photo credit: Aidan Jones
Incubators (or business incubators) are programs aimed to accelerate the growth of entrepreneurial companies by providing them with an array of business resources and services. Incubators may vary in the style in which they deliver these services, in the type of clients they serve or the organizational structure they have.
Incubators are especially dedicated to growth and development of start up companies. Research and Technology parks on the other hand support large scale projects that support everything from corporate, government or university labs to very small companies.
A successful incubator I would like to mention here is Y incubator launched by Paul Graham in 2005. It has funded over 60 startups and still continues to inspire many others. The model followed by Y incubator has been imitated widely through out the world and hence there are many incubators around the world offering good services and seed funding to startups.
If you’re a startup founder looking for seed funding, here are a few incubators suggested by ReadWriteWeb: Y Combinator, TechStars, SeedCamp, Summer@Highland, Launch Box, Bootup Labs etc. For more details on this please visit
http://www.readwriteweb.com/archives/guide_to_seed_fund_incubators.php
While Graham may not like it, there are a large number of start up incubators following the model he created with Y Combinator and handing out microinvestments in web startups in return for a small stake.
photo credit: Torley
Sooner or later, any business or startup needs to refine/reshape its client base for one of the following reasons:
• To part with low-profit customers – proactive
• To part with customers whose demands don’t fit the company policies and damage profitability and morale – reactive
In some scenarios parting becomes necessary and the difficult part is that it requires a lot of effort and finesse. Here are a few tips on how to manage it:
Identify the ‘vital’ customers - Follow the Pareto Principle (80/20 rule). In business, 20 percent of the customers account for 80 percent of the sales, while another 20 percent account for 80 percent problems. Identify the profitable 20 percent for your business. For every minute you put on solving a problem of the costly ones, spend four minutes taking care of the profitable ones.
Get Proactive - Define the customers that cause your startup time and profitability. Solution is to keep them satisfied and less costly is by revising cost and services.
Get Reactive (if you need to) - If you think a customer is causing serious damage to your startup and the costs exceed profitability, then it is time to part ways. Tip here listen carefully, don’t get defensive and try reaching on an agreement (If possible)
As a startup, you should try and identify both kind of customers and try your best to keep them satisfied. If for some reason (genuine ones) a customer is causing more damage than benefit, it is definitely time to part ways.
For more information on this we suggest you visit:
http://www.entrepreneur.com/sales/customerservice/article204926.html
Follow up. It's important to keep in touch to see that the referral worked out. Your aim here is twofold: to help the customer and to avoid any sense of abandonment that could lead to negative reviews of your business.
photo credit: Marco Bellucci
There are a few ‘best’ questions related to startups which pop up in our mind now and then. Questions such as - when is the best time to startup? Which sector is the best to startup in? Which is best - funding through revenues or investors? In this post we attempt to answer these questions precisely. The post is inspired by a very good article I came across recently.
The Best Time
Anytime is a good time to startup with a slight tilt towards starting up during a recession. And why is that? That is because if you survive turbulent times then you definitely learn how to manage a business given any other time or scenario. The tough times teach you. On the contrary if your startup has flourished because of the boom period then it will be difficult for you to sustain in times of drought.
What do GE, Disney, HP and Microsoft all have in common? They were all startups that took off the ground during steep declines in the U.S economy.
The Best Sector
If we take a close look at all companies today, we will find out most of the companies started as outliers (extreme deviation from what their original idea was) , and then with time grew in mass and had a bunch of companies following them to form a so called ‘best sector’. Was there an aircraft manufacturing sector before a Boeing? Not really. So the tip here is not to worry about the sector, just do your business where you have a sustainable competitive advantage in what you’re offering.
Investors
Always keep in mind that investors have different motivations from entrepreneurs. As an entrepreneur, you want to build a company over a long term and as an investor, you want to exit with a good value over the next 7 years (entrepreneurial investors are really rare to find).
Your first option should be getting your funding from customers (revenues i.e.) And if you need outside investors then keep in mind the time frame in which you have to generate real value and a ground-breaking idea that will get you an actual investment. And of course, shape your pitch according to different investors – be a good marketer.
photo credit: Ahmed Rabea
The decision to extend the scope of your business by launching a startup must be a result of thoughtful consideration of various factors – financial, logistical or even emotional readiness. Launching a startup from an existing business can be as overwhelming as launching a startup from scratch, after all, your existing business reputation is at stake.
A common practice is to launch a startup relating to your existing business. For example: If you’re an existing subscription based social networking website for teens and you decide to ‘startup’ a social networking website for working moms.
The chief advantages of launching a startup from an existing running business are;
1. Familiarity with the whole ‘starting up process’ – chances that you already know some of the challenges and issues that may come up in the process.
2. An existing community for your product/service – knowledge of the industry and experience will help create a buzz for your new offering.
3. Funding will become easy (bootstrapping or external investment)
4. Expansion of revenue stream
For more information on the above idea visit:
http://thestartupist.com/2010/01/launching-a-startup-from-an-already-successful-business/
photo credit: Spencer E Holtaway
My definition of a ‘startup’ was quite clear until recently when I saw Facebook being awarded the ‘Best Overall Startup of the Year’ by TechCrunch. Yes all of us love Facebook and Zuckerberg (CEO of Facebook) but will you categorize Facebook as a Startup? The Crunchies awards have raised a debate and questions like what is a startup and when does a company stop being a startup have started gaining heat.
These are the exact questions that came into my mind as well – when does a startup 'stop being a startup' and becomes a business/company. What criteria’s define a startup?
Is it defined by:
1. Time? – the number of years into existence
2. Valuation? – post billion dollars you’re not a startup?
3. Staff size? – the number of employees
4. Profitability?
5. Traffic? (probably number of views per month)
If we talk about Facebook; it has been into existence for five years, 500+ million dollar funded ‘company’ and a staff of around 1000 employees.(Source: Crunchbase) I wouldn’t classify Facebook as a startup considering these points.
A startup starts with the intent to build X. Once they build X, they become a business that sustains and grows X (Facebook falls exactly in this category of sustaining and growing its product).
X may be a product, a service or may be a new approach to an existing problem. Once they move from the first stage of building to having to sustain it, it becomes a business (and doesn’t remain a startup).
Fore more information on this topic you can check:
http://bx.businessweek.com/facebook/view?url=http%3A%2F%2Frashmisinha.com%2F2010%2F01%2F09%2Fwhat-is-a-startup-is-facebook-still-one%2F
http://www.techcrunch.com/2009/01/10/congratulations-to-the-crunchies-winners-facebook-takes-top-prize-for-second-year/
Facebook is a revolution in the social networking and Web 2.0 world but it cannot be categorized as a startup (not anymore). TechCrunch could probably rename the award as ‘The Best Overall (Web/Software) Product’.
Going by the numbers, it’s easy to say 2009 was the year social networking went mainstream. After all, if Facebook were a country, it would be the world’s third most populated, behind China and India. And because of this trend, businesses began to adopt social media in 2009 and are likely to get more involved in the New Year.
To keep in pace, most of the startups also jump on this lovely, brightly-colored social media bandwagon. So are startups doing the right thing by blindly following the ‘social media movement’? A lot of experienced consultants would say it all comes down to the approach you take, which is very true.
As a startup, being overly invested in social media can be detrimental to your growth. Also, you have a few resources to spend namely tech resources and number of hours in a day. Startups should look at social media in a different light – instead of jumping in and asking “how can it help us” ask “do we need this right now”. Larger companies have bigger resources, so as a startup you can’t compare or copy what they do.
Social media is here to stay – and at certain times, when used in certain ways, it can be very effective. But startups should learn how to prioritize and have a look at the ‘Terms of Use’ of Social media. The following article gives more insight on the subject:
Start-ups also have a ton of options. They really are entering with a clean slate most of the time and, often, a huge number of resources. They have investors, boards, friends, family, old colleagues, old networks, etc., all pushing for them and offering a helping hand. So when it comes to deciding where they want to invest their energy and call in those favors, it can get tricky.
