Prediction Markets Gaining Popularity

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Best Buy, General Electric, Hewlett-Packard and others are having their own employees participate in “prediction markets” to gain insight into product demand, store opening dates, and other future events, the “NY Times” reported. The notion that the opinion of a large group of well-informed individuals will be more accurate than one or a few “experts” was popularized by James Surowiecki’s book “The Wisdom of Crowds,” and is now being tested by dozens of major corporations, including Google, Cisco Systems and General Mills. Small service providers like Consensus Point, NewsFutures and Xpree (since renamed Crowdcast) are assisting companies that don’t have the in-house expertise to establish prediction markets on their own.

Balance Scorecards add Insight

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A Balanced Scorecard is used to regularly monitor a business’ success on a number of fronts: Sales Pipeline, Marketing Spending, Client Effectiveness, Process Improvements and Financial Results. With such balanced reporting an organization is really forced to own up to its weak points and take actions. But because a Balanced Scorecard covers so many functional areas, it requires a multi-functional effort, plus high-level sponsorship, to successfully launch the report. One word of advice: resist the temptation to load up a Balanced Scorecard with too many metrics, it is best to keep it to 15 or fewer.

It’s January, do you know where your budget is?

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If your business has not yet created a budget for 2007, it is still worth taking the time to do so. Having a budget gives a comparison basis for each month’s actual results, to see where you are ahead and behind pace. To make your budget a more useful management report, try to group p&l lines as follows: 1) cost of revenues, 2) sales and marketing, 3) general & administrative, with sub-totals for each section.

More Biz Owners Selling Businesses Themselves

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The percentage of listings at BusinessesforSale.com posted by owners has doubled to about 10% over the last five years, CEO Marcus Markou told BusinessWeek SmallBiz, according to an article in the Fall 2006 issue. Robert Fliegel, owner of Discovery Treks posted a listing for his business in January and sold it to an Arizona couple for $265,000 by July, saving a 10-20% broker commission. “People who try to sell on their own end up wasting a lot of time with unqualified prospects who have no intention of buying,” cautions business broker Karl Grasemann. Other online exchanges include BizBuySell.com and BizQuest.com.

15 Things You Need to Score VC Funding

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Vivek Wadhwa tells “Business Week Online” fifteen things you need to know before you go for VC funding. The list includes ten things you need to have in place, and five insights about how VC’s conduct their due diligence on your business.

This article is truly a must-read for anyone thinking about seeking out VC funding for the first time. Venture Capitalists really leave no stone unturned to find out about you, your people and your track records before they invest. Also, please be sure to read to the very bottom of the linked article, including the last paragraph where it says VC’s are looking to make 5-10 times their investment in 3-5 years. By my calculation, this equates to an internal rate of return in the 60-70% range. If this seems greedy on the VC’s part, bear in mind that some investments never pay back a dime! – dr