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In this issue

·         Angels sign in record numbers!

·         What's new for February?

·         Common start-up pitfalls

·         Intellectual Property - the do's and don'ts

·         What are Angels really looking for?

·         Find us on Facebook and Twitter.

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Dear Athol Haas,

Welcome to the CBAN Newsletter for February 2010.

This month we have several new ideas looking for funding ranging from specialist recruitment, vehicle repair and maintenance, software development and commercial land purchasing right the way through to hospital/medical wear and renewable energy! All of these businesses are expected to have completed their full business plan and cash flows within the next two to three weeks and they will then be circulated around our investor members. If any of them sound interesting to you now, please email us and register your interest. 

The early bird often grabs the best deals!

Angels sign in record numbers!

January 2010 was a record month for CBAN with 73 new Angels joining the network. They include several very well known Angel syndicates and Venture Capital firms as well as many private high net worth individuals. The Angel numbers are always growing as more and more people learn about and sign up to the advantages and opportunities that CBAN brings to their portfolios.

If you have not yet signed up to the network and are interested in investing in existing or start-up ventures, please visit the site www.cban.co.uk and click "register" to sign up with no cost, no obligation and absolute discretion assured.

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What's new for February?

We have signed up a variety of business ideas this month and these will be distributed around investor members towards the end of the each month as usual. The opportunities so far this month come from sectors as varied as specialist recruitment, construction, environmental consultancy and mobile telephone software application design.

If you are looking for funding, it is important to understand that CBAN is a service designed to put your idea into a professional and presentable format and to distribute that plan amongst suitable investors. We are not here to comment or advise and every opportunity is treated with equal zeal.

Please contact us for more information.

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Common start-up pitfalls

When an enterprise is ready to be launched, it makes a lot of sense to take a little time to look at things from the customer’s viewpoint in order to enhance the venture’s chances of success. It can be hard for a manufacturer to step into the customer’s shoes, and involvement in technical and logistical details may blur the most important factor in running a business – customer satisfaction. Let us look at the common mistakes made by start-up companies, and see how best they can be rectified or avoided.

These mistakes all have one thing in common – the customer is not the focus in such cases. The primary objective of sales material is to engage the customer at the first level of interest, and this interest should be followed up appropriately. But in order to get the prospective customer’s attention in the first place, you should avoid making the mistakes discussed below.

Website that waxes eloquent about the company’s achievements rather than offering customer focused information
A website that blows its own trumpet without giving the customer or prospect the information being sought, defeats its own purpose. While details of the team’s hard work or the manager’s brilliance may be riveting to those within the company, such information is of little or no use to the customer and can actually put him or her off.

How do you avoid this mistake? When you are constructing your website, you need to make a conscious effort to put yourself in your customer’s shoes. Think about what he or she is looking for, think about what would be the keywords used when a prospect is using a search engine, and how best to ensure that your company shows up high on the list of results. And if a customer does visit your website, it is essential that he or she finds what is needed in the first few seconds of landing there. Fancy graphics, an animated logo and a home page that uses a lot of words to say very little may please the CEO of the company, but they are not what the customer is looking for. The website needs to provide the details the customer really wants as quickly and simply as possible – further information can be provided at a later stage. Make sure that your website is customer-centric rather than ego-centric.

Online and print sales material that over-emphasise technical and engineering aspects
A potential customer needs to know what the start-up company is offering. Sales material should be presented in such a way that the customer gets a clear picture of what he or she will get. Benefits should be presented up-front, and technical details can be minimised. Complicated engineering aspects may not be the information the customer is looking for at all, and boasting about these areas rather than showcasing benefits will have a negative or neutral effect.

The idea of the product has to be sold effectively on the website, and this is not done by overloading the prospect with technical information that does not directly affect his or her buying decision.

Passive selling
While a product or service may be showcased well on a website, this is not enough for effective selling. Customers need to be led to the point of purchase.
Active selling is necessary; a product may be innovative, useful and reasonably priced, but unless marketing efforts are planned and a well thought out marketing strategy implemented, the product is unlikely to succeed. It’s not enough to merely offer a description of the product or service and then sit back and expect the world to beat a path to your door. You have to draw your prospect in, and convent prospects into sales by active selling processes.

Over-generalisation of the product
This mistake is frequently made by entrepreneurs who believe that it is better not to be too specific about a product to keep as many customers as possible interested, but this could have the opposite of the desired result.

In the efforts to avoid risk of missing out on some customers, the product is described so vaguely that the real prospects are left cold. It is very important to identify your target audience, understand your most likely customer thoroughly, and direct marketing efforts, product descriptions, advertising and so on to a specific group of people who are likely to buy. This will be much more effective than trying to spread your efforts over too large a market, and then failing to get a good market share.

Information overload
Often, too many details about the product are force-fed to the prospect at a single time. Sales material should tantalise as well as attract, and too much information can cause a loss of interest.

In this context, ideally, it is important to focus on a specific area that will be projected to potential customers through sales and advertising material. Since the primary objective here is getting the customer interested in the product or service, a brochure, for instance, should tell the reader just enough to pique his interest and make him want to learn more. There should be a call to action included, with details on how the prospective customer can get more information, or meet with sales personnel. Once the customer evinces interest, it is the sales force’s job to convert that interest into a purchase.
At different stages, different kinds of sales material and marketing may be used. One medium could be used to attract new customers, while a regular customer could be rewarded for loyalty in another medium. A comprehensive, effective marketing plan will be one with material that tells the customer what he or she wants to hear at his or her stage of engagement in the sales process. Thus, a new prospect should be given a concise introduction to the product, someone who has asked for further information could be given information about the company and the edge the product has over competition. So marketing needs to be attended to diligently and strategies evolved by an expert in the field.

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Intellectual Property - the do's and don'ts

During the due diligence process, a lot of enterprises makes certain errors with regard to their intellectual property. These mistakes can have long-term effects on the value of the company, yet a little thought can easily avoid them. Here are the ten most common intellectual property rights errors – here we discuss how and why these pitfalls should be avoided.

Leaving patent applications too late
There are certain rules that apply to patent applications, and non-compliance with these rules could mean that a company loses out on the advantages offered by protecting intellectual property. It is best to make patents applications as soon as possible, so that there is no chance of missing out.

Excessively narrow claims
Many entrepreneurs make the mistake of making patent claims that are insufficiently broad in their scope. Such narrow definitions for patent claims mean that a rival enterprise can easily circumvent the patent claims, and exploit the invention or innovation for its own ends. It is not easy to decide on the scope a claim should encompass, but it is important to include as wide a definition as possible.

Wilful infringement
Wilful patent infringement will be punished, and enterprises infringing on another venture’s patent will have to pay heavy fines. So steps should be taken to ensure that neither accidental nor deliberate patent infringement takes place.

Protecting software only with copyrights
Copyrights are not very expensive, and safeguarding intellectual property with the use of copyrights is quite common. But while this is effective for certain kinds of work, reverse engineering on some material can help a competitor understand it thoroughly, and use it to his or her own advantage. In such cases, it is better to protect intellectual property with a patent as well as a copyright.

Unspecified ownership of intellectual property
Sometimes the intellectual property of an enterprise is jointly owned by several parties – employees, consultants, customers and vendors may all have contributed to a particular innovation. So it is important to clearly identify the ownership of any intellectual property so that problems that competition could take advantage of do not arise later.

Failing to take legal implications into account
If the legal implications are not taken into account, especially with regard to amended claims and scope of patents, various problems can arise. The doctrine of equivalence should be understood clearly in this context.

Failing to emphasise the significance of confidentiality
Trade secrets and confidential information that the employees of an enterprise are privy to should be carefully safeguarded while, for instance, patents are pending. Non-disclosure agreements with employees will be useful in this regard. A failure to attend to this aspect of intellectual property protection could cost an enterprise dearly.

Neglecting to exploit the benefits of tax shelters
A new enterprise should not omit to use offshore strategies that will cut down on tax payments. When you want to protect your intellectual property rights at a global level, you will find that global tax strategies, wisely applied, will make things easier as far as taxes are concerned.

Slow response to notifications from patent authorities
To avoid delays, act quickly when required by the patent authorities in your area. See that legal requirements are met promptly, especially if there are claims against your patent.

Cost cutting on legal expenses
With the aim of saving money, some enterprises hire patent professionals based on the low fees they charge, but this could prove unwise in the long run. It is essential to hire professionals who are highly competent as well as experienced, and it is worth paying the higher fees that skilled patent lawyers charge.

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What are Angels really looking for?

If you want to encourage investors to put money into your business, understanding the mindset of an angel investor can be invaluable. Investors can help take a business forward by leaps an bounds and knowing what they are looking for will help you get your venture the capital it needs.

The most important things an angel investor will want to know are:

·         Details about product or service

·         Details about prospective customer

·         Benefits of the product to the customer

·         When your product is expected to be available for sale in the market

·         Pricing and methods of payment

·         Likelihood of repeat customers for your product or service

·         Profit expected with a time frame

·         Details about competition

With regard to the capital to be invested, an angel investor will need to know:

·         Expected development costs

·         Expected revenue over the next few years

·         Expected expenditure over the next few years

·         Projected sales over the next few years

·         Whether you as the entrepreneur have invested, or plan to invest capital in the venture

An investor will also want:

·         Proof of customer satisfaction with the product

·         Evidence that you have the investor’s interest at heart, in addition to your own

·         Proof of your skills, leadership abilities and competence

·         A picture of the positioning of your business in the market in relation to other companies in the same field

·         An idea of how you plan to benefit from a market that has been developed by competitors

Investors are likely to be deterred from putting money into your business if:

·         You don’t have the necessary qualifications or experience

·         High levels of complex, advanced technologies are involved routinely in your venture

·         You paint too rosy a picture of your venture’s future

·         You are not objective and practical while assessing relevant facts

·         You have not invested any money yourself

Generally speaking, angel investors prefer to be involved to at least some extent in the businesses in which they have invested. So the trend is for angel investors to get into start up ventures or small businesses, where their skills and experience in business will be useful in taking such an enterprise ahead.

Look for those who are successful, experienced, and who are willing to wait till your venture is ready to offer returns. You also need ensure that your investors have easy access to the capital they are offering. You should not have to pester your investor for money – it is both time-consuming and counter-productive. Remember not to agree to accept a smaller amount of money than what is actually required, and ensure that communication channels between you and the investor are always clear.

Consider the following facts of angel investing:

·         Regular angel investors usually consider only three of the approximately hundred business investment opportunities they are offered in a year

·         85% of business plans are badly presented

·         50% of entrepreneurs do not have the ability to run a business well

Remember not to neglect areas such as banking, vendors, the community your enterprise belongs to, and corporate social responsibility. All these will have an effect on your potential investor’s decision.

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Find us on Facebook and Twitter.

We are advocates of social networking and the benefits it can bring to a business. If you use Facebook and/or Twitter, please click the links below and join our groups. We hope that you find our discussion threads and contact lists to be of interest.

For Facebook click HERE

For Twitter click HERE

Thank you for taking the time to read our newsletter and to support CBAN. It's appreciated and we hope that it proves to be beneficial.

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