BusinessWorks Inc.- A dotcom in making

New BusinessWorks site is up and running.

2005-08-21T15:57:00.000-05:00

Finally, the new site is up and running. There are few updates left to be done, but it wont affect you, the readers. All previous posts are in the process of being categorized, but it takes time. Meanwhile, you will be able to search keywords and hopefully find what you are looking for in this blog. The conversion from Blogger to Wordpress was a relatively painless process, with some help from the online resources and my son.

Please note this website will remain online as long as possible. However new posts will only appear at the new website.

This transition changes few things:

Please update your subscriptions if you are using any RSS readers. Here is the link http://feeds.feedburner.com/BusinessworksInc .

New Url for the BusinessWorks Site is http://businessworks.ideologicllc.com. Please update your bookmarks.

A note to New Visitors:

BusinessWorks has moved to http://businessworks.ideologicllc.com.

See you all there!

Entrepreneurs Beware! Working long hours can be injurious to your health

2005-08-19T23:48:00.000-05:00

It is not uncommon for entrepreneurs to work long hours during start-ups and long time afterwards. This does take a toll on entrepreneurs. Long hours can increase the risk of injuries and health. Statistics are scary. 61% of people faced chances of injury during overtime and injuries were not restricted to any particular segment of the industry. It affected non-labor intensive jobs too. Read this article on Red Herring website.

Omaha - A Billionaire building City?

2005-08-15T22:11:00.000-05:00

My friend Jerry, passed an article to me from USA Today, Monday August 8, 2005 Edition about Omaha. This article is very interesting, so I thought of sharing with you, my readers. Although New York, Los Angeles and San Francisco boast of top 3 three positions in terms of number of billionaires, Omaha is eighth in terms of "per 1 million people", which is way above Los Angeles, Chicago and New York. Apart from numbers game, Omaha is a wonderful place for many things like raising a family, creating billionaires and generating entrepreneurs like me :-). Omaha has so far given 4 actors, 1 president, 1 baseball player,1 Civil Rights Leader and three billionaires to the world. Mention of Omaha is incomplete without the Sage of Omaha, Warren Buffet. So what is the secret of Omaha's success? Is it quality of life? Short commutes to work? Excellent ethics? Decide for yourself by reading the article or better still, by visiting Omaha. Do drop me a line when you visit the city famous for Omaha Steaks.

Changing gears, here is a screenshot of the new Businessworks site.

Visit the Preview site here. Please let me know your comments about this site at businessorati -at gmail -dot- com.

Carnival of Capitalist is up at Weekend Pundit - 15-Aug-2005

2005-08-14T17:04:00.000-05:00

Another excellent edition of Carnival of Capitalists is up a day early at Weekend Pundit. As usual we have excellent business posts from stalwarts like Anita Campbell of Small Business Trends, Wayne Hulbert of Blog Business World, Yvonne DiVita of Lipsticking and many others including yours truly with his post about Business FAQ blog at Ideologic L.L.C.

Transition from Blogger to WordPress

2005-08-14T12:11:00.000-05:00

BusinessWorks Blog will be celebrating it's First Birthday on September 24th, 2005. It is already experiencing growing pains. Google's Blogger is my current Blogging Engine and it has served me well, but it lacks a few critical features like Categories, Search facility, trackbacks that a Blog like mine needs. I am planning to move the blog to a different host and use WordPress as my Blogging Engine. To better serve my readers, each post will be categorized and search will be embedded in the page to find the content you need. There will be lot more features added, with a new theme, current month calendar to find the posts and much more. Current Blog will remain active during the process and once the transition is complete, it will redirect visitors to the new blog.

Please bear with me for the inconvenience caused, until this transition is completed. The posts will be sporadic and few in coming week, but once the transition is complete, it will be atleast one post per day as usual.

Investment Analysis Methodologies - Discounted Cash Flow

2005-08-13T18:03:00.000-05:00

Venture Capitalists, in absence of a solid predictable path, rely on these popular methodologies to arrive at crucial decisions about investments. Discounted cash flow and compound interest are two sides of a coin.

As we know, a dollar you have today is worth more than a dollar you'll have at some point in future, because you can invest today's dollar and earn interest on it starting today. Inflation hasn't eroded today's dollar yet.

Conversely it is true that a future dollar is worth less in today's terms so it has to be discounted to get it's present value. "Discounting" is a way of expressing the loss of interest income and/or erosion by inflation that you suffer by not getting that dollar until some point in the future.

There are ready tables available that shows how much $100, to be paid at the end of various periods in the future, is currently worth, with interest at different rates, compounded annually.

To use the table, find the vertical column under your interest rate (your cost of capital). Then find the horizontal row corresponding to the number of years it will take to receive the payment. The point at which the column and the row intersect is your present value of $100. You can multiply this value by the number of dollars you expect to receive, in order to find the present value of the amount you expect.

net present value of $100 table
years	9.0%	9.5%	10.0%	10.5%
1	$91.74	$91.32	$90.90	$90.49
2	$84.16	$83.40	$82.64	$81.89
3	$77.21	$76.16	$75.13	$74.11
4	$70.84	$69.55	$68.30	$67.07
5	$64.99	$63.52	$62.09	$60.70
6	$59.62	$58.01	$56.44	$54.93
7	$54.70	$52.97	$51.31	$49.71
8	$50.18	$48.38	$46.65	$44.98
9	$46.04	$44.18	$42.40	$40.71
10	$42.24	$40.35	$38.55	$36.84

So for example if a Venture Capitalist has to wait for 6 years before he can expect any profits from the venture. Next he assumes 10% interest (cost of capital). After 6 years, his capital of $1,000,000 will be worth $564,400 in today's dollars! That is the time value of the money.

Investment Analysis Methodologies - Discounted Cash Flow

2005-08-13T17:57:00.000-05:00

net present value of $100 table
years	9.0%	9.5%	10.0%	10.5%
1	$91.74	$91.32	$90.90	$90.49
2	$84.16	$83.40	$82.64	$81.89
3	$77.21	$76.16	$75.13	$74.11
4	$70.84	$69.55	$68.30	$67.07
5	$64.99	$63.52	$62.09	$60.70
6	$59.62	$58.01	$56.44	$54.93
7	$54.70	$52.97	$51.31	$49.71
8	$50.18	$48.38	$46.65	$44.98
9	$46.04	$44.18	$42.40	$40.71
10	$42.24	$40.35	$38.55	$36.84

Investment Analysis Methodologies - Discounted Cash Flow

2005-08-11T23:47:00.000-05:00

net present value of $100 table
years	9.0%	9.5%	10.0%	10.5%
1	$91.74	$91.32	$90.90	$90.49
2	$84.16	$83.40	$82.64	$81.89
3	$77.21	$76.16	$75.13	$74.11
4	$70.84	$69.55	$68.30	$67.07
5	$64.99	$63.52	$62.09	$60.70
6	$59.62	$58.01	$56.44	$54.93
7	$54.70	$52.97	$51.31	$49.71
8	$50.18	$48.38	$46.65	$44.98
9	$46.04	$44.18	$42.40	$40.71
10	$42.24	$40.35	$38.55	$36.84

Investment Analysis Methodologies - Internal Rate of Return

2005-08-09T22:13:00.000-05:00

Time value of money is one of the most important yardstick used by Venture Capitalists before investing. The internal rate of return (IRR) method of analyzing an investment utilizes the time value of money. This parameter provides you an option of calculating interest rate that is equivalent to the dollar returns that you expect from an investment. This helps you in comparing to the rate you can earn by investing in projects of similar merits.

Lower Internal Rate of Return with respect to cost of borrowing indicates a money losing proposition. So typically a Venture Capitalist will be looking for reasonably high Internal Rate of Return when compared with Cost of borrowing. This is expected as Venture Capitalist is in the market to make money for the risk taken, time spent and trouble taken.

Let us consider an example. A venture capitalist is studying an investment where initial cost of the project is $750,000 and expected return is $200,000 per year for next 5 years or $1,000,000 in total. So Internal Rate of Return here is 10%. Suppose cost of borrowing is 2%. That gives the Venture Capitalist has a margin of 8% which may be worth his while to invest in the project.

Cash flow evaluation and not income from investment is the goal of Internal Rate of Return Analysis, as Income from investment is a skewed figure as it includes depreciation etc.

Investment Analysis Methodologies - Payback Period

2005-08-08T21:56:00.000-05:00

If you enter the mind of a Venture Capitalist, you may find amongst other things, a formula that gives him an estimate about when he can realize some profits from a startup. It is called Payback Period. It tells you, how long will it take to recover your investments and be profitable. The formula to calculate Payback Period is simple enough.

All you do is divide Investment by Annual Cash flow to get Payback Period. So suppose if Investment cost is $1,000,000 and Annual Cash Flow expected is $125,000, then Payback Period is 8 years.

However in real world, you can never expect to have a constant Annual Cash Flow every year. So, expected return for each year is added until total cost of Investment is arrived.

Year	Return	Cummulative Project Cost
1	$125,000	$125,000
2	$175,000	$300,000
3	$225,000	$525,000
4	$250,000	$775,000
5	$250,000	$1,025,000

In the table above, Investment cost will be recovered just shy of Five years. So when a Venture Capitalist has three competing projects, he may consider Payback period amongst other things and go for the project that has the shortest Payback Period. As with any other method, this method has a disadvantage that it ignores time value of the money. However if this method is used in conjunction with the Net Present Value and Internal Rate of Return, it is a great tool for the Venture Capitalist.

As an Entrepreneur, when you prepare your projections, you must be careful with your calculations so that decision process is smoother and in your favour. Who knows, when a Venture Capitalist is comparing your project with other projects with similar merits, you may come out as a winner due to your realistic projections.

Investment Analysis Methodologies - Net Present Value

2005-08-07T20:44:00.000-05:00

We all know, task of a Venture Capitalist is not an easy one. It is not an easy job to calculate the risk in investing in a start-up, but they have to start somewhere. Net Present Value is one such method that is used to analyze the profitability of an investment.

The Net Present Value method (NPV) of evaluating a major investment allows you to consider the time value of money. Essentially, it helps you find the present value in "today's dollars" of the future net cash flow of a project. Then, you can compare that amount with the amount of money needed to implement the project.

If the NPV is greater than the cost, the project will be profitable for you (assuming, of course, that your estimated cash flow is reasonably close to reality). If you have more than one project on the table, you can compute the NPV of both, and choose the one with the greatest difference between NPV and cost. Let us take an example here:

Project	Initial Cost	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Present Value	Net Present Value
Startup One	$10,000	$2700	$2600	$2400	$2800	$1342	$1444	$13,286	$3286
Startup Two	$10,000	$2000	$2000	$2000	$500	$500	$3000	$10,000	$0
Startup Three	$10,000	$4000	$500	$500	$500	$500	$1000	$7000	-$3000

As an example of how NPV works, let's say you're looking at a project "Startup One" costing $10,000 that is expected to return a total of $13,286 in a period of 6 years. Using NPV analysis you can determine that if the discount rate on the project was 10 percent, the net present value of the expected returns would be $9,967.28. In other words, if you had $9,967.28 today and invested it at 10 percent, after six years you'd wind up with $18,116.67, much more than your return on your project. Thus, it looks as if the expected additional return on the project has shrunk to about $4,830.67, which may not be worth all the time and effort you'd have to put in. Although Startup One seemed to be a profitable proposition as per the table, you just saw it was not very profitable.

NPV analysis is generally used to evaluate the project's cash flows. Although NPV is widely used in Investment decisions, it has disadvantage of not being flexible enough to account for flexibility / uncertainty associated with the project decision.

How do you compute NPV? The easiest way is to use a good financial calculator or Microsoft Excel Spreadsheet's Financial function (NPV). There are online calculators available to perform this calculation.

Investment Analysis Methodologies - Introduction

2005-08-05T22:57:00.000-05:00

We have learnt a lot about "What and How" to pitch to Venture Capitalists, but have you ever wondered what is going on in Venture Capitalist's brain? What is the math and science behind VC's investment decisions? Would it not be great to understand the basis of VC's decisions? So I decided to go behind the scenes and get those formulae and present them here and try to explain them in layman terms. Please remember there are other criteria used by investors, my purpose here is to help entrepreneurs tailor their projections in such a way that it increases the probability of their success.
Here are some of the popular methodologies:

* Net Present Value (NPV) - Capital budgeting where the present value of cash inflows is subtracted by the present value of cash outflows
* Payback Period - Initial Outlay Recovery Period
* Internal Rate of Return (IRR) - the return that a company would earn if they expanded or invested in themselves, rather than investing that money abroad.
* Book Rate of Return - Profit from Investment to Initial Capital Outlay Ratio
* Discounted Cash Flows (DCF) - Attractiveness of an Investment opportunity.

I will be discussing each methodology in upcoming posts in layman terms. Have a wonderful weekend.

10 principles of Money Mastery

2005-08-04T22:58:00.000-05:00

This is actually a review of a book that I came across other day. It is a very relevant book for entrepreneurs as well as anyone else who is trying to fight a battle against debt or simply trying to get best value for their dollar. Book is divided in two parts, one is Money Mastery Principles and other is Tax Strategies. I will review this book from entrepreneur's point of view.

If you read the titles of ten chapters, complete Part One can be summarized as "Money is emotional, track it, control it! There is no such thing as savings, To power down your debt, you got to know the rules of the game as the rules are always changing, So always look at the big picture, organize the wealth, understand taxation and put your money in motion".

As reasonable human beings, we know money is important and it should be spent with care, but we being emotional, spend money emotionally. Men spend on Gadgets and cars and women spend on clothes. This book teaches commonsense principles about money. Authors advise to track what you spend and control the emotions and savings is defined as "delayed spending", which is a very interesting concept. An entrepreneur is a family person too. He / she has obligations towards family, pay mortgage and other bills. This book promises to get the reader out of debt, pay off mortgage in nine years or less and teaches how to reduce taxes by 50% legally, using "Power down" method. Authors Alan M. Williams, Peter R.Jeppson and Sanford C. Botkin also conduct "Money Mastery" classes. If you think, this reasonably priced book will help you achieve control over money, buy it from your nearest store or click the link below.

Resources for Market and Industry Research

2005-08-03T22:21:00.000-05:00

I have gathered few resources for my personal use, but would love to share with my readers. I hope this will help busy entrepreneurs as I think time spent on research is time well spent.

My first resource is EBSCO Information Services. This website catalogues business journals, magazines and trade journals. Many local and regional business publications are included. There are quite a few full text articles to read. Subscription is required.

Other resource is ABI / INFORM. This site has a database covering business, management, economics and a wide range of related fields. It provides abstracts of material from 1971 onwards and full text (various formats) from 1987. Subscription is required.

Lexis Nexis Academic is another excellent resource which has full text information of newspapers, news magazines, trade and industry publications. Subscription is required.

For a reason, I have not included any free resources. For serious research, one must go to a reliable source.

20 Questions to ask before starting a business

2005-08-02T23:09:00.000-05:00

Starting your own business and becoming an entrepreneur is no easy task. As I said in my previous posts, a would-be entrepreneur need to evaluate himself/herself before actually starting the business. Here is a handy list of questions to ask and answer convincingly and in great detail.

1. What is the product or service?
2. Can I describe the product in three to four sentences?
3. What is the target market for the product or service?
4. Is this product or service practical? feasible?
5. Is there a demand for the product after discounting for existing suppliers?
6. What is the price I can get for the product?
7. What are the qualities that will give me an advantage over other businesses?
8. Where will the business be located?
9. What is the advantage in locating the business in a particular location? Availability of raw material? close to target market?
10. Do I need to consider any zoning or fire regulations or restrictions before opening the business?
11. Is any permit or license needed to start the business?
12. What will be the legal structure of the business? 'C' corp., 'S' corp., LLC or Sole Proprietership?
13. What equipment, plant, machinery, raw material and supplies needed?
14. What type of commercial and professional insurance is needed?
15. What is the inventory of skills and experience? self? in surrounding areas?
16. How much capital is needed for startup and maintenance of the business?
17. What are the financial resources available?
18. How do I identify and reach my customers? marketing? website? weblog? mailings?
19. What will be my day to day operations plan? procedures?
20. How and when do I compensate myself?

Skype - Indispensable tool for an Entrepreneur

2005-08-01T23:29:00.000-05:00

A dollar saved is a dollar earned. An entrepreneur has to be spendthrift where possible. I am always on lookout for low-cost or almost free, time saving, efficiency improving tools. Today I came across Skype, which is one such tool.

Skype has been around for quite sometime. I know, I am late to the game but I discovered today, how indispensable Skype is for an entrepreneur. For those of you, who are like me, late to catch on to the Skype wave, this is a tool to make free calls over the internet to anyone else who also has Skype and believe me there are lot of people around the world who do have Skype. I tried out Skype half way accross the world and voice quality was amazingly crystal clear like a conventional phone. This services is free. There are other value-added ancillary services by Skype which are of great value to an entrepreneur. First one is SkypeOut which you can use to call any ordinary phone from Skype. Then there is SkypeIn, which is a real phone number your business contacts can call . You can pick up this call in Skype. Skype Voicemail lets you direct calls when you are offline or busy to your voicemail.

I am particularly excited by the news today where a start-up company is piggybacking on Skype to bring free international phone calls from cell phones. They plan to offer this service free initially and eventually charge $9.95 a year. I also came across a Skype related service called Skypable that informs a caller about your status. All you got to do is put a link on your website to display your status.

You can reach me via Skype using my ID: Businessorati or simply click on the "Skype Me" button on the left.

Other great resources from FORBES Best of Web - Small Business Blogs

2005-07-31T15:29:00.000-05:00

BusinessWorks is a would-be entrepreneur's blog. Today I would like to share with my readers other great blogs which are on FORBES-Best of Web list under Small Business Blog Category. These blogs have contributed towards business in general, marketing and entrepreneurship with their excellent posts and informational material. I am honored to find my blog in the elite company of these blogs. Visit them and find out for yourself:

Duct Tape Marketing by John Jantsch (rated Forbes Favorite)
All Business Blog Center
Church of the Customer by Ben Mcconnel and Jackie Huba
Fresh Inc. by Inc.com
Small Business Trends by Anita Campbell
Entrepreneurial Mind by Jeff Cornwall
Small Business Brief by Linda Riley

Thank-you Forbes!

Some more business basics

2005-07-30T16:29:00.000-05:00

My last post must have left you thinking, whether you are made for business and entrepreneurship? Today's post will make sure if you are ready for the most exciting, sometimes hardest, time of your life. So let us begin that journey towards that realization.

Gaining Real World Knowledge

There is a modern saying by yours truly, if you want to be in the business of RFID, you have to work in the field of RFID and gain some valuable experience or going by an older saying, you must learn to walk before you run. On serious note, if you already have the expertise in the area of technology on which your business will be based on, gain some sales and marketing experience. This experience will help you gain valuable insight to develop products with marketability value.

Finding Seed Capital

If there is a need for $1 million for your business, your options are to approach venture capitalist, maybe an angel investor or to the bank. Irrespective of which path you choose to raise capital, each one of this source will ask for your commitment in terms of money. They want to know your motivation to succeed in the business. Having an idea is not enough. You need to come up with atleast 20% of the funds to invest in the business. This 20% capital may be raised from your own savings or from your relatives and friends. Cut your expenses. However, do not touch your retirement savings. You will need those savings for your future.

Simplify..Simplify

At every moment in your entrepreneurial journey, try to keep things as simple as possible. Remember you have only 24 hours in a day, possibly have a family and a business to run. It is in your best interest to simplify the processes, do not try to do every small thing yourself, delegate as much as possible. Concentrate on your area of expertise, and leave other things to the experts in their respective fields. An entrepreneur is always working hard trying to manage money in an efficient way and in this effort he ends up doing everything himself and loses his focus. This is one of the most common reason of the failure of start-up businesses.

Plan before you Leap

Planning is everywhere in our life. To wake up in morning, you plan in night and set up alarm clock to wake you up. Business is same way, you must plan well in advance. Even if you do not have the seed money, you must have a business plan to have an idea about expenses involved. Business plan is a path for you to follow. So make this plan early and be on your way from Concept to Wall Street.

Back to Business Basics

2005-07-28T22:55:00.000-05:00

In my past posts, I have stated, Phase I grants can range from $70,000 to $100,000. If you think this amount is enough to get started and and sustain your business for a period of six months (time provided by federal agencies for completion of Phase I), then you have severely underestimated your budget. What I am getting at is, once you sit down to write a financial plan, you will realize Phase I Amount won't even last you for three months. When I sat down to write a proposal for a RFID based project, I was shocked to see calculated capital requirements.

Please read my post about Cost of business and subsequent post about Capital and Expense Projection, there is a minimum outlay of $2 million! There is a big gap to be filled and the question is, how do you bridge this gap? Let us go back to basics of business to find the answer.

Basic Business Requirements

You must have :
- a feasible and marketable idea, product or service.
- knowledge (or some one knowledgeable) of the product.
- access to working Capital.
- an operating, marketing, business and financial plan.
- Economic and emotional ability to withstand ups and downs of the business.

These requirements are valid whether you are starting a business, buying an independent business or a franchised business. You have to set realistic goals. Generally when it is your idea, you tend to be biased towards that idea and ignore certain critical things like Capital. Make sure you get your idea evaluated from your trusted source and not ignore things that are important. Do ask yourself following questions:

1. What product / service your idea will provide?
2. What needs does this idea will fulfill?
3. Who will be your potential customers?
4. How will you reach these customers?
5. Why will they purchase this product or service from you?
6. Where will the Capital come from?

When you can convincingly answer each of these questions, you can move forward and take your second, third and fourth steps.

Bottomline: When you solve the jigsaw puzzle of your future business, Phase I funding is just a small piece of this puzzle.

BusinessWorks featured on the Forbes Best of Web List

2005-07-26T22:13:00.000-05:00

My 15 minutes of fame! BusinessWorks is featured on Forbes.com, Best of Web under the Small Business Blogs category. Read the complete review here.

Lea Goldman of Forbes has pointed out a couple of things, that I definitely need to work on. First is "big gaps between posts". I am guilty as charged. I agree, I was busy developing my other weblog about Business Blog Process Outsourcing. Lea also says "while Keshwani is exceedingly detailed about the nuances of starting a business, where's the heart? You don't get a sense of the blood, sweat and tears involved in the start-up process.". While it is true online, real life is different. Nothing is achieved without blood, sweat and tears.

Components of an Effective SBIR/STTR funding proposal

2005-07-24T17:26:00.000-05:00

Your proposal is the first and one of the most important step towards SBIR/STTR Funding. So it better be effective. Today I will write about components of a SBIR/STTR funding proposal.

1. Title - This is self-explanatory, but extremely important.
1.1 Project Summary - Write one page of summary to provide overview of your idea and the project.
1.2 Project Description
1.2.1 Identification and Importance of the Innovation - Identify and explain the significance of your innovation and how it improves existing environment or the current process. No more than 1.5 pages.
1.2.2 Background and Technical Objectives - Describe the background and define technical objectives of your innovation. Upto 3 pages
1.2.3 Research Plan - Details of hardware/software you plan to use for the research. Can be upto 2-3 pages.
1.2.4 Company Information - Describe in a page about your company, its past achievements etc.
1.2.5 Commercial Potential and Feasibility - Provide commercial potential and most important, feasibility of your idea within provided time frame of the project. About 1.5 pages.
1.2.6 Consultants required for the Project - List names and brief resumes of consultants required for the project. 1 or 2 pages.
1.2.7 Overlapping or Equivalent Proposals to other Federal Agencies, if any. - Many a times, two federal agencies may have solicitations which are similar in nature. You may propose to both agencies, but you must mention it on the proposal.
1.3 Cited References - Provide your sources of information, research here.
1.4 Biographical Sketch - List your technical staff, with brief resumes here.
1.5 Budget
1.5.1 Personnel Budget - Provide yearly salary for the required personnel, with their roles clearly defined.
1.5.2 Hardware/Tools Resources Budget - Provide hardware, software and miscellaneous supplies and material costs over here.
1.5.3 Consultant Budget - list Consultant salaries here.
1.5.4 Travel Budget - Amount reserved for travel purposes must be listed here.
Provide justifications for each budget and a work breakdown structure. Try to keep the budgets very close to the funding available for the Phase that you are proposing for. If your budget exceeds the funding available with agencies, provide details about how do you plan to bridge that gap.

Tips for writing a Proposal for SBIR/STTR solicitation or grants

2005-07-20T23:18:00.000-05:00

A proposal is a response to SBIR/STTR grant or solicitation, which may either result in funding of your project or a rejection. This underscores the importance of the proposal for an enterprenuer. In a way, a proposal is no different from creating a Business Plan, except that it is more focussed on the solicitation. Here are few tips in creating a winner proposal (These tips apply to all three phases)

1. Search for the solicitation that best suits your skills on SBIRWorld. Download the solicitation from the Agency's website. Thoroughly read the solicitation. If you do not meet the requirements, do not submit the proposal until you fully meet the requirements of the solicitation. You may lose out on one solicitation, but there are many more opportunities from various agencies with many of them releasing solicitations every three months.
2. Never go for creating a proposal alone. There are financial and technical components involved. Involve your qualified personnel to help you create projections. If possible, hire an experienced proposal writer. It is money well spent.
3. Be ready to spend 250+ hours in creating a proposal. Although it is a 20-24 pages of proposal, there is lot of work involved in proposing a feasible idea.
4. Be open to collaboration with corporations and universities. Universities are a great resource of research talent and corporations are a great source of additional funding.
5. For each solicitation, there is a Program manager assigned to it by the agency. Sometimes written word must be supplemented with spoken word. Ask Program manager about what agency is looking for in the proposal. Program Manager is there to help, so utilize this resource well.
6. If possible, attend a SIBIR/STTR conference to increase your knowledge and understanding of the process. You can meet program managers, Grant and contract awardees face to face and learn from them. Once again great resource for the conferences is SBIRWorld.
7. Learn from the success stories found on each agency's website.
8. Be very clear while presenting your ideas. If you cannot explain your idea in less than 4 lines, you need to work harder on clarifying your idea.

I hope these tips help you in creating that winner proposal. I wish you luck and feel free to write to me if you have any questions about these tips.

SBIR, STTR and RFID

2005-07-19T23:21:00.000-05:00

My last post, was about SBIR funding. Today, I will write about funding opportunities available in the area of RFID and Wireless Sensor Networks (WSN), but first let me mention few resources available for SBIR. One of the most comprehensive resource is SBIRWorld. It is a warehouse of SBIR/STTR related conferences, open and past solicitations and federal agencies. Search feature helps in searching open and past solicitations for projects of special interests. For example, I searched for "RFID" and found 14 past solicitations in near past.
Second resource is a regular E-mail alert received roughly every three weeks with open solicitations and due dates for the solicitations. Send an email to lyris-at-lyris-dot-pnl-dot-gov (replace -at- with @ and -dot- with .) with words "Subscribe sbir-alert" in Subject of E-mail.

Federal agencies like National Science Foundation, Department of Defence - Army and Department of Defence - Navy are major funding agencies for RFID related grants and solicitations. Sometimes RFID related solicitations can come from unexpected sources like Department of Agriculture-for tagging the poultry and other farm animals, especially in the wake of mad cow disease.

National Science Foundation (NSF) has one of the most open ended grants, where you can provide a proposal about your unique idea based on the general guidelines provided and get funded. Ofcourse your idea should be practical and feasible. However, as more and more people become aware of SBIR grants and solicitations, competition increases and it gets relatively hard to get funding. One key thing to remember, SBIR funds may or may not be enough to completely finance your business operations, so it is prudent to have other financing resources available for your business.

In my next post, I will provide some tips on writing a proposal for the grant or solicitation.

What is SBIR funding?

2005-04-09T08:38:00.000-05:00

I am back from SBIR conference, held in Omaha. There is lot to share for days to come. SBIR Conference was a great networking event apart from being a excellent learning experience. In coming days, I will be sharing my knowledge that I gained in these 3 days.

What is SBIR funding?

SBIR stands for Small Business Innovation Research. US Federal government has set aside 2.5% of it's research budget for small businesses.
Small businesses are defined as follows:
* less than 500 employees
* 51% owned by American citizen or Permanent Resident Alien
* It is a for profit business
* business must be in United States
* Principal Investigator for research must be an employee of the business during project.

Why use SBIR funding?

Venture capital financing is hard, if not impossible, to get at initial stage. SBIR funding, gives businesses access to funding at the stage of feasibility study.

Who provides SBIR funding?

SBIR funding is provided by various federal agencies like Department of Defence (DoD), NASA, National Institute of Health (NIH), National Science Foundation (NSF), Department of Transportation (DoT) and many others. For our purpose, I will refer to them as "agency"

How does it work?

SBIR funds are of two types: Grants and Contracts.
Grants: Agency defines a wide scope and invites proposals from small businesses. If a small business has an innovative idea that falls within that scope, it can propose the idea within the guidelines provided by the agency.
Contracts: Here agency defines a specific problem in the form of solicitation and small business has to come up with an innovative idea that resolves the problem.

SBIR funding is divided into three phases:

Phase I: A proposal needs to be submitted to the agency detailing the solution to the problem or an innovative idea, with a business plan and commercialization potential. If the agency likes the proposal, small business is awarded a grant or a contract worth upto $100,000, depending on the type of agency. Small business is expected to conduct feasibility study for the solicitation provided by agency and provide this study within 6 months from the date of award.

Phase II:In this phase, small business conducts research. Goal is to come up with a prototype. This grant or contract is awarded only if the small business has provided an excellent feasibility study in Phase 1. This phase has a life span of two years and can be worth upto 1 million dollars depending on the agency.

Phase III: This is the phase where small business is ready to go to a Venture capitalist. With a prototype ready, business plan made and commercial potential documented, small business is well equipped to approach a Venture capitalist. Many agencies do NOT fund the phase III. However, recently some of the agencies have started to match 50 cents for every dollar provided by VC funding upto $500,000.

SBIR Conference in Omaha

2005-03-08T21:01:00.000-06:00

I had not posted for nearly a month now, but I wanted everyone to know, I had taken a short break to focus on "real" business. Currently I am attending Small Business Innovation Research (SBIR) conference happening right now at Qwest Center, Omaha. I am planning to write series of blog posts about SBIR / STTR financing, once the the conference is over.

Tracking People?!

2005-02-16T20:16:00.000-06:00

Tracking of students? http://www.msnbc.msn.com/id/6942751/

National ID Cards on the way?
http://news.com.com/From+high-tech+drivers+licenses+to+national+ID+cards/2100-1028_3-5573414.html?tag=nefd.lede

No way you say? The question, 'why not?' would probably result in a scoff from most people. I don't want to be tracked, the government can't force me to carry a national ID card, and I do not want big brother in my life are just a few answers one could expect. How many state and federal government enforced identification systems were first 'controversial' and now just another fact of life? 'There is a way to make kids safer without making them feel like a piece of inventory.' - Michael Cantrall parent of two students in the California Program.

Would you accept a number that is assigned to you from cradle until grave and mandated by law at birth? If you are an American, I am betting you have a social security number that is exactly that. Would you carry around a tracking device that is legally admissible in court of law able to triangulate your exact position? If you carry a cell phone, you don't mind so much. Is this really a conspiracy theory or just part of our convenient life today? RFID is obviously starting with internal supply chain integration. At it's inception it's application was originally friend or foe identification. This year begins the application of supply chain through track and trace.

Not a year has passed and other applications that are emerging such as track and trace of students. Identity technology will be speeding up with each passing month. When you perfect systems, one can start running with possibilities. Imagine a key fob on every student's backpack. Each class could automatically report present, tardy, sick, and skipping students may be reported and printed with the report card with a detailed to an integrated student database of grades. Time would be saved and more time could be spent efficiently. Role in assemblies would be automatic and real time. School security could have associated student fob and vehicle fobs. The Principal, Earnie Graham hopes to eventually add bar codes to the existing ID's so that students can use them to pay for cafeteria meals and check out library books.The possibilities go on. This takes school administration to the next level, and another identity application through RFID will take hold.

Are we ready?

2005-02-14T22:27:00.000-06:00

There was a huge uproar over a California school's RFID Student Tracking. It makes me think, are we ready for RFID in our day-to-day life? Could RFID monitoring had prevented or limited Columbine High School tragedy? Can RFID monitoring make our schools gun-free and drug-free? I don't know the answer, but these questions generate some interesting possibilities.

After I posted my request for submitting pilot test projects, on various RFID forums, I received a request for testing from a school technologies developer who is planning to implement RFID technology in schools. This developer is outside US and has an ambitious plan to track thousands of students and teachers. Similar efforts are in progress in Indian sub-continent. Are these people not concerned about privacy or the benefits of using RFID far outweigh privacy issues?

Carnival of the Capitalists has excellent entries this week

2005-02-14T13:05:00.000-06:00

This week's Carnival of the Capitalists is hosted at Weekend Pundit. It has the best round-up of business posts in the blogosphere for the week ending February 13th, 2005. Outstanding job is done in categorizing posts, which makes it easy to follow posts related to investments, economics, marketing, business education, social security (yes..it has become so hot that it is categorized), technology and taxes. Also, do not miss the editor's picks.

The hype can prevent us seeing the forest for the trees, or the leaves for that matter

2005-02-08T11:02:00.000-06:00

RFID must be the pinnacle to all technologies. With Wal*Mart, Target, and the Department of Defense all agreeing on implementation for various application, it must be the next big thing. Let's take a step back from all the hype and understand what is really going on here. Before any technology may truly proliferate, standards must be set and agreed upon, deployed, and enforced. The Department of Motor Vehicles enforces and controls government mandated standards for identifying vehicles and matching them with the identity of their owners. The internationally accepted standard of TCP/IP allows millions of nodes to be identified and networked. EPC Global is creating standards, among them is the task of identity related standardization of individual RFID tags and readers. A six-character license plate without the database with correlating VIN numbers, expiration stickers, associated taxes, and local law enforcement system is merely a scrap of metal. A networked powerful workstation with a network card is going nowhere online without the routers and fiber optics pushing ones and zeros to IP addresses. Therefore, RFID tags without antennas, middleware, object naming servers, a network, and business applications are simply hype.

Each system has key components in common. The greatest common denominators are identity association, a networked infrastructure, and policies that are agreed upon and compulsory. Please note, at no point have I said any of these systems are either effective or enjoyable. It is up to the masochistic early adopters of this elusive new technology and systems to pioneer the next identity system, infrastructure, work through the standards, find out the balance of policies, and somehow make a profit in the meantime. We all have ROI hanging over our heads no matter how much hype revolves around RFID regardless of industry reports potential of more than $3B forecasted by 2008.

Make no mistake about it; whether you are talking a single can of Coke or the infamous sub dermal embedded Digital Angel Chip, this evolutionary step is being taken personally. Groups like CASPIAN (Consumers Against Supermarket Privacy Invasion and Numbering) are doing their best to fight the system in the name of society, privacy, and consumer rights. Fortune 100 Companies are scrutinizing massive amounts of data and making major business decisions in the name of efficiency, consumer spending habits, and the ever-looming ROI graph.

Focusing on the primary issue of radio frequency identity systems without considering all the revolving issues is nearly impossible. However when you take into account the identity association, a networked infrastructure, and policies you are looking at much more than RFID tags and readers. As technology and business truly merge into the latest buzz word of the pervasive network or even the adaptive enterprise more than RFID is on the horizon. Sensor based networks enabled by grid networked computing will experience a tsunami of data. The proliferation of this movement is obviously starting with supply chains and will migrate in directions we can only dream of today. This overwhelming amount of data will be valuable, private, and necessary to business and individuals. Few in the industry today doubt the coming of a new age of identity technology; we simply do not know exactly how it will come to be. From a high level the adaptive enterprise, or pervasive technology will be the forest with network of sensor based networks at various levels of maturity while the massive amount of tags, or leaves to follow the analogy, will be the other end of the spectrum. Yes, the leaves vary in shape, size, frequency, passive, active, and so on. But to only focus on the lowest level without regarding the way global ecosystems will eventually have to coincide is, well, hype.

Please welcome new author: Brent Faulk

2005-02-02T15:01:00.000-06:00

BusinessWorks Inc has first member (besides me) on its team! Please join me in welcoming Brent Faulk on board. He will be a worthy co-author, or should I say co-blogger, of this blog. Brent brings a broad spectrum of experience with him. As you know this blog is about a RFID solutions related business and deals with various business related topics, Brent is a perfect fit with his knowledge in RFID Technologies, Business Development, Sales and IT Management.

In his illustrious career, he has worked for NATO - controlling IT iniitatives in Brussels HQ, managed projects for a start-up IT-Resourcing and Integration company, consulted for a database middleware company and has been engaged in RFID Development lately.

He will be a great asset to this blog and I look forward to reading his insight about RFID and business in general.

RFID Development Kit Update

2005-01-25T22:22:00.000-06:00

If you recall my post about RFID Development Kit blog, I had appealed to vendors about providing an evaluation kit. Anita Campbell from RFID-Weblog had posted similar appeal. I had also emailed to various vendors about the kits. Finally, I received one response. This vendor has agreed to provide the kit. Once I receive this kit, I will be starting a new blog as promised. This blog will document various experiments and hopefully help people in doing their own "pilot" projects.

Tips to Approach Venture Capitalists

2005-01-21T22:23:00.000-06:00

This is a continuation of my yesterday's post.

Venture Capitalists are very busy people. It is always a good idea to rehearse your meeting in the privacy of your own office and time yourself while describing salient points about your company. That brings us to first tip:

Be prepared!

It is a well known fact that opportunity knocks once on your door. Make best use of this opportunity, by preparing for the meeting well in advance. If your proposal is rejected due to lack of preparedness or any other reason more than once, your reputation spreads fast in Venture world. Venture capitalists don't hesitate in exchanging notes about the companies.

Present yourself as a Global Player....

Product or services you wish to develop or sell, must be unique and have global appeal. Specialization is essential to get Venture Capitalist interested as it gives your company a niche.

Demonstrate your willingness to risk everything you own....

Your commitment to the project, shows your confidence. For a Venture Capitalist, that is a huge plus in your favour.

Remember, Venture Capitalists are smart individuals....

If you need a million, do not ask for 10. Venture Capitalists can and will, easily spot overestimates. They have various means of finding out.

Then there are other small things, you must remember:

* Wear a conservative suit to the meeting and avoid flashy apparel.
* Demonstrate your frugality by travelling Economy class and in a modest car.
* Use a decent leatherbound cover to present your business plan.

Good Luck in Venture Capital Hunting!

Business of Selecting and Approaching Venture Capitalist

2005-01-20T22:33:00.000-06:00

Now that the Business Plan is made, Vendors are selected, next step is to approach Venture Capitalists with a Business Plan and get some finance to get the business started. Ideally a real business would first get started with their own funds and with loans from banks or angel investors, but then we are not a real business. We will follow the approach of getting the idea approved and financed.

With abundance of Venture Capitalists, there is a need to select one who fits your needs. The Pratt's Guide to Venture Capital Sources (Needham, Massachusetts: Venture Economics, Inc., 1990) documents five ways of choosing a venture capital firm.

Go Local : Whether it is you or me or a Venture Capitalist, one feels safer when investment is local. In other words, the closer the venture capitalist is to the investment, the easier it is to "add value" to it.

Phase of development: Venture Capitalists are sensitive to the stage-of-development they invest. Some have bias towards later-stage investment and very few are seed investment providers.

Amount matters: Follow the glove-fits-the-hand rule. Investment firms have limits, both upper and lower. Approach the firm that can cater to your project needs.

Go to the specialists: After Dotcom boom and bust, the venture capitalists became wiser and started specializing in the industries that they can considered profitable. So go to the firm that understands your business. This way it helps both entrepreneur and investment firm.

Go to the Leader:Smaller investors tend to be cautious and may not be equipped to understand your business. So start with a lead venture capital investor first and let this venture capitalist complete the syndication.

Tips for approaching the Venture Capitalists:

A quality introduction is a must. It carries more weight than directly approaching the Venture Capitalists with a business plan. Your plan may not get the attention it deserves. You can approach your banker, a lawyer, an accountant or even another venture capitalist to make the introduction. If your contact is not willing to introduce you, then they may not be confident about your venture and want to keep their name away from your venture. If your contact does not know any venture capitalists, in that case you must seriously consider changing them.

The best introduction may be from another successful entrepreneur who has received funding from a specific venture capitalist.

In my next post, I will write about more tips to approach Venture Capitalists

Vendor Analysis

2005-01-17T22:01:00.000-06:00

I have presented three vendor profiles so far. Next I will compare them and then select one as a primary vendor and other two as backups.

Features	Vendor One	Vendor Two	Vendor Three
RFID Sales (Annual)	$2,200 million	$1,500 million	$50 million
Tag Volume (Annual)	200 million	150 million	10 million
Transponders	125/134.2 kHz, 13.56 MHz and UHF	433.92 MHz	433.92 MHz
Readers Range	450 feet	250 feet	250 feet
Terms	Credit until project implementation	120 days or Project implementation	Credit until project implementation
Contract	Long Term	Case-to-Case	Long Term

My choice is Vendor Three as a Primary Vendor, Vendor Two as first backup and Vendor One as second backup. Vendor Three, although much smaller in size compared to other two is willing to accommodate all the changes which we may require in the course of implementation. Other two, though reliable, may not be willing to modify their products to suit our requirements.

Due to other commitments, I will be posting twice a week on this blog.

Vendor number 3 Profile

2005-01-13T21:11:00.000-06:00

Profile: RFID VendorThree Inc. is a new entrant to RFID market and is looking to establish relationships with integrators. They have a reasonable production facility. Being new in market, they are willing to bend over backwards to provide best possible product, service and terms. Some risks are involved but I presume this feeling is mutual as our company is a start-up too. VendorThree has similar product portfolio as VendorTwo. Other features of interest are:

RFID Sales (Annual).............. : $50 Millions
Tag Volume (Annual)..............: 10 million tags
Adopted Standards.................: ePC Gen 2 Class 2
Transponder Product Portfolio: 433.92 MHz frequency, Output power of 300 microwatts and range upto 250 feet
Reader Product Portfolio..........: Readers with serial RS-232 or RS-485 protocol. Concealable Range adjustable antennas.Readers can simultaneously read multiple RFID Asset Tags at ranges up to 250 feet.
Applications............................:Asset Tracking, ID systems

Vendor Number 2 profile

2005-01-12T22:27:00.000-06:00

Profile: RFID VendorTwo Inc. is relatively new market but are soon establishing themselves as leaders with excellent products and service. They too have a huge production facility to cater large amount of Tags and Readers. However they are willing to work with RFID solution providers on case to case basis only. Terms are flexible with credit facilities ranging from 120 days to project completion . Other features of interest are:

RFID Sales (Annual).............. : $1500 Millions
Tag Volume (Annual)..............: 150 million tags
Adopted Standards.................: ePC Gen 2 Class 2
Transponder Product Portfolio: ~~UHF (ultra high frequency) RFID tags only~~ 433.92 MHz frequency, Output power of 300 microwatts and range upto 250 feet **
Reader Product Portfolio..........: Readers with serial RS-232 or RS-485 protocol. Concealable Range adjustable antennas.Readers can simultaneously read multiple RFID Asset Tags at ranges up to ~~300~~ 250 feet. **
Applications............................:Asset Tracking, ID systems

** Thanks to my reader Bartek, for pointing out the error

Vendor number 1 profile

2005-01-11T21:01:00.000-06:00

As I had decided in my earlier posts, I will profile three "virtual" vendors for the discussion of Vendor evaluations. Today I will profile our first vendor who has been conveniently named as RFID VendorOne Inc.

Profile: RFID VendorOne Inc. specializes in manufacturing of ePC Gen 2 RFID Tags and Reader systems. They are well established since 1980s with a great customer support. They have a huge production facility to cater large amount of Tags and Readers. So far they have tied up with RFID solution providers on case to case basis. However they are willing to join hands with a select few RFID solution providers for a long term contract to provide RFID hardware.Terms are reasonable with credit facilities till the implementation is completed. Other features of interest are:

RFID Sales (Annual).............. : $2200 Millions
Tag Volume (Annual)..............: 200 million tags
Adopted Standards.................: ePC Gen 2 Class 2
Transponder Product Portfolio..: HF (high frequency) and UHF (ultra high frequency) RFID tag families.(125/134.2 kHz, 13.56 MHz and UHF) in various shapes and sizes
Reader Product Portfolio..........: Readers with Standard 26-bit Wiegand format, serial RS-232 or RS-485 protocol and also able to operate on any new or existing Ethernet LAN / WAN Network. Concealable Range adjustable antennas.Readers can simultaneously read multiple RFID Asset Tags at ranges up to 450 feet.
Applications............................:Asset Tracking

Please note: Information provided here is strictly fictitious. Any resemblance to a real vendor is purely coincidental.

Questions to answer before approaching a Vendor

2005-01-06T22:20:00.000-06:00

If you recall my post dated January 3rd, 2005, I had mentioned few questions that need to be answered before we approach a vendor. Please read the "big" idea post to get a clear perspective about the answered questions.

1. What type of environment will the RFID system be in?

RFID Tags and GPS Devices will be residing in the vehicle and RFID Readers will be located at Truck stops and other strategic locations, mostly exposed to diverse climatic conditions

2. Will there be electrical noise, temperature extremes, high humidity or harsh chemicals?

A combination of all or some of these hazards are possible most of the time as RFID Readers will be located outside in a non-protected environment.

3. How many tags will be needed?

Tags will depend on number of vehicles used, but it will easily in the range of buying bulk quantities. Typically a truck fleet of a reasonable sized transportation company is in excess of 100 vehicles.

4. How many read stations will be needed?

A wild estimate can be thousands of readers, if the fleet travels all over the country.

5. How fast will the tags be moving?

Depending on speed limits of each state, speeds of the vehicle can range from 45 to 75 miles per hour.

6. What read range is needed?

Read range may vary from 5 feet to 50 feet

7. How much information will be transferred to and from the tags?

Tags will be sending Truck ID, Next Destination, goods on truck, Information from previous reader to the current reader. Tags will be receiving Reader ID and Information for the next reader. This information will be at bare minimum. Other information will depend on the application.

8. How often will the tags be read and written to?

This will depend on route selected, but a typical route will require reading and writing of tags at least 10 times

9. Will the RFID system be reporting to a PC or a PLC?

RFID system will be reporting to PC

10. Will more than one tag need to be read at the same time?

Yes. There is a distinct possibility of such a occurrence, multiple times.

These responses are very generalized and can vary from application to application. Feel free to comment if you have worked previously with a similar application.

RFID Development Kit Blog

2005-01-05T20:34:00.000-06:00

This was one of those ideas which I wanted to pursue when I started my Businessworks Blog, that you are currently reading. To do complete justice to a RFID business blog, I needed an actual RFID Development Kit to see the technology in action. I wanted to experiment with RFIDs and explore the problems and find solutions.

My quest for the kit, started from the day I commenced this blog. I did find quite a few kits and all of them were beyond the price I was willing to pay for writing a blog that can do nothing but only benefit the students, entrepreneurs, technology enthusiasts and RFID Industry watchers. With this RFID Development Kit, I wanted to do various experiments with RFIDs and present them in easy to understand, layman language. This blog, I hoped would encourage my audience to experiment on their own.

Due to exorbitant cost, I wrote to various RFID companies who make these kits, if they can provide me with a kit for experimentation. Although I am dead against letting Companies control my writing, I was willing to give due credit for providing me a free kit for evaluation. It was a win-win situation for company providing the kit, my readers and me. Company gets free advertising from my writing and readers get to read those experiments and decide their Pilot Vendors and I get to experiment and learn in the process. However, so far I have not received any response from any of these companies.

Today I found a kit at Phidgets USA. It comes with one RFID Reader, six 30mm disc RFID Tags, two Credit card sized RFID Tags, two Keyfob RFID Tags and a 6 foot USB cable to connect the kit to a PC. It is well under $100 and within my budget. Phidgets provides you with a software interface and one can write programs in Java, Visual Basic, ~~C-Sharp~~, C++, Delphi and ~~Labview~~ to experiment with the kit. It is an excellent hobby kit which I might buy and start my "RFID Development Kit BLOG". However, if I have to influence "decision making process" of my readers, I may still need one of those elusive high priced kits to conduct serious experiments. This does not mean, I am trying to undermine Phidgets, I will most likely buy the kit to start my Blog, unless they read this post first and offer me one.

Understanding RFID System Components

2005-01-04T21:34:00.000-06:00

When Bar code technology was born, it was sufficient for the needs of the time it was born. However as manufacturing and assembly processes became complex, codes were not enough to hold all the needed information. Secondly, codes cannot be used in every assembly application and can be damaged or destroyed by few manufacturing operations. Then entered, low frequency RFID technology to overcome these limitations.

RFID is a means of storing and retrieving data through radio signals. Instead of a scanner that optically reads a code, a device sends and receives radio signals from a small, reusable tag attached to the assembly itself or to the pallet or tote holding the assembly.

The added ability to add and subtract information from identification tags became important to assemblers of cars, computers, appliances and other high-value, high-mix products. An RFID tag traveling with a car chassis can tell an assembler which parts to install--just like a bar code. But, unlike other identification technologies, the assembler can also input information back to the tag. For example, he/she can report that certain parts are installed and successfully tested.

With this background in perspective, let us talk about system components that we defined yesterday.

A typical RFID system implementation will need an antenna, a reader, a controller interface and a number of tags.

Each RF tag (transponder or data carrier, ) consists of a solid-state memory chip, a substrate or circuit board, and an antenna, all of which is encapsulated in epoxy and plastic. The memory chip, usually EEPROM, can be programmed to hold ASCII, hex or decimal characters. The chip can have "read only," "write-once, read-many," or "read-write" memory.

The size, shape and cost attributes of the tag depends on how much memory it has, how far it can send and receive data, and how it will be used. Tags can be shaped like a watch battery, a flat disk, a thin cylinder, a cracker, a credit card or a cigarette pack. A tag the size and shape of a US quarter (suit button) can store 128 bytes of information. A credit card sized tag can store 8 kilobytes.

Unlike printed codes, RFID tags can be reused and they can withstand harsh manufacturing environments. Depending on the tag and its environment, each memory address can be overwritten hundreds of thousands of times. Some tags are unaffected by acids, detergents and other chemicals, and some tags can operate in temperatures of -40 degrees to 350 degrees Fahrenheit.

Tags cost vary from $1 for "off the shelf" ones to $200 each for highly customized ones.

Tags are either passive or active. Passive tags derive their electrical power from the radio waves generated by the reader and antenna. Active tags are powered by a battery. Both tags have their pros and cons and are used depending on the application. Passive tags are less expensive and are long lasting. On other hand, active tags have more memory and a longer radio range than passive tags.

The antenna (interrogator or read-write head) is a coil of copper wire that emits a radio signal at a certain frequency. It constantly broadcasts the signal and waits for a tag's reply. Like RFID tags, the antenna comes in various shapes. It can be a flat, rectangular box or a small cylinder similar to a proximity sensor. Antenna can be mounted above or alongside a conveyor, or it can be a handheld wand.

Either way, the antenna's maximum transmission distance is directly proportional to its size and signal frequency. A large antenna broadcasting a high-frequency signal will have a longer range than a small antenna broadcasting a low-frequency signal.

When first introduced in the 1980s, the first RFID systems were low-frequency devices that broadcast at 125 to 150 kilohertz. The maximum range of these systems is approximately 2 feet for passive tags and 10 feet for active tags.

Medium-frequency systems emerged in the 1990s. These systems broadcast at a standard frequency of 13.56 megahertz. The advantage of this frequency is that tags need fewer coil windings and thus are less expensive. The broadcast range is also slightly larger.

Some recent RFID systems broadcast at 915 megahertz, or the microwave spectrum. These systems have an even longer range than 13.56-megahertz systems. However, because liquids can interfere with microwave signals, this system is not suitable for all applications.

High-frequency systems that broadcast at gigahertz frequencies are available, but are rarely needed for manufacturing. With a broadcast range of several hundred feet, these systems are used in automatic toll collection systems.

For assembly line applications, the distance between the antenna and the tag is usually less than 18 inches and rarely exceeds 6 feet. Tags do not have to be directly in sight of the antenna, but they must be within the antenna's broadcast range. To avoid interference, large metal objects should not be placed between the antenna and the tag.

The reader powers the antenna. It receives tag data from the antenna, then filters, boosts and transmits the data to the controller interface. The interface translates the signals from the reader into a computer language and transfers that information to a PC or a programmable logic controller. A reader can control one or two antennas, and one interface can control several readers. Some RFID suppliers offer the reader and the interface as a single unit.

Vendor Evaluation - Initial steps

2005-01-03T21:21:00.000-06:00

In absence of response from vendors, I have decided to establish three "virtual" vendors and evaluate them. This could have been a wonderful opportunity for vendors to get some free advertising, but it was not to be. In any case, we will evaluate these three imaginary vendors and move forward with our business. Before we begin, let us establish some criteria that will be evaluated. We also need to ask few questions to ourselves before we contact the vendors. Here are some questions we will be looking forward to answer first:

* What will be identified?
* What type of environment will the RFID system be in?
* Will there be electrical noise, temperature extremes, high humidity or harsh chemicals?
* How many tags will be needed?
* How many read stations will be needed?
* How fast will the tags be moving?
* What read range is needed?
* How much information will be transferred to and from the tags?
* How often will the tags be read and written to?
* Will the RFID system be reporting to a PC or a PLC?
* Will more than one tag need to be read at the same time?

However these questions are not easy to answer, unless we go through some basic definitions and understanding of each component of a RFID system. Few terms that are essential to understand are:

Active tag: An RF tag powered by an external source, like battery.

Passive tag: An RF tag that draws its electrical power from radio waves.

Antenna: This sends and receives information from RF tags. Also known as the interrogator or read-write head.

Reader: This device powers the antenna. It receives tag data from the antenna, then filters, boosts and transmits the data to the controller interface.

Interface: The device that translates signals from the reader into a computer language and transfers that information to a Personal Computer or a Programmable Logic Controller (PLC).

EEPROM: Electrically Erasable Programmable Read-Only Memory. A memory chip that holds its content without power. It functions like nonvolatile RAM.

RF portal: The effective broadcast area of the antenna. It is also known as saturation area.

RF tag: This is an assembly of a memory chip, a substrate and an antenna. It is also known as a transponder or data carrier.

Tomorrow I will continue with the explanation of how these defined pieces work together.

'Twas the night before Christmas

2005-01-02T00:53:00.000-06:00

I came across this excellent interview with Santa at RFIDNews. Lets hear what he has to say about RFID and technology in general, but before that a small poem....

'Twas the night before Christmas, when all through the facility
The elves were keeping up to the best of their ability,

Pallets were tagged by the gate with care,
In hopes that St. Nicholas soon would be there;

Retailers were nestled all snug in their beds,
With dreams of ROI dancing in their heads;

And I at the North Pole talking to Santa for you,
In my fourth full-length feature, an RFID News Interview.

When out by the dock there arose such a clattle,
As four new shipments came in from Seattle

And away off the truck goods flew like a flash,
New middleware gave the WMS a touch of panache

But who made the North Pole so lively and quick?
I knew in a moment it must be St. Nick.

He was dressed in fleece from his head to his toe,
This is not the same Santa we all used to know.

He was chubby and plump, a jolly old elf,
And I laughed when asked him, in spite of myself:

“Could you explain how you do it to me?”
And with a mischievous wink he whispered, “RFID”

Now to the article....

RFID Network Appliance Developer's Kit

2004-12-30T23:30:00.000-06:00

Recently, RF Code, Inc, a leading developer, designer and manufacturer of Auto-ID data management software and active RFID technologies announced availability of a powerful set of tools for enterprises that are building RFID networks. This kit will be provided to approved Systems Integrators and enterprise I.T. project teams for a paltry sum of $2995. Read complete article here.

I wonder, when will companies come out with an affordable kit (costing under $100) for RFID enthusiasts like me? I have a desire to start another blog which will be purely technical and based on RFID Development kit experiments. I wonder if some company can sponsor such a blog and provide me a RFID kit? Hint..Hint..I don't mind Santa arriving late with his gift of RFID Developer's kit for me!

The Circle of Information

2004-12-28T22:43:00.000-06:00

First there was light, then there was a Light Bulb controlled by a switch, then came Internet and the light bulb was still controlled by a switch, finally Pervasive internet will come and control the Light Bulb.

This is the vision of Pervasive Internet. This next version of Internet is destined to control :

* Industrial - Capital Equipment, Automation & Control Equipment
* Power - Meters, Distributed Generators, Electricity Grid and Pipelines
* Healthcare - Medical Devices
* Home / Consumer - Game Systems, Consumer Electronics, Appliances
* Buildings / Facilities - Access Controls, Office Equipment, HVAC / Environmental Systems
* Retail - Lighting & Refrigeration Systems, Scanners & Registers
* Transportation - Vehicles, Airplanes, & Intermodal Transport

This congregation of Internet with the smart devices will create a serious shift in the advancement of the digital revolution - forming a comprehensive "digital neural net".

Imagine a large office building in future, completely auotmated, bootstrapped with thousands of Wireless sensors of all types. Temperature sensors monitoring the temperature outside and inside the building and sending information to the computer that controls the HVAC / Environment systems. Light sensors monitoring sunlight to turn on the lights inside and outside the building via the computer. Motion sensors guarding the building in the night. Well, all these things are available in one form or other, right now, so what is new here?

Futuristic buildings of today need to be pre-wired with these sensors. Even after pre-wiring, most of the networks in the building are disconnected and do not operate in unison, cannot communicate with each other. So what will change when Pervasive Internet kicks in?

All sensors will be wireless and networked with each other to effectively communicate with computer to convey the data needed for achieving the level of integration and control needed to completely automate the management of the building.

The Pervasive Internet

2004-12-27T23:21:00.000-06:00

As I briefly mentioned about subtle changes in the blog yesterday, RFID and WSNs, two merging technologies will be focus of our attention. Wireless sensor networks or WSNs will bring about the revolution of "The Pervasive Internet" or as Anita Campbell mentioned in her comment today "The Internet of Things". So what does this "Internet of Things" involve?

Providing intelligence to the manufactured objects to be self-aware, to respond to the changes in it's environment is the essence of the Wireless Sensor Networks. How nice it will be if your Computer network can also control your office lighting, airconditioning requirements and your phone systems. This is possible only if these disconnected networks talk to each other. WSNs has the capability to make this happen.

WSNs combined with RFIDs increase the range of RFIDs, thus reducing(not eliminating) the needs for costly RFID readers. This can be done by using a network of sensors to pickup the signal from RFID tags and relay that signal thru the network to the nearest RFID reader.

I can provide an excellent example of connecting your complete house with WSNs, but then I may invite the wrath of privacy groups, instead tomorrow I will present an example of RFID and WSN usage in industrial environment.

Few subtle changes

2004-12-26T19:55:00.000-06:00

Hello All. Welcome back to the blog! I am back, refreshed and rejuvenated with some fresh ideas for my readers. Recently my blog was reviewed by none other than Anita Campbell herself on her Small Businesses Blog under PowerBlog category. Read the review here. Thanks to Anita's review, traffic has increased to my site and I have received lots of reader appreciations about the blog and valuable suggestions. A reader mentioned about Wireless Sensor Networks (WSN), which is a complementary technology closely related to RFIDs. This raised my curiosity and I researched few of the sites he had sent me. I ended up subscribing to a M2M Magazine and forming a Google group discussing the merger of these two complementary technologies. Check out the group here. I will be discussing about WSNs in upcoming Posts. Meanwhile, here is a small introduction to WSN:

What are Wireless Sensor Networks? As the name suggests devices are
sensors that can sense changes in temperatures, amount of light and
motion. Unique thing about them is that sensors are Wireless and they
can be a node in a network of Wireless sensors. These sensors can
transmit data to the host, practically without having to make changes
in the existing infrastructure. Sensors can use Bluetooth and Zigbee
technologies to communicate with each other. As with any new
technology, sensor have their shortcomings like..need to change
batteries which last from few weeks to few months, but as the product
matures, these batteries may be replaced or supplemented with solar
panels or non-harmful nuclear energy with low level radiation.

Meanwhile on Vendor responses, I have not received any, either due to holiday season or they do not consider my "virtual" business serious enough. In any case, I will wait for them till New year. In my independent study of RFID vendor, Intermec, I found lots of reading material, complete solutions, case studies in various areas where RFID is being used. If my "virtual" business becomes a real business, my website will be similar in flow as Intermec, without infringing any copyrights.

Merry Christmas... I will be busy researching Intermec

2004-12-22T22:41:00.000-06:00

There will be no posts till the end of this week. I plan to do vendor related research on RFIDs and Intermec. They have one of the most exhaustive sites, choke full of Articles, RFID configuations, white papers, products and solutions. I promise, I will be back with more material for you to read in next week.

So till then Merry Christmas!

Vendor Neutrality? Is it possible?

2004-12-21T22:32:00.000-06:00

While we wait for RFID Vendors to respond, let us talk about Vendor neutrality. About couple of months back, UCLA's research wing WINMEC had conducted interesting demonstrations. The idea was to prove that middleware can work with any database, reader, scanner, and tag combination, with specific integration to other enterprise applications coded in on a customized basis. WINMEC experimented with all kinds of readers (UHF, HF, LF) and tags (including EPC 0 and 1, ISO15693, ICODE, and ISO180006B). Success rate was very high in proving the neutrality.

OATsystems is another company that is also working with enterprise application integration (EAI) provider webMethods. Basically data samples, definitions of structures and content and exceptions are given to webMethods and it does the map. So RFID becomes just another data stream or in other words middleware becomes vendor neutral.

There are some exceptions, but it can be generalized that Vendor neutrality is possible. To read this article, click here...

Impact of RFID UHF Generation 2 approval

2004-12-20T22:44:00.000-06:00

There were some heartwarming news last week about EPCGlobal Inc, a nonprofit organization chartered to drive standards for RFID technology, approved UHF Generation 2 specification. What will be the impact? If you recall my earlier post of market analysis, I had said,

Over 90% of the untapped market is either researching the feasibility of the RFID solutions or "waiting" to see the results of other companies. Biggest impediment is high cost of RFID hardware, software and integration to achieve a fast ROI. Other barrier is lack of industry standards.

This approval can accelerate the decision making process of the undecided companies. Hundreds of pilot tests that were waiting for lack of standards can now be conducted with approved hardware.

I had originally planned to start my vendor evaluation this week, but UHF Gen 2 approval news made me rethink and defer this process. In a day or two I will be sending requests to various vendors to know their plans about UHF Gen 2 approved hardware availability. That will help me to evaluate vendors on basis of approved technology.

After Business Plan, What next?

2004-12-18T14:30:00.000-06:00

Logical step after preparing a business plan, is to approach the Venture Capitalists, but we will take a diversion. I will talk about this diversion in a moment.

For those who tuned in late, I am in process of starting a "Virtual" dotcom company, that will do business in RFID based solutions. So far I have done brainstorming about various technologies and selected RFID as the technology of choice. Next I announced the project, which this virtual company will be pursuing. A business start-up needs a path to proceed forward, so the next step was to discuss business plan. You can read all these steps in the archives or from the index on your left.

The diversion I was talking about is selecting RFID vendors for the company. In coming week, I will be evaluating RFID vendors. As BusinessWorks intends to be a complete RFID solution provider, evaluation of RFID vendors is essential. Process of evaluation will consider factors like compatibility, frequency range, costs, feasibility of creating middleware solutions, security features, tag memory and functionality and many more factors. My goal, after evaluating RFID vendors, would be to select two vendors and form a strategic partnerships with them. This is essential to conduct my business with end users, so I might as well conduct this research next.

This evaluation will be free publicity for the vendors, I wonder if they will be nice enough to provide real RFID test kits. That is a wishful thinking ofcourse. We will have to depend on theoretical evaluation of RFIDs.

I would like to invite my readers to help in this evaluation, especially if they are technically inclined.

AIM Global

2004-12-17T21:20:00.000-06:00

This is the last RFID related website review. Today's site is Association for Automatic Identification and Mobility. This is a truly rich content website dealing with RFID, bar code, biometrics, smart card, Electronic Article Surveillance and card technologies. AIM is a global trade organization of components, networks, systems and service providers whose services include collection and integration of data with information management systems. There are case studies available upon request or you can select one of the vertical markets and view various case studies. Comprehensive Solution Provider evaluation guide is provided on the site to help you make a educated decision in selecting consultants, systems integrator or a value added reseller in RFID and other areas. You can request or propose business opportunities, look for jobs or employees in the career center. Be sure to check out the RFID events in your area in the calendar section.

AIM also has documents for various RFID standard, so read to your heart's content and when you are done reading that, there is a technology-wise Buyer's guide. AIM Global has most exhaustive coverage on the subject of RFID. This is one website you must have on your favorites, if you are interested in RFID.

Spy Chips are a privacy concern?

2004-12-16T21:54:00.000-06:00

While I am reviewing RFID related websites this week, it will be unfair not to consider RFID Privacy sites. I visited SpyChips website today. As expected, they have a good tutorial on what are RFID chips and how your privacy can be violated. It even has a section on frequently asked questions. News articles and Press releases are included to give you complete coverage on privacy issues. Website invites you to get involved in opposing retail surveillance.

I invite you to read Spy Chips website and before you form you opinion about RFID and related privacy concerns, read an article on ComputerWorld website about how RFID privacy scare is overblown.

RFID Handbook

2004-12-15T22:11:00.000-06:00

Today my quest was to find a technically complete handbook on RFID and I hit a jackpot at RFID-Handbook.com. This book is available in 4 different languages apart from English. The author, Klaus Finkenzeller maintains this resource rich site. This site has RFID related forums, links, downloads which includes a simulation program and an obvious book purchase link. I read a free chapter available on the website and was impressed by the explanations, diagrams and the depth of knowledge, author Klaus Finkenzeller posesses. I went ahead and ordered the book from one of the online book sites. Next I visited the links and that area is a goldmine of resources. About 164 companies related with RFIDs are listed. Other links are categorized as Applications, Middleware, Events, Online resources, Education and Research, Radio Regulations, Standardizations, Publications and News.

RFID Tribe

2004-12-14T22:32:00.000-06:00

RFID and Tribe are worlds apart, but RFID Tribe does exist on web and few select cities and is thriving well by deriving it's support from RFID "Warriors", "Braves" and "Chiefs". This tribe is a unique group, which establishes chapters in various cities throughout the world, offers discounted training programs to its members, run electronic forums to collaborate, connect and communicate with other members. Membership is available at various levels, from free to paid, depending on your contribution towards the betterment of the tribe. If you are serious about RFID and want to participate in this technology of future, check on Tribe's website, if there is a "chapter" in your area or become first one to create a "chapter" in your area.

You must be wondering if my focus has shifted from writing about business to reviewing RFID related web sites. It is definitely not the case. I am taking a small break from serious business writing for a while.

Investing in RFID sector

2004-12-13T22:04:00.000-06:00

After writing about the business plan for so many days, I decided to take a break and research stocks of the companies, which are involved in the business of RFID. I started off with a search in Google, and first result itself uncovered a gem. The website is RFID Investing. Website has a convenient RFID stocks portfolio, that one can track and research. Site also has RFID related new items, Trade shows & conferences. RFIDInvesting site is a part of InvestorIdeas website, which deals with other sectors like Nanotechnology, Wireless, Homeland Security and many others.

Research of 44 RFID related stocks kept me preoccupied most of the time. I plan to select 10 most promising stocks and list my portfolio on the website. RFIDInvesting is one site, that is a "must include" on my Favorites list.

Business Plan - Putting it all together

2004-12-11T22:31:00.000-06:00

We have completed all the components of a business plan successfully. The task on hand now is to package these components in a presentable manner and avoid mistakes, generally commited by entrepreuners. Here are some tips:

* Make the presentation attractive enough by adding tables, charts, bullets and other graphics wherever necessary. Afterall a picture is worth thousand words.
* Packaging is equally important. Use a decent three ring or a spiral folder that can lie flat on the desk for easy reading.
* Proofread the business plan thoroughly twice and the Executive summary thrice.
* Make sure the numbers match in graphs, charts, statements and other places.

I am including a Table of Contents for your reference and to quickly go to a topic of interest.

Table of Contents

I. Executive Summary

II. Company Description

III. Product / Service Desc.

IV. Market Research

V. Marketing Plan

VI. Operations Introduction

VII. Organization Structure

VIII. Capital Projection

IX. Management Team

X. Exit Strategy

XI. Financial Plan - Introduction

- Assumptions - Part I

- Assumptions - Part II

- Income Statement

- Cash Flow Statement

- Balance Sheet

- Performance Review

Business Plan - An Exit Strategy

2004-12-09T22:22:00.000-06:00

Businesses, especially high profile, high risk Technology based ones must have a mandatory exit strategy as a part of the business plan. Nothing pleases a Venture Capitalist more than seeing a well laid out exit plan, where he / she can get his / her money back(hopefully with a reasonable return) and exit your company. They look for an exit plan of roughly 3 to 7 years (10 years in case of nano or bio-technology) and ofcourse high returns. There are some well established exit strategies you can offer in a business plan:

* Franchise the business
* Initial Public Offering (IPO)
* Merger / Acquisition
* Buyout by partner
* Handing down the business to another family member

Due to uniqueness of each business, exit plan should be custom made taking into account, business life-cycle, management needs, competitive environment. Plan should also be customized to include provisions for death, divorce (marital or business partnership) and disability.

Some fallacies to avoid:
* Never ignore your personal goals when planning an exit strategy.
* overconfidence about your business's potential to go public.

Bottom Line: The most effective exit plan will take into account business, personal, and investor goals. Business plan, being the road map for your company, a well thought out exit strategy defines a future destination when your investor can expect to reach liquidity.

This concludes the series on components of a Business Plan. Tomorrow I will write about "putting it all together" and include an index to each component of a business plan.

Business Plan - The Management Team

2004-12-09T00:13:00.000-06:00

Being a virtual business, I will refrain from publishing the names of the management team, instead I will give you a quick tutorial on selecting the Mangement team

Ideally an entrepreneur would love to inject company's employees with the love of learning and with the thrill of thinking strategically. But, as with any other process, this comes gradually and with the help from the initial team. And that means he or she will need to select individuals to be members of the initial strategy team, which can motivate rest of the employees. So how many individuals do we select? Very Few (less than 5) and you will have a hard time maintaining a high energy level in your strategy sessions. Too many (beyond 12) and your sessions will easily degenerate into tactical, rather than strategic, discussions.

Important criteria for selection of the team should be the fact that selected person is a strategic thinker. And that criteria will drive home a most important point. That your organization values strategic thinking…and thus, strategic thinkers. Also, make sure they’re smart and Visionaries too. Not everyone has a flair for thinking about the future. Be sure that at least a few of the people on your strategy team have such flair. That they both enjoy the challenge and are somewhat skilled at future thinking… at least they’re interested enough that they’re eager to learn.

With these things in mind, you should make a checklist of talents a team member must possess or better still, write up a resume of an ideal team member and while interviewing your candidates, try to match and size them up with your ideal resume. Make sure you give them questions about the real life business issues and situations and ask them, how they will resolve those issues. Test their team participation skills and give them an excercise to envision the company five or ten years from now.

Business Startups generally do not have the liberty of forming an initial team. However an initial team is so important that it can either make or break the company. Be ready to give away a big piece of your company to your management team. This keeps them motivated to perform better to give you the expected results.

Few other steps to follow are:

* Clearly define your expectations to the team
* Explain what is valued in your company's culture
* Foster a culture for learning
* Offer your feedback regularly to your team.

Tomorrow we will discuss the Exit plan for the business.

A RFID Idea for Taxicabs

2004-12-07T22:40:00.000-06:00

We have two components left to discuss for the business plan, but before that I would like to present the idea received from one my readers. In his own words...

"You should market your RFID to taxi cab companies as well. If you could provide a software solution that would allow dispatchers to "queue" future pick-ups, see in real-time where the cabs are, and utilize some method of maximizing efficiency (say, the best route for cab A would be this way, picking up X passengers, etc), I think even more money could be made. Plus it could allow taxi companies to discover underutilized areas in a particular city, thus maximizing their revenue. A possible pitfall could be an event where someone hails a taxi; how do we update the most efficient path then? Do the future pickups which have already been queued for driver A shuffle to driver B, who is now closer and would maximize revenue? And what about human error; could driver B react that quickly to the new order?"

This idea has lots of potential. There are some issues to resolve. Let us examine them one at a time:

How do we update the most efficient path when someone hails a taxi? This can be resolved by installing a Garmin GPS device or something similar. Although I am not sure, how many days that device will last in a city like New York!

Do the future pickups, which have already been queued for driver A shuffle to driver B, who is now closer and would maximize revenue? And what about human error; could driver B react that quickly to the new order? Real world scenarios will include factors like traffic jams, accidents, adverse weather conditions, driver lethargy and human errors. These cannot be avoided. Only an effort can be made to minimize the effects of these factors. There is a certain limit to automation and control, rest is dependant on human and natural factors.

I plan to group these ideas and make them available at one place for everyone to access. Another reader asked me, if I plan to start a real business based on RFID solutions? My reply is "Yes. Maybe sometime in the future. Let me put it this way..I am practising for the future by writing this blog!"

Financial Plan - Performance Review

2004-12-06T23:31:00.000-06:00

Performance Review is the last component of the Financial plan. Buyers, investors always face a dilemma before buying or investing in a business about the valuation of the company. Valuation can be a very subjective matter, so they have come out with financial ratios which presents the investor with a decision making tool. These ratios are defined in the areas of Performance, Financing, company activity and Liquidity. We will discuss about Performance related ratios. There are 10 ratios associated with performance of the company:

Average Interest Rate: This is the average rate of interest at which company borrows. This is a useful measurement that tells you how much debt company is carrying from year to year.
Formula to calculate Average Interest Rate is (Interest Expense - Accounts Payable) / Liabilities..

Book Value per Share: This is the accounting value of the share and is radically different than the value that market percieves for the share. Market and book value have nothing in common. Market value is what the investors expectations are and book value is based on costs and retained earnings. Only time Book value is useful when market value is below book value. In such a situation, share is considered to be undervalued and may be an attractive buy for the investor. Formula to calculate Book Value is (Stockholders Equity - Preferred Stock) / Average Outstanding Shares.

Cash Flow to Assets Ratio: This ratio tells us how much cash can company generate with respect to its size. A profitable company is not of much use if it does not have enough cash around to pay the bills. Higher the ratio better it is. Formula to calculate this ratio is Cash from Operations / Total Assets.

Dividend Payout Ratio: This ratio indicates what portion of earnings can be used to pay dividends to the shareholders. Nowadays companies prefer to reinvest this payout in the growth of business. Formula to define this ratio is Yearly Dividend per Share / Earnings per share.

Earnings per Share (EPS) : This popular ratio tells you how much profit was generated per share. However real picture is seen when current EPS is compared to the previous years. Formula to calculate EPS is (Net Income - Dividends on Preferred Stock) / Average Outstanding Shares.

Gross Profit Margin: This ratio gives pretty good idea about company's pricing policies and markup margins. A stable Gross profit Margin is seen as a healthy sign. Gross Profit Margin is calculated as (Revenue - Cost of Goods Sold) / Revenue.

Price to Earnings Ratio (PE Ratio): Another popular ratio which is used to compare the current share price with earnings to indicate if stock is under or over valued. Formula is Market Value per Share / Earnings per Share.

Profit Margin: This indicates what proportion of sales contribute towards the income of the company. A low margin indicates poor pricing strategy or strain from competition. Formula is Net Income / Revenue.

Return on Assets: This tells us what return a company is generating on it's investments and assets. That is why, this ratio is also referred as ROI or Return on Investment. It is calculated as (Net Income + Interest Expenses) / Total Assets.

Return on Equity: This is amount of return, company is generating on the shareholder's investment and is defined as Net Income / Shareholder's Equity.

December 04 -The Carinval of Capitalists

2004-12-05T22:37:00.000-06:00

Another wonderful episode of the Carnival of Capitalists is up. This week, the host is Jeff Cornwall who holds Jack C Massey chair in Entrepreneurship at Belmont University. As usual, we get to read some of the finest piece of writing you can find in the areas of Capitalism and business. There is also a good post about blogging for business by Russell. Read the Carnival of Capitalists here.

Financial Plan - Balance Sheet

2004-12-04T09:26:00.000-06:00

On of my readers reminded me that I am missing one of the key components of the Financial Plan i.e. The Balance Sheet. This report is a snapshot in time of company's finances. Although it is a snapshot, it is a very important statement, because it tell you about Assets, Liabilities and Equity of the company. It not only provides you a list of assets, it also tells you which assets are financed by debt or by equity. Let us quickly define few terms here:

Asset: Asset is something that company owns for its economic value.Current Assets are assets that can be converted to cash within a year. There are various types of assets like Intangible, tangible, marquee and alternate. I will define two of the most commonly used ones:
* Intangible Asset, that is not physical in nature. Examples are goodwill, patents, copyrights and intellectual property
* Tangible Asset, that is physical in nature. Cash, land, building and machinery are prime examples of Tangible Assets.

Liability: Liability is an obligation or legal debt as a result of accrual accounting. A liability can be accounts payable, loans, accrued expenses, mortgages. Liabilities can be either current, which are debts payable within a year, or long term, which are debts payable over longer period of time.

Equity: In Balance sheet terms, equity is defined as the contribution value of stockholders and the retained earnings or losses.

The Balance sheet report has two sides viz. Left hand side or Assets and right hand side or Liabilities and Equity.The name "Balance sheet" comes from the fact that Left hand side balances with Right hand side, or in other words Assets = Liabilities + Equity.

Financial Plan - Cash Flow Statement

2004-12-02T21:54:00.000-06:00

Cash is the King! To analyse the Cash inflows and Outflows, there is a need for Cash Flow Statement. Cash flow and Income Statement are similar as both report Company's performance over a specified period of time. Cash Flow differs from Income Statement when it comes to non-cash accounting items such as depreciation and amortization. The cash flow statement tells you about how much cash the company has generated by stripping away non-cash accounting items. The Cash flow statement is also used to determine company's ability to finance growth related activities and ability to pay bills and creditors. The potential buyers and investors use the cash flow statements to make crucial decision about investing in the company.

Cash Flow statement has three components:

Operating Cash Flow:It has another name - Working Capital. This is the cash generated from product / service sales and from internal operations, so it can be controlled.

Investing Cash Flow:This cash flow is generated internally from non-operating activities like investments in plant and equipment or other fixed assets and non-recurring loses or gains.

Financing Cash Flow:This cash flow is the cash to and from external sources, such as lenders, investors and shareholders. A new loan, the repayment of a loan, the issuance of stock and the payment of dividend are some of the activities that would be included in this section of the cash flow statement.

Financial Plan - Income Statement

2004-12-01T22:46:00.000-06:00

Income statement is also known as Profit and Loss Statement. The income statement is important for Venture Capitalists as it is the basic measuring stick of profitability of the company. The Income Statement provides the investor with much insight to the company's revenues and expenses. You can identify where the company spends much of its income and compare that to similar companies. You can also compare a company's performance with previous years. Most importantly, the income statement tells an investor if the business is profitable. Let us talk about the components of a typical income statement.

Gross Profit on Sales: This is the net value of Sales of the company less Cost of Goods Sold.

Net Sales:This is defined as revenue generated from the sale of all the company's products or services minus an allowance for returns, rebates, etc.

Cost of Goods Sold:It is the money that company spends to buy the raw materials needed to produce its products and manufacturing its products and labor costs.

Operating Income: This is a company's earnings from its business after it has deducted its cost of goods sold and its general operating expenses. Operating income excludes interest expenses, other financing costs, income generated outside the normal activities of the company, such as income on investments or foreign currency gains.

General Operating Expenses:These are normal expenses incurred in the day-to-day operation of running a business which include sales or marketing expenses, salaries, rent, and research and development costs.

Depreciation: It is defined as the gradual loss in value of equipment and other tangible assets over the course of its useful life. Accountants use depreciation to allocate the initial purchase price of a long-term asset to all of the periods for which the asset will be used.

Operating Income: This is very important as it is measures profitability based on a company's operations. In other words, it assesses whether a company is profitable. It ignores income or losses outside of a company's normal domain. It also excludes extraordinary events, such as lawsuits or natural disasters, which in a typical year would not affect the company's bottom line.

Earnings Before Interest and Taxes (EBIT): This is the sum of operating and non-operating income and is also known as "other income" and "extraordinary income (or loss)". As its name indicates, it is a firm's income excluding interest expenses and income tax expenses.

Net Earnings:Also known as Net Income, is the proverbial bottom line. It measures the amount of profit a company makes after all of its income and all of its expenses. It also represents the total dollar figure that may be distributed to its shareholders. Net Earnings are also the typical benchmark of success. Negative Net Earnings are are known as Net Loss :).

Retained Earnings:This is the amount of money that a company keeps for future use or investment. Another way to look at it is as the earnings left over after dividends are paid out. Generally, a company has a set policy regarding the amount of dividends it will pay out every year.

Here is the brief summary in terms of formulae:

Gross Profit on Sales = Sales - Cost of Goods Sold
Operating Income = Gross profit - General Operating Expenses - Depreciation Expense
EBIT = Operating Income +(-) Other Income (loss) +(-) Extraordinary Income (loss)
Net Earnings = Earnings before Interest and Taxes - Interest Expense - Income Taxes
Retained Earnings = Net Earnings - Dividends

Financial Plan - Assumptions - 2

2004-11-30T22:11:00.000-06:00

There is a slight change since yesterday. I will not fill the Assumption table in yesterday's post. Instead, I will discuss what each variable means. This way table is more meaningful, rather than mere numbers.

Variables_Used_for_Assumption	Units_Used	Explanation_of_Variables
Average Monthly Sales	US $000s	Here you can enter net sales value.
Desired average finished inventory	% of Sales	Does not apply to Service / Distribution business. For Manufacturing business, this variable is % of sales.
Cost of materials/goods	As % Sales	This value is set to zero for Service business and for Distribution it refers to the purchases/inventory for resale.
Target materials/goods inventory	US $000s	This value is set to zero for Service business and for Distribution it refers to the purchases/inventory for resale.
Average monthly direct costs	US $000s	It is set to zero for for Distribution business
Average monthly overhead expenses	US $000s	Interest and Depreciation is not included
Opening total cost of fixed assets	US $000s	This is cost as on start date of projection
Accumulated opening depreciation	US $000s	This is the value on the start date of projections
Average depreciation rate	% p.a.	This is approximated weighted average rate of all fixed assets
Planned capital expenditure for year	US $000s	Equipment purchases for the year
Interest rate for cash balances	% p.a.	This is approximated weighted average rate
Interest rate for all debt/notes	% p.a.	This is approximated weighted average rate
Opening cash balance (deficit)	US $000s	If business is started with line of credit, then this number is negative
Opening longterm debt/notes	US $000s	Total value of all long-term debt/loans/notes
Net change in longterm debt/notes in yr	US $000s	Use appropriate sign for increase or decrease in the value
Opening accounts receivable	US $000s	As of projection start date. Do not include expected bad debts
Opening accounts payable	US $000s	As of projection start date. Also include all other planned payments
Average credit given on sales	Days Sales	Use estimates with consideration of cash sales
Average credit taken for materials /goods	Days Sales	Estimate should include suppliers who do not give credit
Expected federal/state tax rate	%	Use Effective rate
Planned dividend for year	US $000s	Include declared dividends only
Opening number of shares	000s	Issued shares only
Proceeds of new stock issues	US $000s	Proceeds should be net of all fund raising costs
Number of new shares issued	000s	Add this number to opening number of shares

November 29: Carnival of Capitalists

2004-11-30T14:23:00.000-06:00

This wonderful event takes place every week and fellow bloggers host it. I will be hosting "Carnival of Capitalists" in the week of May 23rd, 2005. That is a long long time from now. Meanwhile you can enjoy it on Lachlan Gemmell's blog. Overall, it was wonderful reading, but my personal favourites were Ankesh Kothari's reducing risks when starting a new business, then an encouraging inverview of a small business expert Andy Birol by Anita Campbell of Small Business Trends about why US Presidential Election does not matter for small businesses.. Then there is an excellent leadership article by Steve Rucinski of Small Business CEO. There are too many to list here. Why not visit Lachlan's site and enjoy all the fine articles yourself. Oh by the way you can become a proud host for Carnival of Capitalists by visiting this Website.

Financial Plan - Assumptions-1

2004-11-29T21:19:00.000-06:00

I received a comment from a Planware representative about their Excel-based products dealing with Financial projections and Business Plans. I checked out their website, they have some wonderful products, which may be used as a model for building the plan and creating projections. You will see some of those projections being used in our plan too.

Before we start with an actual Financial plan, there is a need to make some Assumptions. These assumptions will put the plan in proper perspective leaving no doubts in the mind of Venture Capitalists, when they read the plan projections. In assumptions area, you clearly get to specify average values, opening balances, percentages, tax rates and some ratios.As a start-up business, we will have very few variables that we can state in our assumptions list. I will build a template here and fill in the values tomorrow. Not all variables will be filled, as we are a service organization.

Variables	Units	First Year	Second Year	3-5 Years
Average Monthly Sales	US $000s
Desired average finished inventory	% of Sales
Cost of materials/goods	As % Sales
Target materials/goods inventory	US $000s
Average monthly direct costs	US $000s
Average monthly overhead expenses	US $000s
Opening total cost of fixed assets	US $000s
Accumulated opening depreciation	US $000s
Average depreciation rate	% p.a.
Planned capital expenditure for year	US $000s
Interest rate for cash balances	% p.a.
Interest rate for all debt/notes	% p.a.
Opening cash balance (deficit)	US $000s
Opening longterm debt/notes	US $000s
Net change in longterm debt/notes in yr	US $000s
Opening accounts receivable	US $000s
Opening accounts payable	US $000s
Average credit given on sales	Days Sales
Average credit taken for materials/goods	Days Sales
Expected federal/state tax rate	%
Planned dividend for year	US $000s
Opening number of shares	000s
Proceeds of new stock issues	US $000s
Number of new shares issued	000s

Financial Plan - An Introduction

2004-11-28T22:48:00.000-06:00

Startups or big enterprises need Financial planning as it is a lifeline for company's survival. Having an idea about your financial obligations and earnings give you an advantage in arranging your priorities. A typical Financial plan has following components:

Assumptions: Assumptions are essential and key to form a foundation of any financial plan. Averages, opening balances, depreciation rates, units are all defined here.

Income Statement: This summarizes a company's revenues and expenses for a fiscal year. It reflects a company's operating performance by identifying the sources of income and the various costs and expenses, gains and losses, which result in a final net income figure.

Cash flow Statement: This is a worksheet that shows the flow of cash in and out of a company over a month by month period. Balance Sheet: A snapshot in time of a company's assets, liabilities, and net worth.

Performance Review: This statement provides information about how a company will perform in coming year using projected figures. It contains various financial ratios which are useful in quickly gauging company's performance.

Revised Executive Summary

2004-11-27T14:02:00.000-06:00

I would like to thank one of my readers for being alert enough to point out in his/her comment, capital requirements stated in earlier post does not match with numbers stated in the last post. It is good to know, people are participating and reading my blog with interest. This also suggests, creating a Business plan is an iterative process, where you might have to go back frequently and correct the numbers, till you have a plan that can convince a Venture Capitalist and is a realistic and achievable projection of the future. Here is the revised executive summary with capital outlay.

Executive Summary: BusinessWorks Inc intends to be a complete Radio Frequency Identification solution designer/prototyper for a wide range of industry applications. BusinessWorks will create an initial prototype solution for the transportation industry using RFID and GPS systems. Once the prototype is made, it will be marketed to the transportation companies. This solution will be useful for the companies that want to track the progress of their vehicles in the city or nationwide, and conduct path, driver and other analysis based on data gathered from RFID and GPS systems. Unique aspect of BusinessWorks solution will be ability to provide complete analysis of data gathered from RFIDs and GPS and plotting of vehicle location in real time on the maps for tracking purposes.

In addition to the transportation solution, BusinessWorks will develop solutions to cater healthcare and retail segments. Businessworks will leverage their competitive advantages of skills and expertise of technically inclined management team to gain reasonable market share. BusinessWorks initial outlay of capital is 4.5 million dollars for the first two years of operations. Profitability is expected to be reached by the fourth year and is projected to bring in one million dollars of profit.

Business Plan - Capital Projections

2004-11-25T22:31:00.000-06:00

Today we will discuss Capital and Expenses requirement of the company. Although we have discussed the cost of business in our previous post, here we will talk about what Venture Capitalist wants to see in these statements and how we can present it so that investors can be convinced.

If I am a Venture Capitalist, I would like to see if my investment in the company is spent wisely to generate profits. What is my Return On Investment? What are the risks involved in this investment? What is the waiting period before I start getting my returns? Are the targets set by the company are realistic and achievable? If yes, are those targets achievable in the time frame suggested by the company?

Keeping these questions in mind, let us make our projections for the investor.

Capital and Expense Projections

Asset	Year 1	Year 2	Year 3	Total
Equipment	$44,100	No Change	No Change	$44,100
Staff	$1,350,000	$1,485,000	$1,633,500	$4,468,500
Office Space & Equipment	$218,250	$240,075	$264,082	$722,407
Consumables	$2,400	$2,640	$2,904	$7,944
Maintenance	$12,000	$13,200	$14,520	$39,720
Travel	$50,000	$55,000	$60,500	$165,500
Miscellaneous	$480,000	$528,000	$580,800	$1,588,800
Totals	$2,156,750	$2,372,425	$2,609,667	$7,138,842

Business Plan - Organization Structure

2004-11-24T22:50:00.000-06:00

The Organization structure has a special place in the business plan as it helps in projecting operating expenses. This is one of the key numbers in the financial statements, which Venture Capitalists scrutinize heavily. Thus a well-formed organization structure is essential for the business.

Every company is different, but it can be broadly classified to have four areas:

* Sales and Marketing
* Research and Development
* Production
* Administration

So lets define our Company's Organization Structure.

Organization Structure

BusinessWorks Inc. will have have following Organization Structure:

Sales and Marketing: This team will be responsible for marketing our RFID solutions. Team will be divided in two sub-groups: one will handle Customer relations, support and service. Initially we will have 5 employees in this sub-group. The other sub-group will be Application Consulting group. There will be 5 Application consultants, who will be experts in RFID, software and marketing. They will study the client application and suggest solutions to the customers.

Research and Development: This group will be developing the RFID solution itself. In this team, there will be 4 software engineers and 2 hardware engineers. Hardware group will be responsible for RFID and GPS equipment research, selection and operations. Software engineers will develop the middleware and interface with industry standard packages.

Production: Although we will be using market standard RFID and GPS equipment, 2 employees, 1 software engineer and 1 hardware engineer will be needed to to manage the software and hardware that is already developed.

Administration: This group of 3 employees will handle human resources, payroll, billing, accounts receivable and payables and miscellaneous tasks.

Business Plan - Operations Intro

2004-11-23T22:29:00.000-06:00

A top-notch management team is essential for a business to succeed. However an operation plan is equally important for a business to perform well. Operations plan will lay a foundation for the logistics of the company which will include

* responsibilities of the management team
* the tasks assigned to each division within the company
* capital and expense demands for smooth running of the business

We will list here two important components of the Operations Plan and discuss them in separate posts:

1. Organization Structure
2. Capital and Expense requirements of the company.

Tomorrow we will talk about Organization structure.

Business Plan - Marketing Plan

2004-11-22T22:20:00.000-06:00

After market research comes preparation of marketing plan, but before that let us talk briefly about the the competition. Marketing plan cannot be made without considering competition. Many entrepreneur realize the potential of RFID and will be entering this profitable market, making it competitive. This makes it essential to have a plan to counteract the challenge.

RFID market, which is still in its infancy makes it an uphill task to build a competitive marketing plan which involves establishing pricing and promotional strategies.

Marketing Plan

Target Market: Third Party Logistics Provider (3PL), Trucking services, Air, Ocean, Rail Freighters, Warehousing facilities.

Strategy: Conventional Marketing plans cannot be used as a guideline to RFID based solutions. RFID market research shows, the biggest reason why our target market wants to go for RFID is customer compliance. This is an indicator to design a three pronged strategy.

First strategy will be to approach our target market itself with benefits of implementing RFID solutions. Promoting compliance and taking steps towards industry standards will be a big effort towards this cause as achieving these tasks itself, is battle half won.

Second strategy will be to approach customers of our target market and study their logistics and functions which results in developing solutions that will make us compliant and certified with customers. This will help us go to the target market with confidence and be one-up on competitors.

Third strategy will be to form an alliance with large ERP software providers and develop solutions compatible and aligned with their software. This will aid our second strategy while approaching customers of our target market.

Pricing: Although pricing strategy and calculations will be complex, some basic rules will be followed:
1. All prices will cover our costs.
2. Prices will reflect market changes,competition and demand.
3. Pricing method followed will be Markup pricing.

Advertising: Initial advertising plan will be low key and direct. After a successful implementation with one customer, RFID and Transportation related Trade journals will be used to advertise our solutions.

Packaging Strategy: Our services will be provided to clients as a complete solution package comprising of RFID and GPS hardware and software.

Sales Forecast: First year will be spent in development. With reasonable expectations, in second year, company expects to have atleast two to three projects. Each project is expected to bring $500,000 in revenue. Sales Projection can be in the range of $1 million in second year. However company is expected to be profitable in third year.

Business Plan - Market Analysis

2004-11-20T17:35:00.000-06:00

A Venture capitalist is always looking for ways to validate the claims in Business Plans. They are expecting solid market research for the demand of your products or services in near and long term future. Once the potential of the product / service is established, venture capitalist feels much at ease to invest in your venture. So a thousand dollars spent on a market research report from a reputable source is money well spent. After all, this single report can get you millions of dollars in funding. So let us build a strong case for RFID based Solutions that BusinessWorks plans to sell. I would like to thank Steve Rucinski of Small Business CEO for pointing me to Research available on Eye For Transport .

Market Research: A reputed market research company, recently concluded a survey about RFID in transportation sector. A blend of Third-Party Logistics ProviderS (3PL), Trucking services, Warehousing, Air, Ocean and Rail Freighters were selected for this survey. Results were surprising and very favorable towards the business model, BusinessWorks plans to implement. Survey indicated 75% of the market is still untapped. Larger percentage of rest of the market was piloting a solution and a very small percentage had actually rolled out a solution. Over 90% of the untapped market is either researching the feasibility of the RFID solutions or "waiting" to see the results of other companies. Customer compliance, improved efficiency and information accuracy are the most important reasons why companies are interested in RFID solutions. This is no surprise as Wal-Mart is one customer, many companies would like to please. Second most important reasons are the prospects of winning new customers and security improvements satisfying government regulations.

Obstacles in implementing RFID solutions were also considered in this survey. Biggest impediment is high cost of RFID hardware, software and integration to achieve a fast ROI. Other barrier is lack of industry standards. Survey also indicated that respondents felt, the business case to implement RFID solutions was not strong enough. As the technology matures, these obstacles will come in focus and will be resolved in next 12 to 18 months.

Survey clearly concludes, demand for RFID solutions is clearly on the rise and is Customer driven. Indecisiveness due to lack of RFID industry standards, will soon decline, once the usage increases.

Business Plan - Product/Service Description

2004-11-18T22:35:00.000-06:00

Products/services and the management team makes the company successful. Business startup like ours, has an idea to nurture and develop it into a product or a service. A Venture capitalist, however views your idea as an outsider, hence he needs explanation of this idea in layman terms. Let me be clear, I do not intend to underestimate knowledge level of Venture Capitalists. They are smart, very smart, that is why they have deep pockets. All I say, idea should be explained in easy to understand terms to ensure there are no doubts or misunderstandings in the mind of VC.

Product / Service Description: BusinessWorks intends to create a solution, which will help transportation sector in two areas. One is tracking of commercial vehicles and other is to analyze the tracking data for the purpose of improving driver efficiency and route optimization. This solution will consist of Radio Frequency Identification (RFID) tags, Global Position System devices, RFID Readers and the software to capture and analyze the data received from these devices. Although this solution will have substantial cost attached to it, benefits will far outweigh the costs. Implementation will involve attaching either an RFID tag or a GPS module to every vehicle in the fleet. Each vehicle will then broadcast it's position and this raw data will be collected and fed to our Analysis program, which will generate meaningful reports and help in decision making process. RFID and GPS hardware will be purchased from reputed vendors and software will be developed in-house. However, complete solution will be provided to the customer with full support for the hardware and the software.

Business Plan - Company Description

2004-11-17T22:17:00.000-06:00

If Venture Capitalist has gone past the page of Executive Summary, then you have good chances, that your venture will be financed. One must fortify the success of Executive summary with a balanced Company Description and that is what we will attempt to do in next few paragraphs.

Describing one's own company fairly can be a daunting task, when one has to curb the use of superlatives and at the same time not to undersell it. Best approach is to state hard facts and be straightforward.

Company Description: BusinessWorks Inc was born in September 2004 with an intention of conducting business by developing and selling state of art RFID based solutions for various industry segments. The Company will be managed by the team of top-notch engineers and MBAs. Initially, BusinessWorks plans to develop a working prototype and market it to Transportation industry. This prototype will provide tracking via RFID chips and GPS modules. Tracking data can be analysed by using the Company's software. Businessworks expects to be a profitable in a short span of three years. This will be achieved with the help of aggressive development programs. Financing needs of the company are modest, which can be financed in two phases.

[Here we can include brief resumes of the management team and attach detailed resumes in appendix]

Business Plan - Executive Summary

2004-11-16T22:58:00.000-06:00

Today, I will try to create first draft of Executive Summary, the most important part of our Business Plan. An exciting Executive Summary must contain following ingredients:

Description of the Company
Description of the service/product
specialty of your service/product
The Management Team
Financing needs

It is very easy to get carried away in an effort to please Venture Capitalists. So it is very essential to state facts and figures along with cautious optimism, carefully avoiding sensationalism. So lets get started with a draft, which we can refine later based on our own discoveries or suggestions from my readers:

Executive Summary: BusinessWorks Inc intends to be a complete Radio Frequency Identification solution designer/prototyper for a wide range of industry applications. BusinessWorks will create an initial prototype solution for the transportation industry using RFID and GPS systems. Once the prototype is made, it will be marketed to the transportation companies. This solution will be useful for the companies that want to track the progress of their vehicles in the city or nationwide, and conduct path, driver and other analysis based on data gathered from RFID and GPS systems. Unique aspect of BusinessWorks solution will be ability to provide complete analysis of data gathered from RFIDs and GPS and plotting of vehicle location in real time on the maps for tracking purposes.

In addition to the transportation solution, BusinessWorks will develop solutions to cater healthcare and retail segments. Businessworks will leverage their competitive advantages of skills and expertise of technically inclined management team to gain reasonable market share. BusinessWorks initial outlay of capital is three million dollars for the first two years of operations. Profitability is expected to be reached by the third year and is projected to bring in one million dollars of profit.

Components of a Business Plan

2004-11-15T23:18:00.000-06:00

We have sufficient information to get started with our Business Plan. There are missing bits and pieces, we will gather those pieces as we progress with the plan. When an entrepreneur goes to a Venture Capitalist with a Business Plan, both are strangers to each other. Business Plan has to be really impressive to break the ice and get Venture capitalist interested. I will list key components of a business plan along with brief description, then define and create each component in upcoming postings. The components are as follows:

Executive Summary: This component is so important that it is listed before Table of Contents. VC reads this summary first and if it piques his interest, he may read rest of the plan

Table of Contents: Although this is second on the list, it can be complete only when all sections are done.

Company Description: This is where you can brag about the company and it must be done factually. Be honest and remember, Venture capitalist has seen enough plans to distinguish between the plans.

Product/Service:Describe the product/service in layman terms, without any jargon. Put yourself in the shoes of VC and ask yourself if you would invest large sum of money in the product/service described to you.

Market Analysis: Here you have to demonstrate that you are a old hat who knows practically all the aspects of the business. Tonnes of research is required and VCs love the research. Demonstrate how similar products and services have done well in the market and justify your claims.

Marketing Plan: Detail your selling strategies, evaluate your competition and suggest ways to overcome that competition in this component

Operations Plan: Build a solid foundation and eliminate the vagaries, which may appear in your Executive summary. Document nuts and bolts of the business operation here.

Financial Plan:The numbers game! You have to play it right by stating cash flows, profit and loss, balance sheet and sales forecasting.

Management: Propose a strong management team with summary resumes. Remember, people make the difference.

Exit Strategy: Always propose an exit plan to safeguard a path for Investor. It gives reassurance that end-result of the proposed business is either a merger or an acquisition or more exotic result i.e. Initial Public Offering (IPO).

Appendices:This is the place to insert necessary material, like manager resumes, promotional material, product photos and independent assessments.

Categorization of all the posts

2004-11-14T23:14:00.000-06:00

Many of you have asked for categorizing my blog entries to easily find the information needed. So here it is :

Introduction

Brainstorming

Idea Viability

Talent Availability

Funding Opportunities

Federal Regulations

Return vs Effort

Socio-Economic Factors

Summary/Comparision of all technologies
Technology is selected
The Big Idea

Business
Corporate Business Structure

Business Plan

Hope this index helps all of you. Soon you will be able to see these entries on the sidebar for easy reference.

The Management Team

2004-11-12T22:39:00.000-06:00

Steve Rucinski of Small Business CEO visited my blog today and provided some constructive criticism, good tips and pointers. Thanks Steve! I appreciate it very much. He also suggested to provide an explanation about what problem my business idea will solve. I will writing a special post for this explanation soon. Now onto today's topic of the Management Team.

The Management Team can make or break the company. People will be most important assets in our company and they will treated with utmost care and will be provided with best possible resources. Our Management team will be techincally savvy and will have keen business sense. They must posses excellent ability to market company's capabilities, and must have earned an enviable reputation for quality and innovation. Team will build a network of contacts among the top levels of biggest customers. Team must have rare ability to see new trends coming and should be agile enough to adjust to take advantage of them.

Generally an entrepreneur is technically savvy himself and when he/she gets involved in managing a company, he/she gets tied up between managing and performing technical tasks. However in our case, situation is unique. Although I am technically inclined, my main focus will be managing and developing business along with professional management team. I will not commit the mistake of trying to manage everything and end up achieving nothing. However top caliber management team comes with a price tag and I am willing to pay that price to get such a team.

Businessworks Inc featured on RFID-Weblog!

2004-11-12T09:03:00.000-06:00

RFID Weblog, a premier source of information about RFID and related technology and Small Business CEO, an excellent source of business related information, has always been source of inspiration and resources for me. On November 11th, my weblog was featured on RFID Weblog. I consider this as a honor! Check it out here.

The Location

2004-11-11T22:23:00.000-06:00

Today I will talk about another important aspect of business and business plan. Business community is never tired of repeating "Location....Location...Location" and I totally agree with them, "Location is everything!" However, we are a "Virtual" company, so I cannot give an named locations, but I can describe what an ideal location can be.

Business Startups of technological nature are usually born in "incubators", which are generally supported and built by states, universities or private organizations to promote entrepreneur. These self contained incubators provide necessary services like conference rooms, videoconferencing facilities, secretarial services, office space, storage facilities, shipping & receiving, and most important shared lab facilities. Our business involves affixing RFIDs to vehicles and tracking them, using RFID readers. For this purpose we need a large test area and incubators can provide us this area at a nominal cost. If you recall my earlier post about working capital, we can save lots of working capital by starting the business in an incubator.

Incubator is an excellent place to start a business, but business grows and when it does, it needs a place and resources of its own. Ideal location is always decided by the nature of business. In our case, a perfect location would be in a large city, but somewhere in mid town, with reasonable access to airports and highways, access to large open space, close to housing complexes, eating joints and other professional services. All these factors help in easy client and employee access which is crucial to any business.

The Competition

2004-11-10T21:59:00.000-06:00

Generally, with newer technologies, competition is practically non existent or there is enough room for everyone to expand and piece of the pie. Although RFID seems to be no exception, competition is closer than it appears to be. RFID services will sooner or later face same challenges that IT industry is facing. Outsourcing companies are already planning to enter the world of RFID in big way. Recent article in Optimize magazine states, two Bangalore, India based technology based service companies intend to become experts in RFID.

There are always two ways to deal with the competition. One is to face it and fight it and other is to create a niche for yourself and eliminate the competition. We will try to create a niche for ourselves by combining two technologies, RFID and GPS to come out successful in competition.

Even though few companies are trying to come up with canned software for handling RFID tasks, I am sure demand for the custom software and integrated solution providers will not subside. Canned software can reduce the cost of software, but due to reduced flexibility, implementation becomes more costlier, thus wiping out cost advantages.

Market Research - Transportation

2004-11-09T22:33:00.000-06:00

Efforts to find market research data about RFID in transportation proved futile. Atleast it proves, RFID usage in transportation sector is a virgin territory waiting to be explored. However, in absence of data in terms of RFID, I did the next best thing i.e. research in growth of transportation industry. Since we will be dealing with commercial vehicles, I researched and found American Truckers Association (ATA) forecast of bullish stand on Freight volumes for the industry in year 2005. Trucking industry added 3,700 jobs in September alone and about 38,000 jobs in last year. With these figures in mind and Trucking industry's openness in embracing new technology, especially RFID and GPS systems, prospects seem good for us.

In my research today, I found an excellent source of RFID references and knowledge base called RFIDa blog. It is regularly updated and has variety of research materials.

Market Research - General

2004-11-08T22:56:00.000-06:00

One of the most important things in business is ability to feel the market pulse and act accordingly in shortest possible time. I researched various sources and tried to gauge the projected growth in software and services market and here are my findings:

Growth	2005	2006	2007
Software	30%	33%	35%
Services	19%	23%	27%

Percentage growth is substantial in both Software and Services sector of RFID, which is good news for our company. On the sidelines, RFID hardware is projected to grow by 48% each year, which itself is encouraging. With these statistics, I have covered overall growth of RFID. Next I will cover the sector pertaining to our area of concentration.

Cost of Business

2004-11-07T14:25:00.000-06:00

Other day I listed our initial requirements, today let me put some prices on each one of those and come up with working capital requirements.

Please note: This list is by no means complete, but it covers most of the expenses and working capital requirements. Employee salaries, benefits, equipment prices are very close to real costs but may vary from place to place.

All calculations are for one year. Approximately $1 million outlay of funds is required for the comfortable operation of this business.

Asset	Units	Cost/Unit	Total Cost
Equipment
RFID Tags	100	$1	$100
RFID Readers	20	$350	$7,000
Wi-Fi Stations	4	$500	$2,000
GPS Sets	4	$250	$1,000
Personal Computers	10	$2,000	$20,000
Vehicles (used)	4	$3,500	$14,000
Staff
Software Engineers	5	$80,000	$400,000
Hardware Engineers	3	$70,000	$210,000
Marketing Consultants	5	$60,000	$300,000
Application Consultants	5	$70,000	$350,000
Office Staff	3	$30,000	$90,000
Space, etcetra
Office Space	1	$120,000	$120,000
Test Area	1	$60,000	$60,000
Fax Machine	1	$250	$250
Copier-cum-printer	1	$10,000	$10,000
Phone System	1	$20,000	$20,000
Personal Computers	4	$2,000	$8,000
Consumables
Toners & Cartridges	12	$200	$1,200
Stationery	12	$200	$1,200
Maintenance
Office - Janitorial services	12	$500	$6,000
Phone System	12	$250	$3,000
Copier	12	$250	$3,000
Miscellaneous
Employee Benefits	21	$20,000	$420,000
Taxes	12	$5,000	$60,000

Pre-Plan Research

2004-11-04T22:10:00.000-06:00

Newer technologies generally have few things in common like unclear ROI, lack of wide industry adoption and agreed upon standards. RFID is no exception. When I started research for RFID related data for the business plans, it became clear, task is not going to be easy. However, I need to start someplace, so I will begin with some "must-haves" and "would-be-great-if-we-had-it" and then go about building a list with some prices and project the costs, returns for next three to five years.

Let us start with basic requirements:

RFID Tags
RFID Readers
Wi-Fi Stations
GPS sets
Personal Computers
Vehicles (for testing RFID)

Then add the staff requirements:

Software Engineers
Hardware Engineers
Marketing Consultants
Application Consultants

Space and other Requirements:

Office space
Large test area either attached to the office or near by
Fax machine
Copier
Phone system
Personal computers for other staff

This list is just a subset of what we will need. I will add the costs and list "cost of business" and other working capital requirements tomorrow.

Before the Plan...

2004-11-03T21:03:00.000-06:00

In my quest for resources, for preparation of a Business Plan, I came across a very interesting concept which falls in line with my "Virtual" company. It is appropriately called Virtual Incubator. Although this site is Wisconsin based, most of the resources are generally usable. It is good enough to get you started.

Let us talk about Business plan. A business plan is a written document that glues a business concept, market potential, opportunities, growth strategies, financial requirements, and management for a company. It also identifies potential risks, problems, and trade-offs. It's an excellent way to help evaluate opportunity and guide a start-up or existing business. It forces the founder to consider every facet of a proposed business or growth idea and places approval and funding decisions on paper, where they can be evaluated and considered by all interested parties.

Sitting down and developing the business plan requires the entrepreneur to think critically and plan. Writing a business plan forces the owner and management team to review various aspects of a business and challenge assumptions. A business plan may also lead the owner to examine and re-think the consequences of different strategies, as well as the personnel and financial requirements needed to launch or grow a business.

A business plan is a document that should be used as a management tool to operate a business rather than as a strict blueprint that must be implemented exactly. A business plan can help an owner pinpoint great ideas and clarify goals. With written goals, both the owner and employees will find it easier to take the business seriously. The process of analyzing the business and setting goals will enable an owner to better understand and clarify risks, thereby uncovering new ways to manage or reduce risks.

Our next step would be to gather some RFID-specific statistics.

What next?

2004-11-02T23:47:00.000-06:00

I have received few e-mails requesting further details about the operations of the company, about the idea I proposed yesterday and about the business plan. I will discuss those things here and more.

Businessworks will target automobile manufacturers, airplane manufacturers, ship manufacturers, transportation companies, package shipping companies to sell complete RFID solutions. As I said in earlier posts, company will not get involved in manufacturing, instead the company will setup ties with RFID and GPS hardware manufacturers and develop "middleware" software in-house.

Although company has access to $1,000,000 as working capital, operational costs and capital requirements will be decided after an elaborate business plan is made. I anticipate 1-2 year time frame for complete solution development.

Immediate tasks on hand are:

make a business plan
place to conduct business
hiring employees
buying equipment

So our next step will be to gather some data for the business plan, which we will continue to do tomorrow. Meanwhile here are two interesting RFID websites. One is RFID.org and another is a blog. Both provide excellent coverage of the subject.

The Big Idea!

2004-11-01T21:32:00.000-06:00

"Daring ideas are like chessmen moved forward; they may be beaten, but they may start a winning game." - Goethe, Johann Wolfgang von

With this said, let me present the outline of Product and Services that Businessworks Inc will be providing to the industry:

Objective:Develop a wireless system that can manage and track vehicles, tools and other assets either on a shopfloor or anywhere in city or larger areas.

Description:A complete solution is to be developed for tracking vehicles or tools using wireless locators. Matching of those vehicles or tools with the task being performed, and ensuring the availability and accountability of tools using a management system is a must. Wireless locators are small devices that can be attached to pieces of vehicles or tools to know their whereabouts at all times. These small devices will automatically alert the network if tampered with or removed. We will develop the solution based on two types of systems that wirelessly track the assets. One will use the Global Positioning System (GPS) and cell phone technology to report the location. The other one uses the less expensive radio frequency identification (RFID) for tracking. A tracker who wants to discover the location of a trackee should be able to submit a request through a web page on the server or using a phone to talk to the server.

In the GPS-based system, the server then "calls" the locator, asks for a position fix, and then draws a map showing the current location of the tracking device. In the RFID-based system, the location is identified by an array of antennas that sense the location of small tags with built-in radio transmitters. Although RFID systems lack the ubiquitous coverage of GPS-based technology, but the cost of RFID systems can be much less. Backend Management software will be common to both technologies except for the interface portion.

This proposed solution, based on either GPS or RFID, will include asset management, attempt to match tools with specific repairs, match vehicles with destinations, path optimization, practicality of path selected and driver management. Process will preclude data mining to allow predictive analysis on the usage of vehicles and tools. By combining the current asset tracking technologies with process management software and a work portal, we can ensure that tools are always available and maintain a relationship between tool and task, vehicle is always being used for task assigned and is on proper path. Such a system helps in capturing the knowledge about vehicle and tool usage in the context of a task, in addition to tracking and managing the assets on a large shop floor or larger cities or beyond.

Technology is decided!

2004-10-31T18:57:00.000-06:00

The poll results are out! 11 votes were casted. 2 were in favor of Nanotechnology, 1 in favor of Biotechnology and 8 in favor of RFID based solutions! Apart from poll results, RFID solutions seems to offer better prospect. Shorter development times, easier venture capital financing, good talent availability are all positives in case of RFID based solutions.

Our Technology of choice will be

RFID based solutions

I will be announcing the RFID solution, that Businessworks Inc. will develop, in tomorrow's post. Our next major upcoming task is preparation of a Business plan, which will lay a foundation and prepare a path for the business in next five years. To learn more about business plans, visit Small Business Administration link.

Which technology will it be?

2004-10-30T22:00:00.000-05:00

We have 8 votes so far with six of them in favor of RFID. I will keep this poll active one more day. Meanwhile, I will talk about the business structure that I have already selected and why did I select it.

The site that helped me decide is Dane Carlson's Business Opportunities Weblog. Read this post about deciding business structure. Why is it so important to decide the structure? A little extra effort in deciding the right structure goes a long way for your business. There are five main structures a business can go for in US, namely C-corporations, S-corporations, limited liability companies, sole proprietorships, and partnerships. Each has it own merits and demerits, which you can find on Dane's blog. I have selected my business structure as C-corporation.

My reasons for selecting a C-corporation structure are as follows:

Keep personal and business entities, hence liabilities separate.
Easier structure when I have to raise capital
Provides a much better image to conduct business (my personal thought)
Structure gives flexibility to deal with employee benefits, when common shares are to be issued or when stock options are to be given to employees.
It is easier to conduct business in all states as laws regarding C-corporations are settled in all states.

There are few cons in forming a C-Corporation, but they are minor compared to the benefits. I have listed the cons just for your reference:

The corporation's income is taxed at the corporate level. Then when you distribute earnings to the shareholders via dividend, the shareholders include the dividend in their taxable income and are all taxed on that income again. This is commonly referred to as double taxation.
Increased administration costs to maintain separate books of accounting.

Depending on your individual situations, other forms of business structure may be appropriate for you. Do consider professional help to suggest what is good for your type of business.

RFID Summary

2004-10-29T21:58:00.000-05:00

Here is our final summary of three technologies. I will keep the poll up for my readers to vote, for couple of days. Then based upon the comparison given here and votes received, we will take calculated leap of faith.

	BioTech	NanoTech	RFID
Idea Viability	Almost all ideas controversial as it involves modifying nature	Great Ideas, but long development times	Many potential ideas with shorter development times
Talent Availability	Abundance of Talent, but retaining that talent can be an issue	Shortage of talent and lots of turnover	Reasonable availability of talent and shorter development times eliminate fear of turnover
Funding Opportunities	Venture Capital is hard to come, due to long product development times	Being a glamorous technology, Funding is easier to get, inspite of longer product development time	Two-thirds of funding coming to IT area suggests funding is relatively easy to find
Federal Regulation	Strict Regulations and lots of them	Still in infancy stage. Company has chance to formulate them in co-operation with Government	Early Privacy concerns have paved the way for proper regulations
Return v/s Effort	Great returns (50%) but longer product development times (up to 10 years)	Potential of great returns but much longer product development times (up to 15 years)	Great returns due to need of middle ware. Shorter ROI times
Socio- Economic Factors	Social, Economic and Political Factors can adversely affect profitability especially in Biotech	Not much of immediate concern	Privacy violation is one of the biggest concern, easily addressed by avoiding consumer business segment

RFID - Socio-Economic Factors

2004-10-28T20:14:00.000-05:00

Firstly, I would like to acknowledge receipt of ideas from two of my readers. Coincidently both ideas deal with RFID based solutions. I will briefly outline the ideas here and then discuss Socio-economic factors with those ideas in perspective:

Idea 1: This one is to convince state governments to embed RFID Tags in License Plates, given for the vehicles when property taxes are paid. Next step is to install RFID readers (which are GPS capable), at strategic locations for tracking the vehicles. Usage by various government agencies to track vehicles.

Idea 2: Providing tracking facilities to transportation industry using combination of RFID tags, WI-FI and GPS capable readers which will help companies to track efficiency of drivers, optimization of routes and improving delivery times.

There are many social factors in implementing RFID solutions. Let us consider first idea, which involves embedding RFID tags in vehicle license plates, will be a big privacy concern. Although idea is great, we respect the privacy of consumers.

In other cases, RFID has proved very useful in Legoland, practically eliminating possibility of lost children. Usage of RFID tags as legbands in poultry and pigs has proved useful in tracking them.

Second idea seems more feasible as it deals with commercial vehicles and is worth considering. Economically it seems a very sound idea, with lots of scope to provide middleware support. In any case, I would like to thank both readers for submitting wonderful ideas and would encourage other readers to submit more ideas to make this blog a lively and vibrant community.

I would also like to mention couple of things here. I have put up a poll to vote for your favorite technology. Two, please feel free to contact me using the Contact me link or submit your ideas using the Submit link.

RFID - Return vs Effort

2004-10-27T21:42:00.000-05:00

For a Customer, who is RFID hardware and software consumer, bulk of the return will come from intelligent use of the RFID-generated data and that will happen with the use of middleware. This will equate to excellent return for middleware solution provider company.

Next, let us consider areas where middleware will be essential. This will help define streams which will provide good returns to us as a business.

Ideally RFID hardware consists of Readers and RFID chips. Middleware can help coordination of these two components by configuring, monitor, implement and issue commands directly to readers.
Middleware can achieve filtering and smoothing of Data which is very essential to separate redundant and duplicate data.
What good is the data if it cannot be integrated with enterprise resource planning (ERP) or supply chain management (SCM) or customer Relationship management (CRM) systems? Middleware makes this integration possible.
Middleware makes Monitoring and Triggering of events in another part of the process based on data received from RFID tags possible.

Although RFID tags has existed for many years, concept of analyzing, filtering, controlling and integrating data from RFID with various systems is relatively new. It will provide a niche position for a company entering early in this race.

Next we will explore socio-economic factors associated with RFID.

RFID - Federal Regulations

2004-10-26T22:01:00.000-05:00

RFID, besides being a very exciting technology, unfortunately can also be a very privacy invading technology. Every time a company decides to start-up a RFID based company, privacy concerns are raised.

However good news is around the corner, Federal Trade Commission has laid out the blueprints of agency's dominion over RFID and will soon establish guidelines on RFID usage. Some very essential steps will be taken to monitor usage of item-level tagging after studying the consequences on consumers and address privacy concerns.

Item-level tagging can happen when a RFID tag is attached to an item instead of whole pallet in a warehouse. If item is tagged, leaves the warehouse and reaches home of a consumer and consumer is unaware of it, then it becomes a privacy concern.

If we decide to go with this technology, we will respect the privacy of consumers and will develop software solution around RFID, which will be used in areas where privacy is not violated.

Next we will discuss RFID's Return vs Effort.

RFID - Funding Opportunities

2004-10-25T22:19:00.000-05:00

In spite of privacy concerns, RFID technology is darling of Venture capitalists. In recent months, US experienced growth in quarterly capital funding over previous quarters, for the first time in three years.

Combined with short project times, ready availability of technology, rising interest and demand from retail and other industries, has made RFID based startups very attractive for Venture capitalists. Nearly two-thirds of the VC funding out of 450 deals went to IT companies.

Funding is relatively easy in RFID based solutions compared to other technologies, but it still comes with a price. In my previous posts, I had mentioned about alternate methods of funding. One such method is Federal government's SBIR funding. In very general terms, SBIR funding works as follows. Various Federal agencies release specifications of the technology to be developed and divide the complete project in three phases, which are proof of concept, prototype development and commercialization of the idea. Company gets funding for first two phases from the Federal agency and Venture capitalists may be approached for the third phase.

This type of funding gives the company freedom to be independent till the third phase of the project. Surprisingly Federal agencies have some really exciting project ideas with commercial potential.

RFID - Talent Availability

2004-10-24T15:40:00.000-05:00

As discussed in my earlier posts, if we decide for RFID, we will not manufacture RFID chips but
instead, we will develop solutions around RFID chips, using "middleware" software. Big names like IBM, Microsoft, Sun, SAS, SAP are either in process of providing development environment or out-of-the-box solutions for RFID. I want to concentrate on the niche market of bringing all the tools together and providing complete solutions that are most profitable for the industry.

I always had concerns about long term commitments from the employees. RFID reduces that concern, as RFID solution development cycle are in reasonable time frame. Shorter development times, coupled with good bit of talent is an encouraging enough to get involved with this technology.

Another bit of news that gives me comfort is about Walmart. The Information Systems Division of Walmart plans to manage the work from programming to process reengineering, relying very little on commercial software and not at all on outsourcing. Their programmers have built intelligent RFID middleware to handle the influx of data to be generated as the first wave of 100-plus suppliers that begins to send RFID-tagged cases and pallets of products through the doors of Wal-Mart's Sanger, Texas, distribution center in near future.

The comforting part is Wal-Mart's reputation for designing applications and working with new technology acts as a powerful recruiting tool, drawing 95% of new IT employees to its Bentonville, Ark., headquarters from outside the state. And many of those who come to work for Wal-Mart's Information Systems Division stay for a long time. The executives in charge of key operations, including the company's data warehouse, its human-resources systems, and its international systems, each count a decade or more of experience with Wal-Mart.

We will discuss Funding opportunities tomorrow.

RFID - Idea Viability

2004-10-23T20:18:00.000-05:00

We are onto the last technology in our comparison. Here we will be discussing Radio Frequency IDentification based solutions - Idea viability. As in computers, Hardware is becoming cheaper every day, whereas custom software that make these computers useful, remains premium cost component of complete computer solution. RFID solutions seems to be following the same path. RFID chips are racing to 10 cent price tag, whereas the software (also called middleware) is one of the major cost component of the RFID solution.

So is the idea viable? With big names like WalMart and Albertsons entering the race to "RFID-ize" their warehouses and stores, other big retailers will soon join in. Timing seems just right to latch on to this idea and be ready to provide RFID solutions to retailers. However, we will try not to restrict ourselves to just retailers. The scope of RFID solutions extend beyond retailers. After we evaluate RFID solutions completely and if we decide to go for this technology, we will discuss the ultimate flagship product and/or services that BusinessWorks will offer.

Biggest difference between Biotechnology, nanotechnology and RFID based solutions is the availability of RFID technology with a middleware development lead time of 6-24 months which is much shorter than rest of the technologies.

We respect the privacy concern, which people have concerning the RFID chips. If we select this technology, we will try to restrict our solutions in the areas of following:

Supply Chain Pallets and Cases
Asset Management
Real Time Location Systems
Pharmaceutical and Retail Smart Shelving
Mobile commerce

Next we will discuss talent availability to develop the RFID solutions

Nanotechnology Summary

2004-10-20T22:07:00.000-05:00

Summary of Biotechnology and Nanotechnology factors:

	BioTech	NanoTech	RFID
Idea Viability	Almost all ideas controversial as it involves modifying nature	Great Ideas, but long development times	Coming Soon
Talent Availability	Abundance of Talent, but retaining that talent can be an issue	Shortage of talent and lots of turnover	Coming Soon
Funding Opportunities	Venture Capital is hard to come, due to long product development times	Being a glamourous technology, Funding is easier to get, inspite of longer product development time	Coming Soon
Federal Regulation	Strict Regulations and lots of them	Still in infancy stage. Company has chance to formulate them in co-operation with Government	Coming Soon
Return v/s Effort	Great returns (50%) but longer product development times (up to 10 years)	Potential of great returns but much longer product development times (up to 15 years)	Coming Soon
Socio- Economic Factors	Social, Economic and Political Factors can adversely affect profitability especially in Biotech	Not much of immediate concern	Coming Soon