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Blog posts tagged business funding

Why business owners should go to the casino and save us all a lot of trouble

September 26, 2012 by Robert Craven

Why business owners should go to the casino and save us all a lot of trouble/casino roulette{{}}I have just read an article claiming that 10% of companies that America’s top ten venture capital firms or VCs [ie private equity firms] invest in actually succeed. This correlates exactly with the yardstick that VCs and seed corn capitalists I know use. 10%!

One chance in ten. We know that only 10% of small businesses actually make it to year five, so it could be reasonable to suggest that anything greater than 1:10 (10%) odds would be better than you get from starting a business. Just 10%.

So, is it worth it for a 10% gamble? Well, to put all this in perspective, here are the chances of winning at the casino:

Slot machines          32%

Horse racing            41%

Blackjack                47%

Roulette                 47%

Here are some conclusions (if you are in any way rational).

  1.  If you go to a casino then do not go near the slot machines (but 68% of gamblers do.) Another conclusion might be:
  2.  If you have money to gamble then do not open a small business (but more than 4m people have done so in the UK).
  3.  If you are the government, then do not gamble anything on small businesses but spend the money in the casino (higher odds of success).
  4.  As far a small business owners are concerned, maybe it is just not about the money.

Do not gamble at small business unless… Unless what?

  • Robert Craven is the author of business best-seller Kick-Start Your Business (foreword by Sir Richard Branson). His latest book – Grow Your Service Firm – is out now.  

Guerilla tactics

November 27, 2009 by Chris Barling

I’ve always felt that there were two types of startup – those with too much money and those with too little. I’ll leave the topic of too much money for another day, and instead think about the more common problem of having too little money.

When you’ve got too little money, the key is not to spend a penny you don’t need to, and to make sure that every penny you do spend is effective. That’s pretty much common sense, but I think that it’s worth drilling into much more deeply.

One of the pitfalls when starting a business is mixing up the keys to business success with the stuff that has to be done as you become successful. In start up mode, all your effort needs to go into the former and virtually nothing into the latter.

A business bank account, business cards, business premises and the services of an accountant can all be vital ingredients – but not if your business isn’t yet making any sales.

Your efforts and resources should go into working out your business proposition, finding customers and delivering that proposition to them. Make sure that you keep 100% accurate records, and probably set up a limited liability company to protect you from personal bankruptcy, but otherwise focus on starting to make sales and money.

When I set up SellerDeck (formerly Actinic), providing ecommerce services for SMEs, we had two vital objectives. We were trying to sell critical technology to small companies and ISPs, and we also needed to raise funds. I renamed my house “Actinic House” which was perfectly legal and cost nothing. I also joined the Institute of Directors and met all prospective investors in the IoD offices in Pall Mall.

These are the sorts of techniques that I would describe as “guerilla” – getting to your objectives by low cost and unconventional means. You can find all sorts of ideas both online and from other successful entrepreneurs. You won’t get them from the bank manager or the accountant, these techniques tend to be anathema to them. But it’s these that will help you to succeed, not having leather bound accounts.

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Starting up in a down-turn – but where to get funding?

November 26, 2009 by Mark Sinclair

Starting up a business is always going to be tough and like many things in life, there’s probably never going to be a perfect time to take the leap and launch your idea. For many entrepreneurs, one of the key concerns is acquiring funding to turn your dream into a reality. Doug Richard says that one of the best ways to fund your start up is to seek investment from one of the three Fs – Friends, Family and Fools.

Many people are reluctant to enter into business with friends. What has your experience been? Would you advocate mixing business and friendship?

If you are looking for funding right now, watch this ...

November 10, 2009 by Mark Sinclair

It's not easy raising finance for any business right now, least of all a start up.  Which is why it's worth taking a few moments to find out how Simon Woodroffe managed to finance Yo Sushi, when the banks were turning him down.

Has anyone else out there been creative with early stage funding for their business?  Please share your story.

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