, Jefferies Equity Research
pitz-fitz@jefferies.com

The Ultimate Guide to Startup Marketing

noreply@blogger.com (Unknown) — Fri, 30 May 2014 03:50:00 +0000

Starting a business is exhilarating. Unfortunately, the “build it and they will come” theory doesn’t hold much weight and those overnight success stories you hear about are often the result of behind the scenes years of hard work. Simply put, startup marketing is a unique challenge often times because of the limited resources, whether it’s time, money or talent.

You have to be sure every effort, no matter how small, is well-planned and flawlessly executed. And to make it even more difficult, the traditional marketing strategies don’t always work.

Startup marketing is a whole different science. How so? The secret is properly combining the right channels: Content Marketing and PR.

So, starting from the beginning, here’s the complete Startup Marketing Manual.

Foundation

Before you start laying bricks, you need a solid foundation. A successful startup marketing strategy follows that same principle. Before you jump into marketing your startup, make sure you have the following bases covered.

1. Choosing a Market

It’s easy for startup founders to believe the whole world will love their products. After all, founders eat, sleep and breathe their products. The reality is that only a small portion of the population is interested in your product.

If you try to market your startup to everyone, you waste both time and money. The key is to identify a niche target market and go after market share aggressively.

How do you choose a market? There are four main factors to consider:

Market Size – Are you targeting a regional demographic? Male? Children? Know exactly how many potential customers are in your target market.
Market Wealth – Does this market have the money to spend on your product?
Market Competition – Is the market saturated? As in, are their many competitors?
Value Proposition – Is your value proposition unique enough to cut thru the noise?

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Entrepreneurs Talk about Raising Money

noreply@blogger.com (Unknown) — Fri, 30 May 2014 03:08:00 +0000

Here are more of their experiences and insights on getting startups funded.

Lower Infrastructure Costs

With the growing availability of cloud-based computing and services, fewer startups need to spend their money on hardware. “In the early days of Spotify (2006-07),” recalls Enh, “we spent weeks looking at data centers and negotiating with hardware vendors, then finally co-locating. When we started Wrapp five years later, we didn’t need to buy any infrastructure. Higher and higher layers of business service are available in the cloud, so you get more and more stuff without having to buy or do it yourself.”

This has changed seed funding in particular, since startups can lower their initial costs and get products out faster. And for later rounds, notes Reddy, cloud resources make it easier to put up a prototype to show investors.

Changing the VC-entrepreneur balance

Those lower costs can affect the VC-entrepreneur balance, Enh believes. “Large, traditional VCs with hundreds of millions of dollars need a portfolio of about 200 companies to do angel investment properly. Anything that lowers the cost of starting a business may present VCs with the problem of keeping their money active.”

Besides VCs, it’s helpful for the ecosystem to have angels and accelerators willing to invest, says Fears, especially in Latin America where there are fewer institutional investors. “There’s also a growing community of 25- to 30-year-olds,” he adds, “who have had a couple of successful exits and want to invest $50-75,000 in first-time entrepreneurs. Those investors add a lot of value because they are willing to coach and mentor.”

Terms vs. valuation

In the offer, what’s more important for the entrepreneur to examine: terms or valuation?

Of course, the press will focus more on the valuation, but the terms are your agreement with the investors and you’ll have to live with it (and them) a long time.

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Venture Capital: 5 Tips for Nailing the Full Partnership Pitch

noreply@blogger.com (Unknown) — Thu, 29 May 2014 11:06:00 +0000

You have already had one (or likely multiple) meetings with a subset of a firm’s investment team, including a principal and perhaps a general partner. You’ve impressed your point person (or people) sufficiently so that you have been invited to present to the broader partnership. What do you do now? Here are five things to keep in mind.

1. Focus on Style, Not Just Substance

This may sound counterintuitive. However, if you have been asked to come in and present to the full partnership, you have already done a good job defining, defending and articulating your business plan, and addressing many questions and concerns. Your initial contacts from the firm have likely already written up one or more memos introducing your company, and have had multiple internal discussions about your company’s compelling prospective investment.

Now it's showtime! Most likely, the partnership will already be familiar with the facts around your team, market, business model, product, customers, competition and financial projections. They are now looking for the “X factor” — your ability to present with pizzazz, to capture and sustain the attention of the room, to project a degree of informed enthusiasm and to showcase your natural leadership and sales abilities with a healthy spark of charisma.

2. Balance Confidence With Thoughtful Introspection

You know your business better than anyone else. It is important for you to project confidence and conviction around the viability, magnitude and trajectory of your business. It is the job of those in the room to challenge your assumptions or to present perspectives that counter your thesis. It is your job to respectfully but credibly convey what you are doing and how you will actualize your plan.

At the same time, be introspective. The best CEOs and entrepreneurs know their strengths but also recognize where they need help.

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16 rules of engagement to rocket fuel your start-up’s growth

noreply@blogger.com (Unknown) — Thu, 29 May 2014 03:41:00 +0000

Here are 16 things that essential if you are going to see your young start-up flourish into a high growth mid-market tiger:

1. Don’t be alone
The experienced, objective and dispassionate adviser / chairman / non-executive director (mentor) can make for a powerful combination with the passionate yet inexperienced entrepreneur who is not always as objective as is required. It’s someone to talk to and vent your frustrations at – safely.

2. Hire a high calibre senior leadership team
You need one of these if you are serious about growth. Too many founders think they can do it virtually by themselves or employ junior managers and expect director level results. Recruit for greatness.

3. Challenge
It is no longer all down to you and if your leadership team is motivated by long term growth in the value of the company then it’s likely they now own part of it too. You have to respect their views and listen to their advice. Expect to be challenged. If you aren’t something is wrong – you have a weak team or you are overbearing. Both are equally dangerous.

4. Learn to lead not manage
This means you have to build a great leadership team and then let them get on with it. Your role as CEO & founder is to provide the direction and uphold the vision and focus – through the ups and downs. Pick the right people and they’ll build a great company for you. Too often, a promising young business is stifled because the founder cannot make the leap from being the nexus of all decisions to leading a team. More of what got you here is not what will get you to where you want to get to. You have to let go and delegate, not over manage.

5. Trust
I trusted my fellow directors 100% that they always had the best interests of Coffee Nation at heart. We had a simple vision and were always aligned. Of course, we didn’t always agree but that is healthy.

6. Style

Simple Tips to Attract Venture Capital

noreply@blogger.com (Unknown) — Thu, 29 May 2014 03:19:00 +0000

When it comes to technology ventures, software has been taking the lead in terms of the number of rounds cleared, however shifts in technology have made it practical for hardware companies to raise capital for their projects. The biggest reasons why software has taken the lead is because the iteration cycle is smaller and also the fact hardware tends to be more cumbersome.

Today however, investors are now branching into hardware startups because device development has become much easier than in the past. Rather than requiring specialized equipment which often filled entire labs, Arduino and Raspberry Pi boards now allow virtually anyone (including children) to hone their Electrical Engineering skills with only a standard computer and a curious mind.

Ultimately however this shift in hardware will be covered in a later article, but it is important to note that venture capitalists are now warming up a bit to hardware despite it being more complex than software.

The Benefit of Crowdfunding

While many venture capitalists and traditional financiers look down on crowdfunding as being a modern day gold rush where everyone is looking for a quick buck, crowdfunding can be a vital entrepreneurial tool if used properly. In particular a crowdfunding campaign can be used to test the waters and make sure your idea actually has a market. Additionally if you have a successful crwowdfunding campaign, you can take that to an investor to justify your request for funding.

Keep in mind that this method only works with hardware/product startups since crowdfunding isn’t really intended for service oriented companies.

What VC’s Look for in Entrepreneurs

One of the most important points taken from the venture capital panel at CES is that the average venture capital investment lasts longer than the typical marriage. This means that one of the biggest factors an investor considers when making a decision is how well the team members know each other. Ultimately investors will only consider working with teams who have already weathered major challenges since entrepreneurship is rarely a smooth path.

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Entrepreneurship - What do you need to know?

noreply@blogger.com (Unknown) — Wed, 28 May 2014 11:23:00 +0000

In today’s day and age, consumers possess a very calculated mind as it helps them see every company they come across in a clear, context manner with reference to cost factor, time taken for travel, quality, quantity, and many more .This is where a wise businessman must equip himself with fair knowledge and understanding of these needs and desires of the customers, and know how to canvass them using his innovative skills, in order to attract a large set of people towards his business. After all, why would they seek his company’s service when they can get a better service at a cheap rate in a neighbor company?

He must also be aware that people keep changing. If you are desperate about succeeding, you ought to think differently, that is the rule. Hence on knowing this well, he must operate in a more established manner as his only goal is to satiate his customers in general, making him standout from rest of his rivals.

Moreover, he must thrive hard to change their mentality in order to become his regular, loyal customers. But he never should take them for granted. Each customer is unique, such that their tastes and expectations tend to be different. He should consider this fact after doing a thorough research and form a more realistic approach rather than an artificial one. The following are the essential questions to ask yourself, if you are sincere about starting a business.

1) Are you going to take risk as a sole proprietor? What sort of customers are you planning to deal with? How will your business be different from that of your competitors? Do you have effective marketing techniques to run the same?

2) When the idea of a business startup popped into your head, was it because were you inspired by the victory of another startup? If it is so, you should be unduly cautious and brilliant enough to avoid imitations or falsifications of any kind that might lead to unnecessary conflicts.

3) You may start your business any time at any place; but a crucial point or situation may arise where you have to abandon it due to family issues, time constraints, and lack of money, investors, etc. Are you 100% sure, you are ready for this?

4) Let us suppose you have started running your business and is quite content with its progress coupled with auspicious and impressive profit of which you are confident in getting .Suddenly, an unexpected, heavy loss occurs and ruins your business abruptly leaving you all scattered to tiny pieces. In this case, will you promptly quit or have the courage to start over again?

After asking these questions, you still are very much interested, the following are some of the important aspects that you should never fail to concentrate during the course time of running your business.

a) Enthusiasm for Entrepreneurship

How can startups collaborate with big corporations?

noreply@blogger.com (Unknown) — Wed, 28 May 2014 11:05:00 +0000

Going into some form of partnership with a bigger brand can be an enormous opportunity for a startup and take at least some of the heat off when you’re first setting out.

However, the actual partnership deal can itself be strewn with hidden dangers, and the validation, press, prestige and growth you assumed would follow from a successful partnership may not be so immediately forthcoming as you’d imagined. Just getting a foot in the door often takes tremendous amounts of time and effort, and then after the contract is signed the delivery of real, mutual value can also be a challenge.

But partnerships with big brands can and do work well when approached intelligently and with no undue expectations of magical transformations suddenly taking place. Here are a few points to take on board when considering such an arrangement yourself.

Press isn’t everything

Getting the word out about your business does not in itself guarantee success. Increased press coverage can in fact be a mere passing spike, and everyone can cite examples of where massive press launches led to complete failure only months later. Press should be seen as a means to other ends such as fundraising, but going into partnership for this reason alone would not be cost or time-effective, as well as a sad waste of resources that could better be spent elsewhere.

Contact the right advocates

Thoroughly investigate the advocate company’s business goals, mandate and experience of similar projects before committing. Just because a small group of enthusiasts in the organisation have shown an interest doesn’t necessarily mean that the key players are on board, and they are the ones who will ultimately sign off the Det ar enkelt att lara sig spela spelautomater pa natet , och om du ar helt ny som spelare sa kan du valja att spela dina forsta rundor genom att bara satsa pa ett enkelt nummer. deal.

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The advantages of having a partner for business startups

noreply@blogger.com (Unknown) — Wed, 28 May 2014 10:50:00 +0000

Two types of business operations in the form of a partnership that has been very popular today. Because if compared to the benefits the business owners who have the sole monopoly on the business owner is one of the shareholders that the difference is quite large. Together with the form of business in the current structure in the economy to facilitate business operations in the latter, more in this era, so you do not really have a chance to see emerging businesses that stem from the same owner, but only a little. The advantages of strategic partnerships with the following.

1. A capital increase.

Fund business is that of matching the story is well known for business. The partners will help business operators are promising to raise capital to expand much more. This is beneficial to invest in things that will not expand branch offices. Funds for the purchase of products. Employs. Working capital in the company. That these issues will have very limited if the company is owned only one shareholder. The financing will be difficult to run than companies that have business partners who share the same management.

2. Have an advisor on hand to help.

The assisted forward advice without having to pay employment benefits that the company is a partnership with business over the sole owner. Of course, because it operates in part to be indispensable, although, it is not difficult to see problems in the operation. This is to meet all the experience of business life. Having a good advisor who understands the problems and needs access to the company will help alleviate the burden on the operators to be very they are ready to be behind the scenes who help support the idea of entrepreneurship and ready to be ahead in removing obstacles to encounter problems. It is helpful if businesses will open tremendous business partner with a partner. How bad because two heads are better than one head, lean on dinner.

3. has broad social networking business.

10 Marketing Tips For Startups

noreply@blogger.com (Unknown) — Wed, 28 May 2014 10:40:00 +0000

Marketing is a full time job, and when you’ve got a newborn startup on your hands, strategic marketing is key. With the competition in the startup scene at an all time high, calculated marketing tricks can either make or break a new company. As a new startup, money for large scale marketing campaigns isn’t always in over abundance, so how does a company market big on a small budget? Believe it or not, you don’t have to break to bank to properly execute some effective marketing strategies. So for those of you in need of some creative guidance to get your marketing strategy off the ground, here are 10 marketing tips for startups.

1. Hire a Marketing Division

Before getting your marketing strategy off the ground, the first step is to build a strong and savvy team. Whether you have one dedicated employee focused solely on marketing, or a team of staff building and strategizing new marketing campaigns, having a marketing division is a must. If you ask a startup owner what his schedule is for the day, you’re most likely going to get a jam packed list of to-do’s. With so much on a startup founder’s mind, marketing is one important task that often gets overlooked. So, if you want to successfully market your startup, first be sure that you have a reliable team whose job description includes developing, and deploying daily marketing strategies.

2. Choose your Target Audience

Sometimes that great concept, or idea you have in your head just won’t fly with the masses. One of the most important steps to effective marketing, especially in the startup world, is to choose your target audience wisely. No offense, but you’re not Coca Cola. Unless you are an internationally recognized brand, a marketing strategy that attempts to appeal to the entirety of the general public is surely going to flop.

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9 Things You Need To Know For Startup Investing

noreply@blogger.com (Unknown) — Wed, 28 May 2014 10:26:00 +0000

Startup investing can be rewarding both financially and personally. By investing in a startup you are contributing to job creation and capital formation. The influence of entrepreneurs has shaped the U.S. since before its founding and the contribution with such innovation its absolutely immeasurable.

Even though picking winners is not an easy game, making a home run by investing in startups means that the returns could yield between 5x to 100 times returns on the initial investment. However, it is crucial to conduct the appropriate due diligence on the business, market, competitive landscape and founding members to mitigate against risk.

At the company I co-founded for instance, RockThePost, an investment platform for startups, we help with the due diligence process by only showcasing highly vetted startups. Each entrepreneur and their high level officers have to pass through background checks in order to even be considered, in addition to pitching the business venture to our investment committee, which is comprised of four financial experts, and led by the former Chief Financial Officer of E*Trade Financial, Robert Simmons.

Below are some of the most important tips when considering making an investment in a startup company.

1) Invest in a domain you know. One of the best ways to reduce risk is to understand the market that startup operates in. This will provide you with a better sense when projecting the potential success of the venture. Make sure that the business has a scalable model so that it can grow to a level in which you will be able to get your money back as an investor.

2) Drill into the track record of the founders. The people behind the company are the most critical factor, especially for early stage companies. This is mainly due to the fact that products need to be iterated several times until they are able to find where they fit in the market. Just like Jim Collins’ book “From Good To Great”, it is all about having the right people sitting in the right seat. Eventually they will end up finding the right direction. Here you want to focus on their background story (previous companies, education, etc.) and what type of value they bring to the table.

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Startup Advice From 7 Successful Entrepreneurs

noreply@blogger.com (Unknown) — Tue, 28 Jan 2014 10:52:00 +0000

Starting a business can be exhausting, exciting and exhilarating--all at the same time. This is precisely why it's refreshing to hear words of encouragement from those who have done it before--and succeeded. We spoke with entrepreneurs we admire to cull the single best bit of startup advice they could muster--and the experiences that led to it. They're simple mottoes, to be sure, but their impact can be tremendous.

"Don't think, do."

So said a stranger to Jeff Curran, founder and CEO of Curran Catalog, a high-end home furnishings company in Seattle, more than 20 years ago.

The two men were sitting next to each other on a cross-country flight, and Curran, then 25, had just broken into the catalog business. They got to talking, and Curran spilled his idea for a startup while his neighbor interjected with devil's-advocate questions. When the plane landed and the two rose to claim their bags from the overhead bins, the stranger finally opened up his can of insight. Those three words inspired Curran to pour $15,000 of his own cash into launching his company, which has grown into a profitable B2B and B2C brand.

"After that plane flight, I'm sitting in the bathroom at my parents' house and I pick up [a financial] magazine, and this guy was on the cover," remembers Curran, now 47. Turns out the man was mutual-fund maven Mario Gabelli.

Curran still lives by Gabelli's advice. Earlier this year, after learning about profit margins in the high-end car-accessories business, Curran Catalog launched a new product line: designer flooring for collector and European automobiles. "There is such a thing as overthinking a big decision," Curran says. "Sometimes you just have to get it done."

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Buying a Business: Important Issues to Consider

noreply@blogger.com (Unknown) — Tue, 28 Jan 2014 04:56:00 +0000

Buying a business can be a very good opportunity to get into an industry without going through the startup process, which can be time consuming, costly, and comes with no guarantees.

That being said, a business that is for sale is like a used car. There are lots of companies out there but only a select few are worth purchasing. Due to this, it is very important for people to do their due diligence and investigate whether or not the business they are interested in has potential.

Evaluate Yourself

Owning a company is certainly not for everyone. It is up to individuals to make sure that they have considered all available options before making the ultimate decision to be their own boss. Therefore, it is important for a person to identify their weaknesses and strengths. It is always a great idea to jot these down on paper.

Aside from listing your professional achievements, strengths and skills, you should also note your personal characteristics. These play an important role in achieving success in the business world. This also allows you to compare your traits with the attitudes that make a good business owner. Some of these attitudes include the following:

Dedication

Perseverance

Leadership

Entrepreneurship

Confidence

Self-belief

A person who does not have these attitudes should try their best to develop them. If not, you may need to reconsider owning your own business.

Business Structure

As a potential buyer, you should consider the business structure prior to purchasing a company. This is because there are taxation considerations and protection issues that need to be shored up. Some of the possible business structures that can be adopted include the following:

Company

Trust

Partnership

Sole Trader

A combination of a trust and company structure

A potential buyer should always remember that each kind of structure described attracts ongoing compliance costs, setup costs, personal risk and tax rates.

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A Financial Advisor Explains How To Increase Your Credit Rating

noreply@blogger.com (Unknown) — Tue, 28 Jan 2014 04:32:00 +0000

If you're considering buying a house or taking out a loan next year, you'll want to get your credit rating in the best possible shape. But what's the best way to approach it?

In a Reddit "Ask Me Anything" thread posted earlier this year, an advisor from a major credit card company took dozens of burning personal finance questions from the public, and quite a few concerned how to improve your credit.

The advisor asked to remain anonymous, but Reddit vets all experts before they host an AMA thread. We've also reviewed the responses and found them to be accurate. Here's how the advisor suggests you tackle your credit rating:

Q: What's the best way to increase my credit rating so banks are knocking at my door with awesome offers?

A: Unfortunately, the best answer for this one is always going to be TIME. But there are a lot of factors that you can do that will speed up some of the process. Do not do any balance transfers between your credit cards and stay away from cash advances. Mortgages will always make sure your "debt-to-income" ratio is low. This means that if the amount of debt you have is close to what your annual income is, they will likely reject you.

Q: Does how much credit you have matter as much to potential credit lenders as how well you make payments?

A: Having a card or two with a higher limit is good. But you don't want too much unused credit either. The biggest thing you'll find with loans is that they are looking for HOW MUCH history you have with your current creditors. The longer the better.

Q: Is it better to pay off your entire monthly balance, justthe minimum, or somewhere in between?

7 Tips for Small Business Owners Looking to Jump Into Social Media

noreply@blogger.com (Unknown) — Tue, 28 Jan 2014 04:08:00 +0000

Because of my background working on social media marketing campaigns for numerous large businesses, small and independent business owners often ask me how they should dive into the social media world. Many of them have little or no experience with social media and some of them may use it but without purpose. Here are 7 general tips I give to them before they take the plunge into social media marketing.

1. Develop a social media marketing plan. Start with your objectives and map out a plan-of-action to meet these objectives. What are you planning to get out of social media marketing? Who and how will you reach your target audience? These are just some of the things you'll want to address in your plan. By organizing your thoughts and ideas, you'll have a roadmap and something to refer back to should you lose focus.

2. Start from the inside out. I always stress to clients that before you pull the trigger on social media you need to be sure that you are ready for it internally. Are you and your staff ready to handle any questions that come through the door? Do you have a crisis communication plan in place should something arise via social media? Do you have the bandwidth to actively keep up with this audience? Who will take ownership of retrieving and posting content?

3. All or nothing. Like a marriage or any relationship that you want to work, social media marketing is most effective when you're committed to it. You either give it your all or don't bother turning the switch on. You'll do more harm than good if you go into it half-heartedly.

4. Build your community.

Top 3 Productivity Tips For Small Business Owners

noreply@blogger.com (Unknown) — Tue, 28 Jan 2014 03:45:00 +0000

Productivity guru Tim Ferriss, author of the best-selling book “The 4-Hour Workweek,” popularized the idea that many seemingly difficult pursuits — running a business, getting in shape, learning a language — can be achieved in much less time than most of us imagine.

Ferriss started out as a small business owner working 90-hour weeks to grow his online supplement company, Brain Quicken. Dissatisfied with his workaholic lifestyle, he transformed the way he used his time and spent his days. Focusing in on the effective use of his time quickly increased sales and helped him drastically cut his hours.

He’s exploring this time-use theory again in a new television show, “The Tim Ferriss Experiment,” which premieres on Sunday on HLN. On each episode, he uses rapid-learning techniques to master a new skill, such as learning to play a musical instrument and competing at the professional level of a sport, in just five days.

We caught up with Ferriss to get his advice for small business owners who want to be more productive and effective with their time. Here are his three best tips:

Create a new category rather than try to dominate an existing one.

“From a positioning standpoint, if you’re undifferentiated in a crowded market, it’s going to be a race to the bottom, in terms of lowering prices and increasing hours per week,” says Ferriss, who adds that attempting to dominate an existing category will only result in small incremental improvements. “From the outset, positioning yourself intelligently can save you a ton of work and make it a game that’s easier to win.”

Schedule an 80/20 analysis of your efforts once a month.

Doing a regular 80/20 analysis helps you identify the most important things you should be focusing on. Essentially, you determine the 20% of activities that are producing 80% of results that you want, as well as the 20% of activities that are consuming 80% of your time.

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Restructuring: Do You Need to Restart Your Startup?

noreply@blogger.com (Unknown) — Tue, 28 Jan 2014 03:25:00 +0000

You wouldn't start a business if you didn't think it could work. Yes, entrepreneurs tend to have an outsized sense of the possible, no one would put in the time, money and effort required to start a business without a compelling sense that it could really become a success. Why, then, do so many startups fail?

One big reason is because entrepreneurs aren't known for listening and learning from their mistakes. When everything seems to be falling down around you, there's a fine line between blindly sticking to your original plan and being open to pausing, analyzing what went wrong, and making course corrections with the benefit of your recent experience and new information. Ending up on the correct side of this line can be the difference between failure and success.

Mistakes are inevitable, especially in a startup where so many factors must come together simultaneously. It is almost as inevitable that an entrepreneur will become overextended during the startup phase. Every entrepreneur has war stories of the chainsaw juggling that's inherent in the first few years of a company's existence.

No Room for Error

Our war story starts when we hit our stride and were maturing as an organization. We were growing at a rapid clip, were 100 percent staffed with our strategy consulting business, and had just doubled our associate class. We were fully extended financially and had more than doubled our team; we had no room for error.

Our business can be spikey and, as bad luck would have it, two of our biggest clients had a change in their business that reduced the need for our support. We had to cut our cost structure fast and deep to get it in line with the new forecasted revenue base.

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The Difference Between An Entrepreneur And A Small Business Owner

noreply@blogger.com (Unknown) — Wed, 22 Jan 2014 06:39:00 +0000

When I was a kid growing up in the late 1970’s and early 1980’s I would sometimes ask my dad what he did for a living. And each time he would reply the same. “I’m an entrepreneur,” he would say proudly. “Look it up.” So I did. The dictionary defined an entrepreneur as “a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.” My dad was right – he was an entrepreneur. And a lousy one at that.

He raised money from investors and for years worked out of his home (and this was before working from one’s home was acceptable) where he supervised a handful of misfit and quirky programmers who worked odd hours developing a bookkeeping application based on a patent he held in his name. Until the money ran out. And when that happened he took his unfinished product to market where he suffered painful project after painful project. And (of course) he timed his product launch perfectly with Intuit’s latest iteration of QuickBooks, which was infinitely better, faster, more reliable and cheaper than his.

I know this firsthand because in 1994 I left my job, formed my own company, and partnered with him. For six years I also struggled to sell and implement his terrible, incomplete and poorly designed bookkeeping software. Mercifully, the year 2000 “bug” took us both out of our misery, rendering the software unworkable. Yes Virginia, there is a Santa Claus. We were forced to change directions and resell software products made by other companies. Since then I’ve managed to do what my father was never able to accomplish: earn a profit.

“I’m an entrepreneur,” my dad would keep telling me. OK. My dad was an entrepreneur. Just not a very good one. I learned from that. My company has grown to ten people.

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Loans and Financing Tips for Small Start-Up Businesses

noreply@blogger.com (Unknown) — Wed, 22 Jan 2014 06:26:00 +0000

Getting a loan for a small start-up business is hard work, especially considering the economy and the financial market today. Banks and financial institutions do not give loans to businesses which may close down in a few months. There are a few banks which are actually interested in giving loans to small start-up businesses. Since there is a lot of risk involved when lending money to new and small businesses, the interest rate is higher than the prevailing market rate as the bank may not get back the money lent to the business if the business goes bankrupt.

Nevertheless, it is not all doom and gloom, since most banks and financial institutions prefer providing loans to small businesses, as it helps the economy and the community. There are certain steps which have to be met by the business in order to acquire the loan and guarantee proper financing for their business. Here are some tips which will help you acquire loans for your small start-up from banks and financial institutions:

Research about Different Banks and Financial Institutions in Your Area

This is the first step to undertake if you want to request a loan for your business, since it will give you a pretty good idea about which banks and financial institutions provide loans in the market to small businesses like yours.

It is important to realize that financial institutions and banks have different terms and conditions on which they offer loans to smallbusinesses like yours, and proper research will allow you to tackle them more efficiently. Finally, acquire the loan from banks and financial institutions which are experienced and well established in the market, since they will be able to give you good financial advice and loan at better terms which will not challenge you in the near future.

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Venture capital funding: Understanding its advantages and disadvantages

noreply@blogger.com (Unknown) — Wed, 22 Jan 2014 06:15:00 +0000

Before taking on venture capital, entrepreneurs must ask themselves a fundamental question – “Do you want to be rich or be king?” As Harvard Business School Professor Noam Wasserman explains, it’s difficult for founders to maintain control over their businesses once they take on outside investors. However, without them, such businesses like Twitter and Facebook would likely have never have taken off. For those entrepreneurs who have developed a product with a large untapped market and a potential for rapid, high growth, venture capital (VC) funding makes sense if you’re willing to give up some control and most likely sell your business at the end of the investment period, or fund life-cycle (i.e. when the fund becomes due). However, if you would like to build a generational business, an angel investor may offer more favorable terms that will allow you to receive some equity while maintaining a degree of control.

Looking for that big return

“A VC firm does not invest in a business,” explains investment banker Jeff Koons of San Francisco-based Vista Point Advisors. Instead, it invests in a company that will sell for a lot more than it’s worth at the time of the initial investment. And such firms are looking for a big return (up to 20 times the initial investment) in a relatively short amount of time (3 to 10 years, depending on the fund life-cycle). “If your business is growing just 20 to 30 percent per year, VC funding is not for you,” notes Koons. Focusing primarily on the tech sector, Vista Point acts as a broker to bootstrapped entrepreneurs entering the VC world for the first time. “We help them think through the process from valuation to exit,” notes Koons.

Defending your interests

10 key startup tips from entrepreneur and Babson professor Michael Cummings

noreply@blogger.com (Unknown) — Wed, 22 Jan 2014 06:01:00 +0000

Years ago, Michael Cummings wanted to start his own company. But he was not confident and unsure about the future — he was wavering.

Hearing this, his wife handed him a slip of paper with a quote from Mark Twain.

“Twenty years from now, you will be more disappointed by the things that you didn’t do, than by the ones that you did do,” it read. “So, throw off the bow lines. Sail away from safe harbors. Catch the trade winds in your sills. Explore, dream, discover.”

Cummings still carried that message in his pocket Tuesday evening at Via Vita in Bellevue as he shared his best entrepreneurial tips to members of the local non-profit entrepreneurial network TiE. That Twain quote, he said, is still the most important piece of advice he’s received over the years.

Cummings, a professor at prestigious Massachusetts business school Babson, is certainly worthy of providing some help for budding startup hopefuls. He is the founder of LTC Group, a Massachusetts corporation that owns and operates long-term care facilities. Cummings also founded Health Force of Fall River, a provider of in-home nursing services, and Image Scan, a manufacturer of industrial bar code labels and related identification products.

Now, he’s teaching the next generation of startup stars at Babson as the MBA Faculty Director and shared a wealth of knowledge to a group of over 50 people Tuesday night.

Here are his 10 tips for anyone looking to start a business:

1. Stop thinking about it and start doing it. “You can’t think your way to success,” he said. “If you have an inclination, act on it. You won’t regret the business, even if you blow it. As painful as it gets, it will be something you won’t regret.”

2. Be driven by something else rather than money.

What Are The Best Ways To Think Of Ideas For A Startup?

noreply@blogger.com (Unknown) — Wed, 22 Jan 2014 05:50:00 +0000

This approach will help you think of a solid startup idea.

It is broken into 5 steps to facilitate progress through a system that in total should take about 30-40 hours to complete over a week or two, if you do it all.

Summary

Add rigor and discipline to your brainstorming and idea evaluation process:

Build lists of potential customer types and business or pricing models.

Evaluate the opportunities where these lists overlap.

Then, exit your ivory tower and evaluate the top ideas with real potential users, customers, or suppliers.

This will improve your likelihood of success and waste less time down the road, even if you pivot from your original idea.

Preface: There certainly are simpler answers like, “pick an area that is trending,” “look for a large market that hasn’t changed in 10 years,” or “convert your hobby into a business.” Unfortunately those aren’t particularly helpful, and since this question comes up often in discussions, I wanted to get my thoughts down in a more comprehensive way.

Also, while this answer covers the ideation part of the journey, keep in mind that implementing the idea is the hard part.

Three primary paths to a new business idea

1. The spontaneous idea: It hits you when you’re in the shower, driving in your car, talking with friends, or doodling during a meeting. The dots suddenly connect in a new way and you have an epiphany … your sudden insight is surprising and exciting, and the value of this new idea seems obvious. You can’t believe nobody else has thought of it before!

So you go online and poke around … and … most of the time, it turns out that someone has thought of it before.

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20 Cheap Businesses You Can Start in Your Spare Time

noreply@blogger.com (Unknown) — Wed, 22 Jan 2014 05:33:00 +0000

If you're thinking of starting up your own business, but don't want to make a huge investment, you're in luck. We've compiled a list of 20 cheap startup business ideas that won't break the bank, and you can work on in your spare time.

1. Sales Consultant: Avon, Mary Kay, Pampered Chef, and Tupperware all enlist the help of local sales representatives to get the word out to shoppers about their products. If you're comfortable talking to people about a product, this business idea could be for you. To start, Avon costs just $5 to register, Pampered Chef is $80; both Tupperware and Mary Kay cost $100 to start with each company.

Beverly Kemner of Pottstown, Pa., sees being an Avon representative as a way to earn money to supplement her income and has been running her part-time business for about four years. To get started, she paid $5 to register with Avon.

"I could do it out of my own home on my own time," she says. "They give you everything you need to start the first campaign ... I think it's perfect for this economy."

Kemner says the harder you work at building your customer base, the more sales you make, and that flexibility appealed to Kemner, who suffers from a chronic illness. "You do the best when you can put the time in to it," she says. "You need to give it a little bit of time, but it's not as time-demanding as some other (businesses)."

2. Lawn care: This is a seasonal job that can be lucrative if marketed to time-crunched homeowners who have better things to do on their days off than mow their lawns.

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15 Creative Ways to Finance Your Small Business

noreply@blogger.com (Unknown) — Wed, 22 Jan 2014 04:57:00 +0000

The road to starting a successful business can be a long one, filled with many hurdles and obstacles along the way. And perhaps there is no part of that journey more challenging than finding the right way to fund your business. While the process may sound daunting, there is a light at the end of the tunnel for future business owners, who now have a multitude of ways to finance their business. Here's an overview of some of the traditional and creative financing options available to those thinking of starting their own business.

Small Business Administration loan

The Small Business Administration (SBA) was started in 1953 to encourage aspiring entrepreneurs to start their own businesses. Under the SBA, there are two types of loans that can help prospective borrowers get the capital they need to start their business: a 7(a) guarantee small business loan and the 504 fixed-asset small business finance program.

The 7(a) guarantee loans for small businesses are more common for small businesses. Prospective borrowers can apply for these loans at banks that participate in the SBA loan process.

"Both programs look for businesses not in the startup phase," said Chuck Evans, co-founder of Prudent Lenders LLC. "They look for businesses two years into the business cycle that are generating cash flow."

These loans have a number of advantages for small businesses.
"The advantage to the borrower is, they have more access to capital," said Evans of the 7(a) guarantee loan. "When borrowing with a loan, collateral or purpose often dictates the terms. If you look at real estate, you are looking at a 20- to 25-year term. If you are financing equipment, you look at the useful life and may finance it for five years. With a guarantee from the SBA, banks can go up to 10 years for working capital, 10 years for equipment and 25 years for real estate. It gives the borrower longer terms and improved cash flow."

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15 Things I Wish I’d Known Before Starting My First Company

noreply@blogger.com (Unknown) — Wed, 22 Jan 2014 03:54:00 +0000

From a very young age, I loved the idea of starting a business. It helps that I grew up in a family full of entrepreneurs, so there’s no surprise that I launched my first company while I was in high school.

Since then, I’ve launched several businesses. Some succeeded, but most failed. While I made and lost a lot of money, each success or failure always led me to learn something new. So, looking back over my career, I’ve compiled 15 things I wish I’d known before I started my first business. Here they are:

Lesson #1: Swing for the fence

Here’s the deal: it takes as much effort to create a small company as it does to create a large one, so you might as well swing for the fences.

What does that look like? Well, the first question you have to ask is this: are you are a slugger or a base hitter? In other words, what is your tolerance for risk versus reward?

Employees are base hitters. Entrepreneurs, on the other hand, can be sluggers. While CEOs can make big money, most of the millionaires in America are entrepreneurs.

So the question is, where do you want to be? If my business partner and I focused all of our energy on our first business and tried to swing for the fences instead of creating a lifestyle business, we would have made much more money than we both currently have.

Lesson #2: Create a simple product

Some of the best products are simple. Take the iPad, for example. I bought my dad one and was about to tell him how to use it. He grabbed it from me, looked at it (the iPad was on already) and started swiping away. He didn’t need a degree in rocket science.

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