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Startup Best Practices 

New Business Startup Plan Strategy Aspir


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Since we provide seed, venture, and growth-stage funding through our portfolio companies we have the perfect purview to see first hand what works and doesn't work. In addition, we also continually and exhaustively scour the start-up, mid-market, and academic arenas to source best practices to help you scale.


5 Things the Most Successful Entrepreneurs All Have in Common

What it take to rise above the rest.

Published on: Nov 18, 2016 by Ernst & Young

What do Spanx founder Sara Blakely, AOL co-founder Steve Case, and Dell's founder Michael Dell all have in common? Besides running their own powerhouse companies, they were also all winners of the Ernst & Young Entrepreneur of the Year Award--in 2002, 1994, and 1989, respectively. It's an award the New York City-based professional services firm has given to an average of 300 business leaders each year across regions and industries for 30 years. In honor of the award's anniversary, EY partnered with the Harvard Business Review to survey 500 of its more than 9,000 past award winners, which includes luxury-fashion company co-founder Rebecca Minkoff and Starbucks CEO Howard Schultz, to find out what it takes to go from big idea to scalable business. Here are the five main lessons that the founders and executives at companies with a collective $1 trillion in revenue and 14 million employees credit with their success.


1. Debunk founders syndrome.

It's a popularly held belief that a founder who stays in place too long could end up poisoning the mission of the company and its culture with his or her personal objectives and personality. But the study says that the most successful founders were able to balance out their own influence in the company by empowering other members of their team to own different parts of the mission. By giving employees freedom within the company, 2014 EOY winner and founder of food-service company Bon Appétit Management Fedele Bauccio says he's able to stay with the company but out of the way of its mission. Plus, it gives him time to do what he's good at. "The founder is important since a professional CEO may not be able to maintain the culture and vision of the company in a way that has real meat," he says.

2. Tap into the power of purpose.

It's not just an altruistic notion anymore. The most successful leaders say they employ a defined purpose to retain employees, earn funding, and build brand loyalty. Founders like Ben Cohen of Ben & Jerry's say that while profits should be a measurement of success, striving for a greater purpose should be the goal. And the market backs them up: according to EY's analysis of public companies between 1996 and 2001, those with a defined purpose outperformed the S&P 500 10-fold.

3. Run lean as long as possible.

Self-funding strategies forced founders to focus on the most important aspects of achieving their company's mission early on. Cohen says bootstrapping was one of the main secrets for his success. "It's important not to have enough money when you start," he says. "If you have a lot of capital, you can easily end up wasting it because you have it to spend."

4. Always be selling--to potential employees.

Finding the right talent was cited as the biggest challenge for businesses--both during the startup days and throughout every stage of growth. The reason? Respondents don't see recruiting as an end in itself--that is, finding someone with certain skills to fill a job slot. Instead, it's important to find team members who connect with the company's mission and possess the qualities that will keep them involved long term. To do that, founders emphasize the importance of fostering a distinct company culture, regularly recognizing employees' accomplishments, and compensating them fairly. As a small, but important gesture, NPS Pharmaceutical CEO Francois Nader says he makes it a priority to personally greet and shake the hand of each new employee. "It is amazing how much employee engagement you can build from seemingly small gestures of recognition."

5. Don't be risky when it comes to risk.

Approaching risk correctly, something all entrepreneurs have to do, is about switching to a proactive mindset. EY's study says that these founders learned they must map out all the possible routes, and associated risks, before making a move. That way they can form a strategy for mitigating risks along their chosen path. It's the difference between playing defense, like many corporate executives do, and playing offense, says AOL co-founder Steve Case. "Many corporate executives are defenders. Entrepreneurs are attackers. They are still focused on what might go wrong, but put their attention on making sure more things go right."

Submitting a Plan for Funding

Packaging your Content

Successful funding requires the right packaging, so prior to submitting your company for funding (whether it's with us or with other funding sources) you should create the following documents: 

  • Exeuctive Summary: About two pages long. This is usaully sufficient for an initial submission. The VC will ask for other documents if they decide to proceeed
  • Business Plan: Up to 30 pages long. Most VC's will ask to see a copy of your business plan
  • Resumes: Keep them to one page if possible. VC's like to see the resumes for all members of your key management team
  • Financial Projections: Make sure they are realistic and explicitly describe the assumptions supporting the model
  • Capitalization Table: Describe the current owenrship of the company, including the number of shares and percentage. Include the employee option pool in this calculation


Executive Summary - An effective executive summary is typically one to two pages long and answers the following questions:

  • What is your business ?

  • Who is your management team?

  • What is your business model (primary source of revenue)?

  • What need are you fufilling or what problem are you solving?

  • Who are your competitors?

  • Who are your customers?

  • What is the status of development?

    • Idea stage

    • Development stage

    • Product or service available to customers

    • Have raised some revenue

    • Have raised significant revenue and are looking to ramp the business


  • How much money are you seeking to raise?

  • What is your target valuation?

  • Who are your current investors?

  • Where are you headquartered? 


Business Plan - The full business plan should cover the following: 

  • The business - a) Short description of company's business b) Vision statement c) Mission statement

  • Market - a) Historic and projected size b) Market trends

  • Product Offering - a) Product description b) Current development status and projections c) Differentiation d) Revenue generation

  • Distribution - a) Key customers b) Sales channels c) Partnerships

  • Competition - a) Key competitors b) Barrier to entry

  • Management Team - a) Team background b) Board composition

  • Financials - a) Current balance sheet b) Projected cash flow (first two years by quarters) c) Projected head count by functional area (G & A, sales, marketing, Product Development)

  • The Deal - a) Amount to be raised b) Valuation asked c) Use of proceeds


Raising Capital

The Process

Raising capital is never easy, but Startups can have it particularly difficult stemming in part from their steep risk curve. Startups go through various stages as they progress along the growth curve:


  • Angel/Seed Stage: capital is often used to validate and idea. Money is raised from friends and family, to crowdfunding, to Angel investors. This stage may even be partitioned between “seed” and “angel” rounds.

  • Startup Stage: if capital was unavailable from Angel investors in the seed stage, they may come in at this stage. The startup stage is characterized by product and/or market validation. Capital is required to further develop the product and initiate a marketing plan.

  • Early/Growth Stage: the startup is selling its product or services and may be at, or may have visibility to, break-even. At this stage the startup may begin to attract institutional financing from Venture Capital firms.

  • Late/Expansion Stage: at this stage the company is profitable and is attracting “alphabet” rounds of equity, or venture/mezzanine debt to scale the business.

  • Exit: here the company either goes public through an IPO or gets acquired.

Brand Building

Finding your Catalyst Moment

From Chipotle to Startbucks: How Brands Create Catalyst Moments (Source: Inc Magazine - Jill Kransy, Staff Wrtitter)


When Chipotle suspended pork sales at about a third of its restaurants last month, the fast-casual chain didn't just punish its supplier; it also sent a bold message about its focus on quality food. As John Marshall, senior partner and global director of strategy at the marketing firm Lippincott, sees it, the move represented a "catalyst moment." That's when a company takes "the kind of action that gets attention, gets people thinking, and shows where a brand is going."


Given how saturated the media landscape has become, it takes that much more to grab people's attention. That's why an event or symbol--especially when it's tied to a purpose--can make such a powerful statement. Of course, catalysts can take many forms. Marshall cites John Legere's dubbing T-Mobile the "un-carrier" and Starbucks CEO Howard Schultz's temporarily closing thousands of stores to retrain baristas. Here are some memorable catalyst moments and what you can learn from them. 


  • Starbucks closes 7,000 stores:  When the coffee shop chain was faltering in 2008, Schultz, who had previously stepped down, swooped in to save it. That February, he temporarily closed about 7,000 stores for several hours to retrain baristas. "The unprecedented decision to literally close stores--which cost us millions of dollars--was done to demonstrate how serious and committed I was to making sure we go back to the core," Schultz explained to NPR later. Needless to say, it worked. 

  • T-Mobile becomes the "un-carrier:"  It was an industry game-changer when T-Mobile announced it was doing away with contracts in March 2013. Finally, customers could opt out whenever they wanted. And that wasn't all: T-Mobile used the "un-carrier" concept to pave the rest of its strategy, from doing away with international roaming charges to agreeing to pay early-termination fees for customers switching from Verizon, AT&T, or Sprint. 

  • Walmart debuts $4 prescriptions:  "This embodies what the brand wants to be known for," Marshall says of the program. Walmart aims to "help you live a better life and save money at the same time." Apparently the chain is offering $4 doctor visits as well. At a time when Americans crave speed and convenience, Walmart is making good on its promise to be consumers' one-stop family resource. 

  • Target goes highbrow:  Say what you will about the beleaguered discount retailer, but when it comes to releasing coveted capsule collections, nobody does it better. Missoni turned out an adorable luggage range, while Zac Posen's well-tailored dresses flew off the racks. Not everyone's a fan of the high-low collaborations (see this year's partnership with Lilly Pulitzer), but when Target debuted the strategy several years ago, it felt exciting and fresh--accessible style for a reasonable price point, which is what the brand is about. 

  • Maptia's nomadic office:  What better way to show your passion for travel than by relocating your office? Having participated in Start-Up Chile in Santiago and TechStars in Seattle, Maptia, a startup that aims to help travelers share their stories, has also called Taghazout, a small fishing village in southwest Morocco, and the Swiss tourist town of Locarno its home. 


Tough Questions VC's ask

Prepare Yourself

Typical Questions asked by VC's:


  • Management Team:

    • What type of business experience does the management team have?

    • Are the members acheivers?

    • What motivates each team member?

    • Can the team accomplish the job outlined in the business plan?


  • Industry and Trends: 

    • How does your company and product fit into the industry?

    • What are the current market trends in relation to your company's product and or service?

    • What are the keys to success in your industry?

    • How did you determine the total sales of the industry and it's growth rate?

    • What industry changes most affect your company's profits?

    • What are the seasonal effects in your indsutry?


  • Differentiation:

    • What makes your business different?

    • Why does this business have high growth potential?

    • What makes this business situation special?

    • Why will this business succeed?


  • Product:

    • Why is this product or service useful?

    • What will the product do for the user?

    • What is the expected liefcycle of the product?

    • How do advances in technology affect your product and business?

    • What is the product viability?

    • What makes this business and product unique?

    • Why will your business succeed when it must compete with larger companies?

    • Does the product meet a specific need or preceived need of the customer?

    • Does the product have brand name recognition?

    • Are there repeat uses for the product?

    • Is this a high quality or low quality product?

    • Is the consumer the end user of the product?

    • Does this product have mass appeal or single large buyers?


  • Competition:

    • Who is your competition?

    • What advantages does your competition have over you?

    • What advantages do you have over your competition?

    • Compared to your competitors, how do you compete in terms of price, performance, service, and warranties?

    • Are there any substitutes for your product?

    • How do you expect the competition to react to your company?

    • If you plan to take market share, how will you do it?


  • Marketing and Sales:

    • What are the critical elements of your marketing plan?

    • Is this primarily a retail or industrial marketing strategy?

    • How important is adversiting in your mareketing plan?

    • How sensitive are sales to your advertising plan?

    • How will your marketing strategy change as the product/or industry matures?

    • Is direct selling involved?

    • How large is your customer base?

    • What is the typical demographic of your customer base? 

    • What is the lag time between initial buyer contact and the actual sale?

    • What is the capacity of your facility?

    • Where do you see bottlenecks developing?

    • How important is quality control?

    • What is the curent backlog?


  • Manufacturing and R&D:

    • Is the product assembly line based or individually customized?

    • What are the health and safety concerns in producing this product?

    • Who are your suppliers and how long have they been in business?

    • How many sources of suppliers are there?

    • Currently, are there any shortages in components?

    • How many employees do you have?

    • What is the anticipated need in the immediate future?

    • Where does the labor supply come from?

    • What is the employee breakdown, i.e., full time, part ime, managerial staff, support staff, prodution/service?

    • What are the costs of training?

    • Is the labor force primarily skilled or unskilled workers?

    • Is there a union and what is the company's relationship?

    • How old is your company's equipment?

    • What is the yearly maintenance costs?

    • What are your capital requirements over the next five years?

    • Do your competitors have an advantage due to equipment?

    • Do you lease or own the property/facilities?

    • What are the terms of your lease?

    • How much do you owe on the mortgage?

    • Are the facilities adequate for future expansion based on your business plan?

    • Will the patent expansion require relocation?

    • Who owns the patent?

    • What licensing arrangements have been made between you and the patent company?

    • Does anyone else have a licensing arrangement? If so, how does this impact your company?

    • What is the current research and development?

    • What is the annual expenditure?

    • How does R&D impact future sales?

Crowd Source Funding

Tips for Securing It

5 Tips for a Successful Crowd Funding Project (Source: Joey Ader, a freelance writer and editor pondering all things finance-related)


There are many ways to fund a new business project. Traditional bank funding, business cash advances from sites like, venture capitalist funding, and private placements, have long been the mainstays of corporate finance. These can be very effective, but there is a modern alternative: crowdfunding. This allows you to gather the donations of a large amount of people to finance your project. The donations can be small, but since you are accessing many people, they can add up to large amounts.


If this sounds like the way charities work, you’re on the right track. There are significant differences between crowdfunding and soliciting charitable donations. Donors, despite the title, get something back in exchange for their money. The return doesn’t have to be monetary. Sites like Kickstarter allow people to set up projects where the payback can come in the form of something as simple as a download or something fairly elaborate. We offer tips on how you can plan, grow, and connect with your new crowdfunding project.


  1. Timing Is Everything: Set an appropriate length for your project. Thirty days is the most commonly suggested time span for a new project. This gives enough time to accumulate funds, but allows you to end the project before you get burned out. One month is a dependable amount of time to gather sources and compile the funding you need to launch your new venture.

  2. Set Your Sights: Select the appropriate funding target. Make it big enough to be impressive, but small enough to be reachable. You don’t want to limit yourself to any kind of source. Some sites won’t back you up if you don’t hit your goal, so be sure to aim right. Look at similar projects to get an idea of the funding levels that are successful. It’s always a good rule of thumb to compare and contrast.

  3. Socialize: Set up an online social network before launching a funding project. By having people on your side right from the start, you gain access to those who are most likely to fund your project. Better yet, they can help spread the word to other interested people. If you’re lucky, your project may even go viral. Sites like Facebook and Twitter will allow people to see your progress on a personable scale, including pictures and quick updates. LinkedIn will get you connected to the professionals who are taking an interest in you, and will even get you connected on the down the line with other available resources.

  4. Offer A Desirable Reward: Many people use crowdfunding to finance creative projects that offer incentives. T-shirts, tickets to performances, and other rewards of this nature are common. Different perks are usually offered for various levels of funding in a manner similar to that used by public broadcasting. From enhanced versions of your product to giving contributors credit for its progress, are both examples of giving back.

  5. Have A Theme: Come up with a good theme for your campaign. Find something that can move people emotionally; something that will make the project have more of a sense of community. Since crowdfunding is a collaborative effort, similar concepts are promoted by keeping everyone involved.


By following these tips and being creative, you improve your chances of getting enough donations for your crowdfunding project to do the job. With a successful crowdfunding campaign, you can avoid the cycle of debt and interest that goes with other financing methods.

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