This week’s top stories include small business advice covering the following four topics:
- Startups Don’t Need More Money— They Need More Customer Insights
- Trying to Sell Your Business? Skipping This One Step Will Leave a Fortune on the Table
- What you need to know before you take on an investor for your business
- 5 steps to turn your side gig into a full-fledged business
Each week we scour all the top business-related magazines and newspapers for articles with the best advice for the small business owner, so you do not have to.
Startups Don’t Need More Money— They Need More Customer Insights
By: Denise Lee Yohn
When startup founders fail, they usually blame the lack of funding. But, according to three recent studies, most startups don’t necessarily need more money. Startups need more customer insights.
Startup studio Wilbur Labs surveyed more than 150 startup founders for their insights about startup failure. When asked for recommendations to prevent failure, the most common answer (given by 30% of founders) urged startups to do more research prior to launch. The advice founders indicated they would give to other aspiring entrepreneurs reflected that the research should focus on understanding customers and their needs. Fifty-four percent advised, “Listen to your customers;” the same number (54%) advised, “Ensure there is a market for your product.” While the need for customer insights are timeless, Wilbur Labs observed, “Solving real problems that serve people better is even more critical now, given the sheer number of products competing daily for attention,”
Trying to Sell Your Business? Skipping This One Step Will Leave a Fortune on the Table
By: Joe Valley
You’ve decided you want to sell your business — and you’re excited about it. You’ve poured years of effort into building your empire, you have buyer interest or even an offer on the table, and for the first time in years, you can see the light at the end of the tunnel. A part of you wants to just power through, seal the deal and ride off into the sunset.
Not so fast. While it can feel tempting to rush into the sale, doing so without properly calculating the seller’s discretionary earnings (SDE) can often leave tens of thousands or even hundreds of thousands of dollars on the table. Most likely, your business will be sold as a multiple of SDE, and SDE equals net income plus add-backs. Most of us are intimately familiar with that first number, but the second number is the secret sauce behind lucrative exits.
Related Post: Recasting Financial Reports When Selling Your Business
What you need to know before you take on an investor for your business
By: Michelle Fox
When Tina McGonagill wanted to expand her food container business, she took on an investor she met at a trade show.
For $50,000, she gave Trent Lowenstein a 20% stake in Big Fat Lunch. Yet before she spent the money, the two were at odds over the best strategy to increase profits.
“Without stock we have no business, because at the end of the day when you own a product your biggest priority is to get into retail,” she told CNBC’s “Money Court.”
Lowenstein, on the other hand, wanted to turn to social media and influencers to increase direct-to-consumer sales. With lower margins, there is increased profit on each product sold, he argued.
The dispute shows the importance of having a smart governance structure, such as a board, and understanding the rights an investor has in company decisions
Related Post: How To Allocate Equity In A Startup.10 Rules For Allocation And Pricing Shares In A New Venture.
5 steps to turn your side gig into a full-fledged business
By: Rosalie Murphy
In 2017, Courtney Lynn Ottrix started blogging about things to do in Cleveland. She’d done some freelancing in the past, and the blog offered occasional opportunities for income.
But two years later, when her full-time position was eliminated, Ottrix suddenly found herself self-employed.
“I had started to see what could be of my business if I gave it my all,” Ottrix says. “And literally overnight, Courtney Covers Cleveland went from a blog to next level.”
Whether you’re pushed into it like Ottrix or have time to make a plan, following these steps can help you transition your business from a side hustle to self-employment.
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