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When Writing a Business Plan Is a Waste of Time

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Spending months writing a business plan can make you feel like you’re being productive, but what you really need is market data and some experience.

John Warrillow is the author of Built To Sell: Creating a Business That Can Thrive Without You. He has started and exited four companies and in 2008 was recognized by BtoB Magazine’s “Who’s Who” list as one of America’s most influential business-to-business marketers.

John Warrillow is the author of Built To Sell: Creating a Business That Can Thrive Without You. He has started and exited four companies and in 2008 was recognized by BtoB Magazine’s “Who’s Who” list as one of America’s most influential business-to-business marketers.

Walk into any bank in the country and ask for a loan to start a business and the knee jerk reaction of the banker behind the desk will be to ask you to write a business plan—even though they themselves have likely never written one and will not base their lending decision on its content.

The problem with writing a business plan as a start-up is that it will be based on one assumption on top of another. If your first assumption is flawed, then the whole thing is useless.

Way back in 1996, I wrote a business plan for an audiotape magazine. My idea was, each month, to give subscribers a new audio recording of an interview I had conducted with a well-known entrepreneur (sort of like today’s model of podcasting). I decided to charge $99 for an annual subscription.

My business plan called for 10,000 subscribers in the first year, which amounted to a run rate of a cool $1 million in annual revenue. I had no idea what it would cost to acquire a new subscriber but figured $10, or about 10 percent of what I was charging them, seemed about right, so I calculated that it would cost $100,000 to get to my 10,000-subscriber base. With only $17,000 saved up to start the business, I assumed I would finance the acquisition of subscribers through the $99 prepayments of my new customers. I calculated the cost of mass producing 10,000 cassettes (this was long before iPods) and the cost of mailing the cassettes to my 10,000 subscribers each month.

I invested months in writing my business plan, and when it was complete, I felt ready to start running my million-dollar business.

My first step was to put together a top-notch first edition befitting of a million-dollar company. I rented studio time at a professional facility and hired an announcer from a popular morning show in Toronto and a producer from a local radio station. By the time I had my first edition finished, I had invested roughly $5,000 of the $17,000 I had saved up to start the business.

Next, I went to a printing company and had a four-color logo and package designed for my tape series. Each color added a little bit more to the cost of the tapes, but I justified the fancy graphics to myself because, spread across the 10,000 subscribers my business plan called for, the cost of each extra color was negligible.

I then created a fax-back subscription form (yes, this is well before ecommerce-enabled websites) and set up a fax machine in my parents’ basement.

To get my 10,000 subscribers, I printed brochures and started handing them out anywhere entrepreneurial people gathered: trade shows, small-business development centers and so on.

The first morning after handing out the brochures at a small-business trade show, I rushed downstairs to see how many orders I had received.

None.

I checked the paper cartridge—it was full. I picked up the receiver to ensure there was a dial tone, and sure enough, the fax machine was working. I tried to remain optimistic, figuring people were still returning to their offices from the trade show, and told myself I’d have orders the next day.

The next morning I went downstairs again in anticipation of the floodgates opening. Still no orders.

The next day, again, I was shut out. I became increasingly depressed with each passing day of not selling a single subscription.

By the time I ran out of money and had to shut the business down, I had sold just 82 subscriptions in three months.

As I think back on the experience, the business plan I had spent months on was useless. It didn’t matter how much time I spent modeling out a million-dollar company because the house of cards was all based on one wobbly assumption: my guess that it would cost $10 to acquire a subscriber.

I had no basis for this assumption. I just made it up—which, of course, is the problem with the business plan of most start-ups: it’s all fiction until you get into the market and start selling. While it is true you can find comparable data from some sources, oftentimes start-ups are bringing a new concept to market making it impossible to find an apples-to-apples comparison.

What you really need to plan your business is some market data, which only comes from—you guessed it—the market. My advice for starting a business is to develop your product or service as cheaply as you can (or even develop just a description of what you plan to offer) and try to start selling it.

Skip wasting time on writing a traditional plan, and instead invest that energy in establishing a benchmark for what it costs in time, money and prospects to close a sale. Once you have a baseline, try to improve your efficiency over time.

Let’s say, for example, it costs you $16.60 to get a prospect (or a website visitor, person to visit your booth or shopper to come into your store). If you have to pitch 15 prospects before one says yes, your cost per customer acquired is $249 (15 x $16.60).

Now let’s imagine you charge only $200 for your product. With a marketing cost of $249, you’re underwater and need either to raise your price or to get more efficient at selling.

Start by getting more efficient. Let’s say you tweak your pitch and, over time, get your cost per customer down to $135.

Now start nudging up the price and see if you can keep acquiring customers at $135 each. Imagine you’re able to get your price to $250 without compromising your ability to get a customer.

You’re now clearing $115 per sale, and assuming you’re making your product for less than that, you’re in business.

Spending months writing a business plan can make you feel like you’re being productive, but it’s really just busywork. No bank in the country is going to lend you money based on your business plan (they only lend to start-ups based on your personal creditworthiness). Hiding behind a spreadsheet won’t help you get a business off the ground. What you need first is some real-world data, and you won’t get that from sitting in front of Excel. It comes when someone says “yes” to what you’re selling.

With some real data, you can start to write a business plan for scaling up your company. I think too many of us make the mistake—often encouraged by well-meaning bankers and advisers—of writing a business plan before you start. The problem is, until you have some real-world data, your business plan will be pure fiction.

John Warrillow is the author of Built To Sell: Creating a Business That Can Thrive Without You, which will be released by Portfolio/Penguin on April 28, 2011.

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Business

BANK OF CHILE HIT BY CYBER-ATTACK, HACKERS ROB MILLIONS

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Shares in the Bank of Chile were down on Monday after it confirmed hackers had syphoned off $10 million (roughly Rs. 67 crores) of its funds, mainly to Hong Kong, though the country’s second-largest commercial bank said no client accounts had been impacted.

The cyberheist is the latest in a string of such attacks, including one in May in Mexico in which thieves used phantom orders and fake accounts to steal hundreds of millions of Mexican pesos out of the country’s banks, including Banorte.

Shares in the Bank of Chile, which is controlled by the Chilean Luksic family and Citigroup, were down 0.47 percent at CLP 100.4 ($.16) in mid-day trading.

Bank CEO Eduardo Ebensperger told Chilean daily La Tercera in an interview on Saturday that hackers had initially used a virus as a distraction, prompting the bank to disconnect 9,000 computers in branches across the country on May 24 to protect customer accounts.

Meanwhile, the hackers quietly used the global SWIFT bank messaging service to initiate a series of fraudulent transactions that were eventually spotted by the bank and cancelled but not before millions were funnelled to accounts abroad.

“The [attack] was meant to hurt the bank, not our customers,” Ebensperger said.

Ebensperger said a forensic analysis conducted by Microsoft had determined the attack was the work of a sophisticated international group of hackers, likely from eastern Europe or Asia, and that the bank had filed a criminal complaint in Hong Kong.

The bank said in a May financial statement that it would work with insurers to recoup the lost funds.

 

 

 

 

source: Gadgets 360

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Industry

HUAWEI MATE 20 PRO TIPPED TO SPORT A 6.9-INCH SAMSUNG OLED DISPLAY

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arlier this month, Huawei introduced the Watch 2 smartwatch with an eSIM and voice call support. Now, a new development claims that the company is procuring OLED displays from Samsung. The South Korean giant is said to have already sent out samples to Huawei, and if all goes well, full scale production is expected to start by Q3 2018. The smartphone to sport these 6.9-inch OLED panels is said to release sometime in the fourth quarter or even early 2019, and we largely expect to see them on the Huawei Mate 20 Pro.

South Korean media The Bell reports that Samsung is in the process of finalising samples with Huawei for its order of 6.9-inch OLED displays. These large-sized displays are usually seen on Huawei’s P series or Mate series. While the P30 series is not expected to arrive before MWC 2019, the Mate series traditionally arrives sometime in Q4. Furthermore, with the screen size being so large, we expect the Pro version to sport the 6.9-inch display, while the Mate 20 could sport a 6.1-inch or some such.

If Huawei is indeed bringing a 6.9-inch display smartphone, it should easily win the screen size battle, as the iPhone X Plus is expected to sport a 6.5-inch display, while the Samsung Galaxy Note 9 is expected to sport a 6.4-incher. These large sized displays are very popular in the Chinese market, and Huawei wants to meet expectations in its home market. Bigger screens are popular also because of the large text area used by the Chinese language, the report adds. Huawei wouldn’t want to lose its momentum in its biggest market by not staying ahead of its game.

Of course, all of this is based on sheer speculation, and we expect you to take everything with a pinch of salt, till Huawei makes things official.

 

 

Source: Gadget360

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Business

VPN TUNNEL : WHAT IS IT, HOW CAN IT KEEP YOUR INTERNET DATA SECURE

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With growing censorship and regulations threatening global internet freedom and security, in turn, we’ve seen an increasing number of services become available to protect your online web browsing.

Virtual Private Networks (or VPNs) have become increasingly popular in recent years for their ability to bypass government censorship and geo-blocked websites and services, and do so without giving away who is doing the bypassing.

For a VPN to do this, it creates what is known as a tunnel between you and the internet, encrypting your internet connection and stopping ISPs, hackers, and even the government from nosing through your browsing activity.

We explain the basics of what a VPN is here
What is a VPN Tunnel?
When you connect to the internet with a VPN, the VPN creates a connection between you and the internet that surrounds your internet data like a tunnel, encrypting the data packets your device sends.

While technically created by a VPN, the tunnel on its own can’t be considered private unless it’s accompanied with encryption strong enough to prevent governments or ISPs from intercepting and reading your internet activity.

The level of encryption the VPN tunnel has depends on the type of tunneling protocol used to encapsulate and encrypt the data going to and from your device and the internet.

Types of VPN tunneling protocols
There are many types of VPN tunneling protocols that offer varying levels of security and other features. The most commonly used tunneling protocols in the VPN industry are PPTP, L2TP/IPSec, SSTP, and OpenVPN. Let’s take a closer look at them.

1. PPTP
Point to Point Tunneling Protocol (PPTP) is one of the oldest protocols still being used by VPNs today. Developed by Microsoft and released with Windows 95, PPTP encrypts your data in packets and sends them through a tunnel it creates over your network connection.

PPTP is one of the easiest protocols to configure, requiring only a username, password, and server address to connect to the server. It’s one of the fastest VPN protocols because of its low encryption level.

While it boasts fast connection speeds, the low level of encryption makes PPTP one of the least secure protocols you can use to protect your data. With known vulnerabilities dating as far back as 1998, and the absence of strong encryption, you’ll want to avoid using this protocol if you need solid online security and anonymity – government agencies and authorities like the NSA have been able to compromise the protocol’s encryption.

2. L2TP/IPSec
Layer 2 Tunneling Protocol (L2TP) is used in conjunction with Internet Protocol Security (IPSec) to create a more secure tunneling protocol than PPTP. L2TP encapsulates the data, but isn’t adequately encrypted until IPSec wraps the data again with its own encryption to create two layers of encryption, securing the confidentiality of the data packets going through the tunnel.

L2TP/IPSec provides AES-256 bit encryption, one of the most advanced encryption standards that can be implemented. This double encapsulation does, however, make it a little slower than PPTP. It can also struggle with bypassing restrictive firewalls because it uses fixed ports, making VPN connections with L2TP easier to block. L2TP/IPSec is nonetheless a very popular protocol given the high level of security it provides.

3. SSTP
Secure Socket Tunneling Protocol, named for its ability to transport internet data through the Secure Sockets Layer or SSL, is supported natively on Windows, making it easy for Windows users to set up this particular protocol. SSL makes internet data going through SSTP very secure, and because the port it uses isn’t fixed, it is less likely to struggle with firewalls than L2TP.

SSL is also used in conjunction with Transport Layer Security (TLS) on your web browsers to add a layer to the site you’re visiting to create a secure connection with your device. You can see this implemented whenever the website you visit starts with ‘https’ instead of ‘http’.

As a Windows-based tunneling protocol, SSTP is not available on any other operating system, and hasn’t been independently audited for potential backdoors built into the protocol.

4. OpenVPN
Saving the best for last, we have OpenVPN, a relatively recent open source tunneling protocol that uses AES 256-bit encryption to protect data packets. Because the protocol is open source, the code is vetted thoroughly and regularly by the security community, who are constantly looking for potential security flaws.

The protocol is configurable on Windows, Mac, Android, and iOS, although third-party software is required to set up the protocol, and the protocol can be hard to configure. After configuration, however, OpenVPN provides a strong and wide range of cryptographic algorithms that will allow users to keep their internet data secure and to even bypass firewalls at fast connection speeds.

Which tunneling protocol should I use?
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Even though it’s the fastest, you should steer clear of PPTP if you want to keep your internet data secure. L2TP/IPSec provides 256-bit encryption but is slower and struggles with firewalls given its fixed ports. SSTP, while very secure, is only available on Windows, and closed off from security checks for built-in backdoors.

OpenVPN, with its open source code, strong encryption, and ability to bypass firewalls, is the best tunneling protocol to keep your internet data secure. While it requires third-party software that isn’t available on all operating systems, for the most secure VPN connection to the internet, you’ll want to use the OpenVPN protocol.

A good VPN service should offer you the choice of at least these four types of tunneling protocols when going online. We’ve compiled a list of the best VPNs in the industry for you to get started on protecting your internet data.

 

 

 

Source: Tech Radar

 

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