HOW TO AVOID COMMON STARTUP MISTAKES and MY BUSINESS PLAN

 In his interview entitled “HOW TO AVOID COMMON STARTUP MISTAKES”,  John Gachiri  thought that making mistakes is part of the process of building a company; quickly recovering from them is what’s most important.

He gave 4 steps to avoid when starting a business:

Step 1: Stay on Target
A mistake often associated with the first step is signaled by an entrepreneur’s inability to clearly and concisely convey his idea. You have to be able to generate buy-in from investors, partners and potential employees, so nail down your “elevator speech” — what you would say if you ran into an important potential investor in an elevator. Try using a Twitter-like template to refine the essence of your concept into just 140 characters. Once you’ve done that, expand your message to a maximum of 500 characters. Remember, the shorter your pitch is, the clearer it will be.

An associated error is lack of focus. If your start-up has been tagged as “the next big thing,” the adrenaline rush that comes with building buzz can lead to impetuous decisions and a loss of a sense of purpose. Many entrepreneurs end up sprinting in many directions instead of taking assertive steps toward their target. Clearly define your goals and strategies, then establish a timeline. Don’t let the other possibilities or hazy dreams distract you from achieving your goal.

Getting too far ahead of yourself is also dangerous. If your product or service is still on the drawing board, don’t get sidetracked by plans for future versions. As a general guideline, looking two or three years ahead is best, but the nature of your business and feedback from your investors will help you determine just how far ahead you should plan.

Be flexible, because just as a lack of planning can be a problem, adhering blindly to your plan is a surefire way to steer your company off a cliff. A successful entrepreneur will constantly adjust course without losing sight of the final destination.

Step 2: Be Realistic About Costs
Don’t shortchange your start-up when estimating the funds you will require — you’ll just diminish your chances of success. Keeping your expenses under control is vital, but don’t confuse capitalization with costs. The playing field is littered with undercapitalized start-ups that were doomed from the outset.

In the late ’90s, David Neeleman told me he needed $160 million in start-up capital for JetBlue — a huge sum, far more than most entrants to the industry manage to raise. Most of the so-called experts scoffed at the notion that he would be able to find the money and launch a low-cost airline when established companies were failing one after the other, but he stuck to his guns and raised the money. As a result, JetBlue had one of the most successful airline launches of all time, and turned a profit only six months after its launch in 2000.

Step 3: Hire the People You Need, Not the People You Like
As tempting as it may be to staff your new business with friends and relatives, this is likely to be a serious mistake. If they don’t work out, asking them to leave will be very tough.

When Virgin starts any new business, we always hire a core team of smart people who already know the industry and its inherent risks. Take full advantage of the knowledge pool you’ve created; when a problem comes up, remember that nobody has all the answers, including you. One of your goals should be to find a manager who truly shares your vision, and to whom you can someday confidently hand the reins so that you can carry out the next step.

Step 4: Know When to Say Goodbye 
A great entrepreneur knows when the time has come to leave the CEO role. It’s seldom easy, but it has to be done: few entrepreneurs make great managers. In my own case, managing the daily operations of a business simply isn’t in my DNA. (Or, as I’ve said to friends, “It’s not bloody likely.”)

Stepping back doesn’t mean turning your back on your business. At Virgin, I’m always involved in the launch of a new business, and then I gradually hand over control to the new management team as it starts to jell. But no matter how long it has been since I was at the helm, if I see something that I don’t like, I’m not at all shy about making my thoughts known and asking some very pointed questions.

This week I started my business plan related to the $100 challenge:

MY BUSINESS PLAN by Maria Dimitrov

Executive summary

"Fabulous Exchanges" (FE) is a sales service of second-hand products that serve customers throughout the Portuguese territory. Customers are willing to pay for a second-hand product with quality (in good condition) and pay a lower price for it.  Our motto is customer satisfaction. The growth rate for "Fabulous Exchanges" (FE) is great, given the low initial costs. FE is headquartered in Maria Dimitrov’s house. The initial business plan with reduced costs will help in growing the business in the near future.

Objectives

The objectives of the "Fabulous Exchanges" (FE) in the first two years of operation include: Create a company based on selling second hand services to all the continental territory of Portugal using the internet as a platform to sell second-hand products to,

 # 1 goal, exceed customer satisfaction.

 # 2 goal, meeting the growing demand for second-hand products but with quality to families with low income or to customers that do not want to spend much for a product (which, in many cases, will serve its purpose only temporarily)

# 3 goal intended to circulate and give life to products which otherwise would not be used. In making this re-use of products we concern about the environment.

# 4 goal pretend to increase the number of sales by 12% per year.

Initially, I pretend to develop the business in my own home to have the lowest possible cost.

Mission

The mission of the FE is to provide the customer with a professional and fully reliable service. We exist to win and maintain our customers and to provide them with the best products to a good price by attending their needs. In the future we will move to a store.

Company Summary

"Fabulous Exchanges" (FE) will work in the area of ​​Odivelas through all Portugal, offering second hand products and shipping them if necessary by mail.  "Fabulous Exchanges" (FE) will be managed by Maria Dimitrov and is responsible for the planning, estimates, orders, and customer service management. It will be a sole proprietorship, at the moment but with the potential of growth in a near future.

Property Company

"Fabulous Exchanges" (FE) will be a sole proprietorship, owned by Maria Dimitrov.

Summary start-up

Initial costs include the equipment required for business based on your own home, initial legal fees and marketing fees. Office equipment includes a computer and a cell phone. The legal fees are used for the formation of the company. Marketing fees revert to the production of brochures.

As I will use the existing web page of OLX to sell my products I do not need to pay anything for it.

Services

"Fabulous Exchanges" (FE) will provide the selling of second hand products by Internet to potential buyers. The formalization of the deal will be done by phone and will be completed by bank transfer.

  When necessary, the products will be shipped to the customer by mail with the postage to be paid by the customer.

Market Analysis Summary

"Fabulous Exchanges"  (FE) " will target families with low income or potential customers that want to save some money by providing a quality and honest  service. Marketing our products by word of mouth, by internet, or by pamphlets to our potential customers,  and further promoting  discounts to our best customers .In a near future I will create an internet site to be explore for the customers, with all the information of services  prices, and forms of deliveries and payments.

Strategy and Implementation Summary

"Fabulous Exchanges" (FE) is promoting second hand products to competitive prices and quality.

Competitiveness

Our competitive advantage is based on a more efficient, quality, and speedy service to our customers. Professionalism is a skill that will be used to show our reliability and competence. We will build a relationship of trust between the company and the customer. This bond of trust will bring to our customer loyalty and also the subsequent referral of their friends.

Sales strategy

The sales process starts with our marketing campaign. This campaign will promote interest through our leaflets appealing. Important to show what sets us apart from our competition and how the expectation will be surpassed by the presentation of our services.

Sales forecast

It is a business that can be started right now. The first step is to photograph the items you plan to sell and put on OLX. Depending on the product quality you establish an attractive price to the potential buyer. The amount of available items will not be an initial problem because I have many items in good conditions I want to rid of them but that may be useful to others, especially families with children. For a near future the business will expand to the purchase and sale of second-hand items, so there is an amount in inventory able to cope with demand.

Summary management

"Fabulous Exchanges" (FE) is owned and operated by Maria Dimitrov. It will be formed as a sole proprietorship. Maria Dimitrov, founder and owner, has an experience in selling second good items occasionally, and saw the potential of this business. Maria is studying Business Management at BYU Idaho. Maria has experience in working as management team and sales for about 5 years.

Plan staff

The team will be composed of Maria working full time to "Fabulous Exchanges" (FE). Initially Maria will work both in the activity itself and by the end of the year, with the expansion of the business and moving to store will employ at least one employee, to stay in the store while Maria manages all the business. Over time you will need to hire an accountant.  After the demonstration of a reliable and steady work, wages will raise accordance with the company's profits. Maria will have paid a monthly salary. The rest of the profits will remain within the company.