Economy

Kiddie market for mobile phones… Six degrees of myth… Funding start-ups: The reality

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New market for mobiles

Here’s one answer to the problem of market saturation for mobile phone sellers: go younger to the pre-teens. Trendhhunter.com reports on the growing trend of making a mobile phone a must have for children as young as six years old.

Mobiles might make sense for parents of teenagers who want to keep tabs on their progeny, but what is the point of a mobile for a six year old? And what will these kids be asking for by the time they turn 13?

Companies have started producing colourful and kid-friendly phones ranging in price from around $US20 to more than $US100.

 

Debunking the “Six Degrees of Separation”

 Ever since the movie, it’s been a popular belief: anyone in the world is only six people removed. Rubbish, says Ivan Misner on Entrepreneur.com, and he explains what it means for networking.

Apparently the myth stems from several “small world experiments” conducted by Stanley Milgram in the 1960s and 1970s that involved sending folders or letters from a group of people in one part of the country to a specific person they didn’t know in another part of the country. The people were told to get the material to someone who might know someone that would know the individual.

It was, in fact, found that the letters or folders took, on average, between five and six connections to reach the intended recipient. Though the average number of links was five or six, the majority of the connections ranged from two to 10 links.

What’s more, the overwhelming majority of people in Milgram’s studies never got the material to the intended recipient. His most successful study only yielded a 29% completion rate. In one study, the number was only 5%.

Misner says the myth creates complacency. “The notion gives some people a false sense of expectation that connections are bound to happen sooner or later, no matter what they do. If this were the case, you wouldn’t read a networking columnist, would you?”

And, he says, the studies’ findings clearly indicate that some people are better connected than others. So the good news is networking is a skill that can be developed with reading, training and coaching.

 

7 ways to fund a start-up

Coming up with a great business idea is one thing: scraping the money together to make it happen is something else entirely. Fortune magazine looked at the best ways to get a start-up off the ground.

Bootstrapping. Sad but true – much of the money for start-ups comes from the entrepreneur themselves. Entrepreneurs spend an average of $70,000 to start a business, according to William Bygrave, the Frederic C. Hamilton professor of free enterprise at Babson College in Wellesley, Massachusetts.

Where do entrepreneurs find the money? Personal savings, borrowing against a home loan, even credit cards are all in the mix. In fact, perhaps half of all start-ups are funded by the owners’ credit cards.

Friends and family. Mum and dad, siblings and close friends have got many a new business venture off the ground. Usually, friends-and-family financing is informal – but the larger the sum, the more formal documentation makes sense.

Banks. Getting a traditional bank loan can be tough, especially at the beginning. Banks will often only consider making loans to businesses that have been in business for two years and need to see a tangible asset that can be used as collateral.

Angels and venture capital. Business angels and venture capital are professional early-stage investors. They have dollars to invest – but everyone knows it, so the competition is fierce and the standard is high.

To get money from professional investors, not only do you need a product that works, a persuasive and detailed pitch is also required. The up-side is, once you have them on-board, VC or angel investors will often be able to provide you with savvy business advice along with investment.

Customers and suppliers. Some customers may be willing to help fund your product development if you customise it for them. As for suppliers, you may be able to convince one to hold inventory for you, as long as you guarantee them you’ll pay for the material by a certain date.

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