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4 weeks ago

Reagan Pollack
Measuring #ROAS (return on ad spend) is key for #SMB #startups: ROAS = (Revenue from ad)/(Cost of ad) e.g; $5000/$1000 = 5:1 (500%). However, I like to also measure Net ROAS (net profit from ad source). e.g; $2000/$1000 = 2:1 (200%) it shows how profitable your ads truly are💡From a gross revenue perspective, a ROAS of 1:1 or 100% yields a ROI of what it costs. But, a lot of businesses get into trouble thinking they have a 200% or 2X ROAS, when after they measure NET ROAS, they realize they have a negative return on ad spend, thus unprofitability. 😲👉Be smarter, measure and track both Gross and Net ROAS to determine the true profitability and return on your marketing campaigns/assets. #nostartupleftbehind #advertising #finance #startupbusiness #SMB #SupportSmallBusiness #smallbusiness #vc #KPI ... See MoreSee Less
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4 weeks ago

Reagan Pollack
In 2007 I wrote a 50-page business plan that nearly won the Business Plan competition at my business school back in Boston. A year later, I launched my first #startup and none of the plan came true. Save yourself the trouble of writing that 50-page plan over months, and instead write a 3 to 5 page turnkey plan in days: The Challenge: What is the true pain you are solving and for whom? How can you clearly define or quantify this pain?The Solution: How would you really solve it? Can you prove the outcome? If so how? If not think twice about picking this challenge to solve. The Opportunity: How realistically big is this market, and who cares so deeply about it that they have to have a solution to their problem? TAM: Total Addressable Market - don’t say “if we can only get one percent of a $100 million market we will make $1 million bucks”, but rather say “what does it take in time and capital to build up to acquire each customer”? Multiply that out for the month or year and that will be more accurate. Team: Who is helping you, guiding you, or who will you need to solve this issue? When you start a company you get a lot of advice but what you need is real roll up your sleeves action. Do you need a technical cofounder or a financial maven or how about a head chef?Financials: Limit this to a basic start up cost guide for the first 6 to 12 months. Whatever you project add 25%-50% your cost to be more conservative and accurate. Unit Economics: Break out what you’re selling, how much it costs, what you were selling it for, and what the gross margin is in percentage and dollar amount. Model: Are you B-2-B, B-2-C, or B-2-B-2-C? Flesh out your business model so you understand how it works. Milestones: Milestones are specific deliverables that you must meet to advance the business, helping you to see a roadmap for actionable items that you need to accomplish to reach the next tier of growth by a specific date. That’s it. No 3-5 year proforma statement. No investor pitch deck. No 50-page book. The goal is to test your hypothesis, gain market feedback, and learn the market’s receptivity first before wasting months assuming you know what they want. ... See MoreSee Less
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1 month ago

Reagan Pollack
When should you raise a large investor round of capital? What makes VCs want to fund you? What level of traction do you need to be convincing? These are the questions I field on a weekly basis with some of the entrepreneurs that I advise. The real answer to this question lies with three components that need to align in order for a venture capital deal to get done. 1) Timing 2) Traction 3) FOMO (fear of missing out) Timing is critical to raising venture capital. Entrepreneurs should look at when VC firms have raised their last institutional round and when they’re raising their next round to determine how much is left for distribution. Often investors want to close out the fund before they start distributing from the next fund. Timing plays a key role when you pitch your startup to investors. Being too early can be a red flag and being too late to market is also a red flag. It’s hard to time it properly so that’s why it’s key to demonstrate significant traction in either case. Traction, for most investors, is consistently growing revenues month over month. While profitability is a nice to have component, it’s often not required to raise large venture capital however it is prudent to be able to reach profitability and understand what mechanisms need to be in place to do so. FOMO, fear of missing out, is the emotional component that gets investors to take action quickly. When you get financial commitments from other investors it often becomes easier to get other investors to close out a funding round. When you give investors a specific date that you’re closing the round out at and you are firm on that it can create urgency which might help land you funding faster. At the end of the day, if you’re going to raise large venture capital you should be mindful of the fact that investors are the supplier of capital and you are the customer - it’s not the other way around. Most founders think that they’re selling their company but in reality you’re buying capital at a cost of equity, which is often the most expensive form of capital in the long run. #nostartupleftbehind #venturecapital #vc #finance #funding #entrepreneur #entrepreneurship ... See MoreSee Less
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