Resources for the Venture

8/10/2019 Resources for the Venture

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RESOURCES FOR THE VENTURE

THE ENTREPRENEURIAL

APPROACH: seizing opportunityand pursuing it REGARDLESS ofresources currently controlled


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Entrepreneurial Approach to

Resources:Resources include:

People, assets, financial resources,

business planNeed for resources and the ownership andmanagement of resources are vieweddifferently from in large organisationsSeek to use the minimum possible amount ofall types of resources at each stageRather than own the resources they seek tocontrol them


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Using this approach to reduce

riskStaged Capital CommitmentsSmaller initial capital, matching capital infusion with

milestonesLess Capital

Reducing financial exposure and dilution of thefounders equity More Flexibility

Owning vs. Not owningLow sunk cost

Ability to abort at any timeLower costsReduced risk

Less exposure, lower risk of obsolescence


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FUNDRAISING:Startups typically lack criteria used byinvestors:

Scale, proprietary advantage, well-defined plans,well-regarded founders!Most ventures are low-budget start-ups!

80% ventures in USA financed by:Personal savingsCredit cardsSecond mortgages


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OTHER SOURCES:

FINANCIAL:Commercial BanksFriendsFamilySavings personal, partnerSuppliersCustomersSale of assets

NON-FINANCIAL: AdviceNetwork contacts

FavoursHuman capital - reputation


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ISSUES IN ACCESSING

RESOURCES1. Takes time2. Costs legal fees, stamp duties,

consultant fees, accounting fees3. Information needs for investors,

bankers; how much to reveal?4. Top management attention


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Minimising Resources According to Greg Gianforte lack ofmoney, employees, equipment even a

lack of product is a huge advantagebecause it forces the bootstrapper to toconcentrate on selling to bring in cashQuestion- How to do more with less andpursue the opportunity


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BOOTSTRAPPING:

(Minimising resources)Lack of resource intensity

At each stage, accomplishing more with a

little lessOpposite attitude in large organisationsFamous Bootstrappers:

Clorox Nike

Marriott AppleGateway DominosBlack & Decker MicrosoftHewlett PackardDell


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OPR (OTHER PEOPLES

RESOURCES)Important in early stages:

Money loans, equity, grantsPeople (staff)SpaceEquipment

Material Advice, technical assistance

(Build your brain trust)

Bartering


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Brain TrustThe right advisors and brain trustmembers provide critical value. Identifyindividuals with the know-how,experience, networks , and access tocritical talent, experience and resources

that can make the difference.


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BUILDING RELATIONSHIPS:Educate your financiers about your businessKeep to the agreed terms and commitments

pay on time!Communicate bad news fast!Consider them part of your team

View them simply as another supplier, but akey oneLet them know you have optionsKnow what others can offer!


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MANAGING YOUR BANKER:Does it:

See you through adversity?Save you time?

Treat you as an individual?Understand your business?Teach and advise?

Do something special for you? Accept responsibility for its mistakes?Let you borrow against the future?Find customers for you?Help you search for alternatives?


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BOARD OF DIRECTORS:Part of the teamCareful evaluation of missing experience,

know-how, contactsExternal directors objectivityChoose directors for objectivity, integrity andspecial skills

Define role, responsibilities, structureConsider liability take steps to minimiseCompensation!

Alternatives to a formal board


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PROFESSIONALS:

AttorneysConsultants

AccountantsBankers

Selection:Experience, expertiseIntegrity, reputation (seek testimonials , trust

but verify)Client baseSize, supportCostChemistr do the fit with ou?


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BOOTSTRAPPING TO

SUCCESS:Get operational quickly target smallmarket, then seek other opportunities

Look for quick break-even, cash-generating projectsHigh value products or services that can

sustain direct personal selling


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BOOTSTRAPPING TOSUCCESS:

Keep growth in checkFOCUS ON CASH, NOT PROFITS OR

MARKET SHARE!Cultivate banking relationships early

Abandon the rules, and be flexible!

Seek opportunity everywhere, all thetime!


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Financial Resources

Evaluate financial requirements after allresource needs have been identified

Important to realise that cash is the life-bloodof the venture (not profit)Financial resources are always limited thustrade-offsSpreadsheets- see what the venture will looklike financially in a given time frame. Use

what if scenarios

Resources for the Venture

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