Condor: Recap Business Counseling Mtg

Yesterday was our scheduled meeting with SCORE. The purpose for meeting with them was to help us answer three questions:

1) which business structure is most favorable for investors?
2) how do we request seed-capital?
3) how do we determine the valuation of our venture?

So here is how the meeting went...

The meeting was at noon, but I stopped by on the way to work to drop off the draft Condor executive summary for Jim Batz to read prior to the meeting; his expertise is in business planning and manufacturing.

Our Background
His first question for me was about my background, particularly education and current job. Fine.

Then he wanted to know about why I was there? I laid out the three questions that we wanted answered and then we started talking about the business model.

Business Model
A half hour discussion about the business model with him trying to understand how he would make use of it. He asked, "so after this occurs, then what?" Good point, I had never made it clear in the executive summary, and had always assumed that readers would understand what would happen next. Jim's uncertainty meant that we need to include this critical step; good.

Commitment Level
He looked at the executive summary and mentioned, "You're asking for this much money." I explained that it was an early guess at a need and that it was a placeholder value in order to complete the draft executive summary. He then asked, "will you be quiting your job?" Of course I said yes and that was what he wanted to hear.

Purpose of a business?
Uhmmm, I replied, "to make money". He remarked that making money is the result of doing business, not the purpose. My second response was the right one, "to meet the needs of the consumer." He emphasized that we need to always keep the customer's needs understood and met. Fine.

Then we spent the rest of the session focused on what to do for a business plan. He gave us some forms to review and to do -- homework for the next meeting with him.

Who makes the decisions?
He remarked that we have three cofounders... he wanted us to know that someone has to be able to make the final decision. Okay.

Corporate Structure
He referred us to some online sources to understand the different structures, but remarked that we may want to consider an LLC umbrella company with sub-companies under it.

Financials to Valuation
He explained briefly what we need to do to get our financial projections started. This exercise will feed directly in doing our valuation, question 3. This value is also driven by our business model, How do you add value to the market by using your business model?

What is the ideal business going to be 3-5 years from now? What are the things that need to be in place at that 3 year timeframe? Looking out and working backwards, we'll be able to know what internal and external pieces have to be in place to achieve the ideal system. This vision core + ideal will allow us to cost the core capacity and capability. Capacity + Capability = Cost

We'll have to calculate different capacity levels to help us crunch our numbers for different financial scenarios. 100%, 80%, Reasonable Guess, and Break-Even. If we can't succeed at 80% capacity, we shouldn't be in business. This being said, Jim has a manufacturing background and I am not sure how well running a server at maximum capacity will fit into this capacity calculation. Especially since we're thinking of scaling our infrastructure using a hosted model. When we get to this part of the business plan, I'll be sure to work with Jim to iron this out.

So once we understand a maximum capacity, we will also know the maximum capability. This will then allow us to figure out what the cost will be to have a system running full-bore at 100%. We'll be able to cost bandwidth, hosting, rent, salaries, etc... Add up the numbers and that is the cost of running the system. I'm a little unclear though, how to go from this point to the valuation, but we'll get there.

What is your hamburger?
McDonald's sells all sorts of food, but they are identified with hambugers. That being said, what is our core offering, such that Condor will be identified by that service?

Homework/Research
There is a lot for us to review and work on individually/together so that we can all be on the same page. Business entity, corporate structure, licensing, insurance, getting a lawyer, etc...

Next Meeting
I scheduled the next meeting for Oct. 24th at 11am.

To Do List
There is a lot to do yet; this never changes. We should try and meet this Sunday to review our personal expectations for the business, our roles, etc... Setting aside the project for now, what is it that we want from this business and how each of us thinks we can get there.

That's it for now!
-john