Business Start-Ups Issues
New Business Finance options include venture capital, angel investors, retirement and pension plans, Kickstarter, IndieGoGo, bonds, and banks.
The initial budget for start-ups and acquisitions require answers for several key questions including market data, sales, projected income, startup costs, and an exit strategy:
How much start-up capital is needed and project the burn rate?
How much money is raised to date? Will early income arrive in the start-up or will the initial expenses for SEO, website creation, product selection, initial service offering, marketing, R&D, and legal costs to build and protect your brand delay income?
Does the money plan include equity, preferred returns for early investors versus late, partial income sweeps into an escrow account, mezzanine financing, debt convertible into stock in the event of an IPO?
What finance software, tax service, or CPA is selected? Does the business require annual compliance and audit ? Does the strategy appear inadequate?
Were institutional investors (venture capitalists) members of the last round of financing? How many rounds of financing do you anticipate? How long will this financing last? Is the firm cash-flow positive? If not, when will this target occur?
Define start-up value and describe the firm’s value at your last round of financing? What valuation do you expect during next round of financing?
Personnel and culture are key. Does your start-up team have opportunities outside of work to build relationships? This matters for start-ups. Team building and mentoring are visible when dog and pony time arrives for your IPO or acquisition by Google.
Analyze the personality required to excel in a certain marketplace and select your key employees very carefully to fit culture and skills required at startup. This area will change after the roll out phase. Running an operating business may require a new set of eyes and ears.
Who developed the business plan? What are their ideas on age, skill set, languages, international relationship building skills, IQ, hobbies, education, and software skills?
What is the culture of your company? What kind of culture do you plan to build going forward as you expand your scope and product line or add locations?
How big is your current team? Are employment contracts used? Is the firm implementing secrecy agreements, non-disclosure agreements, and non-circumvention agreements? Do you have a multi-year hiring plan? Are you skilled in hiring and managing freelance workers through FreeLancer and other sites?
Outline personnel breakdown in terms of departmental roles (i.e. how many people work in R&D, M&A, engineering, sales, customer support, operations, legal, and marketing, etc.)?
Customer and Sales are visual reminders of success or failure.
Update the initial Proforma with real sales numbers for your investors and lenders. Attach this to a Power Point presentation with a straight forward explanation goals and targets.
Customer/user acquisition and startup growth will help you to understand the overall health of the business. Closely monitor sales growth options and key account relationships. Try out a software like Sales Force. Utilize a commercial email system on a regular basis. There are several and each is driven by contact size.Social media is another great way to make customer contact to increase sales.
How many customers do you have? For consumer-oriented startups, this could be daily active users (DAUs) or monthly active users (MAUs).
Explain your revenue and income growth based on customers, sales, or events?
Can the acquisition of an existing business to speed your income growth?
Does the sales model include affiliate sales models or business clones/franchisees?
How do you acquire new customers/users? What is the customer cost? If the customer acquisition cost exceeds the long-term value, examine this new customer expense versus in-house origination.
Identify key issues including sales, closings, refunds, and returns.
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