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HOW TO GATHER ENTREPRENEURAL RESOURCES FOR A NEW VENTURE


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Determining what resources for a new venture are needed, when they are needed, and how to acquire them is a critical piece of a feasibility puzzle.
Start-up resources include:
(i) People such as the founding team, advisors, and independent contractors.
(ii) Physical assets, such as equipment, inventory, and office or plant space.
(iii) Financial resources, such as cash, equity, and debt.

The goal is to create a mixture of resources that will allow the new venture to start and operate until the income of the business produces a positive cash flow – that is, until income exceeds expenses. One of the secrets to success in constructing this resource mix is to maintain flexibility by owning only those resources that cannot be obtained by any other means. Owning a resource reduces the entrepreneur’s flexibility and mobility. A dynamic marketplace, coupled with the inherent chaos of a start-up venture, requires that a new venture remain lean so that its products, services, and strategies can be tested and modified quickly in response to customers’ feedback.
Bootstrapping is a term often applied to the minimizing of resources. It simply means that entrepreneurs beg, borrow, or lease resources whenever they can so that can keep their overhead, or fixed costs, as low as possible. New venture start-up teams typically have no previous history, no track record with customers, and no evidence of performance, so their resource decision making is based solely on current information and advice from others. Consequently, many new ventures fail because of poor decisions about resources and their management.
To succeed, entrepreneurs must create innovative combinations of resources that will generate a competitive advantage and lead to the creation of wealth. Innovative entrepreneurial ventures require different types of resources from their small business counterparts.
When to raise money
Knowing when to raise money for your business is as important as knowing how much to raise and from whom to raise it. Timing really is everything. Here are three critical pieces of information you must have to make sure our timing is perfect.
1. When must you have the money in your business accounts? Normally your business needs money because of some milestone or events that are imminent.
2. How confident are you that your sales and cash flow will take you to that critical date? In other words, make sure that the date by which the money must be there is not at a time when you risk having no money in the business accounts.
3. Are you seeking money from sources that can provide it quickly, or will it take time? Generally, it takes many months to obtain funding from professional investors such as venture capitalists. Funding from private sources like friends and family is the quickest to secure.
How to identify resource needs
To identify accurately the resources required to start the venture, it is important to understand all the activities and processes in the business – in order words, to know how exactly the business works. This is best accomplished by creating a process map that details how information flows through the business. Having such a map at hand makes it much easier to define the operations, information flow, and resource requirements of the business.
To create a process map, take an imaginary tour of the business during a single day, listing all the functions, people, equipment, supplies, and space required to run the business. Begin at the front door of the business and ask the following questions.
1. Who does the work in the business?
2. Where do these people work?
3. What do they need to do the business (equipment, major supplies, space, etc.)?
4. What information is being generated (work orders, invoices, customer lists, etc.)?
5. Where does the information go?
Then begin making of tasks, equipment, and people needed to complete a particular process or activity. This information will be useful for figuring expenses for financial projections and for determining what kind of personnel will have t to be hired to perform those tasks.

In a packaging solutions business, for example, what is the first thing a customer sees when he or she approaches the site? The sign for the business? A display window? When customers enter, is there a counter attended by someone who will answer their questions? What equipment does that person use to do his or her job?
Note that without going beyond the customer’s entry through the door of the business, a significant list of resources has been amassed. The imaginary tour is one of the best ways to begin to detail the processes in the business. Understanding how the business works should help to clarify whether the entrepreneur can employ a virtual organizational structure or whether a traditional structure is more appropriate.
All these decisions regarding resources come into play in the calculation of how much start-up capital is needed to start the business and operate it until it begins to generate a positive cash flow.

Determining what resources for a new venture are needed, when they are needed, and how to acquire them is a critical piece of a feasibility puzzle.

Start-up resources include:

(i) People such as the founding team, advisors, and independent contractors.

(ii) Physical assets, such as equipment, inventory, and office or plant space.

(iii) Financial resources, such as cash, equity, and debt.

 

The goal is to create a mixture of resources that will allow the new venture to start and operate until the income of the business produces a positive cash flow – that is, until income exceeds expenses. One of the secrets to success in constructing this resource mix is to maintain flexibility by owning only those resources that cannot be obtained by any other means.  Owning a resource reduces the entrepreneur’s flexibility and mobility. A dynamic marketplace, coupled with the inherent chaos of a start-up venture, requires that a new venture remain lean so that its products, services, and strategies can be tested and modified quickly in response to customers’ feedback.

Bootstrapping is a term often applied to the minimizing of resources. It simply means that entrepreneurs beg, borrow, or lease resources whenever they can so that can keep their overhead, or fixed costs, as low as possible.  New venture start-up teams typically have no previous history, no track record with customers, and no evidence of performance, so their resource decision making is based solely on current information and advice from others.  Consequently, many new ventures fail because of poor decisions about resources and their management.

To succeed, entrepreneurs must create innovative combinations of resources that will generate a competitive advantage and lead to the creation of wealth. Innovative entrepreneurial ventures require different types of resources from their small business counterparts.

When to raise money

Knowing when to raise money for your business is as important as knowing how much to raise and from whom to raise it. Timing really is everything.  Here are three critical pieces of information you must have to make sure our timing is perfect.

  1. When must you have the money in your business accounts? Normally your business needs money because of some milestone or events that are imminent.
  2. How confident are you that your sales and cash flow will take you to that critical date? In other words, make sure that the date by which the money must be there is not at a time when you risk having no money in the business accounts.
  3. Are you seeking money from sources that can provide it quickly, or will it take time?  Generally, it takes many months to obtain funding from professional investors such as venture capitalists.  Funding from private sources like friends and family is the quickest to secure.

How to identify resource needs

To identify accurately the resources required to start the venture, it is important to understand all the activities   and processes in the business – in order words, to know how exactly the business works. This is best accomplished by creating a process map that details how information flows through the business. Having such a map at hand makes it much easier to define the operations, information flow, and resource requirements of the business.

To create a process map, take an imaginary tour of the business during a single day, listing all the functions, people, equipment, supplies, and space required to run the business.  Begin at the front door of the business and ask the following questions.

  1. Who does the work in the business?
  2. Where do these people work?
  3. What do they need to do the business (equipment, major supplies, space, etc.)?
  4. What information is being generated (work orders, invoices, customer lists, etc.)?
  5. Where does the information go?

Then begin making of tasks, equipment, and people needed to complete a particular process or activity.  This information will be useful for figuring expenses for financial projections and for determining what kind of personnel will have t to be hired to perform those tasks.

 

In a packaging solutions business, for example, what is the first thing a customer sees when he or she approaches the site?  The sign for the business? A display window? When customers enter, is there a counter attended by someone who will answer their questions?  What equipment does that person use to do his or her job?

Note that without going beyond the customer’s entry through the door of the business, a significant list of resources has been amassed. The imaginary tour is one of the best ways to begin to detail the processes in the business. Understanding how the business works should help to clarify whether the entrepreneur can employ a virtual organizational structure or whether a traditional structure is more appropriate.

All these decisions regarding resources come into play in the calculation of how much start-up capital is needed to start the business and operate it until it begins to generate a positive cash flow.

tors such as venture capitalists. Funding from private sources like friends and family is the quickest to secure.
How to identify resource needs To identify accurately the resources required to start the venture, it is important to
understand all the activities and processes in the business – in order words, to
know how exactly the business works. This is best accomplished by creating a
process map that details how information flows through the business. Having such
a map at hand makes it much easier to define the operations, information flow, and
resource requirements of the business.
To create a process map, take an imaginary tour of the business during a single
day, listing all the functions, people, equipment, supplies, and space required to run
the business. Begin at the front door of the business and ask the following
questions.

1. Who does the work in the business?
2. Where do these people work?
3. What do they need to do the business (equipment, major supplies, space, etc.)?
4. What information is being generated (work orders, invoices, customer lists, etc.)?

5. Where does the information go?
Then begin making of tasks, equipment, and people needed to complete a particular process or activity. This information will be useful for figuring expenses for financial projections and for determining what kind of personnel will have to be hired to perform those tasks.

In a packaging solutions business, for example, what is the first thing a customer sees when he or she approaches the site? The sign for the business? A display window? When customers enter, is there a counter attended by someone who will answer their questions? What equipment does that person use to do his or her job?

Note that without going beyond the customer’s entry through the door of the business, a significant list of resources has been amassed. The imaginary tour is one of the best ways to begin to detail the processes in the business. Understanding how the business works should help to clarify whether the entrepreneur can
employ a virtual organizational structure or whether a traditional structure is more appropriate.

All these decisions regarding resources come into play in the calculation of how much start-up capital is needed to start the business and operate it until it begins to generate a positive cash flow.

Bernard TaiwoBernard Taiwo
Bernard Taiwo
I am Management strategist, Editor and Publisher.

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