Category: Small Business
For years start-ups have been sending investors and other potential funding sources their business plans. With more and more start-ups pitching these days, and funders having less and less time to review them all, a new trend is emerging about how to approach funders. It’s the one-page pitch. Get to the point immediately. Here are some basic questions the answers to which should be included:
· What’s the problem?
· How are you solving it?
· Who’s your customer?
· How will your solution make money (your business model)?
· What stage is your company in right now?
· How much money are you looking for?
· What are you going to do with the funds?
· What’s the payback horizon and how much return will the funder get on their investment?
What’s really good about the one-page pitch is that it can be a significant way to force you to clarify, condense and articulate your ideas.
John Ason, an angel investor, often speaks about the one-page pitch: he has approximately 1-3 minutes to look at your idea. And it had all better be on that one page. And not single spaced with no white space on the page. If it’s not visually inviting, he won’t read it. John always offers very pointed and amusing illustrations of how he wants to invest. When asked what John looks for in a management team, his answer includes passion but he also says the combined age of the two principals should not be more than his age. Another, related to return on investment, is that the payout should not extend past his lifetime – his event horizon (as is that of many investors) is a 10x earnings return on his investment in a reasonable time frame (usually less than five years).
To learn more about John, how he works, what he looks for when investing, what he’s invested in etc.
Check out Martin Zwilling’s post on pitching angel investors – BTW these points hold true for VC and other pitches as well.
Here’s a first time funder’s story
How to maintain integrity in the creative and entertainment industries is a central question to the new and struggling creative entrepreneur. What you’re willing to compromise can define your career.
In this digital age of increased transparency, consumers want to know what to expect from a business and they readily share that information to broad social networks. This is why it’s important to set a precedent and maintain it; still, there are certain moments that call for flexibility.
Is responding to these calls necessary every time, and if so how flexible should one be? While the answers to these questions depend on the situation, overall one should be able to respond to these moments in a way that is consistent with the company’s and one’s own moral and social values. Set aside time to figure out what you and/or your company stands for as a creative and professional enterprise. Outlining these values now may help you maintain your integrity as your business grows.
Read more to gain insight on recognizing precarious compromises and get tips on maintaining integrity in your business:
If fashion tech interests you, or you are a fashion tech person, then this event is well worth attending.
Art: you make it, you sell it.
It’s not a well-loved mantra in creative circles or in art school hallways, but in order to live as an artist you have to survive. At the very least, one should be able to cover expenses and yield some profit. How is this done in a competitive marketplace where gallery space is limited and visibility is key?
Increasingly, artists are using online platforms to gain visibility and even sell their work. From Etsy to Saatchi Online, these platforms offer artists a way to network, promote, sell, and gain momentum as entrepreneurs with very little overhead costs. In some cases, retailers and other interested buyers are drawn to the established package that comes from DIY online promoting: a product with a defined brand and built-in audience. If you’ve already done the work of packaging your creative product, research alternative ways to facilitate your business outside of gallery circles– it might ultimately lead you back to them.
Here is a great list of 200 places to sell your work online:
Visual artists should consider Saatchi Online and the unique benefits of its social media-inspired platform:
Be mindful of the triple C’s at all times:
Your Company, Your Customer and Your Competition.
It’s important to have a 360 view of your business universe so that you are prepared to never be caught by surprise and never miss an opportunity. At the point where the three overlap, you’re in the zone.
· You’re focused on their needs and wants
· At the same time, you’re keeping up with the trends, not just current, but anticipating and maybe even creating future ones
· You’re always staying in touch with them
· Where are they weak
· Where are they vulnerable
· What aren’t they doing that you can do
· What are they doing that you can do better
· What skills do you have in house – are you maximizing them
· What are your assets (especially intellectual property and capital – this means your employees)
· What kind of culture have you created that everyone lives in – internally and externally
For more on the subject, check out some strategic insight offered by the Harvard Review
The Design Entrepreneurs NYC (http://www.designentrepreneursnyc.com/) program is in full swing. One of the programs’ many offerings is an open classroom “mentoring” evening, where designers in the program can swing by and ask questions of instructors who are there for that purpose. It’s a great and informal way to get multiple opinions, points-of-view and advice on the designers’ company, business plan (which they write as part of the program) etc.
This recent Wednesday evening I was co-mentoring with Shawn Grain Carter, who teaches Fashion Merchandising and Marketing at FIT. The subject, as often happens, was brought up of designers negotiating with big companies – this could mean, contracts, licenses, royalties, intellectual property, employment, or all of the above. Many design entrepreneurs do these negotiations alone. Sometimes they feel they have enough knowledge to negotiate well for themselves. Sometimes they don’t know any better. Sometimes they don’t have the money to pay an attorney to go with them to help and advocate for them (and to keep them out of trouble). We discussed this in class and Shawn and I agreed that an entrepreneur absolutely needs an attorney to accompany them to such negotiation meetings. Or a business person, like an accountant. Or both. And Shawn advised everyone, and I agree, that they should have double A’s – an accountant and an attorney. They both keep you safe in any kind of business negotiation.
It’s a necessity in the fashion business but also in every sector. At the very least, there’s a second pair of ears listening to what’s going on and picking out important points that the entrepreneur might miss. At the very most, your A-team keeps you from making costly, and sometimes business-ending, mistakes. The world is littered with stories of failure because the entrepreneurs couldn’t or wouldn’t bring an attorney or accountant into a crucial negotiation (and, let’s face it, every negotiation when you’re a small business is crucial) with them.
I know you’ve heard me say this before…but repeating it never hurts…always use an attorney and/or accountant in contract reviews, negotiations, any business matter. The fees you pay your Double A-Team are minor compared with the money they save or help you get in the long run.
It’s so much easier than starting from scratch. That’s because the relationship is already there. Of course the foundation of any great relationship is good communications. And to maintain a great working relationship even when you’re not working together.
I have been very lucky in my business. Almost every single client I ever had (I’ve been in business for 16 years) I’m still in touch with. When they go on to new opportunities I’m usually the first person they contact to see if we can work together. When I started a new company a few years back, I reached out to some of them to be on my Advisory Board. The nice thing about these relationships is that I’m always thinking about my clients and how I can help them and likewise they are looking out for me. This is actually true with colleagues and business associates in my network as well.
Heather Townsend put out a post listing 17 ways to get more referrals from existing clients. It’s useful. Here’s an 18th – stay in touch with my clients over the years even when your not working with them. I take some clients to lunch when they’re in town, and find ways to help them. Even if we don’t work together for long periods of time, I stay in touch. So when they do have a referral, I’m top of mind.
For all you fashion folks, this might be a great event to find a business partner, an investor, an idea about the latest in fashion tech.
A few weeks ago Men’s Warehouse founder, George Zimmer was fired from the company he founded. It turned out he wasn’t the majority shareholder of the company. That led to his ouster.
No matter what kind of company you found, there are a few key points to ensure this doesn’t happen to you (unless you are just in it for a quick turnaround and flip, in which case that’s your exit strategy and what you strive for).
· When raising money, remember, the probability of having to give up more than 50% to get the money is very high. That means you’re giving up control. Often the founder is parachuted out with lots of cash. But if you want to build a company and maintain control, think carefully about the sources of your money. This is what is meant by “expensive” money.
· When taking on partners or starting out with partners, make sure there is a strong contractual agreement in place that covers who is in control of what and to what degree. Anything can happen, and the weird stuff often does – if your partner dies or gets divorced, you may wind up with an heir who knows or cares nothing about the business. Then your problems really begin, especially if they don’t want to be bought out (or you can’t afford to buy them out).
· Vision = Control as stated very clearly in the article link below. If you want to see your vision flourish, make sure you maintain control of your company.
· If your company has a Board of Directors, remember one of their main functions is to determine whether or not to fire you (and your management team). This is what happened at Men’s Warehouse. This is also why so many large corporations have a Board of Directors that is composed of cronies.