Established companies tend to take last year’s budget and increase it by inflation to get to next year’s: not a great process in any case, and useless for a new venture without any precedent…!
Take a percentage of sales maybe? why not. 5%? 10%? That top down approach might give you a (fairly random) overall number but no clue whether it is the right amount or how to spend it, so let’s skip that one as well.
In my experience, there are only a couple of useful methods to set up a marketing budget from scratch:
Talking to many successful entrepreneurs and investors, here is an overview of what they say is needed to start a successful business. We’ll look at the skills required in a new venture, how to gage whether the idea will work, what resources are needed and… getting started!
A successful venture will require key skills from you and your co-founders. You don’t need to be an expert at everything in a new venture (that’s what your team is for!) but you need to be able to see the whole management picture, and you need to be able to sell your story and take people on your journey. …
You want to start-up a venture but have no idea how to get started? Here are the main steps on the road to success!
We’ll go from what to do when you don’t have an idea yet, to validating your new idea, building proofs of concepts and MVP (minimum viable product), and eventually reaching product-market fit and getting traction.
The ideation part is probably the most tricky one because it’s all about creativity. Make sure you start by identifying a need, ie a problem worth solving, preferably one that someone somewhere would be happy to pay for! Then you can ideate solutions for that problem (rather than retro-fit problems to an existing “solution”). …
Startup founders have a tendency to pick the best numbers, so investors have a tendency to check them…!
Congratulations, you just got your first seed round covered… or do you? Getting the first “yes” is an amazing feeling, but it’s still a long way until the money is in the bank. And in that way stands the due diligence, especially technical, financial and commercial due diligence.
Commercial due diligence covers 3 main points:
Coming up with a fair valuation is always difficult, even more so for startups; customer-unit economics can help.
Customer-driven investment methodologies use customer metrics to assess a startup underlying value. Simply put, can you -the startup team- acquire customers profitably and retain them for many years, therefore having a longer-term profit potential larger than the revenue growth to date had implied?
Whether you have recurring (subscription-based) or discretionary revenue stream, customer-unit economics can shed light on your fair value by making projections from the bottom up, looking at how individual customer behaviour drives the top line.
Investors prefer businesses with recurring revenues as there is more certainty of income and the investment calculations are quite straight-forward (recurring revenue + new revenue — churn), giving a sense of the “true value” of the business. For startups with discretionary revenue, customer behaviour is not as easy to predict, at least until there is enough data for statistical analysis and by that time you might already have run out of cash! For early-stage start-ups with such discretionary revenue, the best path is to test the behaviour of their customer cohorts at all levels of the purchase funnel to get benchmarks and build a “proof of concept” of the path to profitability. …
The COVID-19 is not just a health hazard, it’s also a terrifying economic catastrophe, likely to take many businesses under all over the worlds. Let’s assume you’ve reacted quickly and pivoted your business model to become more digital than ever, you’re not out of the woods!
Marketing will play a critical role in getting your business to survive the crisis, especially as your customers will be poorer or feel poorer and stop buying many things, including potentially yours. The longer the crisis last, the more scared and the less willing to spend they will be. They will be more frugal and cautious in their expenditures. …
Covid is destroying many startups and scaring all of us.
As a founder, it’s both your dream and your livelihood at stake. You’ve probably already taken drastic steps to save cash and extend your runway: stop any non-essential operating expense, called investors for some more cash, discussed with your suppliers and other creditors, maybe had to resort to decrease the days and hours of your staff, and obviously asked your customers for their support.
The questions every startup or small business CEO needs to ask now are:
I was just reading an interesting article by Gary Aitchison about startup risk assessment (available on Medium here) but thought he’s missing half the story: the rewards part!
I think his “phi measure” is an interesting way to visualise a startup risk profile and make sure any addition to the portfolio doesn’t increase a specific risk factor, or help mitigate some of the risks if you’re bringing skills in addition to cash.
The 11 risk factors he considers are:
Most entrepreneurs are clear on what problem their product is going to solve, and have a rough idea of how to monetise. Where most struggle though with the go-to-market: how to sell cost-effectively.
This is especially difficult for entreprise sales as there can be many different stakeholders and decision-makers, and a long and complex purchase decision process.
In my experience working with small businesses, startups and entrepreneurs, the go-to-market (GTM) differs significantly based on the size of the target customer and their long-term value. If we assume you’ve done your homework and already have established buyer personas, decision journey and a preferred sales methodology (eg SPIN selling, account-based, challenger sales, solution selling, consultative selling, transactional selling, etc, etc, etc!) and have built your sales & marketing lead machine and funnel, then you main question now is about negotiating commercial terms, particularly pricing. …
I work with many startups, entrepreneurs and small business owners and hear it again and again: my product is great, but how do I tell the world? I’ve tried to do “digital”, ie doing some search on Google, publishing some content on LinkedIn, maybe even tried a few ads but it “doesn’t work”…. In other words, they don’t get the results they were expecting (hoping for?!) and are not sure what to do next…
Some quit, thinking “there’s no demand”, most want to get help but don’t know how to select an agency, how to brief them, or get scared having to invest advertising money convinced the product should sell itself through word of mouth…! …