startbizup 8 steps to a successful start up Wed, 08 May 2019 13:10:44 +0000 en-US hourly 1 startbizup 32 32 Give Your Startup an Edge by Going the Extra Mile Wed, 08 May 2019 13:10:44 +0000

Don Quijote, or commonly referred to as Donki, claims to be the largest discount chain store in Japan. One of the key success factors for Donki is the low prices it charged. The company’s discount business took off in the 1990s with the bursting of the economic bubble in Japan. However what is noteworthy is its attraction to tourists who are seduced not only by its low prices but by getting a tax refund on the spot. This happens not at the airport store but elsewhere such as its stores in Tokyo or Osaka. Furthermore tourists need not make a sizeable purchase to qualify for the tax refund, unlike many other outlets providing such services. Even those purchasing groceries for less than ¥2,000 (about $18) can claim for the tax refund. However Donki too has a floor for branded goods like handbags at its outlet.

What proportion of Donki’s business comes from tourists is not known. However, the fact that tourists make a bee line for its outlets when visiting Japan is testimony of the attractiveness of its tax refund service. Since the minimum purchase amount for the tax refund is relatively low, one can only imagine the volume of paperwork that Donki has to process in order to claim back the tax paid from the Japanese government.

Many companies refrain from incurring expenses to do such work with what they perceive to have low returns. As a result of their myopic views, they are unable to compete with Donki. In the 1990s, non-fast food restaurants providing home delivery services were relatively unheard of. Today, with the proliferation of food delivery services, it is soon becoming the other way around. The reason is simple. If everyone is doing it and you don’t do it, you are at the losing end.

When starting up a business, look for areas where you can provide a service which competitors refrain from doing. In other words, if everyone is not doing it and you are the only one doing it, you are a winner.

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Use Your Knowledge and Skills to Shorten the Learning Curve Sun, 21 Apr 2019 13:05:30 +0000

There are 2 basic aspects of skills and knowledge required in a startup. The first is the technical aspects of the business. By technical, we are referring to the knowledge and skills fundamental to the nature of  the business. For instance, the technical aspect of a bakery refers to the baking and other skills required to produce good products for sale. The other skills would be necessary to make savory buns and pastries to entice customers. If the business is to develop android apps, the technical aspect would be the programming and other skills. The other skills could be related to the aesthetic and functionality of the app.

However, good technical skills and knowledge alone would not be sufficient to make a startup viable. You could be making delicious pastries and buns for sale in the bakery but due to lack of promotion and marketing as well as mispricing, the business could be doomed to failure.

This bring us to the second aspect which is the management skills and knowledge needed to make the business profitable. There are many areas under management which includes marketing, human resource, finance, operations and so on. In the bakery example, pricing products correctly as well as promotions especially during the startup phase are key to the business success. Employing the right people for the business is critical. Ensuring adequate capital especially the cash flow during this initial period is crucial. Also, you have to ensure smooth operations with minimal disruptions to customers while trying to get things right.

Entrepreneurs experience a steep learning curve during the initial phase of their startup. Thus if an entrepreneur enters a business in which he or she had no technical and management experience at all, the learning curve is going to be especially steep. Therefore think twice about entering such a business. If you had technical experience, for instance as a baker in a bakery shop, you have a distinct advantage. Though you may have the technical skills, you probably do not have adequate management knowledge and skills needed to run a bakery successfully. However your learning curve is dwindled down to learning the management aspect of the business. With a shortened learning curve, your chances of success are much better than another entrepreneur who lacks both technical and management skills.

On the other hand, an entrepreneur may have been the manager of a bakery shop before taking the plunge to open one himself or herself. It is true that he or she may not have the baking and other skills needed to come up with savory buns and pastries. However the experience in running a bakery had provided this person with the management knowledge and skills required to make the startup a success. In  fact, he or she probably had experience in recruiting bakers and other staff needed for all aspects of the business. Still, this entrepreneur would need to experience a  learning curve to come up with a range of products to make the bakery stand out in the eyes of consumers.

Therefore think about the learning curve before you take the plunge to startup a business. Make sure that you are well equipped with the technical or management aspect of the business you are getting into. The best business to get into is the one in which you have both the technical and management knowledge and skills required to make it a success.


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Lower your startup costs by buying used items Wed, 03 Apr 2019 13:37:47 +0000

Startups tend to have the false belief that everything that they need for the business have to be brand new. I had personally seen startups which invested considerable sums of money to renovate the office, purchase new costly furniture, laptops, office equipment, and other capital items. This happened even before these startup received sufficient revenue for their services in the initial stages. In fact, they only had an order or two at this stage. Two years after, I heard that one startup had closed completely, while another downsized to a shared office.

The time needed for the startup to build up the business can be considerable. Nobody is an overnight success. Therefore it makes much sense to reduce the burn rate as much as possible. This would make the capital invested last as long as possible in the initial stages.  This requires reducing the amount to be spent on furniture, laptops, office equipment and so on.

If you are equipping an office, chances are that you require partitions, office tables and chairs. Although the paperless office appear to be closer to reality than before, my guess is that most people would still need cabinets for files. Now these furniture need to be sufficiently durable to withstand the rough and tumble of an office. However they need not be brand new. You may be asking what if clients drop by and see the used furniture. Well, my reply is that the client probably would not be bothered unless the furniture is really in a dismal state. So what if the used partitions do not totally match the color of the other furniture.

One should be able to locate a used office furniture outlet near where the startup is going to be located. In all likelihood, you could save up to 50% in purchasing used furniture.  The reduction in the amount invested should help to reduce the losses likely to be incurred in the initial stages due to the lower depreciation amount. This means that the chances of the startup turning a profit are very much higher than another equipped with all brand new furniture, all else being equal. At the same time, the breakeven point when cash flow turns positive would come considerably earlier. Therefore the probability of the startup being viable is significantly higher than another startup which invested in brand new furniture. And to top it all, you could launch the startup with much lower capital.

If you are not convinced, download the StartBizUp App and do the sums.

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Locate your operations at cheapest premises if location doesn’t matter Mon, 18 Mar 2019 12:54:42 +0000

I vaguely recall reading a book on investing in the stock market many years ago. In that book, the author recommended buying stocks of companies which operate from premises which are, to put it nicely, not stellar. In the same breath, the author advised against investing in companies with new and impressive premises. The rationale is simple. Those companies in mediocre premises are paying low rents and thus have low overheads. As a result, their profit margins tend to be better than companies with monumental assets.

The same strategy can be used for startups. Of course, startups in businesses like food and beverage and certain retail which rely heavily on foot traffic have little choice but to pay high rents for premium locations. Even then, new ways of reaching to customers online without the need for these stellar premises are turning the location need upside down.

Many startups are not in businesses where their locations are critical to the success of the endeavor. It is tempting to have an address on your calling card that impresses the potential client. However you should resist the temptation even if you have adequate capital to do it. Making losses due to high overheads which come with the good image may give the startup a short lifespan.

Clients usually requires that you or your associates visit them to pitch your stuff rather than the other way around. What you fear is the client making a visit to your premises just before awarding your startup the contract. In  any case, the client is likely not to be bothered by the shabby premises that you operate from in the event of a visit. That is unless the contract is worth millions and impression on image counts. For a startup though, that is not probable.

Therefore it pays to look around for the cheapest premises to house your startup. That way, you have a headstart in term of low overheads due to the bargain rent that you need to pay. This will give you leverage in terms of competing on price for your first year of operations. As your startup is not well known at this initial period, charging a low price for market entry is a reasonable strategy. With the low overheads, you should be able to still make a decent profit with that low price strategy.

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Start a Business that Helps Others Make Money Thu, 28 Feb 2019 13:18:52 +0000

It is normal human instinct to follow the crowd when there is money to be made. For instance, when the stock market reaches new high, the tendency for investors is to jump in and buy more stocks. The same can be said for property, cryptocurrencies, gold, and many other investments. However, not everyone who puts money into these investments make money. Usually the early birds make the most while those who come in late are left holding the baby when the market turns.

Thus a good strategy would be to spot the trend early and enter the market before it gets too hot. However this is easier said than done. Which is why most of us are not billionaires or even multi-millionaires. There is however an alternative strategy which surprisingly has less risk and could end up giving spectacular returns.

I recently came across an article about Levi Strauss which got me thinking. Instead of joining the California gold rush in the United States in the mid 1800s, Strauss made and sold jeans to those panning for gold. Given the harsh environment that these miners were in, they appreciated the durability of the blue jeans made by Levi Strauss and Company. As a result, sales boomed.

In a more recent period, the rise of Bitcoin and other cryptocurrencies had fueled the sales of specialized computers used for their mining. This led to high demand for makers of graphic processing units or GPUs which excel in the mathematical calculations needed to mine these cryptocurrencies, When Bitcoin price reached its peak in December 2017, GPU manufacturers  like Nvidia benefited greatly from the high demand.

The alternative strategy is obviously to enter a business which supports those who are at the frontlines of the money frenzy. However this is not about entering mundane businesses which support almost every type of business like stationery, personal computers, copiers, etc. The support provided should be unique and generally not available at that time. Durable blue jeans were not available for miners before Strauss introduced them. GPU were initially used for computer games before someone reckoned that their advanced mathematical processing capability could work out the algorithm for cryptocurrencies much faster.

Thus it pays to look at what people are getting into to get good returns for their money. Then consider how to facilitate these people’s process of making money. Generally it involves making the process faster or cheaper or easier. If you manage to solve the problems that these people face, you may have a winning idea for a startup.

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Timing the Startup Sun, 17 Feb 2019 12:57:47 +0000

According to the Chinese calendar, the year of the pig is upon us. Many of us wonder whether the year of the pig would bring better times ahead. However your guess is as good as mine in forecasting whether the year would bring good fortune or not.

Like stock market investments, it would be ideal if one is able to time their investment in a startup just before a major upward trend. Intuitively, this sounds logical since a growth trend would result in an increase in revenue over time. Unfortunately, as investors would tell you, timing an investment to predict a rising trend like in the stock market would be an almost impossible task. Many investors have stories of how the market turned immediately after they had made a large investment.

Actually the time when most investors put money in the stock market is when major indexes have risen considerably and appear to continue to rise. At this stage, the fear of losing out prevails and investors jump in with all eagerness. The same is true for many other investments including cryptocurrencies like Bitcoin. When Bitcoin price approached almost $20,000 in Dec 2017, many investors started investing in cryptocurrencies themselves or computer hardware for mining Bitcoin or other cryptocurrencies. At the same time, the savvy ones were taking huge profits in unloading their stakes in Bitcoin and other cryptocurrencies. Today with Bitcoin price at less than 20% of the peak, demand for cryptomining hardware has plummeted.  Cryptocurrencies investors too seemed to have vanished.

On the other hand, in a down market, very few investors make investments for fear of losing money. However as experts would tell you, the pros make the bulk of their purchases in a down market and sell a substantial portion of their stakes when the market is high.

There is, however, a difference in investing in a startup.  For a start, entrepreneurs would tell you that the decision to invest in a startup could happen anytime. The passion could be fired up in the midst of a recession or when the economy is booming. There is no question of  waiting for the right time to invest in a startup. However entrepreneurs could use the approach of professional fund managers in underinvesting in stocks when the market is booming and overinvesting during a downturn. They could do this by scaling down the investment in the startup when things appear to be doing too well. Similarly, the entrepreneur could scale up the investment during the middle of a recession. This counter intuitive move may seem illogical but parallels the contrarian approach used by some successful fund managers. The logic is that when things are doing too well, the next move is likely to be downwards and vice versa. This way, entrepreneurs need not try to time the market in launching the startup and risk missing out on a good business idea.

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Meeting Customers’ Expectation is Key to Success Tue, 29 Jan 2019 00:51:43 +0000

There is a never ending debate regarding whether it is a better business strategy to offer a limited or wide range of products. Consumers are familiar with the success of McDonalds’ which to a certain extent hinges on its limited menu selection. On the other hand, there are many success stories of outlets which thrive because of their offering of a wide range of products. The extensive selection of crepes of this outlet at Takeshita Street in Tokyo in the photo above is a good example of this strategy.

For a would be entrepreneur thinking of starting up a business, the choice can be baffling. Both strategies have their pros and cons. For a fast food outlet, the decision could be made that convenience, quality and value are of utmost importance in narrowing down the range of products. Convenience could be in terms of product delivery time. Quality could be on the consistency of the product and value could related to the price charged for it. For an outlet making crepes as an example, the decision could be based on offering customers a wide selection to entice them in the first place. Since the crepes are positioned as an impulse purchase,  the likelihood of someone eyeing a suitable selection is higher with a wide choice given.

At the end of the day, the correct strategy would be to meet the customers’ expectation. In going to a fast food outlet, a customer expects to have a consistent quality burger at a reasonable price while not waiting too long for it to be ready. As for crepes, the customer expectation is for the outlet to have the toppings that he or she wants. If the outlet does not have the desired toppings, the customer may or may not make a purchase.

Thus it would be useful for the would be entrepreneur to put himself or herself in the shoes of the customer. Ask yourself the reasons why a customer would want to make a purchase from the business. There are likely to be a host of reasons. Rank them to find out the key decision points for the purchase. Then ask yourself whether it is a better strategy to excel in the top three reasons or just be good in all the reasons. As in most things, you can’t excel in everything so be realistic. Sometimes, trying to excel in one reason could result in pulling down another reason. For instance, in trying to offer quality ingredients, it may become more difficult for you to offer low prices. In such cases, one has to analyze the importance of both reasons and give priority to the more important one.


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StartBizUp App Version 2.2 released Mon, 28 Jan 2019 09:16:48 +0000 The StartBizUp App version 2.2 was released on Jan 28, 2019.

The changes made to the App are as follows:

“Make revenue projection period variable from 1 to 5 years. Make depreciation and amortization periods variable from 1 to 5 years. Make displays of graph and table variable according to the projection period (ie from 1 to 5 years). Change profit default from profit before interest, taxes, depreciation and amortization (EBITDA) to profit before interest and taxes (EBIT). Fix bugs.”

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Adapt Foreign Products to Local Needs Tue, 01 Jan 2019 13:24:56 +0000

In many countries. there seems to be an appeal for something foreign to interest the locals. This is especially true for food. For instance, Chinese food is prevalent in the countries such as the United States, Britain, Europe and Australia. On the other hand, western food is common in Asian and African countries. The photo above shows an outlet selling Singapore Chicken Rice in Japan.

However, if you ask a Chinese whether the Chinese food in the US is authentic, the answer is probably negative. Western food are easier to copy to a certain extent. Obviously, foods that require fresh ingredients that are hard to get in a foreign country especially in winter tends to taste less authentic.

There is nothing wrong with the Chinese food not tasting authentic to the Chinese in the US. In fact, when the outlet serving Chinese food started, the taste was probably more authentic. Over the years, it had received feedback from its many customers, most of them being non-Chinese Americans. As a result, the outlet had finetuned its recipe to adapt to the taste preferred by the majority. The majority, thus , were not Chinese.

One of the reasons for establishing an outlet selling foreign food to locals may be based on nostalgia. The outlet selling Singapore Chicken Rice in Japan could be trying to attract Japanese and non-Japanese customers who reminisce enjoying the food in Singapore.

Whatever it is, the point of this article is to stress the importance of adapting to local taste. This is absolutely necessary for those trying to serve the mass market. If the food that you are serving does not appeal to the locals, no matter how authentic, there would not be much demand. The adaptation mentioned here may also include the sugar or salt levels or things like amount of oil or spiciness. Another important factor could be the availability or more accurately, the cost of ingredients. This could lead to the use of substitutes in place of the authentic ingredient.

A good example is McDonald’s which came up with non-meat hamburgers in India to serve the locals who tend to be vegetarians. Indian curries served in outlets in the US, Britain, Europe, Australia tend to be less spicy hot than the authentic version.

Of course, someone setting up a high end restaurant may want to be much more authentic that the mass market outlet. Even so, there had to be some level of adaptation to the local palate.

That is food for thought for your start up idea.


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Getting financing for your start up Thu, 13 Dec 2018 08:18:04 +0000

Three enthusiastic persons in their early twenties had good ideas for their start up only to falter due to insufficient funds. They felt that they had done their homework, did some rough calculations and envisaged that their business idea would be workable. They anticipated that in 2 years time, they would breakeven, and start making serious profits from the third year onwards. What was required was a sum of about $350,000 to start up their business venture.

They approached their parents, relatives, friends, financial institutions and angel investors for loans or investments. During these sessions, they were asked many questions which they had difficulties in replying. The common thread they heard was that they lacked a viable business plan. As a result they failed to attract investments and were also unable to obtain a loan.

Essentially a business plan gives the reader a roadmap for your start up. The key contents of a business plan are as follows:

1. Introduction

Under introduction, you should give an explanation of what the start up idea is about in a nutshell. Clearly specify the product that your start up intends to offer and why you believe this will be a success. Explain what the team hopes to achieve in 3 to 5 years time. At this point, it would be useful to give a rough estimate of the costs involved and the amount of investment or financing sought.


Elaborate on the industry which best describes the business the start up is in. If the start up idea is to disrupt a particular industry, at the end of the day, it would still be considered as operating in that industry. Hence there is a need to give an idea of how the industry operates and who the major players are. In addition, there is a need to state who you perceive to be your major competitors. Explain where your major supplies come from and spell out the possibilities of disruption.

3. Market Segment and Market Positioning

Indicate the reasons why you segment the market in a certain way be it by geographic, demographics, psychographic or behavioral. An example of demographic segmentation would be by income levels, age, gender, etc. Psychographic segmentation relates to lifestyles, values or socio-economic classes. Behavioral segmentation uses factors like usage rates, benefits sought, brand loyalty and so on. Under market positioning, state whether you are pricing your product at premium rates with similar levels of service or at budget rates with little or no service offered or somewhere in between.

4. Core Competencies and SWOT Analysis

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Explain the core competencies your team brings to the table as part of your strengths in the SWOT analysis. You have to be frank about the weaknesses of your team. Opportunities relate to the areas in which your product or  service intends to take advantage of. Finally, under threats, spell out what barriers that new entrants face in entering your market or your competitors giving you a fierce fight to retain market share. At the same time, mention why your products beat competitors already in your market.

5. Customers and Income Sources

Explain the type of customers from your targeted market segment where your start up expects to earn most of its income from. This could be from the main products offered. It could be supplemented by income from supporting products. As an example, the main product of this website is an app for start ups. The supporting product could be providing training programs for would be entrepreneurs to go through the process of evaluating their business ideas. This would be possible given the complexity of the entire process. Other income sources could come from advertisements, memberships, subscriptions and obtaining sponsorships.

6. Costs

Start with capital costs like machinery and equipment and depreciate them accordingly to the period of their useful life. Then include any non-tangible assets and  amortize them over the period of their useful life as well. Next, you need to indicate the size and type of premises that your start up would occupy for its business. Give an estimate for the rent for the premises. If you need to renovate the premises for the business, depreciate the cost according to the period of useful life. Your start up has to employ people to operate. Give each of your team members including yourself a meaningful salary. If your start up needs to employ additional staff, include them accordingly. Under expenses, include all significant purchases that are needed to keep the business running. For the moment, exclude the direct cost of goods or services purchased for the sale or resale of your products.

7. Project revenue

In order to project the revenue, you need to simplify the product categories to a maximum of 10. For each product category, you have to reveal the gross margins and hence the cost of goods sold. Then project the numbers for each product category you expect to sell on an average month in year 3 of your operations. You need to use a spreadsheet or an App like StartBizUp to help you do the financial projects. Just take note that revenue, costs and profits and not the same as cash. Expenditures which are depreciated or amortized are paid in total cash upfront (as cash out) on the month of purchase but come up as monthly cost based on the depreciated or amortized amount. The monthly cost based on the depreciated or amortized amount does not result in any cash out. At the end of the day, you need to show that the startup would be cash positive months before the end of year 3.     

8. Sources of Funds

Let us assume that your start up is cash positive months before the end of year 3. From your spreadsheet or the StartBizUp App, there would be a point where the cash flow is most negative. This most negative amount plus a margin of say 10% – 20% would be the required capital needed for the start up. You need to show the sources of funding already amassed for the start up. This could be funds from yourself or your family or anyone who believed in your venture. Thus explaining the shortfall needed for your start up to launch would be more convincing.

Bind the Business Plan Report to make it look professional. Prepare as Powerpoint presentation to give to any potential investor or financial institution if you seek a loan.  Good Luck.

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