10Aug
How to Approach a VC Firm

VC firms are a great way to help launch and finance your startup. If you are unsure about how to approach a VC firm, here are a few tips:

1) Find a connection/advocate
The best way to create initial contact with a VC firm is by getting an introduction. You can get referred by an entrepreneurship program such as ProMontreal Entrepreneurs, or simply be introduced by a friend or colleague.

2) Never send in your business plan
The VC firm will not read your 40-page business plan over email. Instead, once you’ve secured a meeting bring your pitch deck to the firm. If they want to know more about your business, that’s when bring out the business plan.

3) Don’t cold call, especially if you’re not ready
If you cold call a VC firm without having been introduced, you run the chances of a) not getting your call returned and b) your chances of getting a deal are close to zero. Furthermore, don’t rush to approach a VC: make sure you are ready. If your start-up is not ready and you make contact with the VC firm, you have missed your opportunity of the first impression and possibly ruined your chances of making a deal with this firm. Remember VC firms, get pitch ALL the time. Make your chance count!

4) Do your research
Yes, this point seems to appear in every single blog post, but research is important. Research the firm itself, to find out the services they offer and to make sure your start-up would be of interest to them. Furthermore, talk to companies that have already been financed by that firm in order to see what kind of experience they have had. Don’t blindly accept the first deal that comes your way. Make sure that the VC firm you approach has the connections you need to make your start-up grow.

2Jul
Optimizing Social Media for your Business

Promoting your start-up and making it go viral is now easier than ever, thanks to the multitude of social media outlets available online. As a start-up, you should use as much of these tools as possible, as they will help your business expand and gain popularity. Yes, your business probably already has a Facebook, Twitter, YouTube, LinkedIn, and Google+ account. If it doesn’t, you should get on that as soon as possible. However, you may want to consider making your start-up known on more social media platforms. Here are just a few you may want to use:Pinterest

Pinterest can help your business expand in many ways. For example, you can collaborate with established pinners who have a large follower database to help your own business grow and expand. You can also pin educational and informative boards that will establish your business as an authority in your field. By using Pinterest, you will educate people on your product and will promote it at the same time.
Instagram will work well for you especially if your start-up creates great visual content or products. Instagram lets you post pictures of your business and products. However, Instagram being a social media website, you should balance business photos with fun, uplifting photos. Fun photos do not necessarily have to be photos of cats. You can post things that are still related to your business: for example, if you sell nutritional supplements, you can post pictures of healthy foods to promote the healthy lifestyle. Remember to follow back the people who follow you on Instagram, as this will let you create strategic business relationships in the future.
Foursquare is the largest social media platform when it comes to location-focus. By using Foursquare, you will be able to make your customer base grow without doing much yourself. Let’s assume, for example, that your start-up is a restaurant. When a customer visits you, he can “check-in” using Foursquare. Thus, his or her friends will see the name and location of your business, and are likely to visit you when they are unsure about where to eat.“Check-ins” spread very quickly, increasing your visibility exponentially on Foursquare, and increasing customers.
Reddit is an extremely important tool when it comes to building relationships with clients. There are so many tools you can use to connect and communicate with customers. One of the most important Reddit features for start-ups are sub-Reddits, topics that are narrowed down to a specific subject for a specific audience. Sub-Reddits can help you create discussion topics about your product or service and offer customer support. Furthermore, you can add news and events about your start-up to keep your clients up to date.

Remember that your main social media platforms are still Facebook, Twitter, and LinkedIn. The websites mentioned above however, will increase the popularity of your business even further. When it comes to social media, more is always better: do not limit yourself. In fact, look around to find other social media websites you can use.

15Jun
Common Legal Mistakes Entrepreneurs Make

Smart entrepreneurs learn from their mistakes, while smarter entrepreneurs learn from the mistakes of others.

Managing start-ups can at times be an overwhelming experience, but can be done right if certain crucial mistakes are avoided. Although some legal slipups are easily fixed, others will cause big problems to your business in the long run. Here are a few common legal mistakes entrepreneurs make that have serious long term consequences.

Not having a shareholders agreement with co-founders

Think of this as a pre-nuptial agreement between the co-founders. When you launch your start-up, you all have the same goal and the same vision for your company. As your business grows and expands however, interests may change, and if the deal is not clear between you, this can result in legal troubles. Just think of the Zuckerberg/Winklevoss scandal back in 2004.

The deal between co-owners must be made clear from the very beginning to avoid legal troubles in the futures. Establish issues such as:
– What percentage of the company does each person have?
– How will you decide the sale of your business?
– What is the goal of the business?

These are just a few questions to be asked. Make sure your agreement is exhaustive and will protect you from any possible conflict between co-founders.

Disregarding Trademark and Copyright

Once your company innovates a new product, a new idea, or a new technology, this innovation has to be protected. Many intellectual property protective measures can be used by start-ups such as patents, copyrights, trademarks, trade secrets, etc. Inform yourself on which protective measure is appropriate for your business.

It is also important to note that this concept goes both ways. As much as you need to protect your intellectual property, make sure you don’t infringe other companies’ trademarks and copyrights. For example, make sure you do ample research before deciding on your company name or your domain name. You can use tools such as GoDaddy to avoid legal issues of the sort.

Not Lawyering Up

Saving money by cutting back on expenses is definitely a good thing for your start-up. However, you should not hire an inexperienced lawyer or a friend to guide your start up: while you may save money at first, the legal troubles caused by an inexperienced lawyer will definitely catch up to you in the long run.

A good lawyer can also help with trademark and copyright, as well as your terms and conditions and privacy policy. Invest in a good lawyer, and make sure he or she is specialized for your type of business. Different online resources are available in order for you to find the lawyer that is just right for your start-up.

These are just a few important legal tips to think about when starting your business. Legal mistakes are often made by start-ups, but it is crucial to avoid legal problems that you won’t be able to fix down the line.

4May
Top 5 Sources for Reference Letters

To apply for funding to various programs (including ProMontreal Entrepreneurs), candidates are often required to submit a letter of reference, and I am always asked for my advice on whom to request a letter from. It’s not a good idea to ask for a reference letter from an employee or a parent, because of the conflict of interest it creates which therefore makes the person writing the letter not credible.

So, what is a letter of reference? The letter serves as a character reference, where the person is vouching for you, your skills and your abilities to get the job done. In the letter, they need to provide context as to where their knowledge comes from, and they should clearly outline the project, context or experience they had with you in order to write the letter.

That being said, who can you ask to write you a reference letter? Here are the top 5 sources:

1) People from the same industry
It’s important to establish yourself as an active participant in your industry. Presumably, you are in contact with other individuals from your industry that are not direct competitors but that know the industry and the opportunity your product or service may offer. They could talk about your potential impact or innovation, or express an interest they might have in doing business with you. This is also known as a letter of intent. Even though this contact may not know you on a personal basis yet, they should state in their letter that they have intentions of working with you or doing business with you in the future. Of course, just because they mention this in their letter does not make it legally binding.

2) People currently doing business with you
If you are a few years into the startup stage of your business and you have some traction, chances are you are already doing business with various people. For example, it could be a supplier, distributor, or retailer you’re working with. We once funded a company that got a reference letter from a store that was directly implicated in selling their products. They can vouch that you have a good quality product or service.

3) Past employers
Past employers are great sources for attesting to your work ethic, your achievements, your leadership, and any transferable skills that you have in the workplace. They are ideal because they have firsthand experience in working with you.

4) Past professors
Asking for a reference letter from a past professor is a great idea for younger entrepreneurs who may not have as much experience in a professional work environment. In the past, I’ve received glowing letters of recommendation from professors of Masters/PHD students we’ve funded. Professors can attest to your diligence, work ethic, and they can easily back up any of their claims with references to your past projects or grades.

5) Community service
Perhaps you don’t have much experience in a work or university environment, but you spend a lot of time doing community service. If you’re an active member of an organization (i.e. you’ve volunteered there more than once or twice), and especially if you hold some sort of leadership role, getting a reference letter from a supervisor could be valuable.

If you have any other ideas for reference letter sources, feel free to leave a comment below!

23Feb
Demystifying Industry & Market Analysis

Understanding how your market works and what customers want is vital. When done right, it will enable you to find investors, help spot potential roadblocks, and most importantly, attract customers.

Having a properly done market analysis is going to provide key data to convince the investors that your business idea is worth investing in because you will have the hard numbers to back it up.

What is a Market Analysis?

Market analysis is determining the characteristics unique to your particular market and analyzing this information, which will help you make informed decisions for your startup. A market analysis will help you determine and gather valuable data that will enable you to get to know your customers, figure out your competitors, set pricing and pinpoint exactly where opportunities lie.

Industry Description and Outlook

The first step is to describe your industry, paying close attention to its current size and historic growth rate, as well as other trends and characteristics. Relevant industry metrics like size, trends, life cycle, and projected growth should all be included here.

Target Market or Niche Market

It’s important to establish a clear idea of your target market or niche market early on. A lot of new entrepreneurs make the newbie mistake of thinking that everyone is their potential market; they are not. By identifying your real customers, you’ll be able to better use your marketing dollars in an effective way while attracting and retaining loyal customers. The target market section of your business plan should include the following:

User Persona and Characteristics: A persona represents a cluster of users who exhibit similar behavioral patterns in their purchasing decisions, use of technology or products, customer service preferences, lifestyle choices, and the like. Behaviors, attitudes, and motivations are common to a “type” regardless of age, gender, education, and other typical demographics.

Market size: Do your research and find out who and where your competitors are, and how much your customers spend annually on your product or service. How big is the potential market for your business? A question you should ask yourself is who do you fear most and why?

Competitive Analysis

Evaluate your competitors by placing them in strategic groups according to how directly they compete for a share of the customer’s dollar. For each competitor, list their product or service, strengths and weaknesses, and size. Obviously, it’s a good idea to know what you’re up against, but this strategy also lets you spot the competition’s weaknesses. Are there customers out there being under served? What can you offer that similar businesses aren’t offering? The competitive analysis should contain the following components:

Market: Who are your main competitors? Are there any indirect competitors who could impact your business?
Competitor strengths and weaknesses: What is your competition good at? Where do they leave a gap where you can come in and meet the need they are not addressing?
Window of opportunity: Does your entry into the market rely on time-sensitive technology? Do you need to get in early to take advantage of an emerging market?

Barriers to entry: Is the industry easy or difficult to enter? If entry is easy, competitors enter the market during periods of high profitability and expand production capacity. This drives down prices and profit margins. Barriers to entry make it more difficult for competitors to enter so profit margins remain favorable. Barriers to entry include the following:
- Limited access to markets – If the market is dominated by well established branded products, a new entrant will need to spend the time, money and effort to establish a successfully branded product.
- Large-scale production – If large scale production requires substantial financial investment, the financial requirements will limit entry.
- Limited access to technology or production processes – Patented technology and other intellectual property will also limit entry.
This is where you examine your weaknesses. Be honest with investors and yourself.

Regulations

Some business may be subject to governmental regulations or restrictions in order to provide a fair ground in which to do business. If your business is subject to regulations or restrictions, you’ll need to bring them up and discuss how you’re going to comply with them. Is there a cost to the compliance?

In conclusion, market analyses vary from industry to industry and company to company. Most of the information you will need to include can be found by a simple Google search and, most importantly, it can be found for free. Keep in mind that a little estimation is okay, but the bulk of your numbers need to be based on facts and they must, in all cases, be sourced. If you don’t know were to begin, download our entrepreneurship guide that outlines all the good places to start your market research.

8Dec
Hiring Talent for Your Startup

Today’s startups need the best possible talent. Great people are out there and it’s up to you, as the entrepreneur, to find them or to attract them. Perhaps you have never been an employer before, so it’s imperative to have a clear understanding of the kind of talent you need, but most importantly, the kind of work environment you wish to cultivate. Like every individual has a personality, every company has a culture. What kind of culture do you wish to have? Is it unique? Energizing? Compelling? Here are some tips for hiring based on your company’s culture.

Hire slow & fire fast. If an employee doesn’t fit the vision you have for your workplace, listen to your intuition and let them go. Not all people will fit within the culture of your company; they may hinder the creative process and slow down teamwork, even if, on paper, they’re qualified for the job.

Hire relevant experience. Desired work experience should be defined not in terms of years, but rather in terms of specific work achievements. A way to define work experience is in relation to their previous work environment. As you review candidates, pay attention to work histories in which applicants were required to perform with little managerial supervision and team assistance.

Don’t be too micromanagy. At some point, you’re going to have to relinquish some of your responsibilities. This is the only way your company will grow. Hire people you have confidence in so that you won’t be inclined to monitor their every move. An autonomous and proficient worker will give you peace of mind.

Pay well and have the right incentives. It seems like a no-brainer, but paying well and having the right perks in place will really help you attract some killer talent. Instill a results-oriented work environment wherein the employee is allowed freedom, and the main mandate is getting the job done. This is the type of innovative perk that attracts people.

By the time you create the right company culture, you should have the type of start-up where great talents want to work at. Who seeks out companies like these? Individuals who are sharp, capable, and motivated.

Like attracts like. Kind attracts kind. And if you want to attract innovators, you’ve got to be innovative.

23Oct
Money Stopping You From Starting a Business?

No money to start a business? Even though you have limited cash, it doesn’t mean you don’t have any options. It is possible to start a business with very little money, if you have the right combination of skills, work ethic and marketing know-how.

According to some experts, to succeed in a business project, you should think carefully about all the skills you have that could be helpful to others.

A great way to start is to make something. Yes, making something does take an initial cost in supplies, but often times, these products can be sold for many times over their actual cost. What you decide to make is up to you, but there are several places you can sell your handmade options online:

Abe’s Market deals in natural and organic goods, such as lotions, candles, granola, and more.
icraft deals with independent artists and crafters from around the globe. They sell only new handmade products.
Etsy is one of the largest online markets for almost anything homemade, from jewelry to wooden toys for kids.
eBay is one of the biggest online eCommerce marketplaces in the world.

Many business owners sell their products on multiple platforms to get the most exposure possible. It is important to make sure your inventory stays updated on all sites you have a storefront on. If you want to learn about more resources for selling homemade items, check out this Lifehacker post.

23Sep
Finding a Co-Founder

I am asked a lot of questions. Aside from “where do I get money to fund my start-up?”, the second most-asked question is: “where do I find a co-founder?” It is a difficult question to answer, because it’s not just about someone who will share in the work, which at the beginning can seem insurmountable. It is also someone who will have to share your passion and your commitment to seeing the idea through. I’ve been a victim of partnering with a friend. In the end, it didn’t work because he just wasn’t committed enough to the project. It changed our friendship.

Now for the million dollar question, where can you find a co-founder? My answer is always the same: you find a co-founder when you least expect it. When talking about your business idea in an informal setting: over drinks, over dinner. It works best when it’s not forced. Then, it just happens; that magical moment when it just clicks. It’s really as simple as that. Sure, there are websites that promise that they can help you find a co-founder but personality and work ethic is so important, I think that meeting someone in an informal setting and seeing how this person interacts with others and with you, is the best way. You find other commonalities that transcend a business relationship, which in my opinion is very important. Remember you will spend so many hours together and make complicated decisions together so if the personalities don’t fit, it won’t work.