Makaziwe and Tukwini Mandela bring to their new wine business one of the most revered names in the world. “Yes, my father is a great person,” says Makaziwe Mandela. “But this is not about Nelson Mandela.”

Makaziwe Mandela is the eldest daughter of the Nobel Peace Prize winner and former South African President. Tukwini is her daughter. House of Mandela, which launched in South Africa in July, is a negociant; the company sources grapes from several growers, blends them, and markets them under its own label. Its first three offerings — a Chardonnay, a Cabernet Sauvignon, and a Shiraz — should be available in the U.S. sometime next year.

Makaziwe Mandela, who five years ago started a business to broker mineral resources, got the idea for House of Mandela from a Norwegian friend who pointed out that “there are no prominent wine brands from South Africa,” she says. House of Mandela is one of only a tiny number of black-owned businesses in the country’s $3 billion wine industry.

The brand, Makaziwe says, reflects her pride in her farming heritage, which she traces back to the founding of the Madiba clan in the early 1800s. “The traditions and values — such as courage and compassion — that shaped my father shaped all of us,” she says.

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A Wine Label From the Mandela Family | Start-up

Each day, Inc.’s reporters scour the Web for the most important and interesting news to entrepreneurs. Here’s what we found today:

The Reinvention of AOL. AOL, often thought of as a relic of Internet’s first days, is experiencing a rebirth, according to CNN. AOL’s plans to become a “content company” became mighty clear last week when it aggressively acquired not one, but three online companies, including TechCrunch, 5Min Media and Thing Labs, a social media company. The company’s president of Media and Studios, David Eun, tells CNN, “We want to be the pipe to distribute the best, most compelling content on the Web.” The story points out that AOL’s “widely recognized brand” is its strong suit, but because the company has lagged behind the competition for years, finding smaller content companies to sign on with them may be a struggle. “AOL has to buy companies in the primordial slime,” says Todd Dagres of Spark Capital. “People may not know much about Thing Labs, but AOL has to act almost as a venture capitalist and help guide these new companies.”

What country has the best brains? The BBC poses the question, and answers it unscientifically, by simply counting the number of Nobel Prize winners hailing from each nation. Since 1901, France has been awarded 57 Nobel prizes, Germany, 103, and the United Kingdom, 117. Who’s on top for best brainpower? Drumroll, please. With a whopping 323 Nobel prizes racked up, it’s … the United States!

Tune in, drop out, start-up. Never mind the perennial debate over whether or not an MBA is useful when starting a business. Perhaps a better question might be whether or not a college degree is even necessary. While Bill Gates and Mark Zuckerberg are famous Harvard drop-outs, the American Express OPEN Forum has a list of other well-known entrepreneurs who have started wildly successful companies without the aid of a college degree. For example, Ingvar Kamprad, founder of IKEA, became one of the 11 wealthiest people in the world without a sheepskin. Likewise, John Mackey, founder of Whole Foods dropped out of college twice and never took a single business course.

Start-up lessons from The Social Network. There’s more than just a bunch of laugh-lines to take away from David Fincher’s Facebook film. If you’re an entrepreneur working on your latest ‘preneur, The Wall Street Journal suggests you take a nod from the fictionalized account of Mark Zuckerberg’s journey and do things like ask your friends and family for seed money, get on the same page as your coworkers, and dream big. Just can’t get enough? Read our review by Charles Taylor.

Redefining the music industry. Thus far, ad-supported music services offering free content have largely staggered. Yet Spotify, a Swedish company that’s become quite popular in Europe, aims to break this tradition by landing deals with major music labels this winter, CNET reports. Like its predecessors, Spotify faces a number of daunting obstacles to successfully penetrate the U.S. market, not the least of these is Apple. The only real way Spotify could get the labels on board, CNET says, would be to pay up and limit the risk the labels would have to take on. The site also faces an impending threat from Google, which plans to launch its own music service by early 2011.

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AOL’s Second Chance | Start-up

Founder: Tony Bacigalupo, 27
Location: New York City
Employees: None
Funding: Self-funded; savings of $4,000 spent on a semifurnished sublet
2009 Revenue: $75,000
Start-Up Year: 2008
Breakeven: Immediate — from membership dues, which range from $30 a month to $550
Insider Insight: No outside funding is necessary. Because co-working centers charge recurring fees, they can be bootstrapped easily.
Blind Spot: It’s hard to make a lot of money on memberships alone. Like health clubs that augment revenue with personal training and massages, co-working centers need additional revenue streams, such as classes and events.

When Tony Bacigalupo’s boss announced his company was going virtual, Bacigalupo was thrilled to ditch the office. “I’d always dreaded the idea of dragging myself to a 9-to-5 job,” he says. “This seemed like the perfect way out.”

But after a year spent working out of his childhood bedroom in Greenlawn, New York, Bacigalupo badly missed the office. He had few friends nearby, and his parents had their own jobs, leaving him alone for hours at a time. Personal hygiene and normal social skills fell by the wayside. “That winter, I spent three days in a row without leaving the house,” he says. “I was going crazy.”

Bacigalupo started wondering why there wasn’t a place where freelancers could congregate to work and socialize. He imagined an office with Internet access, desks, conference rooms, and, most important, other people. Unfortunately, nothing like that existed nearby. But he did find a bimonthly meet-up in a New York City apartment in which freelancers, entrepreneurs, and other soloists got together to work and socialize. “I went there as this lonely Long Islander, and I suddenly had 20 incredibly bright friends,” he says. “I was hooked on co-working immediately.”

Bacigalupo liked it so much that when the organizer left New York for San Francisco, Bacigalupo took charge of the meet-ups. Soon he was encouraging his fellow co-workers to meet in a local coffee shop every day. But taking client phone calls over the hiss of an espresso machine seemed somehow unseemly, so, within a few months, he went looking for a proper office.

New Work City launched in a semifurnished downtown sublet in late 2008. Bacigalupo signed up 15 members, who paid $25 to $500 a month depending on how many days they used the space. He has added members slowly — there are now 45 — and the company booked a modest profit in 2009.

Bacigalupo still hasn’t taken a salary. Like many entrepreneurs, he bootstrapped the company while working a second job and only recently left it to run New Work City full time. In the meantime, he tried to automate most of the day-to-day tasks involved in managing the company. Members sign up for automatic recurring payments on PayPal, a vast improvement over having to pester a bunch of broke freelancers for the monthly membership fee. He also instituted an honor system for printing costs (free, unless a member prints a superexorbitant amount), food and drinks (members drop $1 in the jar for a Coke), and closing time (“We close when the last person we trust to lock up leaves,” Bacigalupo says).

This fall, New Work City will move into a permanent home, a 4,700-square-foot space that will more than double its current capacity and, Bacigalupo hopes, generate enough revenue to allow him to hire an employee or two to handle customer service.

The new space will have 50 desks, as well as couches, beanbag chairs, and a bar. Once the move is complete, Bacigalupo plans to begin offering additional services: classes in how to go into business for oneself and sponsored events for freelancers (hence the bar). New Work City may also make money by offering consulting services to other co-working centers — last year, the company booked its first such assignment, helping the nonprofit Alliance for Downtown New York set up its own co-working center.

“We’re in the middle of a revolution in which huge swaths of the work force will shift to working from home,” Bacigalupo says. “New Work City is a platform to take advantage of that.”

New Work City – New York – New York City – Tony Bacigalupo – San Francisco

See the original post: 
Start-Ups 2010: How to Launch a Co-Working Facility | Start-up

The economic recession that put America on its knees hardly touched Toronto. Steadied by strong, highly regulated banks and buoyed by an educated workforce, Canada’s largest city is open for business.

“TSX is the third-largest stock exchange on the continent. It’s rock solid,” says Katherine Roos, manager of Enterprise Toronto, a public-private alliance run by the city to support entrepreneurs and small businesses. “The Canadian banks didn’t go under, they didn’t need to be bailed out.”

In addition, the multicultural city is clean, safe, and full of parkland. The main disadvantage might actually be that the city doesn’t tend to shout about its strengths, particularly as an incubator for a wide range of businesses.

For entrepreneurs contemplating a move to the great north, Torontonians offer these insights:

Step 1: Identify the Basic Incentives

“The strength of Toronto is that we have such a diversified economy,” says Eva Pyatt, director of business services for the city’s economic development and culture division. That strong economy is a natural draw for entrepreneurs.

Ontario has a low net debt-to-GDP ratio, which helps keep taxes down. Early in 2010, the international professional auditing firm KPMG, based in the Netherlands, assessed 41 large cities worldwide on their general tax competitiveness, including corporate income taxes and statutory labor costs. It ranked Toronto fifth, above New York, Los Angeles, and London.

There are many local business incentives available, Roos says. They include resource conservation and energy efficiency incentives offered through the city’s Better Buildings Partnership and funding for early stage businesses from the province. An Ontario Centre of Excellence in Toronto also provides funding for rapid-growth entrepreneurs.

Roos cites Susan Ho as an example of an entrepreneur who received substantial startup support. With help from an Ontario self-employment training program and the city-funded food business incubator, she started a company in Toronto that makes tea-infused cookies. Now, more than 200 retailers are selling her Tea Aura Inc. cookies.

Step 2: Register Your Business

Toronto is one of the easiest places in the world to start a business. In Canada, it’s a one-step procedure versus six in both the United Kingdom and the United States, according to the World Bank. New businesses can simply register through Enterprise Toronto.

Roos says she frequently gets calls from extremely well educated entrepreneurs who live overseas about setting up a business in the city. “They couldn’t believe that they could just walk into our offices and walk out at the end of the day with paperwork showing they’d registered their business,” she says.

Step 3: Check on License Requirements

Licensing for business is separate from registration, but is only required for businesses that fall into certain categories. The city’s Municipal Licensing and Standards Division handles the application process, which is straightforward. Photo identification and proof of work status are required, and so is a copy of the registration along with notarized controlling interest forms, if they apply.

Roos says licensing applies to businesses, particularly those with health implications that the city regulates. The list includes hairdressers, pet shops, grocery stores, holistic centers, secondhand shops, nightclubs and restaurants among others. Applications have to be completed in person.

Step 4: Find The Best Business Supporters

Start-up strength in Toronto doesn’t just stay back home. Toronto might not have its own Silicon Valley, but it has the C100, a group of Canadians working in Silicon Valley who are using their expertise to support entrepreneurs back home. The nonprofit organization’s membership includes CEOs at startups as well as Oracle, eBay, Microsoft, and Google execs.

“Toronto is a pretty unique city in the sense that it’s one of the most socially connected in the world,” says Sarah Prevette, one of Inc.’s 30 Under 30 and the founder of the entrepreneur social networking service Sprouter. “Certainly there is a lot of support for business owners at a grassroots level.”

Support includes local stewards who volunteer their time to help as well as formal assistance from accelerators and business incubators. The Toronto Fashion Incubator, Toronto Food Business Incubator, Toronto Business Development Centre, and the Centre for Social Innovation are some of the top incubators, Roos says.

Dig Deeper: Inc.’s 30 Under 30: Sarah Prevette, Founder of Sprouter

Step 5: Scope out Hiring

Finding qualified workers for a new venture isn’t a problem, Roos says. Torontonians are highly educated — 64 percent of people aged 25 to 64 have a post-secondary degree. The city’s population is also intensely diverse. Half of the 5.1 million people in the greater metropolitan area were born elsewhere.

Idris Mootee, CEO of the Toronto-based strategic innovation consulting firm Idea Couture Inc., has lived in major cities around the world. His company has offices in San Francisco, Shanghai, and Washington, D.C. While the workforces in New York and San Francisco can be like a rollercoaster, he says, Toronto is different.

“The No. 1 thing is it’s a good talent base here when you’re looking at engineers, consultants,” he says. “Most of the people here are starting families. It’s generally a good place to raise kids with the healthcare system.” And that means great workforce stability, he adds.

Prospective business owners should be warned that they will need to pay into the Canadian equivalent of Social Security, Canada Pension. But Pyatt points out that providing healthcare benefits will cost far less than it does in America due to the country’s universal healthcare system.

Dig Deeper: How to Communicate Employee Expectations Effectively

Step 6: Secure Financing

Toronto is the headquarters for the country’s banking sector, and those national banks are highly regulated. There are fewer banks here than there are in The United States, but they offer financial services with which Americans are familiar. Most of Canada’s banks also have locations abroad, and 44 bank subsidiaries have locations in Toronto.

“Banking is very safe, secure, and highly accessible,” Pyatt says. “We’re a leader in electronic banking and electronic accessibility from the get-go.”

Looking for investment? That might be a bit trickier. Venture capitalists in Canada are known for being conservative, so entrepreneurs might encounter some risk-aversion. However, thoughtful strategic investing helps keep the local economy solid. When Canadian VCs do act, Roos says, “they make good decisions.”

Dig Deeper: 10 Ways to Finance Your Start-up

Step 7: Choose a Neighborhood

Toronto regularly tops most livable cities lists, in part because it has a large percentage of parkland. Mootee says that it’s been easy for his company to hire employees from overseas and get them set up in town. “It’s like a cleaner, greener version of New York,” he says.

The immigrant population is so large that the city has several Chinatowns and Little Italys, in addition to dozens of ethnic neighborhoods. “Torontonians have international business experience, international connections,” Roos says.

In addition to districts known for fashion and technology, the city has 70 business improvement areas, where local businesses are working with City Hall to draw residents to their goods and services. And at the day’s end, the downtown core stays hopping because residents can easily live close to where they work.

Dig Deeper: The Secrets of Building a Scalable (and Sellable) Business

Step 8: Find Office Space

Real estate vacancy rates for real estate are between 6 and 7 percent, Pyatt says. While funkier post-and-beam spaces do exist and industrial buildings are being converted to offices, Toronto has more than 100 new high-rise buildings under construction.

Being such an environmentally conscious city, those new millions of square feet in office space are primarily LEED-certified, meaning they have the Leadership in Energy and Environmental Design green building designation.

For businesses that are building a new facility or planning to retrofit a space, Pyatt says there are tax increment equivalent investment grants for some sectors if spending hits $1 million (Canadian dollars). Eligible development receives a grant for up to 60 percent of the increase in applicable municipal taxes over a 10-year period.

Dig Deeper: How to Purchase Commercial Real Estate

Step 9: Tap Into Transit

The expansive Toronto Transit Commission’s system of subways and rapid transit routes carries one million people daily. One of the cleanest in the world, the system received a $1.5 billion (Canadian) investment in for five new light rail routes, Pyatt says.

The Toronto Pearson International Airport is the country’s largest, as well as the busiest. It also recently introduced free Wi-Fi. Toronto is only a one-hour flight or less from about half the U.S. population, Roos says. Being so close to the U.S. border, Toronto’s highway access makes it ideal for companies specializing in exporting and manufacturing that need just-in-time deliveries.

Dig Deeper: How to Encourage Your Employees to Bike to Work

Step 10: Make the Move

Americans relocating to Toronto will likely feel at home, culturally. “The only main cultural difference I can find is that Canadians tend to be a little bit more demure and a little less aggressive,” Prevette says. No surprise then that Toronto has been far too modest about its strengths.

“We’re just a well-kept secret,” Pyatt observes. Not for long, eh?

Business – United States – Toronto – Microsoft – Non-profit organization

See the original post:
10 Steps to Starting a Business in Toronto | Start-up

As we pass Labor Day, it is a good day to look at the changing labor force in the US, and how that affects startups. In April, I wrote about “Virtual Workers as a Start-Up Resource” and the trends we saw then have accelerated. Independent workers make up 30% of the nation’s workforce, according to the Freelancers Union.

I spoke with Gary Swart, CEO of ODesk (#286 on the INC 500), a marketplace for online workers and companies that hire them. With over 715,000 contractors and 215,000 employers, ODesk shows an increase (up until the past quarter) (correction) of Small and Medium-sized Businesses (SMBs) utilizing contractors via their online marketplace. They report that contractor earnings were up 82% from this time last year. The average overall rates that ODesk contractors make is pretty low compared to US minimum wage – but that reflects the global nature of their business, said Swart. “Jobs like software development have a much higher average cost-per-hour, and you can see US rates in the stats [above].”

“Demand for tech skills is very active and always has been,” said Swart. “Early adopters are there, and things can be done internationally. New products like mobile development, Photoshop (with special interest around latest release), iPhone, iPad and Android development [are popular]. We’re also seeing a spike for project management – up 70% for this skill set. If I’m hiring a team of remote workers, I’d like to be in control, but have someone to manage the project. Lots of start-ups are hiring teams of developers all managed by a single resource.”

Swart also told me that Search Engine Optimization, Search Engine Marketing and Social Media Optimization are all marketing functions that small companies are outsourcing via ODesk. Additionally, many are now trying “home-shoring” instead of off-shoring. They are using talent here in the US to get jobs done. “Our growth in the US has been spectacular. We hit a low for wages in January 2009 but the average has risen about 20% since then.”

As noted in the previous article, trust is often difficult when you’re outsourcing a job, but ODesk provides feedback and reputation scores. It also lets you pay workers as complete contractors using a W9, or as employees with benefits using a W2 system. Your company pays ODesk and they handle the taxes and payments without you having to manage that. ODesk takes a percentage of the paid hourly rate, and to contractor it offers guaranteed payments. Via their team room platform, employers can see what contractors are working on at any time, via screen shots. There is significant growth in this outsourcing market – ODesk reports an increase of 2% per week in hours contractors are billing, and the company’s growth is up 500%.

At press time I received some stats from ODesk competitor ELance that confirm this growth – they note “62% of service providers stated that their income has increased in the past 12 months and 58% feel that they will find more online work in the coming 12 months.”

Has your startup used outsourced labor via ODesk or a similar site to save money or find skills you couldn’t find locally? Let us know how it went in the comments below.

http://www.inc.com/inc5000/profile/odesk

Business – oDesk – Employment – iPhone – Search Engine Optimization

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Leverage Virtual Workers for your Start-Up | Start-up

Having launched two tech companies and a consulting business in Cary, North Carolina, Glen Lang decided to take on a different kind of challenge: politics. After Lang was elected mayor of Cary, he got to work easing the city’s growing pains and tackling its infrastructure problems. But he never stopped thinking like an entrepreneur. Lang’s political career, which ended in 2003, inspired him to start Connexion Technologies, which installs private fiber-optic networks that deliver Internet, phone, and television services to housing developments and apartment complexes nationwide.

I’ve been in the tech industry since college. I worked for Sun Microsystems before starting a software development company in 1992. It had about 78 employees when I sold it for $11 million. I started two more companies: a cable modem business and a consulting firm.

When I turned 40, my wife thought it would be best if I quit starting companies and stayed home with the family. So I cut back and just did consulting.

I was home and partially retired when city workers came by to dig up our neighborhood to replace the sewer line. That was a waste of funds; only part of the line needed repair. I led my neighbors in opposing the project at city hall. That’s what got me thinking about public office.

In 1997, I was elected to town council. I became mayor of Cary in 1999. I ran on a platform of slow growth. Cary’s population, which is now close to 137,000, had been growing about 9 percent a year, but infrastructure wasn’t keeping up. As mayor, I got the city to slow approval of new home permits while we built new roads, schools, and water plants.

I also commissioned a study to see what it would cost to wire the city for broadband Internet. I used the findings to nudge Time Warner and Bell South to speed up their deployment of high-speed Internet access in Cary.

I kept thinking about this problem of how to get Internet service without having to rely on big companies. There seemed to be an opportunity for a private company.

I founded my current company in 2002, when I was still mayor. We build private fiber-optic networks and lease them to telephone and cable companies. I pitched my business plan to Jim Goodnight, the founder of SAS, which is based in Cary. He liked my idea. He said I worked hard as mayor and that anyone with my persistence would be successful. He invested a couple million dollars.

Being mayor taught me about the utilities business. With a new development, the city grants rights of way, which allow cable and telephone companies to lay new lines. We go directly to the landowner and get an easement, which lets us install our fiber networks on the property first.

We’re outfitting apartment complexes across the country. In many areas, there didn’t used to be a choice of service providers. Now, consumers get more choices and lower costs, and providers don’t have to invest $1,000 to $2,000 per unit in infrastructure to service that community.

I definitely enjoy private enterprise more than I did public service. But no matter what you do, as long as you keep learning, you evolve as an entrepreneur.

Business – Glen Lang – Cary North Carolina – Time Warner – Sun Microsystems

Read more here:
What Politics Taught Me About Business | Inc. 5000 Companies

Dear Norm,
In October, I parted ways with my former employer. I have decided to start my own business creating mobile websites and apps for businesses. The trouble is, I have no idea how to set pricing. My overhead is $7,044 a month, and it takes me about two weeks to develop each website or app. I have one client, a friend of the family, whom I charged $500 for a huge website, which I know was too little, but I’m worried about losing customers by setting my rates too high. Then again, I need to eat! What do you advise?

Kate McGinley, founder, McGinley Media
Pittsburgh

Everything has a price, as the saying goes, but a lot of people struggle with figuring out what the right price is. I get more inquiries about pricing than about any other subject. The classic mistake is the one Kate was about to make: setting a price based on what she feels she needs to earn rather than on how the market values her service. Competition generally determines the price you can charge. So the first step should always be to find out what competitors are charging. There are many ways to do that. You can call up other providers and — posing as a customer — get estimates. Local, state, or national trade associations may also provide the information you’re looking for. If all else fails, you can follow my father’s advice, which he gave me in the form of a humorous story:

A brand-new optician opens up a store and isn’t sure what to charge. On the first day, he gets his first customer, who looks at some glasses and asks how much they cost. “Uh, $20,” the optician says. “$20?” the customer responds. “That’s all?” “Well, that’s just the frames,” the optician says. “The lenses are extra.” “How much?” the customer asks. “Uh, $15,” the optician says. “Only $15?” says the customer. “Per lens,” says the optician. “Oh,” says the customer. “So that’s $50 altogether.” “Well, the case is $5 extra,” says the optician. “Hmm, $55,” says the customer. “That’s a little high, but I’ll take it.”

I’ve used this method, and it works. But whatever approach you take, the rule is the same: You don’t set the price; the market does. Your job is to determine what the market will pay. Then you can decide whether it’s enough to cover your costs and fund your lifestyle. If you do it the other way — starting with your own financial needs — you’re likely to wind up charging too much or too little. And charging too little is even more dangerous than charging too much. If you set your prices too high, you can always just reduce them. But if you undercharge, you develop the wrong kind of reputation. I told Kate, “You don’t want people saying, ‘Let’s use Kate McGinley. She’s cheap.’ It’s a lot better if they say, ‘Yes, she’s a little expensive, but her quality is worth paying for.’ “

Please send all questions to AskNorm@inc.com. Norm Brodsky is a veteran entrepreneur. His co-author is editor-at-large Bo Burlingham. Their book, The Knack, is now available in paperback under the title Street Smarts: An All-Purpose Tool Kit for Entrepreneurs.

Next Question

Business – Optician – Customer – Entrepreneur – Pricing

Original post:
Solving the Pricing Riddle | Start-up

Yelp allows the multitudes to fancy themselves restaurant critics, Twitter gives them an outlet to celebrate the perfect pizza or slam the worst Key lime pie ever, and Foursquare lets friends track one another’s every move. Now, along comes a flurry of start-ups that use social media tools to help foodies follow one another’s eating odysseys on the Web, where 600,000 or so food-blog listings are already found on Google. No one has yet figured out how to turn these businesses into moneymakers. For those who do, the payoff could be sweet.

Foodspotting
When Foodspotting launched early in 2010, it was dubbed “the Foursquare for food.” Foodies use a free iPhone app to photograph restaurant dishes, and, as with Foursquare, they earn points and badges for contributing tips that prove popular with other Foodspotting users. Photographs are searchable by restaurant, type of dish, and location. Founders Ted Grubb, Alexa Andrzejewski, and Soraya Darabi hope to make money by selling advertising within search results. Another income source could be guides sponsored by media companies that would offer prizes for, say, sampling the most items posted on Foodspotting. The San Francisco Chronicle has launched a beta guide on the site.
USERS: 140,000

Fiddme
A Twitter posting by Yosi Taguri, one of four Fiddme co-founders, on the “best mille-feuille pastry ever,” which he tasted while in Paris, led to an enthusiastic string of responses and, soon thereafter, the creation of the Fiddme site. The Israel-based start-up focuses on building foodie communities. Whenever users update their Fiddme accounts, their Twitter, Facebook, and Foursquare accounts are also updated. Friends can follow one another’s restaurant outings and browse photos and descriptions of meals their friends have posted. Fiddme also encourages cooks to post recipes and photos of their personal creations for comments.
USERS: 30,000

Eat.ly
Four friends in New York City and London figured that if they could remember what they ate, they would eat more healthfully. So, in November 2009, Sam Huleatt, Mike Singleton, Eric Friedman, and Sam Brown teamed up to created Eat.ly, a website on which users can post photos of their meals and track their eating habits by assigning the photos health rankings. Profiles can be made public, integrated with Twitter and Foursquare, or remain private for a defined group of friends or to share only with, say, a trainer or nutritionist. The founders plan to earn income by selling their software platform to people who want to create similar sites on different topics.
USERS: 3,000

Chevia
Its Foodstream app tracks local food news. Users get a news feed of local posts that might include restaurant specials or new dishes. Founder Paul Lo, a former Yahoo software developer and executive, hopes to make money from advertisers, which will be able to place their spots based on user preferences. Advertisers can target their messages to audiences based on geographic area or what sorts of foods or restaurants they indicate they enjoy. Lo also envisions businesses paying to sponsor contests that award prizes for, say, the most tacos eaten outside the U.S. or the most pizzas consumed in Chicago. The site launched recently; a beta version was well received.
USERS: 1,000 (beta version)

THE LINE: Foodspotting has amassed the largest user base, but its success depends heavily upon advertisers’ willingness to pay for preferential positioning on the site. Chevia is in a similar situation. Eat.ly has the advantage of serving two vast markets — foodies and weight watchers. But Foodspotting’s interactive guides and Chevia’s business-sponsored awards may be the fastest ways to bring in revenue.

Foodspotting – Alexa Andrzejewski – New York City – Google – San Francisco Chronicle

Excerpt from: 
Social Media for Foodies | %source%

Most of the jobs start-ups create remain as the fledgling companies age, creating a lasting effect on the economy, says a new study.

The Ewing Marion Kauffman Foundation study – titled “After Inception: How Enduring is Job Creation by Start-ups?” – found that although only a fifth of start-ups make it to their 25th birthday, employment figures stayed at 68 percent of the initial number. It suggests the number of start-ups that flourish and create jobs balances the jobs lost by companies that close.

The study is based on Business Dynamics Statistics, which is compiled by the U.S. Census Bureau and tracks the number of new businesses from 1977 to 2005. The organization defines start-ups as businesses that are less than one year old.

Although start-ups’ employment after five years is 80 percent of what it was when the companies began, many of those jobs remain long term. The study found that in the year 2000, start-ups created almost 3.1 million jobs. Only half of those firms survived to 2005, but the surviving firms maintained 78 percent, or more than 2.4 million, of the jobs that existed in 2000.

The study also analyzed entrepreneurship and employment during recessions. Companies starting up during recessions at first hired fewer employees than those started up at other times, but generally increased their hiring post-recession to catch up. But companies born during extended recessions – those lasting three years or more – created about 10 percent fewer jobs than companies that avoided a recession in their first five years. That’s about .2 percent of all jobs in the economy. (To hear the Kauffman Foundation’s take on why great companies tend to start during a recession, read this article.)

“While a recession has a negative effect on a company’s employment in its first few years, a recession does not impose lasting consequences on startups,” said Robert Litan, the study co-author, an Inc. contributing editor, and the foundation’s vice president of research and policy, in a statement.

Business – Ewing Marion Kauffman Foundation – Employment – United States – Small Business

Here is the original:
Study: Start-ups Create Lasting Job Growth | %source%

When Annmarie Scotto-Dinan quit her Manhattan public relations job to launch a women’s fashion label, she knew she’d need to invest a significant amount of time in learning the trade, but she didn’t know she’d also be investing a massive chunk of her savings. Dinan figured a small business loan would be key to financing her endeavor, but by the time she applied for loans in 2008, the economy was beginning its slide into recession.

Despite being unable to secure a small business loan, she went ahead with founding her label, Chloe & Reese, digging into her significant savings to do so. Her bootstrapping worked: Chloe & Reese has grown steadily through the recession, and Scotto-Dinan is coming out of the economic downturn with her dresses sold in global department stores like Saks Fifth Avenue and Neiman Marcus, as well as small boutiques all over the world.

How’d she do it?

“It’s not just making a design that’s great – it’s figuring out wholesale margins, adding in the cost of packaging, shipping, taxes, tariffs, and making sure your profit margin will keep your business running,” Scotto-Dinan said. “Like many designers, I’m so much more creative than analytical. But you have to focus on the numbers to make your business actually work.”

In other words, breaking into fashion requires a lot more than just a degree in design and a talent dreaming up runway styles. We’ve interviewed emerging designers who have built their businesses from scratch, as well as legal experts who filled in the finer points of financial and legal sustainability to guide you through the fashion start-up process.

Breaking Into Fashion: Pin Down Your Dreams

Whether you create handcrafted vegan footwear or custom ball-gowns, before you take your product to market, experts suggest you ask yourself why, precisely, you want to do so. What’s your goal?

George Nemphos, the chair of the corporate practice group at Duane Morris, a law firm in New York City that works with a lot of emerging and established fashion designers, says he asks all of his clients what their goals are for the business they’re setting up.

“People in the apparel industry are very creative, and some of the legal aspects can escape them,” Nemphos said. “It’s part of the business that goes unseen. It’s not what they’re thinking about when designing, or are out there with the buyers.”

Nemphos suggests before even enlisting an accountant or attorney to help set up the business, that an emerging designer solidifies plans for what kind of company they want to have, and what kind of life they’d like in coming years. How big they want to be, and where they’d like to sell their designs, will determine a lot of how a company should be set up – and help guide legal issues going forward.

Scotto-Dinan agrees that entrepreneurs in fashion and design should ask themselves: “Do you want something nice and easy, something that brings you joy and a bit of income without much stress? Or do you want to be a fashion empire? I really do think that goal speaks to how you’re going to work.”

For designer Jiminie Hayward, starting her business small – and keeping it small – is right in line with her goals. She graduated from Boston’s School of Fashion Design in 2007 and began scoping out a target audience for her custom-made formal dresses. Her dream: to sew and sell custom-fitted hand-made dresses at an affordable price. Mass-producing was not an option.

So, Hayward designed 10 dresses and launched her brand softly, selling it online through an Etsy shop, MyBlackDress. She says she started with about $500 in fabric and supplies, and now orders from individuals account for $2,000 to $4,000 of income monthly.

“I get lots of requests for wholesale from boutiques and online stores. I will look into that in the future, but I can’t handle it right now. I really like doing custom work for now,” she said. The number of orders coming in online keeps her at the sewing machine from 8:30 a.m. until evening.

For Sonali Singh, who met her business partner and husband, Jeet, while they were students at New York’s Fashion Institute of Technology, the greatest bulk of preparation in starting their label, San & Soni, went into market research.

“We had to do a lot of market research, as far as price points, what brands we wanted to sit in with,” she said. The pair’s label doesn’t offer basics, such as a simple white blouse. Instead, it’s centered on inventive construction. “We spent a lot of time on theme and inspiration, and that’s how we came into the contemporary market – and we’re in the higher end of contemporary.”

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Breaking Into Fashion: Get the Financials Straight

Considering that manufacturing, importing, distribution, and sales are in your future, unless you’re particularly numbers-savvy, you’ll mostly likely want to enlist an accountant and a legal counsel to help advise on business incorporation and how to set up your financial accountability.

Nemphos suggests that too many independent clothing and accessory designers don’t work with advisors, and instead end up simply setting themselves up as a sole proprietor of their company without exploring other incorporation options.

“As a sole proprietor, you are on the hook for everything – so we advise them to not do that necessarily. Setting oneself up as an S-Corporation could also affect them if they are possibly going to seek financing in the future,” he said.

Creating an LLC might seem more complex from the start and for tax purposes, but doing so can give business owners organizational flexibility – and doing so ensures there is a corporate entity comfortably wedged between your business and your personal liabilities. It also allows some flexibility in terms of changing your form of business incorporation later without harsh tax penalties.

Scotto-Dinan said her top advice to a bootstrapping fashion entrepreneur would be to invest in a good accountant and a good attorney. “Definitely speaking to a good accountant about your goals so that you can set your business up, and to be careful about how you set it up, because while at the moment it might not feel like a crucial decision, it absolutely is a wise investment.”

If you decide to keep accounting in your own hands and file for incorporation yourself, which Hayward successfully did, you might want to consider educating yourself first. And, no, Googling isn’t sufficient.

“It’s really important to take some tax classes,” she said. “That’s the least fun part about running your business, doing your taxes. But the city often offers bookkeeping classes, and they can teach you how to create monthly income statements. Absolutely do those, then it makes it a lot easier at the end of the year.”

From the start, you’ll also want to protect your label from trademark infringement. “If you have a service mark or trade name, you’re going to want to file with the patent and trademark logo. Once you have done that, you can use that on a label, for events, and on your website,” Nemphos said. He also warns that brands should be proactive about promoting their brand online, because simply getting your name out, and attaching it to products, protects your use of it. He suggests registering URLs with your brand name right away, and using the brand name prominently on products and labels. Doing so doesn’t hurt marketing, either. “Brand development comes from just being out there and known, and that you take the steps to show off your product and your concept.”

Once you have a legal counsel and accountant in place, remember that they likely have a great deal of expertise in the industry – and can serve as valuable advisors to your business. Don’t be afraid to ask questions – doing so can open your eyes to everything from money-saving options to marketing trends.

Dig Deeper: How to Incorporate

Breaking Into Fashion: Build Your Production Model

Today, in the era of super-simplified online sales via eBay, Etsy, and a host of other online storefront options, it’s easy to start small. You can learn how to set up an Etsy store. Inc.com also has guides on setting up shop on eBay and how to use your local market as a business incubator.

Hayward could be considered model of how to make a sustainable, and truly profitable, business that exists solely through an online storefront. But she’s planning big: she’d like her own boutique, complete with sewing lab – as well as to use the space to offer educational courses in designing and sewing. She’s anticipating hiring her first employee soon: another seamstress.

“You can start small – you can do custom wedding dresses or bridesmaid dresses. Start small with a very focused audience,” she said. “But I’m getting to the point where I’m working late evenings, and I’d like to create every dress myself, but I’m going to have to expand production.”

Scotto-Dinan, on the other hand, knew from the beginning she’d need a production facility. She read Womens Wear Daily to learn about the industry, and found advertisements for a variety of New York factories in its pages. Once she found a handful that seemed aligned with her goals, she interviewed them, and found one “that was a good match for what I was planning. I aligned myself with one local facility – and to this day I’m with them.”

Scotto-Dinan, who is based in New York, knew that she wanted to work with a local producer. However, sourcing a product abroad is a popular – and often money-saving – choice, though doing so creates myriad shipping, customs, and quality control issues.

When you’re ready to sign on with a production house, mind the contract, attorneys caution. “The cutting houses and factories will throw a contract at you. There’s a standard contract that they give you, but some of them come back and say, once you’re working with them, that they own the patterns. You can’t let that happen,” Nemphos said.

One way to preempt disputes is to have a legal confidentiality agreement and a development agreement ready. Also, if you’re using unique patterns or fabric designs, you might want to consider trademarking them. Yes, that’s right: patterns are considered intellectual property and fit into the trademark purview rather than being considered patentable.

Then again, if you’re developing a new fabric, or chemical compound that creates a fabric, you should consider patenting that process, Nemphos says. “There’s a great deal of change in the materials that are used in apparel. A lot of it is specially designed and created – and that material has to find its way into contracts, because you have a trade secret on your hands,” he said. “That can, and should, be patented.”

Nanette Heide, a corporate partner in the New York office of Duane Morris, added: “You really have to be careful who you give access to information on how your product is made. That’s handled through confidentiality agreements. You have to make sure your stuff is kept secret.”

Before establishing your brand, search out others who might be using the same, or similar, names. Don’t enter the same retail space as a direct competitor with the same, or a similar, mark. That said, Heide advised that throughout your brand’s lifetime: “You want to keep a watchful eye on whether someone out there is using a similar mark or name. If someone is, at that point, you’d need to send a cease and desist letter.” In other words: call your lawyer.

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Breaking Into Fashion: Ramp up Sales, Think Big, and Address Market Desires

The legal issues involved in establishing a brand only expand as your business grows. So do sales and marketing demands. At this level, both innovation and sales are your keys to success, Scotto-Dinan advises.

“If you know your market, and it’s department stores, call the fashion director at Bloomingdales. You can find these people. You have to sell your product, and if you know it’s good, just do it,” she said. “Send them your look book and don’t look back.”

Another part of succeeding as a designer in this economy is being innovative. But also being mindful of your audience helps. If your brand is selling well in a few boutiques, listen to their buyers, Singh said. If they’re not talking, actively solicit their advice on your last line, including what they liked, what didn’t sell well, and what they’d like to see in the future.

“One thing I would share with any emerging designer is you have to be open to things your buyers are saying,” she said. “It’s true that designers can be like babies, and be very attached to what they design. But being open to what buyers have to say can really help you make a collection they want to buy.”

And that can tune you into what consumers want. For instance, when Scotto-Dinan began receiving a bulk of calls requesting dresses for bridal parties, she knew the bridesmaid dress market was ripe for the picking.

“We launched this January a second collection, the Ardour Collection, in bridal stores last year, to fit that demand,” she said. Now the Ardour Collection is in 25 bridal stores.

Scotto-Dinan has also built on the shapewear trend, which has been firmly established with the popularity of Spanxs, by creating a line of shapewear-lined dresses called SLEEK NYC, which will be launching this year at department stores. She has a fourth label, a private label for Anthropologie stores, called Annabelle, this year.

“What I love is the big question mark, how you don’t know what will happen, but that you can strive to build it. Even if it doesn’t grow to that huge point, you know you’re building it,” she said.

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