Starting a business is not an easy task especially if you have limited resources, and coupled with the economy downtime experienced by the world. Starting a business involves skills, being open minded, flexible and finally knowing what you’re doing and where you want to be. The main goal of every entrepreneur is to succeed, though success doesn’t come easy. Success in businesses is worked on and it doesn’t come overnight, it requires a lot of strategic planning, persistence and determination. However, if you want to start a business below are 5 things to consider;
Starting a new business takes intelligence, bravery, and endless hours of hard-work, hence you have to properly consider your options and know the height you intend to take the business.
A home business is the quickest and easiest type of business. Most successful business today started from the home. To begin a new business that will be successful eventually, you don’t necessarily need a big space or a huge amount of money. All you need to have is a unique and good idea with a space, then you are ready to go!
However in recent times, a home business requires certain tips to take it to the next level. Below are some tips on how to start a home business quickly;
Though home businesses were not taken seriously in the past, it’s not the case anymore as home businesses are now the fastest growing type of business today. People in general tend to love the idea of being their own boss and working from the comfort of their homes.
The art of figuring out if a business will be successful and worth investing is not an easy task, coupled with the massive amount of stagnant startups out there. Though there are lots of new businesses out there with little or no green-light regarding future success or profitability, there are still some ways you can pick a wining business and choose a startup to invest in without regrets.
Below are 4 major tips on how to choose which startups to invest in…
Investing in a new business is a big deal; hence you need to make sure you do your homework in terms of proper research and investigation before putting a penny into that business.
You should have a good financial knowledge to succeed with a startup even though you have wonderful products lined up, good SEO, fantastic sales, efficient marketing model etc. You cannot just undermine the knowledge of finance while running a business. Along with this knowledge on financial rations is essential for establishing a successful company. This knowledge should rank you up as a smart entrepreneur and investor as you will have sufficient vision for your future company. Below are seven key financial ratios you need to know.
This particular ratio points at the company’s ability to bear its debts using sufficient assets. This ratio is of current liabilities.
This ratio calculates the organization’s entire financial leverage. People measure this using the entire liabilities. It can not only be applied to financial statements that are personal, but also those of corporate ones. The company’s total debt and its total equity ratio should not more than one and a half. Anything more than this should be avoided.
This ratio is the figure that shows the overall health of the company after a certain cost, namely COGS, is cut off. The ratio shows how much money is profited from any amount earned.
The company’s earning depends a lot on the sales. The margin ratio for net profit shows the figure of company’s net profit for each dollar it earns in sales.
This ratio simply measures the firm’s efficiency in using its assets. You need to divide the number of sales by the receivable accounts to get the ratio.
This particular ratio would measure the investment efficiency.
This ratio calculates the company’s profitability with the resources and money invested by the shareholders.
These are seven main financial ratios all startups should know.
All companies need to start with an idea. To realize the dream of a successful company and leading a small startup attempt to that level you must need funding. This will not only grow confidence in you but also help expand your company. However, the traditional funding is done with the help of bank loans or personal loans. These loans often have high interest rate which can take a toll on the long run. In such situation equity investment comes very handy and reliable. Initially equity purchasing appear as creation of debt, but at a later stage it can be transformed as company shares. Let us discuss the steps of equity investment.
Pre-seed funding is the primary stage in terms of equity investment. It is usually done at the initial stage of your startup business. At this stage you might not have a large number of employees working for you, or as less as you and the other partners. Usually commercial banks do not show interest in providing loans at such stage. Alternatively, incubators may also help funding at this point. Their help may come in the form of support services.
At this step friendly investors along with initial-stage VCs may invest in the startup and provide aid to enhance the development. With money the startup starts to grow at this level. What you should do is allocating the resources in such a manner that boosts the company even more. More marketing policies can be taken.
Using pre-money and post-money valuation you need to determine the actual value of the company. This will focus on gross margin and flow of cash.
A capitalization table needs to be assembled at this point after the valuation.
The above mentioned steps are towards equity investment in the early stage of Startup.