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Tag: Starting a Business

  • Entrepreneur | Four Things Entrepreneurs Don’t Need, According to This Outdoor Adventurer and Creative Founder

    Entrepreneur | Four Things Entrepreneurs Don’t Need, According to This Outdoor Adventurer and Creative Founder

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    In this ongoing series, we are sharing advice, tips and insights from real entrepreneurs who are out there doing business battle on a daily basis. (Answers have been edited and condensed for clarity.)

    Who are you and what’s your business?

    My name is L. Renee Blount. I am a professional athlete, (@urbanclimbr on Instagram), and founder of WndrHaus, a full-service creative house where whimsey, brand strategy, production and storytelling meet. We work to illuminate untold stories and rethink the future. Our biggest clients are interested in tapping our passion to showcase joy, flavor and adventure amongst underrepresented groups, as well as go-to-market strategies for campaigns.

    What inspired you to create this business?

    Very simply, my love for the outdoors and the creative realm, and not seeing many of “me” represented out there. Meaning, three things:

    1. A black-owned and women-owned business where I am a rarity in both the outdoor and creative consulting businesses (product and brand specifically).

    2. Ownership to open doors not just for myself in these industries but for others as well. I hire an all-women crew whenever possible for my assignments because I know that in my personal experience, I have been overlooked simply because “a man can carry more equipment” on certain expeditions, where I knew I should have been chosen and could have produced even more amazing content for those companies.

    3. I love the behind-the-scenes action. It’s often not the most famous people who are moving and shaking things. It’s those who are connected and provide a business case as to why it matters. I want to play in this space for a long time. Since my time working in brand strategy & innovation, I rarely have seen people who look like me, which illuminates the structural issues to get here, but importantly highlights. There’s so much room to do really rad and epic things that are different. I bring a different energy and such different perspectives from my peers – and more importantly, an exuberance that I am really proud to take ownership of. I truly believe in what I am doing and want to make sure I’m a gate opener, rather than a gatekeeper.

    Related: It’s Never Too Late to Launch Your Dream, Say These Skincare Entrepreneurs

    I didn’t get to play a ton of sports or camp growing up, but I did attend a high school that was deeply concentrated on the arts, which was instrumental in many ways in getting me where I am now. I pursued a graduate degree in architecture at Harvard, which transitioned into a career as a creative director where I could marry my love for the outdoors and creativity while having an impact in representing the underrepresented through my work and in my community. Because I wasn’t seeing marketing campaigns and ads that reflected me or who looked like my friends, I wanted to change not only that but also make climbing more accessible to people of color who normally don’t have access due to financial limitations or not having the opportunity culturally. I know that I have a special gift for making content more accessible to the everyday person, and showing more joy and flavor in my work.

    What advice would you give entrepreneurs looking for funding?

    It starts with relationships and having a vision. It’s a game of hustle, where I keep learning and maneuvering wherever possible. It’s about being able to learn on the fly, being respectful yet persistent and pleasant, staying nimble with the changes and being willing to fail – but learning how to fail forward. For example, someone with more resources than I do will have a bigger window to fail. For someone with fewer resources, we have to figure out how to make the window of possible failure shorter because you might not have as much fallback. You have to think about what you’ll do if it doesn’t go well, and have a cushion to take a risk like having enough savings and the right timing.

    What does the word “entrepreneur” mean to you?

    Entrepreneurship is leaving a legacy like nothing else. By helping to create a new set of rules, a new playbook, and a new flow that adds to the lexicon of what is happening and how we can progress forward. As an entrepreneur, it means we exist to serve one another, not just our pockets. It is being a steward of trust and decency to your partners. More importantly, you have the ability to hire and uplift others, especially your community, which is powerful.

    
Related: You Don’t Have to Be a Business Owner to Think Like an Entrepreneur

    What is something many aspiring business owners think they need that they really don’t?

    Simply, I went to too much school. As a first-generation student, I thought it was the ticket. With little guidance, I was book-smart and was not cognizant of other avenues. I didn’t know they existed. Hence, I believe in seeking out people to converse with now constantly to illuminate what’s possible and understand much sooner.

    When people ask me about the graduate school path and often ask about Harvard, I really ask what their reasonings are. I ask them about their ROI and what that adjacency will really do for them. For some, it makes sense, for many it absolutely does not, especially if they have a full-ride elsewhere (It also depends on the degree. I don’t believe in going to high debt for lower-income yielding fields). It’s about financial mobility especially when you have access to fewer resources. I could wax poetic on that longer!

    As someone who comes from a single-parent household, I’m filled with gratitude that I’ve been able to navigate this path. It’s been far from easy. There’s a lot I’ve had to do to learn. And THAT I can never regret. Information is such an unlock. Getting coffees with the executives you’d like to be can shave off so much time – and money too.

    Other things you may not need:

    • A grandiose vision: Maybe you want to solve something that’s simple. That’s what it was in my case initially. I didn’t see myself represented out there and because I came from brand strategy & innovation, the solutions seemed obvious to me. And I could speak to it.

    • Lots of voices: Go for it. You may not hear validation for a while and that’s okay if you’ve done your research.

    • Balance: I think it doesn’t exist for many, to be truthful. Enjoy the work and know it does take sacrifice.

    • Debt: I worked a full-time job until I could leave. I had a shorter window of time to take that risk (due to a small fallback), but I tried to make the most out of it when I jumped in head first. If I failed, it was okay. My mom and grandmother knew what it was like to not be supported in taking risks, so they cheered me on. That meant everything.

    More importantly, what you do need is a cheerleader, grit, and hope. You have the ability to take risks.

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    Dan Bova

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  • Entrepreneur | Why 2023 Will Be a Great Year to Start an Online Business

    Entrepreneur | Why 2023 Will Be a Great Year to Start an Online Business

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    Opinions expressed by Entrepreneur contributors are their own.

    One of the big stories of the pandemic, especially during the early uncertain days, was the rise of entrepreneurship. Millions of Americans started new businesses and side hustles, experimented with working from home and expressed an openness to new ways of creating economic value. Recent data from the U.S. Census Bureau on Business Formation Statistics found that the pandemic’s burst of entrepreneurship was no one-time fluke: Americans formed more than 5 million new businesses in 2022, representing a 44% increase in new business formations compared to 2019.

    It appears that the 2020s boom in entrepreneurship is here to stay — and that’s good news for the digital economy. Despite some recent gloomy headlines from Silicon Valley and Wall Street and some painful downturns in the stock market, there are strong signs that 2023 might be an even better year for entrepreneurs to start a business — especially in the online small business space.

    Let’s look at a few big reasons why 2023 will be a great year for digital entrepreneurs.

    Related: 4 Reasons Why an Online Business is the Best Investment You Will Ever Make

    Big Tech layoffs lead to new opportunities

    Just within the past few weeks, we’ve seen thousands of job cuts at Big Tech companies like Google, Meta, Microsoft and Amazon. Of course, these job losses are painful in the short run for the affected employees and their loved ones; no one likes to get laid off. But this temporary pain can lead to bigger opportunities for the future.

    Thousands of entrepreneurs with valuable, in-demand tech skills are now looking for their next gig. Some of them might want to start their own business, and some might band together to launch a new startup with their colleagues; some might want to consult, while others might want to invest in acquiring an existing online business.

    There’s going to be an unleashing of human capital and ingenuity that was concentrated at a few big companies; this is ultimately going to spark new growth in digital entrepreneurship. Lots of great companies get started during an economic downturn when customers are looking for new innovations and there’s less competition and noise in the market.

    I’m excited to see what new ideas and innovations emerge from today’s Big Tech layoffs. There are people getting laid off today who might become the CEOs of the next decade’s biggest success stories.

    Related: Laid-Off From Your Big Tech Job? It Could Be The Ideal Time to Pursue Entrepreneurship.

    Strong opportunities for “Main Street” online businesses

    Publicly traded Big Tech companies have attracted lots of hype and massive investment in the past few years, but the digital economy is not just about these large public firms. There is a very large underrated area of the digital economy that we call “Main Street” — sub $10MM revenue businesses including blogs, apps and ecommerce stores.

    There are lots of ways for entrepreneurs to make real money with online businesses, and it can often be done with limited upfront investment and minimal overhead costs, such as starting a Fulfillment by Amazon (FBA) business. Starting a content-based website or blog can help digital entrepreneurs serve a unique niche and build a loyal audience of fans, followers, and repeat customers. Mobile apps continue to be the center of people’s everyday lives — and there are big opportunities for helpful, profitable mobile apps that can provide a useful service.

    The next wave of innovation in the digital economy is going to come from small online businesses. These are often generating steady revenue and offer big upside potential for growth. Look for more entrepreneurs to explore the Main Street of the digital economy.

    Freedoms of being your own boss

    The continuing boom in new business formations, worker shortages in many industries and the rise of remote work are all strong signs that entrepreneurs are fed up with the traditional corporate workday grind. They want to create value on their own terms, be productive on their own schedule, enjoy better work-life balance and unlock opportunities for themselves in new ways.

    Online entrepreneurship can be a huge force in this larger transformation of how people work and live. When you own a digital small business or other digital assets, you can work from anywhere in the world. You don’t have to punch a clock or report to a manager or be surveilled by an employer. You don’t have to ask permission to go on vacation. You can explore new business ideas, try new things, launch new products and discover new markets without the bureaucracy and limitations of a traditional employer.

    The pandemic caused millions of people to reassess what they want out of life, where they live and how they work. The freedom and flexibility of digital business ownership can be a good fit for many new entrepreneurs.

    Related: 5 Steps to Start an Online Business and Living a Much Better Life

    High-growth online businesses categories

    Digital small businesses offer many flexible models to help entrepreneurs capitalize on the newest trends and consumer lifestyle shifts. No matter what customers are demanding now, digital small businesses are adaptable and well-positioned to deliver it. A few high-growth online business categories that I’m hearing about from digital entrepreneurs right now include fitness, travel, health, finance and pets.

    Think about how consumer behavior has changed in the past few years. People want to focus on their health and wellness; they want to exercise and feel better; they want to take vacations; they want to improve their financial situation; and they want to pamper their pets.

    All of these consumer needs are well-suited to online business ownership. There are many creative ways to build relationships with customers in these categories with valuable products, advice and professional services.

    Acquiring existing businesses as an investment

    2022 was a terrible year for the stock market and lots of investors got burned by meme stocks and overhyped alternative asset categories. What if there was a better way? Investing in online businesses by buying an existing website or other small business can be a great way to invest, and these digital small businesses never got overhyped or overvalued. In fact, some digital small businesses are delivering 30% or more annualized returns.

    Acquiring an existing business is often faster, easier and lower risk than starting an original business, and acquiring a business gives you the reassurance of knowing that this business is generating real revenues and has a base of users, customers and web traffic to build upon. Look for more investors — individual entrepreneurs and larger aggregators and institutional investors — to buy into online small businesses as an investment category in 2023.

    Bottom line: Despite some gloomy headlines from Wall Street and short-term pain for Big Tech, the future is bright for the digital economy. One of the biggest growth areas in tech for 2023 will be on “Digital Main Street,” in small online businesses like mobile apps, SaaS solutions, ecommerce stores, blogs, content-based websites and other digital assets. Small online businesses can spark big growth and open up a new era of digital entrepreneurship.

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    Blake Hutchison

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  • Entrepreneur | How User Research Helps You Win Before a New Product Launch

    Entrepreneur | How User Research Helps You Win Before a New Product Launch

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    Opinions expressed by Entrepreneur contributors are their own.

    Creating and launching new products is an exciting yet daunting period for both startups and enterprises. If the new product succeeds, it will lead to huge sales and business success. However, this is not always what happens. According to research from Harvard Business School, 95% of new products introduced each year fail.

    When you’ve poured millions of dollars and immeasurable labor into launching a new product, and it tanks, this is a crushing blow for the business.

    While there is no definitive way to guarantee success with a new product launch, you can dramatically improve your chances by understanding your users and their needs. It seems obvious, but you’d be surprised to know that 50% of businesses still don’t invest in deep user research.

    When you understand your users’ goals, struggles and anxieties, you will not have to guess what to build. Read on to dive deep into how to conduct user research correctly so that you can read your user’s mind and build successful products and stronger startups.

    Related: How to Nail a Successful Product Launch

    1. Deeply understand your user behaviors and motivators

    Have an idea for a new product? It’s easy to think that’s what your users want, and that’s why most businesses start with a solution. But if you want to create products that your users want, it’s crucial that you don’t put solutions in front of potential users while doing user research.

    Instead, spend your time deeply understanding the space you’re trying to operate in and the people for whom you’re trying to solve it. A deeper understanding of your users will help you avoid confirmation bias, and it will help you create products your users need, not just something you need to sell. If you fail to do this, you won’t be able to launch a successful product.

    Remember, it’s easy to get attached to an idea or solution you’re sure will be great without getting the real users’ input; it happens to the best of us. But creating and launching successful products requires listening to your users and adapting to their needs.

    2. Focus on the right users — don’t build for everyone

    Building great products is difficult — we all know that. But do you know you reduce your chances of launching a successful product if you make it for multiple users?

    Why? Because not all users are equally important, especially in the enterprise world of buyers. So, to launch successful products, you must make the hard decisions about which users are more critical.

    Still, many businesses don’t differentiate, so they don’t make hard decisions. But to succeed, you must be clear about which users are crucial for your product and business success.

    So, the first step to creating and launching a successful product is not just to understand your users but to understand all the people who are going to use your product. So, you can pick and build your product for the right users.

    Related: Why Research Is Key to Startup Growth and Customer Centricity

    3. Combine qualitative and quantitative research

    Most new products fail because companies take shortcuts and don’t invest in collecting data — mainly qualitative data. They feel they “know” their users or that the collection process is too expensive or time-consuming. So, they rely on quantitative research, which helps them confirm their assumptions.

    Remember, it is crucial to collect qualitative data when exploring new opportunities. In fact, qualitative research is vital for every business’s success. With qualitative data, you can get a deeper understanding of user attitudes about product adoption and interest.

    With today’s integrated market research platforms becoming more accessible, affordable and faster, there’s no reason to launch products under a cloud of dust and gas. You can collect data about people’s perceptions of an idea, product or brand. If you use qualitative information to calibrate the quantitative research before launch, you will be more likely to start down the right path.

    4. Pay attention to the user’s unstated responses

    Most new products fail because, while researching, we discount users’ unstated preferences. You should never discount users’ unstated preferences — even when the data says something completely different.

    Before you invest time and money into creating a new product, you need to confirm your product is something people want. And gathering unstated feedback will help you refine your original idea and can even generate a pivot to an entirely new and better product idea. It’s not a step you want to skip.

    Now, I am not saying you shouldn’t listen to what users say. But you should pay equal attention to what they do as well.

    Deeper user research will allow you to discover your users’ true needs, wants and motivations, which will help you create successful products — the ones your users really want and need. And with solutions such as eye-tracking and facial coding, it has become easy to read your user’s minds and uncover their true responses.

    Related: Developing a New Product? Here’s How to Make It a Hit Success

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    Reshu Rathi

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  • Entrepreneur | True Religion’s Co-Founder Leads Differently Today—Here’s Why

    Entrepreneur | True Religion’s Co-Founder Leads Differently Today—Here’s Why

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    Opinions expressed by Entrepreneur contributors are their own.

    I’ve been a serial entrepreneur driven by my passions my entire life. I love the challenge of creating something from scratch and am always eager to learn new things. One of my most notable accomplishments was co-founding the first-ever fashion denim brand: True Religion, which sold for more than $800 million in 2013.

    When I co-founded the company, denim had no stretch; you either wore stiff jeans or jeggings. Worst of all, there were no suitable jeans options for curvier bodies out there. They were clearly being underserved. The designs of our jeans were very technical and intentional in order to achieve a sexy jean that would fit every body type.

    In 2008, I sold my shares of True Religion and set out for my next phase in entrepreneurial endeavors. After I left the company, I started building homes, and as I was staging them, it was impossible to find cohesive styles that fit with the designs and aesthetics. It was arduous to decorate the rooms in these homes and make them look seamless, so I decided to do something about it.

    I founded Style Union Home, a luxury home ceramics brand with handmade pieces crafted in LA, two years ago to fill that gap. Since then, the line has been carried in 200 stores across the U.S., and it’s still growing.

    My passion for being the first to develop something motivated me to start all of my businesses. I have used my 30-plus years of experience founding and selling them to help shape my new home-fashions line — and I’m doing things differently this time.

    Related: What Part Does Passion Play in Your Success as an Entrepreneur?

    These are lessons that I’ve learned along the way and have incorporated into Style Union Home.

    I’d never deal with an all-male board again.

    At True Religion, I was the largest shareholder, but I was also the only woman on the board. During my time at the company, it was hard to find any support from the all-male board of directors.

    We were disrupting the denim industry, and often times they didn’t recognize how to do that because they couldn’t see or relate to the woman’s perspective. We were developing a brand for women, and they couldn’t figure out how to do that. I fought for many of my ideas that ended up being successful for the brand because I knew what our customers wanted.

    Being the biggest shareholder and not being heard was the biggest thorn in my side. The men I worked with could be exclusive; they didn’t care to listen and figure out what it was women really wanted.

    As a result, I never received the support I needed.

    For example, while we were still building True Religion, Neiman Marcus reached out and wanted us to create a dress. The board immediately shut down the idea — they said it had nothing to do with denim. They didn’t see dollars in the project, but I knew they were wrong.

    I created the dress for Neiman Marcus anyway. That denim dress was on the cover of the Neiman Marcus catalog and garnered a lot of positive attention. None of that would have happened if I had listened to the board and not gone with my gut.

    Related: 3 Super Simple Ways to Understand What Your Customer Wants

    I’m committed to hiring and working with incredible women.

    As a result of my experience with the all-male board, I knew I wanted to work with women. As entrepreneurs, we need to build our teams, and by hiring women, we have the power to ensure that they receive equal pay and become part of an inclusive environment. The only way to tackle issues like this is to make the change yourself, and everything else will follow.

    Today, I’m focused on working with women and supporting them every step of the way.

    When it comes to my hiring process, it’s really about passion for me. I look for people who are ambitious and love what they do. Of course, you want to work with people who have experience and know what they’re doing, but they should also be passionate about the work they’re putting out there.

    Today, I’m focused on working with women and supporting them every step of the way. We’re developing a brand primarily for women, and women know women. They can see the vision ahead because they understand and appreciate our customers’ perspectives and what they need.

    Related: 7 Practical Ways to Celebrate and Support Women Entrepreneurs

    Understand the difference between listening and hearing.

    Every entrepreneur should work on their listening and hearing skills — and they’re not the same. Anyone can passively pay attention to what they’re being told and repeat it back, but are you listening and absorbing what’s being asked of you?

    As a leader, you need to listen to your teams and understand their needs. They need to know that you are mindfully present. You can’t run a business with a team that doesn’t feel supported. That’s when things start to fall apart.

    An entrepreneur is only as good as their team.

    Every brand has a vision, and the only way to execute it successfully is by surrounding yourself with people who can also see the big picture. Entrepreneurs need to be able to depend on their teams, and you can only do that if you’re working toward the same goal with a solid group of people. The vigor of the people around you is fundamental to your success.

    Despite being the largest shareholder at True Religion, I never felt supported because the team failed to see what I did. It’s essential that you align yourself with a team on the same page about your vision and let them know they’re valuable.

    Stay true to your leadership style.

    Women in business obviously face a double standard in the workplace. We’ve been taught to do what we can to fit into the “boys’ club” or to tone down our feminine energy.

    But the things that they tell you to downplay (for example, leading with emotional intelligence) are what could make you a great leader in your field. We’re asked to alter our identities when we don’t need to; we just need to learn how to harness those qualities.

    Your passion is valuable. It will speak for you, and people will be receptive.

    You don’t need to be aggressive to get your point across. You can be heard by staying true to yourself and your leadership style. Your passion is valuable. It will speak for you, and people will be receptive.

    Related: The Importance of Staying True to Your Roots as an Entrepreneur

    Leadership by example is the hallmark of a good leader.

    A strong leader makes a strong team. Your actions, however small you might think them to be, have influence over your team. Respect your employees, and they will respect you in return. They have to trust you, and the only way to earn their trust is by showing them that you put your words into action.

    I would never ask someone on my team to do something I wouldn’t do myself. Being a leader does not make you superior to others. You’re all critical pieces of one big unit that only functions when you’re in sync.

    If you’re not ready for something, there’s nothing wrong with saying “no.”

    Business owners think that they have to say yes to every single opportunity that comes their way. But they’re operating on a scarcity mindset. They believe that if they say no, the prospect is lost forever. But I haven’t found that to be true at all.

    When making decisions, it’s essential for founders to learn when to say no because it can make or break their business. It’s tempting to say yes when you’re presented with a potentially lucrative offer, but you have to think strategically about the long-term impact. Before making any commitments, you should wait until you have all your ducks in a row.

    If a business owner knows they aren’t prepared for something, the worst thing they can do is say yes to it and possibly sacrifice that connection. If you’re not ready, that’s okay. Don’t do it. They’ll come back.

    I will never repeat the mistakes I made at True Religion, but I’m grateful for the lessons that I’ve been able to learn along the way.

    I’m taking all of my experience into Style Union Home’s growth plan for 2023. Aside from these lessons, we’re also utilizing invaluable information from our retailers and customers to guide us in the right direction.

    I will never repeat the mistakes I made at True Religion, but I’m grateful for the lessons that I’ve been able to learn along the way because now I know exactly how I want to run my business and how that contributes to success in the long run.

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    Kym Gold

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  • How to Write Proposals That Get Accepted and Don’t Take Forever to Write

    How to Write Proposals That Get Accepted and Don’t Take Forever to Write

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    Time kills deals. So if you’ve ever struggled to write a business proposal, check out the most recent episode of the Launch Your Business Podcast.

    You’ll learn how to write proposals that get accepted and don’t take forever to write. I’ve provided a few of the key takeaways below.

    But as heads up, this is a rather detailed guide (which includes a sample proposal) so I suggest saving it, blocking off time to read it, and sharing it with another business owner who could use the help.

    The three questions you must ask before creating a proposal

    The process of writing a proposal actually starts with the sales call and the questions you ask. So, once the prospect indicates a willingness to move forward, here are the three questions you must ask.

    “What do you need to see in the proposal?”

    Too often we assume the prospect wants a 30 page essay on how you’re going to change their life when they really just want an invoice. Asking this question upfront will save you a lot of time and stress.

    And, you can go as far to ask if they’d prefer a specific format, details or even an example of a proposal that’s been accepted in the past. The more you know, the faster you can move and the more likely you are to have your proposal accepted.

    “Who else needs to see this proposal in order for it to be approved?”

    You might have a great relationship with the prospect you’re chatting with but you never know if there’s a spouse or coworker – who you haven’t met – that also needs to be involved in the approval process. And since they weren’t involved in any other conversations you wouldn’t be aware of any stipulations or questions they may have about the engagement.

    You can speed up the sales process and avoid a lot of back and forth by understanding whether or not it makes sense to have a call with an additional stakeholder. This additional call would allow you to develop rapport with them and answer any questions they may have before you write the proposal.

    “How soon would you like to start?”

    You’re going to ask this just in case they take forever signing the proposal. So, let’s say the state they need to get started by May 29th. If it’s May 22nd and they still haven’t signed the proposal you can email them and say “Hey, if you want to get started by the 29th the contract needs to be signed this week. I’ll need to send you some onboarding materials and it will take me a few days to prep in advance.”

    This should get you a response since you’re referencing the deadline they created. Hopefully it doesn’t come to that point but you’re prepared just in case it does.

    Key elements to include in your proposal

    So now that we have all the information we need, it’s time to write the proposal. And, my approach is based on the book Million Dollar Consulting proposals by Alan Weiss. I picked it up when I first started my business and was surprised by the fact a proposal didn’t have to be a dissertation. In fact, his recommended format is only one and a half pages long. I’ll walk you through all the sections now.

    Overview

    The first is the overview. And, this is the part where you explain what you’ll do along with the impact it will have on the company or organization. The example you’ll find on my website is based on a service provider who helps companies optimize their email marketing campaigns.

    The overview is fairly basic. I’ll share an excerpt from the sample proposal below.

    The goal of this engagement is to provide tactic-level guidance and support as it applies to your optimizing your email marketing strategy. Key outcomes include increasing your list size and revenue generated per subscriber.

    Key Performance Indicators

    The next section is where you’ll indicate how success will be measured. These are the key performance indicators or KPIs. And, I’ll share an excerpt from the sample proposal again.

    Key Metrics of Success:

    • Email list growth
    • Email open rate
    • Email click rate
    • Website purchases

    The metrics you mention will obviously be different and you want to agree on these during a conversation with the prospect.

    For example, let’s say you offer training that helps companies boost their employees morale. And, the goal is to reduce turnover and increase employee satisfaction.

    The KPIs might be:

    • Reduction in employee turnover
    • Increase in employee satisfaction (based on a pre and post training survey)
    • Net Promoter Score. (how well did participants rate you and your training)

    Your KPIs are important because anyone should be able to quickly scan them and immediately understand the impact of your work. So, be sure to put some thought into these.

    Services Provided

    We have our overview, and our KPIs, now we’re going to list the specific services you’ll provide. And, unless requested, you should keep this relatively brief. Stick to bullet points if possible.

    Here are the services referenced in our sample.

    The Consultant agrees that they shall provide their expertise to the Client for all things pertaining to optimizing their email campaigns including:

    • Email list maintenance
    • Subject lines optimization
    • Email copy best practices
    • Increasing revenue per subscriber

    Again, this will all be based on the service you offer but you get the point, keep it brief. If you want to provide more details I suggest adding sub bullets as opposed to paragraphs.

    For example, I referenced email list maintenance . A sub-bullet could break down exactly what I mean by that.

    • Email list maintenance
      • Removing people who unsubscribed from the email list
      • Labeling subscriber who buy specific products
      • Identify individuals who spend more per purchase

    I don’t want to turn this into an email marketing lesson but you get the point here, provide additional details without getting into the weeds.

    Fulfillment Process

    After providing information on the services, it’s time for the next section, which is your process. What does the client journey look like from start to finish? The more you can help someone visualize the entire engagement, the easier it will be for them to wrap their head around it and say yes. Again, you want to use bullet points here.

    So, here’s the process based on the email marketing training we’ve been talking about.

    • Client grants access to email marketing platform
    • Consultant audits current campaigns
    • Consultant delivers summary and optimization roadmap
    • Consultant trains team members
    • Team members implement new techniques and tools for 30 days
    • Consultant audits new campaigns and identifies improvement and ongoing opportunities for optimization

    So now it’s your turn. Jot down every milestone that takes place from beginning to end, but say it in a concise manner.

    Delivery & Communication

    The next section describes how you’ll provide this service and how you will stay in communication during the project. This one is rather basic as well but it’s important. So, here’s an example for you.

    The Consultant will perform work remotely unless otherwise noted.

    In addition to emails and messages, the Consultant will meet with the Client once per week to discuss progress and continue implementation of solutions. The consultant agrees to respond to all client communications within one business day with the goal of answering any questions within 48 hours.

    That last part is important since it establishes expectations for how quickly you’ll get back to a client. I usually get back to people relatively quickly but this is a great way to establish communication protocols.

    Terms of Agreement

    The next part is the terms of the agreement. And by terms I’m not referring to a legal contract, this is just a summary of when the engagement will start and end.

    This Agreement shall begin on [Begin date] and continue for [Time period]. Either Party may terminate this agreement for any reason with [Days written notice] days written notice to the other Party.

    Again, this clearly isn’t a legal contract. But if you are looking for help with writing legal contracts I’ve provided more information on my site at terryrice.co/proposal

    Compensation

    The last part is exciting and scary at the same time, compensation. As you may have guessed, this is the part where you state how much it will cost and when you’ll get paid.

    Here’s the copy provided in the sample.

    In consideration for the services referenced, the client shall pay the consultant a flat rate of $30,000.

    Consultant shall invoice client on the following schedule:

    • 33% upon agreement
    • 33% at halfway
    • 33% upon completion

    So, a few things to call out here. Always get paid before you do any work, even if it’s just a 20% deposit. And youre doing this in case the client backs out for one reason or another after you’ve already started working. For larger engagements I like to break these down into phases, especially if it’s going to take several months. You can choose to get paid upon completion of each stage of the process.

    Putting it all together

    So there you have it, an easier approach to writing proposals that don’t take forever.

    And, if you want to create them even faster, use a template that can be quickly customized. I use a tool called Honeybook for this and you can also use it to send invoices.

    As a heads up they have a promotion where you can use the service for just one dollar per month for the first eight months. So it’s a great opportunity to try it out for a very low price. You can sign up here. And, I should note, I’m an affiliate partner for HoneyBook and will receive a small commission if you choose to use their service. But like I said, it’s my go-to platform, which is why I highly recommend it.

    A quick pep talk for you

    I know the process of creating proposals can be challenging so my goal here was to help you save time and avoid confusion.

    But before we go I want to address a few questions that may be on your mind.

    • What happens if something is missing from the proposal?
    • What if they want more details?

    And those are valid questions. In fact, it happens to me quite often. But fortunately the foundation you’ve established is so clear, the prospect will ask more pointed questions as opposed to being confused about what the heck you’re going to do.

    These are buying questions, not “What the heck are you talking about?” questions. So you may just need to make a few adjustments before your prospect is ready to sign and you get paid!

    What’s next?

    Block off one hour to complete your proposal. But remember, done is better than perfect.

    And if you’d like help growing your professional service business consider joining my video course, The Solopreneur’s Shortcut. Through a combination of videos, worksheets and templates you’ll discover how to package, price and promote your services so you can attract high-paying clients.

    Either way, I wish you the best of luck and if you have any questions feel free to contact me on LinkedIn or Instagram.

    To hear the full conversation and get access to additional resources tune in to this week’s episode of the Launch Your Business podcast.

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    Terry Rice

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  • Considering Becoming a Multi-Unit Franchise Operator of a New Brand? Here’s What You Should Know First.

    Considering Becoming a Multi-Unit Franchise Operator of a New Brand? Here’s What You Should Know First.

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    Opinions expressed by Entrepreneur contributors are their own.

    Multi-unit operators (MUOs) in the U.S. own more than 50% of franchise units. According to FRANdata, the number of MUO franchisees with more than 50 units has grown 112.3% since 2019. Some sectors skew higher. MUOs control 82% of all quick-service restaurant (QSR) units, 71.5% of beauty-related and 72% of sit-down restaurants in the U.S.

    Some of this is natural consolidation of existing units due to retirements, and some is due to new multi-unit agreements. Many articles have been written about building wealth in franchising via multi-unit ownership. Should you consider it?

    Related: 4 Reasons to Become a Multi-Unit Franchise Owner

    Should you consider becoming a multi-unit operator?

    Let’s break this into two discussions: resales (which I will address in my next article) and new development multi-packs. Selling new multi-pack licenses is becoming increasingly common in franchising. The reasons are simple:

    1. Multi-packs generate more cash for the parent company.

    2. They demonstrate “demand,” which franchisors hope will attract private equity.

    3. Fewer franchisees are less costly to support.

    4. Only higher net worth buyers qualify

    5. Buyers themselves demand multi-pack buying opportunities because it’s easier to build operating scale and profitability.

    Multi-packs can be as small as two to three units and as large as 50-100 units or more to sell out entire large territories or states. Note that the sale of “multi-packs” is distinct from the sale of area development agreements or master licenses, which have different performance requirements.

    The competition to attract franchisee talent is fierce and expensive. High-commission outsourced sales channels, marketing and expensive lead generation eat up franchise fees. Under-capitalized young brands are at a distinct disadvantage. Royalty self-sufficiency (when a brand can fund corporate activities through royalties) is pushed out as franchisee recruiting costs rise.

    Traditionally, franchisors limited the number of licenses a new franchisee could sign until they proved themselves as an operator (or had existing MUO experience). Once inside, limits were also put on expansion licenses to ensure only proven operators in good standing with the franchisor were allowed to add territories. But more emerging brands now skip the initial step and jump right to selling multi-packs.

    Besides trying to sell their way onto private equity’s radar, this is how some young brands get around the “starvation by high commission” problem in a high-cost sales environment. It seems nonsensical to me that anyone would agree to buy a 10+ pack of licenses from a brand with only 10 total units open. But buyers are doing exactly that. Some brands even sell with messages about how they only accept “executive” buyers who don’t need financing. This is meant to partly flatter buyers but can also signal that there isn’t enough margin in the business to allow any financing!

    There shouldn’t be pressure to buy so much upfront from an emerging brand. There’s little chance your home market will suddenly “sell out.” But aggressive salespeople sometimes convince buyers otherwise (“We have ten units, all in Florida. Where are you calling from? Indianapolis? It just so happens we have another candidate ready to sign for that market!”). Furthermore, candidates may be rushed through a 30-day buying process (“Don’t wait! Territories are selling fast!”).

    Related: 5 Encouraging Facts to Know About Multi-Unit Franchising

    Case study

    Here is a case study to consider. This is an emerging franchise currently sold by an outsourced franchise sales organization (FSO). I’m not including names because I want you to take away the signals of a potential problem brewing … not get hung up about a specific brand.

    The company’s Franchise Disclosure Document: Item 19 earnings disclosure for 2020 included the financials of only one corporate unit. Three franchise units had been sold but were not yet open, so no financials for those franchise units were included. The company showed a net loss of $92,000 in 2020 and had only $43,000 in cash. Mid-year in 2021 the company had nearly $26,000 of credit card debt. The company paid $363,000 in franchise sales commission. There were also $753,000 of “uncategorized expenses,” a whopping 62% of total corporate expenses reported. Based on the “strength” of this FDD disclosure, the company hired an FSO to help it start selling franchises. And sell it did! As the FSO proudly asserts on its own website, “from 3 to 320 awarded!”

    The current 2022 FDD shows $9M 2021 income, of which $8.8M was franchise fees. But 6.1M immediately went out the door in sales commissions paid. Credit card debt was $32,000. The Item 20 showed 50 units open and another 49 in development. Training expenses were $15,000. I pay more than that for my kid’s school tuition! What sort of training was provided for the 50 units open that only cost $15k? And what happened to the “320 awarded?” Some multi-pack opportunities are worthwhile, but to me, this emerging brand has red flags.

    Here’s my advice on new multi-pack agreements:

    1. Start small — three or fewer units. Unless you have franchise experience and the system is proven, you’re burning cash on fees for units you may never open. You can add expansion territories later. Have your attorney carefully review territory, site approval and encroachment contract language.

    2. Validate! Talk to as many franchisees as possible. Are they meeting their profit objectives? Did all their units open?

    3. “Territories” sold by population size require extra due diligence. It’s often a crafty way to upsell you and get you to pay more in fees instead of crafting viable territories of the appropriate size in the first place. If the territory is not exclusive, you have double trouble. Population number also doesn’t address demographics or density. Talk to franchisees at length about what makes their territories and the model financially viable. Determine cash on cash return for your investment. Is it worth it?

    4. Slow down. Do your homework. If you see red flags, don’t talk yourself into anything. Move on. The right franchise opportunity is out there.

    Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

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    Alicia Miller

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  • This Entrepreneur Went on a Reality Dating Show. She Didn’t Find Love, But She Did Find a New Career Path.

    This Entrepreneur Went on a Reality Dating Show. She Didn’t Find Love, But She Did Find a New Career Path.

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    In celebration of Black History Month, we are spotlighting great entrepreneurs from the past and present.

    When Tennesha Wood moved to San Francisco after nine years in the Army, she landed a job in sales and began to explore the online dating scene. It was 2010, and searching for love online involved logging into a website on a computer, not swiping on the many apps people have on their mobile devices today. “I met a lot of really great guys that way,” Wood says. “But not everybody you meet is going to be your Prince Charming forever, and there are some frogs in there. Most of the guys I met were really cool — they just weren’t for me. There wasn’t that spark and chemistry.”

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    Amanda Breen

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  • The Best Time to Start Your Dream Business Is Now. Here’s Why You Shouldn’t Worry About Timing.

    The Best Time to Start Your Dream Business Is Now. Here’s Why You Shouldn’t Worry About Timing.

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    Opinions expressed by Entrepreneur contributors are their own.

    If you have a business idea, the best time to start is now. If you’re worried about timing, don’t be: The economy doesn’t matter. And if you are worried about failing again and again, that’s okay too — because it’s impossible to time the market perfectly anyway!

    Everyone has a business idea, but not everyone takes the time to pursue their dream. Your idea doesn’t have to be perfect and ready because you can always refine it later on in the process.

    If you start now, even if you are not fully prepared, at least you will have taken steps toward making your dream come true! It’s better than never starting at all. There will always be reasons why it’s not the right time for someone else or themselves, but when asked why, it’s always the fear of uncertainty and failure.

    Related: Why Right Now Is the Best Time Ever to Start a Business

    Keeping an eye on the economy should be the last thing on your mind.

    When it comes to getting into business, don’t wait for the economy to improve. Don’t wait for the economy to worsen. Don’t wait for the economy to recover. And definitely don’t wait for it to crash or burn down around your ears before you get started on a new venture.

    The truth is that no one really knows what will happen with our nation’s economic future, and there’s no way anyone can predict its direction with any real accuracy. It stands to reason then that if we’re going to be successful in business, we need not worry about what might happen tomorrow or next year — we just need to focus on today and ensure that our businesses thrive now, regardless of what lies ahead in years to come!

    Don’t listen to the naysayers

    You may hear a lot of people telling you that you’re not ready for business or that it’s too risky. Don’t let them talk you out of your dreams, and don’t let them pull you into their own beliefs and ideologies. Many have fallen victim to these naysayers because they didn’t know how powerful they could be when they put their minds to it.

    There is never a better time than now! The world has never been more connected and open than it is today, which means we must take advantage of this unprecedented opportunity before someone else does.

    You will fail, again and again. And that’s okay.

    Failure is part of the process and in many ways a learning experience. But it’s not just about learning from your mistakes either; failure is an opportunity for growth, for new ideas and perspectives that can help you succeed in the future. You won’t succeed if you don’t take risks, so keep at it!

    Related: How to Become an Entrepreneur – 8 Tips to Get Your Business Going, Even if You Don’t Know Where to Start

    Listen to your gut. Don’t wait for inspiration.

    The most important thing to remember is that you can’t wait for inspiration. You need to start now, and trust that you will find your way.

    It’s all too easy to wait until you have everything figured out. The truth is that there are no answers — not really — and nobody has it all figured out. Not even me.

    There never will be a perfect time or circumstance where we can say with confidence: “This is the moment I start my business.” Every single entrepreneur goes through their own journey of exploration and discovery as they learn what works best for them personally when deciding when (or if) they should take the leap into entrepreneurship.

    Yes, there is risk — so what?

    There is no such thing as a risk-free business. There are only different levels of risk and how you manage your risks.

    One way to think about it is like this: If you never take any risks, then nothing will ever change in your life. You won’t get ahead or even stay in the same place. You may be comfortable, but if things don’t change, then everything around you will eventually become boring and unfulfilling.

    Additionally, taking no risks means everything becomes risky, as it can result in unpreparedness. It is impossible to develop a plan or structure to manage risks if you don’t take risks. In fact, most businesses fail because their owners didn’t properly mitigate their business’ biggest risks before getting started on day one!

    It is impossible to time the market perfectly

    You are better off starting when you want to, even if the timing is “bad.” You can’t time the market. It is impossible to predict what will happen with the economy or with your business. You have to work with the information you have at the time. If you’re lucky and fortunate enough to have an idea for a new business that you want to start, then don’t let anyone tell you not to do it because of “bad timing.”

    There are many reasons why now is the best time, and I think it boils down to one simple truth: You only get one chance at life. Don’t waste your time by waiting for the perfect moment or trying to predict the future. Instead, focus on what you can do right now and how much better tomorrow will be because of it!

    Related: The Complete, 12-Step Guide to Starting a Business

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    Roy Dekel

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  • Why Your Job Title Doesn’t Matter

    Why Your Job Title Doesn’t Matter

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    Opinions expressed by Entrepreneur contributors are their own.

    In a corporate setting, a job title can be used as leverage, something for you to strive for. Titles to distinguish levels, such as Associate, Vice President and Managing Director, allow other employees to understand your position in the firm and the status that comes with it. Certain titles come with specific salary ranges and perks — which is one of the reasons to strive for them. Humans aim to be verified with some level of significance, and in a business setting, one of those levels of significance comes from the job title. However, when it comes to entrepreneurship, the way we think of titles is different.

    One of the concepts I covered in a previous article was the risk and rewards of priorities. I have seen inexperienced entrepreneurs over-prioritize their titles — picking a title should be at the bottom of the priority list. In the age of social media, there is a never-ending wave of titles people can pick from, like Boss, President, Principle, CEO, Founder, King and Owner — take your pick. All these are non-important to an entrepreneur and are ways to validate an ego without doing any work.

    A job title does not matter at the entrepreneurial level. Here’s why.

    1. Job titles can be lies

    Job titles in any business size can be misleading, but at the entrepreneurial level, they can be outright lies — especially if you’re the one who created it. You might call yourself a CEO, but what exactly are you chief of executing? You might be a President, but what exactly are you presiding over?

    Just because you decide on a fancy title does not mean you are good at your entrepreneurial role. Similarly, just because someone you’re networking with has a fancy title does not mean they have the skills and experience to back it up. Job titles don’t always accurately represent a person’s level of knowledge or expertise.

    All companies, big or small, want to be seen as professional and worth doing business with. One of the ways this is accomplished is by giving specific titles to employees. Who wouldn’t want to do business with a “vice president of a company?” But this “vice president” could be one of the less senior roles. This is true across most companies and is an old way of operating. On the other hand, someone with a simple title may be a valuable contributor to the team.

    Related: The Weirdest Job Titles Might Also Be the Most Unpopular (Infographic)

    2. Job titles are misleading

    Building off the previous point, job titles don’t necessarily reflect a person’s responsibilities — especially in the entrepreneurial world. When you work for a company, you realize quickly that sometimes your responsibilities tend to go above and beyond your job description. The smaller the company, the more roles you play.

    For example, your title might fall in with sales, but specific responsibilities would fall more into an operations or customer service category. Furthermore, two people with the same job title may have vastly different roles and responsibilities within a company. And this becomes even more true when comparing job titles across companies.

    Related: Why Job Titles Don’t Always Reflect the Value of Employees

    3. Job titles can be changed at any moment

    If a job title can change at any moment, it has zero value. Furthermore, as an entrepreneur, you will find that focusing too much on your title can create a culture problem as the company grows. If employees start to question and compete for title status at such an early stage, that removes the focus and teamwork from accomplishing the actual goal — growing the company. Titles can motivate employees when the company gets a specific size or has a particular structure – anything before that is just a hindrance.

    Related: You’re a Real CEO When Your Company Is Bigger Than Your Title

    As an entrepreneur, especially a bootstrapped entrepreneur, your job title is whatever needs to be done that day. If you need to make sales, you’re a salesman. If you need to pay bills, you’re an accountant. If you need to clean the office, you’re a janitor. Your job is to do whatever needs to be done.

    Now, as the company changes, that concept changes. As growth comes, there will be a need for more structure and delegation. Hopefully, there comes a point when you can delegate out low ROI responsibilities. Cleaning probably is not generating the company’s greatest ROI, so delegate it. Paying bills is not generating the best ROI for your skill set, so delegate it.

    When does a job title matter?

    A job title matters when you decide it matters. If you feel that you can absolutely not move forward with being an entrepreneur unless you have picked out the appropriate title — then you will have to pick out the appropriate title (disclaimer: if that is the case – you might want to question if entrepreneurship is right for you).

    Now, if you feel you need a title after your first hire, go for it. But chances are everyone internally understands their place in the business and their role. In my experience, depending on the business model, most employees instinctively understand their role and where they are in the structure until about 15 employees. At that point, titles might make sense.

    Related: What’s A Job Title Really Worth?

    Finally, if you feel you need an awesome title to fit in with all of the other awesome business people, remember this: A true business person, especially in the entrepreneurial world, does not care about your title. They care about what you do, your portfolio and what you can do to help each other grow.

    If you can pick out a title and move on to focus on key priorities, excellent. But if you find yourself getting held up on titles and other minutiae, remember: titles don’t matter; execution does. Do not validate your ego by picking out a title. Validate your ego by building a better business.

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    Anthony D. Anselmo

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  • Live Q&A: The Producers of ‘Start Up’ Explain How to Get Your Business on TV

    Live Q&A: The Producers of ‘Start Up’ Explain How to Get Your Business on TV

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    EntrepreneurTV docuseries Start Up tells the inspiring stories of entrepreneurs who dared to go their own way, overcame obstacles, and launched their dream businesses.

    In this live Q&A, the Emmy-nominated host and writer of the show, Gary Bredow, and award-winning producer Jenny Feterovich will discuss what they look for when searching for people and businesses to feature on the series, as well as give tips to anyone hoping to make their own documentary series or feature. Whether you are hoping to be in front of the camera or behind it, this is not to be missed!

    Where can I watch?

    Watch and stream: YouTube, LinkedIn and Twitter

    You can watch on your phone, tablet or computer.

    What time does it start?

    Time: Friday, 2/10 at 1:30p ET

    Why should I watch?

    The Emmy-nominated creators will be sharing incredible insights for anyone who dreams of having their business featured on TV, or anyone who dreams about making powerful films and videos. None of this is easy, and these battle-tested creators will share the ups and downs they’ve personally experienced to help you on your journey.

    Related: Watch Co-Founder of Netflix Marc Randolph’s Latest Success Webinar

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    Entrepreneur Staff

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  • How to Manage Cash Flow for Your Home Pet Business

    How to Manage Cash Flow for Your Home Pet Business

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    Rich Mintzer’s new book, Start Your Own Pet Business, outlines everything you need to know about launching and growing an animal-based business from your home. In this excerpt, he dives into the specifics of managing your finances to keep your business as healthy and happy as your tail-wagging clients.

    Sign up for an accounting workshop

    No matter if you are caring for two dogs or two hundred, every business needs to keep track of money coming in and money going out. One way to make the accounting and financial framework of your business less daunting is to take an accounting class. You can find many online classes, as well as articles, on basic accounting and/or managing finances for a small business. You can also check with your local Small Business Development Center (SBDC), which may offer small-business accounting classes or keep a list of classes offered through local community colleges or continuing-education programs at a local university. Be logical when you sign up for an accounting class—don’t sign up for a class that covers information beyond your current need or ability to understand. You don’t need to know how to read the financial report of a $60 million international company to run your $20,000 local pet-sitting operation.

    Keep receipts

    If you have ever had even the smallest business or if you have ever worked for anyone else, you probably have heard this before, but it bears repeating: Keep every receipt for any dime you spend on the business. Keep them in one place and record them in your ledger at least weekly. These records tell you a lot about your business. You may notice patterns, expenditures that seem excessive, or other changes you could make for your business to be more efficient.

    Related: Dive deeper with Start Your Own Pet Business on sale now

    Set up a separate checking account

    Because pet-sitting businesses often don’t take a lot of capital to set up, you have to be careful not to fall into the trap of starting your business and simply using your personal checking account to pay for expenses and to deposit income. Set up a separate checking account and designate it for the business. Pay for everything with this account, even if you use its debit card instead of actually writing a check. It doesn’t have to be a “business” checking account—another personal account will do—just give the business an account all its own. Not only is it good for keeping accurate track of expenses, but some psychological aspects result from having separate accounts and ledgers for taking yourself and your business seriously. Have the business name printed on your business-specific checking account—it lends an air of professionalism.

    Get bookkeeping software

    Many software programs exist for easy setup of bookkeeping for your small business. Two commonly used ones are QuickBooks and Microsoft Office. Set aside a large chunk of time to get yourself set up, and then set aside time on an ongoing basis, maybe an hour weekly and a morning monthly. Be sure to keep these software products up-to-date by signing up for automatic updates or reminders so you can keep as up-to-date as possible. Although the bookkeeping programs probably won’t have as much in the way of updates, tax programs have constant updates. If you know yourself well enough to know you are not going to set aside this time to feed your bookkeeping software, then hire an accountant. The same goes for tax time. You may want to enlist a small business tax expert to decipher what expenses can and can not be deducted, at least for the first year of running your business.

    Creating invoices and receipts

    Even if you require payment on the spot, you always want to provide your client with an invoice for your services. This allows both of you to keep a record of your visits. Depending on how fast your business plan shows your business increasing revenue and adding clients, you may want to think early on about having client software that keeps records of your clients. If you look to have only ten clients for the first year, you could create a spreadsheet using Excel or Google Sheets. As you grow, you may want to invest in a business software package. Besides generating invoices, it keeps an easy-to-access history of services you provided.

    Related: Pet Lovers, Here’s How to Get Your Dream Business or Side Hustle Started

    Payment options

    The easiest manner in which to collect money in a business such as pet-sitting might be good old cash or a simple account transfer via an app like Venmo or PayPal because your fees are typically for only a few hours at a time. As your company grows, you’ll want to look into having credit card options, such as the easy-to-use Square payment system, which allows you to use your cell phone as a mobile cash register (https://squareup.com). This will entail setting up a credit card merchant account, a bank account, and a way to process payments. Some startup payment fees and fees per transaction (which are usually around 2 to 4 percent) apply. The merchant account will allow you to accept payments through Visa, Mastercard, American Express, and other credit card companies. You can Google merchant services and compare options.

    Paying yourself

    One of the perks of opening a low-cost, no-overhead business is you can usually start taking some money for yourself early on while putting the rest into the business. If you know your ongoing expenses, you can cover them and have some money left over. If, however, you are looking to build a large pet-sitting business with offices and many employees, then—like most startups—you will need to put nearly all the money earned back into the business for the first year or two. This means you need to have some money set aside to help you pay your bills when starting the business. If you can afford to do this, that’s great—you should probably plan to do this for at least the first year, depending on how complex a business you establish.

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    Entrepreneur Staff

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  • How to Provide a Must-Have Product In a Do-Without Economy

    How to Provide a Must-Have Product In a Do-Without Economy

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    Opinions expressed by Entrepreneur contributors are their own.

    Consumers might not be putting the brakes on their spending. However, they’re certainly letting up on the gas.

    According to Deloitte’s most recent State of the US Customer report, around 75% of buyers remain concerned about prices. This is nine fewer percentage points than seven months prior. Nevertheless, it’s still a reason for company leaders to take notice. And with 47% of people worried about their savings, consumers could quickly tighten their purse strings.

    There’s a shiny silver lining, though: As long as your product is needed, you can expect sales. Think about what happened in 2020. Shoppers didn’t stop purchasing items they considered “must-haves,” including home gym tech, machines, and accessories. This caused a lasting trend that’s pushed the expected CAGR of the fitness equipment market to 5.2% until 2028.

    So what does this mean for your product or service lineup? You need to make sure that you are providing something that seems necessary to target users. “Seems” is the operative word. Were Pelotons necessary during pandemic shutdowns? Not from Maslow’s hierarchy of needs perspective. But don’t tell that to the customers who pushed the brand toward the billion-dollar revenue mark.

    Related: This Is the Framework to Make Your Product a Smash Success

    To help you review and revise your marketing in a do-without economy, take these recommendations into consideration.

    1. Solve a recession-proof need

    People change their behaviors during recessions and near-recessions. Nevertheless, the dad who switches to generic grocery labels may still buy his kiddo the more expensive bike. Why? Maybe it has earned higher safety marks. Perhaps it’s the same brand as the one he rides. Either way, he views the higher bike investment as necessary because he can justify it.

    Take a moment to think about what your company sells. What recession-proof need could it satisfy? You may want to work backward to come up with an “Aha!” answer. CitizenShipper, for instance, connects private drivers willing to move pets and precious items across the nation for people interested in bypassing the big shipping companies. One of the biggest requests the company fulfills is the need for reliable, personalized ground transportation of pets. When pet parents need to relocate their pets, they will pay a reasonable price in order to be able to do so.

    While you’re undergoing this exercise, don’t be afraid to think about niches within your current target customer base. With a little digging, you may be able to uncover smaller consumer segments that would see your offerings as a must-have. Once those segments are identified, you can begin marketing to them.

    Related: 3 Tips for Using Consumer Data to Create More Personalized Experiences

    2. Go for the feels

    We’d like to think that we make purchasing decisions solely based on objectivity, data and logic. We don’t. Our brains are wired to take the information into account but add a modicum of emotion to the mix. With that in mind, head back to the drawing board regarding your sales and support. The more of an emotional connection you can make with leads, the more likely they will return.

    One way to add more of an emotional link between you and your customers is with personalization. About seven out of 10 people told McKinsey they wanted more personalized engagement with their preferred brands. Your job, then, is to find ways to make the customer journey more of an individualized experience.

    Are you looking for inspiration for personalizing a product or service? Check out Sephora. The company has consistently won kudos for its personalization machine. You can book an appointment online with a conversational “assistant.” You can find the right foundation shade in the store using Sephora’s software. You can become an Insider and get extra rewards. It’s personalization all over — and that’s why Sephora, which isn’t “need to have, “is still seeing incredible revenue growth.

    Don’t instantly picture that your team will need to babysit every email or text. You can leverage tech tools that integrate with your existing systems to make interactions feel more one-to-one. That way, you don’t have to exhaust your human resources to offer up Sephora-level personalization.

    Related: Why People Buy What They Buy

    3. Explain your value-added differentiators

    Now isn’t the time to hold back on all the differentiators that set you apart from your competition. The more value you can bring to consumers, the more likely they’ll be to pick your products over others’. For best outcomes, make sure that the differentiators you pick matter.

    Case in point: If you sell socks, you could point out the many benefits your socks provide. These could include added cushioning, reinforced heels, moisture-wicking qualities, quick-dry technology, etc.

    For the past few years, Chipotle has been a solid case study for the power of differentiation. Its growth continues into 2023, despite other fast food chains like Burger King losing their luster. Chipotle’s key to remaining a top pick for hungry eaters is a mixture of picking top ingredients, making everything fresh and offering flavor consistency.

    Related: Why Your Business Idea Should Sell Itself

    Want to dive deeper into your differentiators and perhaps uncover some you didn’t know were important? Consider surveying your employees and customers. A well-written survey can highlight what matters most so you can lead with it in future “here’s why we’re the ONLY choice” campaigns.

    Even if inflation causes prices to creep upward more, consumers will still spend money. Your diligence and strategic planning today could ensure that some of their disposable income goes toward your products and services.

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    Kimberly Zhang

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  • How to Make Money As a Virtual Assistant

    How to Make Money As a Virtual Assistant

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    In the new book How to Start Your Own Virtual Assistant Business, author Jason R. Rich and the staff of Entrepreneur have outlined everything you need to know to launch a lucrative side hustle or full-time business. In the following excerpt, Rich breaks down the basics of why this is the ideal time to use your skills and experience to create a new revenue stream.

    Why be a virtual assistant now?

    While virtual assistants have been around as long as the internet, these positions are now more diverse in terms of their responsibilities and more widely accepted than ever. In 2021 and beyond, working as a virtual assistant (or VA) can be an incredibly prosperous career path.

    Every day, clients hire virtual assistants to complete a broad range of both common and highly specialized tasks. If you have specialized skills and/or experience in writing, bookkeeping/accounting, social media marketing, web design, travel planning/coordination, telemarketing, executive administration, data entry, booking appointments/scheduling, project management, database management, or research, for example, you can earn a higher-income than a VA who handles more general or administrative tasks for clients. As a virtual assistant, set yourself apart from your competition by developing a niche.

    Related: How to Start Your Own Virtual Assistant Business on sale now

    Cindy Opong, the founder of Creative Assistants, explains her business, “In my opinion, the role of a virtual assistant is to support and, in some cases, run the back end of a client’s business, so they can focus their time and effort on what they’re really good at. I personally specialize in working with [former] top-level executives with corporations who are now starting or running their own consulting businesses. These people were used to having an executive assistant in the corporate space, and many don’t know how to handle core tasks that an executive assistant would typically handle. I come in and I take up that role remotely for them.”

    How much can you make as a virtual assistant?

    In 2020, the Association of Virtual Assistants conducted a survey of more than 500 working virtual assistants for its VA State of the Industry Report. In the survey, 93 percent of respondents said they “enjoy[ed] freedom and flexibility” working as VAs.

    The report also found that 38 percent of respondents worked 20 to 30 hours per week, while 26 percent said they worked more than 40 hours, 24 percent worked 10 to 20 hours, and 11 percent worked 1 to 10 hours.

    When it came to hourly rates, the report stated that 58 percent of virtual assistants earn $26 to $50 per hour, 23 percent earn $10 to $25 per hour, 18 percent earn $51 to $100 per hour, and just 1 percent earn more than $100 per hour.

    In terms of monthly income, 33 percent reported making between $2,001 and $5,000 per month, 26 percent made between $1,001 and $2,000, 16 percent made between $0 and $500, 14 percent made between $551 and $1,000, and 11 percent made more than $5,000.

    Related: Check out what the Entrepreneur Bookstore’s discount section

    What you’ll need

    One of the biggest benefits of being a virtual assistant is that your location rarely matters to your clients, as long as you’re accessible during their business hours and finish your work on time. However, some clients do prefer VAs who live and work in their time zone, even though they may never meet in person. Working as an independent contractor from your home office makes you your own boss. You set your rates, determine the number of hours you’re willing to work each week and create your daily schedule. As a business operator, you’re also in charge of:

    • Finding and managing your clients
    • Marketing and promoting your business (online and in the real world) P Handling the bookkeeping and accounting
    • Billing (and collecting on overdue invoices)
    • Keeping your skill set up-to-date
    • Meeting your deadlines

    How do you get started?

    Pick up How to Start Your Own Virtual Assistant Business available now for a fully-detailed guide to setting up your business, finding customers, and turning your expertise into a new revenue stream.

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    Entrepreneur Staff

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  • How Every Company Can Enter the Billion-Dollar Space Economy

    How Every Company Can Enter the Billion-Dollar Space Economy

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    Opinions expressed by Entrepreneur contributors are their own.

    We are living through a new era of space activity, and the evidence is all around us. From striking images of private sector rocket launches to new satellite and data capabilities to the innovative tools that will permit lunar exploration, the space industry is more vibrant and ripe with opportunity than ever before — and this is true not just for “space companies,” whose primary business is space activity, services and tools, but for every company.

    This may at first seem counterintuitive. The current space economy is valued at $469 billion, according to The Space Report, and is expected to top $639 billion by 2026. This growing economy is fueled by thousands of businesses large and small worldwide, and many of these companies are not space-specific. Instead, they are “space adjacent,” which means their products and services have applications in the space industry, as well as in other sectors, like high-precision manufacturing, data science and artificial intelligence, and life sciences and biology.

    In this era of dynamic growth in the space market, the challenge for entrepreneurs is to answer:

    1. Is their enterprise space adjacent or could it be changed to become space adjacent?
    2. What is the space market demanding and what could the company offer?
    3. How does the business leader or entrepreneur identify and access opportunities that require fundamentally innovative applications for space?

    There is not one route or strategy that will lead a space-adjacent company into the space economy. The approach that best fits the existing business model isn’t necessarily defined by the entrepreneur or business leader. Yet, there are best practices and signposts along the way that can facilitate entrance. With that in mind, here are four steps to consider when seeking opportunities in the global space economy.

    Related: Entrepreneurs in Space: Musk Shouldn’t Have Mars All to Himself

    1. Start local

    As with any business endeavor, opportunity requires connections and collaboration. Wherever the business is located geographically (potential in more than one location), survey the area for organizations or businesses that are already engaged in the space economy.

    This does not necessarily mean seeking out a rocket launch provider. Instead, consult with large manufacturers who may be selling technology components to civil or commercial space organizations. Engage with regional military installations, where there are sure to be space-engaged professionals who can help elucidate market opportunities and facilitate introductions. Look for local chamber of commerce events related to space and explore industry groups and academic institutions that may offer space-focused seminars and forums. Ultimately, only the entrepreneur or business leader will be able to precisely identify local space stakeholders. Step one is to find them and grow from there.

    2. Seek new applications for existing IP

    When we think of space products and activities, some might imagine breakthrough technologies invented in government-run labs whose applications begin and end in space. This is incorrect. In fact, while some space technologies are entirely novel (e.g. scientific instruments for biological experiments in microgravity), many are simply the reapplication of space tools and services devised for use on Earth.

    To wit, entrepreneurs and businesses may already have intellectual property that, with some adjustments, could be sold to companies engaged in space activities. If you are engaged in textiles, do you hold a patent on an innovative material whose properties may be useful in space operations? If your business is in the food and beverage industry, could you cater to the local space operations on Earth or even adapt your product for consumption in space? In industrial construction, artificial intelligence, raw materials sourcing, supply chain optimization, the list of industries where existing products could be used in space is unending. When seeking space economy access, entrepreneurs should look to existing IP and consult with their growing network of space industry contacts.

    Related: Space Stories: A Startup Made of Artists, Scientists, and Ex-Government Officials

    3. Convert data to opportunity

    The space-to-Earth market accounts for most of the space economy. Put another way, the enormous data flows pouring in from satellites and other space-based assets are the currently dominant area for financial return. Entrepreneurs and businesses in the data science fields can find eager customers seeking insights and services derived from this data. This can include markets for Earth observation, climate monitoring, logistics and transportation, agriculture, water management, public health and many other industries. In this, space adjacency is defined by the capacity to process and compute data streamed from space and sell the resulting insights to markets here on Earth.

    For example, an incisive understanding of water levels and drought in a geographic region could be highly valuable to water utilities, local governments and agricultural businesses. The task for entrepreneurs and businesses is to consider how to access space-derived datasets, consider their data science capabilities and look to the marketplace for the intersection between space adjacency, data insights and on-Earth demand.

    4. Check for patents in the public domain

    Space activity is valuable in part because the tools and technology needed to operate in space often have important applications on Earth. In the United States, NASA offers a Technology Transfer Program and a database of thousands of its expired patents that are available for unrestricted commercial use. The European Space Agency also offers a technology transfer process. These and other space agencies already did costly, innovative work to create something new. Dig through these databases, consider your capabilities and identify patents you can use to bring new products to market.

    We are still only at the beginning of a new era of space access and exploration, and analysts expect the global space economy will reach $1 trillion in the coming years. Entrepreneurs and business leaders who begin probing the space domain for opportunity today will not only open new revenue streams and invigorate innovation. They will also capitalize on first-mover advantages and position their organizations to lead as the space market grows.

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    Kelli Kedis Ogborn

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  • How One Entrepreneur Turned $40 Into $4 Million in Revenue

    How One Entrepreneur Turned $40 Into $4 Million in Revenue

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    • Tori Dunlap started her financial-advice blog with $40 and grew it to $4 million in revenue last year.
    • Today she teaches customers how to invest, save money, and build startups of their own.
    • She shares the most important investments for any business owner and what founders should avoid.

    This article originally appeared on Business Insider.

    Tori Dunlap started her business as side hustle in 2016 with just $40. Last year, her business booked $4 million in revenue.

    Dunlap has scaled the multimedia platform Her First $100K to also include a podcast, book, and more than 2 million social-media followers. Through her financial-advice platform, Dunlap shares her guidance for investing, saving money, and building a business.

    In a conversation with Insider, Dunlap shared the most important business investments she’s made and what founders should avoid. This is an as-told-to story based on an interview with Dunlap. It has been edited for length and clarity.

    Run a lean team, until you don’t have to

    I started the business with very little money, just $20 for the website and $20 for the domain. That low startup cost was crucial for the business, especially because it was a side hustle at first.

    Sometimes new founders try to take on too many expenses at once, which can drain your finances. Whether it’s purchasing brand-new equipment to launch or investing in too many ads before the business concept is proven, founders should keep it as lean as possible until their business is earning money.

    Most of my investments were in the form of time and energy for the first few years.

    People are the most important investment

    While I started the business on my own, outsourcing tasks and bringing people onto the team was the best investment I ever made. In fact, the moment I could outsource, I did: I hired my first freelancer when the blog was still a side hustle.

    They only worked around five hours a week and I couldn’t pay them much because the business wasn’t making a ton of money. But if I wanted it to grow beyond a side gig, I knew I needed the help.

    The first tasks I outsourced were email marketing, graphic design, Instagram posting, and calendar management. I realized that anything I didn’t have to physically be there for could be outsourced to save time and energy.

    I get a lot of messages from other entrepreneurs asking how I was able to trust others to help me build my business. There are great people out there with many different skills and strengths, so I relinquished control because I realized I couldn’t do everything alone.

    If you can afford to hire somebody and you don’t, you’re actively holding your business back.

    Investing in trends can be a waste of money

    Dunlap invested in her podcast after her audience showed interest. Courtesy of Dunlap

    Founders should remember their core business goals when making any financial decisions or investments. Decide your own priorities and determine your finances that way.

    I often see founders taking on too many expensive new ventures. For instance, it’s very tempting to go all in on creative projects, like a podcast or a YouTube show. But make sure that whatever you’re investing in will actually help you achieve those core goals.

    It can be a waste of money if you’re paying for something just because other business owners do.

    So many people want to be entrepreneurs because they look up to other founders online. Social media can make it seem like you need to buy the latest equipment, tools, or products or invest in new branding or expensive marketing tactics. But founders should take a look at their books and determine if any money is being spent just to keep up with a trend or someone else’s business model.

    Instead, think about the long-term effects of how that new venture or product will make you money in return.

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    Alexandra York

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  • How This Trip to Italy for Pizza Cost Less Money Than Domino’s

    How This Trip to Italy for Pizza Cost Less Money Than Domino’s

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    When it comes to pricey pizza, Domino’s probably isn’t at the top of a “Most Expensive” list.

    But one TikToker is going viral for showing how going international — flight included — can be even cheaper than a pie from the beloved chain.

    In a clip that’s been viewed over 2.2 million times, influencer Callum Ryan took viewers on a journey from his home in the U.K. all the way to Milan, Italy to prove that he could get to Italy and back with a slice of pizza for less than the price of a medium size Domino’s pizza that usually goes for £19.99 (or about $24.11)

    Viewers were flabbergasted watching him snag an £8 flight from London to Milan and head straight to a pizza place that he said was recommended to him on TikTok.

    @thatonecal Do you think the pizza was worth the trip…? ?? I can’t believe how close it was ? #thatonecal #milan #pizza #dominos ♬ Green Green Grass – George Ezra

    There he received a free glass of Prosecco and ordered a Margherita pizza.

    The results? The pizza was €8.50 with €2.50 for table service bringing the grand total to €11, or £9.72. Add that to the £8 flight and the grand total is £17.72 or about $21.37.

    “We did it! We flew all the way to Italy for pizza for less than the price of a Domino’s,” Ryan said excitedly.

    Though undoubtedly impressive, many viewers in the comment section questioned if this was really legitimate as Ryan didn’t factor in the price of a cab or flight home.

    “Bro how you get to the airport, how you get to the pizza place from the airport, where you staying,” one pointed out.

    “Cost of getting to the airport, cost of getting from the airport to the pizza place, cost of the flight home,” another questioned.

    Even bargain airline Ryanair, the airline that the TikToker used for his flight, had to join in on the fun by commenting “We still have £8 flights?!?”

    “Apparently you do,” Ryan jokingly responded back.

    For those in the U.S. looking to pull off a similar feat, don’t get too excited. The average price of a stateside medium-sized cheeze Domino’s pizza is about $7.99.

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    Emily Rella

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  • How to Create a Successful Product Portfolio

    How to Create a Successful Product Portfolio

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    Opinions expressed by Entrepreneur contributors are their own.

    Crafting a successful product portfolio might sound daunting, and it certainly can be if you’re not well-prepared. But in reality, it doesn’t have to be an overwhelming process. With the right strategies and knowledge, you can create and maintain a strong product portfolio that meets your customers’ needs and stands out from the competition.

    In this article, we’ll walk through the steps necessary to craft a successful product portfolio.

    Related: How to Nail a Successful Product Launch

    Do your research

    Before you start creating your product portfolio, you must do some research and understand the market landscape. Gather as much information as possible about your potential customers, competitors, and industry trends. This will help you develop a compelling product roadmap and ensure your products stay on top of the latest technological advances.

    Consider using various research methods such as surveys, interviews, focus groups or observation studies to gain insights into customer needs and preferences. Other data sources include industry reports, competitive analysis, analytics from existing products or customer feedback from existing users. Take the time to analyze all available data points to get a complete picture of the current market environment and identify growth opportunities.

    Related: Assume Potential Customers Don’t Know Anything About Anything

    Identify your goals

    Once you’ve done your research, it’s time to set goals for your product portfolio. Think about what success looks like for each product and establish clear objectives with measurable metrics such as customer satisfaction scores or user engagement numbers. To ensure accuracy, break down objectives into smaller tasks and milestones that can be tracked more easily over time. This will enable teams to assess progress regularly while also allowing flexibility should plans need to change due to unexpected circumstances or new requirements arising mid-way through development cycles.

    Consider long-term implications such as future expansion plans or scalability issues when setting goals. This will ensure that products remain relevant in the years ahead, even if certain technologies become obsolete or new solutions enter the market.

    Design with intent

    When designing product features, take the time to think through their purpose and how they can benefit users. Consider who is using the product and why they may want or need certain features or functionality. This could range from simple usability enhancements for novice users to advanced capabilities for more experienced ones. Keep an eye out for any gaps between user intent and existing features that a new offering in your portfolio could fill. This could open up opportunities for growth while also providing value to users at the same time.

    Try to incorporate design elements that resonate with different types of customers — whether visual design styles that match branding guidelines or interactive components that are easily accessible regardless of experience level with a certain type of device or technology platform.

    Related: 5 Strategies To Build an Online Portfolio Boosting Any Business Website Performance

    Execute effectively

    No matter how well-planned a project may be, ultimately, its success hinges on execution. Develop an agile workflow that allows fast iterations while preserving quality standards, making progress visible throughout development cycles. This will enable teams to make quick decisions based on feedback from stakeholders and changing market conditions without compromising overall results.

    Utilize feedback from customers and other stakeholders along the way. This can help identify problems before too many resources have already been invested in a particular direction. It also ensures that all points of view are considered when making decisions about feature development or improvement. This will help create products that truly meet customer needs rather than just incorporating features because they sound good on paper but don’t necessarily deliver real value in practice.

    Strive for transparency throughout every stage of development. This will build trust amongst stakeholders involved in the project and make it easier for everyone involved to keep track of the progress being made against established milestones & objectives.

    A successful product portfolio requires careful planning, research, intentional design and effective execution. By investing the time to do these tasks correctly, you can create products that meet customer expectations and deliver significant value in return. Whether you’re looking to launch a new product or revamp your existing one, following these steps will ensure that your portfolio is strong and positioned for success.

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    Christopher Massimine

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  • How to Choose the Right Debt Provider for Your Business

    How to Choose the Right Debt Provider for Your Business

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    Opinions expressed by Entrepreneur contributors are their own.

    When founders think of raising debt, they often imagine going to a bank. In my three years advising companies on debt financing options, I frequently remind founders that banks are certainly an option — but not the only one. Founders exploring debt should familiarize themselves with all of the options in the market, from traditional asset-based loans to more innovative venture debt and revenue-based financing solutions.

    These various lenders don’t just have distinctive structures and terms for their capital, they also each have a particular set of criteria to qualify for a loan. By acquainting yourself with the entire market upfront, you can focus on the lenders that suit your business the best, maximize the number of term sheets you receive and spend less time chasing dead ends.

    Related: Why Founders Should Embrace Debt Alongside Equity

    Banks

    Banks themselves come in various shapes and sizes. When it comes to business loans, you have your regional community banks, large multinational banks and specialized venture debt banks. Sometimes one large bank may roll up all of these divisions under one roof, providing a range of options from revolving lines of credit, term loans, warehouse lines and more.

    Oftentimes these banks have access to the cheapest available capital and therefore can offer you the lowest interest rate. But bear in mind that while this is usually the cheapest option, banks also have a high bar to qualify for their capital. They may include covenants or other performance requirements to ensure the business continues to meet their benchmarks throughout the duration of the loan.

    For many small businesses, taking a loan from a local community bank can be a simple low-cost option. But be aware that they may have minimum asset or cash flow requirements to qualify or even ask for a personal guarantee.

    Venture debt banks, on the other hand, specialize in VC-backed cash-burning businesses that show huge growth potential. Oftentimes, getting a loan from one of these banks requires several rounds of equity from brand-name venture capital funds, providing up to 25-35% of your most recent equity raise amount.

    Eventually, once your business is generating several millions of dollars in cash flow, an even wider spectrum of bank options opens up including some of the largest multinational banks.

    Venture debt funds

    More traditional venture debt offerings are very similar to those one would find at a bank. A three- to four-term loan structure is standard, though generally, rates are more expensive than banks with the flipside of a greater quantum of capital.

    Similarly, venture debt funds look for VC-backed companies or at least some form of institutional backing, rapid growth and high LTV/CAC. More bespoke options do exist as well, oftentimes branded as growth debt rather than venture debt, since they can provide capital to angel-backed or even fully bootstrapped businesses.

    Both of these options typically come at a cost of capital in the teens with interest-only periods and can be quite creative in structure. Founders should be aware that for both venture debt banks and funds, loan packages often come with warrants — effectively an option to purchase shares of the company in the future at a fixed price. Meaning, a small amount of dilution should be expected, though some lenders in this space pride themselves on being fully non-dilutive.

    Related: When is the Best Time to Raise Venture Debt – Here’s the Key

    Revenue-based financing (RBF)

    An increasingly popular non-dilutive financing solution for early-stage companies is technically not debt. Revenue-based financing functions more akin to a cash advance. Capital injections are repaid as a percentage of monthly revenues, as opposed to a fixed principal repayment schedule.

    If you’re looking for the fastest path to receiving capital, revenue-based financing is the solution. Many firms that use API integrations to your accounting and commerce data are able to aggregate that data through their underwriting systems and offer terms in 24-48 hours.

    While this capital tends to be on the more expensive side, speed and flexibility make up for it. Unlike other lenders, RBF facilities usually don’t require collateral or impose restrictive covenants that may limit your ability to grow.

    In terms of qualifying for an RBF, monthly revenue minimums can be as low as $10K with at least six months of operating history. The crucial requirement is to show evidence of recurring revenue. This usually means SaaS revenue with low churn, but can also be applied to most subscription-style businesses or even transactional ecommerce businesses that show a strong history of sticky customers.

    Non-bank cash flow lending

    Traditional private credit funds lend to established companies that have several years of traction under their belts. They generally are EBITDA or cash flow positive, some starting at as low as $3M annual EBITDA while others require $10M+. Businesses can be founder or sponsor-owned, and range from fast-growing later-stage tech companies to more traditional businesses and even turnaround financing for distressed situations.

    Use of capital covers a huge spectrum from funding leveraged buyouts or asset purchases to growth capital. Funding structures run the gamut, from senior secured to mezzanine debt (below senior lenders but above equity-holders) or even preferred equity in the capital stack. Rates are typically higher than banks from single digits to mid-teens, with three- to five-year terms. Closing fees and exit fees are common, as are covenants, and loan sizes are derived either holistically on the business fundamentals or as a function of cash flow.

    Non-bank asset-based lending (ABL)

    An ABL facility allows borrowers to use an asset as collateral for a line of credit or term loan. The asset can be as liquid as accounts receivable and inventory or as illiquid as real estate or a specific piece of equipment. Some of these loans can be secured with just one asset. For instance, a company needs a new warehouse and gets ABL financing for that, or it could be a combination like A/R and inventory.

    Asset-based lenders will often focus on a specific industry and require a minimum amount of whichever asset(s) they specialize in (accounts receivable, inventory, capital equipment, real estate or even intellectual property). Those assets can be held on the books as collateral or in some cases purchased outright at a discount (receivables factoring, for example).

    Unlike the other debt facilities covered, ABLs normally carve out a specific asset rather than taking a security interest on the entire company. This lowers the risk for borrowers and provides some flexibility to stack on additional debt, provided they can cover it. The advance rate (the amount of cash you get up-front) is usually between 50% and 90% of the value of the pledged assets.

    Related: The Old-School Solution to Cash Flow Problems Hiding in Your Receivables

    Questions to ask yourself

    As you consider which debt provider to approach, you need to think about the characteristics of the funding vehicle that will unlock the long-term potential of your business — while covering your short-term cash flow needs. Don’t forget that each lender has its own unique criteria. Fundraising without a clear plan of action can become a huge time suck for founders, pulling them away from operating the business. By strategizing upfront and learning the market, you can ensure that you only spend valuable time with lenders that can provide a real offer.

    Once the term sheets are in hand, you can now leverage them and pick the terms that are best for you. I’ll discuss that in my next article.

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    Tim Makhauri

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  • How To Raise Money For Your Startup

    How To Raise Money For Your Startup

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    Opinions expressed by Entrepreneur contributors are their own.

    Raising money for a brand-new startup idea can be challenging, especially in a tough economy. However, with the right approach and preparation, you can find the funding required to realize your vision. Let’s explore some of the most effective methods and tools available to entrepreneurs who want to raise money to create their own new businesses.

    Have an “investors pitch”

    An investor pitch is usually a PDF with around ten slides. It tells a story about who the company is, the service or product they offer, the problem in that market and the solution your company presents. It also shows your company traction and includes more information about your team, your staffing projections, and the potential revenue an investor can get if they back up your idea.

    I recommend the book “The Lean Startup,” by Eric Ries to anyone starting a new company. It is a great starting point to understand some essential terms you’ll need to know, such as “minimum viable product.”

    Related: 13 Tips on How to Deliver a Pitch Investors Simply Can’t Turn Down

    A business plan

    A strong business plan must be in place. Your business plan should concisely describe your concept, target market, sources of income, and projected financial results. A thorough explanation of how you intend to use the money you raise to expand your company should also be included. Potential investors will have an easier time comprehending your vision and developing confidence in your capacity to carry it out if you have a well-written business plan.

    I commonly get a question: “how many years of projections should my business plan include?”

    My recommendation is to include at least five years. I usually pay close attention to the first three, and year number four and five can be a little more ambiguous or focus on the bigger picture. Why? Because so many things are expected to happen within the first three years, years four and five are likely to include changes, evolutions, or pivots.

    Grow your network

    The next crucial step is to network and develop connections with potential investors. A wide variety of investors, including venture capitalists, angel investors and crowdfunding platforms, are likely available in any city. Even if they’re not, recur to virtual platforms to connect with them (think LinkedIn or Zoom meetings.)

    Get to know your connections and nurture those relationships. By establishing connections with potential investors, you can learn more about their investment preferences and modify your pitch to better suit their needs. Additionally, you can get insightful criticism and guidance on enhancing your business plan and raise the likelihood that you’ll get funding.

    When considering investors, I often tell them I’m looking for “strategic partnerships,” which means I’m looking for an investor who will not only provide capital but also leverage their knowledge in the matter or their connections to push our plans further.

    Related: Five Ways To Raise Money To Launch Your Own Startup

    Attend startup events

    Startup events and pitch competitions are excellent places to meet and develop relationships with potential investors. Attend as many events as possible where interactions with investors may occur. Get to know like-minded individuals who are also doing the same, and exchange ideas and what has worked for you.

    Platforms for crowdsourcing are another method of raising money. Through websites like Kickstarter, Indiegogo or GoFundMe, crowdfunding enables business owners to raise money from many contributors. Crowdfunding can be a great way to attract investors for your startup and create a network of people who share your vision.

    Related: 6 Steps to Planning a Free Startup Event and Making a Splash

    Think outside the box

    You can also request loans and grants from governmental or nonprofit organizations for a more conventional strategy. Chances are the city where you live offers opportunities or services that may help push your business forward.

    For example, the New York City Economic Development Corporation provides a range of services and tools for business owners looking to establish or expand their operations in the city. Additionally, they offer Small Business Services (SBS), which facilitates access to funding and other resources for small businesses.

    Consider all options available

    Consider equity crowdfunding, for instance, which enables you to raise money in exchange for company equity. Alternatively, think about bootstrapping your company, which entails self-financing your start-up by reinvesting profits and reducing expenses.

    Preparing for different outcomes and being open to new opportunities is important because raising capital is a process. Not all startups will raise the same amount or in the same way. My biggest advice is to approach meetings fully knowing and understanding your business plan. But most importantly, approach all meetings with enthusiasm and positive energy. More often than not, investors vest in a team or a person before they invest in an idea.

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    Rodolfo Delgado

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  • Here’s What You Need to Know About the Changing Face of Venture Capital

    Here’s What You Need to Know About the Changing Face of Venture Capital

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    Opinions expressed by Entrepreneur contributors are their own.

    Picture a venture capitalist. You might imagine an older white man in a suit, maybe with a gray beard. But the reality is that the VC landscape is changing — rapidly. Today, VCs are getting younger and more diverse. The rise of Gen Z angel investors perfectly illustrates this shift.

    There are more than 20,000 Gen Z angels investing in startups globally. And they’re putting their money into some of the most innovative companies around, from the Web3 space to clean energy. On a broader level, recent data shows that the average age of the typical VCT investor has dropped by 11 years since 2017.

    Related: Getting In On The Act: A New Generation Of Investors Is Here

    Young people are seeking higher returns

    What’s driving this trend? For starters, everyone under 58 is seeing the highest inflation of their adult lives. At the same time, young people have never seen healthy bond yields or bank deposit rates. The stock market offers little in the way of safety or stability, either, with millennials experiencing three “once in a lifetime” crashes in the last 20 years: the dot-com bubble, the financial crisis and Covid-19. Today’s bear market, too, is at risk of turning into a worse crash.

    With low public market returns and inflation still high, young people are searching for alternative investments that offer higher potential returns. And they’re willing to take on more risk to get them.

    VCs are also getting more diverse. For example, Base10 Partners is a black-led VC fund that raised over $130 million to fund seed-stage startups with between $500,000 and $5 million. Further, Arlan Hamilton has built a $36 million fund dedicated exclusively to black women founders, called Backstage Capital.

    This diversity is, in part, being driven by a desire to invest in companies that reflect the founders’ own experiences and backgrounds. This heterogeneity is set to increase the aperture of evaluation for startup opportunities and lead to novel value propositions being funded.

    Digital natives are flocking to VC

    Another driving force behind the changing face of VC is the fact that young people are digital natives. They grew up with the internet and are comfortable with digital tools and platforms. This makes them more open to new models of investing, like online VC funds.

    What’s more, digital natives are used to seeing startups succeed. They’re familiar with the stories of companies like Facebook, Tinder and Robinhood — all of which were founded by young people. This makes them more likely to view investing in startups as a viable option.

    Related: Here’s What’s Driving the Trend of Self-Made Gen Z and Millennial Millionaires

    Purpose-driven investors

    Finally, millennials and Gen Zers are purpose-driven investors. They’re interested in making a positive impact with their money and are drawn to companies that align with their values.

    This is reflected in the increasing interest in impact investing and environmental, social and governance (ESG) factors. In 2020, 33% of total U.S. assets under professional management were sustainably invested. This trend is only going to continue as more young people enter the VC landscape.

    Comfort level with risk is also leading young people to invest in new areas, like cryptocurrency and blockchain. These technologies are still in their early stages, but as digital natives, young investors are more comfortable with the risks involved. They’re also more likely to be interested in the potential rewards — which can be significant.

    The future of investing

    The face of venture capital is changing. And it’s being driven by a desire for higher returns, more risk tolerance and a focus on making a positive impact. Private market investing platforms have emerged to help individual investors more effectively deploy their capital, and more new offerings will come. Gridline, for instance, is a digital wealth platform that raised $9 million to provide access to top-quartile alternative investments with lower capital minimums, fees and liquidity.

    We’re at the beginning of a generational shift in terms of how people invest. As Gen Z gains more buying power, expect to see an even wider array of impact and venture investment products emerge — all tailored for this new investor class.

    Related: What You Can Learn From This 21-Year-Old VC Who Started A $60 Million Fund

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    Frederik Bussler

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