I am not sure if this is the correct place to ask these questions, but I have been working at a large corporation for most of my career. I was recently introduced to a person who is running a startup, and we set up a time next week to discuss an opportunity there. What questions would you want answers to if you were considering such a dramatic career change?
Hi dear all
I’m currently working as a Brand Manager in a global FMCG company. I have a meditation app idea. All other business & marketing issues aside I had a hard time solving some of the below questions: 1) Would you recommend working with B level Indian developers? I have no development exp. Donr want a fully bugged, design flawed app but dont have enough capital or confidence to go for a premium developer 2) If you suggest finding a developer partner, do you tell the all about your business plan during the interview? This goes for other people as well. If you have a unique -but hard to execute- idea, would you comdortably share it with everyone to get feedbacks? 3) As an MVP I considered starting a Youtube channel with some of the meditations. Do you think it makes sense? What would be KPIs? Views, view rates, likes, comments? How are they translatable into a validation for my app? 4) If I launch a basic version of the app, I fear anyone downloading it early would lose interest before waiting the full version. I believe full version has justifiable merits though, how can I keep or reach those initial users? Via mail? 5) I am going to need one or more content partners to facilitate meditations. I believe I can contribute writing as well but would prefer to keep an expert in the loop. Shall I pay them upfront (Got limited cash, mostly reserved for development and marketing) or offer partnership? If partnership, how much – as a range? 6) Can I start developing with a person/team and than hand it over to another if I’m not satisfied or have more budget to spare in phase 2? 7) Can the developers take into consideration what future features I have in mind? If we dont think of it before, how complicated it is to add new features? (Any general learnings?₺) 8) Can I find people/ teams who can do all graphics, animations, UI/UX, development from scratch? 9) What would be you go-to-marketing platform for a meditation app? I considered app store ads, social media and online communities 10) On social media ads, would you recommend CPC or CPM model? I fear CPI would be too expensive. Is 2% downloads a valid rate for CPM model?
Got around 15-20K USD. Hoping it’s enough to roll out a basic version and earn. Would appreciate any general or specific comment
Hi, my partner and I are at university at the moment and we enjoy painting figurines and such. We want to start up a painting business but I'm really not very knowledgable in that area. I have a few questions and I apologize if they may seem stupid, this is just not my area of expertise. I'm going to bold my questions just to make them easier to read with my general problem/understand underneath.
Would it be ideal to work as a partnership?
It's just us two and we don't want anyone else. We're set on working together.
Tax. How in the heck does this work with a partnership?
I know that when you're employed in the UK, you don't have pay tax if you earn under a certain amount. Would that apply to a partnership, like how on earth does tax work?
How do I figure out profit and make sure it's all recorded correctly?
There's no way in hell I earn enough to get an accountant so obviously I have to figure out that profits and that myself. Do I just write down every time I buy tools and models and postage and deduct that from whatever has been earned?
Is there any legality issues with registering a business at a parent's address that may already have an Ltd business registered there?
We are unable to register our business where we rent as it's in the contract. Are we able to register at a family members house (my partner suggested his parents but his dad is classed as an Ltd apparently) or is there any issues with that?
As a partnership would we be able to buy things at warehouses or get "business" deals on any tools we may have?
I just wonder.
Does it cost to start up a business?
Is there a fee?
Are there any sites or videos you recommend I read/watch?
I want to be a sponge and absorb information.
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Entrepreneurs looking for investor funding often fail to realize that all money comes with strings. For example, if you have watched the Shark Tank TV series, you probably noticed that the Sharks always ask the entrepreneurs for their intended “use of funds.” Those who respond with one of the wrong answers, such as “I want to pay myself a salary,” usually go home empty-handed.
You may think this question is just an artifact of good television, but let me assure you that in my experience as an angel investor, it’s a standard “make or break” inquiry posed to every entrepreneur. Here are some guidelines that will help you with the right answers, not only in closing your next investment, but in planning when and how much money to ask for:
- Investors are most interested in helping you scale the business. That means they normally only invest in startups with a working product that has already been sold to at least one customer for full price (beta tests, giveaways and best friends don’t count). They are willing to cover marketing, inventory and scaling, but not product development.
- Make your focus and priorities clear. A long list of everyday expenses is not helpful here. I recommend that you simplify your use to no more than three items or categories, with a percent allocation to each. An example might be 50 percent for marketing, 30 percent for inventory and 20 percent for staffing. Have backup charts for investors wanting more detail.
- Funding for founder salaries at this stage is a red flag. Investors expect you to “bet on the future” with them. You may pay salaries to your team, but your salary should come from earnings, when they occur. Taking your cut before earnings exist implies that you are not willing to take the same risk of no return, as you are asking of investors.
- Make sure allocation amounts are reasonable. These days, even viral marketing requires real money, for events and promotions. Startups whose marketing budget is trivial lose credibility and most likely the investment. Conversely, a huge marketing budget implies an intent to “spray and pray,” in hopes that something works.
- Use of funds must be tied to projected cash flow negatives. If you ask for a million dollars, your financial projections better show a negative cash flow approximating that number (with a 20 percent buffer). Investors are not interested in giving you money to keep in the bank for backup, for investing in real estate or a fancy new car.
- Tie use of funds to real traction milestones. A valid milestone might be closing a specific big-name customer or channel, such as Walmart, or it might mean getting your first 100,000 social-media followers, by a given target date. Building a huge inventory before you have a confirmed customer is not a convincing strategy.
If you are really looking for research and development money, and you didn’t sell your last startup for $ 800 million, professional investors are not the place to start. Hopefully, you can find some friends or a rich uncle who believe in your potential. The other alternative is to find a strategic partner who knows the space well and will benefit from your solution.
Professional investors always look for a proven business model and an existing revenue stream to minimize the risk. Then they look at the people behind the model, the execution status and how they might get their money back. Your proposed use of their funds will be seen in these three contexts. They will look to your business plan for cash flows and specific return on investment projections.
In all cases, your goal must be to explain how the investment will help you scale up the business and become more profitable sooner. You should always be prepared to mention a plan B, if possible, to grow more slowly by reinvesting initial earnings over time. Confessing that you are in survival mode, desperate for money now, will not improve your odds with investors.
Whether it be in the context of a five-minute elevator pitch or a more formal presentation to professional investors, the projected use of funds should be summarized and prioritized into three “chunks.” These must remain focused on scaling the business.
Investors want to be convinced that your use of their money will maximize their returns in the first five years, as well as yours. After that, all you have to do is make it happen. Have fun!
Startup Professionals Musings