Cathy Harris is the Ethical Black Business Coach

A Complete Resource Guide to Start a Business in 2012

2011-12-15T18:31:00.000-08:00

Use this list of free -- or almost free -- tools to turn your business idea into a reality in the new year.

If you're planning to launch a business in 2012, you'll need every last penny you can get your hands on. That's why we put together a guide to free and low-cost resources to help you ease smoothly into the world of entrepreneurship.

It's still tough out there. Credit remains relatively tight, and consumers are cautious. So arm yourself with valuable information that will help you to get off to a winning start. We're here to help. Here are the essential steps you'll need to take to get your new business off the ground.

Figure out the right concept. To be successful and happy in your own business, you need to think seriously about how you like to spend your time and where you want to live. After you've come up with a business concept that suits you personally, the next step is to research the competition, your prospective customers and the cost of getting started.

•Here are trends we think are going to be hot next year: 10 Hot Startup Sectors for New Business Ideas in 2012
•Identify your passions and the things that make you happy with these five creativity exercises.
•Have you thought about a franchise? We've got a list of 100 low-cost franchises you can start for less than $50,000.
•To estimate your startup costs, work through our free and low-cost financial forms.

Create a business plan. Putting your goals on paper will help you focus your concept. A business plan typically includes details about the product or service, the competition and target consumers, plus a cash-flow projection. You'll also want to come up with a clever name for your startup.

•Explore our how-to guides on business plans, including the basics of writing your plan, what you must include and where to find help.
•As you consider names for your business, be sure to check the U.S. Patent and Trademark Office's website to make sure they aren't already taken.
•You'll need to determine the structure of your business for tax purposes. Study the SBA's list of possibilities and tax implications for each one.
•Find your local chapter of SCORE, a nonprofit association created to educate and mentor entrepreneurs. It may be able to refer you to local business owners to serve as advisers.
•If you plan to recruit employees, look for guidance in our hiring center, including how to start employees on the right track. You can also review the SBA's 10 steps to making your first hire.

Find Financing. The idea is hatched, the plan is set. But nothing happens without some green. Getting a loan could prove challenging because banks often are hesitant to lend to someone without a track record. And another traditional credit source—the home equity loan—has become harder to come by since the housing market cratered and home values plummeted. So it just might be time to hit up friends and family and draw on your personal savings.

•Follow our guide to raising money for helpful tips. In particular, check out the section about startup financing.
•Search for angel investors in the directory for the Angel Capital Association. We also recap the top 10 angel investor groups that fund startups, ranked by number of investors.
•Find venture capital investors through the directory of the National Venture Capital Association.
•Try the SBA's search tool for loans and grants to find out what you may be eligible for.
•If you're considering giving up a stake in your company for cash, use our Investment ROI calculator to see how you may fare in the end.
•This search tool from MultiFunding, a loan advisory firm, will tell you how friendly your bank is toward small businesses.

Develop and execute a marketing plan. In the Internet age, you can choose from an ever-expanding array of marketing tools, including traditional media, social networks, blogs, email and pay-per-click ads. They all require time and money, and the trick is to determine which offer the best return on investment for your particular business.

•What is a marketing plan and how should you put it together? Consider these five steps to get started.
•If you're advertising online, you will want to optimize your rank on Google and other search engines. Check out Google's beginners guide to search engine optimization.
•Become a member--for free--of the Foundation for the Advancement of Marketing Excellence in Entrepreneurs and take one of its online courses.
•Use Entrepreneur.com's calculators to determine your ROI for pay-per-click advertising and the efficiency of email marketing campaigns.

Start selling. When you hang out the "open" sign, be ready to meet your new customers with enthusiasm and the right sales pitch. Once you start attracting customers, you'll need to figure out how to keep them coming back with great service, new products and promotions.

•When approaching your first customers, you're likely to face rejection before you reach sales success. Consider these seven rules to help you cope.
•Are you going to accept credit and debit cards? If so, consult the National Federation of Independent Business for recommendations for finding a merchant card processor: You also can watch its free webinar, "Payment Processing 101 for Small Businesses."
•Now that you're making sales, you have to pay taxes, of course. Check out the IRS's Virtual Workshop to learn the basics.
•While on the road making sales calls, you can stay organized with these essential sales apps.

How to Create a Social Media Marketing Schedule

2011-11-11T14:27:00.000-08:00

It's easy to get into social media for the wrong reasons and to post too much or too little. Here's how to balance out your social media efforts.

BY John D. Leavy

Why have you joined the social media world?

Some social networkers are there for purely egotistical reasons. They don't want to engage in the conversation. They simply collect followers and friends in order to have bragging rights every time they collect another thousand. But connecting, following or befriending just anyone dilutes your influence and standing among those in your audience.

Others join because they feel they must. They spend a few days setting up their profiles and then abandon them when other tasks call.

The real motivation for any business social networker is connection: You should want to connect with like-minded people who can help your business and whose businesses you can assist. You want to add to the conversation, and not come across as desperate, spammy or a waste of time. If you develop a bad reputation in these communities, it will be hard to shake off.

But making such strong, real connections takes time, effort and thoughtfulness. If you never return to your profiles, you and your business will be forgotten (best case) or seen as unconnected, clueless or lazy (worst case). If you post too much, people might consider you a pest and stop following you.

Some social networkers are the worst of both worlds: They don’t post to their blog or text their friends or colleagues for weeks at a time. They don’t reply to messages sent to them, and the company site looks like it has gone out of business. Then, without any warning, they’re back . . . alive . . . and conversing. Was the organization’s social networking person out of the country? Did they suffer a grave illness? Nope. They were just distracted, disorganized, sidetracked or overworked. There’s no method to the company’s madness in being a social networking participant. Not committed. No strategy. Its influence will never be felt. The competition will soon fill the void.

Whether your company is a one-person business or a large organization, your commitment to social networking should be consistent, compelling and informative. The social networking community is a fragile, collaborative ecosystem. Make the commitment. People will follow a trail of dependable, exciting, instructive news. But once the trail goes cold, they’re gone and likely never to return.

Being a social media maniac isn’t the right persona either. You know who we’re talking about. These people can answer emails on their laptops with one hand while texting friends or colleagues on their iPhones with the other. They can’t be looked in the eye when talking because their heads are always looking down at some screen. This behavior may be seen as good technology gone bad.

The key is to strike a balance somewhere in the middle. Avoid becoming a social media ignorer or a social media maniac. Develop a social networking schedule that does not run your life but does keep you accountable. The goal should be consistency. Choose a schedule and stay the course for at least six months. As you find success, you can slowly grow your social networking persona.

The sample social networking agenda below can be used as a springboard for designing one that suits your schedule and the community channels you’ve joined.

Twice Daily in the Morning and Afternoon

•Check Twitter via a program like HootSuite. Respond when necessary. Follow the @replies that make sense.
•Check LinkedIn. Reply to emails and comments when appropriate.
•Scan Twitter followers for relevant conversations to join.
•Check your business's Facebook Page for questions and respond when necessary.
•Scan Google Alerts for brand and company mentions. Respond as appropriate.

Weekly or on Weekends

•Build Twitter Lists to better organize ongoing discussions and special interest groups. Set up saved searches in Hootsuite to find out if people are talking about you or your company.
•Scan LinkedIn questions from network connections and respond when appropriate.
•Catch up on LinkedIn discussions. Add to discussion when appropriate.
•Send LinkedIn invitations to connect with clients when beginning a new assignment.
•Ask for LinkedIn recommendation after successfully completing a project or engagement.
•Add new content to Facebook like videos or photos.
•Think of ways to repurpose this content and energy to reach a larger audience with the social networking gospel.
•Keep an eye open for new social networking venues, tools, and functionality that will make the social networking experience more enjoyable and easier to traverse.
•Identify new social networking influencers and build relationships where appropriate.

Through the Week

•Mondays: Schedule tweets through HootSuite to go out three times per day at regular intervals.
•Mondays, Wednesdays and Fridays: Join one hot trend conversation on Twitter, if appropriate, and add new content to Facebook (new items you are selling, photos, discounts and other promotions).
•Tuesdays and Thursdays: Respond to blog comments.
•Fridays: Check traffic at your blog or website.

Obviously, your daily social networking to-do list will be much different, given your available time and commitments. Just be sure to make the schedule livable. If it’s not working, change it. Keep making modifications until it works for you.

A Lesson in Social Media from Snoop Dogg

2011-10-11T10:52:00.001-07:00

In the age of social media, pop stars aren't just burning up the song charts.

Using social media, personalities the likes of Justin Bieber, 50 Cent, Puff Daddy and Kanye West have evolved beyond the music industry into some of the biggest brands online. Through a combination of social platforms including Twitter and Facebook, they've been able to create a conversation around their music and grow their fan base. They've also been able to promote their entrepreneurial ventures from fashion and films to sites and apps.

So how does the one and only rap icon Snoop Dogg handle the online game?

While Snoop has millions of followers on Twitter and Facebook, he doesn't consider them just 'fans.' Rather, he calls them his "family." "My recipe is just being me: I'm up front; I'm up close and personal. My fans don't have a wall between me and them," he says.

Snoop's social-media team also offered some insight on how they work to keep his online presence consistent and growing. "As with all of our clients -- Far East Movement, RZA and Raekwon -- we are focused on helping them enhance what they're already doing," says Seung Chung, president and co-founder of the Cashmere Agency, a Los Angeles-based marketing firm. "The strategy with Snoop is to give his audience both an insider look at his life and to continually pump out relevant video content."

Beyond the social media giants, which new platforms or tools are providing the most traction for your clients?

Viddy.com is one new platform that we feel will continue to explode. The app allows users to records brief video clips, apply various filters and then share with their friends on the app or through their social networks. We helped Snoop Dogg get started on the platform and then we aided in launching an actual Snoop Dogg-themed filter late last month. We know that video content is now firmly rooted in cyberspace, so we feel that helping users interact with brands using video is a real plus.

Chill.com is another platform that we are very interested in. Chill allows groups of people to gather online and watch content together and create a dialogue around it. Users login and create personal avatars and then comment on curated content. There is already a Snoop avatar that he uses when he is on the site. So far, fans love it.

What can entrepreneurs learn from how the music industry uses social media?

The entertainment business is about winning customers/fans over one at a time. Since the first customers you interact with will likely be your best fans, make them your focus. These early adopters will help spread the gospel of your product. It is the interactive power of social media that will not only get your name out to the masses, but also identify core customers where you can learn, reward and repeat.

And what's the best way to keep fans coming back?

You must stay consistent and cohesive. To be most effective, you have to have a real commitment to putting up content and messaging on a regular basis. You also must have real interactions with your core audience and customers. In a way, social media allows you to build a voice and a persona for your brand -- a personification that can work to build your brand's message.

How Young Entrepreneurs Can Bridge the Generation Gap

2011-08-05T16:25:00.001-07:00

Three strategies for overcoming age bias when starting a business.

By Matthew Toren,August 5, 2011

You could start a business, lasso funding and already have top-tier clients, but, because you're young, some people still won't take you seriously. What's worse, some may even try to take advantage of your youth.

Having co-owned a series of businesses with my brother since I was 7 years old -- we sold stunt airplanes at a festival with my grandfather -- I've seen my share of that kind of discrimination. For our first decent-sized venture out of school, we purchased a struggling pool hall in Vancouver, B.C., which we bootstrapped with money that we had earned with a few small, successful business ventures we launched during high school. Although we eventually turned the place into a thriving hot spot, we faced a number of challenges along the way. From the initial purchase transaction to setting up accounts with vendors, we learned quickly to be on guard from people who assumed we didn't have to be taken seriously or that they could "play" us because of our youth.

One situation that stands out happened when we were hiring a contractor to perform renovations for the bar. The first guy we contacted for a bid met with me at the pool hall. He had sized me up as young and naïve, before I even opened my mouth. After asking me to get my boss, he was clearly surprised -- and a little amused, if I'm not mistaken -- when I told him that it was me. The encounter went downhill from there.

Not only did he try to tell me we needed completely unnecessary (and overpriced) repairs, he had the nerve to say we had to pay in full for the work and materials up front. "That's just the way it's done," he said. Needless to say, he didn't get the job, but, to his credit, he prepared me for what I'd be up against time and again throughout my younger days as an entrepreneur. I quickly learned that I'd need to step up my game to be recognized and respected as a "real" business person.

So, how did I do it? Here are three strategies I used to bridge the generation gap, and you can too:

1. Know what you're talking about. If you're "winging it," people can tell, and, perhaps justifiably, they won't take you seriously. To elicit the opposite response, you should learn everything you can about your industry -- and your own product or service -- so you can speak clearly and authoritatively about your business. If you're also professional with everyone from vendors to employees to customers, you're bound to be seen in a better light. Once my brother and I learned everything we could about pool halls, we were able to communicate with beverage distributors, equipment manufacturers and food suppliers in their own language. That effort made all the difference. We took away their excuse to treat us differently than their other clients.

2. Admit that you don't know everything. Many young entrepreneurs try to overcompensate for inexperience by talking as though they've got it all figured out. The only thing worse than not knowing all you should know is not knowing, and then acting like you do. There's certainly nothing wrong with confidence, but admitting that you don't know something and asking for help shows integrity, which can't be underestimated. To help you figure things out, I encourage all young entrepreneurs to find a mentor to learn from and bounce ideas off of. This person can be a more seasoned entrepreneur than yourself or simply a business person who has expertise in your industry. It was our grandfather who recognized that my brother and I had a hunger for entrepreneurship. He helped guide us through some of the basic principles of entrepreneurship, showing us what it means to be an entrepreneur. I remember him telling us that an entrepreneur does anything and everything that needs to get done. That’s a lesson that has stuck with us to this day.

3. Clean up. People judge others by the way they present themselves -- how they look, how they dress and how they speak. It might be the latest style to wear eight piercings in your face and your pants around your thighs. But while this look might impress your friends, it's likely to repel adult vendors, customers, and potential mentors. Is that "fair"? We can debate that point all day long, but it won't change the fact that superficial judgments take place virtually every time we meet someone.

That’s not to say that individuality isn't important. So, let me clarify: I'm not talking about acting like someone you aren't. I'm simply saying that you already have built-in obstacles to overcome as a young entrepreneur, and you can amplify those challenges by dressing, talking and acting like your favorite rock star. My brother and I didn't dress in suits every day by any means, but we made sure we presented ourselves as professionals who took business seriously. As an entrepreneur, the key is to standout as unique because you've got it together, rather than standing out for less desirable reasons.

The 10 Best Things for Entrepreneurs to Outsource

2011-07-09T12:51:00.000-07:00

by Carol Tice

Take a look at your schedule this week, business owners. How much of your time is taken up with activities that don't create new products or services, drive more sales or find new customers?

If the answer is a lot, it's probably time to think about offloading some of your chores so you can concentrate on what really matters. For instance, are you cleaning counters or writing Web copy, when what you're really good at is inventing, selling or servicing customers?

Here is a list of the top 10 tasks creative solopreneurs should outsource, says Kevin Reeth, CEO and co-founder of the accounting-software firm Outright.

1.Taxes
2.Production
3.Technology Setup
4.Scheduling
5.Cleaning
6.Bookkeeping
7.Data entry
8.Shopping
9.Creative work outside your specialty
10.Anything you don't enjoy

Personally, I think that No. 10 there should come first on this list. Things you don't enjoy take forever to do, naturally. So what that amounts to for you is a major time-waster.

Shopping and errands, to me, rank a close second. Rather than drive to town, hand a bank deposit to a teller and pick up the dry cleaning, your precious time is likely better spent elsewhere. Recruit a teen -- unemployment is high among our nation's youth and you won't have any trouble finding someone great.

Cleaning I have made a longstanding vow not to do -- it's really a bad idea for me, as I am allergic to both dust and cleaners. Plus I hate it, so back to that No. 10 there.

Having once been a secretary, I'm not so sure scheduling is a good one to outsource. Seems like half the time there's a miscommunication once you hand that off, and we all have those handy online calendars now that track our appointments. Think I'm keeping that one.

Bookkeeping or accounting always seem like the one where you outsource it and the next thing you know, you realize somebody's been writing themselves company checks and they've flown off to the Bahamas. Or maybe it's that I'm sort of a numbers dork, having covered business finance for a long time, so I like it. Just did my half-year close and projections for annual income for 2011 this morning...my idea of a good time. If you outsource this one, I say make sure you keep a close eye on it.

Start a Teen Business This Summer? Why Not!

2011-06-03T13:17:00.000-07:00

For teen entrepreneurs, minimum wage summer jobs just won't do.

Every season has its own qualities that make it enjoyable. Fall can mean changing colors, warm sweaters and crisp evenings. Winter is a great time for playing in the snow, curling up by the fire and spending time with family at the holidays. Spring melts away the chill of winter and ushers in regrowth and warmer days. But summer? Just like There's Something About Mary--well, there's just something about summer.

Aside from the fact that most of you probably aren't in school during the summer, this time of year is just plain enjoyable. Who couldn't love a season when wearing shorts all day long and not seeing nightfall until 8 o'clock at night is the norm? At the same time, this time of year also means opportunity.at least if you're an entrepreneur. If you're reading this, you probably are.

While other teens are busy working minimum wage jobs--slinging french fries or collecting measly tips at a local café--you could be busy raking in big-time profits and enjoying yourself at the same time. Free of homework and tests, summer is a great time to start your business. Whether you just want a business to run while you're not in school or you want to start something more permanent, you have plenty of options when it comes to starting a business.

Great Summer Businesses to Start

Ahhhh.summertime. It's just around the corner. And already, you've found yourself daydreaming about how you'll spend those lazy days.at the beach, hanging with your friends and earning some serious cash.

Did that last item stop you in your tracks? It doesn't need to. There are plenty of cool ways for you to be your own boss this summer--and still have time for fun in the sun.

And you'll probably earn more money than you would have if you'd chosen to go the traditional job route. Surveys by YoungBiz staff show that most teens who run their own businesses earn at least 25 percent more than teens who accept typical part-time jobs.

Homegrown Money

Blair Sheridan Barber doesn't mind getting up a little early in the summer--when there's money involved. In fact, for the past few summers, this Phoenix, Maryland, teen has been up at the crack of dawn most days, tending his garden and selling homegrown tomatoes with a sign in his front yard advertising Blair's Tomatoes.

Like many 'treps, Barber ran his business only during the months of June, July and August. Not only was it a good time for growing tomatoes, but it was also a good time for him since it didn't interfere with school.

Barber has made a profit of about $2,400 during the summers he's run the business. Knowing the alternative--working for $6 an hour sacking groceries or slinging burgers and earning only $1,500 for the summer--Barber thinks his business is a pretty cool deal.

Seeing Green

Maybe getting up and heading out to the garden at the crack of dawn isn't at the top of your list of fun things to do. That's OK. There are plenty of summer businesses that can help you see green, even if you don't want to see the light of dawn.

You won't have to go far, either. Many of your customers are right in your own neighborhood. Try these trusty favorites on for size:

•Car washing: People who care about their cars need them washed at least once a week. Find out what a local car wash charges and set your prices a little lower. If you do a good job, you'll have business all summer.

•Child care: If you like kids, this is an excellent opportunity. Busy parents today are willing to pay well for a good, dependable sitter. Pass out fliers and let folks know you are available.

•Lawn care: Offer a complete line of services, including mowing, edging, weeding, trimming and flowerbed maintenance. Or specialize in one service. Make it your goal to build a list of regular weekly customers.

•Pet care: Today people spend lots of money on pets. Earn some of those bucks for yourself by offering to groom pets, give flea baths, clean fish tanks or pet-sit when your neighbors go on vacation.

Our Start-Up Kits will give you dozens of ideas for businesses to start.

"We encourage teens to use tried-and-true money-makers like car washing and babysitting as a starting point, then personalize their businesses to fit special needs in their communities," says YoungBiz CEO Steve Morris.

A little creativity and extra attention to detail goes a long way. Customers who need a car wash may also need their boat or RV cleaned, for example. Those who hire you to pet-sit may also need pet grooming or carpet cleaning (to remove pet stains). The kids you baby-sit may be prime prospects for craft lessons, baseball coaching or math tutoring.

Reaping the Rewards

Sure, a summer job is about earning some extra cash. But it's more than that--there's no better way to prepare yourself for running your own year-round business.

"The real value of a summer job is what you learn," Morris says. "A young person who is a business owner for the summer is going to learn 10 times more about customer service, business management and planning than the teen who simply mops tables every day."

YoungBiz.com

How To Create a Home Office on a Budget

2011-05-17T19:51:00.000-07:00

10 tips for creating a comfortable and professional work space.

For many companies, offices are a thing of the past. Colleagues communicate via instant messages and bosses use tools like Skype and Base Camp to delegate tasks. Physical work spaces have become less important and, as a result, more people are working from home.

Working from home can be wonderful; you have the option to wake up later, avoid morning commutes, stay in pajamas, and get tax write-offs on rent.

It can also be challenging. There are more distractions, such as television, family members, and household chores. Supervisors aren’t around to keep an eye on you, and you may feel less inclined to work to at maximum capacity.

A home office is the best of both worlds. It is the room in your house reserved for all things business. Shut the door to buckle down, but wander freely into the kitchen for snacks at will.

Here are 10 tips for creating an efficient home office on a budget.

1.Be creative with your space. Renovating an entire room can be costly. Instead of completely converting the space, consider using a screen to set off one corner for work. Otherwise, set up shop in an isolated, sparsely used spot, such as an attic or basement.

2.Don’t run to big, chain office stores for supplies. Consider cheaper options like Walmart and The Dollar Store for basic items such as papers, pens, filing cabinets, and bulletin boards.

3.Go green. Look into smaller computers, electrical outlets, and phone chargers that save energy. Don’t forget to turn off lights and unplug chargers when you are not using them, and recycle paper. You will help the environment while cutting costs.

4.Use what you already have. Look around your house for much-needed office items. Desks and lamps can often be found in attics or spare rooms while smaller items, such as staplers and notebooks, may be buried in closets from school days past.

5.Hit the thrift stores and flea markets. If you don’t already have furniture, visit flea markets and thrift shops to purchase items. Many antique pieces are affordable and can add a sophisticated feel to your home office.

6.Decorate the office yourself. The advantage of working at home is having the freedom to make your space your own. Be creative; hang pictures of family and friends, frame inspiring quotes, or hang your kids’ artwork.

7.Avoid landlines. Having a landline in addition to your cell phone can be costly and unnecessary. Use a cell phone for all correspondence. Instead of having a fax machine, buy a printer that has scanning capabilities.

8.Barter or trade with neighbors. Find items you need by posting ads on Craigslist or putting up bulletins in community organizations. If you don’t have extra items to trade, consider offering your professional services.

9.Shop the sales. Take your time setting up your office; you don’t need every item at once. Make a wish list of everything you need, prioritize the items, and only buy them when they are on sale.

10.Make yourself a D.I.Y. expert. Instead of hiring painters, electricians, and furniture assemblers, do everything yourself. It will be a fun way to learn new skills, and you will save a lot on these otherwise costly services.

The Best Exits Start Early

2011-04-09T10:50:00.001-07:00

Perhaps one of the least well understood parts of being an entrepreneur is how to incorporate an exit strategy. With all the demands start-ups face, exits often appear low on the "to do" list with the result that CEO's and their Boards sometimes miss the optimum window. That window often opens before rather than after a company hits its peak because after the peak, the company's market value may begin to slip. At least that's the way investors see it.

One pro in the exit arena is Jim Estill, who until 2009 was CEO of Canrock Ventures, a technology investment fund where he remains a partner. Out of 100 angel investments, Jim has been an active participant in about 20 exits. Jim's advice is to "put exit on the agenda" as soon as you join a board, or start a company. He believes it's important to start building relationships with potential buyers by courting them at trade shows, for example, and then staying in touch. "Identifying acquirers early," Jim advises, "provides input for strategic planning to align the company's activities or descriptive materials with potential buyers' markets." He also advises gathering materials to build a selling document periodically by adding anything "helpful to the sale, " such as financial statements, patent information, legal documents; he also includes links to articles on industry news or sales which provide potentially useful competitive data.

In several of the exits in which he has taken an active role, Jim positions himself as "Exit Chair or even Co-CEO." The Exit CEO does not operate the company, but spends a month or two conducting due diligence as a preamble to setting up and leading exit meetings with prospects. His rationale for the title is that "exits are very intense times and demand long hours outside of the operating demands on the CEO." Plus most CEO's have never sold a company, so it's useful to have an exit specialist drawn either from the Board or from company investors. It's also a good deal for a company, Jim says, "because it adds a lot of value and doesn't cost very much, since compensation is success-based. Besides, bankers love Exit CEO's who share the considerable workload of preparing documents for mergers or acquisitions."

In some cases, an exit strategy, especially for many women, is never to sell because they see their companies as lifestyle enterprises. But even in cases where the entrepreneur is not actively looking, buyers may come calling. In 2006 Laney Whitcanack, founded Big Tent, an online company that connects women with communities they care about, making it easy for groups to organize and communicate. The group choices are many, in such areas as arts, crafts and hobbies, health, sports, and parenting, often concentrated in an area, such as Moms of Multiples of Indy (Indianapolis). While Big Tent offers it services free to groups, it generates revenues through connecting marketers to the million women currently in Big Tent groups.

In a world divided between missionaries and mercenaries, Big Tent founder Laney Whitcanack counted herself among the missionaries because "I had a big vision and was driven by the idea which I wanted to see through." The relationship with Federated Media, a next generation media and publishing company that connects web conversations with brand markets, developed casually and "evolved over a year before the offer came." In 2010 about 11 members of her team moved with Laney to Federated Media where she is now Chief Community Officer, working on strategies for more consumer interaction as the "web grows increasingly group- based. "

The former CEO of Big Tent, Donna Novitsky, chose to leave when the exit came. "For me," she says, "it was like my baby going off to college. We had built something meaningful that needed a bigger stage, but Federated didn't need another CEO! I don't think you can't plan for exit but you can build the biggest, most successful company you can envision and eventually someone will make you an offer you can't refuse." One way to get a little closer to finding that partner, Donna suggests, "is to create partnerships with companies that are potential acquirers. For one thing it will help you understand your company from another point of view--ideally that of the customers."

Founder-Executive Publisher Joanna Track of Sweetspot.ca, a Toronto-based website that alerts savvy shoppers to the latest trends in clothes, restaurants, shops, never went looking either. But in 2006 she was "discovered" by Rogers Media, which owns 70 magazines and 54 radio stations, and was interested in a minority stake as well as foothold in digital media. Joanna compared the process to a dating relationship in which you get to know each other and have to look for the dirty laundry too. "I did a lot of research," Joanna notes, "to be sure I was getting a fair deal and that they would stick to their word because I had had two prior painful experiences." Of course the corporate sweep of Rogers added considerable exposure to Sweetspot, tripling subscribers in the year following their first investment.

By 2010, Rogers bought out Joanna's entire remaining stake and within months she was preparing to launch another start-up. "Day to day operations, especially within a corporate bureaucracy, are not my thing. I never wanted to work for a big company. My nature is to build and develop and move on." Her new venture, to be launched later this spring, is Dealuxe to provide designer fashions and accessories to Canadian shoppers online, removing the frustrations of purchasing from US and other international retailers.

Exit coach Basil Peters, author of Early Exits often says that exiting can be "the most fun part of being an entrepreneur." But ask Joanna Track what she likes best. While she talks with enormous pride about Sweetspot and its new future, she positively lights up as she describes her plans for Dealuxe, her next "creation."

For more on women entrepreneurs, visit www.wstartup.com

Follow Angela Haines on Twitter: www.twitter.com/AngelaMHaines

Venture Capitalists Aren't Investing In Black Entrepreneurs

2011-04-09T10:37:00.000-07:00

It's a simple formula: Investing in high-growth companies creates jobs while generating more wealth for investors. The formula has worked for America's private venture capital investment community for 65 years.

Unfortunately, no such active community exists in Black America.

This week, the National Venture Capital Association and the Angel Capital Association meets in Boston for the ACA Summit (April 4-6, 2011) and NVCA Annual Meeting (April 6-8). Together, these organizations are comprised of more than 500 groups of private equity investors who make up a large portion of the reason why the 21st century Innovation Economy races along at breakneck speed and offers solutions to the problems of high rates of unemployment and diminishing levels of wealth.

There are no such comparable gatherings in Black America.

Producing Jobs and Wealth

Between 1980 and 2005, all net job growth in America was produced by companies less than five years old. That doesn't happen without angel and venture capital investing in high-growth entrepreneurship.

During the same time period, venture capital experienced its largest boon since it was first introduced in the '50s.

In the '50s and '60s Blacks were legally and institutionally barred from many facets of the American Dream. In the 70s, Americans were still consumed by widespread, overt racial disparities, some of which seeped underground during the '80s and '90s, when private equity capital enjoyed its heyday and the establishment of a firm economic investment infrastructure and high-growth entrepreneurial culture

None of that job- and wealth-creating infrastructure was built in Black America ... or any broad regions comprised primarily of any racial minority demographic groups.

Infrastructure: High-Growth Entrepreneurial Ecosystem

The culture of high risk-high return capital investment had been established by the 80's, which led to rapid growth in the technology sectors. This laid the foundation and established conditions in which high growth startups could emerge. These startups have gone on to revolutionize, if not create industries, including biotechnology (Genentech), personal computers (Microsoft, Apple) and eventually internet-based commerce including social networking sites like Google, Facebook, etc...

This type of high risk and explosive entrepreneurial culture has yet to take root in Black America, but not due to lack of an entrepreneurial, innovative or creative spirit among Black Americans. Rather, it has been the lack of understanding of the relationship between (high) risk capital, explosive entrepreneurship and economic growth that has hampered Black America's participation in the Innovation Economy.

The private equity capital investment community laid the framework for the high-growth Innovation Economy today, which has replaced the former manufacturing economy, which replaced the agrarian economy.

Today, it is private equity capital investments from high net worth individuals and SEC-qualified investors (both known as angels), along with venture capital, that ignite the fire blazing into new technology frontiers. Fueling that fire is science, technology, engineering and math (STEM) education and those pursuing professions in the various STEM fields.

Since 1995, more than 50,000 companies have received a total amount greater than $439 billion in venture capital equity investments. That's not counting angel investments, which typically enter in the equation early and exit earlier than venture capital.

Much of this activity has somehow escaped Black America. However, it is also clear that very few of those companies are led by Black entrepreneurs. In 2010, Black tech entrepreneurs received just 1% of technology based equity investments.

America's Job Creators Meet in Boston

Likely few Blacks will find their way to the ACA and NVCA events in Boston this week, where many of the people responsible for the success of high-growth entrepreneurs (who have created jobs that reduced the unemployment rate and generated more wealth for investors) will come together to network, learn, share and improve their infrastructure.

Indeed, the private equity investment infrastructure is expanding. And President Obama has recognized the private equity investment community as the leading opportunity for job creation and wealth generation in America, as well as the solution for the U.S. becoming more competitive in the global marketplace.

So, where is Black America?

Missing: Black Capital Investments

While the recent unemployment numbers brought good news for the nation as a whole, with total unemployment dropping to a two-year low, it left a sour taste in the mouths of Black Americans, who must contend with the notion that the rate of unemployment today for Black Americans remains double the rate it is overall for the nation. That point hasn't changed much since Dr. King bemoaned being left out of the American Dream when he articulated his famous "Dream" speech in August of 1963.

Moreover, a May 2010 data report by the Institute on Assets and Social Policy reveals that wealth is being generated in America at an astounding rate, yet has managed to bypass Black America. This report shows a quadrupling of the wealth gap between Blacks and Whites over the 23 years the study was conducted (1984 - 2007).

It's not a secret how wealth is created in America on a mass scale. Other minority groups have managed to figure out the formula.

Asian Americans Invest in STEM / High-Growth Entrepreneurs

For example, Asian Americans, who own nearly one million fewer businesses than Black Americans, produced $2.5T in total gross receipts compared to $137 billion by 1.9 million Black-owned businesses.

Asian Americans have an investment infrastructure. They own hundreds of companies in Silicon Valley. They also produce STEM-educated professionals and high-growth entrepreneurs at a significant rate.

Black Americans are no strangers to entrepreneurship nor innovation. Our focus, however, has been on lifestyle entrepreneurship ventures primarily rather than high-growth equity backed enterprises that produce more fast-growing employer firms.

Government Solutions?

It is no secret the focus of economic activity in Black America has targeted conducting business with the government as a prime channel of activity. Thus, major investments of time, energy and money have been made in obtaining political cache in attempts to affect public policies that open doors of access and opportunities for a tiny percentage of Black-owned small businesses.

This focus on government solutions, which proved prudent during the 20th century battles over constitutional citizenship, must be transformed to fully engage in the 21st century quest for economic equity citizenship.

Today, Black America is missing out on a vital element required for job creation and wealth generation: an innovative infrastructure that focuses on high-growth entrepreneurship fueled by a pipeline of STEM ingenuity and risk capital. Such an infrastructure would be the foundation of capital investments necessary to fund an ecosystem of high-growth entrepreneurship.

Real Economic Solutions

If Black America is to change the current paradigm of a widening wealth gap compared to White America and a rate of unemployment consistently much higher than the national average, it must recognize an immediate need to establish its own private equity investment community and establish strong ties with the current infrastructure that has decades of experience.

Perhaps a step in the right direction would be to show such a significant presence at the equity capital investor gatherings in Boston this week to a degree that simply the sheer attendance numbers alone would raise eyebrows and interest. Or perhaps there should be a convening of the minds within our community to address this important issue?

What's preventing us from establishing such a valuable infrastructure and ecosystem?

The numbers speak for themselves. While the rest of America has figured out how to create both jobs and wealth, Blacks have consistently lagged behind in both. The missing element in Black America is a viable, growing equity capital investment community that can fuel high growth entrepreneurship and Black participation in the Innovation Economy.

Follow Mike Green on Twitter: www.twitter.com/amikegreen2

Top Ten Business Plan Killers

2010-12-26T16:58:00.000-08:00

July 30th, 2010 As a lender, I wish we could approve every loan application that hit our table; unfortunately it’s not possible. We deal with mostly very small businesses seeking small loans, usually less than $250,000. Lending to inexperienced, new business owners is one of the riskiest arenas for a lending agency. Still, we manage to keep our losses to a minimum. The amazing thing about these business plan killers is that they rarely travel alone; they almost always appear in clusters. Here are the top ten business plan killers and what you can do to avoid or fix them:

1. Dreadful Personal Financial Profile

What is the likelihood that one who demonstrates abysmal financial management in his or her personal affairs will miraculously become an effective manager of finances for a business? It’s highly unlikely. It’s a lot more likely that poor practices in one’s personal situation are simply carried into the business. The main difference is that in business a much broader range of people and organizations usually get burned as a result of mismanaged business finances. Red flags pop up in business plans in the form of high credit card financing, garages full of toys (trucks, Seadoos, Skidoos, bikes, boats) 90% financed, poor credit history and no savings.

Strategy One: Tidy up your personal finances before applying for a business loan. Pay down loans, clean up any bad debts, collect some business-related equipment and save some money.

2. Insufficient or Non-Existent Owner Equity or Security

Business is always risky, but new business is infinitely more so. Lenders will want to see you personally “invested” in your business. The part of the business you personally own is called your equity. Another way to describe equity is the amount of cash or equipment you put into the business. A lender wants to see that you are invested to the point that you will not be inclined to walk away when the going gets tough. How much owner equity is enough? The amount varies from lender to lender, but less than 10% is inviting scrutiny while 20% or more will make your proposition more enticing. Any savvy lender will insist on seeing you invested to the degree that any financial complications result in you, not them, laying awake nights stressing over how to pay the bills. Security is the surly sister of equity. Your loan application will be stronger if you bring some sort of asset to the table as security. Lenders will be more attracted to assets with a clear resale value of more than the loan. Inventory is usually less desirable because it tends to grow legs and disappear when the going gets tough.

Strategy Two: Create some equity to bring to the table. Save money, sell some toys, borrow some love money, or get a second job for a while.

3. Inadequate Market Research

Inadequate market research manifests itself in various cruel ways. It can surface in the business plan as an unconvincing business case. It can reveal itself in the form of too much secondary information (from other sources) and not enough primary market research (that which you gather yourself). Lack of market research can lead to a business plan that is too general – not specific enough. Perhaps one of the most common and perplexing indicators is that the entrepreneur has not talked to or listened to the potential customers. A lender will want to see that you have “turned over all the rocks” in search of knowledge about your business. After reading your business plan, if I feel that I know more about your business than you do, I will not be inspired to approve your loan.

Strategy Three: Prove your business case to yourself and to your reader. Persist in your market research efforts until you become “the expert” for your business. You will feel more confident and have an easier time convincing your readers that you know what you are doing.

4. Transmitting and Not Receiving

It’s your responsibility to find that elusive balance between being bullheaded enough to bulldoze your way to success, yet sensitive enough to receive critical information. Your ability to listen to your clients is the key to your success in business. Falling in love with your business idea at the high cost of closing your ears to input will not help you acquire a loan. Business analysts, bankers and customers vote with their money. They have no need to yell at you to get their points across. It’s important to listen attentively when they speak at normal volumes.

Strategy Four: Listen and learn. Listen to those who agree with you AND to those who do not. Listen to all who shoot holes in your business idea, they might just be pointing you toward success. When you think you’ve heard it all, listen harder!

5. Dishonesty, Discrepancies, Inconsistencies

One sure way to cheat yourself out of a loan is to give the appearance, intentionally or accidentally, that you are anything less than above board. Any form of dishonesty in your business plan, or during your dealings with the targeted lending agency staff, is a sure way to have your application rejected. Blatant untruths are the more obvious offence, but it is entirely possible to communication underhandedness in other ways. For example, missing or inaccurate information invites questions and sends the wrong message. Conveniently leaving out some of the less obvious, non-flattering financial information (like unpaid long overdue taxes) is a sure way to a “NO”.

Strategy Five: Be honest, thorough, and accurate.

6. Not Answering the Key Business Questions Clearly

Your business plan is a tool for communicating with others. What is your product or service? Who are your customers? How will you market and distribute your product or service to your customers? Will you make money? Will your business be able to repay the loan? Does your plan communicate these things clearly?

Strategy Six: Answer the basic business questions. Who, what, where, why, when, how. There are many business planning systems (although none surpass the Roadmap!) that will provide a framework to keep you on track. A proper business planning system will provide you with a framework in which to place the assortment of information you will gather. Choose a system and use it.

7. Shoddy Presentation

You can do the best market research on the planet, but if you can’t communicate it clearly and package your business plan professionally, your target audience might not even read it.

Strategy Seven: Provide a professional presentation. Ask a friend or pay someone to proof, get someone to keypunch the plan if you need to, but do a professional job. Demonstrate that you care and you will increase your odds with the lender.

8. Pie-In-The-Sky

Inflated, over optimistic sales forecasts or cash flow projections will derail your loan application every time. A future too bright will blind the lenders and scare them off the loan.

Strategy Eight: Be realistic in your expectations, even if you believe you will be floating on a sea of cash within months. No matter how lofty your financial aspirations might be, know that businesses are usually not profitable for the first while. Estimate your sales conservatively and your expenses a bit higher than you think they will be. Keep that cash flow realistic and be sure to include ALL expenses.

9. Fish-Out-Of-Water Syndrome

This is what happens when someone tries to get into a business they know nothing about. It becomes evident when the owner background reveals that the applicant has no prior experience in the area of expertise that is the main focus of the business. For example, a heavy-duty mechanic might seek to start a small restaurant. Not an impossible leap, just risky.

Strategy Nine: Know your business. It is so important to have a base of knowledge about your business and experience where possible. Many successful businesses arise from disgruntled or displaced employees who feel they can do as good as or better than their employer. Enhance this background experience with solid market research, the Internet, courses, books, tapes, and trade publications. Knowing your business will increase your confidence and enhance your loan options.

10. Too Little Too Late

This point pertains to existing businesses in search of financial assistance after things have already gone sideways. Too often we see the application when the accounts receivable is out of control or major suppliers have already been hung out too long for scary large sums of money. Other aspects of this condition are collectors hot on the trail and long overdue taxes. It’s really difficult to get excited about loaning money to pay for bills that should already have been paid.

Strategy Ten: Be decisive when your business gets into rough financial waters. Make the tough decisions early and then act on them quickly. If your recovery plan involves a loan, you are far stronger coming to the table early with a well thought out plan, than later with a plea for assistance to pay back taxes.

Article Source

About the Author

Dan Boudreau makes business planning achievable, fast and fun. Want to learn more about how to do your own business plan? Subscribe to the RiskBuster Newsletter and instantly download a free copy of Dan’s popular fast-track business plan template.

10 Things Every Small Business Website Needs

2010-11-07T09:24:00.000-08:00

The Web is full of horrendous sites, and we're not just talking about bad design. There are many other elements besides how your website looks that go into making it customer-friendly -- not to mention something that inspires them to actually do business with you.

From thorough contact information to customer testimonials, here are the essentials that every small business website should have for it to effectively help you do business.

1. A clear description of who you are

Someone who stumbles upon your website shouldn't have to do investigative work to figure out what, exactly, it is that you do. That means clearly stating your name and summing up your products or services right on the homepage, says John Zhuang, of Web-design and SEO-optimization firm Winning Interactive.

"Tell people this is the right website that they have been searching for," he says. "[A clear description] will attract the visitor's attention immediately within 2-3 seconds, and encourage them to stay on your website longer."

2. A simple, sensible Web address

Don't make things complicated.

"Your domain name is like your brand. It should be easy for a user to type it into a Web browser or an e-mail address," says Ron Wright, the founder of business Web design and online marketing firm Accentix.

He adds: "I always recommend the .com domain as users are conditioned to type that extension when they enter a Web address. For non-profits or organizations, I usually recommend using a .org domain for branding purposes, but also recommend having a .com version of the domain in case a user accidentally types the .com address."

Wright also suggests avoiding dashes (which can cause SEO headaches) and numbers (which can cause confusion for customers).

3. An easily-navigated site map

Clear links to the most important pages, and a site map, are crucial for guiding visitors to the information they're looking for.

"Be sure your navigation is clearly laid out. I always recommend using dropdowns in the navigation menu so the visitor can see the content under every heading from virtually any page. You want to make it very easy for your visitors to find what they are looking for, or what you want them to know," Wright suggests.

4. Easy-to-find contact information

You wouldn't want to lose a customer to a competitor just because you made it difficult for them to get in touch with you.

"Not every online visitor has the patience to click through every page on your website to find the contact information," says Zhuang.

"The best place for the contact information is the top left or top right corner of the home page," he recommends. "It is also a good practice to include contact information in every page of the website in the footer or side bar or even in top right corner, which helps the visitors to find it more easily."

You should also be sure to include several ways for them to contact you -- phone, e-mail, and a standard contact form, are all good options. Forbes also suggests including your address, and even a link to your location in Google maps.

"One of the biggest mistakes business owners make is to force only one way to reach them," says Wright. "The point is to make it very easy for users to communicate with you on their terms."

5. Customer testimonials

Honest words from others help make your products or services more tangible to customers who are visiting you online.

"They help your potential customers to build trust in you, especially if you are new," Zhuang says. "[And they] help shoppers to confirm whether the product [or] services meet their needs."

"People love to hear stories from real people," he adds. "They help people [find out] other things you haven't said [on] your website."

6. An obvious call to action

"Tell the online visitors literally what you want them to do with clear tones of commend," says Zhuang. "For instance, you may want them to call you now for free quote, or sign up to your exclusively online coupons, or add products to the online shopping cart, etc."

And, he adds, call attention to your suggestion -- by using special buttons or highlighting the text, for example.

7. Know the basics of SEO

Your website won't do you as much good if no one can stumble upon it. Become familiar with the SEO basics to make it more accessible by search engine.

"You don't need to employ mysterious, ninja, black hat SEO types to rank well on the search engines. Simply make sure your website is coded correctly," Wright says.

That means using the correct keywords throughout your text, putting in plenty of links, naming your page titles and URLs correctly, and employing the magic of images and videos.

8. Fresh, quality content

For many businesses, your website is your first impression on a customer. You want to give them what they're looking for, and perhaps even give them a reason to keep coming back.

Wright says, "The user is looking for something. Make sure you give it to them.... [and be] sure your content is original, well written and valuable."

Fresh content is a goldmine for SEO, as well. You can keep your content from getting stale (and give your company some personality, too) by incorporating a regularly-updated blog or connecting in your social media feeds.

9. A secure hosting platform

Having your online information hijacked is a nightmare, and, should it happen to your business, it could cost you customers.

"It is imperative that you have a secure, trustworthy hosting company to keep the bad guys out and your content up and running," says Wright. "It is also very important to keep your content management system updated in order to stay one step ahead of the hackers."

10. A design and style that's friendly to online readers

As Forbes puts it, "Web surfers have the attention spans of drunken gnats."

Zhuang describes it in more detail: "Online visitors often scan through a Web page to sample the content first when they open a new Web page. If they feel like they are on the right page, they will slow down to read the full story. To enhance user's experience on your small business website, you need to organize the content for scanning."

He recommends three style points for online writing to keep in mind:

•Break things down into short paragraphs, with headers if necessary
•Use bullet points
•Highlight important words or phrases.
Wright adds, "In the end, simplicity and basic colors are the best bet. Again, the content is the focus, not dancing clowns at the top of the page."

Secrets of Crafting a Top-Notch Online Video

2010-09-08T12:01:00.001-07:00

Heed these tips and you'll boost SEO and connect with more customers.

By Starr Hall | September 2, 2010

Online video is now a necessary marketing tool for reaching--and, more importantly, connecting with--followers, fans and customers. By adding a smile and a friendly voice, you can build rapport with your customers quickly and help them relate to your business on a more personal level.

There are several advantages to video marketing. One is its ability to reach all three types of learning styles: visual people who learn by reading or seeing, auditory learners, and kinesthetic learners (who learn best from hands-on methods, which can now be covered in a video via demonstration of a product or service).

Another advantage of video marketing is improved SEO. With video marketing, browsers and search engines spend less time reading through endless web pages of text; instead, they pick up on keywords tagged on videos.

Find Your Perfect Business Automotive Business Svcs. Children's Products/Svcs. Cleaning & Maintenance Computer & Tech Education & Training Food & Restaurants Health & Personal Care Home Products/Svcs. Professional Services Retail Businesses Specialty Prods. Sports/Recreation Travel & Lodging Here are nine tips for creating better online videos.

1.You Don't Need Expensive Equipment: Consider using a Flip Video Camcorder. It's a small camcorder that can shoot a few hours of high-definition video, and it costs a few hundred dollars at the most. It's easy to use, plugs directly into any USB port and even includes editing software to get you up and running quickly.

2.Don't Worry About Being Perfect: Chances are you won't like the first take of any video you create. It's OK to record a few extra takes, but don't let multiple takes slow you down to the point of taking weeks or months to finish your video. Find the key points, rehearse and then speak to your customers from your heart. Your confidence will grow as you get more comfortable in front of the camera.

3.Keep it Short: The less people know about you, the shorter their attention span will be when watching your video. Your prospective customers want to know who you are, what you do and, most importantly, what's in it for them. So give them the message in less than three minutes. Often, 60 to 90 seconds can be enough.

4.Include a Call to Action: So many websites have great videos but no call to action. If you want clients to call you or click on a link, then ask them to do so. You can also ask them to sign up for your e-mail list or visit your blog. If your video is focused on what's in it for them, you'll have their undivided attention. So take maximum advantage of this and prompt them to take the action you want them to take.

5.Make Your Video Visible: It must be on the first page of your website. Don't hide your video on some obscure or deep page an online customer will never find. Including a short video on your home page can keep visitors on your site longer. Make sure you keep your video "above the fold" on your site, meaning visitors shouldn't have to scroll down to view it.

6.Determine Whether You Want Your Video to Begin Playing Automatically: When your customers (or prospective customers) visit your website, do you want your video to play automatically? Your decision comes down to the behavior of your customers. If you're selling a "one off" and customers will only visit your website once to purchase, then a video that plays automatically might work just fine. However, if your customers visit your website multiple times, you may want to consider having your video play on demand, as an automatically playing video could irritate them and make them leave.

7.Include Your URL at the End of Your Video: It's a great way to get additional exposure online, especially if you are posting it to YouTube or Viddler, as there are millions of viewers on these sites. Make sure your URL is in a larger font, and place it at the bottom middle for better viewing and exposure.

8.Upload to Multiple Sites at Once: Uploading your video to all of the video sites available can be time-consuming. There are paid tools and services you can use to upload your video to multiple video sites simultaneously. There are also free sites, such as TubeMogul. After uploading your video, you can log in to your TubeMogul account and track the number of views, clicks and comments on your video. You can also track 10 other videos within the TubeMogul system, so if you're in a competitive marketplace where video is used a lot, this is a great way to see what other businesses are doing.

9.Name Your Video Correctly: Give a relevant name to your video, and your video will show up better in search engine results. Your title should be something that matches what your customers are looking for. For example, if I'm selling widgets, then "Mybestwidget.mov" would be a better title choice than "9077709845wdgt.mov." Use keywords in your title, and search engines will find it much easier to index your video file.

It's important for you to integrate video into your online marketing efforts. Even if you start with a basic video tip on how to best use your product or service, just get it recorded and get it up. Although customers like humor and creativity, messages that help them save time or money--or make their life easier--are what they're really looking for.

Starr Hall is the author of Get Connected: The Social Networking Toolkit for Business , available from Entrepreneur Press. Starr specializes in PR, co-branding, licensing, online branding and building businesses worldwide using the power of social networking.

Stop Sabotaging Your Success

2010-08-05T06:29:00.000-07:00

Get past the self-doubt and stop blaming others if you want to reach your goals.

By: Lisa Orrell | 08/02/2010

Take a moment to consider this powerful quote by Marcus Aurelius Antonius: "The happiness of your life depends on the quality of your thoughts." Not only do I find it to be true, I believe it is the foundational driver of whether you're successful or not.

As a business coach, I see many clients suffering from self-sabotage, yet they are oblivious to it. It's sneaky and comes in many forms, but for the purposes of this article we're going to focus on two of the most common ways people get in the way of their success and happiness. They are:

1.Not taking responsibility for their actions

2.Choosing to be in the "victim" role--both personally and professionally.

Many people are more comfortable in the "victim role" because they can blame everyone else for whatever is not working in their lives or business. And although placing blame on others for your own issues can be quite seductive (it gets you off the hook as far as doing any introspection), it can be more exhausting than simply being honest with yourself. Most important, the victim mentality can make it virtually impossible to realize significant progress . . . yet totally possible to experience consistent breakdowns in making progress within any aspect of your life.

And, no, I'm not referring to major emotional breakdowns requiring medication or hospitalization. I mean those consistent obstacles that get thrown at us all the time in business and life, and that cause us moments of overwhelming paralysis--typically due to self-doubt.

To effectively break through a personal, professional or emotional obstacle, the driving force behind it is taking responsibility for your actions and trusting yourself. Let's look at both of those drivers more closely:

Responsibility: You gain significant empowerment and freedom when you choose to shift your perspective from assigning blame to accepting responsibility. And although you may feel in control when assigning blame to others for challenges you face, the reality is that you are totally out of control. Why? You have given your power to someone else. And even though it may feel like a "relief" initially, it can manifest into more stress later.

You simply cannot resolve personal issues, and have breakthroughs, when the power is not your own. At the point of assigning blame and releasing all responsibility for challenges in your life, not only have you given all the power to others, your "destiny" becomes based on their next move and decisions--not yours.

Being able to shift your perspective to being someone who takes responsibility starts with self-trust.

Self-Trust: Self-trust is the foundation of our being. Lack of self-trust leads to self-doubt. Doubting yourself is a powerful force that can set you up for failure in anything you attempt. Why? Because you already assume that the decisions you make and actions you take probably aren't the right ones, and that they won't provide you with the results you desire.

Think of this in terms of two real-world scenarios:

•Scenario One: You want to make a career change because you're bored or very unhappy with your current occupation or business. If you lack self-trust, making a change could be clouded by self-defeating "doubt" questions like: Am I smart enough to do this? Can I afford to do this? What will my friends, family and peers think? What if they judge me for making this career change?

With those types of questions running through your brain, you can actually talk yourself out of making the career change before you even try. The result is being stuck in a career or running a business you no longer enjoy and wishing you were doing something else--yet never trying to make the change happen.

•Scenario Two: You don't have enough business and you're struggling. But have you really done the work to get more business, or do find yourself blaming the economy, the competition or other outside forces?
I hear clients complain often about lack of business. And when they tell me what their business development strategies have been prior to hiring me, I don't doubt they've been struggling. Posting a couple of blog posts, sending a few tweets here and there, creating a website, and occasionally going to networking events isn't enough. Yet they truly believe the "problem" is all about the economy or other circumstances, and all they want to do is vent about it vs. take action.

However, after we have some honest dialogue together, a perspective shift occurs. They soon realize they need to take responsibility for their lives and business, and they need to stop blaming others for their lack of success and happiness. They have to come up with an overall business development strategy. It can't be the occasional blog post or the odd networking event. Business development has to be planned and managed.

If you can relate to any of this, I suggest you take some time to ask yourself:

1.Are there situations in my life where I choose to assign blame vs. take responsibility?

2.How does assigning blame serve me when I'm trying to break through an obstacle?

3.How can I build self-trust to foster consistent, positive breakthroughs?

4.When I feel paralyzed by self-doubt, what can I do to create a breakthrough vs. a breakdown in making progress?

Your personal success and business success depend on you. You can have the best brand platform in the world, a terrific marketing strategy, have written an amazing book, or offer an amazing product or services, but none of these will get you where you want to go if the demons in your head constantly try to sell you garbage . . . and you willingly buy it.

Lisa Orrell, The Promote U Guru, is a branding and marketing expert, and a certified business coach. Orrell is also an author and professional speaker. She's been interviewed by countless media, including The New York Times and Wall Street Journal, and has appeared on ABC, MSNBC and NPR.

Six Tips for Women Entrepreneurs

2010-05-15T10:00:00.001-07:00

May 5th, 2010 | Peri H. Pakroo J.D.

More women than ever before are grabbing the reins and starting their own businesses. The number of women-owned small businesses is growing approximately twice as quickly as the national average for all start-ups.

For entrepreneurs of all stripes — women and men included — the pre-start-up phase is typically characterized by a flood of questions about what exactly it takes to make it in business. Are there different answers to these questions for men versus women? Not really. Every business needs to be based on a solid idea, aimed at a profitable market or niche, have solid systems in place, and market itself effectively. And of course, the legal and bureaucratic rules facing women entrepreneurs are exactly the same as those facing men.

But as many women business owners will tell you, the road to success for women often involves its own unique set of curves. Surveys of women business owners show that women’s business concerns tend to skew towards issues such as finding work-life balance, start-up (or expansion) financing, and marketing. The following tips address some of the issues and concerns that are most commonly faced by women entrepreneurs.

1. Start a business that works for you and fits with your personal life. There are no rules as to what a “real” business looks like. For some businesspeople, success might mean an international operation with hundreds of employees and annual revenues in the tens of millions. For others, a small consulting firm or artisan business that pays a healthy salary and allows generous personal freedom might be considered the pinnacle of success. The key is to take the time early in the planning process to consider this question and decide for yourself what your ideal vision is for your business and your personal life.

2. Don’t sweat the bureaucracy. A lot of would-be entrepreneurs, women and men alike, find themselves stuck on the verge of taking the leap into starting a business, but confused about how to tackle the legal rules of getting started. This hang-up is always grounded more in fear than reality; the truth is that clearing the bureaucratic hurdles isn’t usually big deal.

You can usually start a sole proprietorship (the legal term for a one-owner business) or a partnership (a business with more than one owner) by registering with just one government office. And for business owners who want protection from personal liability for business debts — often referred to by the legal jargon “limited liability” — the simplest corporations or limited liability companies (LLCs) require only a couple more registration tasks to complete.

Of course, there’s a lot more to launching a successful small business than dealing with bureaucratic requirements. For starters, you’ll need to have a sound business idea, and you’ll need to be able to develop good management skills to guide it to success. This is where you should put your mental energy and good ideas; don’t waste precious brain cells worrying about the legal hurdles.

3. For businesses with moderate to significant overhead, it is crucial to start the business with adequate funds. Starting a business without enough money to ride out the early lean days (described as “undercapitalization”) is the most common reason that businesses fail. Undercapitalization is less of an issue with small service-based businesses that don’t have many fixed expenses. But businesses with overhead such as rent, salaries for employees, utility bills, inventory, equipment, insurance, or other fixed costs absolutely need to plan carefully and pull together enough funding to support the fledgling business as it works up to speed.

Also, though it’s important to start your business with enough capital, that doesn’t mean that every business needs piles and piles of money to get off the ground. Plenty of mega-successful businesses were started on a shoestring: Apple Computer started in a garage; Hewlett-Packard started in the dining room of the Packard home; the list goes on and on. Generally speaking, a business that can find creative, thrifty ways to provide its product or service — especially in its early days — will typically find more success than a business that adopts a “spend more money” approach.

4. If you need start-up or expansion financing, consider sources other than traditional banks. One of the concerns most commonly cited by women entrepreneurs is difficulty finding start-up financing. And it’s little wonder: traditional banks typically don’t lend money to new ventures that don’t have a track record of success or creditworthiness. Instead of focusing on conventional big-chain banks, start-ups should instead look for local community banks, credit unions, and other local financial institutions that have a vested interest in the health of the local economy. Often, their application processes and criteria are softer than the big banks.

Two resources that women should definitely look into are Women’s Business Centers and community development financial institutions. Women’s Business Centers (WBCs) exist nationwide and focus on supporting women entrepreneurs through business training and counseling, and access to credit and capital, among other services. Community development financial institutions (CDFIs), which are certified by the U.S. Treasury, are a fast-growing segment of the business financing market specializing in loans to underserved communities and populations. CDFIs usually — but not always — have a specific focus such as improving economic opportunities in blighted communities or supporting women- or minority-owned entrepreneurs. Both WBCs and CDFIs can be especially helpful for start-ups, businesses with poor credit, and businesses seeking relatively small loans, generally up to $100,000. Even better, they often offer guidance and expertise to your business in addition to financing, which will help your chances of success.

As an example, the fabulous nonprofit where I teach entrepreneurship classes — WESST in Albuquerque — is both a WBC and a CDFI. It offers a wide range of high-quality classes on business planning, financial management, and marketing, plus offers loans and one-on-one counseling. With an organization like WESST on its side, a business gets a major boost in its chances of success.

5. Network like a social butterfly — it is one of the best ways to market your business and create profitable opportunities. Networking involves actively cultivating relationships with people, businesses, community leaders, and others who present possible opportunities for your business — not just as potential customers, but also as vendors, partners, investors, or other roles. Remember, networking is not the same thing as sales! Rather than the simple goal of making a sale, a huge goal of networking is to inform other businesspeople and influential people about what you do in hopes that they will recommend your business to their circle of contacts.

I look at networking more as a self-employed lifestyle than a specific activity. You are “networking” every time you attend an event held by a local trade association, get to know other business owners and community leaders, send an email introducing two of your contacts to each other, write a letter to the editor, participate in an online discussion group, or have lunch with another local business owner.

6. Forge relationships with contacts before you need help from them. For example, if you need the support of a local politician on an upcoming city zoning decision, you’ll have a better chance of getting the politician’s vote if he or she already knows you and thinks favorably of your business than if you place a call to his or her office out of the blue.

© 2010 Peri H. Pakroo J.D., author of The Women’s Small Business Start-Up Kit: A Step-by-Step Legal Guide

About the Author: Peri Pakroo is a business and communications consultant, specializing in legal and start-up issues for businesses and nonprofits. She has started, participated in, and consulted with start-up businesses for 20 years. She is the author of The Women’s Small Business Start-Up Kit (Nolo) and top-selling business books. Her blog is at www.peripakroo.com.

10 Ways to Waste Your Time in a Networking Group

2010-03-11T21:31:00.000-08:00

Referral business from networking groups can pay off handsomely, so make the most of every meeting.

Word-of-mouth marketing is a sure-fire way to generate new business. A single referral can start a chain reaction of new business as positive word spreads. It's no wonder networking groups pay off handsomely in referral business and that membership in a good networking group can be worth a considerable amount of money; especially if you calculate the time you spend each month and the value of that time.

So make your time and efforts worthwhile. Don't squander your opportunity by doing the wrong things in those meetings.

Success in a networking group comes when the rest of the group members trust you enough to open up their best referrals to you. Unless they've seen your work, you have to earn that trust by demonstrating your professionalism to them. Since founding BNI almost 25 years ago, I've seen how people truly succeeded in networks and I've seen how people totally waste their time in them.

Here are 10 mistakes to avoid if you don't want to waste your time in a networking group:

1.Go ahead, air your grievances among your fellow networkers and guests; after all, they really want to hear about your complaints.

2.Wing it in your regular presentations to fellow members--don't worry, you have a mulligan.

3.Use one-on-one meetings to talk about your networking groups' issues instead of learning more about each other.

4.Focus your efforts primarily on selling your services to members of the group.

5.Don't rush to follow up on a referral when someone gives you one. Hey, they know where to find you if they really need you.

6.While other people are doing their introductions, that's the perfect time to think about what referrals you can give that week.

7.Never invite your own guests, just focus on those who show up.

8.Don't worry if you get to the meeting late. No one will notice.

9.Absenteeism, it's no big deal. You can just call in your referrals ... right?

10.Take that phone call and check your messages during a meeting. No, no, it doesn't bother anyone; actually it's a sign of real professionalism that everyone admires.

Imagine how you'd respond if someone in your networking group continually exhibited the behaviors above. Would you be enthusiastic to pass them referrals? Of course not! You'd be hesitant, rightfully, because they've convinced you that they are unprofessional and irresponsible. Of course you'd withhold your valued connections.

We all need to beware of these common pitfalls and take great care to avoid them. They're great reminders that doing business through word-of-mouth marketing requires a special ingredient that only you can supply--commitment.

Commit to the process from the beginning. You have to be an active, responsible, professional, accountable participant and show your fellow networkers the respect, attention, and support that you want them to give you.

You see, the key concept in referral marketing is relationships, and referral relationships don't just spring up full grown--they must be nurtured. Avoid the 10 mistakes on this list because they're detrimental to growing your referral relationships; they will cause the time you spend in your networking meetings to be nothing more than a waste.

Focus on growing your referral relationships by acting in ways that are exactly opposite of what's described above and concentrate on building relationships based on mutual trust and shared benefits. You'll get a lot more out of your group and so will your fellow members.

Remember, if you start putting together your network when the need arises, you're too late. The better way is to begin developing relationships now with the people whose help you will need in the future. Your networking group meetings offer the perfect opportunity and the perfect place to do this. Make the most of this opportunity because there's no room for wasted time. And if you see chronic offenders at your next meeting, print out this list and pass it along.

Called the "father of modern networking" by CNN, Dr. Ivan Misner is a New York Times bestselling author. He is the Founder and Chairman of BNI, the world's largest business networking organization. His latest No. 1 bestseller, The 29% Solution can be viewed at www.29PercentSolution.com. Dr. Misner is also the Sr. Partner for the Referral Institute, an international referral training company.

What to Do When Your Partnership Sours

2010-03-11T21:22:00.001-08:00

Even in the best of circumstances, business partnerships can be fraught with conflict. To handle the twists and turns, smart co-owners put a well-drafted partnership agreement in place to act as a road map. Without one, lack of guidance in the event of a dispute can result in a free-for-all for partners, says Jonathan Levitt, a principal with Outside GC LLC, a team of former senior in-house lawyers who act as "on-demand" in-house counsel for clients.

For partners who don't have an agreement, or even those who do, there are a few things they should consider in order to best protect themselves when conflict arises.

First, business partners need to evaluate whether they can mend fences and settle their differences. Difficult issues surface in all partnerships, and they can create stress in the relationship, "but if you work through these issues, you usually have a stronger partnership," says Steven Thayer, an attorney with Handler Thayer LLP in Chicago.
It's important to figure out what's at the root of the friction. Ask, "What is occurring within the partnership that is causing you to make a decision to [want to] sell or liquidate?" says Terry Mackin, managing director at Generational Equity, merger and acquisition advisor for small businesses. It can come down to rifts, family dynamics or other issues. "How are those things affecting the business?" says Mackin.

Business issues such as not making enough money, having too much debt or realizing your business model doesn't work are situations that may require you to adapt and change your business plan to make it work, says Thayer. Of course, fundamental issues that are hard to move past--lying, cheating, stealing or other illegal activity, for example--can be deal breakers and a legitimate basis to terminate the relationship.

Whether conflicts are resolved to make the partnership work is a business decision based in part on each partner's risk/reward tolerance level. "Each partner should regularly assess the risks and rewards associated with their business […] to make sure they are in check," says Thayer.

To that end, ongoing communication and a periodic review of your partnership (especially the agreement, if you have one) is essential. Just as in any relationship, partnerships grow old and co-owners need to reassess how decisions are made, who makes what decisions, etc., says Kurt D. Olender, a corporate attorney in Manhattan.

What do you do if you're unable to resolve your conflicts? At this point, business partners need to determine whether or not one partner buys out the other or both sell out to a third party. In the case of a partner buyout, the two important questions to ask are "Who has the most passion for the business, and who has an immediate cash need that requires them to cash out of the business?" says Steve Nielsen, CEO of PartnerUp, an online small-business networking community. As one would expect, both partners need to agree on the next course of action. In some cases, reaching an agreement may require a good business attorney to act as a sort of "corporate therapist."

Whatever the decision, make sure you hire a good business attorney to help with the dissolution of the partnership. There is too much at stake to use your friend's uncle or some other attorney who is not an expert in business law. Finally, "It is extremely critical that both parties either have their own independent valuations or that they agree on an independent business-valuation expert to determine the value of the business, " says Nielsen.

Most issues, serious or not, can be resolved at the onset through good communication and effective negotiation skills. "Before you resort to the worst case, try working things out by talking," says Nielsen.

Toddi is an award-winning journalist, writer and editor and currently is a contributing writer covering career management issues for The Wall Street Journal.

Buy a Business Instead of Starting One From Scratch

2010-03-04T09:32:00.001-08:00

It is a good time to buy a business, according to Mike Handelsman, the general manager of the online portal, BizBuySell.com. "Many business owners delayed plans to exit their businesses and retire in 2009," he says. "In the latter part of 2009, we started to see clear signs of recovery, and 2010 is now shaping up to be a much more productive year for selling and buying businesses."

Buying a cash flowing business is better than starting one from scratch. It can cost less to buy a going-concern than it does to invest the initial working capital needed to start one up. Furthermore, fixtures, furnishings, equipment and trained employees are all in place when you buy an existing business. There are fewer unknowns and the risk of failure is lower.

But be forewarned that you must do independent research to understand what you are buying because you cannot trust the numbers and descriptions outlined in the business broker's promotional piece. That is why it includes disclaimers and says the broker is not responsible for the information because it comes from the seller.

Furthermore, brokers may not be the best place to begin your search. Many of the best businesses are not listed or advertised for sale.

Begin your search by targeting the industry that matches your skills and background, and has a strong potential for growth. Then, join a trade association where you can meet the industry's business owners. An example is the National Restaurant Association if you want to buy a restaurant. Associations are comfortable places to form personal relationships and spread the word that you want to buy a business.

The recession and credit crunch has turned owners into prospective sellers and they will seek you out. They are burned out because banks refuse to renew lines of credit. Lenders are turning them down for loans needed to replace old equipment or capital for expansion. They are fed up with introducing themselves to strangers every time their bank shuffles loan officers.

Owners dream about a more enjoyable lifestyle. They are tired of supporting employees when there is not enough business to justify keeping them on the payroll. Their jaws hurt from smiling and being polite to rude customers that are looking for bargains instead of quality products and superior service.

You will meet these owners at trade association meetings, conventions and cocktail parties. They will approach you gingerly. They will talk about selling out to a buyer that appreciates their business goals and is willing to carry on the founder's vision. You can become that buyer.

That is how negotiations begin -- by forming relationships.

Over time, the buyer and seller agree upon the selling price, terms and conditions. In the current buyers' market, sellers know that they will have to accept less.

Now is a good time to hook up with a savvy accountant that you will need to help you with due diligence. Add a talented business lawyer to the mix. He or she will structure the legal aspects of a tax-advantaged, lower risk purchase.

Start now or you might miss a window of opportunity while values are still depressed.

Jerry Chautin is a volunteer SCORE business counselor, business columnist and SBA's 2006 national "Journalist of the Year" award winner. He is a former entrepreneur, commercial mortgage banker and business lender. Follow Jerry on Twitter, www.twitter.com/JerryChautin

Follow Jerry Chautin on Twitter: www.twitter.com/JerryChautin

Market Your Way To the Top

2009-11-23T13:27:00.000-08:00

Never stop thinking about marketing--it's the best way to grow your business.

By Elizabeth Wilson | June 16, 2009

Entrepreneur.com expert columnist and marketing guru Mark Stevens addresses the most common marketing questions and fears new business owners and would-be entrepreneurs face as they start up in a sluggish market. The solutions he offers are both time-tested and cutting-edge--ensuring you'll land at the top by the time this sour economy turns sweeter. Learn how to measure your ROI, when and how to devise new marketing strategies to replace ones that don't work and how to gain more market share over your competitors.

Entrepreneur.com: What is marketing?

Mark Stevens: Marketing is the most misunderstood work in business; ask 100 people what marketing is, and you'll get 100 different answers. You get back: advertising, websites, good service, etc. It's all of those things, but the essence of marketing is that it's the movement of the business from one level of profitable revenue to the next. Marketing has to be a driver of business growth, so if you're doing a million in revenue one year, the next year you need to be doing a million and a half, and then you take it to 2 million and so on. You can't stay where you are. You need a catalyst for growth. Accounting can't drive growth, HR can't drive growth, organizational structure can't drive growth--these are all important structures, but marketing is the engine for growth. The only valid definition of marketing is the ability to take a company from one level of profitable revenue and continue to do that.

What's the most common misperception people have about marketing? What happens often is that people over the years have confused marketing with creativity. We'll have people come in typically right out of school and apply for a job and we'll say, "Why do you want to go into marketing?" And they'll say, "Because I'm a creative person." They say, "I like art" or "I like this and that." Well, you really have to like business; what's happened over the years is that marketing has begun to focus on creativity, on aesthetics, on making beautiful commercials and ads or websites. These things have a place, but much more important is the development of a strategy that can effectively make the business two things--scalable and sustainable.

What are your tips for creating a successful business plan? Most small-business owners really start off with the desire that they will grow something of substance; they just don't know how. It is the self-reliant kind of person who starts a business, so sometimes she takes that self reliance to extremes and doesn't delegate anything to anyone. Then she is held hostage by her own limited situation.

Very few, maybe 1 percent, really truly want to stay a small business: "I don't want any employees, I don't want any hassles, I don't want anybody to manage." That's not a small-business owner though, that's a self-employed person. If you want a business, then you do have to learn how to manage and know how to manage five, 10 or more employees. And then you should want to grow it. Because if you believe in the value of growing, and you believe that your products are really superb and are better than anybody else's, you should want to grow your business and have people enjoy them far away. It's not really difficult to manage people--you have to understand leadership. It's not a popularity contest, and you're going to sometimes make decisions that people will be unhappy with. If you are open to ideas from employees and listen to them and then make a decision, that's all you have to do.

A useful equation that I built when I started MSCO that applies to every business is "C" plus "A" plus "M" equals PG.

C=Capture Attrition happens, so you must continuously capture clients or customers.

Solution: Capture through your website, internet marketing, events, etc.

A=Amplify Once you have a relationship with a customer or client, you need to grow it. You need to cross-sell them, up-sell them, enhance the relationship and get referrals. Oftentimes businesses, once they turn a prospect into a customer or client, lose the sort of lust they had when they pursued that person as a client.

Solution: Give them the same level of wonderful support you did in the beginning. Ensure that your customers know the full range of products or services offered.

M=Maintain You maintain customers not by giving them loyalty points but by providing exceptional products and level of service.

Solution: Do things they don't expect. For example, I was at home recuperating when a salesperson at my favorite store drove out and brought me a royal blue sweater (my favorite color) from a designer I liked. You can't leave a business that does those kinds of things for you.

PG=Perpetual Growth If you do all three things, you will have perpetual growth. The problem is businesses tend to stop doing one, two or even three of those things. How many businesses actually do these types of things? Not very many, which is good news for your business.

What is the best way to grow a business using marketing? You need to contact your existing client base. It's almost free--you just send e-mails making them aware of the fact that "By the way, we have these 10 products you may not know about, and because you're a good customer, if you purchase one of your regular items, we'll give you a sample of one of the other products for free." Instead of doing those things, many businesses simply advertise. There's nothing wrong with advertising--we recommend it to our clients and we do it ourselves--but you can't simply just advertise; you have to have a strategy that's wrapped around those three elements.

You need to measure your ROI. If you spend $1,000 on marketing, you need to get back at the very minimum $1,001. A lot of people come to me and say "I tried direct mail, I tried Yellow pages, I tried this and that and it didn't work." Well, they didn't really measure and they don't really know--they don't test things. The ability to measure ROI is critical to the effectiveness of any marketing campaign. The reason I wrote Your Marketing Sucks was because I felt like the way marketing has been done takes money from small-business owners and puts it in the garbage--there's no strategy and they're not testing it to get a strategy that does work.

How do you do research to determine what kind of campaign is going to work? Let's say you do an advertising campaign. The best thing to do is make sure there's a prominent way for people who see or hear your ad to get in touch with the company. You need a phone number and a url. Sometimes you may want to create a special url so you can make sure you know where people are responding. For example, go to YourMarketingSucks.com. There's a page where you can set up an appointment by phone. We set that up for a particular campaign we're having as a way to know where people are coming from. They do it, we measure it and see how many people made appointments. But that's not good enough, either--you need to determine how many appointments were converted into clients. That particular campaign cost about $10,000. So the only way it is successful is if we get back at least $10,001 in revenue.

So what if you don't; Do you scrap that campaign? You might want to change the message to another message, and if it doesn't work, then you can also try another medium. But in that campaign, for example, in the first week it was a radio ad, which cost $10,800. We generated more than $200,000 in business. That was pretty good ROI. Two weeks after that we did an $8,000 TV campaign for two weeks and only got two people responding, so radio worked better. But the client who responded to the TV campaign has already paid $75,000. So we did learn that radio is more effective for the number of respondents, but maybe the responders for TV will be bigger fee payers--we're not sure yet. Perhaps a better commercial will give an even higher ROI, or maybe I'll be sorry. Regardless, you have to use one as the model and then keep testing against it.

How much time should a new business owner spend on marketing? He or she should never stop thinking about marketing. The person who owns the business should always think of himself or herself as the marketer-in-chief. It should be the most important thing he or she does because it's the growth of the business; the business owner shouldn't just hand it off to other people or another firm. Someone else can do it, but the person who owns the business should always be involved.

Many new business owners are experts in their services or products but aren't well versed in marketing strategies. What would you suggest they do? They have to recognize that while they're the expert in the operations of the business--how the factory works or the retail store works--those aspects don't grow the business. You have to become a marketer. The reason small businesses fail is because they stop thinking about marketing. It's also why big businesses fail. It's why General Motors is failing now, because the senior management of General Motors stopped thinking about hybrids and creating cutting-edge cars. They just stopped doing it, whereas Toyota never stopped thinking about marketing and making products more and more appealing. A lot of small-business owners start businesses in areas of their expertise--they're IT specialists, computer fixers or chefs, for example. It's important to maintain skills as a chef, but you have got to think, how am I going to market my restaurant? Otherwise you'll be cooking for yourself.

Can you talk about why right now is a good time to increase marketing efforts?

Right now your competitors are sleeping; they're hiding in the bunker, they're waiting for the dust to clear. And they're leaving you a golden opportunity to grow your market share. So develop a strategy, think it through--remembering it can't be perfect from the start. Get the courage to make an investment and then test, test, test until you break the code.

Start a Business Without Going Broke

2009-09-27T10:29:00.000-07:00

Keep startup costs low and consider these recession-proof industries.
By Debbie Dragon | August 10, 2009

Starting a business is difficult enough when the economy is strong but when you decide to start a business amid a 9.7 percent unemployment rate--while foreclosures are at an all-time high and bankruptcies are reaching epic proportions--the odds for success seem hopeless.

For startups willing to defy the odds, there are many advantages to starting a small business during a recession, and it can even be done without burring yourself in debt. Experts will tell you that the absolute best time to start a business is during a recession, and several well-known, highly successful businesses were launched during weakened economies.

Why did these companies succeed against the odds? They succeeded because the founders recognized a need in the market and filled it. Identifying that market need is the key to success for any business--regardless of what the economic climate is when those market needs are fulfilled.

Hewlett Packard was started in a garage during the Great Depression with startup costs of just $538. It was the first technology company to exceed $100 billion in revenue and is currently operating in almost every country worldwide. Burger King got its start during the recession of 1954; the Whopper was added to the menu during the recession of 1957. Microsoft was started during the 1975 recession. Bill Gates dealt with primitive computer languages until the creation of MS-DOS, which IBM Corp purchased, starting the company's climb to fortune.

Tips for Starting a Business In a Recession

The high risk of failure during recession requires that the start up costs are kept as low as possible. Businesses that start and survive during a recession are in the best position to take advantage of the inevitable economic upturn. Businesses that postpone launch until the economy shows signs of strengthening are that much further behind, and give a head start to competitors who took the risk of starting during a recession. Keep starting costs low by:

•Keeping your day job. If you're lucky enough to still have a job, try starting your business in your off-hours. You'll have the steady income from your existing job to pay your living expenses and can focus on making your new business profitable without the risk.

•Not buying, leasing or renting office space. Most businesses can be started right from your home. Don't waste money on an office space or retail storefront before absolutely necessary. Use your kitchen table, home office, basement or garage as office space. Some businesses will never need to venture outside the home.

•Not hiring employees. If you need help from other people, use contract workers and issue 1099s instead of hiring employees.

•Not wasting money on advertising. There are countless ways to advertise your business, product or service without spending money. If you--the maker of your product or provider of your service--can't sell yourself, no one else can, either.

Recession Proof Industries

Whenever possible, you should look at starting businesses in industries that are considered “recession proof”. These are the industries where consumers will still pay for the products or services offered even when money is tight. Recession proof industries tend to be:

•Food
•Health care, including psychology and substance abuse
•Computers and IT--especially fixing other peoples computers. People aren't buying new equipment; they're fixing what they have to save money.
•Security / criminal justice / police
•Education--adults go back to school when they lose their jobs; more high school graduates will go to college because they can't find jobs out of high school
•International business--just because the economy is bad in the US doesn't mean it is everywhere else

Finding Your Niche

When starting a new business, whether you create a product or provide a service, you need something that distinguishes you from everything else that's already available. Your long-term success is defined by your ability to be both unique and better than your competition, by adhering to these principles you’ll fill a void in the marketplace.

One of the best ways to find your niche is to create a business that offers something you needed but couldn't find. If you couldn’t find something you needed, chances are good others have the same need. If you have a business venture that fills a void in the marketplace and can be launched at a low costs, you're in good shape--regardless of the economic climate.

The Upside of the Downturn

2009-07-27T16:41:00.000-07:00

This economic upheaval is a wake-up call for all of us to educate ourselves financially.

By: Kim Kiyosaki | 04/13/2009

Most people, I think, would label much of the change we've experienced in the past year as negative. If you take into account the banking crisis, the growing numbers of unemployed people, the double-digit losses in so many 401(k)s and retirement plans, and the number of cities and states whose budgets are upside down, it all paints a pretty dismal picture.

However, being the optimist that I am, I'm always looking for the positive lessons in seemingly negative events and circumstances. I've asked myself: What is the upside in all this? Today, I see two very powerful and encouraging things that could come out of this worldwide economic mess.

A Financial Wake-Up Call

Sometimes things have to get bad before we take action to fix them. This time in history could very well be our financial and economic wake-up call. Many pieces of this puzzle are broken, and it will take more than a new president, new rules for Wall Street and some crooks going to jail to fix it all. This is undoubtedly a global problem, and it will take resources from around the world to turn this around. This should convince our political, business and financial leaders that real and tough changes have to be made now.

There's an even more important wake-up call for each individual who is willing to address it--the absolute need for true financial education. We can't allow ourselves to remain so ignorant that we accept a well-crafted, seemingly sincere but greed-based sales pitch as education or financial advice, and then blindly follow that advice.

In the article, "Contemplating the Boobs We Were," Peter Applebome of The New York Times says:

"...a toast to us all--the boobs and easy marks who from time immemorial have mastered the art of buying high and selling low, investing in bubbles as transparent as an open window, making crashes and swindles as much as part of the human experience as love, vanity and bad breath."

He says there are many lessons to be learned from "this latest round of financial catastrophe" and suggests, "Maybe it's time we even start thinking about ways to teach (people)."

After reading the article I wondered whether the general public is finally beginning to recognize the vital need for financial education--from grade school upward.

I trust these cataclysmic events to serve as one giant wake-up call so that we become aware, educated and in control of our money. And in the bigger picture, I hope the same holds true for our cities, states and nations. Ignorance is not bliss--it's foolish, expensive and painful.

A Return to the Fundamentals

One of the things that created this financial fiasco is that many of us ignored the basics of sound investment and went off on a tangent of day trading, derivatives and the latest hot deals--without the knowledge of what we were buying.

So I trust that the outcome of this dilemma will be a return to sound and proven investment fundamentals. Here are seven basic investment rules for quick review.

1.Increase your financial education. My friend and CPA/tax advisor/investor Tom Wheelwright simplified the essence of financial education:

The greater your financial education, the lower your risk and the greater your returns. Simple.

2.Look at the overall fundamentals of an investment. Do they make sense? If you're buying a stock, is the company solid? Why should the revelation that the 55-year-old CEO smoked pot once in college affect the stock price? What does that have to do with the performance of the company? Are the financials, the management, the products and the market demand strong? If you're buying an investment property do the income, expenses and debt generate a positive cash flow? If you're investing in an upcoming business, have you checked out the management's track record, where the investment money is going and if there a demand for what it's selling?

3.Are you making decisions based upon facts or opinion? A fact is that you have three years of financials on Property ABC and know how well or how poorly that property is performing. The opinion is, "Rents are going up all over. You'll get a great cash flow on this property."

The facts about Stock XYZ: The company has strong cash reserves, no debt and has just signed three five-year contracts with companies K, L and M. The opinion is, "This stock is going to the moon!"

4.Know the difference between cash flow and capital gains. The average capital gains investor only makes money when the markets are going up. When the stock market or real estate market goes down, she loses. Capital gains investors only make money when they sell the investments.

Cash flow investors generally invest based on the fundamentals of an investment and tend to take a longer-view approach. They're not affected as much by the ups and downs in the market. They make money every month if they manage their investments wisely and continue to own the investments. The return on their investments is, to a great extent, determined when they buy the investment.

Neither strategy is right nor wrong, and each reacts differently to the changes in the markets. It's important to know which strategy you're pursuing.

5.Invest your time first, money second. Before investing your money, invest your time to research and understand the investment you're considering. You probably research a set of pots and pans before you buy it. Why wouldn't you research an investment the same way?

If the return on your investment sounds too good to be true, then it probably is. Do your homework. Don't blindly invest in a "hot tip." If the crowd is all running to A, head to B.

6.Management is key. Whether you are investing in a startup company, buying stock in a public company or purchasing an investment property, the success of your investment rests primarily on how well that investment is managed.

One vital rule of money is that money follows management. If it's a company or stock in a company you are considering investing in, then who is the management team behind the company? Does that team have the skills, the track record and the leadership needed for success? If rental real estate is your investment of choice, then it's the experience and talent of your property management person or team that determines the quality of your cash flow.

7.Stay neutral. This one is easier said than done for me. Once I see an investment I like, it takes everything I have to keep my emotions in check. Neutrality typically goes out the window. It's OK to be excited about an investment, but if I let my emotions take over, then that blinds me to the potential problems that can affect the true value, or cash flow, of the investment.

Keep it neutral. Calmly look at the pros and cons of the investment without bias. If you can do that, your success with the investment greatly improves.

It's Not Rocket Science

The world of investing is not nearly as complicated as many would have you believe. Good financial habits and fundamentals are as much common sense as they are education. It's time for us to get back to the basics of sound investing. Sometimes it takes a wake-up call to bring us to our senses.

Secrets to Surviving the Recession

2009-07-27T16:39:00.000-07:00

By Kimberlee Morrison

According to a recent survey of about 2,000 California small-business owners, many entrepreneurs are seeing serious declines in profits, struggling with taxes and looking for help from the government to survive.

Joseph Benoit, a small-business banking executive for Union Bank, talks about the results of the survey, the financial challenges facing small-business owners and what they are doing to meet those challenges head-on.

How much of a burden are taxes on small businesses?

Well, I think that they are right up on top. Entrepreneurs are certainly looking for help, not only for tax relief, but relief in other things that have a direct correlation to the expense. Health care is obviously something that they're looking for help and some sort of relief on. Generally speaking, they’re looking for relief from either the state or the federal government. Not only in taxes, small-business owners are looking for any type of help they can get. So there’s a huge reliance, unlike any other year, on government agencies.

The survey indicated that the average size of these businesses is 13.5 people, and more than 50 percent said that health care isn’t really important. Or is it sort of split down the middle?

No, I think it is a big concern for those companies that provide health care. Just to be clear, there are obviously some companies that don’t provide health care and are looking for their employees to provide their own health care. Other companies pick up a portion of the health care expense, and I’m certain there are a few that are generous and pick up the majority--if not all of--that expense.

Which industries would you say are experiencing the most extreme declines in growth?
I don’t know that we really defined it by industry. I think that across the board. I think that there is probably no industry untouched by what’s going on in the current economic environment. But interestingly enough, in dealing with the entrepreneurs--and this might be one of the big ahas of the survey--about a quarter of the people we talked to were pessimistic about 2009 and expected their profits to decline. This is an increase over 2008. But we also found that 36 percent--call it one-third--expect 2009 profits to increase. So in this very difficult environment, you have this group of entrepreneurs, one-third of whom expected their profits to increase. And we sat back for a minute, scratched our heads and asked ourselves why?

These folks are risk takers. They have already made, in many cases, the tough decisions to decrease expenses, either through head count or through services they no longer needed or they are looking for alternative sources of revenue, in going out and trying to broaden their customer base and to do exactly what needs to happen for them to be profitable and successful.

That’s actually more optimistic than the survey looked . . .

Yeah. It was very interesting. Last year that number was 50 percent. So 50 percent of the people that we looked at last year said we expect 2008 to be better than 2007, and this year it's one-third . This year it's decreased, it’s one-third, but still I think that’s a remarkable number of people that literally are working six or seven days a week, 10 to 12 hours a day and creating a livelihood, not only for themselves and their families, but for a small group of trusted employees.

The survey indicated that 2008 was about accepting the downturn, 2009 is about survival and 2010 is about conscious expansion. Can you talk more about this concept?
I think it’s a hopeful concept. I think that the silver lining is that if the tough decisions need to be made and have been made in 2009, it will properly prepare and align these businesses for success, so then they can start rebuilding their businesses, possibly thinking about a larger piece of real estate and/or new equipment and/or going into hiring mode. So no one can predict--I wish we all had a crystal ball and could tell when we actually hit bottom and are on our way back up. But I think that it is probably entrepreneurial optimism to think that we will have seen the worst of this downturn sometime during 2009, and many of these businesses will feel like they're getting back on track in 2010 and beyond.

What can entrepreneurs do to put themselves on track for this growth in 2010?

I think they’re doing it today. They’re in survival mode. Many of these small businesses are doing what it takes to be very protective of their client base. It’s important to collect accounts receivable in a timely manner. To look at possible equipment that they're not using and maybe selling it to generate cash and help their cash flow. They’re making day-to-day decisions that will help them continue to prosper.

Read more: http://www.entrepreneur.com

6 Ways to Grow, Despite the Downturn

2009-07-27T16:36:00.000-07:00

By: Lesley Spencer Pyle

The good news in this economy is that people are still spending, and they'll continue to do so. Businesses still produce their products and deliver services. So what can you do as a home-based business owner to make sure you're not left out?

Don't cut prices. Avoid the temptation to discount products and services in competitive environments. It can erode your profit and, ultimately, your brand. After all, if you cut your prices, does that mean you were charging too much in the first place? Price-cutting can also give the impression that you're desperate, which doesn't breed confidence. Plus, if you cut prices, your customers may sit around waiting for further discounts before buying.

Adjust marketing tactics. Increase your marketing efforts, even if you don't increase your advertising budget. While it may cost you additional time, you'll find that the investment pays off. "Initially, (the economy's downturn) was why I turned to Twitter and Facebook," says Sherri Morris, president of Digi Time Capsule LLC. "I was not real big on the social networking, as I had tried MySpace, but have found that Facebook and Twitter offer a much better atmosphere."

Ignore the doomsayers. Sometimes it pays to ignore all predictions of doom and gloom, and operate with full confidence. "I'm not doing business any differently," says Kassandra Vaughn, CEO of ROI Coaching. "I don't consider this a lean time. I know that some of the greatest, most successful businesses are resulting out of these times and I consider ROI Coaching to be one of them. We're a one-stop location for virtual and audio coaching, and our demand in the marketplace has not changed."

Add value. Just about every small business can find some way of adding value to its existing product or service. Consider adding a new line or service that costs less than your current offering. Consider adding free gift wrapping, a small bonus gift or a discount for a longer contract.

"I'm always looking for new ways to increase the value we offer our clients and customers," Vaughn says. "If you sell a service, bundle more features into the same price so customers get more and you add more value to your offering. You can also bundle complementary products together."

Find a mentor. Another option to survive tough times is to get help from people who have experienced the same struggles. There are volunteer programs such as SCORE, which is composed of mostly retired executives and entrepreneurs. There also are formal mentoring programs, such as the Athena Foundation and Helzberg Entrepreneurial Mentoring Program. Or look into professional organizations such as the National Women's Business Council.

Form partnerships. Now may be the best time to look for innovative partnerships and collaborations. Think beyond link exchanges and be creative. If you're a baby planner, look for ways to partner with a company that makes baby announcements or unique baby toys. Could you bundle gifts and services together? Take time this week to look into and start mutually beneficial partnerships.

Angel Investors

2009-05-03T16:27:00.000-07:00

These individual VC investors seem like they're from heaven, but be prepared to give up a chunk of your company for funding.

Definition or Explanation: Working with angel investors means acquiring venture capital from individual investors. These individuals look for companies that exhibit high-growth prospects, have a synergy with their own business or compete in an industry in which they have succeeded.

Appropriate For: Early-stage companies with no revenues or established companies with sales and earnings. Companies seeking equity capital from angel investors must welcome the outside ownership and perhaps be willing to relinquish some control. To successfully accommodate angel investors, a company must also be able to provide an "exit" to these investors in the form of an eventual public offering or buyout from a larger firm.

Supply: The supply of angel investors is large within a 150-mile radius of metropolitan areas. The more technology driven an area's economy, the more abundant these investors are.

Best Use: Runs the gamut, from companies developing a product to those with an established product or service for which they need additional funding to execute a marketing program. Also, angel investors are appropriate for companies that have increasing product or service sales and need additional capital to bridge the gap between the sale and the receipt of funds from the customer.

Cost: Expensive. Capital from angel investors is likely to cost no less than 10 percent of a company's equity and, for early-stage companies, perhaps more than 50 percent. In addition, many angel investors charge a management fee in the form of a monthly retainer.

Ease of Acquisition: Angels are easy to find but sometimes difficult to negotiate with because they usually do not invest in concert and may demand different terms.

Range of Funds Typically Available: $300,000 to $5 million.

First Steps

Angel investors are at once difficult and easy to find. The situation is analogous to searching for gold. Generally, it's difficult to find, but once you hit a vein...all your hard work pays off in a big way.

Here are the places angels might be hiding:

•Universities: According to Bob Tosterud, Freeman Chair for Entrepreneurial Studies at the University of South Dakota, angel investors tend to hover near university programs because of the high level of new business activity they generate. He advises that if you are looking for money, call the nearest university that has an entrepreneurship program, and make an appointment to speak with the person who runs it. Generally, he says, such people can point you in the direction of angels.

•Business incubators: According to the National Business Incubation Association (NBIA), there are about 1,000 business incubators in North America. At first blush, incubators appear to be the mere bricks and mortar facilities that offer entrepreneurs reasonable rents, access to shared services, exposure to professional assistance and an atmosphere of entrepreneurial energy. But according to NBIA president and CEO Dinah Adkins, many business incubators offer formal or informal access to angel investors.

•Venture capital clubs: The tremendous wealth created through the commercialization of technology, as well as the robust stock market of the 1990s, have resulted in a large number of angel investors who have begun to formalize their activities into groups or clubs. These clubs actively look for deals to invest in and their members want to hear from entrepreneurs looking for capital.

•Angel confederacies: Some angels, shunning the formality of a venture capital club, band together in informal groups that share information and deals. Members of the group often invest independently or join together to fund a company. So-called confederacies are not easy to find, but once you locate one member, you gain access to them all, a number that could top 50 investors.

Here are 10 action steps you can take to find angel investors in your area:

1. Call your chamber of commerce and ask if it hosts a venture capital group. Many such groups have a chamber affiliation.

2. Call a Small Business Development Centernear you and ask the executive director if he or she knows of any angel investor groups. Ask the SBA if you don't know where an SBDC is.

3. Ask your accountant. If your accountant doesn't know, call a Big Four Accounting Firm and ask for the partner who handles entrepreneurial services. Ask him or her to point you in the right direction.

4. Ask your attorney. Lawyers always know who has money.

5. Call a professional venture capitalist and ask if he or she is aware of an angel investor group.

6. Contact a regional or state economic development agency and ask if anyone there knows of an angel investor group.

7. Call the editor of a local business publication and ask if he or she knows of any groups. These professionals often write about such activity.

8. Look at the "Principle Shareholders" section of initial public offerings (IPO) prospectuses for companies in your area. This will tell you who has cashed out big.

9. Call the executive director of a trade association you belong to. Ask if there are any investors who specialize in your industry.

10. Ask your banker. If you do business at a small bank, ask the president of the institution. If yours is a larger commercial bank, ask your lender. If you do not have a lender, ask for a lender who works with loans of $1 million or less. A good small-business banker knows of such groups because companies that have received an equity investment are good candidates for a loan.

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Working With Your Angel Investors

Make sure your angel investors won't hold your business back when it's time to graduate to larger investors.

By David Worrell, Entrepreneur Magazine, Nov. 2005

These days, investors at medical services company Inoveonin Oklahoma City are a pretty happy lot. The company recently celebrated its 40,000th customer and revenue has passed the $1 million mark, so investors have much to celebrate. But Inoveon co-founder Dr. Lloyd Hildebrand will tell you that bringing together three founders, seven angel investors and five VCs was not always a party.

When Hildebrand, 48, and his partners decided to commercialize the technology they had been working on at the University of Oklahoma, they started the way most entrepreneurs do--by digging into personal savings and asking friends and family for help. In total, the three founders and seven outside investors put together about $250,000 in seed capital.

From the outset, however, Hildebrand and his team knew that the angel investors' capital wouldn't be enough to get the company off the ground. If Inoveon's technology to diagnose eye disease in diabetic patients was ever to see the light of day, they'd need millions more. Still, they couldn't afford to worry about that in the beginning.

"At that time, we needed dollars to demonstrate the concept would work," Hildebrand says. "Money was more important than smart money at the beginning. We needed capital to stay alive."

That's a typical--and potentially dangerous--predicament for a young company, says Jonathan Karis, partner and chairman of the Business Practice Group at Boston law firm Nixon Peabody. Karis advises entrepreneurs to consider the time when their company may need more money than the angels can provide. Too many unsophisticated or inexperienced angel investors create management headaches and get in the way of raising future capital from VCs.

On Whose Terms?

The real problem for most angel investors comes when the business has outgrown the angels' ability to contribute growth capital. Karis notes that venture capital may come with terms and conditions that significantly devalue or dilute the original shareholders' value. A VC firm may even insist on renegotiating the angels' original investment terms.

Such was the case at Inoveon. Hildebrand says that both of the subsequent rounds of venture capital that Inoveon received were at a valuation substantially below what the angels had negotiated. So the new VC investors actually paid less for their stock than the original angel investors, and as a consequence, the ownership and control held by the angels was drastically reduced. Investors call this a down round, referring to the falling valuation. Of course, down also describes the mood of the early investors. "I don't think anyone was happy about it," says Hildebrand, "but we all understood the realities of the marketplace and of building a company."

Karis says that it could have been much worse. He's seen angel investors refuse to allow VC investment even though their refusal cripples the business. To prevent such a predicament, Karis advises entrepreneurs to look for either one very experienced angel investor or an organized angel club to take the lead role in the initial investment.

As an additional precaution, every company owner should anticipate future funding needs--including possible down rounds--and limit early investors' ability to torpedo negotiations for subsequent funding. "Position your angels legally so you facilitate venture funding instead of hindering it," Karis suggests. "Traditionally, VCs will require approvals of next funding rounds, so angels may ask for the same thing. But I don't want my angels to have too much control over the next round."

By anticipating a funding shift, you can set reasonable investor expectations, backed by the legal framework that gives your company the flexibility to grow. "If you're ready for a $10 million [VC] investment, then the angels just need to come along for the ride," says Karis.

Part of the dilemma is that setting the valuation (i.e., the stock price) for an early stage company is more of an art than a science. As a result, angel investors are more likely to worry about the rights they have as shareholders than about price. Later, when the VCs get involved, valuation is more obvious and often well below the lofty price projected by the early business plan.

As much as they need each other, VCs and angel investors often butt heads over issues of valuation and control. The key to defusing this situation is to set out a fair and flexible agreement in writing before accepting the angel's capital. The agreement should specifically prohibit early investors from blocking subsequent funding rounds under certain conditions. "It's a hard negotiation," says Karis. "But if you build flexibility in when you go to them, that's when you have leverage with them. Once you have their money, it's more difficult."

Even in the best of cases, Karis compares managing investors to herding cats, but a reasonable agreement upfront can make the task less painful.

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The Fine Art of Meeting With an Angel Investor

Practical advice on when and how to pitch private investors for your business

By Asheesh Advani, June 06, 2005

When it comes to raising money for your startup, don't expect any miracles: Angels don't descend from heaven. In most cases, angel investors will already know you or be introduced by a mutual friend. This is partly because they need to have confidence and trust in you to take a risk on you and your business, but also because they simply like hanging out with entrepreneurs. Angel investors like being mentors, and they typically like to experience the entrepreneurial life vicariously.

Why do they want to hang out with you? Angel investors learn about you by being as interested in you personally as they are in what your business does or sells. If they don't already know you--that is, they're neither your friends nor members of your family--they'll ask around about you behind your back. They'll see what kind of car you drive and if and where you take vacations. Their impression of you, as well as your business experience and your management skills, are all critical to their decision to invest. They'll also talk to mutual associates to get the inside skinny on you--if people they know and trust say you're a genius but lousy with money (or something equally frank), they're likely to listen closely.

And angels are interested not just in you; they also want to know about your team. They want to get to know the people working with you and see that you've gathered an experienced and innovative management team to help you grow your business.

Scheduling a Meeting

You'll need to weigh three factors to help you decide when to schedule the meeting where you'll ask the angel for the investment:

1. State of your relationship with the angel investor. The right time to ask for money is when your relationship is comfortable and trusting and when you sense the investor will be open to the request.

If the investor is a friend or family member, you should have a good sense of their personal life. For example, if there are any big life events like a move, a marriage or a new baby coming up, it's probably not the best time to ask for money. If the investor is unrelated, you'll be best served to make contact and have at least two or three social interactions with him or her before asking for money--unless of course you're lucky enough to have a strong introduction from a close friend of the investor--preferably one who's already invested in your business--that is specifically intended to help you schedule a meeting to ask for money.

In each case, the investor should know you have a business plan and be curious to hear more before you suggest a meeting about capital-raising.

2. Cash needs of your business. A useful calculator for estimating your company's cash needs is available on our site here. It will take, at a minimum, many months to close on your round of fundraising, so you'll need to understand your cash flow well enough to plan several months in advance for how much you'll need and when.

3. Time it'll take to close the deal. It takes time to raise money from relatives, friends and angel investors--just like it takes time to raise money from venture capitalists. Entrepreneurs expect it to take six to 12 months to close a round of venture capital. For raising money from relatives, friends and angels, it could take as little as three months to close a round from five to six investors. For raising a larger round from 10 to 15 investors, it could easily take well over 6 months.

Why does it take time? Because you're not just trying to raise money for your business. You're also trying to run your company. And the investors have other things going on as well. Scheduling meetings, communicating, coordinating schedules, drafting documents--all these things take time. You might be able to impose closing dates on VC investors who are investing out of fear of losing the deal, but imposing deadlines on angel investors is notoriously difficult.

Goals for Your Meeting

You have two goals for your "money raising" meeting with an angel: First, you want to share your business idea, and second, you want to achieve a nonbinding agreement, verbal or written, to invest. If you can't end with an agreement to invest, end the meeting with a plan to follow up.

Goal #1: Communicate your business idea. When you ask for equity capital, you really must have an articulate business plan in place for two reasons. First, you need to be able to answer certain important questions about your idea. One popular one is, "When will you make a profit?" The answer to this should be in the cash flow projections of your business plan.

Second, a smart equity investor will nearly always ask to see a copy of your business plan. My advice is, unless they ask for it in advance, don't bring your full plan to the meeting. When they ask about it at the meeting, you can provide them with a plan summary and offer to mail the complete plan to them afterwards. There are two reasons for this. If you have the full plan on hand, you may get bogged down in the details related to the presentation of the plan or some information within it. Also, it's excellent fundraising practice to have a reason to contact the investor after the meeting.

In addition to your business plan, you'll be talking about your idea in general. Here are the three items that, in my experience, you'll need to know for certain before you go into a meeting with a potential investor:

•What it takes to get to profitability. Investors will want to see that you've "crunched the numbers" and made a plan for success.

•What skills you're lacking and which types of people and skill sets you'll need to have. Good leaders have the confidence to surround themselves with smart people who together make a great team. Show your investor that you know this and have a plan in place to bring on board the people needed to make your business a success.

•How your personal finances relate to those of the business. Investors don't want to hear that you're starting a business so you can spend more time at home with your kids. They don't want to see you driving around in a luxury car or dropping cash like it's going out of style. They want to know you'll be the one sweeping the floors after everyone else goes home at night. They want to know you're willing to sacrifice--to scrimp and save--to make the business succeed. They know it's hard work to create and run a successful business, and they expect you to do what it takes to make them a lot of money.

Talking to your equity investors can be nerve-wracking. Although the benefit of having a relationship is that you and your investor already have a certain level of trust established, you should still choose your words carefully. In addition to the tips I offered in my previous article on the kitchen table pitch, you should also avoid saying the following to your investor:

•That you have big plans for the future. Big plans--for example, to turn your startup chocolate pretzel store into the next big franchise--may appear vague and overly ambitious. Your investor expects you to be a visionary, but also to achieve the short term financial projections that will earn both of you a lot of money.
•Anything that appears cagey or dishonest. Honesty is the most important value investors can find in an entrepreneur, and your investor will be trying to assess your degree of honesty from day one. Avoid the temptation to puff up your projected profits or your colleagues' resumes beyond the bounds of reality.

Goal#2: Get to "yes." The goal of your meeting with the angel should be to reach a verbal agreement to invest. In the case of equity investing, because the deal will be more complex than a loan, you can approach this in two ways: with a handshake or with a "letter of intent."

With most family and friend investors, you can proceed from a nonbinding agreement, such as a handshake, straight to a legally binding agreement. But it's rare for a deal to come up and close in the same meeting, so don't expect to ask for and receive the money in one sitting. Aim to get agreement on a range--such as "I could do $25,000 to $50,000"--and that you'll send the paperwork. If you've gotten this far, you're in great shape. All that's left is to follow up by drafting and sending the agreement.

For unrelated angel investors, especially those who are notoriously difficult to pin down, aim to get the investor to sign a letter of intent (LOI) at the meeting. Although the letter will be informal and nonbinding, it's a great way to get the investor to agree to the idea of making the investment. Follow up promptly with the legally binding stock purchase agreement. The LOI is a tool to get you a commitment from an investor at the moment when he or she is most excited about the business. A signed LOI also allows you to nudge other investors by letting them know you already have money committed.

Asheesh Advani is Entrepreneur.com's "Startup Financing" columnistand president of CircleLending, a loan administration company that facilitates loans among friends, relatives and business associates. Get a copy of Circle Lending's free Small Business Financing Guidefor startups.

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Guardian Angels

Now called active capital, the former ACE-Net website is completely revamped and ready to help match companies with angel capital.

By David Worrell, Entrepreneur Magazine,March 2005

Government and small business are not always the best of friends, but once in a great while, the two manage to collaborate in a way that opens new doors of opportunity. One shining example of a great program born from the government is ACE-Net, which helps small businesses find what they otherwise could not easily find on their own.

In fact, ACE-Net--the Angel Capital Electronic Network--is one of the best places for entrepreneurs to start their search for angel capital. Since its launch in 1995, ACE-Net has helped entrepreneurs raise over $100 million.

ACE-Net, however, had its share of growing pains over the past 10 years. After the SBA gave up its central role in the organization in 2000, the ACE-Net website seemed to be more or less abandoned and neglected.

Neglected, that is, until early 2004, when the directors of ACE-Net asked Phil Borden to take the helm as CEO. Borden, a former UCLA professor, serial entrepreneur and small-business finance expert, has since breathed new life into the online entrepreneur equity-matching service with a grand vision and a host of new benefits for entrepreneurs.

A Brand-New Brand

The new and improved ACE-Net bears a new name, Active Capital, and a new URL. Any entrepreneur seeking equity partners should consider stopping by.

Ironically, Active Capital's primary advantage stems from a "No-Action Letter" from the SEC. This document essentially allows Active Capital to operate an interstate matching service for entrepreneurs and investors, so long as they stay within some very specific guidelines.

"The SEC says that the actual operations must take place in either a university or a nonprofit corporation," says Borden. "What they don't want is a bunch of consultants running the show."

By keeping the operations within a university or a nonprofit entity, the SEC hopes to avoid the potential for fraud and deception. While brokers and other consultants typically provide value by being in the middle of a transaction, Active Capital does exactly the opposite: it provides only direct contact between entrepreneurs and accredited investors, thus avoiding any unfair influence over either party.

"The investor has a safe harbor because all the statements made about the company come from the entrepreneur," says Borden. "That's important because it makes the deal fair, and [only] between the entrepreneur and the investor. We, as the middlemen, stay out of the loop."

Online Matchmaking

Borden compares the new Active Capital to a dating service. "We make no comments about your warts or your beauty--we simply pass along the information," he quips. By making the process direct and free from influence, Active Capital accomplishes something else--something even more important to entrepreneurs: It eliminates the need to register the equity offering with state regulators. This is a critical benefit to entrepreneurs because state regulators have just as much authority over funding transactions as the SEC. The online registration process exempts you from having to register separately with each state.

Legislative compliance, especially multistate compliance, says Borden, is one of the most elusive aspects of raising money. "People aren't trying to avoid the law; they just don't know it. It's securities law, and it's complicated."

Entrepreneurs who solicit investors outside their circle of friends, or outside their own state, can run afoul of state "blue sky" laws. Active Capital, however, allows entrepreneurs to promote their opportunities to and raise money from investors in almost any state. "Normally, you'd have to register with state regulators in each state in which you raise money. You can spend $10,000 to $50,000 in each state to register," Borden says. "But Active Capital gets you around all that."

This seemingly impossible task is possible because one of the organization's original accomplishments was harmonizing multiple state regu-lations, creating what is now called the "model accredited investor exemption." According to Borden, 40 states now accept this definition of accredited investors. And since Active Capital accepts only accredited investors, entrepreneurs can reach out to investors almost anywhere in the country with relative impunity. "Now," says Borden, "if you live in Kansas City, you don't have to worry about whether your investor lives in Kansas or Missouri."

Behind the Scenes

When he's not worried about the vagaries of legal compliance, Borden is busy building alliances and support for Active Capital from business leaders across the country. He's assembled a strong board of directors, including members such as Entrepreneur magazine's own editorial director, Rieva Lesonsky, as well as well-known venture capitalists Amy Millman of Springboard Enterprises and Don Jacobs of Consortium Innovation Centers.

All this ought to be enough to drive entrepreneurs to the Active Capital website in droves. For those who need more convincing, Borden says there are other offerings, including news feeds from Entrepreneur and other small-business sources, and video-based tutorials on raising capital and growing businesses.

"We're in the midst of producing 15-minute videos specifically on how to prepare a business for angel funding," says Borden. "If they want to go through the whole course of 40 videos, we'll certify them and guarantee them that an angel will look at their plan."

One last tool available online is an analytic tool that enables entrepreneurs to see what kinds of SEC exemptions they qualify for according to several factors, including their state, growth stage, and rate and exit plans. "We're providing an analytic tool so people know what the regulations are in each state. You'll come on and answer some questions about your opportunity, and depending on what kind of capital you're looking for, we'll be able to tell you what your options are for raising money in your region," says Borden.

The reborn Active Capital is still in its infancy. Having replaced the original ACE-Net website just a few months ago, the new site will continue to build on Borden's vision. Says Borden, "We have a development plan for the website that will continue to increase in sophistication in the coming years."

David Worrell is an investment banker and author of the e-book Finding Funding.

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Not So Fast!

Seeking an investor? Slow down and take five steps to protect your company from making a bad choice.

By David Worrell, September 2003

Bob Shallenberger knows time is money. He talks fast and makes decisions quickly. By all accounts, Shallenberger's need for speed has made him a highly successful entrepreneur. But last year, when his home-building business needed an investor, Shallenberger's rapid-fire approach to decision-making almost burned the house down.

Being in real estate, Shallenberger finds that investors are not shy about offering him their money. Says Shallenberger, "Having an investment that returns 30 percent annually and is backed by real property, it's pretty easy to get people interested."

For Sale

Shallenberger's company, Highland Homes of Saint Louis, never needed an investor until, early this year, with two $500,000 homes already under construction, his banker pulled the plug. "When the bank said we were already overextended, we decided to take on an investor," he recalls.

With hardly a second thought, Shallenberger, 33, reached out to a casual acquaintance who had previously indicated an interest in investing. Immediately, it seemed like a good fit, so Shallenberger closed the deal. "We shook hands and next met at the title company," says Shallenberger. "But did we have a written agreement? No. Did we research his background? No. We just knew he was a partner at a respected law firm."

Shallenberger soon regretted shooting from the hip. He quickly discovered that the investor expected to be consulted on everything from the exterior landscaping to the interior paint color. As a result, the home that was supposed to take five months to build instead took 10.

In hindsight, if Shallenberger had slowed down to better evaluate his investor, he might have seen the warning signs before it was too late. Before you jump the gun with an investor, work through the following five steps:

1. Know the investor's personality. According to attorney Marc Morgenstern, who advises both investors and entrepreneurs in private equity deals at law firm Kahn Kleinman in Cleveland, there are some people an entrepreneur should simply avoid. "For example, I try to never let a client take money from lawyers; they're the worst," he says, without a hint of irony.

More generally, different kinds of investors have different reasons to invest. Shallenberger thought his investor simply wanted a good return on his money. In fact, it was probably more about the status of building expensive homes, he says.

To glean personality clues, Morgenstern advises clients to listen to the questions investors ask. An obsession with operational detail is often a sign an investor will worm his way into day-to-day company management. If you need additional management help, that may be to your advantage. But it can easily spiral into a case of too many chefs spoiling the stew.

2. Do background research. No matter how badly you need investment money, there's no reason to get it from a deadbeat or felon. Internet-based reference search companies, such as ChoicePointOnline.com, LocatePLUS.com Inc. and USSEARCH.com Inc., provide quick and easy ways to know if your investor has any skeletons in the closet.

Reference search services access databases of business licenses, criminal records, bankruptcies, real property transactions, civil court judgments, even utility bills. A basic search through LocatePLUS.com costs less than $8 but could save you thousands in the end.

"Within the search results, look for inconsistencies," advises Jon Latorella, president of Beverly, Massachusetts-based LocatePLUS.com Inc. "A lot of times, the absence of data is more important than the info itself. If very little is available on a person, it could be that they simply pay cash for everything-or it could be more insidious, like their whole personality is fabricated." Likewise, multiple occurrences of different names, or different spellings of the same name, may indicate previous fraud.

Morgenstern also uses background reports to look for someone involved in multiple lawsuits. "People who have been in litigation tend to end up in litigation," he warns. "They could be someone who seeks litigation or simply someone who does not know how to resolve conflict. Either way, avoid those people."

3. Get help. Taking on an investor is like getting married: It's an emotion-filled decision with long-term consequences. That's why consultant Mike O'Malley, who provides due diligence services through his Chicago company, The O'Malley Group, recommends getting an outsider or a consultant to look over the deal. "A consultant has no stake in the deal and can operate at a level above any particular self-interest," he says. "We can ask the tough questions that other people are unwilling to ask because it makes them uncomfortable."

If a paid consultant isn't in the budget, look within your own network for a person whose judgment you trust. Ask them to look at both the investor and the players in your company to assess the fit. "The whole system has to work together," says O'Malley.

4. Set expectations. Perhaps the most overlooked aspect of taking on an investor is setting expectations. Even when a formal contract or subscription agreement exists, it rarely addresses issues like mentoring and management. Do you expect your investor to help manage the business or to keep his distance? Let him know in advance. Morgenstern puts it succinctly: "An expectation unarticulated is a disappointment guaranteed."

One key expectation is reporting: How much are you obligated to tell the investor about your finances and operations? "Most investors will ask for monthly financial statements," says attorney Beth Wilson of business law firm Shaw Pittman in Los Angeles, "but there could also be some requirements that should give you pause, either in terms of the frequency or relevance." Wilson advises entrepreneurs to be sure that onerous reporting requirements don't distract them from the job of running the business.

5. Tackle problems quickly. If there's one area that deserves rapid action, it's dealing with a potential problem investor. At the first sign of things going awry, begin a clear and professional dialog.

"These conversations are hard because they're confrontational," says Morgenstern. "But the investor is a permanent part of your life, and it's not acceptable to have a bad relationship."

If you explain to an investor that his actions are counterproductive, you may not only change his behavior but also win his respect. If you are less fortunate, you will end up with an angry investor-but you may save the company in the meantime.

Sale Pending
Bob Shallenberger is still waiting to sell the home he built with his first financial investor but insists he has already profited from the experience. By having worked with a problem investor, he says, he now knows how to recognize an excellent one. "Just because you get one lemon doesn't mean you'll never buy another car," he laughs.

Shallenberger continues to accept new investors for his real estate dealings, but these days, he looks before he leaps. He finds reputable investors he can work with, and he clearly articulates both his obligations and his expectations through a written contract. Says Shallenberger, "We'll never again be forced to make a bad decision because we weren't prepared."

David Worrell is the author of the e-book Finding Funding, available at www.dworrell.com. Contact him at david@worrell.com.

Originally published in the September 2003 issue of Entrepreneur Magazine

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Do You Believe in Angels?

Angel investors--and their money--are out there. Learn to catch one.

By Nichole L. Torres, Entrepreneur's StartUps, February 2003

Getting angel capital for your business was never all that easy. But today, post-dotcom-crash, is there any angel money to be had? In expert circles, opinions differ a bit.

"If you were to characterize early-stage [angel] investing as an intersection, there isn't a red stop light--there's a blinking yellow caution light," says Brian E. Hill, co-author with Dee Power of Attracting Capital From Angels (Wiley & Sons) and co-founder of Profit Dynamics Inc., an investment consultancy in Fountain Hills, Arizona. Hill notes that the trend of late is for entrepreneurs to do a lot of old-fashioned bootstrapping-spending their own cash and showing a bit of revenue to attract angels. Picking the right angel investor for your particular company is vital, so do your research beforehand. And, says Hill, start building your network of investors before you actually need the money, because it'll take time.

To get some of the estimated $30 billion a year in angel money out there, you need to be armed with the hard truth: "It's more difficult than it's ever been," says Don LeBeau, CEO and chairman of Angel Legacy LLC, a company that matches entrepreneurs to angel investors.

Still, notes Angel Legacy founder Joe Milam, "There's a growing level of interest on the part of investors." The baby boomers are the ones with all the cash to invest, and they're looking for businesses that benefit society--something the investors care about particularly. If your business benefits the environment or betters the world in some way, boomer angels could be a match for you.

Key things to remember as you're hunting for angels: Put together a good management team while marketing yourself to the right angel (one who shares an affinity for your service or product offering). Present your business idea in clear, simple language (no tech jargon), and have a trusted advisor go over your business plan before you send it out to angels to eliminate any potential issues or problems. Though these tips won't guarantee that you'll find money, they can definitely help. Bottom line: It's hard, but still very possible to get blessed by an angel.

Originally published in the February 2003 issue of Entrepreneur's StartUps

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Our Little Angels

Angel investors haven't left us; they're just scaling back their operations.

By David Worrell, Entrepreneur Magazine - January 2003

John Garcia was in the right place at the right time. It was 1982 when he sold his surgical supply company to Baxter Healthcare and started looking for investment opportunities. It wasn't long before he found several small, private companies looking for financial help--including a little-known retail concept called Mail Boxes Etc.

Garcia's investments eventually returned several times his money, catapulting him into angel investing. Now, at 45, he makes a full-time job of connecting businesses with angel capital.

Garcia, founder of Angel Strategies in Tustin, California, has seen the nature of angel investing change. "There was a time when we all believed in 100 times returns. But most angels today would be happy with 10 times--and they'll settle for 3 to 5 times."

Tarby Bryant, founder of The Gathering of Angels in Santa Fe, New Mexico, concurs. "Today, angels are looking for 40 to 50 percent internal rate of return." That translates to about 4 times their investment over three years.

It's no mystery why angels have lowered their expectations. During the heyday of the public markets, angel investors were able to cash out when a company went public. The public was paying big bucks for small-company stock, and that unlocked huge gains for angel investors. But today's successful small business is more often acquired by a larger company--at a price that is sometimes below average because of overall economic conditions.

The decline of the IPO market has brought another significant change to angel investing. Rather than count on any kind of investment liquidity, many of today's angels are looking for something almost unheard of in the past: dividends. "Angels may be willing to forego higher return if they can get some part of the revenue stream on the back end," according to Garcia.

Today's savvy investor simply has more conservative expectations. Unfortunately for the entrepreneur, lower expected returns are accompanied by lower initial valuations. Just as all boats rose with the IPO tide, all boats fall as that tide recedes.

In fact, valuations of private companies have fallen right along with those of public companies. Entrepreneurs won't get top dollar for their private stock, as Garcia points out, when public stocks like Microsoft and Oracle are trading at 30 to 50 percent below their highs.

Tightening the Belt

Falling public exchanges have a double impact on companies seeking financing--not only devaluing private stock but also wiping out vast amounts of angel capital. Garcia estimates Angel Strategies investors lost an average of 50 to 60 percent of their net worth during the declines of 2001 and 2002.

When private investors see their portfolios shrink, they become more conservative. These days, money that might have gone into early-stage, private investments is headed to safer harbors like real estate, CDs and mutual funds.

As investors lick their wounds, offer them less risk and more reward. "The new ideal," says Garcia, "is to be profitable in year one--and by year two, to have excess profits for reinvestment."

Businesses that can show strong sales growth, share profits or offer creative exit strategies will have better chances with angel investors. Today, entrepreneurs who ignore investors' demands for strong sales and profits do so at their own peril.

The Good News
Despite being somewhat pickier in their deal-making, angels are giving entrepreneurs reason to hope.

As venture capital investments decline (see "Dollar Signs" from December 2002), many angels are aggressively seeking to fill the gap. "Fewer VC dollars means better deals for angels," explains Bryant, who sees more and more individual investors stepping up to the plate.

The level of activity is also on the rise within Garcia's Angel Strategies group. In 2002, the group closed more deals than in the previous two years combined. The success of such groups as The Gathering of Angels and Angel Strategies, which bring individual investors together to find, evaluate and nurture growing companies, is an encouraging sign. Similar groups are popping up in almost every city. If your banker or lawyer can't point you toward one, contact a local VC or SBA office.

Entrepreneurs have a better chance of finding interested angels when they're presenting to one of these groups. Further, when a deal is done, companies also stand to benefit from the collective expertise that such organizations offer.

Devil's in the Details

Any business that is looking for financing these days should not overlook the huge opportunity that angel investors present. Whether individually or in groups, angels are an important source of funds for entrepreneurs--perhaps even more so now that VCs have pulled in their horns.

Be prepared, however, for an angel to take a long, hard look at your business and financial plans. Few investors will be fooled by a promise of a quick IPO, and many might prefer a reasonable, steady return on their capital. That, plus a realistic valuation and a reasonable assurance of return, will go a long way toward attracting today's individual investor.

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What Investors Really Want

Forget what you think you know about getting start-up or expansion capital. Here's what investors are looking for.

By Cliff Ennico, June 03, 2002

They're Investing in You

I'm feeling a lot like Sigmund Freud these days. You may recall that people often asked the famous psychiatrist "What does the opposite sex really want?" Since the bursting of the high-tech bubble, people around the country frequently ask me "What do investors really want?"

Let's face a hard fact. Many of the companies that were looking to raise money in the late 1990s were not real businesses. They were ideas--often brilliant ones, but they were not companies. They had not developed, tested or launched their initial product or service. They had no clue (although some had done some market research) whether the consumer would buy what they were offering for sale. They had no revenue or cash flow from operations. And profits? As they say in the Bronx, "Fuhgeddabouddit!"

Learn More

Financing expert David Newton can help you with any other questions you have about getting capital.

Wyn Lydecker, a business development consultant based in Darien, Connecticut, helps early-stage companies craft their business plans to attract outside capital. I asked him to share some insights about what's working and not working these days when it comes to attracting outside capital. "We are finding that angels and venture capitalists are only looking seriously at businesses they can understand," says Lydecker. "Investors tend to invest in what they know. They don't have the time or inclination to learn a new industry."

Lydecker reminds business owners to do their homework before asking for money. "Target your pitches to investors who are interested in your business category. If you have invented a new pump for boats, for instance, try to find investors who are yachtsmen or sport fishermen."

Investors are not really interested in how your products work. Believe it or not, most are willing to trust you to work the bugs out. What they want to see, preferably at the beginning of your presentation, is an in-depth knowledge of your marketplace, and how your products and services serve that marketplace. What problems do your products and services solve, and why will people part with their hard-earned money to buy your solution?

Next in importance is the strength of your management team. "Investors more than ever want to invest in people," says Lydecker. "And they want to invest in people with a track record. If you are starting a fast food restaurant franchise, does your management team have experience in both fast food and franchising?"

Gaps in the management team are a sure sign that a company is not "ready for prime time." I once performed due diligence on a company that was launching a "community" Web site for stay-at-home mothers. The founders were all former top consumer marketing executives with Rolodexes full of super business contacts. There was only one problem--and it was a big one--the company, which planned to target mothers, had no women on its management team. The company is not around today.

Next, never, ever tell a potential investor you have "no competition." "I wince whenever a client tells me [that]," says Lydecker. "Every business has competition. You have to be honest with yourself about who your competitors are, the likelihood that you will beat them in a fair fight, and the strategies you will use in confronting them."

What about financial projections? "They should be simple and straightforward," he advises. "You should make your projections on a cash basis, and be sure that you've really thought through your assumptions. Investors want to know where your revenue, cost and income projections have come from and how realistic they are."

If you are not sure about this, present your investors with three separate projections under the headings "best case," "worst case" and "our expectations," preferably side by side in columns so the investor can make an easy comparison.

When selling your company to investors, it's helpful to remember the "three Cs" of successful business plans:

1. Compelling idea: The appeal of your products and services to the marketplace should be direct, obvious and immediate; if an investor has to ask you why people will buy your stuff, the ballgame's over.

2. Competent management: Do your people thoroughly understand the technology and, more important, the market?

3. Cash flow: If you are not making enough money to pay your electric bill each month, don't expect your investors to pay it. It may take longer to generate profits, but revenue (the number of things you sell multiplied by the price per thing) should be sufficient to cover your basic operating expenses and pay you some sort of salary within your first 12 to 18 months in business. Ideally, you should not be talking to investors (other than your partners, friends and family members) until you have reached this point. In business, nothing says "success" better than piles of cash rolling through the door.

Cliff Ennico is host of the PBS television series MoneyHunt and a leading expert on managing growing companies. His advice for small businesses regularly appears on the "Protecting Your Business" channel on the Small Business Television Network at www.sbtv.com. E-mail him at cennico@legalcareer.com.

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Playing an Angel

Even when the financial arena is dealing nothing but bum hands, angel investors can be the wild card that puts you on top.

By Nichole L. Torres, Entrepreneur Magazine - May 2002

Networking Your Way Into (Investment) Heaven

Raising money ranks right up there with root canals and tax audits as one of those not-so-fun, yet necessary, activities in life. And the dotcom bust, tumultuous money markets and slowing economy certainly haven't made the money hunt any easier.

But that's the bad news. The good news? "There's definitely money out there, and companies that have good business models and combine that with great management teams can certainly get capital today, from both angels and VCs," says Brian Hill, co-author of Attracting Capital From Angels.

The tough part, of course, is getting the money. But experts offer a few tips to help ensure success. First, you have to network with everyone you know, such as family, friends, your lawyer, the neighborhood grocer--anybody who will listen to you talk about your idea. You'll also need to perfect your elevator pitch; two minutes is probably the most time you'll initially get with an angel.

And the companies with the best chance of obtaining angel funding in 2002 are those that already have a product or service on the market or are very near marketability. Those whose companies have made it to the break-even point have an even better shot at growth capital, say experts. So if you're in the early stages of a start-up, you're probably not going to get angel financing just yet--you need to be a bit further along.

Why? Investors are looking for entrepreneurs who have gone back to the bootstrapping way of starting a business--entrepreneurs who have used their own seed money, created a business plan, acquired customers and set up distribution channels. "[Many entrepreneurs] are thinking about doing those things, but they want to get someone else's money to go try it and see if it works," says Cal Simmons, co-author of Every Business Needs an Angel. "I would much rather talk to an entrepreneur who has already put his money and his effort into proving the concept. And I think most angels I know feel the same way right now."

These are the kinds of steps Tori Stuart took when she looked for angels to fund Zoe Foods, her Newton, Massachusetts, natural foods company. She networked with everyone, getting the buzz out on the street about Zoe Flax & Soy Granola, her natural remedy for the symptoms of menopause. It also helped to have a product that already had enthusiastic customers supporting it. "The challenge in raising money is communicating [about our company and product] because we're in the natural foods sector," says Stuart, 36. "[Not all] investors are natural foods consumers." Getting them to believe in a product they weren't familiar with presented its own set of unique challenges.

But starting to network early--and forging connections long before she even needed capital--is ultimately what helped Stuart and her management team raise $1.2 million even at the height of 2001's economic difficulties. "Start months before you need to," says Stuart. "And to some extent, you have to put the economy out of your mind."

So the bottom line in the angel funding arena these days is simple--it's tougher to get capital, yes, but there is still money to be had out there. "Angels by nature tend to be optimistic," says Simmons, "but they just want more assurances today than they did a few years ago. That's OK--I think [it] helps everybody. But there are still plenty of angels out there looking for deals to invest in. So entrepreneurs who do their homework and prepare--they can get financed."

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Send Me an Angel

With new angel funds and networks popping up nationwide, that shouldn't be too hard to do.

By Cynthia E. Griffin

Angel Funds and Networks

When it comes to business financing, the past two years have had a Wild West feel to them. There were companies funded by venture capitalists and taken public in a matter of months, firms whose valuations soared heavenward at light speed, and entrepreneurs in their twenties cashing in on ventures they founded in their dorm rooms.

Then reality hit. Venture capitalists slammed on the brakes, and banks snapped their purse strings shut. Now hundreds of young companies and would-be entrepreneurs are left with start-up and expansion hunger pangs and no clear idea how to satisfy them.

While firms that are more established can turn to the $5 trillion in nonventure private equity available from brokers/dealers, private bankers and qualified institutional buyers, start-ups—especially those not located in the traditional investment hotbeds—will likely need to fall back on an old standby: the $30 billion angel investor arena.

The good news is, today's angel investors are much easier to find than their predecessors, because a growing number of them have created formal and informal networks. Even more encouraging is that a number of these groups are popping up in nontraditional regions.

According to Carol Sands, founder of Angels' Forum LLC in Palo Alto, California, these angel funds or networks fall into three basic categories:

1. There are "social clubs," which bring angels together to view a high volume of companies and then allow investors to execute their own investment deals. This format is a little less personal, and it places the onus on entrepreneurs to make presentations that stand out.

2. There are those that are organized and run like funds, where angels put up a certain dollar amount upfront and one individual manages the process and selects companies to present at regular meetings. Sands says these groups typically invest as a single entity but don't do follow-up work with the company; their only interest is the cash-investment relationship.

3. The final format, into which Angels' Forum falls, is a fund that utilizes a venture capital structure and process, but instead of investing other people's money, they invest their own. These groups invest in companies as a single unit, typically require a board seat and provide continuous assistance. For instance, at Beverly Hills, California-based Idealflow Angel Fund LLC, which targets technology companies nationwide, assistance comes in the form of a "virtual incubator."

These are the basic structures of the new networks, but there are also hybrids like Arizona Angels Investor Network Inc. According to Greg Cobb, managing director of the Scottsdale, Arizona, network, entrepreneurs interested in securing funding from his group must find a lead investor, who doesn't have to be a member of the network. That person handles due diligence, negotiates on behalf of interested investors, and is responsible for taking care of the LLC formed to invest in the business.

For more information on nontraditional angel financing, check out "Angel Funds and Networks".

Nontraditional sources of angel financing

Structured Funds:

•Idealflow Angel Fund LLC
Founded: 2000
Structure: Fund investing as a single entity
Investment range: Varies with number of members (each one contributes $1 million per company and can be given permission to invest additional amounts)
Target companies: Early-stage tech firms
Geographic preferences: Asia and North America

•Sierra Angels
Founded: 1997
Structure: Members investing collectively but able to opt in or out of any investment
Investment range: $250,000 to $2 million
Target companies: Start-up or seed-stage tech firms
Geographic preferences: Nevada and Northern California

HYBRIDS:
•Arizona Angels Investor Network Inc.
Founded: 1999
Structure: Network of angels who invest individually
Investment range: $500,000 to $1.5 million
Target companies: Early-stage firms in any industry
Geographic preferences: Arizona

•Gathering of Angels
Founded: 1996
Structure: Network of angels who invest individually
Investment range: $300,000 to $1 million
Target companies: Predominantly seed-stage tech firms
Geographic preferences: Atlanta; Hilton Head Island, South Carolina; Houston; Phoenix; Santa Fe, New Mexico

•New Product Development Consortium
Founded: 1998
Structure: 130 CEOs of large multinational corporations
Investment range: Starts at $500,000
Target companies: Entities in all industries at the pre-seed stage (no company formed yet)
Geographic preferences: Global

•Silicon Pastures
Founded: 2000
Structure: Network of angels who invest individually
Investment range: $300,000 to $850,000
Target companies: Pre-seed-stage, early-stage and seed-stage companies and high-growth firms in all industries
Geographic preferences: Midwest (particularly Illinois, Minnesota and Wisconsin)

What's Brewing

•The Louisiana Business and Technology Center at Louisiana State University has created a venture forum that will meet quarterly beginning in September. Entrepreneurs can present to interested angel investors. For details on the process, call the center at (225) 578-4842.

•The Genesis Group in Rapid City, South Dakota, is currently raising money for the $5 million Genesis Equity Fund and expects to begin making investments in October. The fund will provide start-up and seed financing ranging from $75,000 to $275,000 to firms with the potential to reach annual revenues of at least $1 million. This privately operated fund also has connections to governmental business assistance groups and can direct entrepreneurs to these resources for help creating presentation materials.

•Charleston Angel Partnership is creating a $5 million fund targeting high-growth New Economy firms, particularly those in the health-care, biotech and telecommunications industries. Companies should be just beyond the start-up stage with a management team in place, have a developed business plan and be looking for $300,000 to $500,000. The group meets monthly, and all deals are initially screened by the partnership administrator. For details, contact the group at charlestonangelpartners@hotmail.com.

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Cash In On Your Class

The rewards of college: friends, a degree . . . and venture capital?

Entrepreneur Magazine - May 2001

Seeking $500,000 to $5 million in angel investor capital? Your old alma mater may be able to help. UniversityAngels.com is a network of 75 university-specific sites that allow current students and alumni to post business plans for 90 days for review by accredited investors.

Interested entrepreneurs start the registration process by completing a business plan summary at the Web site. If accepted, business owners pay a one-time fee of $199, for the plan to be ranked and posted on the site. Prospective investors receive notice of all new postings. You'll have access to the entire network of potential investors; however, your school's alumni are given advanced notice of business plan postings.

If you successfully raise money through UniversityAngels, you pay a success fee to the organization.

Originally published in the May 2001 issue of Entrepreneur Magazine

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Sticky Money

The Web catches customers. Why not use it to catch investors?

By Cynthia E. Griffin, Entrepreneur Magazine - November 2000

Check'Em Out

Play Keyboard For Cash

The Internet is called everything from an information resource to a great equalizer. For those seeking business financing, another description comes to mind: facilitator.

A growing number of Web sites connect business owners with financing resources ranging from banks and venture capitalists to private investors looking to purchase stock in direct public offerings. Some charge hundreds of dollars for their assistance, while others offer services for free to entrepreneurs. Most are privately owned, but one-ACE-Net-is SBA-backed. And they each offer their own range of assistance. For example:

Direct Stock Market is an industry pioneer that began as an online market for direct public offerings in 1993 and has evolved into a site that helps connect investment bankers with entrepreneurs seeking $20 million or less (and refers those looking for more than $20 million to its banking partners). There's no charge to investors, but entrepreneurs whose applications are accepted pay a fee starting at $10,000.

Offroad Capital "acts as an agent to place private equities with a diverse network of investors, including qualified institutions and accredited individuals," says its first vice president of corporate finance, David Anderson. He also stresses that Offroad is not a matchmaking service but does help clients prepare investor information. The cost is a fixed percentage of gross proceeds, so it tends to vary from deal to deal.

Capital-Connection.com is a Web site for the more self-reliant. It charges entrepreneurs a $75 membership fee and lets them decide which investors they're interested in. Then it helps entrepreneurs review their proposals and match them with potential accredited investors in their database for 90 days. "If a match is made, we tell the investor by e-mail or fax, then send them a blind description of the project. If investors want additional information, we tell the entrepreneur the name and contact information of the investors," explains Dee Power, Capital-Connection.com's co-founder.

The key to finding the right online financing site is determining what you need: whether it's someone to help you through the complexities of conducting a DPO or the low-cost, low-maintenance approach of a matchmaker service. Whichever option you choose, remember, online searching should only be part of a comprehensive strategy to find financing.

Access to Capital Electronic Network, or ACE-Net, is a password-protected, fee-based national securities (stock) offering listing service. Initially developed by the SBA's Office of Advocacy, the site is managed by the Whittemore School of Business and Economics and maintained by the Research Computing Center of the University of New Hampshire. Regional ACE-Net Network Operators (listed on the site) manage the day-to-day operations and can charge entrepreneurs and investors up to $450 annually to enroll in the service. Investors are self-certified accredited individuals, venture capital firms, Small Business Investment Companies (SBICs) and institutions. In order to participate in ACE-Net, entrepreneurs must be eligible to sell securities in their company and must conform to SEC rules for Regulation A or Regulation D Rule 504. These requirements are detailed on the site.

BusinessFinance.com is a free Web site offering entrepreneurs access to funding ranging from commercial finance to venture capital. Those interested in venture capital should be seeking at least $250,000, have a management team with a proven track record and be in an extremely high-growth industry. Those seeking other types of investment funds will find sources for private placements, reverse mergers, acquisitions, mezzanine funds and convertible debt offerings. In addition to funding sources, this site features an expert center, which includes links to SCORE, basic information about business assistance and business software to purchase.

Capital.com is an online resource and financial portal offering small and midsized companies free access to capital and financial services ranging from loans and leasing to investment money. It considers requests ranging from $250,000 to $100 million from entrepreneurs who have been in business at least three years and have revenues in excess of $1 million. Included in the assistance this site offers are an automated online valuation system and a team of investment bankers with whom you can talk directly for free to determine what types of financing are best for your company.

Capital-connection.com is a membership organization that provides computerized matching of investors and entrepreneurs. This site says it does not give information to or accept listings from intermediaries, finders or brokers. For a $75 membership, a blind description of members' investment projects are posted for 90 days. The service then automatically matches investors with opportunities and contacts each party to let them know about the potential match. In addition, members get the site's list of venture capital companies and SBICs organized by state. They also receive a report on what venture capitalists really want and the booklet 50 Tips for a Better Business Plan.

Capital Matchmaker matches investors with investment opportunities worldwide from entrepreneurs who seek at least $25,000 in funding. This service charges entrepreneurs $89 to $249 to list their executive summaries for three months on the Web site. (The cost depends on how much money you're trying to raise.) You have the option of sending your summary in on a disk, by e-mail or by mailed hard copy ($30 extra charge).

Commercial Finance Online allows entrepreneurs to list their financing needs free and then offers two ways to find a match. You can do an easy search, which does not require registration, to find more generic financing, or you can become a registered member and submit a more detailed description of your needs. In this case, your profile is automatically matched to that of the finance members. This site offers a fairly exhaustive breakdown of financing options ranging from debt to equity.

Direct Stock Market, which began as an online market for direct public offerings in 1993, has now evolved into a site which helps connect investment bankers with entrepreneurs seeking $20 million or less (those seeking more than $20 million are referred to Direct Stock Market's banking partners). DSM will refer potential deals to investment bankers for underwriting and will distribute the banker's offerings electronically on their site. Those DSM can't refer to the investment bankers will be directed to the resources they need to help them become a potential investor-owned entity. DSM will also take doable deals that are below the investment bankers' financial threshold, spruce up the documentation, and then help the company raise the capital needed.

The Elevator is a password-protected site that allows entrepreneurs 150 words to hook investors. Registration is free for business owners and $150 for investors. In order to visit any area of the site, you must register at the reception desk. From there you move to level three to compose the 150-word pitch. This is reviewed by Elevator staff members, who charge $79.95 if revisions or more information is required (only about one-fifth of pitches posted on the site need revising). Once your pitch is approved, a full business plan must be posted on level four. This is where predominantly local investors go to review plans. Entrepreneurs go into the lounge to check to see how many people have looked at their plans. Entrepreneurs and investors meet on the conference level to negotiate deals.

freePrivateCapital.com connects accredited investors and early-stage growth companies. Entrepreneurs complete a company profile free of charge. It's placed in the database and is matched with all the investors who have created a free profile that matches the business owner's specified criteria. Investors can then log on to the site to review the entrepreneur's profile; if interested, they request that their profile to go into the entrepreneur's investor pool. This enables the business owner to contact the investors directly. Entrepreneurs can also authorize to have their contact information released to investors.

Garage.com is a dealer/broker that helps technology start-ups find seed funding via a password-protected Web site. Entrepreneurs who have developed a basic business idea and strategy, assembled a core management team and who want to raise $1 million to $5 million from accredited investors, venture capitalists or corporations start the process by going to the Web site and clicking on Garage. There you receive a password, which enables completion of a company overview. This is reviewed by Garage.com, and if it meets the criteria, the business is invited to complete a more detailed application. The most promising are invited to meet in person with Garage.com staff in one of their offices. The companies with the most interesting investment opportunities are placed in the Portfolio section of the Web site, where the business owners receive valued-added grooming services before being presented via online to member investors. Garage does not participate in negotiations between entrepreneurs and financiers.

Those firms who have been asked to submit a detailed application but don't become portfolio companies are placed in the DataMine, which investors can peruse on their own. In addition to the online connection, Garage.com hosts start-up boot camps and monthly showcase breakfasts to introduce portfolio companies to investors. Once a Portfolio company receives funding, Garage.com takes a percentage of funds raised and an opportunity to purchase stock in the respective company.

Idealive, a fee-based online marketplace where the creators of intellectual property-type products such as filmmakers, musicians, artists, visual artists and inventors can find accredited investors willing to provide funding for as little as 1 percent of a project to as much as 100 percent. For a $2,000 one-time fee (that includes the fees associated with creating a public company), arts entrepreneurs can list their project prospectus, which should include a description, reviews, interviews, links to Web sites, downloading capabilities and more. While anyone can view the artist's work, only registered investors can access the offering and bid via e-mail.

Currently, the site focuses on working with emerging artists who have a following but who have not gone that next step. By the end of the year, a Basement section will be added, where for $50 (no $50 fee until February 2001), any artists seeking funding will be able to post a prospectus.

NVST.com Inc. is an Internet site connecting entrepreneurs seeking early-stage (but not seed or start-up) capital to private equity funding sources. There are three levels of membership for business owners. The entry level is a free service where owners can list a brief business profile, the opportunity and contact information. Interested investors will contact you directly. For $39.50 a month, entrepreneurs can post their opportunity and also have the opportunity to search the site's advisor and investor database. A $1,995 fee entitles business owners to list their opportunity in the Private Placement Library for six months. This secured portion of the site is only accessible to accredited investors. Here entrepreneurs post only a one-line description and are automatically notified if an investor is interested. The business owner controls how much and to whom information is released.

In addition to facilitating matches, nvst.com offers an increasing number of tools at each membership level to help entrepreneurs complete tasks such as company valuation and investor due diligence.

TECNET, the Technology Capital Network Matching Service, is a computerized matching program that charges both the entrepreneurs and the potential investors. Entrepreneurs needing seed or early-stage funding pay $300 for one year and must fill out a four-page application detailing the company, market and how much money they're seeking. Business owners are also required to send an executive summary and one-page, five-year financial projection. Investors, who must self-certify that they are accredited by Security Exchange Commission standards, also complete a four-page summary detailing their investment criteria, industry they seek, geographic boundaries, investment amounts and what expertise they bring to the table. When a match is made, TCN sends the appropriate information to the investor, who must then contact the service for the entrepreneur's information. At the same time, the entrepreneurs is sent the contact data for the investor.

The Capital Network is a fee-based matching service that focuses on connecting early-stage entrepreneurs seeking $500,000 to more than $10 million with venture capitalists as well as corporate and accredited investors. Before paying $750 for six months, entrepreneurs can submit an application characterizing the venture along with an executive summary to see how many investors in the TCN database match up. If you like the results, pay the fee, and if an investor indicates an interest, TCN sends contact information to both parties.

The fee includes review of the executive summary and assistance in formulating an effective one. In addition to the matching services, TCN hosts international venture conferences, hosts a monthly angel dinner and provides for-fee mentoring services on a case-by case basis.

Universal Business Services is a fee-based matching site. For $495, Universal will list an entrepreneur's opportunity on the site until funding is received. These projects can be viewed by anyone with access to the Internet, but in order for potential investors to obtain contact information for a business owner, they must register.

Virtual Wall Street connects small to midsized companies seeking anything from seed to follow-on funding with accredited and corporate investors through the Virtual IPO section of its Web site. Eligible entrepreneurs fill out an application form in the corporate services section detailing the company, its financial needs and management team, and within 48 hours you will be notified if your are accepted. Business owners are listed for free in the Virtual IPO, and Virtual Wall Street will act as your agent in conjunction with the two broker/dealers the site is affiliated with. The fee for the services depends on the company but can range from a percentage of the funds raise to equity only.

Vista Growth Capital, VistaWEB is an investment banking firm that has created a comprehensive digital marketing program targeting entrepreneurs in emerging companies with proprietary technologies. Business owners can find funding ranging from private placements to investors for their IPOs. Vista, whose Web site is available in 10 languages, takes a company through the entire funding process from preparing a private placement or IPO offering to creating an online road show and even a live Webcast. The cost ranges from $25,000 to $250,000 and begins with a $1,500 submission fee. Once a business plan with financials is submitted, Vista subjects it to a merit approval due diligence process. If approved, the company has an opportunity to go into the sites' IPO Spotlight. Anyone with Web access can view the offerings here, but only sophisticated, accredited foreign investors who are registered with Vista have the opportunity to invest. Vista does not charge stockbroker commission, underwriting or finder fees and will invest up to $1 million itself in technologies it considers especially promising.

Here are a few guidelines to help you evaluate online funding services:

"How long has the online company been in business? At least one year is a good rule of thumb," says Dee Power of Capital-Connection.com.

"Evaluate the Web site," says Power. "The more educational information provided, the more it indicates a depth of commitment to helping entrepreneurs find capital."

"Who is behind the matching service?" asks Power. "Is there a person or company you can contact for more information?"

"Carefully examine 'free' services. Some sites allow entrepreneurs to list for free, but if a match is made, you must pay to find out who you're matched with," says Power.

Who are the investors on the site? Are they venture capitalists, institutional investors, private foundations or accredited investors? Are they listed on the site?

Listing his company on an Internet investor matching service was a no-brainer for Gary Puckett, co-founder and COO of Los Altos, California-based SalonsConnect.com, a business-to-business Web site that connects salon owners with manufacturers, distributors and service providers in the beauty industry.

"We embarked on a number of fund-raising avenues. A few people suggested going to the Internet," explains Puckett. After reviewing several different Web sites, what sold him on his final choice was the price and simplicity of the information request.

After two months on that site, Puckett received about 30 inquiries, most of which came from brokers offering to help the company find money, and he has serious discussions in the works. "One reply came from a [venture] company with a large operation based out of Europe, and this is a group we've begun some initial discussion with and provided our business plan [to]," says Puckett. He studied that VC's Web presence and researched its investors before sending information about SalonsConnect. He hopes these simple actions have helped separate the dross from the potential gold.

Contact Sources

•Clay Womack Direct Stock Market, Mike Harris, (310) 566-4500
•Dee Power, Capital-Connection.com, P.O. Box 18460 Fountain Hills, AZ 85269, (480) 837-9590
•OffRoad Capital, David Andersonm, (415) 796-5127
•Internet Capital Bulletin Board, www.icbb.com

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From Zero To 60

Investor Angels offer seed capital and support for start-ups.

By Paul DeCeglie, July 18, 2000

Business Start-Ups magazine, January 2000

Would $100,000 help get your Internet-based business off the ground? Investor Angels (IA) is offering seed capital and high-powered support to start-ups whose proposals are selected for development. IA launched its Web site (www.investorangels.com) in 1998 in search of a few viable concepts. "We were hit with hundreds of proposals from visionaries all over the country," reports David Cook, founder and CEO of the Hollywood Beach, Florida, company.

Cook, a seasoned entrepreneur with management and high-tech experience, says IA will select proposals with the best potential and provide those businesses with everything they need--like start-up funds, business plans and help going public. "If your plan is sound, Internet-focused, and you're committed to making your business a success, Investor Angels will be there for you," Cook promises.

To maximize the number of start-ups financed and developed, Cook is taking IA public with an SEC Regulation A offering. "We plan an IPO of 5 million shares in [December 1999]," he said at press time. "Each shareholder will be able to vote on which business proposals to pursue." At the initial virtual proxy meeting, the first 40 proposals to win more than 51 percent of the votes will be financed and developed. "Shareholders may also purchase pre-IPO shares in each venture, affording them the opportunity to participate financially in ground-breaking businesses without the need for the traditional [investments of] $100,000 to $200,000," Cook adds.

Once a proposal has been selected by IA's angels, IA forms a subsidiary corporation to develop the concept. IA streamlines the incorporation, bylaws, minutes, tax registration, corporate-banking facilities and Employee Stock Ownership Plan. After receiving the seed capital, the management of the new subsidiary completes the business and marketing plans; registers the trademarks, patents and copyrights; and registers a prospectus to raise operating capital.

"Each step of the way, [entrepreneurs] are guided by angels on an accelerated path more compatible with the growth demands of Internet-based businesses," says Cook. "On their own, most Internet visionaries don't [know] how to start or run a company."

Cook should know: In a previous life, he performed due diligence for major investment banks. In three days, Cook would do a top-to-bottom technology assessment and determine the start-up's chances for survival in the marketplace, then spend three weeks on corporate due diligence to determine who owned the company--or if a company even existed at all. He uncovered a variety of blunders, such as misfiled incorporations, negligent tax registrations, use of the wrong business name, and--his personal favorite--articles of incorporation that banned the company from operating in its existing business.

Says Cook, "Our goal is to do all that messy corporate stuff and do it right the first time so the visionaries can focus on winning the race. We like to think of it as `Business incubation at cyber-speed.' "

Paul DeCeglie (MrWritePDC@aol.com) is a former staff reporter for Journal of Commerce and American Banker

--------------------------

Highway To Heaven

You don't need to look on high--and low--for angel investors. Try these proven paths.

By Art Beroff and David R. Evanson, Entrepreneur Magazine - June 1999

Through the sheer ingenuity of their Internet-based promotional and sweepstakes management service, RealTime Media Inc. co-founder Chuck Seidman and his partners, Bruce S. Allen, Bob Auxier, Peter Jensen and Charles Ruderman, have persuaded some of America's most admired companies to hire them.

The Haverford, Pennsylvania, firm has a lock on the technology for creating scratch-and-win promotions on the Internet (patent pending). Rather than scraping faux gold leaf off of a paper ticket, Internet surfers scratch away with their mice to reveal whether they've won prizes.

As it turns out, the lure of winning $1 million instantly--or, as with the current Beat the Street promotion, $20 million for correctly guessing the close of the Dow Jones and NYSE average on a particular day--is an extremely effective technique for directing Internet surfers to a particular site. "It's all about driving traffic," says Seidman, 47. "Being on the Internet means nothing unless you can get traffic to your site and convert [surfers] into members or give them incentive to take a desired action." Apparently the heavyweights agree, because the likes of Microsoft, Lycos, Ford, Yahoo!, the NFL and CDnow have hired RealTime to create custom instant-win promotions to drive traffic to their Web sites.

All this has been accomplished with the kind of entrepreneurial panache successful companies are made of. Still, Seidman understands that Internet promotion is big business--and his competition is well-funded. "To compete and take this company where we know it can go, we need more capital," he says.

Seidman figures his company needs $3 million, which has him beating the bushes for angel investors. Unlike the promotions he's creating, bringing angels to the table is no game.

For companies like RealTime, raising money from angels, or any kind of investor for that matter, generally is done in four steps: identifying prospects, preparing to contact them, contacting them and closing them. But as with falling dominoes, everything depends on that first critical action. And in this case, entrepreneurs can't possibly hope to finalize deals with angel investors until they succeed in locating prospects.

So where do angels hover? There are a number of predictable haunts, ranging from Internet and chamber of commerce cliques to universities, business incubators and your professional advisors. Here's a rundown on how to get started. (And remember, none of this will be easy, so be prepared to dig hard.)

For many people, a starting point in the quest for angels is the Internet. But keep in mind that at this point, the Internet is a communications medium, not a capital-formation medium. It may turn up leads, but it's not going to deliver the goods lock, stock and barrel.

A good first stop is ACE-Net, an SBA initiative that uses the power of the Internet to match entrepreneurs with accredited investors. By listing your deal on ACE-Net, you make yourself known to the thousands of angel investors who have access to the site.

Moreover, according to Jere Glover, chief counsel of the SBA's Office of Advocacy, ACE-Net now offers contact information for 38 so-called nodes that can act as entrepreneurs' connections to angel investors. "Many of these nodes operate their own angel networks," Glover says. Their names, addresses and telephone numbers can be found at https://ace-net.sr.unh.edu. (The "https" designation indicates that ACE-Net is a secure site, with limitations on access.)

You can also type the words "angel investor" into your search engine, and all manner of matter will surface. There's something new on the Internet every day and some of what comes up may be worth looking into. But beware: There's a lot of junk out there, too.

Another place where angels sometimes congregate is the business incubator. Angels like new business activity, and incubators are often full of promising start-ups. According to Dinah Adkins, executive director of the National Business Incubation Association, some 60 percent of the 550 business incubators in North America offer formal or informal access to early-stage financing, which often means angels.

In addition, many incubators screen applicants, offering what amounts to a quality-control mechanism that attracts investors. In short, you can gain access to angel investors simply by being a member of the club. You can obtain a list of incubators nationwide by sending a self-addressed stamped envelope to the National Business Incubation Association, 20 E. Circle Dr., #190, Athens, OH, 45701-3751. You can also call (740)593-4331 or visit its Web site at http://www.nbia.org.

Universities with entrepreneurship programs can be fertile ground for finding angels. The connection between entrepreneurial academia and successful business start-ups is so well-established (Stanford University and Cisco Systems--need we say more?) that universities attract even more angel investors than incubators do.

The important thing is getting in, seeing if there's a vein to be mined and, if there's not, moving on. Many universities have alumni angel networks, SBA-sponsored Small Business Development Centers, and professors and deans who are wired into angel investors, as well as new venture workshops that are really networking opportunities.

If there's a university nearby and it has an entrepreneurship program (no matter how formative), it's worthwhile to call someone on the teaching staff, make an appointment and sit down with him or her to see how the program can help you find investors. If you have a choice of universities nearby and you want to determine which has the top program, buy a copy of a study that was published in The Journal of Business Venturing called "Measuring Progress in Entrepreneurship Education" by Elsevier Science. Call (800)282-2720 for a reprint of this article, which appeared in Volume 12, Issue 5 of the publication. The cost is approximately $44.

There are any number of formal networking events organized for the express purpose of putting angel investors in direct contact with capital-hungry entrepreneurs. For example, MIT Enterprise Forums, which are held in some 14 cities across the United States and five additional international cities, take the form of a business-plan presentation--followed by a critique of both the plan and presentation--to professional investors, who are often institutional venture capitalists. But there's plenty of time before and after the program to network, see and be seen, pass out cards, and find leads.

Other formats include panel discussions, breakfast workshops, cocktail receptions and brown-bag seminars. Sponsors range from chambers of commerce and professional consulting organizations to universities and state economic development organizations. There are also venture fairs, which give entrepreneurs direct contact with angels in a "walk the midway"-type arrangement. You need to be careful with fairs, however. Many such events are organized to put companies in front of institutional venture capitalists. If you don't qualify for that kind of investment--and very few small businesses do--you'll find trying to get a slot to be a frustrating and generally unproductive use of your time.

To find your venue, call the nearest chamber of commerce and ask if they have a venture group. If you need to locate a chamber near you, call the U.S. Chamber of Commerce in Washington, DC, at (202)659-6000 or visit its Web site at http://www.uschamber.org. If you want to find out if there's an MIT Enterprise Forum scheduled for a city near you, call the MIT Enterprise Forum headquarters at (617)253-0015 or visit its Web site at http://web.mit.edu/entforum/

At the end of the day, it's still the lawyers and accountants who best know where the money is. And either overtly or subtly, part of what many of them are selling is access to investors that might have an interest in your business. In fact, if you own a hotshot technology or Internet company, some law firms and accounting firms will actually defer some (or, if you're lucky, all) of their fees until funds are raised.

At RealTime, Seidman retained Philadelphia-based powerhouse Morgan, Lewis & Bockius, where Stephen Goodman is the lawyer of choice to the region's growing cadre of tech companies. "If there's somebody we need to get to," says Seidman, "he can be effective in making an introduction."

Unfortunately, you can't simply call an attorney or accountant and tell them to turn on the spigot; it's got to be done in the context of an engagement--some engagement, any engagement, that gets everything on a professional footing, such as assistance with financial projections. As the twist to the old saying goes, it takes money to raise money.

Meanwhile, back at RealTime, Seidman and his partners are caught in the archetypal entrepreneur's warp. They're so busy building and running the business that raising money becomes even more challenging. "The only thing I can say," says Seidman, "is that it's a good thing there are so many paths we can take. Otherwise, we'd never find the time to find the investors."

In addition to the organizations listed in this column, the following are some useful Internet privacy sources for small companies:

•Association for interactive media (http://www.interactivehq.org)
•The center for democracy and technology (http://www.cdt.org)
•U.S. department of commerce (http://www.doc.gov)
•Electronic direct marketing association (http://www.edma.org)
•Electronic privacy information center (http://www.epic.org)
•Federal trade commission (http://www.ftc.gov)
•Privacyexchange.org (http://www.privacyexchange.org)

If you don't want to join an online privacy seal program, try following the Federal Trade Commission's principles of fair information practices, which are available at
RealTIME Media Inc.,http://www.realtimemedia.com

David R. Evanson's newest book about raising capital is called Where to Go When the Bank Says No: Alternatives for Financing Your Business(Bloomberg Press). Call (800)233-4830 for ordering information. He is a principal of Financial Communications Associates in Ardmore, Pennsylvania. Art Beroff, a principal of Beroff Associates in Howard Beach, New York, helps companies raise capital and go public.

--------------------------

What Price Advice?

When looking for financing, consider the expertise a value-added investor can offer.

By David R. Evanson, Entrepreneur Magazine - July 1997

Entrepreneur Gerard Powell attributes his success to a simple strategy: Take a product or service that is sold only to the wealthy and make it affordable to the masses.

Following this formula in the early '90s, Powell parlayed a modest investment into a small fortune with his Y-Rent program, which allowed consumers to buy homes for no money down, with monthly payments not much higher than their rental payments.

So in late 1994 when Powell learned that cosmetic surgery was something only very wealthy consumers underwent, a light bulb went off in his head. He joined with partners Charlie Lynn and Vincent Trapasso in their fledgling venture, Cooperative Images Inc., which markets elective surgeries on behalf of physicians.

"The key to the market was making the procedures affordable," says Powell. Through elaborate financing mechanisms and tight credit controls, Powell reduced the price of some surgeries to just $38 a week.

But to put the business over the top, Cooperative Images wanted an infusion of capital to ramp up marketing efforts and increase the number of physicians under contract. While Powell was certain of his ability to create a sales and marketing dynamo, he was less certain in the arena of high finance. "I began to question exactly what I needed," says Powell. "Was it just capital, or was it something more?"

What Powell had hit upon was the great divide in early-stage financing. Did he need a passive investor who would simply deliver a check at the closing table? Or did he need a more active investor--sometimes referred to as a value-added investor--who would help guide the company to the next growth plateau?

The distinction is vital to consider. After all, some entrepreneurs don't appreciate advice at every turn from what appears to be a meddling investor. At the same time, a business owner who wants help from a new shareholder and doesn't get it might flounder his or her way into bankruptcy.

For Powell and Cooperative Images, these considerations were more than academic. Offers of capital came from two investors occupying opposite ends of the spectrum in terms of their involvement in the company--and left Powell searching for the answer to his happy dilemma.

One of the potential investors was Richard Gwinn. Gwinn's company, Radnor, Pennsylvania-based The Abbotts Organization, has been buying, selling and investing in companies for more than 20 years. Gwinn's approach to early-stage investing is hands-on; he not only invests in companies but also offers strategic management services.

The other potential investor was a much larger competitor from Powell's home-building days. This investor had enjoyed substantial success but, in Powell's opinion, didn't have as much knowledge of or connections with the capital markets Powell felt would be critical to Cooperative Images' long-term success.

While Gwinn concedes that value-added investors are not right for every entrepreneur, in most cases, he says, they can play an important role in shaping a company's destiny. "The reason an early-stage company should seek a value-adding investor rather than simply a source of funds," says Gwinn, "is that management, financing, cash management and marketing hazards are absolutely critical to overcome, and an experienced value-adding investor, if he or she is the right one, will spot costly problems early on."

In the case of Cooperative Images, Gwinn brought big guns to the offering table in the form of other experts and professionals who would invest along with him. These included a former partner from a Big Six accounting firm, a corporate attorney, and a successful entrepreneur who had done well in the telemarketing industry.

The expertise in telemarketing was more than a little relevant since a good part of Cooperative Images' success relied on effective telemarketing operations. In Powell's mind, these investors possessed not only a deep well of related experience but also the contacts in investment banking that would help him attain his ultimate goal of setting up an initial public offering or selling the company.

While Gwinn espouses a hands-on approach to investing, he knows it doesn't work in every situation. "If you're autocratic or egocentric in nature," he says, "you don't want the kind of investor who is going to challenge your thinking on sensitive and critical areas."

In addition, Gwinn says that entrepreneurs who can afford the price of outside assistance can also forego seeking out value-added investors. "You can get all the expertise, guidance and counsel you need from accountants, attorneys, marketing and financing consultants," says Gwinn.

There's an important distinction between advice from shareholders and consultants, however. "The consultant is often passive, providing advice, which if followed, should generate a successful result. The value-added investor, on the other hand, will provide advice but has a vested interest in its successful implementation."

If all this sounds a little too touchy-feely, there is a more concrete reason for considering what type of financial partner you really want. In general, hands-on, value-added investors require more equity in a company than strictly passive investors. Why? The value-added investor is taking the same financial risk as the passive investor but with the additional investment of his or her time. This added investment generally translates into owning a bigger piece of the company.

This was true in Powell's situation. Gwinn and his co-investors offered a package that would give them about 18 percent of the company. The passive investor's deal would cost Powell just 12 percent of his equity. Powell feels that 6 percent difference may someday soon be worth $6 million. Knowing this, he is reluctant to give it up unless absolutely necessary.

What's swaying Powell in the value-added direction, however, is the other great elixir of wealth: time. "I can grow the business," he says. "But if at the end of three years we want to sell it, the company will not get the highest possible price unless it's packaged properly right from the beginning, which is what I hope a value-added investor would help us do." In other words, getting the highest possible price on the back end might be worth some sacrifice on the front end.

Though at press time Powell was undecided about which offer he would take, he believes going with hands-on investors might pay big dividends down the road. "All schooling requires tuition," he says. "Mine might be 6 percent. But with the knowledge I acquire, I'll make it up 10 times over my lifetime."

Contact Sources, The Abbotts Organization, fax: (610) 964-3630;

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Can Women Raise Angel Funding?

Despite Impressive numbers from women entrepreneurs, many still struggle to attract equity capital for nontech ventures.

By Crystal Detamore-Rodman, December 27, 2006

When Sharelle Klaus launched Dry Soda in 2005 to produce and distribute her brand of nonalcoholic beverages to high-end restaurants and food retailers, she didn't have to look far for potential backers. As president of the Forum for Women Entrepreneurs in Seattle, it was her job to network with angel investors. So when it was time to raise equity capital of her own, she quickly put her address book to work. "When I started, all my connections were with high-tech investors," recalls Klaus, 37, "but those high-tech investors knew other investors." Not only did those other connections invest in her business, but they also helped her staff the approximately $1.5 million company and find distributors. Klaus also recently completed a $1.5 million round of angel financing.

A recent study from the University of New Hampshire Center for Venture Research shows that women outperformed all entrepreneurs in receiving angel investments to fund their business ventures in 2005. Although women-led ventures accounted for 8.7 percent of the entrepreneurs seeking angel capital, 33 percent of those women received angel dollars in 2005, while the overall rate was just 23 percent, according to the study.

"That's a really recent trend, and I was amazed when I saw it," admits Stephanie Hanbury-Brown, founder of Golden Seeds LLC, an angel investor group based in Cos Cob, Connecticut, that invests exclusively in women-led firms. "The [number of] women entrepreneurs getting venture capital has [hit] a 10-year low."
"At the same time, women are starting businesses at twice the rate of men today," Hanbury-Brown adds, citing a statistic from the Center for Women's Business Research. "The quality of the women starting businesses and the quality of the businesses they are starting has increased in the past several years."

But advocates for women-led firms argue that entrepreneurs like Klaus may be exceptions. More often than not, they say, women entrepreneurs lack access to the traditionally male world of angel investing. That--combined with angels' tendencies to invest in only high-tech ventures--has kept many women entrepreneurs at arm's length.

"[Until recently], women's experiences were more in industries that didn't grow in scale as much, so they were not as likely to be candidates for large equity investments," says Marianne Hudson, director of angel initiatives for the Ewing Marion Kauffman Foundation.

In fact, it was the "imbalance of VC investments that go to men entrepreneurs" that moved Hanbury-Brown to launch Golden Seeds in 2004. "I realized women were starting companies in a whole range of industries [where] typical angel investors probably would not get beyond the executive summaries in their business plans," says Hanbury-Brown, whose group invests in a variety of industries in addition to technology.

Currently, only about half a dozen women angel groups operate in the U.S. However, that number is likely to grow. "Anecdotally, I would say there is a trend toward more women becoming investors but also more women becoming investors and wanting to invest in women," says Maggie Kenefake, manager of growth entrepreneurship for the Kauffman Foundation.

Experts say women investors are more likely to support a broader range of investment opportunities. Adds Kenefake, "Their number-one priority is a solid investment and a healthy financial return, but I think women investors [are] bringing different life experiences to the table, [giving] them a different perspective, and perhaps they will consider opportunities that their male counterparts might not."

The New SBA Is Ready to Help

2009-05-03T16:20:00.000-07:00

Alberto Alvarado, the district director of the SBA's (http://www.sba.gov) Los Angeles office, discusses the agency's new stimulus-backed provisions.

By Jennifer Wang, April 23, 2009

After years of budget cuts, the U.S. Small Business Administration is finally getting a $730 million boost from the American Recovery and Reinvestment Act of 2009. The stimulus bill money, coupled with an additional $15 billion from the Treasury Department to buy up SBA-backed loans, are for some, an indication that the agency will play a pivotal role in economic recovery. Although the SBA doesn't issue loans directly, it facilitates small business lending through banks and other financial institutions by mitigating associated risks.

Alberto Alvarado is the district director of the SBA's Los Angeles office, which oversees the country's highest-volume SBA loan portfolio, valued at approximately $1.3 billion. We asked him to talk about the stimulus bill and the new programs the SBA would offer to provide access to credit, unfreeze the markets and re-inspire lending.

What is the SBA's role in the recovery?

At the end of the day, we are the messengers of hope. We have to go out there and encourage the businesses. Many, many are discouraged. Many, many have closed down. But we see the [bill] as a clear ray of hope, and certainly the best ray of hope we've had in a long time.

Are the programs going to have a visible impact?

We believe so. Starting this fiscal year [October 1, 2008], we've had a significant, significant decline in lending. In 2007, we did on average 120 approvals a week; last year, 70 a week. Last month we had about 20 a week. But once investors start to buy loans and the markets start to move, we expect the weekly number to pick up.

What's holding up the SBA loan markets?

One of the drivers in increasing loan volume has been the ability of a bank to sell a loan in a secondary market and obtain a significant premium. Then the bank could go out with increased liquidity and make more loans. Now, there are $3 billion in loans stuck in that secondary market. For about a year, banks haven't been selling, investors haven't been buying and premiums are low.

How long will the additional money be able to fund these new programs?

The funding will continue to the end of the calendar year and into next year, but that's about as much money as there is to run those programs. We think these are good programs and they will certainly jumpstart things. Whether they will be needed beyond that period is not clear at this point.

Are you expecting additional help from the federal government?

We're not looking necessarily for new programs or features because we think these are significant. Obviously there will be refinements as we go down, but nobody's thinking of these programs not netting the results [because] these measures dramatically increase the SBA's ability to help small business owners.

What's the SBA's outlook?

In concert with other things that are happening, we feel very positive about [the future]. We've seen excitement in the last few weeks, and we expect significant increase in volume and an increase in interest in our programs by the lenders and businesses.

What should business owners do to get the most up-to-date information and position themselves for loans?

Go to the website to read about the various provisions. Visit our offices and go to our events. Get paperwork in order.

Businesses will be able to contact us directly. We can put them on a track to do government contracting. We've also got lists of the most active lenders and we can put them in touch with the sources of those funds.

Breaking Down the $730 Million
Here's a look at where the money's going:

•$375 million: Temporary reduction or elimination of loan fees and increased loan guarantees

How it helps: Savings from lending fees (up to four percent of the loan value) can be significant. This is retroactive to February 17, when the ARRA was signed into law.

Guarantees--essentially a promise that the government will back any defaulted SBA loan--can be up to 90 percent, up from around 75 percent. Loans submitted after March 16 carry the higher rate.

•$255 million: Establishment of an emergency loan program

How it helps: Essentially, these loans of up to $35,000 will be interest-free, 100 percent guaranteed and fast-tracked to help struggling businesses keep up with bills and pay down existing debt. Repayment won't start for 12 months, but the full amount must be repaid within five years.

•$30 million: Expansion of the Microloan program

How it helps: The SBA will be able to finance up to $50 million more in microlending and provide $24 million in assistance grants to help train business owners on relevant financial and technical topics.

•$25 million: Increasing staff to meet new program demand

•$20 million: Implementing the SBA's technology systems to streamline lending and oversight processes.

•$15 million: Expanding the surety bond guarantee program

How it helps: The limit for surety bonds the SBA can guarantee and finance is now $5 million, up from $3 million. These bonds are vital to government contracting opportunities because they guarantee the contractor will not default on the contract or fail to perform.

•$10 million: Ensuring the Office of the Inspector General is equipped to deal with additional oversight and audits of programs funded by the ARRA.

Create Your Own Economic Stimulus

2009-04-29T14:51:00.000-07:00

Strategic planning combined with positive action can take your business to the next level, even in a downturn.

By: Pattie Simone, 04/15/2009

Now more than ever, the time is ripe for intrepid entrepreneurs to take their business to the next level. Here's what you need to know to deal with assorted growing pains and develop a strong, achievable expansion plan.

"The best managers and the smartest people hire people who can replace them," says Sandra Fathi, 38-year-old president and founder of Affect Strategies, a New York City PR and marketing firm specializing in technology. Business owners seeking stability and growth can take that advice to the bank. Fathi's firm went from a solopreneur-run resource to a company with more than 10 people in fewer than eight years--all while she juggled mommy duties for a growing family (she has two children, ages 8 and 3).

Of course, Fathi did a few other things right along the way, including creating a professionally designed website and collaterals, mining her industry connections and sourcing projects (paid hourly) to other talented, senior-level women who were putting family first. Fathi also was prudent with expenditures, subletting space from another woman business owner only when she had the business in place that required hiring more people.

She also mapped out a business plan that included a proposed budget and timeline, as well as a strategy detailing the types of clients she would seek out and how she would go after them (through her website, blogging, social media tools and industry organizations).

Here are Fathi's top six tips to take your business to the next level:

1.Know how to run your business and how to build your own financial reports.

2.Get your team in place, including: an accountant, lawyer and key service providers, along with independent contractors and part-time help.

3.Prune your work force. Fathi says some people have issues you can't resolve. Knowing your limits and their limits can help you make the right decisions.

4.Concentrate on your core business.

5.Get lines of credit in place before you need them. When Fathi started out, that included raising the limits on several credit cards, using them strategically as a last resort to make payroll.

6.Invest in marketing. Fathi recently rebranded her firm and has several significant campaigns running so that her company is top of mind when prospects are ready to do business.

Although Fathi has never wanted to own a large company, she considers it a great time to build her firm. "There are a lot of opportunities in a down economy; it's about survival, but it's also about planning for the future. What people don't do now will put them six months behind (their more aggressive competitors)."

You Need Passion and Planning

Nikki Hardin's journey to success started with the vision of a new kind of magazine, one that was a little literary and a little feminist, with a lot of style. So the then-50-year-old South Carolinian (a native of Kentucky) created Skirt! magazine with $400 and a dream--working hard with a friend to sell ads until they had enough to fund the first printing. She didn't take a salary for two years and didn't have health insurance.

Expand Your Business Here are seven tips to get you where you want to go:

1.Watch your cash flow.

2.Make a strategic action plan.

3.Work your networks.

4.Gather smart team members.

5.Seek out a mentor.

6.Invest in systems, polish procedures.

7.Market your business with gusto, especially in a variety of online and social networking platforms.

No matter what business you're in, it takes strategic planning and positive action to get your business on the expansion track, and keep your bottom line healthy in any economy.

"It was a crazy, stressful time, but I had a very creative designer, and I traded with her to create the brand and make up an oversized layout, " says Hardin, who admitted it took several years before her rates were high enough to make any money. Thinking ahead, she formed an S Corp and trademarked the name statewide and nationally. Hardin and the designer worked out of home offices, and a commissioned salesperson soon took over selling ads.

When it appeared she was onto something, Hardin reached out to two friends: investors who kicked in $12,000 apiece for (at that time) almost worthless stock. In 2003, this pioneering publisher sold her company for a tidy sum--netting her investors a huge return.

Hardin's ultimate success did not happen overnight and most certainly didn't happen by accident.

Here are Hardin's four suggestions for building momentum in your business:

1.Make sure you have enough money. Hardin suggests a two-year cushion.

2.Choose a business that not only you love, but that other people love as well. To do that, thoroughly research what you are going to provide.

3.Hire professionals. According to Hardin, not scrimping on that area of her business kept her on the straight and narrow.

4.Have some sense that you are filling a niche.
While Hardin and Fathi's paths are different, their accomplishments came about because they share two critical components: They have a passion for what they do, and they took action to move their dreams forward.

If you've got the passion and a product or service people need, you can achieve similar results, even with limited resources. Be authentic; engage in meaningful conversations with prospects, peers and clients; and go the extra mile.

As president of Write-Communications.com and Marketing-Advantage.net, and founder of WomenCentric.net, Pattie Simone empowers execs and entrepreneurs around the country, sharing her sales and marketing savvy and communications expertise as a mentor, speaker and writer.

Find Hidden Opportunities in the Senior Market

2009-04-29T14:48:00.000-07:00

Learn how to research the market, i.d. trends, and get a resource guide to help you stay cutting-edge or start up your business today.

By Elizabeth Wilson, April 16, 2009

The senior market is booming, and opportunities are plentiful. To get a better understanding on how businesses can successfully market to seniors, Entrepreneur.com talked to USC Assistant Dean of Gerontology Maria Henke.

What are some specific tips you have for entrepreneurs who want to start a business serving the senior market? The rules of starting any business still apply to serving the senior market. Offer a product or service of value that meets an unmet need, put together a business plan, etc. When targeting older persons it's especially important to consider the functionality and safety of the product and how well that matches up with their needs. Depending on what you're selling you may also have to consider providing support services such as assistance using a new technology or device. Think "universal design"--a rapidly growing concept with the design community [meaning design that's useful to everyone]. Not only will entrepreneurs make and sell better products in the senior market; they will also be more successful to a broader range of consumers.

When it comes to marketing, seniors are a tough crowd. Puffery is wasted on them. They've seen it all when it comes to advertising. Today's octogenarian grew up listening to radio jingles and watching six decades of commercial television. As we mature, we become much more savvy consumers and are more likely to ask ourselves "do I really need this?" than, say, a 14-year-old. It also goes without saying but is especially true for older adults: Avoid stereotyping in your promotional efforts, and make sure your sales force is not condescending or impatient.

Try to segment a particular piece of the senior or baby boomer market. This is not one big homogenous group that ranges in age from 55 to 95. Consider defining your market by education, cultural values, employment and health status. For example, the needs of a healthy, active and employed 65-year-old will differ sharply from a retiree of the same age with poor health. The market segment you choose to target will greatly affect how your product or service will be distributed and how much you can charge.

If you are a small, community-based business, it will be helpful for you to do a little networking with your local aging network or people you suspect are working with or on behalf of the older adults in your community. If you don't know where to start, the U.S. Administration on Aging offers an "Eldercare Locator," which can put you in touch with local agencies serving your community.

What tips can you give to those already in the business? Businesses already serving the senior market may need to change the products and services they offer to the baby boomers who are now just entering their 60s. While it has been a long-held belief that baby boomers are and will be healthier and more active than any other previous cohort of seniors before them, the recent downturn in the economy indicates that many baby boomers will not be retiring as soon as they thought.

Businesses that rely on retiree travel and leisure, for example, may want to come up with a new strategy to accommodate work schedules for older adults. In addition, due to the collapse of the housing market, many baby boomers owe more on their homes than they are worth, and it will be difficult for them to transition into retirement housing. While this is a gloomy situation, it does present opportunities for businesses that cater to older persons aging in place. Successful business models may include operations that can provide community-based or home-based services, including health care, meals, personnel care or can assist home-based businesses in areas such as technology support.

Are there things you see businesses doing wrong (such as in marketing or other aspects of their business) that you would recommend they do differently? The No. 1 mistake is to ignore this huge market. It's also wrong to assume that older people don't know how to use technology. In fact, older adults are the fastest-growing group of internet users. According to the U.S. Census Bureau, people over the age of 65 spend more than $7 billion dollars per year online. Another mistake people make is to assume that people's consumption habits don't change over time. If older Americans are as brand loyal as they're made out to be, then the American auto industry certainly would not be in such dire straits.

What's your top 5 check-off list addressing how entrepreneurs should go about senior-market research? Good market research doesn't change just because you're targeting a particular demographic--all the rules still apply. It would be helpful to hire a gerontologist as a consultant to inform any focus group or survey questionnaires used in product research to find out:

1.What need is to be met with the introduction of the product?

2.How will those needs change over the life of the product?

3.How significant are functionality issues related to familiarity with technology/physical ability, etc.?

4.What language is appropriate and what messages resonate with this target audience?

5.How might the target audience define themselves (e.g., do they think they are "older women" or do they define themselves as "boomers" or "seniors")? How congruent are your views of this audience vs. how they self-identify?

You may also want to consider hiring older adults--who better to understand your target audience and effectively communicate to them than their peers?

What's happening right now that's different than before for businesses that cater to seniors? There's a revolution in the way we view older people, and this is slowly beginning to be reflected by the media. In many ways life does become an imitation of art; when older people see themselves portrayed as active, relevant individuals, they have raised expectations for themselves. For example, movies like "Young@Heart" and "Love in the Time of Cholera," made in the past few years, reflect interesting and vibrant older characters who have not been relegated to institutionalization. That's the good news. The bad news is that the current major economic downturn is going to affect consumers' ability to save for retirement, spend in retirement and be as active as they thought they would be.

The health-care reform that's happening right now will also certainly have an impact on the types of products and services that will be reimbursed by Medicare. We may, I hope, see more funding available for prevention programs, for example. There are lots of new regulations affecting businesses particularly related to health care. Regulatory market changes have created a need for new and different ways of storing, managing and accessing information. Communication channels have also evolved to be more instantaneous and more accessible to consumers 24 hours a day. There are more specialized ways to market new products and programs through both additional avenues in traditional media as well as new online mediums.

Also helpful is cRANKy.com, the world's first age-relevant search engine, which is useful for discovering the sites seniors actually go to rather than websites designed to attract seniors.

Stimulus Stings Some Businesses

2009-04-22T18:46:00.000-07:00

Some entrepreneurs are surprised by the out-of-pocket insurance mandate in the new law.

By Dennis Romero | April 08, 2009

When Congress approved the Obama administration's economic stimulus package in February, a little-known provision aimed at easing the pain of healthcare costs for laid-off workers triggered a financial affliction for business owners.

The American Recovery and Reinvestment Act reduces the amount laid-off workers have to pay in order to extend optional healthcare coverage under federally mandated COBRA (Consolidated Omnibus Budget Reconciliation Act) rules. Instead of writing monthly checks for 102 percent (the extra 2 percent for administrative costs) of the healthcare premium they enjoyed on-the-job, they now have to front only 35 percent. The caveat: The remaining 65 percent must be paid, up-front, by employers, which can then withhold the amount of the payments from their next federal payroll-tax contributions.

"This is a drastic change," says Luis Campos, regional vice president for Priority Payroll. "It will affect small business."

Celebrating the passage of the stimulus bill, Obama put it this way: "…We'll help folks who've lost their jobs through no fault of their own by providing the unemployment benefits they need and protecting the healthcare they count on."

In the meantime, the coverage subsidy means business owners, even in states where "mini-COBRA" statutes cover business below the 20-employee federal threshold, can probably count on a cash-flow headache.

"You have to have the cash to make the payment first, and there is a lag time with payroll tax credits--and there is a cash crunch with small businesses right now," says Bill Rys, tax counsel for the National Federation of Independent Business.

The employer-paid subsidy started March 1 for workers who were laid off and elected to stay covered under COBRA as far back as Sept. 1. The subsidy lasts until the end of the year, and laid-off employees can extend their own group health benefits for 18 months under COBRA.

"At a firm with 10 people on COBRA at $1,000 per person, the employer would be laying out $650 each, which would be $6,500 per month," Campos says. "If that firm only has limited revenue, the $6,500 a month could be significant."

What's more, there will be lag time between COBRA payment and the tax breaks, depending on the frequency of payroll taxes for each company. "It's a short-term loan to the government with a term from anywhere from one to three months," says Jim Edholm, president of Business Benefits Insurance.

There are other complications, too. Employers must track down COBRA-covered employees who were laid-off as far back as September to let them know that they are eligible for the subsidies. And it still isn't entirely clear who qualifies for the COBRA subsidies at a time of record layoffs.

"What about those with early retirement packages," Edholm says. "What about a mutual parting of ways? The employer must specify in writing that this was an involuntary termination. There are still a lot of Is to be dotted and Ts to be crossed."

It's one part of an otherwise benevolent stimulus package that will have some small-business owners questioning whether the Obama administration truly empathizes with the challenges of small business, experts say.

"I think there is definitely some resentment," says labor law attorney Joshua Zuckerberg of Pryor Cashman in New York. "This came down without a lot of guidance."

How to Research a Franchise

2009-02-08T11:55:00.001-08:00

One of the most important parts of buying a franchise is doing your homework. So get out there and grill the people who know the franchise best.

By Carol Tice | Entrepreneur Magazine - January 2009

Sell skin-care products or own a hotel. Groom dogs, help people lose weight or do their taxes. These are just a few of the opportunities in today's franchise world, which includes a boggling variety of concepts selling every imaginable product and service. How do you know which one you'd truly enjoy? How do you know which one represents the best business opportunity?

Franchisors can dazzle prospects with glossy brochures and slick presentations, but you'll need to get beyond those to the hard facts about their offer. To help, we assembled a panel of experts and asked them to identify the key questions you should ask and the best ways to get franchisors and franchisees to tell you what you want to know.

Once you identify a brand you're curious about, start by requesting and thoroughly reading the Franchise Disclosure Document, or FDD, that each franchisor is legally required to provide to prospects. If you don't understand everything in it, have a franchise attorney or consultant explain the terms.

Then you're ready to start talking to franchisors. If he could only ask a franchisor three questions, Jeff Elgin, CEO of franchise consulting firm FranChoice, says they would be:

What's your number-one focus? "The answer you want is ‘the success of our franchisees,'" says Elgin. "But I've gotten: ‘Our number-one focus is our own bottom line.' That would concern me."

Why do franchisees get in trouble? Try to identify exactly what's going wrong for troubled franchisees, Elgin says. If the franchisor says, "They didn't follow the system," press on by asking in what way. "You want to learn where the pressure point is," Elgin says. "What is the difficult thing to do successfully in this system?"

How are conflicts resolved? Ask franchisors for details of a recent franchisee conflict and how it was resolved. You'll learn a lot about the franchisor's respect for franchisees and its commitment to making them successful, Elgin says. If the franchisor says there's never been a conflict, be skeptical. "If it has more than three franchisees, it has had a conflict," Elgin says.

One more thought: Prospects should ask franchisors which skills their franchisees need most, says Joel Libava, president of consulting firm Franchise Selection Specialists Inc. At many franchises, the most successful franchisees have similar skills--they are mostly former marketing executives or sales managers. See if you fit in to their winning group.

Watch for red flags

When you're talking to franchisors, keep a sharp eye out for potential problems, from weak managerial skills to outright scams. Be sure to look at the resume of the franchisor's top management, says Joe Mathews, co-author of Street Smart Franchising and co-founder and principal of The Franchise Performance.

"Often, the people making the decisions have never owned a small business before," he says. "They have big-business goggles on, and they tend to make ivory-tower decisions."

"The more [that franchisees] feel you're a heartbeat away from signing, the more information you will get." --Gordon Dupries, FranNet consultantBe worried about franchisors who take you aside and make earnings claims that differ from what they've stated in Item 19 of their FDD. It's illegal for them to say anything more on the topic. If they skirt this rule, you should be worried about their ethics in general, says FranNet consultant Gordon Dupries.

If a franchisor is overly enthusiastic about signing you up without hearing much about your qualifications, that's another warning sign. Good franchisors are selective, searching for the best-qualified candidates who possess the skills and capital needed to succeed.

"You want companies that award franchises," says Dupries, "not sell them."

Ask the franchisees

Once you've thoroughly grilled the franchisor, you're ready to chat up franchisees. After establishing a rapport, you'll want to ask hard questions--but in ways that the franchisee will feel comfortable answering. Again, Elgin has three questions in mind:

How well prepared were you when you opened? This question covers many bases, from how forthcoming franchisors were to the thoroughness of their training program. If franchisees report that they were well-prepared and that things went smoothly, that's a good sign. Unpleasant surprises or unexpected problems likely point to weaknesses in the franchisor's support for its franchisees.

How effectively do the marketing programs bring customers to you? Franchisors love to talk about the brand and building value. "But what you need to know," says Elgin, "is whether customers will be coming in and spending money in your unit." The answer you want? "From the minute we opened, we were crowded."

What is the financial reality? Nail down as many financial details as you can with the franchisees, Elgin says. You may have to ask several different franchisees to get all your questions answered. How much does it really cost to open a unit? How soon can you start making money? How much can you expect? Only franchisees can give you the real story.

To get the best results with franchisees, don't waste their time, says Dupries. Let the franchisees know you've learned a lot about the brand already. Present yourself professionally, as a serious prospect. "The more they feel you're a heartbeat away from signing," he says, "the more information you will get."

There's another reason for making a good impression on franchisees. Often, Dupries says, franchisors will follow up later by calling the franchisees you interviewed to ask them what they thought about you.

When you're talking to franchisees, remember to consider their point of view, which may influence what they tell you. For instance, if you're talking to a franchisee near the territory you want, he may tell you business is awful because he wants the territory you covet to remain open to lessen his own competition or so he can purchase it later. Or some franchisees may brag about their success because they're too proud to admit they're really in trouble. Ultimately, Dupries says, you'll have to use your gut instincts to decide whether a franchisee is being truthful.

If possible, try to spend an entire day with at least one franchisee. Mathews says that's the only way to find out how franchisees spend their time and what they're doing to be successful. It also gives you more time to build a relationship with the franchisee and hopefully get more honest and detailed answers.

Mathews also advises asking franchisees how many of their ideas get implemented. The answer to this question will vary from franchise to franchise--some have very top-down management styles, while others encourage franchisee feedback and actively incorporate ideas from the field. If the franchisor isn't very receptive to feedback, you have to decide whether you'd be happy in a cookie-cutter format or you'd prefer a system in which you can be more entrepreneurial.

There's a bottom line to being a franchisee, Libava notes. You're giving up a portion of your sales in royalties to the franchisor in exchange for its help running your business.

"What you need to know from franchisees in the end," Libava says, "is what the franchisor does that makes it worth the fees."

Seattle writer Carol Tice reports on business, finance and social issues for Seattle Magazine, The Seattle Times and other leading publications.

How to Research Your Business Idea

2008-08-17T08:51:00.001-07:00

Your brilliant idea may indeed be brilliant--or it may need some work. Here's how to find out whether you're ready for startup.

By: Karen E. Spaeder | 4/18/2007

Somewhere between scribbling your idea on a cocktail napkin and actually starting a business, there's a process you need to carry out that essentially determines either your success or failure in business. Oftentimes, would-be entrepreneurs get so excited about their "epiphanies"-the moments when they imagine the possibilities of a given idea-that they forget to find out whether that idea is viable.

Of course, sometimes the idea works anyway, in spite of a lack of market research. Unfortunately, other times, the idea crashes and burns, halting a business in its tracks. We'd like to help you avoid the latter. This how to on researching your business idea is just what you need to keep your business goals on track.

The Idea Stage

For some entrepreneurs, getting the idea-and imagining the possibilities-is the easy part. It's the market research that doesn't come so naturally. "It's a big red flag when someone outlines the size of the market-multibillion dollars-but doesn't clearly articulate a plan for how the idea will meet an unmet need in the marketplace," says Aaron Keller, an adjunct professor of marketing at the University of St. Thomas in neighboring St. Paul and a managing principal of Capsule, a Minneapolis-based brand development firm.

That kind of full-throttle approach can cost you. "Entrepreneurs are often so passionate about their ideas, they can lose objectivity," adds Nancy A. Shenker, president of the ONswitch LLC, a full-service marketing firm in Westchester, New York. "Rather than taking the time to thoroughly plan and research, they sometimes plow ahead with execution, only to spend valuable dollars on unfocused or untargeted activities."

Market research, then, can prove invaluable in determining your idea's potential. You can gather information from industry associations, Web searches, periodicals, federal and state agencies, and so forth. A trip to the library or a few hours online can set you on your way to really understanding your market. Your aim is to gain a general sense of the type of customer your product or service will serve-or at least to being willing to find out through the research process. "For example," says Shenker, "if you don't know if your product will appeal to the youth market, make sure you include a sample of that population in your research efforts."

Your research plan should spell out the objectives of the research and give you the information you need to either go ahead with your idea, fine-tune it or take it back to the drawing board. Create a list of questions you need to answer in your research, and create a plan for answering them. "Utilize experts in planning and conducting research sessions," Shenker advises. "They can recommend what type of research is most appropriate, help you develop statistically valid samples and write questionnaires, and provide you with an objective and neutral source of information."

The type of information you'll be gathering depends on the type of product or service you want to sell as well as your overall research goals. You can use your research to determine a potential market, to size up the competition, or to test the usefulness and positioning of your product or service. "If, for example, the product is a tangible item, letting the target audience see and touch a prototype could be extremely valuable," notes Shenker. "For intangible products, exposing prospective customers to descriptive copy or a draft Web site could aid in developing clear communications."

Analysis

When working with firms on brand development, Keller first looks at a business idea from four perspectives: company, customer, competitor and collaborator. This approach allows Keller to scrutinize a business idea before even approaching the topic of brand development. Here's what he looks at for each of the four issues:

1. Company. Think of your idea in terms of its product/service features, the benefits to customers, the personality of your company, what key messages you'll be relaying and the core promises you'll be making to customers.

2. Customer. There are three different customers you'll need to think about in relation to your idea: purchasers (those who make the decision or write the check), influencers (the individual, organization or group of people who influence the purchasing decision), and the end users (the person or group of people who will directly interact with your product or service).

3. Competitor. Again, there are three different groups you'll need to keep in mind: primary, secondary and tertiary. Their placement within each level is based on how often your business would compete with them and how you would tailor your messages when competing with each of these groups.

4. Collaborators. Think of organizations and people who may have an interest in your success but aren't directly paid or rewarded for any success your business might realize, such as associations, the media and other organizations that sell to your customers.

Another approach is to research is SWOT analysis, meaning analysis of the strengths of your industry, your product or service; the weaknesses of your product (such as design flaws) or service (such as high prices); and potential threats (such as the economy). "[SWOT] enables you to understand the strengths and flaws, [everything] from internal information such as bureaucracy, product development and cost to external factors such as foreign exchange rates, politics, culture, etc.," says Drew Stevens, a St. Louis professional speaker and consultant who works with entrepreneurs in researching and marketing their ideas. "SWOT enables an entrepreneur to quickly understand whether their product or service will make it in the current environment."

Whatever your approach to evaluating your idea, just be sure you're meeting the research objectives you've outlined for your product or service. With those goals always top-of-mind, your analysis will help you discover whether your idea has any holes that need patching.

Checking Out the Competition

Assuming your research process has helped you uncover your competition, you now need to find out what they're up to. Shenker advises becoming a customer of the competition, whether by shopping them yourself or by enlisting the help of a friend. "Visit their Web site and put yourself on their list," she says. "Talk to your competitor's customers, too-ask them what they like or don't like about your competitor's product or service. If you conduct formal research, include a question like 'Where do you currently go for that product or service? Why?'"

Your aim is to understand what your competition is doing so you can do it better. Maybe their service is poor. Maybe their product has some flaws-something you'll only know if you try it out yourself. Or maybe you've figured out a way to do things better, smarter, more cost-effectively. Find your selling point. It's going to be the core of your marketing program, if and when you're ready for that step. It's also going to be what sets you apart and lures customers your way.

Karen E. Spaeder is a freelance business writer in Southern California.

Conversations With a Teen Entrepreneur

2008-08-17T08:13:00.001-07:00

Ben Cathers shares his tips and tactics for successfully marketing your business.

By Devlin Smith, Mar. 2004

Ben Catherswas just 12 when he started his first business, a Web marketing and advertising firm geared towards teenagers that eventually grew into two offices and 10 employees. Not ready to stop there, Cathers also launched a nationally syndicated radio show, again with teenagers as his target audience.

Now 19 and a student at the Boston University School of Management, Cathers is launching his third venture, a software company that recently raised a round of venture capital. He's also written Conversations with Teen Entrepreneurs(iUniverse Inc.), a book of discussions about business topics-from marketing to funding-with experienced teenaged businesspeople.

Because marketing in particular is such a crucial part of business success, we decided to speak with Cathers about it, focusing on some of the common mistakes teen entrepreneurs make in order to learn the essentials of successful marketing.

Entrepreneur.com: Is there one main marketing mistake you see teen entrepreneurs making over and over?

Ben Cathers: The main thing I see is, [entrepreneurs] just not knowing who their customers are, not knowing who they're marketing to, not knowing what they want. Sometimes entrepreneurs take the cheapest route possible thinking, "Marketing is marketing," but I've seen a lot of people who have skimped on their marketing budgets and have had just absolutely no results [compared to] the people who put a little extra out. You can buy ads online, just a general ad that will appear on any site that's not that expensive, and think, "I'm marketing, I'm advertising. Obviously, I'm doing well." But if you do that, you don't know who your customers are-you're just doing blind ads.

If you don't know who your customers are, if you don't know how you're going to market to them or what they want, then there's absolutely no way to reach them. I had somebody on my radio show advertise once. He was representing an eye care company, and he bought the ad because we offered him a good package, but he didn't get any sales, and he complained to us and I said, "Look, you knew that all the people listening to the show were teenagers. You marketed a product toward 45-year-olds-there's obviously not going to be a connection." Mistakes like that are what really hurt people in marketing.

Entrepreneur.com: How can teen entrepreneurs figure out who their marketing should target?

Cathers: They should first develop a marketing plan-they should really research who their customers are and see what they're doing. If they're targeting teenagers, they have an advantage because they know how they get their information: They know that teenagers don't really click on online ads, that they look more at magazines, that they like getting fliers handed out to them.

If they're marketing to adults, they need to do some research. For example, if they're marketing to 25- to 30-year-olds, [they need to determine how] they'd rather get their messages: Would they rather get them through a magazine, through TV, through radio? They need to research that target market first to understand what influences them-is it word of mouth, should you start a guerilla marketing campaign where you have people telling them what to do, should you do a push campaign or a pull campaign. If you don't research your target market and you don't know how you [should be] marketing, the probability of it working is low.

Entrepreneur.com: Do you think it's easier for teen entrepreneurs to go after customers their own age?

Cathers: That was one of my advantages when I ran my Internet company because I targeted teenagers. It was very easy, because all I ever thought about was, "This is how I get my information." When you start a business, there are hundreds of people begging you to buy ads from them, and I knew that I would never get a response from some of the [companies] who contacted me-I knew those weren't going to work for my customers because it wouldn't work for me.

Entrepreneur.com: Sometimes, though, experts warn against basing your strategies too much on yourself. Do you think that may be a problem, if entrepreneurs take for granted that, "I do everything this way, so all 16-year-olds must be like me"?

Cathers: You can't just rely on one source. If you market to teenagers and you're marketing based on yourself, your research is based on just one person and that won't work because the teenage demographic is very big and very different and very diverse. You have to base your research on a larger target group. If you base your marketing research on just one person, no matter who that is, that's a bad strategy.

Entrepreneur.com: Most teenage entrepreneurs don't have a lot of start-up funds, so what would you suggest as free or inexpensive ways to do market research?

Cathers: Most of the research is available online for free. If you do a Google search for market research, you'll find that most of these sites have basic demographic information available for free, and that demographic information alone is helpful. If you have an idea-for example, that you want to target people in their early 20s-you find a magazine that you know is read by 20-somethings, then go to their rate card or media kit. Those companies have already done all the research you need, and you can use their research to help you plan your strategies as well. Most of what you need is available for free or at a very, very low cost, and if you put the effort into it and you search around, you'll definitely be able to find it.

Entrepreneur.com: If somebody did have the funds available, would you suggest they use a third party or consultants to help with their market research and campaign?

Cathers: It really depends. If it's going to be a large-scale marketing campaign and you've dedicated a large portion of your funds to marketing, [using an outside source] is going to give you the most accurate results. If you get someone who really knows statistics and really knows marketing well and they can do some kind of market analysis for you, that would be fantastic.

But if you could also get it cheaper and put those funds into something else, that's also very efficient. I just actually raised a large amount of financing [recently] for a company I've started, and I can tell you we've dedicated almost nothing to marketing because we know we can do most of the marketing at very low costs. We're developing a software company, so if we do that, we can divert more funds into the software itself and help the main business.

If you're targeting a very different or very hard-to-reach group and there's not a lot of information available, like if you get very specific and you're looking strictly for teenagers aged 16 to 18 who don't drink and don't smoke and live on the East Coast, then obviously that's when you might have to look at paying for [market research].

Entrepreneur.com: How do you determine how much money and time you should put into your marketing?

Cathers: When you write your business plan or your plan of action or your strategy, that's one of the things you're going to have to look into-you're going to have to do some research on the costs. If you contact a market research company, they can give you an estimate or you can ask around to find out what the average prices are. It really depends on what kind of business you have-some marketing is 1 percent of the budget because marketing isn't that important. But if you're a consumer company that's just released a new product, you're probably going to have to dedicate 40 or 50 percent of your budget to marketing.

I can't just say you should be 10 percent in because 10 percent for one business might not be enough for another business. If you know you have to reach massive amounts of people to be able to make a profit, then obviously put more into marketing.

Entrepreneur.com: In your book, you focused quite a bit on Internet marketing. Do you think that's the most effective way for teenager entrepreneurs to market their businesses?

Cathers: For teenagers, absolutely, because the reason why Internet marketing works so well is that you don't have to spend much money and you pay only for results. Focusing on search engine marketing, which is basically paying for positions in a search engine, is probably one of the best ways you can go because when people use a search engine, they're specifically looking for your product. If somebody types in "video games," they're obviously looking for video games, and then if you have a video game sponsor, you can broadcast your message on video games only to the people who are looking for video games. From there, you only pay when somebody actually comes to your site and does business with you. It really minimizes your risk because if you buy an ad in a magazine, there are no guarantees; if you buy an ad on TV, there are no guarantees. But if you buy an ad on a search engine, you're getting a guarantee that someone's going to visit your site. Then it's up to you to make the sale or not. If you find you have a lot of people coming to your site and you can't make a sale, there's something wrong on your end and you'll have to do research to find out why aren't people buying.

Entrepreneur.com: For teen entrepreneurs with a Web site for their brick-and-mortar business, is Internet marketing effective for them as well?

Cathers: This is where research is really important, because you can find out how many people search for that product online. Let's say you're selling baseballs and you only sell those baseballs in your store. If you find out people are searching for information about baseballs and that [keyword is] searched 20,000 times a month, then Internet marketing is still going to work for you because there are 20,000 people searching for information on baseballs.

It still works because it's still very cheap: You can start Internet marketing for as low as $50-most entrepreneurs have an advertising budget of $50. It's also effective, and at least then you're exposing your product to people who have an interest in your product. If you go and buy an ad in ESPN magazine, readers might not be interested in your baseball products. At least with the Internet, you're guaranteed you're going to have somewhat of a match. This is the cheapest way to get somewhat of a guarantee of results.

Proven Ways to Expand Your Business

2008-08-17T08:01:00.000-07:00

These entrepreneurs found a variety of approaches to successful growth.
By: Eve Gumpel

You've worked hard to create a successful business, and now you're ready to take it to another level. There are plenty of ways to expand; you just have to decide which method is right for you.

To help you work through the problem, we shed light on several entrepreneurs who found ways to grow their businesses and boost their profits.

1. Merge with or acquire another business. When Jayne Hancock Group acquired 14-year-old Townsend Inc. in July 2007, it was simply the next logical step in a 2-year-old relationship.

The two agencies had been working under the same roof for two-and-a-half years. Jayne Hancock's firm was a fast-growing marketing group specializing in media, sports and technology, while Jackie Townsend's was a leading technology PR firm focused on branding and PR.

"It was almost like a no-brainer. It was almost like, we can't do this and not come together," Hancock says.

The company that emerged out of the acquisition, JHG-Townsend, helps companies create their branding and messaging, then helps them apply it in traditional and new media markets.

Hancock and Townsend decided against a co-CEO setup for the new company.

"You don't want any cloudiness about the structure and who's going to make the decisions," Townsend said. So Hancock took the top position, and Townsend became executive vice president.

Both say the merger thus far has been terrific. "Everybody's starting to feel and see an energy that we all visualized by doing this," Hancock says. JHG projects $8 million in earnings for 2008.

If you're considering an acquisition, Townsend says you should get to know your potential partner well before committing to a relationship.

"Know what it's going to be like to work things out in the tough times," she says. "If you know you can get through the difficult conversations you need to have, then you know you can get through a partnership." Such conversations, Hancock says, involve strategic or operational decisions, ranging from investing in new systems to opening a new office, bringing in a new hire or making an acquisition.

2. Spin off new profit centers. Jocelyn Silverman started 304 Media, a boutique advertising agency, six-and-a-half years ago. Since then, she's branched out with two more companies: Short Run Cards and Creative-Juice. Short Run Cards can produce small runs of plastic, personalized VIP cards in only two days. The cards are used for loyalty programs that offer discounts or points to cardholders. Creative-Juice offers creative outsourcing solutions that produce design services for larger advertising and PR agencies.

Short Run Cards came about after 304 Media ordered its own set of VIP cards.

"No one could do the turnaround on the cards," Silverman, 28, says. So, like many an entrepreneur, Silverman decided to do it herself. She purchased equipment, and leverages her employees' free time to design the cards and print them in-house. Now 2-and-a-half years old, Short Run Cards made a small profit its first year and has gained traction each year.

Creative-Juice was born out of necessity in March 2007, to make up for the loss of a client that provided 30 percent of 304 Media's business. The gamble is working well.

"Every month has been better than the last month," Silverman says. The three companies combined grossed nearly $400,000 last year, and Silverman anticipates a 40 percent increase in 2008.

With the success of her spinoff businesses, Silverman will launch another related business, StorkMagnets.com, this month. It will produce birth announcement magnets online. It's the ultimate example of leveraging resources, Silverman says, because all of the design and programming are already complete and the website is completely automated. In fact, Silverman expects StorkMagnets to quickly become her primary source of revenue.

"We have received incredible feedback through our initial testing and have several people anxious to place orders," she says.

3. Use subcontractors. Kris Putnam-Walkerly founded Putnam Community Investment Consulting in 1999 to help foundations and other nonprofits develop effective grant-making programs and initiatives. She has a full-time office manager and an executive assistant but relies on subcontractors to provide the consulting expertise needed on various projects.

"It's an effective way to bring on people for a short period of time," she says. It gives her a wide pool of experts. It also allowed her to grow the business while raising children "and not grow into a crazy person," she says.

All subcontractors use an e-mail address linked to Putnam and also rely on Putnam's 800 number to make the organization look seamless.

4. Open a second, virtual office. Putnam achieved a new level of growth in 2007, when Putnam-Walkerly moved from Oakland to Ohio to join her fiancé. She opened a virtual office in San Francisco in place of her Oakland office and announced that Putnam was expanding nationally to serve clients better.

"It didn't hurt my California business at all," she says. In fact, Putnam-Walkerly says, she grossed $800,000 in 2007, twice the amount amassed the previous year. She hopes to exceed $1 million this year.

The virtual office in San Francisco keeps expenses down. The rental company provides a phone number and a receptionist, plus office space and equipment that Putnam-Walkerly can use when she's visiting California.

5. Launch a new division. Kristen Marie Schuerlein is founder and CEO of Affirmagy, which sells cuddly blankets with inspirational messages. Affirmagy, which launched on Valentine's Day 2005, sells direct to consumers through its website and also wholesales the blankets to independent retail shops, including church bookstores.

After a couple of churches used the blankets as profitable youth group fundraisers, word started to spread. Shortly thereafter, Schuerlein realized that 60 percent of her wholesale sales could be attributed to church fundraisers.

"My business partner and I looked at each other and said, 'Wouldn't it be extraordinary if we built a turnkey way to be in service to this community of people and grow our business through fundraising?' "

That idea led to Positively Fundraising, launched as a separate division in March 2008.

"It's an effortless way to encourage and take advantage of the natural buzz and word-of-mouth that was taking place with our product," Schuerlein says.

It's also in alignment with Affirmagy's core philosophy of service to others.

"From my perspective, it's a really cool way to grow my company. It feels right," Schuerlein says.

Room for Hire: A Bed and Breakfast Business

2008-06-28T17:04:00.000-07:00

June 8, 2008, By Syndicated Columnist Cathy Harris

So often in the past, I have spoken to people who had a home in foreclosure. They often made the statement “if I had only taken in a border.”

This is definitely an option for people who can’t afford their mortgage notes and have extra rooms or a basement at their homes.

The biggest dilemma about taking in a border is that no one wants to take in anyone who has children, since children are often destructive to properties. But for many, it’s been a very big mistake!

Now due to this continuous failing economy and administration, it’s time to be strategic and your number one goal should be to keep a roof over your head. If you have food on the table, and you are in fairly good health and have a roof over your head, then you need to count your blessings everyday.

Do you have an extra room or two or a basement that you could rent out? If you do, then you can be in the Bed and Breakfast (B&B) business.

In these times, in order to keep their heads above water, many families are building extra rooms on their homes to offer to paying family members or tenants.

You can turn your home into a Bed and Breakfast business or restore a building that has the potential of being rental units. You might have to reside at the property, managing and maintaining the business and satisfying license requirements.

For people with rentals (condos, houses, etc.) that they can’t sell, you can turn them into a Bed and Breakfast business for short term or long term lodging.

Remember this is your B&B and you might just want to look into long term lodging options such as boarding for 30, 60, 90 days or even 6 months or longer.

For short term lodging options, you will need to decide if you are going to accept one night stays on Friday and Saturday night or should you wait to try to get a 2 night booking for your rooms every weekend.

Remember the weekdays might be emptier than the weekends but you need to consider your market before adopting this sort of strategy. For example, if you’re next to a wedding venue, you may need to be more flexible about one night stays as these guests tend to only want to come for one night.
When you first set up your B&B, you may want to test the waters and see what sort of guests you get before you make a decision about whether to exclude, for example, children. Running the B&B should not adversely affect your business if you except children under 12.

Can you or should you risk turning anyone away? Remember you can always put new terms and conditions in place. After all you are the boss!

If you're right next to the best children's theme park in the country, you will probably benefit from having a children friendly B&B.

It may actually improve your bookings if you have a ‘no children policy’ for many parents staying for a romantic break that have left their own kids at home. If people have gone to the effort of finding a babysitter for a childfree weekend, they will probably not want to be faced by someone else's 5 year old over breakfast.

Creating a home away from home which is often more beautiful than where they are traveling from will ensure many return customers.

This is a great business you can start without too much hassle. If you live near a college town, a tourist attraction, the beach, a lake, a mountain for skiing, etc., it makes your B&B much easier to market. Peak and off-season will have a significant impact on your monthly earnings.

Similar to tourists who choose to stay in traditional hotels, customers who patronize B&Bs seek out relaxation, fun and stress management while on vacation.

The B&B industry offers a unique lodging environment, which caters to an ever-increasing group of travelers. They create a climate of home, where guests become temporary members of a larger family.

In a B&B, a guest is a guest in one's home, not a customer. It becomes a place to return to at the end of a day, or during the next vacation (like going home). This type of customer also prefers comfortable accommodations in a cozy, family environment. These patrons are more social, they love meeting new people while at the same time require enough privacy to enjoy their vacation.

Guests will have the right mix of membership and privacy. The goal is to be dutiful without being intrusive which can be a delicate balance and one that owners have mastered in their various walks of life.

A B&B opens itself to guests, allowing them to participate and share in the richness of a community, while still allowing whatever degree of privacy is preferred.

A variety of settings available in the B&B are situated to enable individuals or small groups to locate the perfect setting for whatever mood or activity one is pursuing (reading, watching television, playing board games, etc.).

You could eventually expand your services to the residents by offering adjourning rooms which open creating a large area, ideal for formal or informal gatherings (i.e. wedding receptions, office parties, Christmas parties, etc.).

You don’t have to serve a huge breakfast. In fact, a bowl of cereal with coffee and some juice is acceptable. Meals can be shared with the innkeepers and other travelers allowing new relationships to be created and old ones enriched. Or, meals can be taken in the privacy of the guest's room.

You don’t necessarily have to provide a private bath, but it is a nice touch.

B&B tenants every need should be met to ensure his/her comfort. For special occasions, catered meals, chilled wine, etc., can be provided for an additional stipend. During the weekends, guests can return to the B&B in the evening and find cheese, fruit, and wine for snacking before turning in.

Some other items you could offer your guests are a complimentary music CD for each room that the guest may keep (copy included in packet): 1) An extensive video and audio library for guest use, 2) CD stereo systems and VCRs in each room, 3) Starbucks coffee, 4) A variety of herbal teas, 5) Daily fresh-baked muffins and fresh fruit, and 6) Links to other businesses, attractions and services in the area.

If you are considering this idea, you should call your insurance company and ask them to review your policy. Should you beef up your liability coverage?
Do tenants need to sign contracts for long term lodging? Should you hire a private investigator to run a background on your guests? Should you check credit references?

Remember you are going to be the one setting up the rules so first of all you have to make sure you are not breaking the law and, secondly, how the rules you set will affect your business.

You need to check into legislation to ensure you and your tourism business stay on the right side of the law. For example, you need to ensure that the rules you set do not break any discrimination laws by not allowing people on grounds of race, sex, sexual orientation or disability to stay at your B&B. And you also need to be careful that you aren't discriminating against people.

You also need to consider how the rules you set will affect your business. Some of the things you need to think about is will you be flexible allowing children, assistance dogs, one night stays, cooking evening meals, etc.

In order to be successful in a B&B, you can offer packages and special rates. You need to build a strong market position among the local patrons. With the right exposure, it is probably an untapped market of vacationers that can be enticed to your B&B.

B&B can sell its rooms directly to repeat customers, as well as via traditional travel agents and through the internet. Repeat customers will have the privilege of priority reservations during the high season. Subscriptions to various web services will provide international exposure to potential customers for annual fees.

You can find out more about how to set up, run and market a B&B by reading books at the libraries and bookstores, conducting research at http://www.goggle.com or http://www.yahoo.com and networking and talking to business owners who actually run a B&B.

Cathy Harris is a Motivational Speaker, http://www.cathyharrisspeaks.com, and is available for seminars, workshops and consultations. She is also the author of a 3-part empowerment book series “How To Take Control of Your Own Life” (http://www.howtotakecontrol.com) and can be reached through her company at Angels Press, P.O. Box 870849, Stone Mountain, GA 30087, Phone: (770) 873-2072, Toll Free (800) 797-8663, Fax: (678) 254-5018, Website: http://www.angelspress.com and Email: info@angelspress.com

The Essentials of Guerrilla Marketing

2008-05-20T16:17:00.000-07:00

Implement these building blocks to create a successful campaign.

By Jay Conrad Levinson | April 30, 2008

As marketing continues to change, the secrets of guerrilla marketing continue to change. There are 18 guerilla marketing secrets, and they guarantee you will exceed your most optimistic projections.

Memorize these words, then live by them. I'm giving you a memory crutch so that you'll never forget these major guerrilla marketing secrets. All these words end in "-ent." Run your business by the guerrilla concepts they represent and reap the rewards.

Commitment

You should know that a mediocre marketing program with commitment will always prove more profitable than a brilliant marketing program without commitment. Commitment makes it happen.

Investment

Marketing is not an expense, but an investment--the best investment available in business if you do it right. With the 18 secrets of guerrilla marketing to guide you, you'll be doing it right.

Consistent

It takes awhile for prospects to trust you. If you change your marketing, media and identity, you're hard to trust. Restraint and repetition are two great allies of the guerrilla.

Confident

In a nationwide test to determine why people buy, price came in fifth, selection fourth, service third, quality second, and, in first place, people said they patronize businesses in which they have confidence.

Patient

Unless the person running your marketing is patient, it will be difficult to practice commitment, view marketing as an investment, be consistent, and make prospects confident. Patience is a guerrilla virtue.

Assortment

Guerrillas know that individual marketing weapons rarely work on their own, but marketing combinations do work. A wide assortment of marketing tools is required to woo and win customers.

Convenient

People know that time is not money--it's far more valuable than money. Respect this by being easy to do business with and running your company for the convenience of your customers, not yourself.

Subsequent

The real profits come after you've made the sale, in the form of repeat and referral business. Non-guerrillas think marketing ends when they've made the sale. Guerrillas know that's when marketing begins.

Amazement

There are elements of your business that you take for granted, but prospects would be amazed if they knew the details. Be sure your marketing reflects that amazement.

Measurement

You can potentially double your profits by measuring the results of your marketing. Some weapons hit bull's-eyes. Others miss the target. Unless you measure, you won't know which is which.

Involvement

This describes the relationship between you and your customers--and it is a relationship. You prove your involvement by following up; they prove theirs by patronizing and recommending you.

Dependent

The guerrilla's job is not to compete but to cooperate with other businesses. Market them in return for them marketing you. Set up tie-ins with others. Become dependent to market more and invest less.

Armament

Armament is defined as "the equipment necessary to wage and win battles." The armament of guerrillas is technology: computers, current software, cell phones, pagers, fax machines. If you're technophobic, see a techno-shrink.

Consent

In an era of non-stop interruption marketing, the key to success is first to gain consent for your marketing materials and market only to those who have given you that consent.

Augment

To succeed online, augment your website with offline and online promotion along with constant maintenance of your site.

Content

Don’t believe that old adage, "Sell the sizzle, not the steak." Sophisticated consumers these days know the sizzle from the steak and prefer the steak every time. Your substance, not your style, will carry the day for you.

Implement

It’s not enough for you to know these 18 secrets. The key is to take action on them, all of them.

Congruent

Be certain that all your marketing is saying the same thing and pulling in the same direction. Don’t undermine what you do with marketing that marches to the beat of a different strategist.

These concepts are the reason many startup guerrillas now run highly successful companies. They are the cornerstone of guerrilla marketing. They might look like just words, but each one is nuclear-powered and capable of propelling you into the land of your dreams.

Jay Conrad Levinson is the author of the Guerrilla Marketing series of books.

More minorities going it alone- Self-employment gains favor

2008-05-20T16:14:00.000-07:00

BY JEFF MCKINNEY | JMCKINNEY@ENQUIRER.COM

A growing number of black, Indian, Hispanic and women baby boomers are walking away from corporate jobs and taking their skills, experience and pay to launch new businesses.

The most recent data from the U.S. Census Bureau show the total number of black-owned businesses, for example, totaled 6,941 in 2002 in the Cincinnati metropolitan statistical area, up nearly 47 percent from 1997.

During the same time, the number of women-owned firms rose about 28 percent, to 40,008, while Hispanic-owned firms jumped 65 percent, to 1,238. Butler County in Ohio, Bracken County in Kentucky, and Franklin County in Indiana were added to the 2002 data.

Moreover, the percentage of self-employed people between ages 55 and 65 climbed 33 percent last year from 2006, according to the U.S. Bureau of Labor Statistics.

There are now at least 3 million entrepreneurs 55 and older, up one-third from 2000, according to the labor bureau.

"The number of baby boomers starting their own businesses is surging," says Kathy Keller, a spokeswoman for the advocacy group AARP Ohio.

As more companies are downsizing and outsourcing jobs, more veteran minority professionals are choosing self-employment as an option to generate income, says Rea Waldon, senior vice president of the Urban League of Greater Cincinnati's Economic Empowerment Center.

She said many baby boomers are taking severance packages and using them to start their own businesses, or are investing in other businesses as silent partners.

"Some of these baby boomers might also start their own businesses because of their age and changing personal values," Waldon said.

Majid Dosani, owner of ACE Products LLC, started his company in 2001 in his basement while working as an engineer for a local environmental engineering firm.

ACE Products is a Blue Ash-based office-supply company that sells more than 50,000 items, including office and printing supplies and business machines.

Dosani landed a contract in 2003 to provide office supplies to Cincinnati Public Schools as part of its supplier diversity program. He invested between $5,000 and $10,000 to open his Blue Ash location that year and left his corporate job in 2004 after 17 years.

Dosani, 50, says changing his lifestyle to run the business was among his biggest challenges.

Though he had to learn the office-supply business quickly, Dosani says the challenge of doing something different has made the gamble worth it. His store is expected to post sales of over $1.5 million this year, up from about $1 million last year, he said.

But like other baby boomers, Dosani has no plans to retire soon, though his income is higher now than when he had a corporate job.

He plans to stay in business until he can put his children - ages 17, 14 and 11 - through college.

"It will be at least another 10 years before I retire, but the good thing is I'm enjoying what I do," Dosani says.

Brenda J. England, owner of England's Elegant Attire, initially opened the business in 1996 and operated it part time while working as an associate engineer at Procter & Gamble Co.

She left P&G in 2000 after 25 years to expand her business.

England's business has grown from being a formal-wear consignment shop in North College Hill to a bridal and formal-wear business in Northgate Mall in Colerain Township.

Her current store is 3,900 square feet - about twice as big as her previous store - and it offers many more services, she said.

England, 58, says her time at P&G gave her the income, multi-tasking ability and people skills to run her own business.

She estimates she has invested about $20,000 of her own money into the business.

"The corporate experience gave me the assertiveness I needed to be an entrepreneur," England says.

While more minorities are becoming entrepreneurs, they still face barriers and challenges as new businesses owners, the Urban League's Waldon says.

She listed access to capital, being able to land projects, and failure to solicit managerial support and resources outside of the businesses among the biggest challenges.

"Those are real challenges for many minority entrepreneurs because they are cornerstones for growing your business," she says.

Outsourcing to Grow Your Home Business

2008-05-20T16:11:00.000-07:00

Getting over the do-it-yourself syndrome by delegating to others reveals a higher level of potential for you and your company.

By Lesley Spencer Pyle | May 13, 2008

Most people go into business desiring success and better balance in their lives. Spending endless hours commuting and dealing with corporate politics isn't exactly the American Dream. But when starting a new business, juggling the demands of business and personal obligations can sometimes be just as exhausting.

The thought of hiring and managing people may make you weak in the knees, but building a staff isn't the only option. Consider outsourcing your needs to a specialized group or individual. That way you can hire as needed without having to worry about hiring, firing, payroll taxes, etc.

The hardest part of outsourcing is giving up the reins on your "baby." The easiest way to start comfortably delegating to others is to make a list of all of the tasks you do on a daily, weekly and monthly basis. Of those items, determine what you don't like to do and what's taking up the majority of your time.

Among the options available to contract help on an hourly, project or set-fee basis are:

Writers

Professional writers can create content for your website, blogs, press releases, e-mails and marketing materials. They can also ghostwrite for you. For example, Lisa Otto from www.CreativeWritingStudios.com focuses on small businesses and offers affordable rates to give a small business a professional image.

Receptionists

Your customers' first contact with your company is vital. Hire an individual or firm that can take your company calls. This can set you apart because:
a. Your company appears larger than the one-person show you are operating.
b. Your calls are answered by a professional vs. an answering machine.

Salespeople

As a one-person show, you can only touch so many potential customers. By contracting with a sales representative, you can take advantage of their experience as well as their extensive list of contacts. And if you're paying on a commission basis, you'll be saving while bringing in additional money.

Graphic Designers

Whether you've already idealized your logo or not, a graphic designer can assist in leaving a memorable impression of your company by creating powerful logos, websites and other marketing materials.

Fulfillment Centers

If you're pole vaulting over piles of business materials and products in your own kitchen or frantically hiding things under your bed when you have company you may need the help of a fulfillment center, like Trending Solutions. These places make sure your customers won't call you looking for their order because it took you four days to ship it.

Marketers

A marketing guru can get your press releases and announcements in the right hands of the media. They can get your foot in the door so you can follow up and nail the sale. They'll also assist with creative approaches to get the word out about your company.

Virtual Assistant

A VA can be a lifesaver when it comes to handling communications with your customers, doing your accounting, invoicing your customers and any administrative tasks you may find yourself putting aside.

You don't need to be a hero by showing that you can do it all. You may just find, like so many of us, that outsourcing enables you to focus on what you do best and grow your business and income. By delegating day-to-day tasks, you can run your business and maintain your personal life.

Outsourcing provides you with more flexibility as your company grows. There are so many options available and many resources on the internet to help you find the perfect candidate.

Lesley Spencer Pyle is the founder and president of the HBWM.com Inc. Network.

Getting Your Startup Paperwork in Order

2008-03-19T18:15:00.000-07:00

Entrepreneurs aren't known for being lazy, but most entrepreneurs I know are notoriously lazy about doing legal paperwork. But there's no place for laziness when it comes to getting licenses and permits for your business. It might seem like an insignificant detail or a waste of money, but it's necessary. This article provides some information on the types of licenses and permits that small businesses need and how to go about getting them cost-effectively.

The majority of small businesses in operation today are required to have one or more permits to ensure that they meet government-mandated guidelines for safety, soundness and tax. Generally, there are licenses and permits that you need to be aware of on the federal, state and local levels.

Federal Registrations and Licenses

Small businesses typically don't have to worry about safety and soundness licenses on the federal level, but every business should be aware of federal tax registrations. The first tax registration is the application for an Employer Identification Number. This is done on Form SS-4, found on the IRS's website, and should be filed by every business. If you're a sole proprietorship, you can use your social security number instead of getting an Employer Identification Number; however, this is not advisable if you want to keep your personal and business affairs separate. If you like the idea of separating business and personal but are concerned about the impact this separation will have on your taxes, consider incorporating as an S corporation, which will allow you to flow certain business losses to your personal income. You can learn more about how to register as an S corporation and how this varies from other forms of incorporation here. If you decide to register as an S corporation, you'll need to file Form 2553with the IRS.

State Registrations and Licenses

Besides the licensing of professional occupations such as doctors and lawyers, many states require licenses for people such as hairdressers, mechanics, private investigators, real estate agents, tax preparers and more. Since the list changes across the different states, you'll need to check with the state you live in to find out the specific requirements. If you have the funds to consult with an attorney, this is the safest course of action. The least expensive way to get this information is to check with your local SCOREchapter or local SBDC, since the individuals who work in these offices will have guidebooks on licensing for your state. For example, the Pioneer Institutehas produced a detailed guidebookon licensing procedures and regulations for small-business owners in Boston. It's useful to read through this free guidebook to get a sense of the types of regulations and permits you might need, particularly if you're starting one of the following types of businesses: day-care center, barber shop, beauty salon, caterer, cleaning service, sewing shop, shoe repair, flower shop, livery, small grocery store, street vendor or TV repair shop.

Some permits are registered under the name of the business, while others, such as permits for hairdressers or accountants, place obligations on the individual entrepreneur to register in his or her name. Generally, permits for the individual are needed for occupations and trades that require specific skills, examinations or ethical guidelines that are linked to the individual providing the services-such as standardized testing for accountants or proof of training for doctors. Keep in mind that both individual and business licenses expire and may require retesting before renewal is allowed.

State tax registration is another issue you'll have to make arrangements for, unless you live in one of the few states that don't assess income taxes. Otherwise, you'll need to register under your state's income tax laws. Check the website for your state's Treasury Department or Department of Revenue for details and forms for doing this.

If your business needs employees, your state's Labor Department can grant you the appropriate registration as an employer. Generally, if you use a payroll company to process checks to employees, this registration is provided. Even if you do your own payroll, once you file a tax return, your state's Labor Department will usually send you a form.

Local Licenses and Permits

Although usually not a huge concern, local taxes can be thorns in your side when you're trying to start a company, particularly if you don't address them right away. The city or town may leverage property taxes on the equipment and other assets that your business owns. Some cities charge taxes on inventory, gross receipts and income. Be careful about avoiding these taxes by claiming ignorance. You may be liable for back taxes.

In addition to the Department of Revenue, there are other departments on a local level that grant licenses, including:

- The Health Department: If your business is a restaurant, catering service or other establishment that provides food preparation or sales, you'll need to be licensed through your local Health Department.

- The police or fire department: If your business attracts large amounts of people, you may need to obtain a license from the local police or fire department.

-The building and safety department: Renovation of any kind almost always requires a permit that states you're complying with local building ordinances and codes.

There's no doubt it's cumbersome to track down all the relevant licenses and permits you may need for your business. Despite my advice, I know that most of the entrepreneurs reading this column will sidestep the licensing process and consciously take on the risk of having to pay back taxes or penalty fees for noncompliance. I suppose that's better than ignoring licensing because of laziness.

Asheesh Advani is president ofCircleLending, a loan administration company that facilitates personal loans, small-business loans, and mortgages. He and his company have written theSmall Business Financing Guidefor startups and have helped small businesses in more than 30 states launch and finance their growth.

The opinions expressed in this column are those of the author, not of Entrepreneur.com.

Raising Funds For Your Invention

2008-03-19T16:18:00.001-07:00

Fund raising is an important step in the invention process, and one that should not be taken lightly. Accepting money from outsiders often comes with strings attached. Therefore, it is important to A) decide the absolute lowest amount of money you can work with, and B) take not a penny more.

That said, there are several potential funding sources that are worth discussing. We will begin with the most glamorized (and also least understood) source: venture capital.

A venture capitalist is someone who invests large sums of money (usually $500,000-$2,000,000 at a time) into a business in exchange for a significant equity stake. In effect, they are "buying" a piece of the company. Venture capital often seems like a very attractive financing option because, entrepreneurs reason, "with all that money, how can we go wrong?" However, there is more to a venture capital investment than the dollar figures involved. Many of them are extremely controlling and insist upon inserting their own personell into the company. Take this quote from a 2002 Wall Street Journal article, written by Barnaby Federer:

"If you ask a VC what value they add, and you get them after a few drinks, they'll say, 'We replace the CEO' ", he said. And that, he indicated, does not vary with the economic climate.

Clearly, this is something to be mindful of when seeking VC funding. Still, there are definitely situations where VC funding makes sense and is beneficial to use. If your invention is very capital-intensive, for example, there is often no other way. Many venture capitalists also have invaluable industry connections that will make your life easier. Still others (like Y Combinator) reject the typical controlling mindset and more or less let the founders man the controls. So how can you increase your chances of getting funding from them? In a word: cash flow. If you do not have cash flow from your business already, you want to demonstrate, as concretely as possible, how you will get it and get it soon. To a VC, cash flow is king: it separates dreamers from doers. Therefore, this is what you want to emphasize in your business plan. The more clearly you can illustrate how their investment will lead to significant profits, the more likely you are to get funding. You should also only target venture capitalists in your sector. No matter how great your pitch is, it wont get funding if the investor in question does not work in that field.

The following website is an excellent resource for anyone seeking venture capital. It explains what it truly takes to get funding, drawing on first-hand accounts from real founders who have already done it. Additionally, it is a splendid refutation of the many "layman's myths" people have about venture capital. This, in turn, will make you smarter about what venture capitalists look for and find important. SRC: http://www.antiventurecapital.com/venturecapital.html

Another (less stressful) way to raise funds for your invention is to get an angel investor on the team. An angel investor is a private individual who makes smaller investments (typically $150,000-$1.5 million) to new businesses. They are often a bridge between self-funded stage of the business to the point where your funding needs reach the level a venture capitalist would offer. In addition, angels also provide expertise and industry contacts to help you along. One major advantage of using angels over venture capitalists is angels, generally, take more of a hands-off posture. They will provide money and guidance, but for the most part let you run the business as you see fit.

If angel investors are something you would like to look into, there are directories of them available for free online. This one, from INC.com, is segmented by geographic locations so you can find angels in your own area.

The other way to raise money is as old as money itself: getting it from friends and family. While this is often the easiest method, it should not be done on a whim. You should only accept money from friends and relatives if they fully understand and accept the risks, as well as the rewards. New business ventures are far from a sure bet, and it would be dishonest to take money from people who think they are. It could also lead to lawsuits if the business tanks and the friend in question feels cheated. As long as these issues are addressed, however, friends and family are a terrific source of funding for new inventions. The best way to make it happen is to promise them a certain percentage of future profits. The more they give you, the higher the percentage. This way, they can feel that their investment has purchased a tangible claim on future returns.

Of course, which funding option you pursue depends largely on your needs. If you only need a few thousand dollars or so to get started, it would be foolish to seek venture capital funding. By the sake token, if you need to open a factory, there may be no other way. The best approach is to think long and hard about your financial needs and let that determine how you raise money.

Eric Corl is the Founder and CEO of Idea Buyer, a marketplace for new technology and products that allows inventors to showcase their intellectual property to consumer product companies, entrepreneurs, retailers, and manufacturers at http://www.IdeaBuyer.com You can email him at EricCorl@IdeaBuyer.com

Small Business Loans - Get Wings For Your Creative Ventures

2008-03-19T16:16:00.001-07:00

Innovation is the name of the game when it comes to the commercial field. Setting up a business and being successful requires conviction in oneself. If you too have some innovative idea that you want to give shape to but are lacking the finance, you can take up small business loans to assist you in your feat.

The borrowers who are interest in setting up a new venture may like to put their idea into practice without putting any of their assets into risk. So for this, these loans seem to be the perfect idea. Since these loans involve small amounts, there is no requirement for the borrowers to pledge any assets with the lenders. This would mean a completely no risk situation for the borrower and thereby be very suitable.

Through these loans, the borrowers can take up money for any purposes that arise in the business of the borrowers. any needs like payment of labor, packaging of finished goods, getting raw materials, purchase of new machines etc can all be fulfilled with the money that is borrowed through these loans.

The borrowers while taking up these loans should rather research well for the lenders of these loans. It is very important to determine the reputation of the lender as there should be no problem in the way of the business of the borrower. Also, this research can help the borrower in getting lower rate deals as there are numerous lenders in the market who are ready to lower their rates.

The borrowers with adverse credit can also take up these loans for their needs easily. The rates that are charged for them on the borrowed money are higher than usual but it is still worth taking up the loans as there is a great chance to restore your good credit by timely repayment. Moreover low rate deals can be researched for easily through the online mode.

With small business loans, the borrowers can get money for their plans and aspirations easily. No collateral is required for the money and bad credit is also not an obstruction.

Michael T. Brian is the author of this article. He is Masters in Business Administration and expert in finance. He writes about various finance related topics.

How To Finance New Business Equipment

2008-03-19T16:12:00.000-07:00

Every business requires equipment at some point. Your business may need computers, vehicles, manufacturing machines, factory equipment and is entirely dependent on the type of business you are running.

Imagine the business equipment needs of a simple business like a coffee shop, for example. You'll need to acquire, in addition to business premises, one or more good quality coffee makers or espresso machines, tables and chairs for your customers, refrigeration units, storage units, a dishwasher and mugs and serving ware. That's quite a list, and quite an outlay for a new business - all before you open your doors. There are, however, a number of different ways that you can acquire equipment and other assets for your business without having to part with your liquid assets by making payments up front.

Operating Lease

An operating lease allows you to acquire the equipment you need for your business without a large initial outlay. In addition, you get up to 90% of the resale value.

The advantages of an operating lease include:

-lower rental fees
-the ability to use the equipment without owning it
-there is no need to dig into other lines of credit to finance a purchase
-your rental fees may be deductible from taxes as operating expenses
-there are other tax advantages, including avoidance of depreciation

Asset Finance Lease

A finance lease allows you to use the equipment you need without owning it. When the lease ends, you may get a percentage of the resale profit in the form of a rental rebate.

The advantages of a business asset finance lease for your equipment include:

-Low initial expenses
-Easily arranged through many vendors
-Monthly fees are a fixed expense
-Leased equipment is a balance sheet asset
-Maintenance contract is often included as part of the monthly rental fee
-Use of equipment without ownership
-Rental fees may be deducted from taxes as operating expense
-Frees up or preserves other lines of credit for other uses
-A percentage of resale price may be available as a rental rebate

Hire Purchase

Hire purchase represents an excellent way to acquire equipment without paying the entire cost up front. The advantages of hire purchase include:

immediate use of the equipment that you need
fixed or variable rates of interest available on loans
the interest on your commercial loans may be tax allowable
consistent monthly payments make bookkeeping easier
ownership of the asset at the end of the payment term
can often be tailored with payment holidays or stepping payments to allow the equipment to start generating profits
balance sheet asset

Most manufacturers and suppliers will work with you in many different types of finance and purchase arrangements. Once you know the type of equipment you need, shop around to find out what finance and purchase arrangements are available to you. A trained business consultant may be of use in helping you decide between asset finance and hire options.

Discover how your business can purchase new assets and equipment without affecting working capital using UK asset finance leasing. Visit Cash4Business at http://www.cash4business.co.uk to find out how your business could benefit.

Business Fundraising - Network With Your Capital Providers Before You Need The Money

2008-03-19T16:10:00.001-07:00

Often entrepreneurs will be in the process of building their businesses and suddenly be struck by a need for cash. The business wins a big contract or general growth has increased in speed. On the down side, the slower economy slows sales growth or customers slow down their payable cycle. Either way, this is not the time to go looking for capital.

If you ever believe you may need capital, the time to start the process is now, be it debt or equity. Take the time to get to know your banker. If you bank at a large bank, such as Bank of America, get to know the local branch manager. Find out how they process business loans. If there is a local loan officer, ask to meet with him or her. Find out what the lending standards are.

Large banks may allow the branch to approve loans up to a certain amount. Higher amounts may be kicked up to the regional or corporate offices. It would be a shame if you were denied a $60,000 loan by a corporate office, but you could have gotten a $50,000 loan approved by the local branch.

Finding a smaller local bank that focuses on commercial accounts will also improve you chance of getting a loan. You can get to know the lending officer personally and keep them informed of your business on a regular basis. If you are meeting your expected revenue milestones, your lending officer will be more likely to believe your plan in the future.

Equity capital is also a relationship business. If you think you may need some friends and family capital in the future, ask your potential candidates to sit on your advisory board. You get their advice and allow them to see you in action. Additionally, you get the experience of working with them, which may lead you to decide that you would not like them to be an owner in your business.

If you are interested in venture capital, make it a point to get to know some venture capitalists. Although reputed to be stand-offish, they are most afraid you are going to ask them for money. If you are just networking, many VCs will be thrilled to meet with you and give you advice and the benefit of their experience.

You can start with networking events put on through your local technology council (or similar state/city entrepreneurship group). You might try presenting at a venture forum. This gives you both practice and gets your name into the venture community. Volunteer to be a mentor in local entrepreneurship organizations. They often hold group meetings and you will get the chance to meet VCs on an equal footing.

Getting a bank loan can take four to eight weeks and raising venture capital can take six months to a year, sometimes more, so having your foot in the door can really help move the process forward. Don't wait until you need money to start looking, it will be too late.

Ms. Worrall is the President of Worrall Consulting, LLC. Worrall Consulting is a finance and business strategy consultancy providing professional services to high growth, early stage companies. The company provides capital formation assistance, market research and business intelligence, and business planning strategy. More information about the company can be found at http://www.worrallconsulting.com . Additional financial and strategy advice can be found at http://www.cfoyourself.com

Business Fundraising - Network With Your Capital Providers Before You Need The Money

2008-03-19T16:10:00.000-07:00

Business Angels vs Venture Capitalists

2008-03-19T16:08:00.000-07:00

Have you these amazing ideas which you're sure you can put into practise and make a living out of your ideas. If so you're more than likely looking into financial help to put these ideas into practise. You may think bank loans, credit cards and loans off family and friends are the only options but Business Angels and Venture Capitalists are also a good option to consider.

Business Angels what are they you may ask, they often work as individuals who themselves are entrepreneurs and have made their dream come true in whatever business sector they chose. They have now have the experience and financial backing to help other entrepreneurs to start their own business just like themselves years ago.

Venture Capitalists are very similar to Business Angels they are often from an entrepreneur background have made a successful business and now would like to give back to other entrepreneurs and help them with finance for their new start-up business.

So you're asking what is the difference between them both, they are:

Business Angels - Give you the financial help you need when you need it, and invest their own money in your business. If it works within an angel network the angels will pool together with their investment as well as sharing research they each do. Angels understand the needs of a new business as they have been there themselves and therefore they not only offer financial help but they can offer good advice when no one else will.

Venture Capitalists - Give you the financial help you require when you need it but uses pooled money them and others have in a professionally managed fund. Venture Capitalists like to take an active role in the business they are investing usually being a director or on the management board of the business.

So if you're looking for some financial help for your new start-up business or even your struggling business you don't just have the options of:

• Family
• Friends
• Banks
• Loans
• Credit Cards

You have the option of using a Business Angel or a Venture Capitalist. Which ever one you decide to use the only way you're going to show your serious in wanting their help is to have a well planned and thorough business plan.

A business plan will not only be used to show your investor what you planned ideas are and your predicted returns in the next few years will be it will also be used for you to run your business well. It will show others what your initial goals were and if you succeeded in these as well as any risks you planned for and if any of these actually occurred and if they did, did you cope ok with rectifying the risk.

It shouldn't just be placed in a drawer and forgotten about it should be regularly updated. Your business will continue to change and usually out of your control and you should reflect on these changes within your business plan. You should have contingency plans to deal with any external influences that would affect your business and the way in which you run it.

You should now be a little wiser of the facts of the difference between these and how they can help you.

Jene Pedder is the Webmaster of Angelstartups who specialise in helping you find a Business Angel or Venture Capitalist.

Please feel free to republish this article provided a working hyperlink remains to our site.

Starting a New Business Requires More Than Just A Good Idea

2008-03-19T16:06:00.000-07:00

The most important thing you can do to prepare for starting and operating your own business is to develop a business plan. This can take time and energy, but it forces you to really solidify your business idea. You can carefully plot exactly what your business, financial and expansion goals are. And this will help you progress in all other areas of starting your business as well. Without funding for startup costs, many successful businesses would never have been able to even open their doors.

Once you've done this, you will realize the significance of unsecured start up funding. Rarely does an individual have the savings or personal resources to put a business plan into action completely on their own. Often, even when one thinks this is the case, deeper development and planning dissuades this initial thought.

Small business funding can be a rather involved subject, filling shelves upon shelves of books at libraries and bookstores. The truth is though, you don't need a how-to book to get good funding. You simply need a good lender. Being able to determine once is what really counts.

A unsecured small business start up loan gives you the startup funding you need, but getting a startup business loan can sometimes be more difficult than it seems. Most lenders today require collateral for small or large start up business loans, but collateral may be something you have never thought of before. When you obtained a mortgage, your home served as the collateral. When you got a car, the vehicle was the collateral. But when you're seeking a new business loan, you probably don't have the commercial collateral you need yet. Your only option then is to offer your personal assets as security for the loan-which is a risk you understandably may be hesitant about.

Collateral is often the biggest obstacle to the prospective business owner. Not only does a new business not yet have any commercial collateral to provide; but it is asking a lot for an entrepreneur to put his hard earned personal assets at risk in order to start a new business venture. Yet, without collateral, getting a unsecured business loan can sometimes seem impossible.

The good news is, though rare, some companies have specialized programs for exactly this scenario. An unsecured business start up loan can get a new business owner the funding he needs to cover initial business costs, without having to provide collateral and place his or her assets risk. With this type of financing plan, the lender utilizes something the borrower has worked hard for and should be able to take advantage of - his good credit. With this approach, the lender can still an unsecured business start up loan at great rates and with a variety of programs.

The small business loan application process can also be made difficult by the imposition of restrictions on how the loan proceeds can be used. This takes away the borrower's freedom to use the funds as he or she may have seen fit. You can escape these hassles by using an online application for a unsecured small business loan.

Today, web lenders offer a new window of opportunity for small businesses and individuals that need a fast start up loan approval process. Time is money! Lenders now offer cash in as little as 72 hours, with no tax forms, no business plans, and no collateral! Such lenders offer the straightest line to unsecured business loan funding, at great rates. In the modern world, financial products as efficient and dynamic as the business world must be available.

Applying for a unsecured small business loan is easy, all the business owner need to do is just go on line and submit their loan details. Then the lenders will refer back to you with the loan decision in a few days.

Wardell Brooks is a current unsecured small business loan analyst for America Funding Network. He has been working in the financial sector for several years. His experience includes banking, mortgages, and sub prime lending. http://www.venturecapital.20m.com

Raising Venture Capital - The Alternative Golden Rule

2008-03-19T16:01:00.001-07:00

The economic translation of the Golden Rule is "he who has the gold makes the rules." If you are raising venture capital, then you need funding. The more you need it, the less control you will have at the end of the day.

A typical entrepreneur scenario I see is: 1) I have a great idea or product and I'm going to start a company although I have no monetary resources myself to put into it.
2) I can scrounge up a hundred or two hundred thousand dollars through loans, grants, credit cards, a few early sales, etc. 3) I've worked on this for a year now and can really see the potential if I only had the money to hire salespeople, build a factory, hire production employees, buy servers...and 4) I've worked for a year and a half and I am tired of being poor, but I don't want to give up on my idea. Hey, I'll raise venture capital.

At this point, the entrepreneur is pretty close to desperate and is willing to give up just about all control to get a decent, steady salary. The other scenario is the company has already raised some amount of money, either friends and family or angel and the money is running out. This entrepreneur is really desperate and is willing to give up just about all control to keep his or her business alive.

Venture capitalists are not really big risk takers. They carefully evaluate every investment and the management team before deciding to invest. Once they have decided that the business has a decent chance of succeeding, they insist on a variety of controls to ensure that they can keep a tight rein on the business, including replacing management if necessary.

Even if the VC owns only a minority of the shares, they will include in their investor rights agreement certain voting rights and protective provisions (see my post on Elements of a Term Sheet for definitions) that will ensure them the ability to protect their investment.

If you are planning to start a business and believe that you might want to raise venture capital someday, you can do several things to avoid losing your company. First, have a plan for growing your company without venture capital. You may not be able to raise it, but if you are and you don't like the provisions in the term sheet, you can walk away.

Second, if you do raise venture capital, be careful with your selection of investor. Make sure that the investor is honest and treats his or her management teams with respect and fairness. Once you have a term sheet, you can ask for a list of their CEOs' contact info. If the VC is reluctant to give references or will only give a couple, you might want to look for another investor. The CEOs will give you the honest opinion of the VC, so make sure you follow up.

If you are going to put your blood, sweat and tears into a company, you don't want it taken away by an unscrupulous investor just for a few investment dollars.

Please visit my website for more small business finance advice: http://cfoyourself.com

Financing Your Company Without Giving Up Equity

2008-03-19T15:56:00.000-07:00

Many business owners think that the most effective way to finance their companies is to secure venture (or Angel) financing. Venture capital has a number of advantages, however, there are two major disadvantages that should be considered. The first one is that venture capital is very hard to obtain. The second disadvantage, which is the focus of this article, is that venture capital requires that you give up an equity stake (ownership) and some control to the venture company. Many times, the ownership stakes that VC's require can be substantial, leaving the founders in a minority ownership/control position.

There is an alternative to venture capital that is often overlooked. It's a form of business financing that provides you with the capital you need to cover operating expenses and grow your company. It's easier to obtain than a business loan or conventional venture capital funding. The catch is that it only works for certain types of companies.

Does your company sell its products to other companies or to government entities? If you do, then you are familiar with the fact that most companies pay their invoices in 30 to 60 days. However, while waiting for payment, you still need to pay suppliers and employees. Few startups or growing companies have the necessary reserves to cover expenses while they wait to get paid. This restricts their ability to grow and capitalize opportunities. This is where factoring your accounts receivable can help you dramatically.

Invoice factoring, as it is commonly referred to, provides you with an immediate advance on your invoices. Factoring eliminates the need to wait for payment and provides you with the liquidity to pay suppliers and employees. It gives you a solid financial footing that enables you to take on new business opportunities.

One of the biggest advantages of factoring receivables is that it's fairly easy to obtain. To qualify for it, your company must do business with credit worthy clients, such as large companies or government agencies. This is the most important requirement because your invoices to those clients are used as collateral.

A substantial benefit of receivable factoring is that you will never have to give the factoring company any equity or ownership in your business. Once you meet your business objectives - you can finish your relationship with the factoring company with no further obligation.

The cost of factoring varies based on a number of parameters, such as the amount of financing you need, the credit quality of your clients and the stability of your company. As a rule, monthly rates go from 1.5% to 3% based on these criteria.

If your company sells products and wait up to 90 days to get paid, you should consider factoring as an alternative to finance your company.

About Commercial Capital LLC

Marco Terry is the Managing Director of Commercial Capital LLC, a leading accounts receivable financing company.

TOP 12 HABITS THAT WILL KEEP YOU FROM SUCCESSFUL BUSINESS OWNERSHIP

2008-01-08T12:01:00.000-08:00

1. Refusing to Conduct Research: Lack of research is the number one reason for business failure. Most businesses go out of business within 2 to 5 years. If you are not conducting research by going to the library every week, visiting book stores reading books and business magazines, using internet websites www.goggle.com or www.yahoo.com, then chances are you will never be in a position to become a successful business owner.

2. Refusing to Keep Your Books: Every business has a creative side, marketing side and business side of running a business. Poor management ranks in the top three reasons why businesses go out of business. If you can’t sit down every 30 days to see what’s coming in and out of your business, then you need to hire a bookkeeper or a Certified Public Accountant (CPA). You can learn how to do the books yourself by buying the quicken.com computer program and taking an accounting class.

3. Refusing to Read Non-Fiction Books: If you are not reading non-fiction books for at least 30 minutes to an hour everyday, then you will never have the knowledge to become a business owner. Some of the books recommended: “How To Take Control of Your Own Life” by Cathy Harris, Think and Grow Rich: A Black Choice by Dennis Kimbro, Think and Grow Rich by Napolean Hill, Powernomics by Dr. Claude Anderson.” Other recommended books are located at www.angelspress.com/recommendedbooks.html

4. Refusing to Support Young Entrepreneurs: Most young people are not like adults because they don’t put self-imposed limitations on themselves and can easily open a business within 30 days and start making money. Since 1 out of every 2 marriages end because of finances, someone in your household (you, your spouse or your youth) needs to open a business.

5. Refusing to Surround Yourself with Good People: You should surround yourself with: 1) people who have integrity, 2) people who are humble (teachable), and 3) people who are respectful. Stay away from people who are toxic, destructive or negative.

6. Refusing to Brainstorm: If you are not brainstorming with legal, marketing, and financial advisors, mentors, consultants, coaches, you will have a hard time moving your business to the next level. Remember you don’t have to do everything yourself. If you are the smartest person in your group, you need to get another group. Asking for help doesn’t mean you are weak, it simply means you want to remain strong so ask others for help in your business.

7. Refusing to Create a Lifestyle Change: You need to understand that becoming a business owner is a complete new lifestyle change. Therefore you need to incorporate being a business owner while paying close attention to your health and finances. As part of your new lifestyle change, you need to make short and long range goals and read books and magazines on health and financial education, and watch health and financial networks instead of unproductive television shows. If you are watching television for hours everyday then forget about becoming a business owner.

8. Refusing to Raise Your Credit Score: Only you can clean up your credit so as you build and grow your business, you do need to order your credit reports yearly from the three credit bureaus (Experian, Equifax, TransUnion) at www.annualcreditreport.com This means you are going to have 3 different credit scores. If your credit scores are between 300 – 500, then you are in bad financial shape. Your goal is to raise your credit score to over 760. It’s estimated that 79% of all credit reports have some type of errors, over 25% have major errors and over 30% have accounts opened that should have been closed.

9. Getting Involved in Multi-Level Marketing: If you still believe that Multi-Level Marketing, also called Network Marketing and Pyramid Schemes, will make you a successful business owner, then you are sadly mistaken. Remember if you are involved in Multi-Level Marketing (noni-juice, melaleuca, pre-paid legal, primerica, YTB travel, Quixstar, ACN, etc.) you DO NOT have your own business. You are working for that person at the top of the pyramid. Never get involved in a business simply because others are doing it. If it’s not your passion, then chances are you will not be happy.

10. Waiting on Grant Money: If you still believe you can get grant money to start or expand a business or non-profit organization simply because it is advertised on black radio shows and websites, you will be waiting a long, long time. If you had conducted research, you would have found out the truth about grant money. There is NO GRANT MONEY to start or expand a business and it’s extremely hard to get money for a non-profit organization, especially if you are an African American. So we need to stop repeating misinformation.

11. Refusing to Write a Business Plan: If you chose not to write a business plan, it’s a red flag that you are not serious about your business. A business plan is a road map and without it you will get lost in your business and go out of business. The key to working with investors is to present a good business plan. Unless you have a good “Executive Summary,” most investors, bankers, financiers will not read the entire business plan.

12. Refusing to Put Up a Website: If you do not choose to put up a website, it will eat away at your creditability. Remember creating a blog and a myspace account does not take the place of a professional website with a domain name. If you have a professional website, then you will look more attractive to investors simply because you chose to take your business online.

This document is copyrighted and was written by Cathy Harris. Cathy Harris is a Motivational Speaker and is known as “The Ethical Black Business Coach” (http://theethicalblackbusinesscoach.blogspot.com). She is available for seminars, workshops and consultations. She is also the author of the 10-part book series “How To Take Control of Your Own Life” (http://www.howtotakecontrol.com) and can be reached through her company at Angels Press, P.O. Box 870849, Stone Mountain, GA 30087, Phone: (770) 873-2072, Toll Free (800) 797-8663, Fax: (678) 254-5018, Website: http://www.angelspress.com and Email: info@angelspress.com

Budget Help For The Small Business Owner

2007-12-24T22:48:00.000-08:00

By Ellen Rohr

Are you ready for the new year that is right around the corner? How wonderful...a brand new year lays at your feet. What are you going to do with it?

Take a look back at January 2007. Compare where you were then with where you are now. Check your progress. Are you happy with it?

Another year gone by. Sigh. It's scary how fast it went.

Are you better off than you were last January? Are your relationships more rewarding? Is your bank account bigger?

"You may delay but time will not." Benjamin Franklin

You are too old to waste time. You have an opportunity to create the life you want starting this year, right now. It's time for the "B" word. "B" stands for goal setting. "B" stands for planning. "B" stands for...BUDGET.

And it's time for you to get over your "B" word problem. You know you are supposed to put a budget together, right? Have you? Have you lined up 2007 in numbers and dollars? Have courage. I'll help you. I have struggled with this. I learned how to budget only because I HAD to. And so do you. If you don't set goals and measure your progress, your business won't get any better. It will get worse! Yikes! Together, we can get through it. Here are some tips for putting together your business budget for 2008...and beyond.

Getting Started...

• Start...by stopping. Stop whining about budgeting. Stop claiming you can't do it. Stop claiming you don't get it. Budgeting is your best guess at what you can do for sales and expenses for a future period of time. That's all.

• Don't worry about doing it just right. You can't do it 100% right, meaning you will never guess exactly what you will have in sales and expenses. You can't do it wrong. Any swing at doing a budget is a positive move.

• Realize your power. You are incredibly powerful, so much more so than you realize. Writing your goals, crafting your budget, actually sets your goals into motion. You have everything to gain and nothing to lose by budgeting. So, let's go!

Tools to use...

• Your accounting program probably has a budgeting program in it. Use it. It will do the math for you.

• Do you provide plumbing, heating, cooling, electrical, over-the-counter sales and septic tank pumping? Create a budget for each entity. Use the departments feature in your accounting program.

• Columnar pads are your friends. You know those green tinted sheets with the rows and columns inked in already? There is nothing wrong with using a pencil and paper to work out your budget.

• Print out your Income Statement (aka Profit and Loss or P&L) from the last two years. If you don't have them, find your income tax returns. Your tax preparer created an income statement for your tax return. You can also have your check book register handy.

Basic Budgeting Steps...

• Create a reasonable chart of accounts. The chart of accounts should reflect YOUR business. Your accountant may encourage you to use THEIR chart of accounts. Doing so makes it easier for him to do your taxes. He should accommodate you and your business by helping you create a chart of accounts that is plumbing-business specific. I've attached a sample chart of accounts for you to use. Show it to your accountant and customize it to reflect the action at YOUR company.

• Simple budgeting involves goal setting for sales and expenses (costs.) Start with account number 4-1000 and work through the rest of the expenses. Of course you can add other expenses. This is just a starting point. More sophisticated budgeting involves the balance sheet items...assets, liabilities and equity (accounts 1-1000 through 3-9000.) If you are new to budgeting, start with sales and expenses. Address the other items with your accountant after you have done that.

• Find a Budget Buddy. Doing your budget with someone else is a GREAT idea. Two sets of eyes will catch more math errors. Two brains will help you think out your assumptions. And, making an appointment with another person to work on the budget will discipline YOU to keep that appointment. Budgeting is easy to blow off because it's not an urgent activity. Who should be your Budget Buddy? Another business owner is good. You can also work with one of your employees on the budget. Don't be afraid to share your financial information with a key employee. Their financial literacy makes them more valuable to your organization.

• There are two ways to approach the sales line of your budget.

1. Set a sales goal... and work from there.

2. Fill in all your projected costs, and then see how much sales will have to be to cover costs and leave your desired profit.

Either way is OK. If you start with the sales line, and there is not enough on the top to cover all the expenses you anticipate, you can go up to the top line and change your budgeted sales to make it work. Remember...the Budget is pretend. It's a guess. You can move the numbers around.

• Work your way down the list of costs and make your best guess. Reference your income statement, tax returns and check register to see how much you have spent on expenses in the past.

• You can fill in the budget for the whole year, or month by month. Month by month is a more usable format when it comes to checking actual performance to budgeted numbers.

• The budget is just goal setting. It doesn't need to be bound by strict accounting rules. You can budget for expenses you haven't incurred yet. For instance, if you want to set aside money for buying a new truck, you can budget for it first...and then buy once you have the money saved.

• Keep a Budgeting Log. You are going to pull some of your budgeted numbers from thin air. Write down notes to yourself as you come up with the numbers for your budget. When you refer to your budget in the months to come, you may forget your assumptions. Write them down in your Budgeting Log.

• John Young, venture capitalist and marketing maverick, helps me put my budget together for Benjamin Franklin Plumbing. He gave me this great piece of advice: Don't put down budgeted numbers that you KNOW won't happen. For instance, if you KNOW that your insurance costs are going to go up this year, don't put down the same dollar amount as you paid last year. If you don't know the increase amount yet, find out...or put in an increased number from last year. But don't put in the same number...because you KNOW that won't be it.

Use it or lose it...

• Don't bury your budget in a drawer once you consider it "done." A budget is a viable goal setting...and getting...tool. Each month, compare your actual performance to your budgeted performance. Even better, check MID month. Check your progress on the 15th of the month. If you are behind in sales, take action to crank up sales...and to cinch down expenses. If you don't refer to your budget until after the month is over, you may miss the opportunity to salvage a month.

Once upon a time, I taught skiing at Park City Ski Area. A client signed up to take a week's worth of ski lessons with me. As an instructor, a week of lessons is a big money maker. Still, I had to turn him down.

I told him, "Listen, you are only going to be here for a week. If you take lessons every day, you'll miss the chance to just SKI. You need to learn a bit, and then go practice. Have fun. Make some mistakes. Try things out on your own. If you only take lessons, you'll miss the point: YOU want to SKI." We settled on a few lessons with some free time in between.

So...go forth and budget. You know more than you think you do. Don't avoid budgeting because you are not sure that you know how. This stuff isn't that hard. If you aren't super comfortable with it, you will avoid it. Or, claim you don't "get" it. But you get it enough to give it a swing. This column has enough information for you to get started. Put together a budget for 2008. Check your progress against it each week. And have some fun out there on the steep slopes of business.

This year, let the "B" stand for BIG BUCKS!
For more help...visit www.barebonesbiz.com or call 877.629.7647
We make business basics EASY at Bare Bones Biz!

Ellen Rohr is the President and Founder of Bare Bones Biz, a business training and consulting company that teaches clients how to turn big ideas into successful businesses. Rohr is the successful author of numerous business basics books, including: Where Did the Money Go? - Accounting Basics for the Business Owner Who Hates Numbers and How Much Should I Charge? - Pricing Basics for Making Money Doing What You Love.

Ready to make more money? Go to http://www.barebonesbiz.com NOW and sign up to receive the latest information on our FREE monthly Teleseminars, Biz Exposes and New Bare Bones Biz Products.

Buying a Business - Understanding Small Business Financing

2007-12-24T22:25:00.000-08:00

By Jason L. Pittman

As a business broker I am frequently discussing with clients and prospective buyers methods of small business financing. Once a buyer and seller agree on price and terms, it all boils down to due diligence and financing.

A lot of factors can determine how lenders will view your deal. It will depend on the type of lender, type of business, and what kind of assets does the business own that can be used as collateral. Is there real estate involved in the transaction?

A commercial banker or loan broker will show you what factors matter most and get your deal funded with their products.

Cash and Equity

Of course, if you're paying all cash, none of this is your concern, however 100% cash deals are not the norm.

Every business is unique and different, but one thing is certain before you seriously consider pursuing a business for sale: You or one of your partners will need sufficient liquid capital or equity for anyone to finance your deal.

Bank Financing

The stories of a "no money down" deals and 90% seller financing are rare and I have personally never seen one that was legitimate.

Again, depending on various factors, when acquiring small business financing through a commercial lender, there is a good chance you'll need 20-40% cash/equity down on the business, financing the balance with debt capital.

You will probably pay "prime + 2" in interest, meaning if the prime rate is 8%, your interest will probably pay 10%.

The term of the loan will probably be 5-10 years. Many of the commercial loans I've seen are 7 year terms.

Business with Real Estate

If you are acquiring real estate in addition to the business, many products are available as "Blended Loans". These loans are "blended" with the standard "real estate loan" (10% down, 30 years).

You end up with roughly a 15% down payment, and a term of 18 - 22 years, which is great for keeping your debt service down and increasing your Cash Flow.

On the other hand, 15% of business and real estate can still be a sizable down payment.

The cost on the "blended loan" will likely be more favorable as well with the real estate as collateral.

Seller Financing

Most small and mid size companies will involve a portion of seller financing.

It is appropriate to amortize the financing over a period of time and have a balloon after 2 or 3 years.

This way the financing serves two purposes: Funds the deal and shows that the seller has confidence in the business - and the buyer.

Jason L. Pittman is a business broker and intermediary in Chicago, IL.

To access more info and resources on real estate and small business:
Visit http://www.chicago-business-broker.com

9 Steps to Building Business Credit

2007-12-24T22:18:00.000-08:00

By Lisa Phillips

Building business credit can be accomplished regardless of your personal credit history. Business credit is essential in conserving cash flow, keeping track of business expenses and more importantly, protecting personal assets and personal credit history. The most important element to building business credit is finding lending institutions, credit card issuers and vendors that will establish business credit without you giving a personal guarantee from your individual credit information.

Business credit is also a way of building your company’s image and identity. The following are 9 Steps to Establishing Credit for Your Business:

Step One
Decide how you want to structure your business. This may take some research but a few common ways to structure a business are: C-Corporation; S-Corporation; Sole-Proprietorship; Limited Liability and Partnerships. For business credit separate from your personal credit you will need to structure your business as a Corporation or LLC. You can also purchase a “shelf” or “aged” corporation in the State where you want to do business. A shelf or aged corporation is one which has no activity and is created and put on the “shelf” to age and use at a later date. There are companies which sell shelf corporations.

Step Two
Obtain an employer identification number (EIN). Business credit is tracked using your business name, business address and employer identification number. You may obtain an EIN from the IRS online. (www.irs.gov). The application is real simple and takes about 5 minutes. As a sole proprietor you may apply or if you are a corporation any officer may apply.

Step Three
Open a separate bank account under the exact legal name of the business. Business checking accounts can be opened with as little as a $100.00 deposit.

Step Four
Business address and telephone number must be listed under the business name in the 411 directory and the telephone must be answered in your business name.

Step Five
Obtain required business license, permits, registrations, etc., in the City or Jurisdiction where you do business.

Step Six
Technically, at this point you are ready to establish business credit with some vendors such as Staples. Simply go to www.staples.com fax your business phone bill along with the credit application on your business letterhead to apply for business credit. No personal guarantee is required and you should receive the standard business credit line of $750.00

Step Seven
Establish a profile with Dun and Bradstreet (DNB) and obtain a D-U-N-S Number. DNB is the largest tracker of business credit. The D-U-N-S Number is a nine-digit identification number that provides unique identifiers of business entities. The website for Dun & Bradstreet is www.dnb.com. There is no charge and you will receive a D-U-N-S Number within 30 business days. You can pay for their credit builder services in order to receive the D-U-N-S immediately, but it is definitely not necessary. Companies where you apply for credit that use Dun & Bradstreet services will request your credit file and this will establish your file. It may take up to 45 days for the companies to report.

Note: If you do decide to pay for their credit builder services preparation is vital when contacting Dun & Bradstreet. Make sure you have covered all your bases. What you say to DNB goes permanently into your file

Step Eight
Now that you have received your D-U-N-S number you are prepared to apply for business credit. As you begin to establish business credit it is imperative that you pay your invoices before the grace period. A Paydex Score of 80 is considered very good and is based on your payment history with at least five (5) vendors. It makes a difference for every day you pay earlier than the actual due date unlike personal credit. Business credit scores range on a scale from 0 to 100 and a Paydex score of 80 will get you the best business credit cards and terms.

Step Nine
After completing the process you may want to apply to the following companies with no personal guarantee required. Do not apply for everything at one time. This may get your business credit file flagged. Allow a couple of weeks between applications.

Office Depot-UPS-Staples-Fedex/Kinkos-T-Mobile-Dell Computers-Office Max-Nextel-Chevron Oil-Cingular-Nebs

Lisa Phillips is a marketing consultant specializing in business expansion and development. Because many small business owners lack the personal and business credit necessary to grow and expand, she has developed a free website to aid consumers as well as entrepreneurs in rebuilding and taking control of their credit. www.rebuildcreditscores.com

Securing Business Credit For Your Startup Business

2007-12-24T22:14:00.000-08:00

By Tl Kleban

One of the most important aspects of running a successful business is securing the finances to run it properly. This involves obtaining loans which has become easier now than in years past thanks to the ample funds and financial resources available in the market. As a business owner we can choose to get loans from either private banks to government institutions. It's this change of attitude by bank which has made acquiring loans easier. It's still not all fun and games, however.

The thing is for these banks to take you seriously as an entrepreneur, you need to separate your personal finances from your business life. They look at your business activity as they would a typical consumer for credit purposes, and will turn you down if your personal credit score is low.

A recent study showed that almost 74% of bankers say financial documentation is the most important aspect when they go to approve a small-business loan, and that 60% of those small businesses are turned down because of poor documentation. Here are some other steps you can take to ensure you are approved for that business loan:

Before you go to your bank asking for a loan, you better be sure that your account is in good standing with them. Think of this as an unwritten assurance which could help you increase your chances of getting that loan.

Do you have enough assets to pledge for your credit. This would consists of items like a house, car or a business premise. All of these items represent your ability to repay the loan back.

Many credit professionals recommend building a good credit score and personal credibility through paying taxes and maintaining all legal documents right from the beginning of the business venture. All lenders like to see both when making a decision on a loan.

Are your sources of past credit correctly reporting your credit and payment history to the chief credit reporting bureaus of your state? If they are not, then you may be in a little bit of trouble.

Keep a file of all business documents you have. They need to be complete and comprehensive. This includes licenses, permits, telephone listing, business name, domain name, investment details and spent capital. These act as an indication of the credibility of your business and you, the proprietor of it.

Another good idea is to try and invest a significant amount in the business before you apply for that credit or loan. Doing so gives the bank the impression you are willing to work hard to reach your business goals. This makes them more comfortable approving you for a loan since you will be more apt to pay the loan back.

What is the profitability of the business? You'll find that banks and other lending institutions will only offer loans to entities more likely to earn back the investment. This happens more often when profit realizations are expected to take a long time.

Visit a few small banks in your area to ask for financing. Bigger banks expect great credit history, collateral, hard cash and also personal credibility before they will offer any loan out to a business, making them difficult to deal with. Smaller banks are easier to work with and why most experts recommend them.

Merit Capital Advance looks at the big picture by offering a financing program that provides small businesses with fast business cash. It is the most convenient way to get a small business cash advance when you need it most. Visit Merit Capital Advance at www.meritcapitaladvance.com.

When One Business Plan Isn't Enough

2007-11-15T10:37:00.000-08:00

Tailoring your plan for different audiences can be as easy as emphasizing different points.

By David H. Bangs, Jr.
www.entrepreneur.com

A wide variety of people will be interested in your business plan, including investors, potential partners, bankers, suppliers and employees. But one plan doesn't fit all. If you want to get maximum impact from your plan, you'll need to tailor it to address the particular needs of your audience.

Venture capitalists see hundreds of plans in a year, so each plan gets very little time. It's essential that you make the right impression fast. Emphasize a cogent, succinct summary and explanation of the basic business concept, and don't stint on the details about the impressive backgrounds of your management team.

Bankers tend to be more formal than VCs and more concerned with financial strength than with exciting concepts and impressive resumes. Pay extra attention to balance sheets and cash flow statements.

Angel investors are more informal investors and require a less formal plan. Rather than going for impressive bulk, seek brevity.

Potential partners should see a plan that deals comprehensively with the ownership structure and clearly spells out matters of control and accountability.

Customers who look at your business plan are probably considering building a long-term relationship with you. Fully address your relationships with other customers and suppliers. Talk about your record on matters that deal with the customer's individual requirements. Skip trends in your industry and other sections that customers already know.

Suppliers want to make sure you can pay your bills, so include cash flow forecasts and other financial reports. Then show how you plan to grow, and you'll be in a better position to negotiate terms.

Managers in your company use the plan to remind themselves of objectives, keep strategies clear and monitor company performance and market conditions. Stress corporate mission and vision statements and analyses of current industry and economic factors. Make it easy for managers to compare sales revenue, profitability and other key financial measures against planned performance.

Employees should get a version of your plan that's been edited for their understanding and needs. It's good to be open, but if you're uncomfortable with employees knowing exactly what all the managers earn, leave this information out. Include data like rates of workplace accidents or absenteeism that would be of only peripheral interest to investors.

Limit your alterations from one plan to another to modifying the emphasis of the information you present. Don't show one set of numbers to a banker you're trying to borrow from and another to a partner you're trying to lure on board. It's one thing to stress one aspect of your operation over another for presentation purposes and entirely another to distort the truth.

David H. Bangs has worked with small business owners for 20 years. He has experience on both sides of the financial table, having been an entrepreneur and a loan officer for Bank of America. He is the founder of Upstart Publishing and author of Business Plans Made Easy.

Are You Ready to Hire a Consultant for Your Business?

2007-11-15T10:25:00.000-08:00

July 16, 2007
by Syndicated Columnist Cathy Harris
www.cathyharrisspeaks.com

At some point in business, it becomes necessary to seek out an expert for advice and counsel. When the going gets tough, consultants provides the expertise you need.

Only you can really determine whether you need a consultant’s help. Don’t get caught in the trap of thinking you can do it all by yourself. Bringing a product from the idea state to the marketplace is a complicated difficult process. Stop for a minute and make a list of the issues you are tackling. Do you need another employee but don’t know the best places to look for one? Are you interested in manufacturing your product overseas but haven’t a clue how to get started? If you have other areas that need your attention and you can’t afford to make too many mistakes with your capital, then you’re the perfect candidate for a consultant.

Consultants are primarily hired to give you advice and counsel. They don’t make guarantees that their input will be effective. You’re the ultimate judge of their value; therefore it is extremely important for you to thoroughly check potential consultants’ references.

Consultants can be extremely helpful especially to inventors. The right consultant can offer advice on how to build a working prototype, assist in finding manufacturers and help develop a marketing strategy. He or she can introduce you to important contacts.

The key is to find a consultant that will meet your needs without wasting your time and money.

The best way to look for a consultant is to ask friends, family and colleagues. Getting referrals is always a good way to start because someone else has done much of the legwork and you will receive the benefits of what they’ve learned.

When beginning your research, don’t be turned off by those who consult part time. This can be good sign that they are active in their area of expertise and can give you up-to-date information.

The Yellow Pages, surprisingly, is a good source. The “Consultant” category is broken down by type (such as management consultants and business consultants), so you should be able to find one that matches your needs.

Trade journals are also helpful. Consultants tend to advertise in journals the majority of their potential clients read.

Make sure you interview consultants before hiring one. If they mention companies that have hired them, take notes.

At the end of the interview with a potential consultant, ask for the phone numbers of the people and companies they mentioned. Again, they should freely provide that information, their resume and a list of other clients and references. If they don’t, don’t hire them.

Also ask them to tell you about a difficult client they worked with. Every consultant should have at least one not-so-great experience. Listen carefully. Their story will give you great insight into how they work. If they claim every job they’ve had was great, how can you be sure they’ll tell you the truth about your issues? If they are overly negative, you should wonder whether they’re really concerned about doing a good job.

Also make sure before hiring a consultant, that the following are true: 1) They have no conflict of interest; 2) They are willingly to provide documentation of training received and share other background information; 3) They present a written contract detailing the types of services to be performed and the fees for those services; 4) They will provide you with a written report upon completions of the project. Finally, make sure you talk to more than one consultant and evaluate the services provided and fees charged, as well as analyze your needs before making a final decision.

When working with a consultant, you should always have an agreement in writing. The agreement should include how the payment will be made and the scope of the work being requested. It’s also very important that the agreement assigns all intellectual property rights to you. Otherwise, the consultant could claim ownership of the idea and leave you without recourse.

In the end, using a consultant has few downsides. They’ll offer expertise you don’t possess, but when it comes to playing the game, they’re only a coach on the sidelines. You are ultimately the one who must act.

Cathy Harris is a motivational speaker and business consultant. She is also the author of the book series “How To Take Control of Your Own Life” (http://www.howtotakeontrol.com) and can be reached through her company at Angels Press, P.O. Box 870849, Stone Mountain, GA 30087, Phone: (800) 797-8663, Fax:
(678) 254-5018, Website: http://www.angelspress.com Email: info@angelspress.com

Get Help With Your Business Plan

2007-11-15T10:22:00.000-08:00

To help you write your business plan, we've compiled a list of the resources that will put you on the right track.

By the time you've read this guide and tried your hand at a few of the various components of a plan, you should be ready to go ahead and complete your own. However, there's always room for improvement, and there are a number of resources you can tap into to increase your expertise in plan writing.

Hiring a Consultant
Businesspeople tend to fall into two camps when it comes to consultants. Some believe strongly in the utility and value of hiring outside experts to bring new perspective and broad knowledge to challenging tasks. Others feel consultants are overpaid yes-men brought in only to endorse plans already decided on or to take the heat for unpopular but necessary decisions.

Who's right? Both are, depending on the consultant you hire and your purpose for hiring one. Most consultants are legitimate experts in specific or general business areas. And most consultants can be hired to help with all or part of the process of writing a business plan.

The downside is, you have to spend a lot of time on communication before and during the process of working with a consultant. Be sure you have fully explained--and the consultant fully understands--the nature of your business, your concept and strategy, your financial needs, and other matters such as control, future plans and so on. Refer to these important issues throughout the process--you don't want to pay for a beautifully done plan that fits somebody else's business, not yours. And when the work is done, debrief the consultant to find out if there is anything you can learn that wasn't included in the plan.

If you decide to hire a consultant to help you prepare your plan, take care to select the right person. Here are some guidelines:

1. Get referrals. Ask colleagues, acquaintances and professionals such as bankers, accountants and lawyers for the names of business plan consultants they recommend. A good referral goes a long way to easing any concerns you may have. Few consultants advertise anyway, so referrals may be your only choice.

2. Look for a fit. Find a consultant who is expert in helping businesses like yours. Ideally, the consultant should have lots of experience with companies of similar size and age in similar industries. Avoid general business experts or those who lack experience in your field.

3. Check references. Get the names of at least three clients the consultant has helped to write plans. Call the former clients and ask about the consultant's performance. Was the consultant's final fee in line with the original estimate? Was the plan completed on time? Did it serve the intended purpose?

4. Get it in writing. Have a legal contract for the consultant's services. It should discuss in detail the fee, when it will be paid and under what circumstances. And make sure you get a detailed written description of what the consultant must do to earn the fee. Whether it's an hourly rate or a flat fee isn't as important as each party knowing exactly what's expected of them.

Organizations

Small Business Development Centers (SBDCs): SBDCs offer a wide variety of information and guidance to individuals and small businesses. If you need help developing your business plan, the SBDC counselors can help by offering assistance with market research, cash-flow projections and more. And, in most cases, the help is free.

SCORE: The Service Corps of Retired Executives, more commonly known as SCORE, is a nonprofit group of mostly retired businesspeople who volunteer to provide counseling to small businesses at no charge. A program of the SBA, SCORE has been around since 1964 and has helped millions of entrepreneurs and aspiring entrepreneurs.
SCORE is a source for all kinds of business advice, from how to write a business plan to investigating marketing potential and managing cash flow. SCORE counselors work out of hundreds of local chapters throughout the United States. You can obtain a referral to a counselor in your local chapter by contacting the national office.

National Business Incubation Association: The NBIA is the national organization for business incubators, which are organizations specially set up to nurture young firms and help them survive and grow. Incubators provide leased office facilities on flexible terms, shared business services, management assistance, help in obtaining financing, and technical support. Its services include providing a directory to local incubators and their services.

Chamber of commerce: The many chambers of commerce throughout the United States are organizations devoted to providing networking, lobbying, training and more. If you think chambers are all about having lunch with a bunch of community boosters, think again. Among the services the U.S. Chamber of Commerce offers is a web-based business solutions program that provides online help with specific small-business needs, including planning, marketing and other tasks such as creating a press release, collecting a bad debt, recruiting employees or creating a retirement plan.

The U.S. Chamber of Commerce is the umbrella organization for local chambers. If you plan on doing business overseas, don't forget to check for an American Chamber of Commerce in the countries where you hope to have a presence. They are set up to provide information and assistance to U.S. firms seeking to do business there. Many, but not all, countries have American Chambers.

Dorm Room Dreams

2007-11-15T10:19:00.000-08:00

Dorm Room Dreams
www.entrepreneur.com
Student entrepreneurs hit the mark with businesses aimed at fellow students.

Sure, there are plenty of college students that charge $5 for a cup at a keg party. Rarer are the students that see opportunities in their collegiate surroundings and start successful businesses aimed at serving other co-eds.

From the educational to the entertaining, these three companies started by twentysomethings are making it by "real world" standards. Read on to find out what inspired them and whether being a student has been a burden or an asset to their growing ventures.

BoxMyDorm
Who: Joe Leary, 21; Peter Handy, 21; and Dan Abrahamsen, 22
What: Moving and storage company aimed at fellow college students
Year Started: 2005
Startup Costs: $30,000 self-funded

Moving On Up: It was in the back of a dirty U-Haul truck where inspiration struck Joe Leary and Peter Handy. Handy had enlisted the help of Leary and a few other friends to help him move his belongings at the end of his freshman year. They found few options for storing their belongings over summer break and instantly knew they could cash in on helping other students facing the same problem every year.

"We were pretty blown away by the demand that took place our first year," says Handy, who recalls the excitement of seeing the orders pour in slowly turn to fear. "We had to basically close the order process down on the website because we had such high demand. We wanted to make sure we could serve our customers the best we could our very first year."

To prepare for the next year, they hired professional moving companies and launched a new backend of the website to provide better customer service. It was a smart move that helped push their first year's sales of $50,000 close to $200,000 the following year.

Successful Students: According to the trio, being full-time students has actually made it easier for them to run their business.

"Probably the most advantageous aspect of being a student entrepreneur has been being here among our own customers," says Leary. Most students don't know he owns the company, so he's able to get honest feedback from them about what they like and what needs to be changed.

"We get a lot of support from the university, which is very helpful," adds Handy. BoxMyDorm is now the official moving and storage company for the student body at Penn State and serves a select number of other college campuses. But the box doesn't stop there.

"We have a very aggressive growth plan," says Handy. "You'll see us next year in a lot of new places across the country."

Mi Maestro
Who: Archie Jeter, 26
What: Live, interactive Spanish classes taught by Latin American tutors via virtual classrooms
Year Started: 2006
Startup Costs: $15,000 from an angel investor

My teacher: Archie Jeter is no stranger to Spanish classes. In addition to his college courses in the U.S., he spent a semester abroad in Madrid, Spain. It was in Guatemala, though, where he learned to embrace the language.

"There was something special about the immersive style of teaching that takes place in Latin America," says Jeter, who spent two months in Guatemala before his senior year. "I saw how much everyone enjoyed learning--and how fast they learned Spanish."

As a self-described "internet nerd," Jeter began wondering how he could connect people in the U.S. that want to learn Spanish with the unique learning opportunities in Latin America.

The answer was Mi Maestro, a site that provides live, one-on-one tutoring with a native speaker located in Latin America. Mi Maestro students book the classes based on their own schedule and click on a link when they're ready to begin the lesson. Once inside the virtual classroom, they have access to a chat feature, an interactive white board and a video window where they can see and hear the tutor in live video and audio.

Double Duty: Jeter wrote his business plan, pitched the idea to investors and analyzed the Latin American market to choose the best location for teachers--all while doing an internship and completing his senior year in a master's program at Florida International University.

"It was what I wanted to do and I had a lot of passion for it, so I made the time and made it a priority."

Final Connection: For Jeter, learning Spanish from a native speaker is crucial to fully understanding the language. "Learning a language is more than just learning words or grammar; it's actually learning the culture," he says. "Through Mi Maestro, you're able to make a real connection between the two."

BustedTees
Who: Ricky Van Veen, 26; Josh Abramson, 26; Zach Klein, 25; and Jacob Lodwick, 26
What: T-shirts with humorous, tongue-in-cheek sayings aimed at twentysomethings
Year Started: 2004
Startup Costs: $4,000 self-funded

Wearable Wit: What began as a fun side business for Ricky Van Veen, Josh Abramson, Zach Klein and Jacob Lodwick is now a successful company that has people wearing the friends' jokes. The team sat down in March 2004 to sketch out 10 shirt designs with the goal of selling the shirts on CollegeHumor.com to fund the then-fledging site. The funny T-shirts were an instant hit with the CollegeHumor fan base.

Tees with 'Tude:BustedTee's shirts range from the topical--"Leave Lindsay A-Lohan"--to the old-school, with inside jokes only their targeted age demographic would understand. A picture of a Nintendo cartridge that says "Blow Me," for example, is only funny for those who owned a Nintendo and remember having to blow the dust out of the cartridges to make them work.

"Culturally speaking, our humor is very on point with our age demographic, which is 18 to 28," says Josh Mohrer, director of retail.

That sort of focused marketing is what makes BustedTees so successful--not to mention they're just plain funny.

Graduation: BustedTees now sells about 1,000 shirts a day and can be found in retail chains like Urban Outfitters. But it was the acquisition by IAC last year that really pushed the small side venture into a bona fide company.

The interactive conglomerate acquired a controlling share of Connected Ventures, the four-company group started by Van Veen and Abramson that includes CollegeHumor, BustedTees, video-sharing site Vimeo and a second T-shirt business called Defunker.

"Despite being owned by this big company, we've really retained our personality in a big way," says Mohrer. "This company has always been run by and for 20-year-olds, and to change that would be a mistake."

Can I Manage My Web Site Myself?

2007-11-15T10:14:00.000-08:00

There are a few things you need to consider before deciding whether to hire a Web designer or do it yourself.

By Tim W. Knox
www.entrepreneur.com

Q: Should I build and maintain my business's Web site myself or pay someone else to do the work for me?

A: When you say "pay someone else to do the work" for you, I am going to assume that you are talking about hiring a professional Web site designer to do the work and not your next-door neighbor's teenage son. If my assumption is correct, then read on. If not, go ahead and flip over to the comics section. You will get no good out of the advice I'm about to give, so you might as well consult Dilbert for your hot business tips.

Should you build and maintain your business Web site yourself or pay someone to do it for you? Let me answer your question with a couple of my own. Number one: Is building and maintaining Web sites the key focus of your business? Number two: Could your time be better spent doing more important things like, oh I don't know, running your business? If your answers were no and yes, respectively, then you have no business building and maintaining a Web site.

Remember this: Every minute you spend on tasks that are not related to the key focus of your business is time spent to the detriment of your business. In other words, every minute you spend focusing on tasks that do not contribute to the growth of your business and thereby increase your bottom line is time wasted.

If you want to be a Web designer, be a Web designer. However, if the key focus of your business is building widgets, it doesn't take a rocket scientist to figure out that your time would be better spent building widgets, not Web sites.

Case in point: I once had a very wealthy dentist ask if I could teach him how to maintain his Web site so he wouldn't have to pay me to do it. Now my teeth had helped put this guy's kids through college, but that didn't seem to matter. At that moment he was more concerned about having to pay for changes to his Web site than my personal oral hygiene. "Sure," I said, "I'll be glad to teach you how to update your Web site, just as soon as you teach me how to clean my own teeth so I don't have to pay you to do it." He got the point. And he charged me enough for the cleaning to keep his site updated for months. Smart man.

Many business owners think they can't afford a professionally designed Web site, and that simply is not true. While the old adage "You get what you pay for" is never more true than when applied to Web site design, having a professional Web designer do the work for you is money well spent. A well-designed Web site can bring you a many-fold return on your investment. You can't say that about too many other collaterals.

While it is best to leave Web site design and maintenance to the experts, it is up to you (or someone considered a subject matter expert within your company) to provide the designer with the content (text and photographs) that best conveys your company's message to your customers. A Web site, no matter how well-designed, is meaningless if it lacks the content required to interest customers in the products you sell or the services you provide.

Here are a few questions that, once answered, will help ensure that your Web site's message is as appealing as its design. Go over these points with the designer before the design process begins, as the answers will help determine the direction your Web site's design should take.

What is the purpose of your Web site? Most business Web sites have two purposes: (1) to educate the consumer and (2) to sell them products or services. If you sell shoes, for example, the purpose of your Web site is to educate potential customers on the quality and durability of your shoes and, as a result, to sell them shoes. If you paint houses, the purpose of your Web site is to educate homeowners on why your services are superior to other painters and sell them on hiring you to paint their house. By defining the purpose of your Web site, you will give the designer the information required to create a Web site that best conveys that purpose to your target audience.

Who is my target audience? Your target audience consists of those folks you want to attract to your Web site: potential and current customers, future and current employees, possible investors and so on. Anyone who might be interested in your company and its products or services is a member of your target audience. Correctly identifying your target audience is vital, since your Web site should be designed specifically to appeal to your target audience.

Put yourself in their shoes (or in front of their computers). Imagine your Web site through their eyes. If you were visiting a Web site such as yours, what would you expect to find and what would you be disappointed not to find? Identify your target audience, then have your Web site designed to fulfill their needs and surpass their expectations.

What content should my Web site feature? Your Web site content should be driven by the nature of your business. If you're a real estate agent, your site should feature photographs of homes you have for sale and information on buying and selling a home. If you own an auto body shop, your site might feature before and after photographs of cars that you have repaired. Remember to determine the purpose of your site, then develop the content to serve that purpose.

What's my competition doing? The last question you should ask is one of the most important: What is your competition doing on the Web? Do a Google search for similar businesses and click around their Web sites. How are their Web sites designed? What message are they trying to convey? Are they doing a good job of conveying that message and, as a result, selling products? What do you like about their Web sites? What don't you like? Make note of the things you like and the things you hate, then share your findings with your site designer.

Remember, you're not stealing trade secrets here. You're just borrowing ideas.

Tim W. Knox is the founder, president and CEO of four successful technology companies: B2Secure Inc., a Web-based hiring management software company; Digital Graphiti Inc., a software development company; and Sidebar Systems, a company that creates cutting-edge convergence software for broadcast media outlets; and Online Profits 4U, an e-business dedicated to helping online entrepreneurs start and prosper from an online, wholesale or drop-ship business.