Starting a business begins with an idea. It must focus on solving a problem in the market. At the concept stage, you have an idea and are exploring the feasibility of building a product or service based on that idea. Essentially, this process is broken up into five basic steps: Ideation, Competition, Organization, Branding & Marketing, and Pitching.
Once you have a basic concept, the focus is on determining whether it solves a meaningful problem and whether anyone would theoretically be interested in the solution. Your idea should reduce someone else’s pain or give them a of concrete benefit or improvement over the existing situation.
Here are five resources to aid in Ideation development:
You will also need to determine how you will build the product or deliver the service and identify the target customers, partners, distributors and competitors in your market. Along the way you must develop and refine the product. The more data you collect, the better your analysis. The more refined your idea, the greater the likelihood of success. You must validate the market and potential demand for your product, particularly whether they will pay for the solution.
Here are resources to aid in developing a Competitive Analysis:
NOTE: This information may discuss issues for which legal advice should be considered prior to a decision or agreement with a third party. FundingSage is not a law firm. FundingSages’ employees and affiliates do not provide legal advice. We recommend you seek the services of an attorney if legal advice is required.
As entrepreneurs begin to establish their companies, they will find they need to register and file with the appropriate state and federal governments. However, some don’t consider the importance of initial branding & marketing as part of this process. Following are seven items entrepreneurs should address as they conduct their research on the opportunity before them.
Here are some resources to help begin Branding & Marketing:
Potential investors utilize your pitch to assess the market opportunity, the management team and expected efficiencies related to the use of potential investment funds. Remember that should the group move to the next stage, they are committing significant time and resources to a potential investment.
Here are some resources to help prepare your Pitch to Investors:
If you do not have an entrepreneurial idea to develop or are in the initial stages of considering entrepreneurialism as an option, you may want to consider attendance at one of the US colleges and universities which offer entrepreneurial programs. A listing of these institutions appears below.
The process of raising funds by obtaining small amounts of money from large groups of people, through the internet is known as crowdfunding. Following are information, resources, and tools, related to this financing methodology.
Background Information
Crowdfunding is a process of raising funds for an opportunity by obtaining small amounts of money from large groups of people, generally through internet sites designed specifically for this purpose. The internet facilitates crowdfunding through fundraising platforms, which, when leveraged with social media websites such as Facebook, Twitter and Linked-in are able to rapidly and efficiently attract vast numbers of potential investors resulting in successful fundraising campaigns for opportunities ranging from personal projects and social support to entrepreneurial ventures.
Crowdfunding, a recent phenomenon, has the potential to radically change the fundraising processes for individuals, non-profits and for profit entrepreneurial endeavors.
Crowdfunding can be utilized to obtain “Money for Goods”. Under this funding model donations are solicited for creative personal projects, social welfare projects/non-profits, scientific and research and to a lesser extent, “for-profit” projects. Monies obtained under this approach are generally categorized under one of the following three funding models:
All or Nothing (AON)
Fund-raising pledges are pursued with a pre-determined minimum. If the minimum is not met, no money is collected.
Keep it All (KIA)
Fund-raising is pursued without a pre-determined minimum. All of the funds collected (less commission) are provided to the entrepreneur. Even if the entrepreneur has insufficient funds to meet the objectives, he/she has the discretion as to whether or not to refund the funds.
Bounty Funds are raised for the purpose of creating a product or providing a solution to a particular problem (i.e.; a software bug). Funds are awarded when someone successfully provides the requested service.
Crowdfunding can raise equity or borrow money for entrepreneurial opportunities/business ventures. Under this model, crowdfunding platforms and social media websites are leveraged to expand the potential investor base providing significantly higher numbers of potential investors for entrepreneurial opportunities.
Currently, in the United States, the options here are somewhat limited as the processes generally continue to require “Accredited Investor” status and transparency. However, the regulators are reviewing current regulations based on the “Jobs Act” and some liberalization my result in expanding the pool of investors to include non-Accredited Investors use of the crowdfunding platforms and capabilities. The environment is dynamic and interested parties in all countries should monitor the environment on a continuing basis for change.
As described above, crowdfunding for equity and debt can be further defined as follows:
Debt crowdfunding– The start-up borrows money which must be repaid, usually with interest.
Equity crowdfunding– Equity is provided to investors for funds invested in start-ups raising funds.
Property crowdfunding– Owners raising funds provide investors an interest in the underlying property.
Other crowdfunding– Various structures generally unique to particular services, (i.e.; perqs, publication, or rewards).
Resources
Crowdfunding Professional Association The Crowdfunding Professional Association (CfPA) is a 501 (c)(6) nonprofit trade organization that was established following the signing of the Jumpstart Our Business Startup Act (“JOBS Act”) in April of 2012. The association is dedicated to representing the Crowdfunding industry, engaging the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) and providing the industry with education, a professional network, and tools that will accelerate the capital formation and ensure investor protection.
JOBS Act The Full Text of the America JOBS Act posted on the White House website.
SEC Press Release (SEC Issues Proposal on Crowdfunding) The Securities and Exchange Commission, (SEC) press release related to the commissions proposed rules on crowdfunding.
Patents are exclusive rights provided to inventors of innovative new, useful, non-obvious machines, processes, industrial designs, articles of manufacture or compositions of matter. Patent protection typically includes provisions of these exclusive rights for a specified period of time, related specifically to the invention.
Trademarks, like patents, provide the holder exclusive rights. They protect signs, designs, and expressions which identify properties of a company’s products and services. When the sign, design or expression identifies a company’s services, it is known as a service mark. Patents and trademarks are both forms of intellectual property.
Background Information
Patents
Sovereign nations typically grant patents to inventors or their assignees for a specified period of time in exchange for the inventor providing a detailed disclosure to the public. Generally, patent protection is available for a minimum of twenty years. However, the duration of exclusive rights related to usage of patented intellectual property does vary by country.
Typically, under the rights granted, third parties are prohibited from commercially producing, selling, using or distributing a patented invention without their having obtained specific rights to do so. In the United States, individual inventors must apply for patents but the patent may ultimately be assigned to corporate entities. Outside the United States, it is more typical for patent applications to be filed by either individuals or corporate entities.
Generally, a formal written application to the nation’s patent office is required and the concept is reviewed by a patent examiner to ensure it qualifies and that there are no precedents to the concepts under consideration. If a patent is infringed upon, the holder must generally enforce their rights through the legal system. Typically, monetary compensation is sought as a remedy to the infringement. In some cases, injunctions prohibiting future acts of infringement are also pursued.
Trademarks
Trademarks and Servicemarks are utilized to claim exclusive properties of products and services by the owner. Like patents, trademark use can be based on both ownership and license agreement. In some jurisdictions, trademark rights can be established through use in the marketplace or by registration through the trademark office or similar jurisdiction. However, some only recognize registration as the appropriate process. Rights typically expire if trademarks are not actively utilized over time.
Trademark infringement can result from intentional acts or occur unintentionally. However, intentional infringement typically results in greater damages to the infringing party.
Resources
IP Australia
IP Australia is the Australian agency that administers intellectual property rights and related legislation associated with patents, trademarks, and designs.
Canadian Intellectual Property Office The Canadian Intellectual Property Office is the Canadian agency which grants Canadian patents and registers trademarks.
European Patent Organisation, (EPO) The European Patent Organisation is an intergovernmental organization established in 1977 based upon the European Patent Convention signed in Munich, Germany in 1973.
Office for Harmonization in the Internal Market, (OHIM) The Office for Harmonization in the Internal Market is the European Agency responsible for managing creativity and innovation in the Community trade mark and the registered community design offices.
United States Patent and Trademark Office, (USPTO) The United States Patent and Trademark Office is the Federal Agency which grants U.S. Patents and registers trademarks.
Small businesses are subject to a significant number of regulatory requirements. The Federal government does control some items, but individual states are the primary regulatory entities when it comes to organizing and controlling small business. They establish approved organizational structures, licensing requirements, and tax policy. State agencies also interpret and implement Federal statutes like environmental regulations.
Areas covered by Legal or Regulatory Requirements:
Advertising laws
Generally, these are covered by both State and Federal consumer protection laws. You need to be truthful and not misleading in your advertising efforts. They generally apply regardless of the advertising medium whether print, on billboards or over the Internet. There are also laws concerning online marketing such as spamming, telemarketing laws, and what you can and can’t say on a product label.
There is a wide range of Federal, State and even local laws pertaining to employee rights such as discrimination and harassment, termination, safe and drug-free work environments, benefits, and wages. Of particular note to small business is the distinctions between salaried and hourly employee classifications as well as rules for subcontractors.
Now that almost every business is online, companies need to be in compliance with laws dealing with online privacy, security, copyright, and taxation issues.
The Environmental Protection Agency (EPA) and your state government have very specific laws when it comes to regulating the impact of business on the environment. Depending on the area of business, companies must deal with disposal of toxic materials, your responsibilities for air pollution control, and more.
These laws protect employees from a multitude of hazardous work environments. The fines for failing to comply with these laws can be substantial and ignorance of the law is no excuse. The Occupational Safety and Health Administration (OSHA) has many outreach programs in place to help small business owners comply with workplace safety regulations.
Disclaimer: The content presented on this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.
The following links give a more in-depth information about State Regulations, Permit and License Requirements, and Business Taxes. Below is a listing of links to each state’s websites.:
SmallBusiness.com: *This website has a series of articles related to small business. While this is a valuable resource, it is not very friendly and lacks a good search tool.
Small Businesses Fret Less…: *This gives a brief description of the issues involved in small business regulation and has an interesting tool that gives an overall ranking for each state’s regulatory/tax environment for small business
Accelerators, also known as seed accelerators, are organizations which support seed and early-stage startups through a formal, defined mentoring program from experts with experience across the startup spectrum. Typically organized as a cohort program lasting twelve to sixteen weeks, the programs end in a public pitch event or demo day presentation to investors.
Background Information
Accelerators provide defined cohort programs, for entrepreneurs and startups. The programs typically last 12 to 16 weeks, although the duration may vary. They generally occur on-site at locations provided by the accelerator. Most include continuing mentorship during the course of the program led by multiple experienced mentors who have been trained for this purpose.
Most accelerators require attendees to be on-site and a few require the attendees to relocate their companies to the region in order to be accepted into the program. Most require a full-time effort by the entrepreneurial teams as opposed to the individual entrepreneur.
Accelerators are designed to address all the key issues from identification of the idea or concept, to building a prototype, conducting market surveys/tests/validating the market, building teams, creating and documenting the company infrastructure and ultimately obtaining third-party financing.
Other resources may include:
Startup stipends which could range from $10K – $100K
Office space during the program
Special events and/or dinners with guest speakers
Entertainment events
Specified professional services from accounting, legal, marketing and other professionals are provided to participants free of charge by some accelerators and their professional partners
Free access for defined periods to select web-hosting, software and SAAS tools supporting the development, growth, and operations of the startup
Occasional housing for the cohort participants (but this is usually the exception)
Post Demo-day mentoring
The culminating event is usually a Demo-day in which the entrepreneurs pitch their companies to the public and investors such as angel and VC groups. The value of the process for the entrepreneur includes a network of connections, the experience of participating in the cohort with peer companies, and recognition for having been chosen and participated in the program.
It is not typical for entrepreneurs or startups to be charged fees for these programs. Instead, the accelerators typically require equity in the startup, ranging from 6% – 10% depending on the accelerator.
Resources
Accelerator Assembly A European based industry-led network that connects accelerators, entrepreneurs and policymakers to strengthen the support afforded to internet-based startups on the continent.
Business Innovation & Incubation Australia Business Innovation & Incubation Australia, (BIIA) is an association of Australian business incubators which sets the practice standards for the incubator industry in Australia.
Canadian Association of Business Incubation The Canadian Association of Business Incubation, (CABI) is a Canadian association dedicated to supporting the growth of new and early-stage businesses in Canada. Their mission is “to advance the success of business incubators and accelerators across Canada while enhancing the knowledge and skills of incubator and accelerator professionals and promoting a better understanding of business incubation/ acceleration’s role in economic development.”
National Business Incubation Association The National Business Incubation Association, (NBIA) was established to advance business incubation and entrepreneurship in the United States. It is a provider of information, education, advocacy, and networking resources to its members and partners to bring excellence to the process of assisting early stage companies.
Accelerator Listing
Many of these accelerators are spotlighted on our FundingSage Startup Accelerator Spotlight. Learn more about your favorite accelerator there!
The Small Business Administration (SBA) site is a comprehensive source for information on starting and operating a small business. However, it can be difficult to navigate. There are multiple links that seem to address the same issue, but don’t always take you where you need to go. You could spend hours looking through this site, some productive, some wasteful.
Resources
SBA FINANCING:
Here are some useful links if you are looking at SBA Loan financing:
Information Site This site gives a brief outline of different financing options. It is very general and does not give detailed information or useful links to specific financing options.
SBA Loan Site This is a useful site for understanding SBA Loan Programs. It is just a broad overview. The link below is much more helpful in understanding the specifics of the loan programs.
SBA Loan Programs This is an extremely useful site for understanding SBA Loans. It gives links to the different loan programs. These pages explain how the loans work, give eligibility criteria, fees, rates and terms.
SBA Lending Information:
Lender Documentation Tool On this page, you identify the type of loan you want and it will identify the documentation you will need and provides links to those documents. For the “do it yourselfer,” this is a useful site.
Find an SBA Lender The Small Business Administration does actually lend money. The program is administered through commercial banks in your area. This is a link to the SBA search engine that may assist in finding a lender in your area.
Be sure to talk with your local banks to see if they are an SBA lender. They will be able to give you specific information about your local options.
Once you have a basic concept, the focus is on determining whether it solves a meaningful problem and whether anyone would theoretically be interested in the solution. Your idea should reduce someone else’s pain or give them a of concrete benefit or improvement over the existing situation.
Organizing a business can be a complex journey. Developing and filing the appropriate documents will create the foundation for a successful business.
Potential investors utilize your pitch to assess the market opportunity, the management team and expected efficiencies related to the use of potential investment funds. Remember that should the group move to the next stage, they are committing significant time and resources to a potential investment.
