How Does Your Business Model Work?

What drives your business and what affects it? Entrepreneurs need to fully understand their Business Model.

What creates revenues in your business? What are the key variables that affect your revenues? Understanding your revenue model completely and analyzing the key drivers is an important component in knowing your Business Model . Perform sensitivity analyses on key variables to see how they affect your revenues. What could you do to control the variables and affect the outcomes?

Similarly, what are the key cost and expense components in your business? What is fixed and what is variable? Do you know the broad categories that account for 80% of your costs and expenses? What can you change to increase your bottom line?

What is controllable versus non-controllable in your Business Model? Are external factors a key component?

As an Entrepreneur one needs to fully understand the Business Model not only to improve performance but also to talk intelligently to potential investors.

Ravi Patel

Published in: on September 27, 2016 at 4:17 am  Leave a Comment  
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Being Productive

Entrepreneurs often are fixated on the notion that working long hours translates to success. Most often this is not true.

Is working long hours always a good thing?

How productive you are is the determinant of success, not necessarily working long hours. Of course, one needs to put in the effort to succeed. However, make sure that the focus is on “Doing the Right Things,” not doing too many things poorly.

The working longer syndrome sometimes is also transferred to the Entrepreneur’s employees. Entrepreneurs sometimes have a tendency to judge employees on how long they work. The focus should be on what employees accomplish and how productive they are.

Stress time management and productive effort to enhance performance! Working hard is good only if it is productive.

Ravi Patel

When Asking Investors ….

All Entrepreneurs, especially start-ups, are in need of money. What are the key things you need to do first when looking for money?

1.   Ask for a specific amount. Don’t state ranges or be vague. If you do not know the specific amount, it does not speak well of you understanding the financial needs of your business. It is okay to ask for slightly more than you need to provide for contingencies, but still look for a specific amount.

2.   Outline exactly how you are going to use the money. If you do not have a well-defined idea of how you plan to spend the money, it does not provide a high level of confidence to potential investors/lenders. However, resist going overboard and itemizing each and every item. You should have that for your own use, but do not need it when looking for money especially in the initial meeting.

3.   Present a realistic argument of how using this money will build a business that will generate positive cash flows. This will be the main selling point. Investors or lenders are not only interested in knowing how they will be repaid (with upside), but also whether the business can become a self-sustaining cash generator. Again, the idea is not present a thick business plan with fluff, but rather a well-defined and articulated strategy backed by realistic projections.

Spend some time in working on the above three requirements before you start looking for money.

Ravi Patel

Published in: on September 13, 2016 at 4:07 am  Leave a Comment  
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Making Mistakes

People make mistakes! Great inventions and discoveries were inspired by mistakes. Entrepreneurs also make mistakes, so their tolerance towards their employees making mistakes is expected.

Entrepreneurs should create a business culture that does not penalize people from thinking outside the box and making mistakes. A company cannot grow if no one takes risks just to avoid making mistakes.

Making mistakes is acceptable if it is during the process of trying new methods or ideas. However, it is essential to learn from these mistakes and prevent future occurrences. People grow by learning from their mistakes.

An employee that keeps on making the same mistake again and again despite training, coaching and direction should be dealt with. This situation is no longer is a process of learning but a performance issue. It ultimately hurts the company and people.

Making a mistake is acceptable. Not learning from that mistake is bad; making the same mistake repeatedly is worse.

Ravi Patel

Published in: on September 7, 2016 at 4:20 am  Leave a Comment  
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