Keywords for this post:
Business plans for angel investors
I finally broke down and watched an episode of The Shark's Tank, that new "reality" show that has entrepreneurs pitching ideas to "venture capitals". And, yes, it was just about as "real" as The Real Housewives of Orange County. None of the candidates had so much as a business plan for angel investors. No, these are not "venture capitalists". They are "angel investors". That distinction, however, is far less important than the incredible misconceptions the show is propagating.
The only time I have EVER seen angel investors listen to a five minute pitch and write a check for $500,000 was during the heydays of internet companies in the 90s. When those companies flopped on their ill conceived bellies, angel investors pretty much gave up their ill conceived ways and returned to business plans and investigation. There was actually an offer of $500,000 and another for $250,000 "investment" in this episode. Absolutely unbelievable.
The one thing the show did drive home is that inventors far over-value their inventions. They seem to place a value somewhere in the future, after the investment has made it successful. That's not how the real world works.
In a real venture investment, the company is valued at present value, not future value. It is the investment that will bring the company's value to grandiose figures. It really is a partnership between ideas and money.
The show also emphasized what poor business sense most inventors have. And that is probably true. There are millions of "better mousetraps". But very few of them ever get noticed because the inventors don't know how to promote and sell them. I think that is why I really did like one lady who appeared. She had a new fangled baster for turkeys, one that doesn't drip or splash. She sold 51% of her company for something like $35,000 to a guy who could promote it effectively. That lady is going to make a lot of money.
If you are creating a small business plan for angel investors, do take a look at the show. Some of the questions the investors had were good, relating to marketing research, prototype development, licensing options and use of funds. In the real world you will have an opportunity to discuss these issues, so be ready.
Monday, August 24, 2009
Wednesday, August 19, 2009
The ER Fairy and Other Urban Legends
There is an ad on TV now about there not being a "credit fairy". While the ad is pretty dorky, it does hit on a core truth: we expect "someone else" to fix it. We are simply spoiled rotten and we expect some magical answer to all our woes, even those we create ourselves.
The health care issue is one of these. More particularly, it is the health care insurance issue. We have created this monster that consumes our savings and drives millions of people into poverty. Small businesses are fighting the healthcare legislation on the basis that it will hurt them financially.
Baloney.
There are two major flaws in this kind of thinking.
First, it will never put a small business at a competitive disadvantage because ALL companies
will be in exactly the same boat. If one company has to pay more for the health of its employees, ALL companies will have to pay more for the health of employees. The only thing that will drive them out of business is if they run a company very poorly anyhow. Prices will rise hither and yon, and may fall hither and yon to accommodate for the new line item. But every single company will be doing the same thing.
And, second, we pay for employee health care already. It is called "emergency care". We wait until people are sick enough to go the ER before we will help them. That ER care costs massive amounts of money. Who do you think pays for those ER visits? The ER fairy?
The health care reform will shift care to earlier care, pre-ER. It will encourage people to go to doctor's offices. Doctors aren't cheap, but they are a dime store bargain compared to ER costs. All in all, we will end up saving BILLIONS. Yes, many, many BILLIONS of dollars.
Yes, the transition may be a bit rocky. Most transitions are, even good ones. But the upside is so strong, I just cannot believe that so many otherwise decent people object so severely to it.
So, tell me, what's wrong with admitting there is no ER fairy?
The health care issue is one of these. More particularly, it is the health care insurance issue. We have created this monster that consumes our savings and drives millions of people into poverty. Small businesses are fighting the healthcare legislation on the basis that it will hurt them financially.
Baloney.
There are two major flaws in this kind of thinking.
First, it will never put a small business at a competitive disadvantage because ALL companies
will be in exactly the same boat. If one company has to pay more for the health of its employees, ALL companies will have to pay more for the health of employees. The only thing that will drive them out of business is if they run a company very poorly anyhow. Prices will rise hither and yon, and may fall hither and yon to accommodate for the new line item. But every single company will be doing the same thing.
And, second, we pay for employee health care already. It is called "emergency care". We wait until people are sick enough to go the ER before we will help them. That ER care costs massive amounts of money. Who do you think pays for those ER visits? The ER fairy?
The health care reform will shift care to earlier care, pre-ER. It will encourage people to go to doctor's offices. Doctors aren't cheap, but they are a dime store bargain compared to ER costs. All in all, we will end up saving BILLIONS. Yes, many, many BILLIONS of dollars.
Yes, the transition may be a bit rocky. Most transitions are, even good ones. But the upside is so strong, I just cannot believe that so many otherwise decent people object so severely to it.
So, tell me, what's wrong with admitting there is no ER fairy?
Monday, August 17, 2009
Up Up And Away! Business Start Ups Are Soaring
Business start ups are planning for the future.
Michael Bloomberg, the Mayor of New York said it very succinctly: "The truth is, the economy is never as good as it looks in a boom and never as hopeless as it looks in a recession ... America has never had a short supply of optimists, which may be the best of all reasons to be hopeful."
I do agree. In fact, I've got a saying of my own: "The folks will only take it for so long." The business folks, the entrepreneur folks, the investment folks -- we just aren't used to being down. When we've had enough we make a recovery happen.
Well, I think we've had just about enough.
Some very impressive business start ups came during recessions: Proctor and Gamble (1837), Hewlett-Packard (1939), Federal Express (1973), Microsoft (1973) and CNN (1980). Even Bloomberg's own TV financial network was founded during a recession (1981).
California has reported a spate of new business start ups, with a 10% rise in corporate filings. We are based in California, and while I haven't seen a spate of new businesses sprouting up all over, the statistic makes sense. The corporation figures reflect the "idea" businesses, the startups that defy definition and don't really care if the economy is good or bad. These are the biotechs, the green energy companies, the next Wiis. These are the business start ups that will fuel the next generation of entrepreneurs.
This is an exciting time to start your business. For many businesses, it is the BEST time to start your business.
Michael Bloomberg, the Mayor of New York said it very succinctly: "The truth is, the economy is never as good as it looks in a boom and never as hopeless as it looks in a recession ... America has never had a short supply of optimists, which may be the best of all reasons to be hopeful."
I do agree. In fact, I've got a saying of my own: "The folks will only take it for so long." The business folks, the entrepreneur folks, the investment folks -- we just aren't used to being down. When we've had enough we make a recovery happen.
Well, I think we've had just about enough.
Some very impressive business start ups came during recessions: Proctor and Gamble (1837), Hewlett-Packard (1939), Federal Express (1973), Microsoft (1973) and CNN (1980). Even Bloomberg's own TV financial network was founded during a recession (1981).
California has reported a spate of new business start ups, with a 10% rise in corporate filings. We are based in California, and while I haven't seen a spate of new businesses sprouting up all over, the statistic makes sense. The corporation figures reflect the "idea" businesses, the startups that defy definition and don't really care if the economy is good or bad. These are the biotechs, the green energy companies, the next Wiis. These are the business start ups that will fuel the next generation of entrepreneurs.
This is an exciting time to start your business. For many businesses, it is the BEST time to start your business.
Tuesday, August 11, 2009
Planning Your Restaurant Business
Keywords for this post:
Restaurant Business Plans
It is just so easy to hate him. He took all those well thought out restaurant business plans, all those delectable recipes and smashed them in full view of the world. He screamed. He ranted. He shouted profanities too rotten to show on TV and terrified young chefs. He was, in short, a b*&^%$*&^. And I don't use that word much. If I knew worse words, I would use those.
The world has no use for business people who flaunt themselves as the gods' gift to humanity, and certainly not when they make it their business to put down everyone else. Life is just too short.
So, like many others, I smugly smiled when I read that Gordon Ramsay's restaurant business plan was falling apart. He is losing millions!!!! His advisors have recommended bankruptcy. YEEEEEEEEEEEEEEEEEEEEEEEEEAH!!!! I simply could not be happier. It could not happen to someone who deserved it more.
He doesn't deserve to lose so much because he is such a jerk, although he certainly is. No, he deserves to lose his whole empire because he believed that acting like some whip lashing prima donna was more important than watching his own business.
Planning your restaurant business means a whole lot more than putting in some tables and chairs with a fancy menu. A whole more. Far more than most businesses, the successful restaurant business requires constant attention. Clients change. Waiters sluff off. Laundry services muddle it. Millions and millions of things happen every single day that need the close attention of someone who really cares.
When someone really does care, the restaurant shows it. A strong restaurant business plan is an everyday affair. Everything just comes together. Even if there are tough times, it still has a much better chance of making it than a neglected, cheap bordello.
So I'm grinning from ear to ear. You jerk, you asked for it.
Restaurant Business Plans
It is just so easy to hate him. He took all those well thought out restaurant business plans, all those delectable recipes and smashed them in full view of the world. He screamed. He ranted. He shouted profanities too rotten to show on TV and terrified young chefs. He was, in short, a b*&^%$*&^. And I don't use that word much. If I knew worse words, I would use those.
The world has no use for business people who flaunt themselves as the gods' gift to humanity, and certainly not when they make it their business to put down everyone else. Life is just too short.
So, like many others, I smugly smiled when I read that Gordon Ramsay's restaurant business plan was falling apart. He is losing millions!!!! His advisors have recommended bankruptcy. YEEEEEEEEEEEEEEEEEEEEEEEEEAH!!!! I simply could not be happier. It could not happen to someone who deserved it more.
He doesn't deserve to lose so much because he is such a jerk, although he certainly is. No, he deserves to lose his whole empire because he believed that acting like some whip lashing prima donna was more important than watching his own business.
Planning your restaurant business means a whole lot more than putting in some tables and chairs with a fancy menu. A whole more. Far more than most businesses, the successful restaurant business requires constant attention. Clients change. Waiters sluff off. Laundry services muddle it. Millions and millions of things happen every single day that need the close attention of someone who really cares.
When someone really does care, the restaurant shows it. A strong restaurant business plan is an everyday affair. Everything just comes together. Even if there are tough times, it still has a much better chance of making it than a neglected, cheap bordello.
So I'm grinning from ear to ear. You jerk, you asked for it.
Tuesday, August 04, 2009
Business Startup Ideas: Share and Share Alike
Keyword for this post: Business Startup Ideas
Bootlegging is IN, and as far as business startup ideas go, it is a pretty good one. Bootlegging means getting a little help from your friends, and picking yourself up by your own bootstraps. In the world of business it means the ability to use your network to do everything cheaper and better. And it means doing without some of the luxuries we might like to have.
Take space for example. Traditionally each business had its own "space", whether that space was office space or design space or retail space, or even manufacturing space. This isn't last year. This is the 21st century, and now space is dear, and space is a shared commodity.
Some businesses share space with their family. It is called a "work at home" business, and as business startup ideas go, it is one of the best. At least in terms of money. Low, low overhead makes for much better profit.
But there are businesses that need a more professional face. In the new world of business, these businesses often share space, whether that space is office space, retail, wholesale or manufacturing.
Rarely does a startup need all the space that is available. One of the major changes in recent years is the amount of sharing going on. A maternity store shares space with a baby store. A framer shares space with an artist. A parts manufacturer partitions off a third of his building for sub-let. A large biotech research firm sets aside one floor to subdivide for small biotech startups.
Getting a single office in a shared suite has long been a staple of small business. But now it is taken to a new level. Non-competing businesses can even share the same office, with the same fax machine, and perhaps even the same desk, especially if neither one uses the office all the time. Years ago when I was doing business consulting, I leased a single office in a law firm. Wow -- talk about prestige!
Having a good business startup idea isn't quite enough anymore. Now you need the ingenuity to stretch those startup dollars as far as possible, and sharing helps you do just that.
Bootlegging is IN, and as far as business startup ideas go, it is a pretty good one. Bootlegging means getting a little help from your friends, and picking yourself up by your own bootstraps. In the world of business it means the ability to use your network to do everything cheaper and better. And it means doing without some of the luxuries we might like to have.
Take space for example. Traditionally each business had its own "space", whether that space was office space or design space or retail space, or even manufacturing space. This isn't last year. This is the 21st century, and now space is dear, and space is a shared commodity.
Some businesses share space with their family. It is called a "work at home" business, and as business startup ideas go, it is one of the best. At least in terms of money. Low, low overhead makes for much better profit.
But there are businesses that need a more professional face. In the new world of business, these businesses often share space, whether that space is office space, retail, wholesale or manufacturing.
Rarely does a startup need all the space that is available. One of the major changes in recent years is the amount of sharing going on. A maternity store shares space with a baby store. A framer shares space with an artist. A parts manufacturer partitions off a third of his building for sub-let. A large biotech research firm sets aside one floor to subdivide for small biotech startups.
Getting a single office in a shared suite has long been a staple of small business. But now it is taken to a new level. Non-competing businesses can even share the same office, with the same fax machine, and perhaps even the same desk, especially if neither one uses the office all the time. Years ago when I was doing business consulting, I leased a single office in a law firm. Wow -- talk about prestige!
Having a good business startup idea isn't quite enough anymore. Now you need the ingenuity to stretch those startup dollars as far as possible, and sharing helps you do just that.
Sunday, August 02, 2009
Big Malls Want YOU: Starting A Small Business
Starting a small business, especially in a mall, used to be a major endeavor. In fact, big malls didn't even want independent entrepreneurs. They wanted chains. Established businesses. Businesses they could count on. Businesses with a real history.
So when I opened the local paper this morning and saw an ad from Westfield Associates, a big mall owner throughout the US, inviting entrepreneurs to a business fair, I was awe struck. Never, never in my life have I seen established malls interested in luring small businesses that want to start up. Never. I have to assume, too, that this isn't just happening in southern California. My guess is that it is happening nationwide.
I probably shouldn't have been so surprised. Yesterday I took a walk through Fashion Island, a rather tony mall in Newport Beach. I was struck by the number of vacancies and the number of locations that have been vacant for many, many months.
Clearly, it is not business as usual in mall land.
The old "name" stores have been in trouble. So have established franchises.
The old tried and true approach isn't working now. Malls need to attract new money, new energy, new ideas. So now they are receptive to entrepreneurs starting a small business, even independent businesses.
The opportunity has never been better for retailers starting a small business. For those with strong backgrounds and financing available, many doors are open. Don't be surprised if these malls try to lure you into a franchise of some sort -- this is what they know. If a franchise is the right option for you, go for it. If not, stick to your guns. You will probably never have a better opportunity to build your own path.
So when I opened the local paper this morning and saw an ad from Westfield Associates, a big mall owner throughout the US, inviting entrepreneurs to a business fair, I was awe struck. Never, never in my life have I seen established malls interested in luring small businesses that want to start up. Never. I have to assume, too, that this isn't just happening in southern California. My guess is that it is happening nationwide.
I probably shouldn't have been so surprised. Yesterday I took a walk through Fashion Island, a rather tony mall in Newport Beach. I was struck by the number of vacancies and the number of locations that have been vacant for many, many months.
Clearly, it is not business as usual in mall land.
The old "name" stores have been in trouble. So have established franchises.
The old tried and true approach isn't working now. Malls need to attract new money, new energy, new ideas. So now they are receptive to entrepreneurs starting a small business, even independent businesses.
The opportunity has never been better for retailers starting a small business. For those with strong backgrounds and financing available, many doors are open. Don't be surprised if these malls try to lure you into a franchise of some sort -- this is what they know. If a franchise is the right option for you, go for it. If not, stick to your guns. You will probably never have a better opportunity to build your own path.
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