Your business will succeed or fail based on the resources you have or can get access to. Resources include skills/abilities from the team you assemble, money (your and other people’s (OPM)), and time (the time it takes to reach your goals, develop your idea, build your business, get the first sales, etc.).
All resources eventually flow back to cash. How much cash do you have to pay people, buy materials, rent needed space, etc.? So a key aspect of developing your business and product ideas is to determine:
- What resources do you need
- When do you need them
- How much will those resources cost
- What return (cash) will they generate and when
Equity and Debt Sources
So your financial resource needs come in two primary categories: equity (ownership) and debt (borrowed money). Your access to resources beyond your personal funds and skills is dependent upon developing your business Concept, identifying your market opportunity, quantifying your resource sources and uses, and developing a cohesive, understandable, compelling business story.
Whether you are seeking investors or lenders (banks, etc.), you have to persuade them that your idea will work. You also need them to know you have done your homework and can articulate the problem/solution set you are pursuing. They want to be convinced of your capability to pursue the Opportunity and the viability (size) of the Opportunity. The more homework you do to validate your concept, define the opportunity and quantify the resources needed to capitalize (profit) the more credible you become.
Credibility – The Key to Other People’s Money
The ability to access OPM (other people’s money) through investors or debt agreements comes down to the confidence the decision-makers who control those funding sources have in you and your team. These funding gatekeepers may be using their own money or funds entrusted to them, so they need information that convinces them that you really have done your homework. One of the most critical elements in their decision is your Entity (or Business) Model. (See the Entity page of this website for more information.)
Resources you may need:
- Office/production space
- Computers and related equipment
- Contractors, Consultants and Advisors – tax, accounting, legal, marketing, etc.
- Website, email and domain
- Meeting space,
- Office and computer supplies
- Travel: Hotels, mileage, parking/tolls, meals, etc.
- Memberships, Dues, and Subscriptions
- Payroll services, wages, taxes, etc.
- Property taxes
- Sales and Use taxes
- Specialized equipment
- Marketing materials
- Conference fees
- Sponsorship fees
- Tradeshow/Event Displays
- Business insurance: general, inland-marine, umbrella, product, workers compensation, business disruption, etc.
- Working capital
The Business Entity Helps Determine Resource Access
As you define your Entity model, you should map your processes and make note of the specific resources you will need. Then hit the internet and look for the cost and alternatives for those items. Again, the more detail you can identify and quantify, the greater your chance of success – in the business and in getting the funding you need.
One of the biggest mistakes businesses make is underestimating the cost of getting started and the on-going costs (working capital). Under-capitalizing your business can put you out of business, even with a great Concept, the right Opportunity, and the best Entity model.
 See this website for information on the Viability, Capability, Credibility, and Visibility components of business.
Articles and Podcasts
- Organic or Cultivated Clients? Which Do You Want? (9/23/2016) - These days the term “organic” seems ubiquitous. Organic has come to mean more than the traditional dictionary definition. In this instance, I want to talk about organic growth as it relates to a natural process that is without direct intervention or influence. Looking at that definition, let me clarify further. Organically Grown Let’s say you decide to open a retail store. It could be just about any retail product, but let’s say it is a clothing store. Now if you locate that clothing store next to a large retailer, say a grocery store in a shopping mall, you will have ...
- Haste Makes Waste: Do It Right the First Time (9/21/2016) - Haste makes waste is a common saying. Another common saying is time is money. Time, like money, is always in short supply in organizations. Every moment is precious, so the question is: “If you don’t have time to spare, how do you have time to fix a problem when you did not have time to do things right the first time?” Now, I recognize that every person and business will drop the ball at some point. It is simply human nature that sometimes we will lose track of a commitment, have an accident, or Murphy’s Law will come into play. ...
- Where is Your Business Located? Realist Road (9/14/2016) - Normally when I am writing about the location of your business, I am focused on the physical or virtual locations of the business. Today I want to focus on the mental or psychological location of your perspective on your business. In working with clients, the success of organizations is impacted by their leaders’ perspectives on events, opportunities, results, and the future. Leaders tend to locate their businesses one of three categories: Optismist Overlook, Pessimist Place, or Realist Road. Welcome to Optimist Overlook When you visit Optimist Overlook, the business may reside at the corner of WishfulThinking and Hope Is My ...
- Strategic Plan: Your Five-Year Roadmap to Success (9/7/2016) - Too often, the owners of many businesses of all sizes and industries don’t see the need for a strategic plan. They make critical decisions on which deals to do, what systems to put in place, and who to hire based on the current vision of the business. They focus on the near term of the current year or at best the year to come. In the past month, I have met with non-profits and for-profits who have yet to even think about a budget for next year, let alone a five-year plan for their organizations. When pressed for revenue and ...
- Is your Business Performance FINE? (9/1/2016) - Does your day start something like this? “How are you today?” “Fine.” This is a typical exchange that occurs for most of us daily. A variation is going to a networking event or business function and “How’s business?” “Fine.” But is your business really FINE? Financially strong, Increasing customer base, New opportunities to pursue, and Exceeding expectations. In today’s world, many businesses are fine, meaning simply “okay.” They are going along and if not thriving at least surviving. But don't you want more for your business? Wouldn’t it be great if you: Didn’t have to worry about having enough in ...
- Motivate Change to Get Desired Performance (8/31/2016) - How to Motivate Change One of the most basic things we need to understand about change is that it is personal. People must choose to change. People can be influenced to change by external sources (e.g., other people, events); however, for true change to occur and be sustainable each person must choose to change. I spent decades in major corporations that were constantly implementing "change initiatives." Some even had change programs that included rewards and incentives to get the change accepted. In one organization one of my responsibilities became managing a change program for the division I was in. This ...
- Business by the Numbers: Financial Oversight (8/24/2016) - Internal Controls and Financial Oversight When it comes to growing your business, you can't afford to not understand the financial perspective of their business. Whether it is the day-to-day performance, budgets, taxes, or other aspects of accounting for your business, you can’t afford not to do business by the numbers. Financial oversight cannot be fully delegated to employees or co-owners. You have to be in the numbers to monitor results. Unfortunately, for many small business owners, technology creators, and other innovators, the simple fact is that too few are trained on the ins and outs of the financial side of ...
- Is the Glass Half Full? Half Empty? Or is it the Wrong Glass? (6/14/2016) - One of my friends was telling me about a discussion she had with her eighteen-year-old son. They were talking literally about a glass of Dr. Pepper. “Is the glass half full or half empty?” she asked her son. He said he thought she just used the wrong glass. If she had used a smaller glass, then she wouldn’t be thinking is the glass half full or empty. It would be full. This difference in how we look at things makes an important point for businesses when it comes to capacity, staffing, and all the elements of being in business. Perhaps ...
- Sales Constraints – What’s holding us back? (6/6/2016) - ARE YOU OPERATING AT peak performance? Do you spend more dollars for less return? When you invest to expand capacity, does it translate into more results (revenues and profits)? If not, you’re investing in the wrong option.Here are 10 constraints: lack of clear business objectives; lack of specific performance objectives for teams and individuals; the goals for teams and individuals don’t match the organizational objective; compensation (tangibles and intangibles) reward the wrong behaviors; lack of corrective action for poor performers; lack of role definition in achieving objectives; investing in places that don’t expand capacity; inability to execute the strategy because ...
- How to Grow Your Business, One Relationship at a Time – Network! (6/6/2016) - Grow Your Business — Build Relationships Previously published in MWorld, The Journal of the American Management Association Volume 8, Number 3 Summer/Fall 2009 In today’s economic uncertainty, having a solid network can help your organization. However, it isn’t easy to build a network that will reap professional benefits. C-Level Peer-to-Peer Networks Peer-to-peer networking at the C-level is a challenge. Too often, any opportunity to network devolves into a situation where some C-level and non-C-level attendees feel compelled to take the opportunity to pitch, pose, and prose about the “opportunities,” products, services, resumes, and/or latest, greatest thing you absolutely must hear about. ...