Mentor’s Thoughts Week 7: The Critical Need to Understand Financing
It troubles me how many entrepreneurs get “bullied” when they look for funding. There are typically many sources of funding, but the entrepreneurs do not know where the sources are. The lack of knowledge means they will fail to take advantage of what is available to them.
In my past experience, I have seen many entrepreneurs coming with great ideas but not having the understanding of how they should start and grow the business. They come looking for funding without understanding how the process works. Some look for the wrong channels of funding at the wrong time, what is right type of financing for their business at that time they need it.
On the other hand, I have seen many investors take advantage of new entrepreneurs by structuring financing deals which may be wrong for their start-up. Entrepreneurs should realize that investors are there not just to provide the funding but also to help and guide the company. Investors should see what is best for the business and all the stakeholders, especially the entrepreneur and his team. Investors should not be thinking of making a quick buck out of the situation especially by forcing early exits. So, I would advise entrepreneurs to do some due diligence of investors before partnering them.
This week we look at:
Tuesday: We look into being decisive and solving problems. How does indecisiveness hurt your business? And how making snap judgments will make you achieve much more, even if you are wrong, rather than overthinking and not taking any actions.
Wednesday: We talk about building your core team. The team is like a family with a common goal, to make the business succeed. As such the people you bring in have to be aligned with that goal, and they must be right for you to achieve it.
Thursday: Every business needs financing at one point or another, to start or to grow. This week we look at Angel Funding, what should you understand about it before you approach an Angel to finance your business.
There is a need for entrepreneurs to understand the basic concepts of funding. They need to understand the types of financing available and they need to know what financing is suitable for them and at what stage. There is also a need to understand the structure of the business and to understand their company’s finances properly so that you can have a feel of when the company will need financing the most. This will help them work out better deals with investors who would favor them and would be in best interests for the business.
Entrepreneurs are a different breed of people; in the beginning stages, they must know and understand everything related to their business, in order to safeguard and grow their interests. Compared to most people who focus and become experts in one aspect of the business their entire lives, entrepreneurs have to work and think fast, and be able to work on every different part of the business, in order to make it succeed. You have to be like the coach of a team who must understand every aspect of the game and understand what every position in the team entails.
[toggle title=”Week 0: Welcome To EntreCity – 22nd Jan 2012″]
Firstly, I would like to welcome you to EntreCity – The City of Entrepreneurial Learning and Sharing. I have been involved with entrepreneurship for a very long time. From starting my first company UTAC (United Test and Assembly Centre) to championing a better entrepreneurship environment in the Singapore. It was through the drive and passion for this subject that I published my first book in 2006, wanting to share my knowledge and experience to help other entrepreneurs take the step towards this path.
Throughout the years, as I embarked on my entrepreneurial journey, whether in Singapore or the Silicon Valley or Taiwan or India and South East Asia, I noticed that many people were starting businesses without taking the time to understand its technicalities and to adjust their mindsets to thinking like entrepreneurs. There were a lucky few who made it, but there were many in that group who failed.
Having a better understanding of business will help to increase the chances of successful start-ups. We started EntreCity, with the idea imparting our knowledge to help entrepreneurs (present and future entrepreneurs). Through a community and knowledge sharing, we would like to help cultivate entrepreneurial thinking among our community. We want our community to be better equipped with the right mindset and tools before starting and running companies.
We intend to build a community of like-minded people, who will share their knowledge to help their peers build better businesses. We encourage sharing and collaboration as a way to help boost businesses in the market.
Our lectures and activities will help you to begin your entrepreneurial journey. Step by step, we want to work on your mindset, business technicalities and impart some useful lessons across.
Being a successful entrepreneur is not about solely focusing on business technicalities. It is about adopting a mindset that you use in your daily life. It is about seeing things from a different angle, and training you to connect the dots along the way. In fact the most important step is for each of us to develop an entrepreneurial mindset for anything we want to do, not just for starting a business.
Classes start on the Monday the 30th of January 2012; in the mean time you can join us on the following networks for updates:
Also do sign up at our Coursekit Classroom to participate in the activities and community discussions:
CLICK COURSEKIT to read more and Sign Up.
I hope that by sharing knowledge and building a community, we can help many entrepreneurs achieve success. See you on the 30th of January.
[toggle title=”Week 1: Let’s Get Started – 30th Jan 2012″]
The beginning of the Entrepreneurial journey starts with the mindset. Faced with many challenges and obstacles along the way, entrepreneurs have to be strong, resilient, creative and quick thinking amongst many other traits. Having a right mindset will make the journey a lot easier.
Entrepreneurs should also have proper knowledge on how to start and run businesses, along with the ability to solve problems. Armed with the right tools, entrepreneurs will find it much easier to tackle the issues that will come their way.
Lastly, they must start a business with the right intentions. You must ask, what problem are you solving and what unfulfilled need are you satisfying? It is crucial to understand that every business caters to the needs of people. All are stakeholders of your venture – yourself, your team members, shareholders, suppliers and more importantly your customers. When creating a product or service, you should focus on making these people’s lives better. You will get their support if they feel you can help make things better and when they see higher value of what you are offering compared to others. Once you can achieve this, the money will come in and all the stakeholders will become your brand ambassadors. It is integral to keep this in mind, when starting a business, otherwise why should people but what you offer, they have many other choices. Here are my thoughts on this week’s lectures:
Tuesday – What is an Entrepreneur?
Understanding yourself is a very important part of the journey. If you don’t start with this, you may find it more difficult to move when faced with obstacles. It helps to know when you need to put the best foot forward and to work on what you are weak in.
A good start is to look at others who have succeeded and understand their entrepreneurial mindset. By being able to identify certain characteristics and traits of entrepreneurs, we can gauge for ourselves which of these characteristics we have, and how to use them properly.
The best way to start is to do a SWOT analysis of yourself. After identifying our strengths and weaknesses, we will be able to capitalize on our strengths and opportunities better, and work harder on improving our weaknesses and threats.
Wednesday – From Idea to Business
A million ideas can fly past through your head. It takes some effort and knowhow to choose an appropriate one and to turn it into a business. Even then you need to organize your thoughts to transform the idea you have into a model which can be used as a basis to form a business.
We need to be able to identify the factors that would turn an idea into a successful business. Lots of questions to be asked (what, when, why, how, where) and lots of different angles to look at.
There is a need to condition your mindset to think differently and to ask all types of questions. The more doubts you get answered, the clearer the picture becomes.
Thursday – A Business is Still a Business
My experience in the dotcom era and in today’s start up market brought many young entrepreneurs my way. Many bright people in the mix, but not all with the right intentions.
A business is not just about raising funds; venture capital is not the end goal. It is just a means to an end, a tool to help you along the way. The main focus of business is about providing a product/service that will create value to others or your target customers. To have a successful business, you should come in with the right intentions.
I hope this first week will show how important the right mindset and tools are for good entrepreneurial growth. Do take the time to attempt the assignments given on Coursekit. It will give you more insights into your journey.
[toggle title=”Week 2: We Begin to Delve Deeper – 6th Feb 2012″]
Week 2: We Begin to Delve Deeper – 6th Feb 2012
Mindsets and characteristics are formed from experience, learning and the value systems we grow up with. Similarly we slowly evolve or transform into entrepreneurs gradually as we gain experience and learn from our experiences and from mistakes we may make.
If you want to start on your entrepreneurial journey, you will have to do more than what a normal person does. You cannot transform into an entrepreneur unless you look at things differently (a cup half full or half empty), and also think and act differently.
I know some of the things I will cover in the coming lectures may seem basic, but many take these for granted and I wanted to emphasize these simple things in life, which if we handle correctly can make a big difference in the outcome. Those who have gone through the experience of building something from scratch will realize this (“Why didn’t I think of that, it is so simple”). I wish there was someone to guide me to see these simple things when I started out. Looking back, the experience was fun, but it would have been much easier if I could have seen things a little differently when I went on my journey.
This week we start delving deeper into each topic:
Tuesday: We work on understanding certain traits of entrepreneurs. We look into ways to develop these traits better in ourselves.
Wednesday: The transformation of an idea into a business, takes time, focus and some knowhow. The more things you can consider in the planning stage, the less obstacles you will face along the way. The journey will never be smooth sailing, but you can strengthen the boat so that your team can ride the rough waves better.
Thursday: We look into idea execution; why ideas and passion alone are not enough. Just because you have a brilliant idea and are passionate about a subject, this will not be sufficient for you to achieve success as an entrepreneur. Execution and the team play big parts in the success of a business.
My experience in entrepreneurship was filled with good and bad times. Going through the School of Hard Knocks was not an easy experience, but looking back it was something that strengthened me in my quest. That being said, some better guidance along the way would have made the journey smoother. I hope to help others shorten their learning curve through these sharing sessions. Through the project, I am also refreshing myself on entrepreneurship and learning from others. As they say you are never too old to learn and learning is a continuous process.
[toggle title=”Week 3: Understanding Fear and Risk – 13th Feb 2012″]
Week 3: Understanding Fear and Risk – 13th Feb 2012
People tend to look at failures with a very negative view. Since young we have been told that failure is a very bad thing. The ideal scenario is to be able to succeed in everything you do in life, turning everything you touch into gold, but sadly that is never the case. If anyone tells you that he or she has succeeded in everything in their lives, they are lying. Our experiences tell us that somehow we overcome failures and moved on. So it is question of how we handle failure and our confidence that will help us overcome the failures. However, people become so afraid to fail, that they dare not take a step forward, preferring not to touch anything that is deemed risky. Starting and running a company is never easy and potential to fail is high, so many end up not taking that step.
To succeed, there is a need to understand failure and risks better. We need to learn to embrace failure, learn from it and recover from it quicker. Start with the mindset that you may fail and if you do fail, what will you do about it and how will you recover. Failure only becomes catastrophic when we allow it to take control over us and bring us down. To minimize failure, we need to understand the work we are doing better, at least understand the type of risks which we will face and then try to mitigate as many risks as possible. If you want every risk to be eliminated before you start, then you are not an entrepreneur.
One way to mitigate risk is by breaking down the issue at hand into smaller parts, then finding solutions to address the risk in each part, as much as possible. If you are uncertain about the work you are going into, then do it on a smaller scale to test it out first before pouring significant resources into the project. Failing at this stage will not be so devastating.
So here we go for this week.
On Tuesday – Beating the Odds: We will be looking into ways of increasing your chances of success by cutting down your risks. By looking at your business at different angles and by researching thoroughly, you can actually push off lots of threats and give your business a better chance at succeeding.
On Wednesday – The Process of Transformation 2: In the second part of this lecture, we will be focusing on execution, by sharing some fundamental insights into things to look out for to help you execute better.
On Thursday – Not So Smart Money: We talk about the issues of funding. Which funding is right for you? Are you better off without external funding or certain sources of funding?
Before we go deeper into each area, we need to start strengthening our foundations by applying what we have learnt. I highly recommend that you take some time, to apply what you have learnt so far, to your business and yourself. It is best to keep reflecting, looking at your strengths and weaknesses, working on continuously improving them.
[toggle title=”Week 4: Taking Action – 20th Feb 2012″]
A journey of a thousand miles begins with a single step – LaoZi.
It is great that you have joined us on this platform to take your journey further. Maybe you are already an entrepreneur, or you are thinking of starting something of your own. Perhaps you have an idea you want to build on, or you want to have some freedom to work on your own. Perhaps you want to change the way some things are done. Whatever the case is, that curiosity and a common interest has brought you here.
The best way to learn is to actively participate, so I urge you to spend some time in discussing issues with our community as well as to do the activities we have prepared. Reading the lectures we have, I hope will be useful, but the act of taking the additional step in implementing, will increase knowledge and skills. The Entrepreneurial Mindset is something that will help you in your everyday life as well.
Building a business or even an idea can seem overwhelming and you may be looking for a place to start. Take the time to complete the assignments and to participate in the classroom sessions. If you have any doubts feel free to even start your own discussion. The team and the community will be very glad to help you with any doubts you may have.
Do join our Classroom by Clicking Here
This week we are looking into:
Tuesday: It is more common for entrepreneurs to work in teams. A good team that can work greatly together and complement each other can really make a big difference. In fact I believe a good idea with a poor team will be less likely succeed but a good team even with a poor idea can create success. Therefore it is important to understand the dynamics of working and choosing the team you work with.
Wednesday: Entrepreneurs are risk takers, but they do not take risks blindly. Understand what is calculated risk, and how to mitigate your risk, so as to be able to build a more successful enterprise.
Thursday: People have many great ideas, some which are amazingly creative, but we do not celebrate great ideas, instead we celebrate great innovations. It takes a certain way of thinking to be able to materialize an idea into a great product that will make people’s life better.
As we are start to get deeper into our lectures, we need to make sure that our foundations are well built and that we truly understand what we are learning.
Lets start taking those little steps towards our dreams.
[toggle title=”Week 5: Building the Entrepreneur – 27th Feb 2012″]
We grow personally from the experiences in our lives. From the time we gain consciousness of our surroundings till the present time, we are shaped by the encounters we have and how we handle them. Having bad experiences in the past with business or projects may hold some people back from future opportunities. On the other hand, bad past experiences may fuel a person on to reach greater heights. It has been popularly said that we cannot control what happens but we can control how we react to what happens. How we react and behave will shape us.
Those who reflect on their past experiences and have learnt lessons from them, will do better in the present. They understand themselves better, especially their strengths and weaknesses. Also they keep in view their past experiences as they experience the present and apply what good they learnt and find solutions for the bad they experienced. This helps develop a mindset that all problems we face can be solved, and gives them confidence to tackle obstacles along the way.
You can build yourself to be stronger, if you understand yourself thoroughly.
This week we look into:
Tuesday: Are entrepreneurs born or bred? We look at how experiences and taking action helps make a stronger entrepreneur.
Wednesday: How having a fluid business plan will allow you to make changes to your strategies, especially when facing obstacles and in times of changing markets. It will give you the flexibility to make alterations that will help improve your business better. Treat the business plan as a living document.
Thursday: Domain knowledge is very important in a business. The understanding of the market and the customer is very crucial in the design of the product or service. You could create the most technologically advanced product, but if the consumers have no need for it, or they are not educated in the product, they will not use it, making the product useless.
It is never too difficult or late to be an entrepreneur. It is a matter of taking the steps to understanding yourself better, what makes you strong and what are your weaknesses. These are the basic steps to building an entrepreneurial mindset.
Start taking those little steps today, to get to know yourself better. Here is the link to the EntreCity SWOT Analysis Template.
[toggle title=”Week 6: Looking at the Real Picture – 5th March 2012″]
It is very troubling to see many new entrepreneurs struggling with their projects. Many of them were not aware of what it involved in starting and running a business when they started their journey. Most books or articles make entrepreneurship look easy, the picture that has been painted is typically rosy and very romantic, but in reality there is a lot more to it than meets the eye. Other than the technicalities of starting and running a company, there is also a lot of hard work, sleepless nights and many a times frustration involved.
Many people give the impression that once you have got your business running you can sit back and relax and it will run automatically. Truthfully, while successful entrepreneurs make it seem easy that is not the case. Successful entrepreneurs work even harder to keep their businesses running and growing after they have started it. Many have started from scratch and have built the business from the ground up, by even doing the dirty work needed, which many may not be willing to do.
As an entrepreneur, it is very important for you to look into all aspects of the business, from the small detail to the bigger picture. The deeper you understand your business the better you will be able to build it. And the earlier you do this the better because as the business grows too big you many not have time to focus on the details. It may seem that many entrepreneurs are lucky and strike it rich immediately without any work, but in actual fact, they have put in many hours, even years to get to that point. They may have been building themselves up for years to get to a certain level, and then they got an opportunity at the right time to capitalize on with their expertise.
Thomas Edison failed for so many years with so many projects, until he finally came up with the light bulb, which revolutionized the world. His hard work and persistence built his expertise and knowledge, helping him to invent such a brilliant product.
This week we look into:
The 3 Mantras of Entrepreneurs –
We start looking at 3 philosophies that many entrepreneurs have in common. We break down and analyze the core values of these philosophies, so that we are able to inculcate them better.
The Back of the Envelope Plan –
Many thoughts and ideas race through our minds faster than the speed of light. It can actually get confusing. We look into why we should sit down and map out our ideas. Putting them in order makes it easier to see the whole picture and it helps in planning the business better.
Customer Financing –
We explore another source of funding for startups. This time we look into getting the customer to finance your product.
It is perfectly fine to build a small business, something on the side that would help you supplement your income. But if you have bigger ambitions, you will have to be prepared to work hard to get yourself on track.
Work hard to understand and enjoy your business better, it will be difficult in the beginning, but it will get easier and the rewards will be great too.