Some Golden Rules for Start-Ups, Scale-Ups and Entrepreneurs
Thinking of starting a Business?
Started one and want to know how to scale?
Looking to raise investment?
Here are some thoughts to help you.
1. Check who owns the Intellectual property (IP) for the idea, product, gadget or concept. Make sure you have a written agreement with your co-founders on exactly who gets what percentage.
2. Do A Prior Art Search to find out if anyone else has made or sold anything similar. Chances are strong that there is something similar out there. If so, how do you differentiate. What is your Unique Selling Point (USP)
3. Find out if there's a big Market for your product or service. You can ask on your own Facebook page friends or use Amazon Mechanical Turk.
4. Work out Your Avatar or Ideal Customer. Who is it? Where do they go, what do they do, what age etc. Then you can target these exact people using Facebook ads and Pixels. You want to ask if (a) They would buy your product and (b) How much would they pay for it?
5. Work out your costs. If You want to sell online you need a 600% mark-up. If a product costs £5 to manufacture, you need to sell it online for £30. So find out if your costs stack up - remember you can add on postage and packing but not VAT at 20% in the UK
6. Set up all the websites and social media around your product or service. You can get a domain name for £2 from GoDaddy and a free website template from Weebly.com You also need Twitter, Instagram, LinkedIn, Snapchat and Facebook pages around the same name.
You also ideally need to have an email address of the same name so Orders@SpiderCathcer.com for example.
(So if you have a new product that catches spiders, get SpiderCatcher.com, @SpiderCatcher for Twitter etc) Your website should have a sales page to buy the product. You should also set up an Amazon account if you can and an eBay sales page.
8. Work out your trading entity. Will it be an incorporated company - Spider Catcher Limited? Set up a bank account. Metro Bank is very good and quick. Set up accounts with Paypal or Stripe and get ready to take orders and payments.
Major Golden Rule and tip; You can take payments through Stripe or Paypal but never make refunds through them! Ever! Make any refund requests direct to the persons bank account. If you make refunds through Stripe or Paypal you run the risk of them refunding every single order!
7. Get advance orders. Go to your ideal customers and offer them a discount. Tell them it's a new product and that they will get a substantial discount for evaluating Version 1 of your product. The discount will be for giving you feedback and reviews. Direct them ONLY to your website sales page and collect all their names and email addresses. You can use Clickfunnels for this.
8. If your product will take 3 months to Manufacture, get the advance orders 1 or 2 months before that. Now you have the funds to order manufacturing to start. If you want to search for any examples of this in action, check out MagFast ( https://www.magfast.com/launch-campaign-desktop/ )
9. If you want someone to help you with website marketing, you could contact Mark Stoffels here: MASGlobal
10. If you need help with Social Media Marketing, go here and watch the video: Social Media Marketing School
11. If you need investment, then you need to consider being part of the UK Governments Enterprise Investment Scheme. This will allow you to raise up to £5m a year and give certain tax related incentives to investors. If an investor is faced with an EIS investment or a non-EIS investment, they tend to go for the one registered for EIS.
You can apply for EIS status on your own by filling in an online form in the Governments website. Or you could pay an accountant to do it for you. They should charge anything from £300 to £500 plus vat (as at April 2018)
12. You can raise investment in 5 ways:
(1) Make a lot of sales
(2) Use your savings as a deposit and
(3) Borrow from a bank or friends and family
(4) Get Angel or equity investors
(1) Making sales is the cheapest way to grow. Rack up the sales by offering discounts on advance orders or offering discounts for beta testers.
(2) Use your savings as a deposit and get a commercial loan. You will need anything from 10% to 40% or you can get an unsecured loan of up to £25k here.
(3) Borrow from the bank (deposit required) or friends and family. Take car with this one!
(4) Get angel or equity investors here at Angels Den.com
(5) Crowdfunding might be the answer if you have a product that can be sold directly to the public or if you need to raise money to scale-up. For example. Instead of asking for £60k from a bank, friends and family or from investors, you might want to offer a deal on a Crowdfunding platform like this.
If you have a requirement to "tool up" and make a product - in this case, a Spidercatcher; Tooling is £30k, inventory £20k and other costs £10k = total requirement of £60k
End product RRP will be £30 plus VAT or £36
But, you could offer beta tasters and Founder "members" a Spidercatcher v1 Discount at the special Founder members Price of £20 if they give you valuable user feedback.
Now you need to make 3,000 sales at £20 to achieve your target.
But you could offer a whole host of other rewards or benefits in return for more "investment"
Popular Crowdfunding sites include: