There are many stages of a business, and it starts from the Basic level where your idea takes a shape like a baby in the womb. If the baby does not get enough nutrition in the mother’s womb, it gets sick and has a great risk of catching an illness.
Like the baby, your business needs to be nurtured before it is made public. There are many points you need to remember but we are talking about the proper investment technique at this point. So let’s talk about 5 points you need to remember before investing in your business.
Table of content:
- Is your idea worth it?
- What is your business model?
- Keep a fair amount of money for promotion aside
- What do you expect from this business?
- Capex and Opex
(1) Is your idea worth it?
Again, I am asking you to think if your idea is worth it? Many people invest without a proper plan and idea and eventually they end up losing all the money and confidence. Give it a thought if you need to invest in your business at this point. To know if your idea is great, do a little market research. If many people are doing this business, gather some data about their revenue and profit.
Go to their store or offices and ask them as a customer. Ask their current sales and product diversity. If you have invented a product and you are willing to sell it after a patent, think it from a customer’s perspective. What can you gain from this product and what you are going to do after buying it?
Check the product’s life and is it okay to pay X amount of money in the future for the same product? If this does not have a problem, check out your business diversity and what is the age range and audience you are going to target in the future? Collect the age and audience data and do a thorough assessment of your business. How many people are going to buy it and what is the amount of sale you expect from your business?
After gathering all the data, if you see any single opportunity, just go ahead invest the amount you are going to need in the future. If you have any questions regarding it, feel free to contact me.
Here is the extract of the points I have mentioned above.
- Think from a customer’s perspective
- How can your customer benefit from your product?
- Product life
- Current Market status and availability of the product
- Age range and targeted audience
- Number of people who need your product
- Market research and competitive landscape
(2) What is your business model?
Another point you need to analyze is your business model. My first startup was a printing related business and after all the problems and issues, It is thriving now.
Do some thorough research on your business model and analyze how are you going to get the profit in the end? To find the data you need, I’ll attach a screenshot of my business model I prepared before starting my business keeping all the things in mind (Including Angel Investors).
A business model usually consists of 5 Parent categories and Countless children categories (It depends on your business model solely).
Research these points and how your business model is going to work in the future. Check out the Business model I have attached below. Because of the size of the picture, I have uploaded it on some other website. because it may slow down the loading of this page. Check it out here.
(3) Keep a fair amount of money for promotion aside:
Promotion is the last step in a successful business. The more you spend on quality content, the more you get from your customers. It is important to spend on promotion. It also depends on your business model as well. In my business, I have to spend over 20% of the total product cost, but the outcome is good. The more I spend, the more customers I get.
I can’t tell how much exactly you need to spend on your business but you need to keep at least 15% of your total amount in your side pocket. You need to divide this amount monthly and start experimenting until you find a perfect audience for you. If you already know what is your audience, you can give it a head start.
Keep a track of your promotional amount and spend it regularly. Always store the data of your customer outreach and sale to sharpen your promotion.
(4) What do you expect from this business:
We all have a different approach in our minds on how we are going to grow our business. Some people start the business in a hope that it will become a multimillion dollars company and make its place in fortune 500. Whereas some people do a startup to grow it, sell it and get a lot of money for their next business.
I was not sure about their thinking first, so I met both types of people to hear their thoughts on it. It turned out that people who were looking for an exponential growth chose the path of growing and selling. The other friend I met is working in his startup for nearly 9 years now. He says “It is hard to stand on our own in the beginning. There are stages where all you have to do is just sell your company. But people who make it out of this trouble have a bright future.” And he has reached the million mark in these 9 years.
There are cons of looking for exponential growth. You’ll meet your expectations in the beginning, but you will put a cap on your growth. To get out of that place, you need to invest a lot of time, hard work and money.
(5) Capex and Opex:
We cannot talk about Capex and Opex in detail in this post. It is another topic that needs explanation. To put it in simple words, Capex and Opex stand for Capital and Operational expenditures respectively.
- Capex: You can calculate your company’s Capital expenditure just by calculating the total amount of Place, Plant, equipment in the balance sheet. But when you are going to spend on your business, you cannot calculate future expenses. But It will be easy if you could make a plan for your business and calculate the equipment you are going to need in the future. Then also add the value of your business plant and property too at the current time.
- Opex: Opex stands for Operational expenses. The total amount you are going to need to spend to run your business. It includes employees’ salary, rent, equipment wear & tear, Marketing and all other things you are gonna spend your money on.
A successful business needs a lot of hard work, patience, time and money. You too can do it, just focus on your strategy and pour yourself into this. All the best.