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Author Archives: Bhavin Gandhi

About Bhavin Gandhi

With MBA and Masters in Computer Science, Bhavin Gandhi has over 10 plus years of business experience in various aspects of Leadership and Management roles in private and public organizations. Through his blog, Bhavin will try to help people to better manage, lead and organize their businesses and lives, in the 21st century.

How to make a perfect business plan that appeals to Venture Capitalists (VCs)?


RaiseCapitalForYourBusinessAlthough every small business (or startup) should always have a live business plan, which they can show it to their future investors at any time; most of the businesses don’t have a targeted business plan, which can work for them while acquiring some funding. All of the investors will be looking for a slightly different information about your business. While you can’t make all of them happy with a single business plan, there are some common things that all the VCs firms are looking for. Thus, in this blog I will share with you some basic information that can help you acquire some funding from a VC firm.

Advertise your executive team: In addition to your understanding of the market, your customers, and the problem you solve, most of the VC firms are looking for the leadership team and their capabilities to do the business. They are mostly looking for your leadership team and why are they qualified to execute your idea? Thus, it would be a good idea to provide some visibility into the work history, networks, skills, and any previous successes of your executive team members on the first/second page of your business plan.

Explain your finances: Most of the venture capitalists (VCs) are from some financial background. They are more interested in making their money grow. And hence, your business plan should focus on basic financial questions. If possible, your business summary should answer few questions, such as – How does your business make money? Who pays for the expenses? How much do they pay? And, when do they pay? What are your expected revenues and expenses? How long do you anticipate this round of funding to last? Etc.

Explain your future plans: Most of the VCs would like to know where their investments are going. Thus, you should be ready with the answers to the questions, such as – How much capital are you trying to raise, what are you going to do with it? Are you looking for money to develop your team, for overhead, or to expand? What is your vision for the future? Have you established milestones for the next two or three years? Etc. If possible, outlay your milestones in your business plan itself, most VC firms would like to keep track of those milestones and hold you accountable for meeting them, if they choose to invest in your company.

Have something to demo: Most of the VCs are visual people. And they are most likely looking for a demonstration that can display how your product works. They want to make sure that they understand how your product works as compared to similar products in the market (if any). At the very least they’ll want to see a mockup. Thus, have some kind of a write-up ready, where you can clearly differentiate how your product differs from your competitors. Having some competitor’s products handy can be a good idea as well. In this way, you can clearly differentiate your product features from your competition. It makes it easier for them to visualize the clear picture.

Having a good idea isn’t enough to make your startup up-and-running. I hope, my tips will help you to create the best business plan for your venture, so that you can make your dreams come true. Please share your comments here, if you agree/disagree with my blog.

Thanks – Bhavin Gandhi

 
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Posted by on November 27, 2014 in 21st Century, Leadership, Management

 

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Self-management for the self-employed


Those who are self-employed will understand that keeping on top of financial affairs is of the utmost importance. For those who are just starting out, this can seem a very daunting task, but there are ways of keeping the whole process manageable so that it does not completely take over. It is important that tasks like this are completed without the need to take time away from other essential aspects of running the business such as marketing and actually doing the work.

Getting – and staying – organized

It is very important when self-employed to keep proper accounts. Noting all incoming monies and expenditure is essential, otherwise it would be too easy to fall into the trap of having more going out than is coming in. If possible, a qualified accountant should manage this side of the business. While some small businesses may be concerned about the cost of hiring an accountant, most find that effective management of taxation can actually save them money in the long term.

The right accounting software should be used and all invoices and receipts input as soon as possible. This allows for checking of the system in real time and makes tax returns and other administrative functions far easier. It will also help to show when bills are due to be paid so that nobody ever needs to knock on the door to demand what is owed to them. One of the easiest ways to stay on top of this task is to dedicate a set amount of time each week to entering data. This should take no more than a couple of hours, but if it is left for any length of time it could begin to amount to several days’ worth of work.

Getting a helping hand

If the thought of dealing with taxation is too much to bear but being employed by another person is also too much, then there is middle ground that will suit. The use of an umbrella company is the ideal solution for those who want to work for themselves but at the same time need the security of knowing that they do not need to complete taxation paperwork themselves.

The freelancer or contractor registers with the umbrella company and becomes an “employee” of the company, which then deals with income tax and national insurance. The company will also deal with invoicing and collecting payments on the freelancer’s behalf. This means that the freelancer is able to spend that time dealing with building their business without the burden of too many administrative tasks. For that self-employed PAYE is still an option.

The important point is that freelancers are not put off going it alone by the thought of endless amounts of paperwork. Many people dream of becoming self-employed and, therefore, independent but, without the right approach to the administrative side of the business, the dream can unravel very quickly, so finding a solution that suits the needs of the business is essential.

 
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Posted by on September 16, 2014 in 21st Century, Leadership, Management

 

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Benefits of getting funding for your business from a venture capitalists (VCs) firm.


In my last blog, I have provided you with multiple reasons on why you shouldn’t consider takVenture Capitalistsing funds from a Venture Capitalist (VC). Apart from the constant stream of funding from these VCs, there are other benefits that comes inherent with working with VC firms. And hence, in this blog I would like to tell you the other side of the story.

Free management consulting: If you are a first time business owner, or slightly weak in handling all the aspects of the new business, then it might not be a bad idea for you to pick an experienced VC with some knowledge /expertise that you might not have. If you pick a VC, who has started his/her own business before, then he might be of a great help in writing a strong business plan, making a killer product, or keeping your finances straight.  In order to get the best VC for your venture, do your self assessment first, and then find out a partner who compliments you. Because most VC firms will have equity in your firm, their desire to help manage your company could be a boon to you if you don’t have those skills.

Access to free workforce: Most of the time, as a new business owner, you might not know everything that you need to know about opening up your own business, but you can get some outside help. And this kind of help is mostly available with many VC firms. Most of the VC firms provide expert business consultants on their payroll who can help you with things like marketing, distribution, research, and more. Having this open channel of help with the expertise that your organization might lack can improve your ability to compete in your space.

Find the brightest talent: Recruiting intelligent and hardworking people for your startup is going to be a challenge for you. But if you have a well connected VC as your partner, then the firm can help you find people with the specialized skills needed to help your business grow. Some firms even have HR people to help the companies they’ve invested in staff key rolls. This can be of huge benefit to you who want to mitigate the risks associated with hiring the wrong people for key rolls.

Although your banker or other financing source has an interest in your success, sometimes you will be better off by taking the funding from a VC firm, for all of the above reasons. Please share your comments here, if you agree/disagree with my blog.

Thanks – Bhavin Gandhi

 
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Posted by on August 13, 2014 in 21st Century, Leadership, Management

 

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Why should you not take funds from venture capitalists (VCs)?


Venture CapitalistDuring my career, I have helped numerous businesses in creating their business plans and acquire their initial funding. Though most of the time, I have connected these new business owners with the venture capitalists (VCs) that I knew, it might not be the right kind of the funding option for many businesses. Following are the few reasons for that.

Selling your equity: I don’t think that giving up your equity is necessarily a pitfall if your investors have the knowledge and the contacts required for your business. VCs can sometimes help you build a thriving and growing business. But they can have many pitfalls as well. Most VC firms require you to give up an equity position. It won’t be small part of your business as well, most of the times they are looking for at least 30-60%of the equity in your business. If you (by chance) choose a wrong investor, then it might create future problems while  selling your company.

No immediate funding: Unlike the bank loans and other kind of funding, VC’s funding is not immediately available. Most of the VCs set goals and milestones for the release of funds. 80% of the time, funding is released in stages and is usually allocated for growth and expansion of the business. I’m editorializing here, but expansion with an eye toward sale or public offering might not always be the best kind of growth.

You are not the only manager: Most of the time, VCs want to be added as a member of your company’s executive team. Don’t get me wrong, this is not always the worst thing to happen. If this is your first business venture, an experienced VC on your executive group will be a huge help. But you can also be put in a difficult situation, if you guys have any disagreement regarding a decision. Most of the VCs wants to lead the company to the path that will reap their anticipated financial reward, not necessarily the best decisions for the company’s future.

Business secrets become public: When you approach a bank or other small business finance company, it’s customary to expect that they will sign a non-disclosure agreement regarding your business plan and what you want to do. This is not the case with venture capitalists. As I have mentioned earlier, most of the VCs want to be invested in the company in the executive position, or as a decision maker, and hence, most of the time they refuse to sign such agreements.

You can’t call all the shots anymore: Don’t get me wrong. Having multiple people on your board of advisory will help you to understand multiple opinions (view points), and then take an educated decision. But if you happen to choose a wrong investor for some reason, that might not workout well for you. One of the biggest challenge that you will face after accepting the funds from a venture capitalists is to give up many of the key decision taking powers, which you would otherwise have. VCs usually want a lot of influence over key decisions and they don’t always agree with the founder. Their equity position gives them a seat at the table when it’s time to make important decisions.

I hope, my view points will help you to think twice before accepting some kind of a funding from VCs. Please share your comments here, if you agree/disagree with my blog.

Thanks – Bhavin Gandhi

 
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Posted by on July 15, 2014 in 21st Century, Leadership, Management

 

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Practical ways to make your Team Meeting more interactive.


Team MeetingWe have all been a part of some kind of a team meeting in our lives. Though these meetings often start as an interactive exercise between you and your team members, they tend to turn into some boring status meeting down the line. As a manager, I am also guilty of making my team meetings boring. For example: When I first took over a completely new team, few of my team meetings were very interactive, where I was trying to understand my team’s needs, and my team member’s working styles. I used to ask them bunch of questions and make sure that their inputs are heard. But after few months, I got used to my team and their working styles, and hence, my focus shifted on improving productivity and eliminating issues. Obviously, as a manager we should be focused on our priorities, but we should always consider the team meeting as the opportunity to make relationships between our team members, and refocusing them on our company’s vision.

Invite guest speakers: By this, I don’t mean to say that you should go ahead and start spending your company’s dollars on inviting motivational leaders to your team meetings. Though once in a while, it wouldn’t hurt to invite someone, you can’t sustain this expensive initiative for long. So, my suggestion is to invite the guest speakers from your own company. If you work in a medium size companies like mine, you won’t run out of options. And this initiative will not only help you in building good relationships within your company, but it will also educate you and your team about the roles and responsibilities of other teams within the organization.

Recognize others: This is not that obvious. I am sure, as a manager, you must be recognizing the work of your employees during the your team meeting, but you might not have given this opportunity to your employees so that they can recognize their peers. Though the concept of this idea is very simple, it will do wonders during your team meetings. This approach will open up the communication between your team members, and help you build the trust relationships within themselves.

Leave with a positive note: After 3-4 months of taking over a new team, my team meetings have also become boring and predictable. And due to the nature of work that we do (testing), we were in the forefront of all the bad news about our products. Due to this, most of my meetings were very negative, and we came out of the meeting as if everything is coming to an end. So, I have implemented a simple but efficient solution. At the end of every team meeting, I required all of my team members to come up with at least one positive thing about their work during this past week. It did sound cheeky at first, but after few weeks, all of our team members came out from the meeting with something positive about themselves, and their overall attitude had changed towards their work.

Give a pizza party: I am not expecting you to provide pizza during every team meeting, but it wouldn’t hurt to provide food during some of your team meetings. I try to do that twice a year, once in the summer and once in the winter. Shifting your team meetings to lunch time and ordering some food for your team will provide them some motivation, and eating together with the team members will provide them the opportunity to socialize within themselves. In order to not make this an awkward event, combine this activity with some other interactive activity like “5 things about you”, “Things you would like to do outside of work”, “Your major accomplishments in life”, etc.

I hope, these simple activities can help you make your team meetings alive again. Do you have any other suggestions?

Thanks – Bhavin Gandhi

 
 

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How can you raise some capital for your business without selling the part of your business?


RaiseCapitalForYourBusinessEvery day, thousands of small businesses and start-ups wrestle with the challenges of finding the cash that they need to finance the growth of their business. But most of those new business owners don’t know what are all the avenues that they have at their disposal for getting some cash. Thus, in this blog post I am going to provide you with few ways through which you can raise some capital for your business.

Ask your friends: This is the easiest way to raise some money. Most of the startup businesses start by taking some money from their friends or family. I know, it is really uncomfortable to ask some money from your family/friends, but it doesn’t hurt to ask. Don’t just go and ask them for money. Try to explain your business plan to your friends, and tell them about your strategy to pay them back. This approach provides them with more confidence in investing in your business.

Real estate loans: These are simpler kind of the loans that anyone can take for their business. These loans are based on the value of the real estate offered as a collateral. Most of the first time business owners take these kind of loans by putting their primary or secondary residence for collateral. But you can also include office buildings, warehouse space, retail storefronts, industrial facilities, and stand-alone buildings in the mix too. This might be the easiest way to take some money out of your existing assets.

Equipment financing: Let’s say, you are opening up a manufacturing plant, and you require some money for buying a new equipment, then you can use this particular way of financing to finance your business. When you finance an equipment, which are  strictly used for your business, the equipment purchased, itself, can be considered as a collateral for the loan. Although equipment financing is used exclusively to acquire business-use equipment, it is sometimes used to obtain cash by borrowing against business equipment you already own.

Merchant cash advance: Most of the small businesses in good standing can borrow some cash against their future earnings. Once you get that kind of financing, you can repay that loan by a daily/weekly withdrawal from the business merchant account. Repayment terms are typically six months to a year. For more information about this kind of a financing option, please visit this link.

Franchise loans: If you own a franchise like Subway or Mc Donald, you can opt for this kind of financing for your business.  These loans are similar to common business and commercial loans, but they are generally designed to finance the purchase of a franchise that can demonstrate an established history of profitability. Since this kind of a loan is dependent on the sale of the established franchise, these kind of loans are comparatively easier to get.

Microloans: There are various services available out there for Microloans. These kind of programs generally provide very small loans to new businesses or for some small business growth. Most of the lenders are non-profit organizations that offer government funding, while others are private investors who wants to invest some small amount of money in a small business  in return of some interest. For more information about these kind of loans, please check out this link.

I hope, my tips will help you to raise some cash without selling the part of your business to a heartless venture capitalists. Please share your comments here, if my blog has helped you in finding your own cash.

Thanks – Bhavin Gandhi

 
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Posted by on May 26, 2014 in 21st Century, Leadership, Management

 

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5 Minutes Plan: Design an effective marketing plan for your small business.


MarketingOver the years, I have seen many start up companies investing large amount of money in their marketing strategy without knowing how exactly it is helping them in selling their products/services. If you are one of those Entrepreneur, you might want to continue reading. In this blog, I am going to provide you with one simple and easy method to calculate your marketing ROI (return on investment), and how to make your marketing dollars work for you.

For many small businesses marketing ROI and customer acquisition costs are mystery figures, yet they are the key ingredients to making decisions concerning marketing expenditures. Questions such as, “What should I give away as a free bonus?” or “How much should I spend on ads for the last quarter?” are answered based on the understanding of the lifetime value of a customer.  So, lets just start with a simple example to calculate new customer acquisition costs.

Let us assume that your total marketing costs for the previous year was $100,000. Now, count how many new customers you did business with last year. Let’s assume that you did business with 5,000 new customers. You can now divide your marketing costs by the number of new customers to determine your cost per customer. In our example, it would be $100,000/5,000 = $20.00. Of course, this is not entirely accurate, since you are not counting the marketing impact on your existing customers, but it’s a pretty good guideline for a start.

Once you do your initial calculation, you should now start to collect some important information from your customers at the time of the sales. For example, you should be tracking how your customers came to you and what motivated them to buy from you. One easiest idea you can use is to have them (customers) fill out a survey for a lucky draw to win a small gift card. Information collected from this survey will provide you some good insight on the marketing medium that works for your business.

Let’s assume that your effective marketing medium is Internet, and let’s assume that your 60% of the new customers come through your website.  It might be a good idea for you to invest chunk of marketing expense to online marketing. Let’s assume, your business is a small business and most of your customers come through word-of-mouth advertising, you can then provide some incentives to your existing customers for a referral. In our example, you can provide your existing customer a rebate of anywhere between $10 – $20 for referring a new customer. After all, your new customer acquisition cost is $20 per new customer.  This approach will not only create a new repo with your existing customers, but it will help you in increasing your business through these spokespersons.

I hope, my tips will help in creating an effective marketing plan for your small business. Before spending your money in bunch of advertisements, please calculate the ROI of your marketing dollars first, and then make an educated decision on where you want to spend that money. Please share your comments here, if you agree/disagree with my point of view.

Thanks – Bhavin Gandhi

 
 

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