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Bootstrapping – does it make you a better entrepreneur?

Following of form my article earlier this month What have I learnt from bootstrapping my latest venture, 6 months in? I have spent some time reflecting on how the experience of bootstrapping this latest venture has helped me nurture some key areas of expertise which I'd not wholly tapped into prior to this period of bootstrapping. Every entrepreneur faces this question are pretty much the same time as they decide on the idea they wish to work on in a start up….. how can I fund this start up? The answers to this question are pretty much limited to looking for outside funding, which for most is a remote possibility, or rolling the sleeves up, and taking a long hard look at the bank statement to access if you are in a position to finance the venture yourself, by bootstrapping. 6 months ago I faced this question and choose the bootstrapping option. I had not bootstrapped a business before though the decision I made has taught me many things about building a business and honed my ability as an entrepreneur. I believe the 6 months of bootstrapping my latest venture has driven me to become a far more effective and hardened entrepreneur, the insights associated with this personal evolution are considered here: 1. Size does matter…small wins every time Bootstrapping is certainly about thinking big, but from an execution perspective I have found small to be the clear winner. With limited funds I was forced to start small, test my thinking and scale as I gained confidence from my customers feedback and an improving bank balance. 2. Superior Products With limited funds my focus on the product became close to obsessive, and by placing customers centrifugal in the development phase the product we evolved through the build phase generated revenue from day 1. This attention to detail coupled with constant listening to our customers resulted in a far superior product and formed a strong basis of our product roadmap for the next 12 months. 3. Control Freaks work just fine in bootstrapped businesses Let this be heard I’m a control freak, but here’s the good news; Bootstrapping a company with your own cash buys you the right to run the show your way with no external forces (e.g. investors), so nobody but you, unless you choose to invite others, has the right to calls the shots. 4. Deliver more with less The art of spending money wisely in business comes a whole lot more naturally when it’s your own hard earned cash that you are deciding to spend. You soon learn the habit of delivering significantly more than you would normally for the same time or cash outlay, and heck you learn quickly how to be an effective and hardened negotiator. 5. The accelerator pedal is full on, there’s a need for speed With limited cash comes limited time, in this finite time period the product must be completed and be in market. Adopting the Minimal Viable Product approach to product development was a gift which ensured we worked on the absolute necessities and on none of the nice to have’s. This challenges your instinct and there is no room for perfectionism, good enough was a term we used frequently and thanks to Nike, “Just do it” became our mantra. This absolute need for speed is created by the sheer lack of funds, interestingly when funds are injected into bootstrapped businesses there is a tendency for the accelerator pedal to be lifted, as the pressure to hit the deadline, dictated by when the cash runs out, significantly shifts in proportion to the $$ invested. 6. Frugal does have an upside The skill of keeping costs low as you get the product to market has a tremendous upside beyond not leaving you cash-less, it helps deliver a great lift to the bottom line, in terms of early profit. With this lean approach to running the business instilled in the DNA of the business through the bootstrapping phase, you are set up to deliver industry leading margins which not only deliver great profitable earnings but are a key indicator used by investor to access investment opportunities.

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Crowdfunding For Your Startup: Your Best Option

If you are starting a new business but don't have the funds in your pocket, neither you have the desire to go chasing banks for a loan, you have one more option to consider before giving up. Crowdfunding for business startups is one of the most popular fundraising strategies now used by thousands of startups and ordinary people. Find out why and learn how you could benefit from crowdfunding for business startups in your own entrepreneurial activities. The traditional method of financing a business used to be applying for a bank loan, self-financing through small-scale borrowing or finding investors. Now, thanks to the rise of crowdfunding platforms that give new business entrepreneurs the option to simply ask the public at large to contribute to the costs of building a startup, things are considerably different. In some respects, they are easier. In others, they are somewhat more difficult. How crowdfunding for business works Setting up a crowdfunding campaign is relatively simple. The business or entrepreneur sets a funding goal and fundraising strategies and offers rewards for individuals to contribute in various categories from small amounts up to larger amounts. Crowdfunding for business startups can be thought of in two ways. One, it is a business offering products for pre-order. On the other hand, it is contributors investing without obtaining equity. People who contribute to crowdfunding for business campaigns are generally more interested in seeing the vision become a reality than they are in owning part of that vision. This is what fuels the desire to buy a product that hasn't been created or manufactured yet. Many contributors feel they are a part of something unique and special if they buy on the promise that product will soon be released. What businesses can expect from crowdfunding As one of the many fundraising strategies, crowdfunding for business startups has been a spectacular success. Crowdfunding platforms like Plumfund have raised tremendous amount to support everything from worldwide travelogues to video games to weddings. Although it may seem like this is a rather simple way to obtain large sums of money, there are some catches. Contributors will expect to have their rewards delivered in a timely manner. Also, since the business launching the campaign must announce their goal, the contributors will expect that goal to be reached and also to deliver everything the business promised. What kinds of businesses can use crowdfunding? According to Business News Daily crowdfunding for business startups on larger sites isn't always guaranteed, so it is always a good idea for any entrepreneur to do their homework before starting a campaign. Crowdfunding for business startups works best on projects with a well-defined goal. Products like video games, films, books, manufacturing prototypes and so forth are very easy to announce as complete. Projects will less well-defined finish lines are somewhat more difficult and often require a bit more work. While crowdfunding for business is by no means a universal solution, it does provide a fair amount of flexibility and power for entrepreneurs that don't fit neatly into the criteria for other funding sources. It is well worth a few minutes of research and consideration for most small businesses. Have you considered crowdfunding for business the possible best option for you? Maybe it is.

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Forex Spot vs Options Trading: What's the Difference?

There are differences between spot and options trading and which to use depends on your strategy, time and appetite risk. Spot trading’s transactions are executed almost immediately while options are executed based on your deal’s date. Spot trading can be for short term to long term while option trading is usually a short-term trade.​   Forex trading is one of the most popular ways to make money online today because traders can make a quick profit by exchanging currencies. The two most commonly used forms of forex trading today are forex spot trading and options trading. If you’re interested in starting forex trading, you may be wondering which one is right for you. This article will show you the major differences between them and give you enough information to help you decide. Difference #1: Physical exchange Spot trading in the forex market is an exchange of currencies. For example, if you trade the EUR/GBP currency pair in the forex spot market, you will be asked to provide euros in exchange for British pounds. Meanwhile, when participating in forex options trading, you are signing contracts with a party to trade a specific amount of a currency pair at a predetermined exchange rate by a given date. With options trading, you may not own underlying assets but still can benefit from their movements. Difference #2: Trade execution In forex spot trading, when you exchange one currency to another, your trade will be executed immediately or shortly thereafter. What about forex options trading? Unlike spot trading, the transactions will be carried out at a predetermined date in the future. Difference #3: Trade duration Forex spot traders are a diverse bunch. They can be long-term traders who buy and hold currencies for a very long time. They may also be mid-term traders who hold currencies for weeks. Or, they can be short-term traders, speculators, and scalpers. Most forex options traders, however, are short-term. They usually close out their contracts before settlement and rarely trade currencies physically. Forex spot vs options trade example Suppose the EUR/USD’s exchange rate is currently at 1.3000. Forex spot traders predict that the euro will fall against the US dollar in the future. Therefore, they exchange their euros for American dollars. When the price decreases to 1.2000, these traders exchange their dollars for euros, and just like that, they make a profit of $0.1 for every euro exchanged. On the other hand, when options traders predict that the EUR/USD’s exchange rate will fall, they open a Put order at 1.3000. In other words, they sign a contract with a broker that allows them to sell 1 euro for 1.3 US dollar at the end of the contract. If the EUR/USD falls to 1.2000 at the time when the contract ends, these traders can still exchange 1 Euro for 1.3 US Dollars following the deal they agreed with the broker. Forex Options Trading There are currently two popular types of forex options: Vanilla and Binary. They have several differences: Vanilla options allow you to buy or sell an underlying asset at a predetermined price on a specific date. Often, vanilla options are available from forex brokers. Binary options allow you to profit from predicting the direction of an underlying asset’s price. You place a Call order if you think an asset’s price will move up, and place a Put order if you think an asset’s price will move down. If your prediction is correct, you will receive a predetermined payout, usually 70 to 90% of your investment amount. However, if your prediction is wrong, you will lose the entire investment amount. Conclusion Those are the major differences between forex spot trading and options trading. Which one you use will depend on your approach to the forex market. Consider your time, strategy and trading personality to find the right form for you.

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How to Efficiently Grow a Small Business on a Tight Budget

Small businesses that are just starting out have to use their money as wisely as possible, getting the best value for the lowest price, and cutting off all extraneous costs. Marketing strategies have to be strategic and aim to make repetitive customers. Branding is essential; be known for something.                         Every single day the number of entrepreneurs is increasing at an exponential rate. Most start their business without knowing the best way to manage their sales in the market. Sales are considered to be the most important element in any business since it’s the key ingredient of your profits. Statistics suggest that most new entrepreneurs fail to succeed in their business due to a budget deficit and lack of proper planning. To build a business from scratch, you need to be wise in using your resources, especially if you are running with a tight budget. As a starter, you can’t afford unplanned spending since you need to use every penny constructively. If you look at the most successful businesses in Australia, then you'll notice they have a solid forecast and know what they want to achieve within a specific time frame. So, let’s discuss how to run a business efficiently with a tight budget: Use resources efficiently The first thing that you need to learn in your business is how to use your resources. As an entrepreneur, you need to put people in the right departments. They can never be productive unless you assign them to a sector they specialize in. Doing so will save you lots of time and money. And most importantly, managing a smaller team is much easier than handling a big team in your business so focus on building a small team at the initial stage. Cut your business cost To grow your business, you first need to cut down any extra costs you may be incurring. For instance, you might be buying low-quality equipment to save money, but in reality, you are paying more as you have to bear the additional cost of the service and replacement of low-quality equipment. So if you bought high-quality equipment at the initial stage, then you won’t have to pay this extra cost. As a startup businessperson, you can learn lots from a professional forex trader. They wait patiently and eradicate all the false signals in their trading platform and wait for a high-quality trade setup. Just like the professional trader you need to focus on efficient staff. Always make sure that their output is at least three times more than their pay at the end of the month. Convert the potential client into a repeat customer As a businessperson, you must have a vision and project objective. When you have a perfect project objective, this means you know your target audience (clients). Without studying your clients demand you can never increase your sales. And your main vision should be focused on turning the potential customers into your repeated customers for continuous sales. So what do you need for that? The answer is pretty simple. You need to assess your competitors in the market and make an offer to customers which others don’t. There are many small businesses which have turned into huge, profitable ones just by following this simple rule. Develop a strategic marketing plan A strategic marketing plan is very vital for the success of a small business. For instance, you need to know how much money you will spend in a certain promotional campaign and what will be the result regarding sales revenue. If you want to see yourself as a successful entrepreneur, then make sure that you have a strategic marketing plan which drives your sales at an exponential rate. You might have the best service to offer clients, but if you don't reach out to them and let them know about your service, they won't buy. Many brilliant business ideas remain unnoticed due to poor marketing. So make sure that you place a portion of your business budget to drive sales with the perfect marketing strategy. Highlight your brand identity Brand identity is extremely crucial for the long-term success of any business. For instance when you hear the brand name "Apple" you are well aware that they create one of the most elite smartphones in society. Similarly, you need to create your brand identity from the very beginning even though you are running on a tight budget. New entrepreneurs often ask how to create the brand identity in the market. You need to assess your market competitors and based on that give some special service to your customers which others don’t. The service must be high quality, and no one else should provide it in the market. It’s true that providing such a service with a tight budget business is extremely difficult, but if you follow all the other mentioned tips, then you can use money in the most efficient way. And this will allow you to use a portion of your hard-earned investment for developing your brand awareness in the market. Stay on Budget Growing a small business from scratch requires strategic implementation of your business plan. You need to be extremely careful about your business. Always stay focused and utilize your budget in the best possible way. As a businessperson, you need to have a clear forecast regarding your achievement for a definite time interval. Make sure that you assess your business performance very frequently and make the necessary adjustments.

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Investors For Start-ups: Where to Find Them?

There are a variety of different types of investor that businesses looking for financial support can look towards for funding. Which type of investor a business owner should approach relies predominately on what kind of business it is, and how much money is needed.  Angel Investor An angel investor is a good option for start-up businesses, but can be very difficult to find. Angel investors are most often individuals with significant financial resources who invest into a business because they personally feel it has potential. In exchange for their funding, the angel investor normally gets a percentage on the return of their investment, or partial ownership of the company. To find an angel investor, business owners should research who might be an ideal candidate, and work to make a credible connection with them. Avoid mentioning investment straight out; instead, work on building a relationship first and discussing money once a connection has been made. Try and find investors with a connection to your business, whether it be an interest in the product or just an interest in the location the business might be set up in. There are also websites that help start-ups make connections with angel investors. Another way to source angel investors is through crowd funding websites like Pozible and Crowdfundit. On these websites you pitch your business concept, and other users can personally contribute to funding it, often in return for a sample of a product or some other benefit. Bank Loan A bank loan is one of the most common and easy ways to get funding for your business, provided you have a good concept and a quality business plan. It works in the same way as most other bank loans, which you pay back with interest at a later date. To get a bank loan, your best bet is to follow the following five steps: 1) Know which loan you want Do your research. Different banks offer different loans at different rates. Figure out which is the best one for you before you start applying. Applying for any loan you think you might get can damage your credit rating and ruin your chances of receiving another one in the future. Once you know which loan you like, make contact with the bank/s and ask them what you will need in order to apply for that loan. 2) Know your financial history Before going for a loan, find out your credit history. Check your current rating, review your financial history and make sure it is accurate. Once you are familiar with your credit history, use this information to figure out exactly how much you are likely to be lent, and how much you can afford to borrow. 3) Get your documentation organised Based on the advice you get from the bank, organise all of the documentation you will need prior to applying for a loan. Some of this can take time to secure, so don’t waste time by trying to apply for anything before you get it. 4) Have realistic expectations If you have developed a realistic time schedule within your business plan, you will have factored in the time it takes to get a loan, and will be prepared for it.  It takes time, and being rushed and unprepared is a sure way to reduce your chances of securing a loan. 5) Be Persistent When you are talking to banks, many might be willing to give you a loan, but not with the terms you want. Call as many banks as you can- you will eventually find one that suits you, or that will want your business enough to work out a deal with you. Personal Investors Personal investors are another good way for new business owners to get the capital they need when starting out. Friends or family members might be willing to contribute financially, or provide other resources that are needed. As with any other loan, it is important that personal loans use an investment contract that outlines the size of the investment and the repayment details. Getting a personal loan can be simple or very difficult, depending on who you know, but often carries greater risk than the others, being that failing could result in strain on a personal relationship. Other types of investors, such as Venture Capitalists, are more appropriate for businesses that are already established, and have a history of returns. These deals are often worth millions of dollars, and are therefore not normally suitable for start-up businesses.

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What have I learnt from bootstrapping my latest venture, 6 months in?

I am now 6 months into my 3rd start up which feels like a good time to share my experience of financially bootstrapping my latest startup, which I believe has lead me to become a better, stronger entrepreneur, and in turn create a business with a real chance of long term success. This venture is my 3rd start up, having sold the 1st two, the hat trick is visible on the horizon, though still some way off! This is the first venture I have Bootstrapped and thus far we are on track to emerge from this phase early in the new year. As I write this article the Bootstrapping category in SavvySME is empty, so here’s to breathing life to this method of funding your startup amongst the SavvySME community. So what is bootstrapping? Bootstrapping a startup is fundamentally about developing the business with little or not external funding, spending as frugally as possible and using the business’s internal cash flow, revenue and possibly your own cash, to fund the early stages of getting the business to market. It’s common for the founders and early employees to not pay themselves any salary from the business, but instead be rewarded with equity in the business. The challenge that arises is that we all have bills to pay, even if it’s the bare necessities of food and accommodation, we still need an income to pay our way and survive. To overcome this challenge bootstrapped businesses have learnt to get creative by splitting their time between paid engagements for other companies and developing the startup. These paid engagement often leverage the core skills of the bootstrappers (consulting & coding) but are not limited to these, with many bootstrappers taking a range of casual work to pay the bills so they continue in the startup. At last count I have completed 8 short term consultancy roles over the last 6 months, each facilitating the next phase of developing the business. Who is bootstrapping relevant to? Not everyone! This is not a conventional approach to starting and building a business and a history of many failed bootstrapped startups tells us that it does not work for everyone. To help you understand if this is an approach that fits your business here’s what we have learnt, most specifically from the last 6 months, of developing our latest bootstrapped business. The common threads between bootstrapped businesses Businesses that are relevant to the bootstrapping approach share some common threads, these include: Relatively low upfront capital requirements (I started this latest venture with less than $10k of capital) Receivable payment terms tend to be short, whilst payable terms tend to be at the longer end of the range   Revenue tends to be recurring, so you are not constantly spending time or paying resource to chase new sales to keep the lights on A significant number of new sales are generated via your current users referring/recommending it to friends and colleagues The common traits of Bootstrapped businesses You work from your bedroom, garage, shed, kitchen table or shared office space Your time is split between income earning (bill paying) roles and building your startup, only committing full time to the startup when it can fund your bills. Outsource ahead of hiring, we are regular users of Odesk through which we have sourced contractors in the Philippines and Indonesia Follow the Minimum Viable Product (MVP) development approach to get your product to market as quickly as possible so you can garner customer feedback prior to evolving the product any further. We had V1 of our product in market within 6 weeks, the feedback we received from this prototype has fundamentally determined our final product build. Use sweat equity as a currency to acquire the services you need which you cannot afford to purchase. This worked really well for David Choe who famously accepted payment of Facebook shares for creating graffiti art at Facebook 1st offices, these shares netted him $200m when Facebook IPO’d Hire based not only on 1st class capability but on cultural fit and commitment Advantages of bootstrapping your business You retain the significant majority of the equity in the business which will pay dividends should you sell in the future As the majority shareholder you control the business and do not need to answer to external shareholders Businesses with no external funding are often described as having “Clean Capital Structures” which is a feature future investors will find appealing once you have the business beyond the startup phase Disadvantages to bootstrapping your business The “Skin in the game” approach where the founder is responsible for all the costs is not without its risks. In the passed 6 months I have used my personal credit card to settle accounts and shore up short term cash requirements, so be prepared to back yourself with your hard earned cash Cash flow is king…..however good the idea and the talent is within the business the key business drivers need to be managed and prioritized, this is often not a core skill of an entrepreneur and one that is difficult to outsource in the early stage Business growth maybe frustratingly slow due to the lack of funds, perseverance is a skill I have learnt over the last 6 months I hope this article provides useful insight into the Bootstrapping method of funding your startup. Subject to the feedback the article receives my intention is to publish a follow up article outlining some of the tools we have used to keep our cost in check and bootstrap through to launch.

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Why You Don’t Need Funding To Get The Wheels Turning

A lot of entrepreneurs are demotivated to start their implementing their great ideas because they don’t have the necessary funding. This story is here to tell you that you do not need funding in order to start your business and succeed. Get the wheels turning with taking the first step of reading this inspiring story. There is such a bubble at the moment about funding, that I am sure there are plenty of hopeful not-yet entrepreneurs out there, who are scared they will fail because they don’t have any funding. People, who cannot picture that big fancy office with a $15,000 conference table, they cannot even see how they will pay their next bill but they have this idea, which they think can solve a real problem. In my eyes, that’s all that really matters. The pure grit, the guts to go ahead and do it. The rest they will figure out later. Where to start? Nike, Apple, Amazon, Disney, and many businesses (including mine) started from the humblest of beginnings with a small amount of savings, a few credit cards maxed out, and lasted beyond the first hurdles because the founder had pure guts to solve that problem, to go after THAT thing. Many never use or receive funding. I fit that rule too. Many businesses out there will not fit the VC model—tech, modern, hip cool businesses. In fact, most won’t, and when I visit my clients’ premises, I quickly re-confirm that not all businesses start from a big tech dream. The majority don't. The media portrays the image of an entrepreneur as being part of the big tech realm and working in an incubator. While there is some truth to this, the actual reality is 90% of businesses start with a dream at a kitchen table. Not all businesses are tech-based and the majority of businesses don’t receive funding either. A great example of this can be Beauté Pacifique (BP) – Denmark’s leading skincare brand. BP is based in Denmark and has been selling skin care products for over 20 years. In 1997, Beauté Pacifique started from scratch, with no funding—just pure will at a kitchen table with a few family members. Today, they stand at the top of the Danish skin care industry and are a reference in anti – aging products and technology. Last year, I had the honour to be invited by BP to visit their Danish headquarters. I was honoured to be given a tour by the owner himself, and we sat in his car discussing his fondness for hounds and how the whole thing started. No need to say I was silently being mind – blown. The love he had for his product and its cause was impossible to not notice, and it goes to show that passion alone is worth more than any amount of funding. He told me the story of building his business, starting from the very beginning. It all started with an engineering angle and in the kitchen of his home. His family would sit around the table, each with a specific role, and manually package the products for hours at a time. With very few resources, the family put in the time and effort to turn the dream into a reality, and boy – that they did. An overnight success of 20 years. In conclusion The BP story will forever sit with me, and I use it as a tool to maintain perspective on what entrepreneurship really is. By believing in your business with an unrelenting passion and surrounding yourself with the true supporters of your idea and advisors, I promise that your business will shape together one way or another, and, who knows, you might even retain a 100% stake in the thing. I went back to my hotel thinking about how legacy companies start and why I love supporting an underdog… and probably always will. So, if you have the sole idea and will to start, don't be scared. 

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