3 Powerful Business Plan
3 important tips about the BIG 5 challenges facing many entrepreneurs.
The BIG 5 challenges are: raising funds, starting up, making more sales to grow the business, building strong systems to run the business, and hiring and keeping the right people.
All of these tips come from insights and conversations we’ve had inside our private members’ area during the week.
Today’s tips are about raising capital, making more sales, and starting up a business.
Here they are:
RAISING CAPITAL – how much is your business worth?
After months of trying to raise capital, you have now found an interested investor.
He is ready to write you a cheque. But there’s a problem.
In return for the $200,000 he’s about to invest, he wants a 40% equity in your business.
At 40% equity, the business you have laboured to build for 4 years will only be worth $0.5 million.
But you believe your business is worth at least $2 million. So, you’re not prepared to give the investor more than 10%.
In the end, you didn’t get the money because the two of you could not agree on a valuation for your company.
This is just an example of how many entrepreneurs miss out on funding opportunities because they are not prepared.
Imagine what could have happened if you walked into that meeting with a business valuation report in your hand.
A valuation report uses objective measures to estimate the value (or range of values) of a business.
However, the most important job of a business valuation report is to set a baseline for negotiations between you and potential investors.
That's the only way to avoid the kind of disagreements and arguments that can kill a deal.
This week, Fatimah, a member of our private group, shared a similar experience and wanted to know what a business valuation report looks like.
So we released two real-life samples of business valuation reports that have been used by some of our clients to engage and negotiate with investors.
One of the samples is for a startup business, and the other is for a growing business.
The reality is, most investors are masters at valuation, but many entrepreneurs just don’t understand valuation.
So, when you put an investor and an entrepreneur in the same room to negotiate a deal, who do you think will come out with a better deal?
If you’re an Insider, please log into the private members area so you can see the real-life samples and adapt them to your business.
On top of that, you can take the full course on business valuation so you can confidently defend your valuation before investors and get a good deal.
SALES – who should you be selling to?
Have you ever wondered why some people fly first class?
For goodness sake, everybody on the plane will get to the same destination. So, does it really matter what seat you have on the plane?
Still, some people pay 3 times the price of an economy-class ticket for a first-class ticket.
Do you know why?
You see, one common mistake entrepreneurs make is they treat all their customers the same.
But guess what: some customers are actually much more valuable than others.
Because airline companies understand this strategy, they use it well to boost their sales and profits.
But many businesses are doing the opposite: they’re treating all their customers the same when some customers could be happy to pay much more.
So, the first step to boosting your sales with this strategy is to know how to identify potential first class customers and understand what motivates them.
That’s why this week, I released a new advanced lesson on sales.
It’s a lesson that will open your eyes to how to assess potential customers (and existing ones) so you can spot those ones who will be happy to pay you more for a first class treatment.
If you’re an Insider, please log into the course area and watch this advanced lesson.
I’ll be looking forward to your questions in the comments area below the video. They are different ways we can get creative with this interesting sales strategy.
Remember, if you’re treating all your customers the same, you’re definitely leaving money on the table.
STARTING UP – do you really need a business plan to start a business?
Some people think business plans are a waste of time.
Most times, before you finish writing your plan, the market may have changed and the business opportunity may be lost.
Some other people think business plans are critical to business success.
After all, what kind of person invests their time, money and energy to start a business without a plan?
The problem is, if you follow any of these two pieces of advice, you could run into trouble.
That’s because every business is different. And more importantly, every entrepreneur is different.
This week, Fatimah, one of our Insiders, asked this same question inside our private members’ area. She’s about to start a renewable energy business.
In my response, I break down the key factors you should consider before investing or wasting time in a detailed business plan.
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