Starting a business is seldom easy. Exciting yes as all you can think of at this stage are the opportunities and possibilities of the idea, how much profit you could be making and how great it will be not to have to answer to you grumpy manager any longer. With all the many perks to start a business of course there also the challenges and finding start-up finance will be one of the first that you will need to overcome. Today we know that there will be a range of possibilities from banks, to venture capital firms to business angels or private equity. Which way to turn will be the real question at this stage and probably for convenience sake the bank will be your first port of call as you know here to find it and have probably dealt with a bank before. But the benefits of other business finance sources should not be overlooked.
Once you have your business plan ready and have done a realistic financial forecast considering all the possible costs, the amount of investment you may need and how long you will talk to pay it back, should it be a lone then the next step will be to start the search for finance.
It's important that you start the search for Start up Capital with a good business plan that shows investors and lenders your company's potential. Follow your business plan with a thorough knowledge of the resources available and a determination to make your business a reality, and you should be on your way to uncovering a source that fits your new business's cash needs.
You should know that many financial institutions provide some type of small business loan program just for those like you who need Start up Capital to get their business off the ground. However in order for you to get your Start up Capital from a bank and fund your business you'll need a pretty solid business plan. You'll need to earn your Start up Capital from the bank by proving that your business will generate enough cash to make the loan payments. Each and every bank will have its own requirements that will differ from other banks, but if you will be able to articulate how exactly your business will succeed, and if you have decent credit, and maybe a co-signer as well, you may be able to get your Start up Capital through a small business bank loan.
When you're looking for Start up Capital, you should look at what the SBA or Small Business Administration has to offer. The Small Business Administration is a great resource that will provide you with information on requirements, on credit factors, on how to apply for loans and many other important things you'll need knowing. Giving them a look-see would be a great starting point before attempting to apply at a bank; the better prepared you'll be the easier it will be when you'll begin the application process.
Now let's not forget that a lot of small businesses get their Start up Capital from family and friends. Your family and friends usually want you to succeed and will believe in your business. However if they are indeed providing you with your Start up Capital then it would be wise to treat these relationships as real business relationships and plan how and when you'll repay their loans, the exact time frame and at what interest rate.
You could also get your Start up Capital form private angel investors and venture capital firms. These two work generally in the same way they will invest in the equity of your business and expect a return in the form of an acquisition, IPO or stock buy-back in the future.
The key to any of the above mentioned methods of getting Start up Capital is to have a well written business plan. Having a good business plan will show your would-be investors that you are serious about your business and that you can demonstrate the way you plan on making it successful.
Don't be overwhelmed by the process. You are in many ways bringing as much if not more to the table. Investors in what ever shape or form will benefit from your business in a big way if the venture takes of so make sure you get what is most beneficial for you and your business.
Wednesday, February 2, 2011
Monday, January 10, 2011
Business loan options for small business
There are several things to take into consideration when seeking financial advice and assistance from institutions or angel networks when starting out a new business venture, or when u require a loan to expand your existing business. Many entrepreneurs may not be aware of the fact that there are various loan options when requiring business finance.
In a great article on business finance sources on the all business website the following options are discussed.
Standard business loans can take on several different forms in specific situations:
Term loans are the most common general purpose loan. They're used for working capital, expansion, refinancing, and acquisitions. You'll repay them monthly over a term based on the expected lifespan of the assets you're purchasing. This straightforward loan is most common for larger amounts.
Short term loans are almost always set up for terms of one year or less, and are repaid in a lump sum at the end of the term, instead of monthly. They're usually for smaller amounts - less than R100,000 - and are best for seasonal inventory buildup or small investments with quick returns.
Equipment financing is generally easier to obtain then general lines of credit, simply because the equipment you buy serves as direct collateral for the loan. It's also less risky, in that if you are unable to make your payments, you don't have a lien against your entire business or your personal real estate: all you lose is the equipment you bought. Depending on the size of your business, equipment financing can cover huge expenses into the millions of dollars.
Lines of credit are more general business loans that are often set up to insure against cash flow problems. Instead of getting a check for the full amount of the loan, the financial institution will allow you to borrow up to a certain amount per year - you take out the money in increments as you need it. The flexibility comes at a cost, though: if you don't repay the loan balances fairly quickly, they can quickly become more expensive than other types of loans. Avoid using a line of credit for significant business improvements: they're designed for temporary cash shortfalls.
Credit card advances - in lending, this phrase does not mean taking out cash through your business credit card, although many businesses do that. Instead, it's a loan based on your track record and your expected future business. It's a good choice if your business has at least a three-year history of accepting credit cards. Because the credit card sales are such a good estimation of your future earnings, you'll be able to get a fairly good rate on a loan against your expected income.
While there are stringent federal guidelines about how banks and other lenders conduct business, there are no definitive standards as to how the various types of business loans are structured: terms and conditions may vary from one lender to the next, and minimum and maximum amounts can differ. Be sure you know exactly what conditions apply to each loan you're considering.
Factoring
Another option for many small businesses is factoring, also known as receivables financing. Factoring is basically selling your invoices to a third party: instead of waiting for your customers to pay, you can get the funds immediately - minus a small fee (3% to 5%) due to the factoring company. Typically you'll receive 80% of the invoice value upfront and the remaining value once the client pays.
Your business might be a good candidate for factoring if you have:
• Fewer than three years in business
• Good growth prospects but less than stellar cash flow
• Active accounts but slow paying customers
Having taken into consideration the above-mentioned options, you can now approach the financial institution of your choice with a better knowledge of what you require and what the needs are in accordance with your business. As an entrepreneur its is important to bare in mind that the financial institutions are there to help and assist, however it is of utmost importance that as a success entrepreneur and business owner/partner, that you approach them with a clear understanding of where you wish to take your business in the future.
In a great article on business finance sources on the all business website the following options are discussed.
Standard business loans can take on several different forms in specific situations:
Term loans are the most common general purpose loan. They're used for working capital, expansion, refinancing, and acquisitions. You'll repay them monthly over a term based on the expected lifespan of the assets you're purchasing. This straightforward loan is most common for larger amounts.
Short term loans are almost always set up for terms of one year or less, and are repaid in a lump sum at the end of the term, instead of monthly. They're usually for smaller amounts - less than R100,000 - and are best for seasonal inventory buildup or small investments with quick returns.
Equipment financing is generally easier to obtain then general lines of credit, simply because the equipment you buy serves as direct collateral for the loan. It's also less risky, in that if you are unable to make your payments, you don't have a lien against your entire business or your personal real estate: all you lose is the equipment you bought. Depending on the size of your business, equipment financing can cover huge expenses into the millions of dollars.
Lines of credit are more general business loans that are often set up to insure against cash flow problems. Instead of getting a check for the full amount of the loan, the financial institution will allow you to borrow up to a certain amount per year - you take out the money in increments as you need it. The flexibility comes at a cost, though: if you don't repay the loan balances fairly quickly, they can quickly become more expensive than other types of loans. Avoid using a line of credit for significant business improvements: they're designed for temporary cash shortfalls.
Credit card advances - in lending, this phrase does not mean taking out cash through your business credit card, although many businesses do that. Instead, it's a loan based on your track record and your expected future business. It's a good choice if your business has at least a three-year history of accepting credit cards. Because the credit card sales are such a good estimation of your future earnings, you'll be able to get a fairly good rate on a loan against your expected income.
While there are stringent federal guidelines about how banks and other lenders conduct business, there are no definitive standards as to how the various types of business loans are structured: terms and conditions may vary from one lender to the next, and minimum and maximum amounts can differ. Be sure you know exactly what conditions apply to each loan you're considering.
Factoring
Another option for many small businesses is factoring, also known as receivables financing. Factoring is basically selling your invoices to a third party: instead of waiting for your customers to pay, you can get the funds immediately - minus a small fee (3% to 5%) due to the factoring company. Typically you'll receive 80% of the invoice value upfront and the remaining value once the client pays.
Your business might be a good candidate for factoring if you have:
• Fewer than three years in business
• Good growth prospects but less than stellar cash flow
• Active accounts but slow paying customers
Having taken into consideration the above-mentioned options, you can now approach the financial institution of your choice with a better knowledge of what you require and what the needs are in accordance with your business. As an entrepreneur its is important to bare in mind that the financial institutions are there to help and assist, however it is of utmost importance that as a success entrepreneur and business owner/partner, that you approach them with a clear understanding of where you wish to take your business in the future.
Friday, December 17, 2010
Business Investment Checklist
Before offering business finance to a business plan, any investors will hopefully go through a rigorous testing process where the entrepreneur's business plan will be analysed, the financial forecasts scrutinised and the marketing research pondered upon. Whether an online business or regular, similar processes will be in place. You are putting your money into someone elses idea with the intention of bot contributing the business and also ultimately getting a healthy return. So what are you looking for from an investment point of view? Here are a a few issues that I hope you will consider before choosing whether or not to back the business in question.
In the spirit of transparency, please see my list below and let me know if you think I am missing any core issues.
The Basics
Can I understand the business?
what is the product?
what is the value?
who is the buyer and why would they buy?
can the buyer quantify the value? If so, what unit?
The Market
Is the market attractive?
Growth rates?
Profitability?
Is there a fundamental disruption that is the basis for the opportunity and limits the incubments' competitive response?
Market
Market --> SaaS, Open Source
Product --> core innovation
Is the product delivered in a buyer appropriate way?
open source for infrastructure
SaaS for a business app buyer
REST/SOAP/JavaScript for a web service
Is the core value tied to a technical innovation?
ex. HWVP's portfolio company examples = Baynote's collective intelligence algorithms and Move Networks' streaming protocols
Requirements and Obstacles
Are their frictions in....?
time and resources required to test the value proposition?
time and resources required to deploy?
time and risk to realize value?
Is there a good market comparable for both the business model and the exit multiple?
What unit scales the revenue model?
page views, sales heads, downloads, sessions?
Is the architecture scalable and does it leverage the best available infrastructure - EC2, S3, Rackspace, etc?
Dependencies
Are there exogenous dependencies?
carrier or MSO deals?
RFID deployments, etc?
Is there a market master?
WMT or MSFT or Dell....
The Entrepreneur
Who is the incumbent? How will they react?
Who are the other new companies in the space?
Is the team able and honest?
Prior track record of working together?
Is the CEO special?
What is his/her motivation, passion, strength?
Where do they need help and complement?
The Investment
Are the round size and pre-money reasonable?
Is the model reasonable (profit margins, growth, burn)?
Is the plan capital efficient?
how much money for 18 months?
margin of safety?
are their clear milestones in the plan that will allow for an objective assessment of value creation - ie a new investor
Opportunity and Possibility
Can this be a home run?
What are the core risks?
why will the company fail? is their a plan in place to mitigate such risks?
What are the KPIs - ie leading indicators to measure and track the company's progress?
Is the cap table clean and the paid-in capital reasonable?
Is the progress to date commensurate with the money in?
Has the money in to date been productive?
While I am sure there are risk and questions not raised above, the goal is to systematically measure a prospect against a consistent analytical framework that, hopefully, ensures smooth take-offs, flights, and landings.
In the spirit of transparency, please see my list below and let me know if you think I am missing any core issues.
The Basics
Can I understand the business?
what is the product?
what is the value?
who is the buyer and why would they buy?
can the buyer quantify the value? If so, what unit?
The Market
Is the market attractive?
Growth rates?
Profitability?
Is there a fundamental disruption that is the basis for the opportunity and limits the incubments' competitive response?
Market
Market --> SaaS, Open Source
Product --> core innovation
Is the product delivered in a buyer appropriate way?
open source for infrastructure
SaaS for a business app buyer
REST/SOAP/JavaScript for a web service
Is the core value tied to a technical innovation?
ex. HWVP's portfolio company examples = Baynote's collective intelligence algorithms and Move Networks' streaming protocols
Requirements and Obstacles
Are their frictions in....?
time and resources required to test the value proposition?
time and resources required to deploy?
time and risk to realize value?
Is there a good market comparable for both the business model and the exit multiple?
What unit scales the revenue model?
page views, sales heads, downloads, sessions?
Is the architecture scalable and does it leverage the best available infrastructure - EC2, S3, Rackspace, etc?
Dependencies
Are there exogenous dependencies?
carrier or MSO deals?
RFID deployments, etc?
Is there a market master?
WMT or MSFT or Dell....
The Entrepreneur
Who is the incumbent? How will they react?
Who are the other new companies in the space?
Is the team able and honest?
Prior track record of working together?
Is the CEO special?
What is his/her motivation, passion, strength?
Where do they need help and complement?
The Investment
Are the round size and pre-money reasonable?
Is the model reasonable (profit margins, growth, burn)?
Is the plan capital efficient?
how much money for 18 months?
margin of safety?
are their clear milestones in the plan that will allow for an objective assessment of value creation - ie a new investor
Opportunity and Possibility
Can this be a home run?
What are the core risks?
why will the company fail? is their a plan in place to mitigate such risks?
What are the KPIs - ie leading indicators to measure and track the company's progress?
Is the cap table clean and the paid-in capital reasonable?
Is the progress to date commensurate with the money in?
Has the money in to date been productive?
While I am sure there are risk and questions not raised above, the goal is to systematically measure a prospect against a consistent analytical framework that, hopefully, ensures smooth take-offs, flights, and landings.
Monday, December 13, 2010
What to include in a business plan
Although every business plan is different as the purpose and the audience for whom it is written for governs the structure and wording within the business plan, most business plans will still consists of three main sections.
- The Executive Summary
- The Main plot
- The Financials and Finance
Arguably, is the most important part of the plan, the Executive Summary normally consists out of one or two pages providing the reader with a synopsis of what is to come. This section can really be seen as a bite-size version of the plan. The reason why it is so important is that, as with most first impressions, the reader will quickly decide if this is something that is of interest or. If yes, the rest of the business plan will be read, if not, well, your plans is probably destined for the waste paper basket and you will have to continue your search for an sympathetic eye. Think of your executive summary as a longish elevator pitch.
The Main Plot provides the reader with a more detailed account of the important areas of your business. This is the ideal place for you to ensure and that you have thought through the functional areas of your business such as strategy, the products and services, the people, the competition the market, and most importantly your sales & marketing plan. Of course you are not only writing the business plan for yourself and this section will also be targeted at the chosen audience who you want to impress. Remember that most of the business plan can be used as a selling document as you are off course intending on getting a second party to take action. Whether the action is to provide you with finance or simply to impress a future business partner or grant provider. Get your fax correct and don’t oversell, as this can be highly off-putting.
The financials will consist of your Profit & Loss, Balance Sheet and Cash-flow forecasts with full assumptions. This section can often develop a life of its own, especially where you re trying to justify a certain amount of funding needed for the business. You must resist the temptation to sound to optimistic as lenders will quickly recognise when your forecasts are unrealistic. Make sure you consider the realities of delivering your products or services and the possibilities of obtaining new business.
One of my favourite quotes comes from John Chambers, CEO of Cisco Systems, "Deal with the world the way it is, not the way you wish it was." Another possible pot hole here is to not under estimate the amount of finance that your business needs. Its common for first time owners to over estimate their income for the first year and hence under forecast the amount of business finance needed. This often results in a red faced entrepreneur having to go back to bank or VC asking for an additional round of funding. Be realistic. Your business does not have to be cash machine to get start-up capital, it simply has to be viable while entering a market with potential.
Saturday, December 4, 2010
The reality of finding finance for a new business
Finding business finance for your business plan is often much more challenging that what people may realise. Luckily us entrepreneurs are a hardy bunch and a few obstacles and challenges along the way will 99% of the time simply make us more determined. You will obviously have written a business plan by now and then the fun really starts. But you should not confuse a challenging financing process with a poor business idea which just simply does not deserve the funding you are looking for. Make sure that you have done sufficient marketing research to determine that someone else that you and your friends & family believes in the product and that will be a demand for the product once it gets to the market.
I am providing this information because so many people here post requests for funding to cover 2 to 3 years of product creation or R&D. Then when they are ignored, they get angry.
Let's look at the typical stages in a successful company's financing. Although there are rare exceptions to this sequence, in most cases it looks like this:
If you are realistic about what types of scenarios attract investors, you won't get angry. Instead you will work to create an opportunity that will be attractive to investors at every stage.
If you think that you are going to attract money to cover your living expenses and provide a bit of fun money while you create the product for 2 or 3 years, you are in for nothing but frustration.
-Seed Round
At this stage you have no more than an idea. You are going to build the next Facebook or Google or Apple...only it will take a year or two of work before there is something that can be sold. Or maybe it's a dull little business which excites only you?
So, who comes in at this stage if you should be lucky enough to attract any money? The answer is the "3Fs", otherwise known as Family, Friends, and Fools. Yes, this means your parents and rich frat buddies from your days at Harvard or Yale. What's that? Your family is not wealthy and you didn't attend an Ivy League college? In that case, you are going to have to finance your seed stage the most common way: with a day job.
-Angel Round
Angels come in with money when you have started selling. They jump aboard because you now have tangible proof of concept. You're finally walking your talk. It's no longer all just hot air coming from the founder. Be honest, talk is cheap.
-Venture Capital A-Round
VCs step in when the business looks like it has potential for an IPO or acquisition a few years down the road.
-Venture Capital B-Round
Wall Street is starting to take notice of the company. Therefore, the VCs want to maximize its forward momentum.
-Venture Capital C-Round
The IPO is now in sight and the C-round is used to "fatten the pig" as much as possible in addition to preparing the company for it. Often this preparation includes replacing management with C-level officers who are known to and respected by Wall Street.
-The IPO
This is the big pay-off at the end of years of hard work. It means liquid stock selling at, hopefully, a high P/E multiple. (The second best alternative is to be acquired by a large company such as a member of the Fortune 1000.)
Welcome to Planet Earth. That's how 99% of start ups get through the seed stage and if you are having difficulty in succeeding here refer yourself to the opening paragraph and assess into which category you fall. Best of luck as you will probably need it.
I am providing this information because so many people here post requests for funding to cover 2 to 3 years of product creation or R&D. Then when they are ignored, they get angry.
Let's look at the typical stages in a successful company's financing. Although there are rare exceptions to this sequence, in most cases it looks like this:
If you are realistic about what types of scenarios attract investors, you won't get angry. Instead you will work to create an opportunity that will be attractive to investors at every stage.
If you think that you are going to attract money to cover your living expenses and provide a bit of fun money while you create the product for 2 or 3 years, you are in for nothing but frustration.
-Seed Round
At this stage you have no more than an idea. You are going to build the next Facebook or Google or Apple...only it will take a year or two of work before there is something that can be sold. Or maybe it's a dull little business which excites only you?
So, who comes in at this stage if you should be lucky enough to attract any money? The answer is the "3Fs", otherwise known as Family, Friends, and Fools. Yes, this means your parents and rich frat buddies from your days at Harvard or Yale. What's that? Your family is not wealthy and you didn't attend an Ivy League college? In that case, you are going to have to finance your seed stage the most common way: with a day job.
-Angel Round
Angels come in with money when you have started selling. They jump aboard because you now have tangible proof of concept. You're finally walking your talk. It's no longer all just hot air coming from the founder. Be honest, talk is cheap.
-Venture Capital A-Round
VCs step in when the business looks like it has potential for an IPO or acquisition a few years down the road.
-Venture Capital B-Round
Wall Street is starting to take notice of the company. Therefore, the VCs want to maximize its forward momentum.
-Venture Capital C-Round
The IPO is now in sight and the C-round is used to "fatten the pig" as much as possible in addition to preparing the company for it. Often this preparation includes replacing management with C-level officers who are known to and respected by Wall Street.
-The IPO
This is the big pay-off at the end of years of hard work. It means liquid stock selling at, hopefully, a high P/E multiple. (The second best alternative is to be acquired by a large company such as a member of the Fortune 1000.)
Welcome to Planet Earth. That's how 99% of start ups get through the seed stage and if you are having difficulty in succeeding here refer yourself to the opening paragraph and assess into which category you fall. Best of luck as you will probably need it.
Sunday, November 21, 2010
Social Network for Fashion raises $millions in finance
Tumblr a online business— which has been compared to Facebook and previously attracted just over $10 million with their business plan from Spark Capital and Union Square Ventures (both key investors in Twitter) — was recently able to raise between $25 million and $30 million in additional business financing, valuing the business at an estimated $135 million. Famed Silicon Valley VC firm Sequoia Capital was the lead investor. “I will say, it is nice to be well-received on the West Coast,” Tumblr’s president, John Maloney, told Business Insider.
According to comScore, microblogging platform Tumblr hit an “inflection point” sometime last June. Page views on Tumblr.com — which lets users create mixed-media blog posts with the kind of extreme simplicity and immediacy not found in traditional blogging platforms — began to surge. By October 2010, page views in the U.S. were up a staggering 1,540 percent from the year before. According to the New York-based company, Tumblr now has 47 million unique visitors per month, 2.7 billion page views per month, and over 9 million users, with approximately 30,000 new users joining the platform every day.
Interestingly, Tumblr has been very well-received in the fashion community, as well, giving rise to a universe of fashion-related microblogs. “Over the past year, fashion has emerged as one of the fastest growing segments of the Tumblr community, with 20% of our top 1000 blogs related to fashion,” said Rich Tong, a co-founder of Weardrobe (sold to Like.com in 2009) and Tumblr’s new fashion director.
It’s not surprising then that Tumblr founder David Karp told TechCrunch last week that Tumblr wants to be “the best place in the world for the best creative communities,” with fashion at the core of this focused strategy.
Many of the most popular fashion Tumblrs are personal style blogs like whatiwore and triciawillgoplaces, vintage and craft-focused blogs like psimadethis and hawtvintage, and street style blogs like fuckyeahstreetstyle and lookbookdotnu, launched by the eponymous look-sharing site. But a recent post on Refinery29 entitled “The Best Fashion Tumblrs To Follow Now” reflects the striking diversity of fashion blogs that have sprung up since the platform was launched in 2007. The list includes shoelust, theimpossiblecool, and textbook, a Tumblr dedicated to answering the question “What would Holden Caulfield wear?”
Industry insiders have embraced the platform as well. Purple Fashion editor Olivier Zahm and photographer Terry Richardson, for example, both use Tumblr to publish informal, spontaneous and highly popular personal diaries, Purple Diary and Terry’s Diary.
On one level, Tumblr has struck a chord with the fashion community because, like fashion itself, the platform is both immediate and highly-visual. While Tumblr posts can be text, images, quotes, links, chats, audio clips or videos, 50% of all posts are photos. “As a platform Tumblr is almost purely visual,” said Francine Ballard, founder and editorial director of Designer Social, an online showroom that operates a Tumblr. “Most of what gets reblogged is prompted by a sort-of visceral response. So by definition, it has the potential to be a fantastic medium for fashion.”
Indeed, Tumblr has found particular resonance amongst fashion creatives, who use the platform to aggregate and share the inspiration they find online. “I use Tumblr as a way for my creative team to share things that they are inspired by,” said Diana Hong, creative director at digital fashion agency CreateThe Group and an early adoptor of the platform.
Tavi Gevinson, best known for her blog The Style Rookie, also maintains a microblog called Slow Motion Crawl, which she migrated from Blogspot to Tumblr early last year. “It’s much more informal, more for archiving and self-reference than anything else. My favorite thing is how convenient it is for storing inspiration — when I compile images for a post on Style Rookie, I usually find them all in my Tumblr archives.”
But as well as being radically visual, quick and convenient — a Tumblr bookmarklet, as well as Tumblr mobile apps for Blackberry, iPhone and Android, make it incredibly simple to share content — Tumblr is fundamentally different from traditional blogging platforms because it comes with a built-in community. On Tumblr, users can “follow” and “reblog” other bloggers, whose posts appear in realtime streams on a Tumblr “dashboard,” much like on Twitter.
“It’s so addictive because you follow your favourite Tumblrs, which give you the best of the internet, so you just keep clicking through your dashboard and finding more and more that you like,” said Tavi.
“Tumblr seems to now have an audience of regular users and we decided it would be beneficial to drive traffic back to the site, as well as being a source of inspiration,” said Alistair Allan, digital director at Dazed Group, which operates popular fashion, art and music website Dazed Digital and, last month, launched dazeddigital.tumblr.com, a Tumblr that highlights favourite items from Dazed Digital each day.
“Many publications primarily care about Tumblr as a traffic driver, but we’ve noticed that the ones who use Tumblr to express a point of view are the ones who succeed within the community,” said Tumblr’s Mr. Tong, commenting on the Dazed Digital offering. “Once they do that, the traffic takes care of itself.”
Notably, Tumblr has managed to attract a passionate community that’s largely composed of young and influential, design-focused people. For fashion media brands, this is an extremely attractive, high-value demographic who have an almost insatiable appetite for content and share their discoveries with their social graph, both on Tumblr and across the web. “Our community loves original content — and loves reblogging it straight from the source,” said Mr. Tong.
Conveniently, a Facebook app and publish to Twitter feature neatly integrate Tumblr into the two most important social networks on the internet, enabling the platform’s influential userbase to easily distribute content to friends and followers.
It’s no surprise, then, that major fashion publishers like Vogue and Elle have recently launched Tumblrs. “The demographics of the Tumblr audience are very much in line with the demographics of our readers: typically young, fashion-minded people with a strong appreciation for pop culture,” said Keith Pollock, editorial director of Elle.com.
The platform also allows fashion media brands to speak to consumers in a softer, more personal tone. “Tumblr provides a great opportunity for brands and publishers to step out of their strict editorial guidelines and create a down to earth, approachable voice,” said Mr. Tong. What’s more, Tumblr makes it easy to establish the kind of genuine reciprocal relationships that turn fans and followers into brand loyalists. “By following users you think create great content, liking their posts and reblogging their content as well, you establish a very passionate and loyal following,” explained Mr. Tong.
But it’s not just media companies who are getting in on the action. LVMH-backed ethical fashion brand Edun operates a Tumblr called Eye of Edun, where the company shares behind the scenes imagery and visual inspiration. “Tumblr is embraced by artists and creative communities more so than other blogging platforms,” said Edun’s brand director Bianca Barattini. “Edun.com tells our entire story, from backstory to mission and offers a shopping experience, while the Tumblr is purely inspiration.”
But it may not be long before fashion brands start to integrate commerce into their Tumblrs. Last Thursday, a small startup called Of a Kind, which offers limited edition items from emerging designers, became the first store to launch on Tumblr. “Building our site on Tumblr seemed like an obvious move — it has allowed us to put our content in front of early adopters in a place where they were already congregating,” said co-founder and president Erica Cerulo. Tumblr does not technically support e-commerce, but Of a Kind was able to easily connect their Tumblr to Shopify, a simple digital commerce app, to offer a fully shopable experience.
Asked if Tumblr would be adding e-commerce functionality in the future, Mr. Tong responded: “We haven’t yet pursued supporting that feature set, but given the virality of our network, we’re definitely exploring ideas on how best to integrate the e-commerce component into our user experience.”
With the possibility of commerce-enabled Tumblrs on the horizon, the existing opportunities for content distribution and audience engagement, and the minimal time and effort it actually takes to start blogging on Tumblr, we suspect it won’t be too long before smart fashion brands see Tumblr as an indispenable tool in their social media arsenal, alongside Twitter and Facebook.
If fashion and creative communities are at the heart of Tumblr, BoF must be there too. You can now follow us on Tumblr: businessoffashion.tumblr.com
Vikram Alexei Kansara is Managing Editor of The Business of Fashion.
According to comScore, microblogging platform Tumblr hit an “inflection point” sometime last June. Page views on Tumblr.com — which lets users create mixed-media blog posts with the kind of extreme simplicity and immediacy not found in traditional blogging platforms — began to surge. By October 2010, page views in the U.S. were up a staggering 1,540 percent from the year before. According to the New York-based company, Tumblr now has 47 million unique visitors per month, 2.7 billion page views per month, and over 9 million users, with approximately 30,000 new users joining the platform every day.
Interestingly, Tumblr has been very well-received in the fashion community, as well, giving rise to a universe of fashion-related microblogs. “Over the past year, fashion has emerged as one of the fastest growing segments of the Tumblr community, with 20% of our top 1000 blogs related to fashion,” said Rich Tong, a co-founder of Weardrobe (sold to Like.com in 2009) and Tumblr’s new fashion director.
It’s not surprising then that Tumblr founder David Karp told TechCrunch last week that Tumblr wants to be “the best place in the world for the best creative communities,” with fashion at the core of this focused strategy.
Many of the most popular fashion Tumblrs are personal style blogs like whatiwore and triciawillgoplaces, vintage and craft-focused blogs like psimadethis and hawtvintage, and street style blogs like fuckyeahstreetstyle and lookbookdotnu, launched by the eponymous look-sharing site. But a recent post on Refinery29 entitled “The Best Fashion Tumblrs To Follow Now” reflects the striking diversity of fashion blogs that have sprung up since the platform was launched in 2007. The list includes shoelust, theimpossiblecool, and textbook, a Tumblr dedicated to answering the question “What would Holden Caulfield wear?”
Industry insiders have embraced the platform as well. Purple Fashion editor Olivier Zahm and photographer Terry Richardson, for example, both use Tumblr to publish informal, spontaneous and highly popular personal diaries, Purple Diary and Terry’s Diary.
On one level, Tumblr has struck a chord with the fashion community because, like fashion itself, the platform is both immediate and highly-visual. While Tumblr posts can be text, images, quotes, links, chats, audio clips or videos, 50% of all posts are photos. “As a platform Tumblr is almost purely visual,” said Francine Ballard, founder and editorial director of Designer Social, an online showroom that operates a Tumblr. “Most of what gets reblogged is prompted by a sort-of visceral response. So by definition, it has the potential to be a fantastic medium for fashion.”
Indeed, Tumblr has found particular resonance amongst fashion creatives, who use the platform to aggregate and share the inspiration they find online. “I use Tumblr as a way for my creative team to share things that they are inspired by,” said Diana Hong, creative director at digital fashion agency CreateThe Group and an early adoptor of the platform.
Tavi Gevinson, best known for her blog The Style Rookie, also maintains a microblog called Slow Motion Crawl, which she migrated from Blogspot to Tumblr early last year. “It’s much more informal, more for archiving and self-reference than anything else. My favorite thing is how convenient it is for storing inspiration — when I compile images for a post on Style Rookie, I usually find them all in my Tumblr archives.”
But as well as being radically visual, quick and convenient — a Tumblr bookmarklet, as well as Tumblr mobile apps for Blackberry, iPhone and Android, make it incredibly simple to share content — Tumblr is fundamentally different from traditional blogging platforms because it comes with a built-in community. On Tumblr, users can “follow” and “reblog” other bloggers, whose posts appear in realtime streams on a Tumblr “dashboard,” much like on Twitter.
“It’s so addictive because you follow your favourite Tumblrs, which give you the best of the internet, so you just keep clicking through your dashboard and finding more and more that you like,” said Tavi.
“Tumblr seems to now have an audience of regular users and we decided it would be beneficial to drive traffic back to the site, as well as being a source of inspiration,” said Alistair Allan, digital director at Dazed Group, which operates popular fashion, art and music website Dazed Digital and, last month, launched dazeddigital.tumblr.com, a Tumblr that highlights favourite items from Dazed Digital each day.
“Many publications primarily care about Tumblr as a traffic driver, but we’ve noticed that the ones who use Tumblr to express a point of view are the ones who succeed within the community,” said Tumblr’s Mr. Tong, commenting on the Dazed Digital offering. “Once they do that, the traffic takes care of itself.”
Notably, Tumblr has managed to attract a passionate community that’s largely composed of young and influential, design-focused people. For fashion media brands, this is an extremely attractive, high-value demographic who have an almost insatiable appetite for content and share their discoveries with their social graph, both on Tumblr and across the web. “Our community loves original content — and loves reblogging it straight from the source,” said Mr. Tong.
Conveniently, a Facebook app and publish to Twitter feature neatly integrate Tumblr into the two most important social networks on the internet, enabling the platform’s influential userbase to easily distribute content to friends and followers.
It’s no surprise, then, that major fashion publishers like Vogue and Elle have recently launched Tumblrs. “The demographics of the Tumblr audience are very much in line with the demographics of our readers: typically young, fashion-minded people with a strong appreciation for pop culture,” said Keith Pollock, editorial director of Elle.com.
The platform also allows fashion media brands to speak to consumers in a softer, more personal tone. “Tumblr provides a great opportunity for brands and publishers to step out of their strict editorial guidelines and create a down to earth, approachable voice,” said Mr. Tong. What’s more, Tumblr makes it easy to establish the kind of genuine reciprocal relationships that turn fans and followers into brand loyalists. “By following users you think create great content, liking their posts and reblogging their content as well, you establish a very passionate and loyal following,” explained Mr. Tong.
But it’s not just media companies who are getting in on the action. LVMH-backed ethical fashion brand Edun operates a Tumblr called Eye of Edun, where the company shares behind the scenes imagery and visual inspiration. “Tumblr is embraced by artists and creative communities more so than other blogging platforms,” said Edun’s brand director Bianca Barattini. “Edun.com tells our entire story, from backstory to mission and offers a shopping experience, while the Tumblr is purely inspiration.”
But it may not be long before fashion brands start to integrate commerce into their Tumblrs. Last Thursday, a small startup called Of a Kind, which offers limited edition items from emerging designers, became the first store to launch on Tumblr. “Building our site on Tumblr seemed like an obvious move — it has allowed us to put our content in front of early adopters in a place where they were already congregating,” said co-founder and president Erica Cerulo. Tumblr does not technically support e-commerce, but Of a Kind was able to easily connect their Tumblr to Shopify, a simple digital commerce app, to offer a fully shopable experience.
Asked if Tumblr would be adding e-commerce functionality in the future, Mr. Tong responded: “We haven’t yet pursued supporting that feature set, but given the virality of our network, we’re definitely exploring ideas on how best to integrate the e-commerce component into our user experience.”
With the possibility of commerce-enabled Tumblrs on the horizon, the existing opportunities for content distribution and audience engagement, and the minimal time and effort it actually takes to start blogging on Tumblr, we suspect it won’t be too long before smart fashion brands see Tumblr as an indispenable tool in their social media arsenal, alongside Twitter and Facebook.
If fashion and creative communities are at the heart of Tumblr, BoF must be there too. You can now follow us on Tumblr: businessoffashion.tumblr.com
Vikram Alexei Kansara is Managing Editor of The Business of Fashion.
Wednesday, October 6, 2010
Business finance available at the Cape Town Business plan competition
Great blog article on the Cape Town business plan competition, currently inviting business plan entries from Cape Town based entrepreneurs. The competition organized by Bandwidth Barn are hoping to make the initiative an annual occurrence, ensuring business finance is made more accessible to entrepreneurs in the region.
Both banks and the government has come under continued pressure to provide further funding to businesses hoping that such finance will create a enterprise culture in the Western Cape region. The idea is obviously for initiatives such as this to first of all support job creation in the area and also to boost the economy as a whole.
Right from the moment someone thinks of a business idea, there needs to be cash. As the business grows there are inevitably greater calls for more money to finance expansion. The day to day running of the business also needs money.
One of the main reasons a business needs finance is to start up in the first place. Depending on the type of business, it will need to finance the purchase of assets, materials and employing people. There will also need to be money to cover the running costs. It may be some time before the business generates enough cash from sales to pay for these costs. Link to cash flow forecasting.
Entrepreneurs have expressed their excitement for the opportunity and we trust that it will go from strength to strength.
Both banks and the government has come under continued pressure to provide further funding to businesses hoping that such finance will create a enterprise culture in the Western Cape region. The idea is obviously for initiatives such as this to first of all support job creation in the area and also to boost the economy as a whole.
Right from the moment someone thinks of a business idea, there needs to be cash. As the business grows there are inevitably greater calls for more money to finance expansion. The day to day running of the business also needs money.
One of the main reasons a business needs finance is to start up in the first place. Depending on the type of business, it will need to finance the purchase of assets, materials and employing people. There will also need to be money to cover the running costs. It may be some time before the business generates enough cash from sales to pay for these costs. Link to cash flow forecasting.
Entrepreneurs have expressed their excitement for the opportunity and we trust that it will go from strength to strength.
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