Why Even A Simple Contract Can Save Your BaconWritten by Richard A. Chapo
Every business owner says it; "Do I really need a written contract?" The answer is "YES, YES and YES!" Using a written contract is like buying insurance for your business deals, but much better. What Is A Contract? Simply put, a contract is an enforceable agreement between two or more parties. The contract contains promises made by parties to one another, which is legally known as "consideration." These promises define relationship being undertaken as well as what happens if business relationship doesn't work out. If one party fails to act according to their promises, then they have "breached" contract and can be found liable for damages. The damages typically equate to what non-breaching party would have received if there had been no breach. Oral Contract v. Written Contract You go to a party with a friend and meet someone interested in your product or service. Eventually, you agree to provide him with 1,000 units of your product in exchange for a discounted price. You have created what is known as an "oral contract." He has promised to order products and you have promised to provide them at a discounted price. Is agreement worth anything? Unfortunately, answer is probably no. Why? In most states, oral contracts are not enforceable if they carry an inherent value in excess of $500. Since it is so difficult to establish terms of an oral contract in a dispute legal system tries to discourage them. In fact, this legal restriction is generally known as "Statute of Frauds."
| | How to Size an Emerging MarketWritten by Dave Lavinsky
In developing their business plans, companies of all sizes face challenge of determining size of their markets. To begin, companies must present size of their “relevant market” in their plans. The relevant market equals company's sales if it were to capture 100% of its specific niche of market. Conversely, stating that you were competing in $1 trillion U.S. healthcare market, for example, is a telltale sign of a poorly reasoned business plan, as there is no company that could reap $1 trillion in healthcare sales. Defining and communicating a credible relevant market size is far more powerful than presenting generic industry figures.The challenge that many firms face is their inability to size their relevant markets, particularly if they are competing in new or rapidly evolving markets. On one hand, fact that markets are new or evolving is reason why there may be a large opportunity to establish them and become market leader. Conversely, investors, shareholders and senior management are often skeptical to invest resources because, since markets do not yet exist, markets may be too small, or not really exist at all. In developing over 200 business plans for emerging ventures, venture capital firms, SMEs and Fortune 500 spinouts, Growthink has encountered challenge of sizing emerging markets numerous times and has developed a proprietary methodology to solve problem. To begin, it is critical to understand why traditional market sizing methodologies are ill-equipped to size emerging markets. To illustrate, if a research firm were to use traditional methods to size a mature market such as coffee market in United States, it would consider demographic trends (e.g., aging baby boomers), psychographic trends (e.g., increased health consciousness), past sales trends and consumption rates, price movements, competitor brand shares and new product development, and channels/retailers among others. However, conducting such an analysis for emerging markets presents a challenge as several of these factors (e.g., past sales, demographics of customer when there are no current customers) don’t exist because markets are presently untapped.
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