Lessons Learned from Elon Musk’s Hyperloop

Buzz Surrounding the Hyperloop

 
Earlier this month Elon Musk created buzz around the nation by releasing details to his newest idea: The Hyperloop, a new high-speed mode of transportation. This is his response to California’s $70 billion proposal to build a high-speed rail system, which Musk sees as expensive and inefficient.
 

Hyperloop Background

 
The Hyperloop, as proposed, will be about one-tenth the cost of the train proposal, travel at 760 MPH, and will produce its own energy to operate.

Musk has been looking into the idea of the Hyperloop since the announcement of the California Rail System. Recently, he came across a major “breakthrough” in the Hyperloop’s development but admitted that it needs to be tested and developed further.

Musk has only released what he calls a “sketch of an idea” but that he has “no time to pursue it” and that “others are welcome to build on it.” He is opening the door for anyone from the public to build upon and run with the start he has presented for the Hyperloop.
 

Musk’s Goal

 
Musk has made career of revolutionizing the transportation industry as the founder and CEO of Tesla Motors and SpaceX. He goes after ideas he deems inefficient with his goal being to begin making changes to the world as we know it. Bruce Leak, a Silicon Valley entrepreneur, said of Musk, “The companies he’s started are executing against a vision measured not in years but in decades.” Musk isn’t looking to make a quick buck, although he may be doing that, he is looking to affect the future.
 

What Could Happen with the Hyperloop

 
There have not been such viable options for breaking away from the four main modes of transportation of the automobile, train, plane, and boat since the inception of these modes of transportation. While some scrutinize the idea of the Hyperloop and deem it not viable, Musk has opened eyes of many to other options outside the status quo.

For the entrepreneur that chases down and runs with the Hyperloop idea there is great potential for high returns and monetary gains. But the benefit to the entrepreneur will not only be measured monetarily. It will be measured by the change generated and the many ideas that will spring from it. This is an opportunity to be seen as a modern Rockefeller or Carnegie; to be a part of a clean, different kind of industrial revolution.

The Hyperloop idea may take off or it may not. If it does, it could be a dramatic change in how we travel. If it doesn’t, at least it has caused excitement to look towards newer, better modes of transportation. This is what Musk is trying to accomplish. He may not want to do the Hyperloop himself but he does want to expand the thinking of those around him. Running with and succeeding with the Hyperloop will open the doors, that remain closed for the time being, to a new way of viewing how we operate and think in our current world.

What can we learn from the Hyperloop? It is still okay to have an imagination and chase down what may seem to be impossible. And who is better to break these barriers than the world’s rising entrepreneurs?

How the SBA Can Help You Build Your Business

Start, Build, and Grow Your Business

 
The United States Small Business Administration (SBA) is an excellent resource for any entrepreneur looking to start their own small business. On their website the SBA states they “help Americans start, build, and grow businesses.” The SBA can be an excellent source of information, a learning resource, and a guide to obtaining financing to name a few.
 

Getting Started

 
Often, when starting a business, the hardest part is knowing where to start. The SBA has several pages, articles, and lists detailing out the steps to starting your own business. These pages will help you learn how to do business planning, find financing, and lead you to mentoring resources. As well, they will help you understand legal and other business considerations to starting your business.
 

Know Your Target Market

 
The SBA also provides information about markets, industries, and statistics on current economic conditions. These are extremely beneficial in the planning stages of your business and making early decisions about your business. The information provided will help you understand your target market enough to make sound decisions about where and how to operate your business.
 

Learn Necessary Skills

 
If you have little previous business or management experience the SBA website has links to a “Starting a Small Business” course which will guide you through the steps and teach you basic business management skills. As well, they have online presentations teaching about other business topics such as disaster planning, mentoring, and other topics that you may want to learn about.

The SBA has many pages explaining and educating about various financing options for your business. Having enough capital is crucial to financial success when starting your business and they can teach you where to go to receive this funding. The SBA also has partnerships with a large group of both private and public financing institutions and can get you set up with lenders and investors. The SBA itself also offers loan options.
 

Growing Through Contract Positioning

 
Not only does the SBA help get started but they can help you build your business. One form in which they accomplish this is through contract positioning. On the SBA website you will find a page and several articles dedicated to showing business owners how to bid for and land contracts with the federal governments. This page will help you understand the federal marketplace and guide you to getting the work you need to build your business in the future.
 
The SBA is an excellent learning resource for any entrepreneur and small business owner. They can guide you through the process of starting a small business and making it successful. By using the SBA as a resource you can learn not only the principles to starting a business but also learn how to obtain funding and work contracts. The SBA can teach many things about starting a small business and often, more importantly, get you in contact with the right people to get the resources needed to head a successful small business.
 

Target your Customers

 
you can utilize zip code data at www.zipcodedownload.com or IP geolocation data at www.locationdata.com to target customers and know where the SBA is more likely to release loans. The truth is where you live and work is very important in determining where money will be released.

Business Plans Help Reduce Restaurant Failure Rate

Decreasing Risk When Starting a Restaurant

 
The restaurant industry is a high-risk, high reward market where statistics currently show that one in four new restaurants close or change ownership within the first year then after three years that statistic jumps to three in five.
 
Analysis has shown that the most common causes of restaurant failure are under-capitalization, poor location, and high costs. While risks cannot be completely eliminated; they can minimized. Creating a thorough business plan can assist you in addressing these issues with capital, location, and costs. Your business plan can help you decrease risk and increase your likelihood of starting a sustainable restaurant.
 

Under-Capitalization

 
Capital refers to the amount of financing that exists to back your business. Often, business owners do not acquire the amount of financing needed or their interest rates swallow up expenses leaving less available money to help fund business expansion. A crucial section of the business plan is creating pro forma business statements which projects the company’s, or in this case the restaurant’s, overall financial picture. By spending the necessary time creating this section of your business plan you can better understand the amount of needed capital and also increase your chances of getting better funding.
 

Location

 
Poor location and lack of market knowledge often leads to failed attempts at starting restaurants. Once again a thorough business plan will address this issue. Your business plan gives you an opportunity to do market research and analysis then publish your findings directly into your plan. Market analysis is essential to understanding future prospects of success. You will come to know what types of restaurants exist in your area, how they fare, local demand for your restaurant idea, and sustainability. The market research that you perform will help you make the wisest, most-educated decision possible in regards to location which then translates to a decreased failure rate.
 

High Costs

 
If there is one thing that can sink a restaurant or any new start-up business it is high costs, especially fixed costs. A business plan requires several considerations which can help lower costs. First, a business plan allows us to think through and decide how big we want our restaurant to be. For example, do we want 40 tables or 100 tables? Do we want a large menu or a smaller menu? These strategic considerations are addressed in a business plan and give a better idea of how big to start then what goals to set in a legitimate timetable. Second, by completing our pro forma financial statements and comparing projected revenues against projected costs will help us understand at what level your restaurant should operate at. Pro forma statements compared with acquired funding give us limits under which we should operate. Once again, the business plan decreases risk by creating a budget under which to operate when starting out.

There are a lot of variables which determine success or failure when starting a restaurant and all cannot be controlled. There will always be risk associated with starting a restaurant but by creating a solid business plan an entrepreneur can decrease that risk. A business plan will help you start the right restaurant, in the right market, under the right budget.

Steps to Starting Your Own Business

Understand the First Steps to Starting a Business

Starting a business can be a daunting task requiring a lot of planning and decision making. Often, it is difficult to know exactly where to start with paperwork, finances, and legal requirements. Below we have outlined a few things to know and consider when starting your business.
 

Write a Business Plan

The first key step to starting your own business is to write a business plan. A business plan includes a synopsis of your business, goals, and organization followed by market analysis, financial projections, and details about needed funding. This is usually a three to five year projection of your business forecasting growth, capital, funding, and profits. Writing a thorough business plan gives direction and organization for future decision making. As well it helps get a company on its feet by giving something palpable to show investors and future clients. There are many resources that serve as a guide to writing a business plan and what to do after writing a business plan.
 

Seek Funding from Appropriate Sources

After thinking through your business and writing a business plan it is necessary to find funding in order to finance your operations. For new small businesses there are several outlets to get funding including; bank loans, venture capital firms, angel investors, and even backing through the U.S. Small Business Administration. Each has its perks as well as it downfalls. The decision of which is best option for you and your business is completely up to you. Regardless of which you choose, it will be necessary to have detailed pro forma (projected) financial statements to show potential funders. These will be part of your business plan and include a balance sheet, income statement, and statement of cash flows.
 

Consider Your Legal Structure

When starting a business it is necessary to decide the legal structure by which your business will be recognized. Once again there are several options: Sole Proprietorship, Limited Liability Company, Cooperative, Corporation, Partnership, and S Corporation. Each of these types of legal structure includes different legal and tax implications. Be sure to research and consult with an accountant or other professionals before deciding exactly which structure you will use.
 

Obtain Necessary Licenses and Certifications

Depending upon where your business is located and what services/products are offered you may need to apply for special licenses and permits through the federal and state governments. For example, an architect may need separate licenses to work in California and Texas because of different building codes associated with each state. In order to understand what requirements your business must meet consult local government departments or the U.S. Small Business Administration has several resources to help you on their website.

After completing these few initial steps you are ready to begin operating your business, hiring employees, and reaching your goals. There is a lot to know when starting your own business. Do not be afraid to seek help along the way through online references, business development/consulting firms, and government resources. With each new step there will be more to know; for example, hiring employees has legal stipulations including liability, etc. Be sure to understand all of these facets as you move forward. Following these steps and creating a strong business plan complete with pro forma financial statements will help get your business up and running in no time.

Utilizing Financial Statement in Business Plans

Financial Statements Are a Must in Business Plans

Starting a new business requires funding which can be attained through various sources including banks, venture capitalists, angel investors, and government agencies.  These financial outlets are searching for companies to invest their money in that will bring return or profit to them.  While you are interested in financing your business they are interested in making money by providing the needed financing.

Each of these investors is going to ask for detailed pro forma financial statements including a balance sheet, income statement, and statement of cash flows. When talking about pro forma financial statements we are simply talking about forecasted or projected statements.

Each of these financial statements is included in the business plan and provides a good reason for creating a business plan: A business plan will significantly help your chances of receiving funding from any outlet.
 

Balance Sheet

The balance sheet is a summary of all assets, liabilities, and equities that exist within the company.  In other words assets are the company’s resources such as property, equipment, inventory, cash, and money owed to the company.  Liabilities include loans, taxes, and anything purchased on credit for which the company has not paid.  Finally, owner’s equity is how much money has been invested into the company by the owners and investors.  The balance sheet provides key information to entrepreneurs and investors alike such as how the company is leveraged (or financed).  For example, is your company financed more heavily by loans or equity which then dictates the liquidity or ability to sell the firm later.  Investors are very interested in such information and the owner must make a conscious decision of how they wish to be financed.  The balance sheet represents this and other key information about the company.
 

Income Statement

The income statement represents the net income of a company in a given period of time.  Net income is reported as revenues minus expenses and all are represented on the income statement.  This provides the business owners and investors with an opportunity to analyze the ability of the firm to keep costs down while generating sales, in other words; the firm’s efficiency or economic performance.
 

Statement of Cash Flows

The statement of cash flows details all inflows and outflows of cash into a firm through operating activities, investing activities, and financing activities.  Simply put, this summarizes where a company gets cash and how it is spent.  The Statement of Cash Flows requires the least estimating of the three financial statements and is emphasized by management.

Each of these financial statements serves internal and external uses.  Internal in that they are important to business owners and management and external in that potential lenders and investors will analyze them.  Your business plan will help you create solid pro forma financial statements for you to use as well as provide financial data to your potential lenders and investors.

Potential lenders and investors are interested in their return on investment (ROI).  They will use the financial statements within your business plan to estimate how much they will receive in the future as a result of investing in your company.

Having well calculated and forecasted financial statements will greatly benefit entrepreneurs in their search for funding.  It is important to be accurate and positive in these financial statements.  These statements within the business plan are the opportunity to prove that your business idea is not only financially feasible but that a large ROI can be expected; which will in turn draw in even more funding for you in the future.

Why Are Business Plans Important?

A business plan is a powerful tool and resource for business owners and entrepreneurs.  A well-crafted business plan lays out the foundation for consistent, good decision-making that leads to success.  When starting or running a business there are lots of different items to consider.  Your personal business plan will allow you to think through your business, to understand what you don’t know about your business, and to bring organization to your busy schedule.
 

Thinking Through Your Business

Successful businesses usually start with an idea for a product or service.  Taking that product or service and turning it into a successful business venture is much tougher than we think.  Sitting down and detailing information about your business will help you consider things you had not before.  For example business plans really help us consider things like:
 

  • How are going to fund our new business?
  • Where do we stand in the industry? Are there barriers to entry? How can we overcome them
  • What is our niche?
  • Who are we going to sell to and how are we going to gain their business?

 
One of the greatest benefits to a business plan is that it will lead you to consider and analyze key factors that you may have otherwise overlooked.
 

Understand What You Don’t Know

In the start- up phase of a business there still many unknowns about the business.  Creating a business plan is like taking a step by step walk through of key business variables, allowing you to uncover information you may have not known about your business.  One such example can be analyzing your respective industry and target market.  Knowing your competitors, what they do, and how they fare can be crucial to a successful business venture and without a business plan may be overlooked.  By creating a business plan the entrepreneur opens an opportunity to expand their knowledge and become a more efficient business owner and manager.
 

Organize Your Busy Schedule

Many start-ups begin with a few or even just one employee carrying out all the various tasks that are often spread out among a whole executive board including financing, marketing, scheduling, etc.  Taking the time to create a business plan will once again create a base to make consistent and good decisions concerning your business.  A quality business plan will aid in prioritizing goals, decisions, and actions to be taken in the present and future.  This ultimately helps entrepreneurs to organize their time better and be more efficient allowing themselves to carry out all the various functions required in a star- up position.
 

Conclusion

Creating a business plan is an important and crucial step in starting a business.  They provide vision and direction to the business owner which allows for consistent decision making now and in the future. This base also allows entrepreneurs to organize their time more effectively. The process of creating a business allows entrepreneurs to think through and really understand their business.  Creating business plans are a learning opportunity and become a valuable asset to any new business owner.

Business Plan vs. Business Model

For decades the business plan has been the heart and first step to starting a business. In order to receive funding from banks or venture capital firms, the business plan was a must have.  A business plan involves a mission statement, problems, solutions, data, and forecasting all used to show how a start-up would execute success in the coming months and years.

Is the Lean Start-up Taking Over the Business Plan

Over the course of the last decade a new approach has evolved called “Lean Start-Up.” The lean start-up approach is based upon a distinction between large companies and start-ups: large companies execute a business model and start-ups are searching for one. The lean definition of a start-up is, “a temporary organization designed to search for a repeatable and scalable business model.” This is done through a three step process outlined as (1) Creating a business model canvas, (2) Customer development, (3) Agile development. Following this process focuses on creating a minimum viable product and testing it with customers rapidly and frequently while making constant adjustments until the right fit has been found. These adjustments may include changes to the product itself or in the target market. This method is catching steam; in fact schools such as Harvard, Stanford, and Berkley have already begun to teach it as part of their entrepreneurial curriculum.

Why a Business Plan is Still Relevant

With the growing popularity of the lean approach the traditional business plan approach is being considered obsolete to some. But a business plan used correctly is still a valuable asset to a business that cannot be replaced by the search for a business model. Consider the differences between a business plan and a business model.

A business plan defines why you are in business and what your company does. The business plan provides an overall plan and vision to be followed in the future.

A business model describes how your company does business.

A business plan provides the vision needed to begin answering how you want to run your business. With this being said a business model is often included within the business plan itself. The lean approach is an excellent method to finding your niche within the market and defining what exactly you are going to include in your business plan once the niche is found.

The lean approach provides the methodology in order to find a business model but the entrepreneur still needs to execute the newly discovered model. A well-designed business plan provides the direction needed to effectively execute the model over time. Considering all of this, a business model cannot replace a business plan as it is inherently part of the plan itself. Using the lean method within a larger scale business plan can be an effective strategy to entrepreneurial success.