SMEs - the stress of start up

What do you do if you suddenly find you have sold your business? Yes, it can happen that the process is so quick, that you suddenly find yourself without a business. You have some capital, but not enough to live off, for very long. You need to live off the capital and start a new business really quick before you consume the capital. The pressure you suddenly find yourself under, can reduce your ability to think clearly and inhibit your creative processes.

A quick rule of thumb is to try and start a business that will give you some real income fairly quickly, especially if your capital base is fairly small. Remember that most businesses, particularly business-to-business sales, often have a 3 to 6 month lead time. Do you have enough capital to last 6 months? If not look for a small cash only retail opportunity. This may then cover your living expenses while at the same time preserving your capital for the development of another business with greater growth opportunities.

Once the other business is up and running you can then sell off the small cash retail business or let your wife or kids run it. Remember to ensure it has immediate sales, and no long sales cycles, which invariably means a consumer type product or service. However, even this kind of business, unless a franchise outlet, is likely to become a major source of profit overnight. However, it may generate sufficient cash flow to sustain the business into the profit zone.

SMEs - venture capital?

Gordon has covered venture capital a few times recently on his blog. His blog is the one entitled The Scottish Entrepreneurial Input lower down on the right hand side of my blog.The question SMEs often have is whether or not they can access venture capital. The answer is yes, but it is not that simple.

The questions you need to think through and have answers to, are as follows.Do I have a good management team in place? Remember that Venture Capitalists (VC's) do not staff your business. Do I have a vision that is very big in scope?

VC's are not looking for deals to invest in much under the US$1million mark if not US$10million in som cases. They are looking to invest big money in return for even bigger returns. They are wanting a product or service with mass appeal and the ability to have a long product lifecycle, or a product or service which is essentially unique and which will command a premium.Am I prepared to sell it all in the next five years? VC's do not hold businesses for long periods. They want to get in and out, either through the sale of the business or a public offering/listing.These three questions are all that often keep the entrepreneur out of the VC funding race. Most entrepreneurs cannot answer these questions the way a VC wants them answered.These three requirements generally demand a major shift in the thinking of the average entrepeneur. Have you got what it takes?