Month: May 2020

Categories
Finance

Transform Your business Creditors Into Investors

Steps to build and grow a personal brand. | File Image
Steps to build and grow a personal brand. | File Image

How to make your Creditor an Investor in the business?

It is always an unnerving experience when you have to make your business creditors an investor in your company. However, getting an investor on board can help grow your business in many ways- from an increase in inventory to experience in the trade and even talented human resources. But why will someone invest in your company when he can give you that money on loan and earn interest out of that.  Here are some tips on how to transform business creditors into investors:

1. Adaptable Business Plan

  • The business environment is highly dynamic and keeps changing. In this scenario, new opportunities will also arise and with these changes your business will also grow along with a rise in your market share and revenue.
  • But there could be times when there is a slowdown; hence your business plan should be adaptable to the best and worst circumstances.
  • This gives your creditors in business the confidence that the company will be able to survive during harsh times as well and will lure him to invest in it.

2. Financial Performance

  • Financial viability plays a key role for anyone to invest in a business. You need to prove to the investor that the company is financially healthy especially when you are seeking funding from a bank or a venture capitalist.
  • It is the potential high returns that will make them cross the bridge from a business creditor to a business investor.
  • An investor should be guaranteed his money is safe and this can be done by showing proof of the assets and liabilities, revenue streams, acquisition cost etc. 

3. The Role of the Investor

One thing both you and the investor should be clear about is that what is expected from the investor. Is it only money or is there something else lacking in the company. The objective needs to be defined clearly as this can help business creditors turn into investors. 

The objective needs to be defined as to what is the purpose of capital requirement. For e.g.

  • Develop new product line/Business expansion
  • Bring in specialized human resource talent, hence hire additional employees
  • Spend on branding and marketing
  • Or bring in the experience and background of the investor to grow your business

4. Company/Product Uniqueness
 

  • If your business creditors can envision the problem you are trying to solve through your business model or product and how large the market size of that problem is, then surely they will be interested in switching sides.
  • If your business has a competitive advantage and you can also offer something exclusive to the business creditors such as marketing and distribution rights of a region, it will be a bonus incentive for them to join in. 

5. Exit Opportunity
 

  • If you want to transform business creditors into potential investors, they need to see a viable exit opportunity as well in your business.
  • While they are rooting and supporting your business, they are also looking for a return on their investment. Also, be sure of what you want out of the exit as well.

Business creditors can always be potential investors, but you as an entrepreneur need to make sure that there are enough substance and uniqueness in the business for creditors to take the plunge into investment. The idea is that it should be a win-win situation for both you and the creditor. 

Categories
Process & Business Expansion

How to Create a Successful Subscription Business Model

How to Build a Successful Subscription Business model

We all have realized that the Subscription business model is here to stay. A large number of businesses are moving from a product economy to a subscription economy. 

Why does a subscription-based business model work?

There are 4 factors that we can attribute to this:

  1. It gives you the opportunity to move towards a recurring revenue model. The model is devised in a such a way that the customer will have to pay monthly, quarterly or yearly for your product and service and if you keep providing him quality, chances are higher that there will be a repeat subscription
  2. It allows you to constantly engage and connect with the consumer. Business-customer relationship should not be limited to just a single point purchase
  3. New revenue streams can be created from the current customers by adding more services to your product
  4. A subscription business model can make you take the plunge into digital which can help you save a lot of cost and can help you scale faster

Now if you have chosen to walk the subscription path, you still need to work hard on your product, on your pricing and your service to make sure it is a success. Here are a few tips to succeed using a subscription model

1. Align your Pricing with the Business Goal

  • Pricing is the most important strategy in a subscription business model to make sure your business is a success. It can help you in a lot of ways to acquire new customers, create more revenue streams from existing customers and also make sure the retention rate is high.
  • Structure your pricing tiers on the basis of monthly, quarterly or a yearly based subscription model
  • Also take into account other factors like usage levels, loyalty, new schemes
  • You can start with some basic pricing tiers & adjust it over time keeping in mind customer feedback

2. Bring in Uniqueness

  • Provide the customer with new products and services that add value to them
  • In a subscription-based business model, customer sometimes might not know about the differentiating services provided by you. Spell it out through constant alerts to prospective clients
  • Your product needs to constantly connect with the consumer for it to work

3. Give the Consumer Convenience

  • Today most companies that provide anytime, anywhere convenience to the customers are the ones making money
  • For e.g. All OTT platforms like Netflix, Amazon Prime, and Hotstar give the consumer an option to watch shows/movies anytime and anywhere. Netflix has also devised a pricing strategy for content watching for mobile-only users. This is cheaper than its usual monthly package.
  • Provide the consumer with variety at the click of a button

4. Streamline Cash flow & Billing
 

  • In a subscription based model most of the cash being received by you is upfront, the maximum credit cycle is also 30-45 days. Hence, make sure you are rotating your cash efficiently
  • Bring in automation and software to ease our the billing process and optimize cash collection

5. Build Customer Relationships

  • Customer Relations form the basis of every business and similar is the case in a subscription business model
  • If the customer is not happy with your product or service he will cancel the subscription for the next time. Hence, innovation and building strong relationships is key
  • Get to know your customer well and then design products for him. This will also help in deciding the pricing strategy

6. Give your Customer a Choice

  • In a subscription business model, the one size fits all strategy might not work well for everyone. Hence, give the customer a choice to choose a specific service or a specific pricing tier according to their likes and needs
  • This will help you attain more customers as paying according to choice will appeal to your target audience

Every entrepreneur wants a regular income in his business for positive cash flow and business growth. Subscription based business models provide the perfect platform to enable that ambition, but the cheery on the cake will always lie in your product quality and customer satisfaction.

Categories
Process & Business Expansion

Learn How to Start Your Company From Scratch

स्टार्टअप
स्टार्टअप

Start a Company with Ease!

Every business has to start from the very beginning, and it’s the passion behind it that drives you to start something and be your own boss. Starting a company from scratch need not be complicated, but requires a lot of planning and backend work. Here are a few tips on how to start a company from ground zero.

1. Research & Refine your Idea

If you are thinking about how to start a company and set a business, you must be having an idea. Thorough background research of the idea is critical

Analyze what market leaders are doing in that space and learn from their mistakes 

Talk to a lot of customers, understand their pain point and try to solve that problem

Conduct surveys, hold focus group meetings and research SEOs

2. Prepare a Business Plan

After researching your business idea, the next phase is preparing a business plan that reflects steady & realistic growth

Don’t rush into things before understanding the key aspects of a business. For e.g. 

  • What is the objective of your business?
  • Your defined customer base
  • Price points
  • Sales projections
  • Operational costs
  • Market Strategy

All this has to be a part of a well-defined business plan

3. Choose your Business Structure

This is very important before you decide to start a company. There are a few structures that SMEs can choose from:

  • Sole Proprietorship where you are the ultimate boss and the cost of setting up is the least
  • Partnership- Where you can start the company with a friend, family member or a business partner and decide your profit and loss sharing ratio
  • Limited Liability Company (LLC)- This is a popular choice for small to medium sized businesses. The cost of set up is not very high and there is a separation between the owners and the company

Once you choose a structure, register the company and follow all mandates to make it official

4. Make a financial breakdown chart

If you are starting a new company, you need to address finances and see how the funding will take place 

One of the ways to do this is to prepare a break-even analysis. This is essential for financial planning to know when your business will be profitable 

The simplest way to do this is to calculate your fixed costs and your variable costs and get the difference between the two

Set a financial goal, this will help in keeping a check of whether you are stretching your budget or there is room for margin

Keep a list of the funding options available to you and at what stage you would like to use them

5. Build a Founding Team

Human resources are important to every business and an entrepreneur should be clear that he cannot manage all the functions

Get together a team by assessing their strengths and weaknesses, so that everyone is an asset to the company

Delegate work effectively

Incentivize the team so that when the company grows, they also benefit from it

6. Improve on the Go

Once you have clarity on all your initial steps, there is never a better time for starting up. Improvisations can be made as you go along. 

Most successful companies have launched with imperfections but that did not deter them from adapting to the changes

Learn from the journey and enjoy every bit of it!

7. Decide a launch Strategy

Once you start a company and your product is ready to hit the market, be clear about how you want it to launch

Think about media spends and the mediums you want to use, how do you want to market the product initially and grow it phase by phase

Start branding yourself using social media. Build a following on Facebook and Instagram to create the initial buzz  

Build a logo, create a website and let people identify with your brand

8. Feedback is Essential

Once the company has started and you have launched your product, let people use it and give feedback. A perspective from the consumer will help you see the product in a different light

Customer feedback will help in improving your business 

There is no perfect route to start a company and grow your business, but a killer instinct and the ability to adapt will help you achieve success. Have a quick problem-solving approach as you will

be constantly competing against time. Don’t rush into things and you will be on your way to building a company that you always dreamt of.