Through our experience and encounter with entrepreneurs, we’ve been asked the following questions on many occasions. In some cases, answers to these questions are controlled by the circumstances at hand, so there is no straight forward and easy answer. But here are short-hand answers to the frequently asked start-up questions that have a high probability of being correct in most cases.
Do I need a business plan?
Yes. A business plan provides a structural framework which your business can be built on. It will guide and act as a tool for you to think through your products and services, marketing activities, management, sales, financials and more. But you must not go overboard with an official 30-page business plan, in some cases a one page plan can do the magic.
Where can I get money for my business?
Here is a summary of effective source of business capital;
• Personal funds
• Friends and family
• Angel investors
• Crowdsourcing sites
• Bank loans
• Grant from government and institutions
• Venture capitalists
• Equipment loan financing
What kind of business should I start?
A business that;
• Can cause meaningful improvement in the users’ life
• You are passionate about and would enjoy doing
• You are experienced in
• Doesn’t take a million dollars to fund
• Has the potential to grow into something big in a reasonable time frame
What are the biggest challenges to starting a business?
The biggest challenges are;
• Generating a viable business idea
• Having a good business plan
• Developing great products and services
• Effectively handling the frustration of constantly being rejected by customers
• Time management
• Hiring the right employees
• Maintaining a healthy and balanced work/family/spiritual life
• Working more than expected
What are the biggest mistakes made by start-up entrepreneurs?
• Starting with inadequate capital
• Wrong budgeting and pricing strategy
• Ignoring legal and contract matters
• Inadequate knowledge of the competitive landscape
• Thinking that success will come easily and quickly
• Underestimating the importance of marketing and sales
• Not focusing on the quality of products and services
How much should I capitalize my business with at the beginning?
In an amount that will at least carry you for 6 – 9 months without income. Depending on the nature of business, it usually takes longer before revenues are generated, so you should anticipate and invest accordingly.
How likely will it be that I can get venture capital financing?
Very unlikely for a start-up. The process is as follows; get a good product, build a solid management team, gain some traction before considering venture capital financing
What kind of books and records do I need to keep for my business?
• Financial Statements (P&L, Balance Sheet, Cash Flow)
• Employee records
• Tax filings and records (Federal, state & local income, sales and property taxes)
• Invoices, receipts, contracts & Creditor records
• Bank accounts