How should I spend my limited financial capability to gain momentum in my startup?


5

I am a start up, with no office. fairly new to Canada with no financial records. No website (only Domain name). Working from a rented room.

I registered my company. Imported a small stock that is enough to start a sale team.
Stored in my car/room for now (ironic but true). Trying to hire independent sales reps to start sales.

With all of this I have a limited C$8,000 left to live on and gain momentum to start my business.

How should I spend this C$8,000 and on what to insure I survive the start up? (I do not like sales calls and would want to spend time on organizational issues such as sales rep contracts, CRM, business plan preparation, and many requirements like this- oh and if sales start rolling ok - move to a house with extra space to function better, office comes later, etc, etc)

I met a product package/retail consultant early this week who was impressed by the product and packaging, my vision, and clear focused ideas. He is giving me a proposal to assist me and suggested to start with a business plan that will assist me to focus on the needed and find financing. While financing is required to excel I still am not too sure if the Business plan is the right way to spend my money on now (3K-3.5K of $8K). I know sales must pick up to cover some expenses but I have to also import some more variety, and around and around we go.

THE PRODUCT BRIEFLY:
I always go for durable, affordable, needed products and I think I hit the bulls-eye this time..... Cost CIF was approx C$5800 for 3000pcs so it is a small item that is easy to stock, easy for sales to handle and shops to display and above all few extra cents is easily translated to a good percentage in profitability terms. The packaging has my company name and website so this is why the office and website and all the above was mentioned as an important issue. A good Website could also be used for sales and drop shipment is also an option (I have no experience to know if web sales could generate enough as an alternative to the start up probably the way to spend my money on- i do not know)

I thank you all for reading this. I smile and ask to please advise me "which came first, the hen or the Egg?"

Startup Costs Business Model Business Plan Financial Budget

asked Aug 19 '11 at 13:23
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Ramzi
26 points

3 Answers


2

I'm not sure what you should spend your money on, but I know what you shouldn't spend your money on:

  • A designer/programmer for your website. You can buy great looking designs for Wordpress or Drupal. You can also pay $20-50/month to sell via something like Shopify.
  • A business plan that costs any money. $3.5k for a business plan? Write it yourself. Then again, do you need one? Your #1 job is to sell product.
  • Paying someone else a lot of money to do something you can do yourself. You have such a small amount of money that paying anyone worth their salt will wipe you out financially.
answered Aug 19 '11 at 13:54
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Ryan Doherty
598 points
  • thank you for your comment. you are absolutely right. I must not think of a business plan now. Expensive and takes months to do while I should be focused on sales, sales and more sales. I also just finished reading an article by Jason Cohen - "You're a little company, now act like one". So true. In a weeks time I will have few sales people with me and this is what I have to do now. I will follow your advise on the website. recently I looked at templetemaster.org and found that i need programming skills. I will choose a provider that does not need me to have programing skills to work with. – Ramzi 7 years ago
  • Glad I could help! If you don't have programming skills, definitely pay for SaaS websites that are inexpensive and provide you with everything you need (Amazon fulfillment, Shopify, Wordpress, etc) – Ryan Doherty 7 years ago
  • I disagree. You DO NEED a business plan now. As a matter of fact, you needed one before you started your business. Writing a business plan is the best way to structure your business. If you had one, you'll know exactly what to do with the money now. – A. Garcia 7 years ago
  • @Garcia: I didn't say he didn't need a business plan, just he shouldn't spend $3.5k on one. – Ryan Doherty 7 years ago

2

Cash is king. Everything you spend money on at this delicate moment should be focused directly at bringing in customers and securing sales. That means a business plan can wait.

I would focus on using your web site to drive sales. It's the greatest amount of bang for the buck. Consider an inbound marketing strategy that focuses on providing valuable content that will attract your target audience. This approach has five steps:

  1. Create remarkable content : This means creating content (using a WordPress blog) that your target audience will find compelling enough that they will want to share it with their peers. This could be because it's informative, inspirational, entertaining, etc...
  2. Optimize for search : Make sure that the content you create is optimized for search engines. The most important aspect of organic search raking is inbound links. By creating remarkable content, you're encouraging people to create links to your site. But you also need to engage in active link building tactics like guest blogging, link exchanges, etc...
  3. Promote via social media : Create syndicate your content on social media channels like Twitter, Facebook, YouTube (product demonstrations), LinkedIn, etc... This will generate inbound links, increase SEO and build a wider audience for your message.
  4. Convert visitors to leads : Make sure you have strong calls to action on your website that direct users to landing pages. Calls to action include things like "purchase now," "download the demo," or "sign up for newsletter."
  5. Measure : Make sure you have analytics installed on your website so that you can measure where your traffic is coming from and (most importantly) what your conversion rates are on those landing pages.

This strategy consistently produces results that are 60% cheaper than outbound (i.e. direct) marketing techniques. However, it does take time to build and audience and generate results. Therefore, Adwords and Facebook ads can be a good bridge to ramp up more quickly. Just make sure that your website has well-designed landing pages before turning on the Adwords or you might as well be setting your money on fire.

EDIT/UPDATE:
With regard to financing, one three things will happen:

  1. After many months of planning, working and begging you will be successful at obtaining equity financing and lose a huge chunk of ownership to somebody else.
  2. After many months of planning, working and begging you will be successful at obtaining debt financing (very difficult in this economic environment), and then have that albatross hanging over you.
  3. After many months of planning, working and begging you will fail to get any financing.
answered Aug 19 '11 at 21:39
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Jon Di Pietro
1,697 points
  • You don't need to spend money to write a business plan. – A. Garcia 7 years ago
  • He specifically said that he had been advised to do just that. I've been running small businesses since 1997. I have spent thousands of dollars and hundreds of hours creating business plans. When you are a solo-preneur as Ramzi is, I do not believe a traditional business plan has any value. A one-page strategic plan that gets some thoughts down on paper regarding how he's going to find leads and turn them into customers wouldn't hurt. But doing revenue projections, market analyses and segmentation, etc... are not going to generate the short term sales needed to stay in business. IMHO. – Jon Di Pietro 7 years ago
  • I disagree to some extent. While revenue projections and other sophisticated forecasts are rarely useful, a well thought strategic plan will help you stay focused and keep the eyes on the big picture. And you don't need to hire anybody to develop such a plan. Plus it gives you credibility in front of potential investors and banks. It is not just you and your idea. It is you, your idea, and a well thought out plan. – A. Garcia 7 years ago
  • both have a point: I need a business plan -there is no doubt- but best is to have a sketch-up or points for now for my personal use.. To me a business plan is time consuming no mater who writes it (me of consultant). At this stage I would end up giving assumptions on sales, where as in few weeks i will have my own sales to give me the market feedback making it more factual and easier to write and convince. (this idea of mine is a 2 yr old but things happened so fast that i went for it- I think all is still well under control and exciting at the same time) – Ramzi 7 years ago
  • My type is as follows: whatever, the size of me is I wouldn't invite investors and then end up regretting it by the time they end up signing. If I invite someone, they must be investors with balls, investors who are ready to invest in a real viable business. I don't want to just double my money. I want to make sure the business plan is worth the 100s of thousands. In the short term, the company has to be organized enough to be worth the investment + the business + a profit if sold. not a debt to live on my shoulders for life. I want to enjoy it and live it, Not rev it on red all my life. – Ramzi 7 years ago

0

First of all good luck Ramzi.

As I said before, I strongly believe you need a business plan NOW. Without it, you'll be making decisions without a structure and you'll have no direction whatsoever. That doesn't mean that you'll fail at all. It will just make the decision making process harder. If things go well, probably in a few months, you'll have another 8000 to invest, but if you don't have a business plan, you'll be coming back here asking for more advice (which is good, don't get me wrong).

The key here is to identify the low hanging fruits. Where can you get the most bang for the buck? What is urgent AND important right now? Many entrepreneurs don't see the difference between urgency and importancy. If I were you, I'd invest everything I have on sales and marketing.

A good website is always helpful as well as the other web marketing strategies suggested by DiPietro, but if you are not selling directly to consumers, and you are basically targeting small retailers in your area, you could do without it for the time being. What worries me is that the packaging has your website on it, but there is really no website up and running right? That may not give a good impression of your company. Imagine you type the address of this great product you just bought and you see nothing. You never get a second chance to make a first impression.

Are you targeting all potential clients? The answer is probably not. Hence, those 8000 should be put towards reaching and promoting your product to that audience. That may involve attending trade fairs, networking through your local chamber of commerce, attending conferences, or even give away some free samples to potential retailers. To do all that you may require some extra help. Just make sure you train them well and they understand the product inside and out (cost structure, benefits, composition, audience,...), as well as your competition's products.

Hope this helped.

answered Aug 19 '11 at 22:43
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A. Garcia
1,601 points

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