What must one do to safeguard his invention or startup ideas?

 If it is a really innovative idea, I would recommend patenting the technology. If it is regular idea, then it is very difficult to grow beyond a point . in silicon valley, the only way to grow beyond a point is to get VC funding. It helps in 2 ways. One it provides a way to finance growth and second it provides insights into markets, eventually opening new doors to potential customers, something that makes business sustainable in long run. I would like to give you 2 examples.

1.) Snapchat. Every new feature they introduced was reported to be copied by Facebook. This meant 2 billion users that Facebook had , have no reason to make a Snapchat account as they already have all the features of Snapchat along with contacts and features of Facebook , on Facebook. What do you think chances of Snapchat are to acquire new users?

2.) Microsoft- quoting Bill Gates talking about initial investors. “The reason we got investments was not because we needed money but what we needed back then was market insights and guidance. Though that didn't help Netscape  United States vs Microsoft Corp

Also I would like to point out investors can be really hard to come by as investment in a startup is a risky business, so they usually seek higher profits and familiar people, many of them investing only in startups started by their community, ethnic group, political ideologies and desired geographies. You see these people own half the money ever created and number in a few 1000. Billions in initial loss is nothing compared to anticipated profits in the future. In comparison a private war or trafficking weapons to rebel group can be done for just a few billion. Since i am from India i would like to talk about a recent suicide of son in law of Chief minister of indian state S M Krishna, Mr. V. G. Siddhartha whose company, Cafe Coffee Day, operated about 2000 outlet in India and internationally. According to his suicide note he claimed he was being pressured to buyback the stake foreign investors had bought in his company.

i would much rather work as a manager than list my company, it’s almost the same, no? in both cases, you just get a salary and returns on your capital and have no sense of ownership, plus you have pesky management and investors breathing down your neck with targets and deadlines. Too many heckles no.

Finally i think people should not have too much money or power, it makes things for others uncomfortable. I also support a cap on wealth a person (or family) should be allowed to hold. If all you do is provide capital for growth, returns should not be too much, Maybe debentures are a good pick in that case as a source of funding for the company. There are reasons one may have to list, though if all you aspire to do is make money for others, you should be a manager and not the CEO. Thats what i think.

In the end it all depends on what your vision for the business is and how your firm and market shapes up in initial years. Best of luck.

How do you prepare your business for a future recession?

Overall your business should give higher returns than fixed deposit rates would on capital plus any wages you can get out of working for another employer. In the developed world it ranges from 0% to 3% but in developing world it range from 5% to 13%. That is the only reason anyone should invest in your business, including yourself. Now if you are sitting in developed world and thinking the economy is already at full employment and any extra profit made if going to go straightaway to higher wages and thinking you can invest in China, India, rest assured there would be costs associated with it. For example currency conversion charges, higher taxes for foreign firm in many countries, The Dollar and euro that keep going up in value compared to the developing market economies and a extra margin for investing in a economy that is known for cooking it’s books. That would basically take care of above quoted interest rate differential.

So the First thing you should do is not start a business on debt. Interest costs add up fast especially in the developing world. Ofcourse in developed world i already mentioned the problem of saturated economy at full employment and all firms usually doing what they can do and want to do with most of them unwilling to change their suppliers unless they see significant cost savings.

Secondly do not buy office space, if you can rent it and the interest returns on your property investments justify renting. With property prices stagnating in most markets you can usually justify renting office space with returns you make from interest payments. It also helps a startup taking a risk and not sure if the business would be able to sustain itself in medium to long run as property is not as liquid a asset as for example cash in bank.

Thirdly ensure you work with well funded business partners. Bad debts are almost equal to a recession.

Fourthly, set realistic goals. Never dream beyond your means.

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