STARTUP FINANCE

STARTUP 

Startup means experiment around vision that is seen by an entrepreneur. Entrepreneur  would need lot of funds to start a business. Funds means capital invested by a person in the business. But just wait a minute before thinking how to raise your fund. First answer my few questions

Questions

Q1  What is your product/service ?

Q2   How would your customer respond to your product ? 

Q3   How much customer money customer would be ready to pay for the product ?

Q4   Can you make product within cost i.e. price that customer is ready to pay minus adequate profit margin ?

Q5    How would you reach your new customers ?

I have asked five questions I am sure you can answer first one remaining for are your estimate or your assumption you would not have answer to four question in most cases.

These questions are crucial to start a startup. First we should find answer to these questions.

  Answer to Question 2

In order to get answer you should do the following exercise

1.Select your customer base i.e. who would be your customer for example college students,teenagers,etc.

2. Prepare you product for about 150-200 customers, if it is less costly and 50-75 if it is costly to produce.

3. Now select customers from your customer base who are unknown to you. Now try to sell it to your selected customers .(Remember it should not be free or discounted)

You would get the answer how customer responds to your product. If response is positive from about 75% of customers then you can move on to question 3.(if you are not able to sell a product then it should be  counted as negative)  

Answer to Question 3 

It is simple check the price at which maximum no of units are sold by you in answer 2.

it is the price at which you should sell it.

Answer to question 4

It is time to plan your process to produce goods/services. After planning process compute cost of each process and it should be realistic one. You can research market for this purpose.We will discuss it in some other posts.

Answer to question 5

If you are planning for online sale or over the counter sale then you should first try to sell it from free sources i.e. by posting pictures on internet and checking response of customer whether customer like to buy service or goods from online portal.

After answering above questions you will be able to decide whether you should start your startup or you should drop idea and save capital from investing in wrong business.
We would learn about how to finance a startup later on.