I’ve been doing brainstorming sessions every week for the past month to get ideas for a new business. With the Economic Crisis hitting every single country in the world and with the developing of my country in particular I saw an opportunity to build a business that may have the opportunity to survive the crisis and grow as we get out of it.
The importance of creating a new business is far from simple, but they key benefits are easy to see. You’ll provide good jobs to the people that start the business with you, you’ll promote jobs in the industry (suppliers and intermediaries) and finally you’ll create an employment for yourself.
Starting ain’t easy. After thinking and analyzing ideas me and my partners came up with 2 possible ideas considering the amount of capital we have available right now (We have many more ideas that requiere more capital and that we will develop in the future). After getting the idea we decided to do a business plan, basically because we were asked for one original business plan at university as a requierment for graduation. Well it came out that doing a business plan is the best idea we’ve ever had. Putting your ideas on paper and starting to back them up with research is the best way to get to know you and your market. First of all you need to do the old SWOT analysis that is basically looking at the outer variables and inner variables togeter. External analysis gives you Opportunities and Threats and Internal analysis gives you Strengths and Weaknesses. Once you know yourself, your resources and how can you make them work on a given market you need to come up with strategies.
Michael Porter came up with a basic theory of strategies that helps a lot, then of course for the specific strategies you need to sit and think again. Coming up with the strategies for a new business it’s a very good thing to do because it makes you think in what will help your business to get costumers, how will you monetize it or create the income cashflows that will serve to keep going and how much service will you put out there.
In an economic downturn you face a market with less cash to spend and therefore and bigger challenge to attract them to use your product, so you need to innovate and the chances are that if you survive a year in an economic downturn with growing sales you can make a succesful business when we get out of it. So I encourage everyone to make a business, but for sure make a business plan so you have some base knowledge to know what to expect and to help you stick with the basic business. Of course, a business plan can be wrong and it usually will fail to be 100% truthful on what to expect, but it’s a fair approach to what will happen and it is a good approach to a map to guide the development of the business. The other important point you need to cover is the capability of reacting to changes in the market. When you analyze the key factors on the SWOT analysis you come up with key variables you need to monitor and follow closely as you develop your business and if you see that one changes you neeed to be able to react quickly.
So building a business right now it’s not a crazy idea, just make sure to plan and know if you could make it survive a year or to with the cash you have. If you don’t have enough money for a big idea scale it down, but think of a business model that has the potential to be succesful in the whole world with minor tweaks, that may help you make a good business that has the potential to be big in it’s niche or market.
For the next year I’ll be involved in launching two projects for startup businesses one in the web market and other one in the Education market with a huge potential of evolving into a webapp.
I think it’s a good idea to blog all my startup advances to share it with people that have ideas and want to turn them into reality.
The first step I’m taking is implementing a business plan model so we can have a guide of where we are going. Many people say business plans suck, and sometimes you don’t need them. That’s true, but it gives you a guide of where to go and focuses your resources and capabilities on the market you want and helps you be aware of the potential threats that may come in the near future.
Today we started by establishing our values and what we wante from the business, we came up with a mission statement and values that will lead the effort we are making. Then we proceeded to establish the resources we have, the ones we lack and did the same thing with the capabilities.
We endend the meeting as all this took us almost 4 hours, we will meet again next week and hopefully finish a SWOT analysis that will lead to determine a possible competitive advantage.
Next week I will post the second part of this planning meetings.
In the mean time I have a few questions.
What was your start up process?
Do you like to use business plans or what do you use?
Internet or Web apps are becoming a huge industry making so much stuff so easy, like for example blogging. Now everybody has a blog, of course if it’s well designed and marketed it will be better. I realized my blog posts don’t get many reads and I know why this happens. It’s all basically my fault. I created a Tumblr account and made it my bio link in my twitter page and then failed to update it, It should have been my blog, and secondly I’m always lazy to post or write long articles.
Well after that random blurb i was thinking on launching 2 podcasts, a nice blog and finally a web app. This are projects I have had for at least 6 months now. Some may be launching soon and probably the web app will take sometime, specially because I’m not in a country with much confidence in web startups, but that will not stop me.
I will have to work hard on that using platform as a service offers out there and contacting some coder around the world, which i hope to find and finally launch the startup and get some funding, even if we have to move it to the US or another country.
So software as a service, platforms as a service and the latest community as a service are all making it possible for people around the world to build lot’s of web products easily and I love how this services democratize the world in a real way. Thomas Friedman said it in his book “The earth is flat” and it is becoming more real for everyone now.
Right now I’m looking for a coder, a web designer and some co-hosts for a podcast and nice blog. I’m sure all this will start and hopefully be sustainable in the future.
So what are your projects now? Continue Reading »
So right now there is a economic downturn in some parts of the world. Many will say it’s global, but the turth is that it isn’t because there are countries growing out there (China, India and Peru). This downturn or crisis causes people to lose confidence and to stop investing and stay safe at home.
But that’s wrong.
This is the time to start winning in your business. For sure your market has slowed it’s growth or even started decreasing. So what? Well, right now i see that as a great opportunity to become more efficient in what you do. Maybe you don’t need those extra servers consuming energy or that extra I.T guy. Ok you’ll contribute to job losses, but you can also ask that guy to find a way to make himself add value to the business and become more efficient in what his collaboration is. The point is that when cash is short you find incredible ways of saving money without losing the quality of service.
You can also move to a bigger office for the same price (that’s if you’re still with high sales and profits). For example, TechCrunch found a nice office and the chance to move thanks to the downturn. This new place will be cheaper and you can make your office a good place to attract talent when the growth period begins again.
Also, many more stuff will be cheap. Let’s say for instance a company goes out of business (i.e Circuit City) you can buy all of their servers, machines, etc. for a cheap price and end up with good equipment to start making your business more efficient. You could add part time workes or even open a co working space with those extra pc’s , servers or furniture.
Finally in times of crisis is when the team can grow together stronger. You’ll have to make some tough calls as the leader and you can make them point to a goal of integration. For example, instead of downsizing your company you can tell your employees you’ll cut their salaries in a porcentage and increase them when the sales and profits increase so that all of you can go through the crisis without losing your jobs. You can also try and make integration events so people can get to know each other in order to increase trust, reduce bureaucracy and increase efficiency.
Sometimes this things are easier said than done. But, in a business things are always tough to do than what they look on paper.
In this times, not only in the countries experiencing the economic crisis but also in the ones experiencing just a slow down in growth (which means are growing slower but still doing good) there are a few ways to make a new company (a startup, a family company or even a lemonade stand) look professionaly, operate as professional in a very cheap way.
The first thing i find useful is google docs. Commonly when you start a new business you currently have a job or have other projects. Let’s say you have a job and your partners also have multiple occupations (one is a caring mother, the other one has it’s own start up and finally the other one lives on the other side of the world). So you can use google docs to share the information that is not “classified”. Then you could build presentations, documents and spreadsheets so that everybody can see the information as it’s done without meeting each other on a daily basis. The alternative will be to pass office documents around by e-mail that will end up in partial documents multiplying around inboxes.
The second thing google offers (yes, because google is that great and mainly because they make a huge effort in developing products others don’t) you can have a free e-mail service with your own domain making your business look serious. Let’s face it your company’s e-mail looks better as email@example.com than as firstname.lastname@example.org. In my opinion with that more people will take you seriously and the cost is less than $10 a year. Plus Gmail can be used in any pc or mac with free clients (like thunderbird) and in your iphone and maybe more phones will support it in the future (or maybe they already do).
Intuit offers a great platform to manage billing and accounting and many more things for cheap prices. So if your business develops a bit to the next level you can still manage growth with relative ease and for low prices. All this cut costs to say it someway can be translated in higher profits without downgrading quality of service or increasing costs for costumers.
For sure there are more tools i don’t know about. What do you use?
After a short break without blogging, mainly due to the academic load at university. I’m back.
This past weeks i have left my job at a good company and decided to look for something that i love to do. It’s sometimes hard to find something that you love to do and that at the same time pays your bills, but it’s possible.
With some freetime now I’ve been thinking about people like Bill Gates, Steve Jobs, Carlos Slim and many other millionaires who decided to do what they loved and got money to pay the bills, not only of them but of a whole bunch of people working directly or indirectly for them.
They didn’t do this alone, but they were keen enough to motivate a group to follow their ideas. If you would like to start doing something you love the best way is finding some people who love the same thing and motivate them to work with you in order to achieve your goal.
Many people don’t get to that point mainly because they never try to find people that share the same passions as them. Now with the internet you can find good people all around the world. So the process should be easier, but it seems the evolution is slow.
Of course you’ll need to get to know this people first, but i can assure that cultivating long term relationships with people you meet al around is an amazing opportunity to find people that can be your partners in the future. It’s a good way to find the next Woz or Paul Allen.
So just go out and search for someone that shares your passion. Then You’ll be ready to kick it!
Economy has been the great subject these past weeks. The financial crisis has made us start to think if the model we’ve been pursuing was the correct one or if we should change to another one from now on. Many answers have came out from diverse people, to the ones proposing a closed market to develop all again, to other ones promoting capitalism with the adequate regulation, based on what Adam Smith proposed a little bit over 2 centuries ago.
In my opinion economy should keep going with the system we’ve been using, but based on a democracy and with close regulations in the places were markets can still fail because the distribution of information is not perfect.
But regardless of the macroeconomic results we will have this coming months I’m worried for the micro economic side of the matter. Microeconomics worry about what happens to us as individuals, so this is our personal state of affairs. How much money we earn, how much do we save, how much do we spend on cars and parties, etc. In the past years I’ve learned that Micro and Macro sometimes are not related. I’ve seen countries growing at 7% annually and yet not improving the quality of life of their people, so i wonder if the opposite is also true.
In this rough times for Macroeconomics we for sure will have to cut off spending, some of us will lose our jobs (remember in macroeconomics losing your job will increase the rate from 4% to 4.000001%, but in Microeconomics it increases from 0% to 100%). But life should not be that hard if we think we are capable of getting creative ideas. In this century brains are the ones that rule, so we need to dust them off and use them as much as we can. Some research shows that humans use just 5% of their brain capacity, in these times i guess we need to start trying to use 6, 7 or 8% so we can get and advantage. Brains are dominating because talented people can build companies and millions of dollars in just a couple of years with ideas and the correct resources.
Back in the 19th century minds followed capital, now it’s the other way round. So in this times of crisis things aren’t that bad. We can’t lose it all, but we have our brains. We can come out with outstanding ideas to make new companies, associations or work clubs to produce nice ideas that will make our life easier. For example, Google has done this and followed a traditional business model. On the other hand Co-Working is doing another revolution and a business model, but with a amazing mission make people who work alone collaborate in a friendly environment. And people are still creating new things. iPhone Apps are increasing in the itunes store, from loan calculators to tax paymentd widgets. Creativity is all around we just need to let the fear go out and start to think.
So if you feel this crisis is going to be bad, forget that! Start thinking in new ideas of how to improve the quality of life without increasing the cost to the people. How to make life easier with a marginal cost or how to help people collaborate to come out with new ideas and you will do well for sure. In this crisis we need to usea our processing power to get out of it.
Economy is not based in capital or it’s based on BRAINS. And we all have one. So there is no excuse.
So continuing with my previous post about fear I will like to remember a bit of my junior classes at college about the SWOT analysis you have to do for your business or organization. I do a SWOT analysis for almost everything, I think I’ve interiorized the importance of the idea and i want to share how this process can help us focus a bit more on the important things in these times when economy suggests we do that.
This are the things you have that make you rock. Every person in the world has at least one strength that makes them rock, every company has one and everything has one too. The first thing a business needs to do these days is ask themselves What makes us rock? What makes users come here everyday? What makes users watch every episode? What makes users post comments? or whatever your result measures are.
Strengths are things people notice that makes them want your product instead of the one made by anybody else. Strenghts are the resources you have inside, are the things you can work to improve.
In this times we need to look to the strenghts and make them more powerful than ever starting with people. In the 21st century we all know brains are the most valuable asset so we need to start developing those in ways we’ve not done it before. That is our main strength, we could lose our computer, servers, HQ offices, or even our house, but we don’t lose the brains.
This are the things we suck at. It’s a very politically incorrect way of saying it, but we definitely are not doing enough to change our weaknesses into strenghts or neutral features. A weakness is a thing that will make users go away from to other people’s product or service. In the times of recession we need to value every user we have so we need to take all of our time monitoring what weaknesses we have. The best way to do this is to accept all the feedback we can, read it and act quickly to solve any problems. If you solve users problems they will most likely love you. I know i will love a company that solves my problems easily or that adapts to serve my needs.
You are allowed to have lot’s of weaknesses the only one you are not allowed to have is : lack of communication with your users.
So far all this has been written over and over again and all entrepreneurs know that they need to focus on their Strenghts and Weaknesses.
Opportunities and Threats
Right now we have lot’s of threats and many people fail to see the opportunities blinded by fear. In my last post i talked about how fear may lead people to act in ways that will cause damage to themselves and to others. On this times of economic crisis what will bring an edge to us is focusing on the Opportunities, more than on the threats. Of course we need to focus on threats, our future depends on what we do to keep them away from us. But this times bring endless opportunities. Stocks go lower and lower as people sell, advisors rate some stocks on the “SELL” list, the truth is that when you are selling somebody else is buying and it may be Warren Buffet, he understands that when the market goes down he has an opportunity to buy.
Remember a bear market brings opportunities for investors and for businesses to start focusing on markets that they didn’t saw in the first place. So i suggest you do a postive check on the world outside to see who might be interested in your product or a variation of it, what companies that may add some know-how to your organization are on sale and for low prices or what skills are being needed that you had and thought will never use.
SWOT all together
Finally if you are focusing on keeping the inside lean you will be able to react quickly to opportunities. Remember this is the theory they teach in every business school, in every first day at work or in every book about business.
My intention here is to remember that the theory may work well this time. Stop focusing or entering in panic because markets are going down and start to focus on what Strenghts you have that will make everyone keep coming to you, look at what people want from you that you are not offering (opportunities), on what other people are failing to achieve so you can do that (others people weaknesses are also opportunities) and finally focus on eliminating everything that makes you weak and a potential victim.
So if you need to take a habit these days take the one of SWOTing all you see. Starting for yourself or your business to the pet shop (you can find opportunities there). It may seem like a time taking process, but in time you will do it naturally.