Author Archives: Nitasha Tiku

How to Start a Pet Care Business

Posted on April 20, 2012 by Nitasha Tiku

When we walk by pet-store windows and see the puppies in the window, what person doesn’t want to stop right then and take one home? As pet lovers, we often care about our animals as much as our family members (sometimes even more). So it makes sense to be interested in starting a career in the pet store industry. According to ownership statistics gathered from the American Pet Products Association’s 2009/2010 survey, 62% of U.S. households own a pet, equating to 71.4 million homes. And in 2010 alone, it is estimated that $47.7 billion will be spent on our pets in the United States (or roughly $658.23 per pet owner, on average). So how you can get a chunk of that? “I am a firm believer that you could open a specialized pet business across the street from a PETCO or a PetSmart with a truly specialized focus and be highly successful,” says William Lechtner, a San Diego-based industry consultant with deep experience in all sizes of pet businesses and across merchandising categories. “Whatever you’re offering, it’s all about that specialty market and giving customers a level of expertise and focus that they don’t get at those larger, more general stores.” In this guide, we will talk about the different types of store you can open, the benefits of opening a digital, real-world or hybrid pet business, the financial commitments required, and why keeping your focus is vital to success in this niche industry. How to Start a Pet Care Business: Finding Your Niche in the Pet Industry Back in 1990, New Yorker John Ziegler had a dog walker taking care of his yellow Labrador puppy, Merembe, while he was at work during the day. One day, he decided to follow the walker to see the type of experience his puppy was being provided. And to his dismay, the walker never actually took Merembe to Central Park to play with the other dogs, rather leaving her confined to Ziegler’s small Upper East Side apartment. From that experience, Ziegler founded Biscuits & Bath , a service-oriented store dedicated to bringing a life of luxury and the outdoors to the dogs of New York City. Now with multiple locations across Manhattan, the services offered include off-leash day care, cage-free 24-hour supervised care, grooming, dog walking, transportation, training, veterinary care and adoption. “Originally I was just looking for an obedience school, because raising a puppy in Manhattan is a huge responsibility,” says Christine Salomone, a Biscuits & Bath customer. “I have my puppy there all month, and honestly, the anxiety goes away and you’re able to ease into the changing lifestyle of ownership, all while your dog is taken amazing care of.” On the retail end, more and more companies traditionally known for human products are going to the dogs, and cats, and reptiles, according to the APPA. Big name companies including Paul Mitchell, Omaha Steaks, Origins, Harley Davidson and Old Navy are offering lines of pet products ranging from dog shampoo, pet attire, and name-brand toys to gourmet treats and food. All of us are familiar with PETCO, the Home Depot of pet stores with over 1,000 locations nationwide and with $3.8 million in assets as of May 1, 2010. But opening a smaller pet store can be profitable in its own right. “Consumers are absolutely ravenous for businesses around pet health and nutrition,” says Lechtner. “So as an entrepreneur, focusing on better quality, higher-nutrition foods is a great approach to success right now. Pet owners can certainly grasp the benefits of a higher-nutrition food, particularly since many of them offer a similar cost per feeding and duration of the bag comparatively to the less expensive alternatives.” According to statistics from the U.S. Census Bureau, there were 15,890 pet and supply establishments in 2001 (the latest year for which data is available). But with the explosion of Internet businesses, particularly in this space, it is likely that number has at least doubled (a number likely to be verified by the 2010 Census results next year). Pet owners are a very intelligent audience, and as consumers, they are still making very clear decisions not to go to grocery or mass distribution stores (like a PETCO or PetSmart), instead preferring to use specialty pet shops for each individual need. It’s important to not try to service part of this industry, but to keep your focus on an individual specialty product, service or breed. Dig Deeper: Man’s New Best Friend? Exotic Pets? How to Start a Pet Care Business: Types of Pet Stores Pet-Sitting/Dog-walking While statistics show that only 3% of American homes use a dog-walker, that translates to nearly 50 or 60 million pets. This can be a great business if you’re in the right city or neighborhood and you market yourself properly. Obviously it’s easier to pull off in larger metropolitan areas like New York and San Francisco because of the close proximity of apartments and the busy nature of the city’s inhabitants. They also tend to be high-income areas, so you can charge a bit more. The more services that you offer in addition to just the walking (cleaning, feeding, bringing in mail and newspapers, etc.) the more desirable your business becomes. And the best part of a dog-walking/pet-sitting business is that it most often exists in the homes of your clients. So you won’t need a standard brick-and-mortar shop to operate from (though you can if you choose). Rather, you can operate based on word-of-mouth recommendations and by building a descriptive, sharp website that shows your various services, satisfied customers, and more. In this industry, it’s all about marketing, and there is no better way to market than through your existing customers. Dog Training So you might not be the famous Dog Whisperer seen on TV but there is a great market for dog trainers. The Association of Pet Dog Trainers lists approximately 5,000 members, so this isn’t an overcrowded field. Certain states may actually require you to get licensed in this field, but many do not. Something to consider here is that while you’re training the dogs, you’re also training the dog owners. For many owners, they’ll need you to be as abrasive and enforce proper conduct for both themselves and their animals. In terms of start-up cost, your cost is again cut down substantially if you decide simply to market your company online. But learning to be more than just an animal-lover is the true capital investment here. AnimalBehaviorCollege.com is a popular nationwide service that provides training ranging anywhere from $2900-$3600, and BarkBusters.com , is a good example of a training company marketing itself right (not just domestically, but internationally). Pet Food/Treats Pet owners spend more money on their animals’ food than any other expenditure, totaling an estimated $18.28 billion in 2010. One of the biggest trends in this space presently is in green-friendly, organically produced foods and nutritional products over traditional low-cost foods. So opening a pet store that focuses on organic or all-natural foods, or even a specialty bakery that focuses on only dog treats, can be successful. Depending on whether you decide to produce your own products or work with existing labels, it is quite easy. The American Pet Products Association can be a great resource for different distributors, and as an entrepreneur, nearly any private label who has an informed nutritionist on staff will sit down to go over and customize product options for your store. “All of the research and statistics show that the informed consumers are still looking for specialty food shops,” says Lechtner. “So no matter what type of food you want to focus on, keep that focus and become a specialist. The smart pet owners will appreciate it and become repeat customers, which is really the key to profitability.” In terms of cost, it varies by location and the size of the store, but based on a 5,000-8,000 sq. ft. shop, Dunn breaks down the costs as: • Fixtures & Equipment: $50-$100,000 based on how elaborate you get with setup • Inventory: $100,000-$200,000 based on negotiation with vendors • Payroll/Administrative Costs: $100,000 for first six months • Tenant improvement costs: can be negotiated with lease but plan $50-$100,000 for this size footprint. Upscale Pet Products We’ve all seen Paris Hilton’s indulgence on her dogs, and some industry analysts suggest that the celebrity dog culture has made premium pet products a booming industry. From deluxe travel cases to custom beds, fancy strollers to jeweled collars, nearly every product has been created for our furry friends. And perhaps unsurprisingly to many animal lovers, this industry did well even in the down economy. As folks were cutting their spending, they still took care of their pets with luxury products (perhaps in an effort to keep up with friends or fellow owners). A luxury pet product business may do best in a resort destination or somewhere where discretionary income is high. Whether you decide to manufacture your own pet products or buy from existing manufacturers ( Total Pet Business magazine annually publishes a list of their best new products), your overhead is relatively low. Grooming/Photography Again in the upscale category, pet grooming and professional photography is a booming industry in 2010. You need to be able to bathe, clip, and clean, but you also will be counted on to detect skin abnormalities or medical issues that a veterinarian should inspect further. Petgroomer.com, the industry’s largest internet resource, reports that career opportunities are nearly endless in this field because there are more than 4,000 dogs and cats for every U.S. grooming business. Dunn breaks down the expected costs for a grooming salon below, but it is based on size of the operation and whether it is a mobile or fixed location: • Fixtures & equipment: $1,000 per station/tub (average 3-10 per store based on size) • Mobile grooming vans: $5-$15,000 based on used or new, and fuel, insurance and maintenance approximately $500-$1000/month • Marketing: the largest variable expense that you cannot afford to be cheap on. Plan $5,000-$10,000/month • Hiring licensed professional groomers key for credibility Dig Deeper: How I Did It: Alexander Tabibi, CEO, Pets United How to Start a Pet Care Business: Digital or Physical Location? Once you’ve decided what type of store you want to open, there are three types of business models for entrepreneurs looking to enter the pet market, and they don’t differ greatly from any other industry. You can open a traditional brick-and-mortar shop in your neighborhood, a purely virtual company with a website and buying/shipping options, or a hybrid model of both, which may be the most profitable in many ways. The main variable in this equation is cost of space, dependent upon the state, location, and size. Brick-and-mortar shop Opening a physical location can be a smart decision once you do your market research, ensure that the pet owners in the area you’re looking at are underserved and will fit the niche small business you’re going to start, and cost is not extraordinary. If you attempt to open a large general store, the cost expenditures are much higher because of your lack of focus. As you try to offer more products, you incur more cost and lose any form of specialization. But opening in an area where there are lots of pet owners and not many specialized options can be a good decision. In terms of cost, you’ll need to consider rent negotiation, utility costs, tenant improvements, alarm and fixtures. Internet site The advancements of the web have made starting an Internet-only pet business considerably easier and offers a great profit margin. In terms of costs, your biggest expenditures should be in design and search engine optimization, so consumers can actually find your products. If you’re specializing in raw, organic foods, you need to make sure you’re one of the top search results when somebody types that into Google. Again, focus is key as opposed to being a larger, general retailer. “To me, the biggest mistake that Internet entrepreneurs make here is looking only at their sales,” Lechtner says. “You need to do a really competitive analysis (perhaps from a deeper analytics service like Compete.com) to see where your consumers are coming from and what type of consumers they are.” If you know that users are coming there because of great user reviews of your products on Yelp, you should make it easy to find the product, probably by putting it on your homepage. Another reason Internet-only business can succeed is that many manufacturers will drop/ship products (in other words, ship directly from their factory to the customer). So your main cost is tied to making your website stand out. Hybrid shop Opening a physical location but also shipping products out of the back of your store, off an established Internet presence, can be quite profitable. This will require extreme focus and you’ll need to establish your credibility and specialization in one of the two spaces before you’re profitable in both, but it can be a good way to capitalize on the Internet and traditional markets. “Most brick and mortar store locations also have an online store,” says John Dunn, the owner of Passionate Pet , a recently opened Orange County, CA-based boutique pet product and services store. “Fulfillment itself would come from the store whereas online-only shops need to fulfill orders via a fulfillment center or direct arrangement, increasing the cost of online-only goods.” Dig Deeper: Kurgo Pet Products in the Inc. 5000 How to Start a Pet Care Business: Keep Your Focus While it is tempting to want to touch every part of this industry to cover all of the above services, it’s important that you remain focused as a new business owner. Don’t try to sell unique foods, offer grooming services, sell travel cases and dog sweaters, or more. Less is more here, as when you can establish that you do one thing well, you’ll retain a loyal customer base that continues to come back. “The more that you stay focused on what you’re doing, become an expert at it and refine the concept to satisfy a majority of your customers, the better chance you have to maximize profitability on your investment,” says Lechtner. “The more you try to scrape off the fringe businesses and get a little more of the pie (as is natural with success), the more you’ll be diluting your core competencies. If you look at the expenses and the effort of expanding from a specialty shop with a core focus to a more broad approach, you’re diluting your investment of time, money, inventory, marketing and more. And customers can see that. That’s when they get unhappy, and you start to lose business.” Dig Deeper: More Best Industries for Starting a Business Continue reading →

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5 Best Places to Start a Business in Philadelphia

Posted on April 14, 2012 by Nitasha Tiku

Philadelphia is a city as diverse as it is full of opportunity. Its state tax breaks reward start-ups in the city’s under-served areas, while its suburban neighborhoods offer business owners a wealth of affluent clientele right in their backyards, making Philly and its surrounding suburbs a good fit for businesses targeting any demographic. And while there are plenty of places to choose from, we’ve broken down the top five places you should check out before starting your business in the City of Brotherly Love. The waterfront neighborhood, which is located 15 minutes away from just about anywhere, is only three-quarters of a mile long, but is chock full of business – with 49 retailers, 32 restaurants and 52 service-related businesses. During weekdays, Manayunk primarily draws a wealthy female clientele, but the nights and weekends belong to young couples and bar hopping twenty-somethings. Perhaps the biggest perk, aside from the affordable rents, is access to the Manayunk Development Corporation, which works hand-in-hand with local business owners, helping them with everything from technical assistance to seeking grant funding. This town is every suburbanite’s dream. Two train stations offer easy access to Center City and downtown Philadelphia, and its cobblestone streets are lined with shops and restaurants. The market skews toward an affluent, environmentally conscious customer base: Residents grocery shop at the local farmers market or a new food co-op. For apparel, they turn to quirky stores like Artisans on the Avenue and the fair-trade retailer Ten Thousand Villages. The district’s Go Green initiative was recently formed to promote sustainable businesses in the neighborhood and the nearby Morris Arboretum is a 92-acre garden. If the success of Facebook has taught us anything, it’s that marketing a business to the college demographic is a brilliant strategy. University City offers the benefits of being close to Center City’s business district, while still offering business owners a captive audience among some 50,000 students from University of Pennsylvania and Drexel University. Because it’s one of the most ethnically and socioeconomically diverse communities in Philadelphia, the state has designated several acres of University City as Keystone Opportunity Zones, where business owners are eligible for state and local tax breaks. This neighborhood is truly a magnet for businesses in finance, insurance, real estate, engineering and legal services. According to the Central Philadelphia Development Corporation, Center City has 9,000 businesses in the district, as well as 92,000 residents, and, because it’s positioned just a near the Pennsylvania Convention Center, the area is easily accessible for visiting business travelers. The neighborhood has a lively retail scene, with 2,400 shops in the area, and its famed Avenue of the Arts draws loads of foot traffic to the 217 restaurants, and 59 bars and nightclubs. One of the most historically wealthy regions of the Philadelphia area, the Main Line is a lucrative starting ground for small businesses. The area consists of several smaller towns, including Radnor, Haverford, Villanova, and Wayne, where Urban Outfitters president Richard Hayne planted the first Anthropologie store in 1992. That store, which still exists today, is just one of many upscale retailers populating Radnor Township, which, according to the U.S. Census Bureau, had an estimated median household income of $129,773 between 2006 and 2008. Continue reading →

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How to Pitch to Angel Investors

Posted on March 25, 2012 by Nitasha Tiku

Mission accomplished. You have found what seems like an ideal match. You are ready for that first meeting with an angel investor where you get to present your business concept. How do you ensure your pitch is a turn on and not a turn off so that you get a second date or opportunity to close the deal with a written check in hand? “You won’t get past first base if you can’t address four areas,” says Mike Levinson, managing partner and co-founder of DreamIt Ventures, a Philadelphia-based accelerator program for start-ups. An angel investor or early stage venture capitalist will look at 1) is the business idea simple enough for me to understand and buy into, 2) does it solve a problem or meet a need, 3) is it a big enough market and customer base for the idea, and 4) does the entrepreneur have the right people on the team to pull it off, Levinson explains. In essence you’re selling your vision and your team. Angles tend to listen more to an exciting story about the business, while venture capitalists may pay attention mostly to the numbers, performance and traction. But given business owners generally have a window of about 15 minutes to make that initial pitch, every minute counts—and may cost money especially if you’ve paid to play. “A lot of entrepreneurs object to paying fees to present to private investors. If you make a bad presentation and walk away without any deal, the cost seems high,” says Mike Williams, CEO of Seattle-based Reality Gap, an online game developer. “Truth be told, if I had worked with an investment bank and paid the normal 10 percent finders fee, it would have cost $450,000 to raise $4.5 million. I paid in total $45,000 in presentation fees in the first 17 months of business, which is more like 1 percent. So, if you know what you are doing, you can raise the money you need, and it turns out to be cheaper,” he explains. Which pitching tools do you need? You should be armed with a business plan that includes a well defined marketing strategy and solid financial statements. That’s a given. But what do most investors hone in on when trying to decide if your business is worth them parting with their cash, anywhere from $25,000 up to $2.5 million. How you look, the way you speak, and what information you leave out during a pitch can sink the deal. “My whole focus is on trying to size up the entrepreneur,” says private investor and real estate mogul Barbara Corcoran. “I am looking at how much wild enthusiasm do they genuinely have for their product. You can’t fake passion,” adds Corcoran, who is part of a panel of experts assessing potential business investments on ABC’s reality program Shark Tank. Often on the TV show it is research and marketing facts and figures that attract the sharks and determine whether they bite. Here are some presentation pointers: How to Pitch to Angel Investors: Focus on the Money What’s the No. 1 mistake entrepreneurs make during the pitch? “Rambling on about their technology or business rather than the financial opportunity—how you and the investor will make money together,” says Tarby Bryant, founder of Gathering of Angels, a group of private investors and venture capitalists. For the first meeting, investors assume that the technology works. You should spend a few minutes talking about the business mechanics; an interested investor will ask for more details, says Bryant. Spell out the amounts and number of investors you are willing to sell equity. Dig Deeper: How to Evaluate Your Company’s Financial Position How to Pitch to Angel Investors: Gauge Your Body Language People physically judge your acumen based on how you look. “The reality is that people do judge a book by its cover,” says Corcoran. Don’t get written off by an investor before you even open your mouth. Beyond the obvious, which is you should be well groomed, professionally dressed, and make direct eye contact. Be careful not to wring your hands or place them in your pockets. “A certain level of nervousness is expected but if you constantly shift on your feet this sends a signal that you aren’t trustworthy, maybe you are hiding something,” Corcoran adds. Dig Deeper: What Is YOUR Personal Brand? How to Pitch to Angel Investors: Watch Your Tongue Fancy talk doesn’t work; it could backfire and create distrust. Clarity is the name of the game. The language you use to convey your concept ought to be concise. You don’t want to come across as a slick talking salesman. Instead you want to display passion and enthusiasm. “I hear that a lot from investors, no passion from the entrepreneur,” says Bryant. If you are just standing there and reading your presentation with no juice, no mojo, nobody gets excited and nobody writes a check.” Communicate clearly here’s my idea, this is my market, here’s what distinguishes me from my competition, this is why it will be a financial success, and here’s why you should invest in it, adds Levinson. Dig Deeper: Close the Deal with a Flexible Communication Style How to Pitch to Angel Investors: Show and Tell A PowerPoint presentation using about 12 slides is standard, particularly with a tech product. If you have a working prototype, show it to investors so they can see how it could actually work. If you can demonstrate your product or hand out product samples that’s a plus. Discuss actual sales or anticipated orders. Also, this is where your research on testing or proving your business concept comes into play, says Levinson. Include results from surveys, focus groups, and product tests to show any customer insight you have gained. Dig Deeper: Business PowerPoint Presentation Template How to Pitch to Angel Investors: Be Prepared Anticipate questions inventors might ask. How large is your market? Who are your competitors? Why is your product better than what is already in the market? What is your customer acquisition strategy? How much money have you made? Also be prepared to provide alternate strategies, such as if advertising doesn’t generate these results, we will do this. Stay cool, calm and collected. Levinson cautions don’t get thrown off by a tough question. “It’s better to say let me get back to you on that then to fumble for an answer.” On Shark Tank investors and entrepreneurs are instructed by the producers not to speak for the first five minutes of the presentation. That moment of silence shakes some people up as they have five sets of glaring shark eyes. “This gives us a very quick snapshot of how the entrepreneur functions under pressure,” says Corcoran. Dig Deeper: Start-Ups 2010: How to Launch Your Dream Company How to Pitch to Angel Investors: Provide A Way Out You need an exit strategy; how the investor will make his or her money back. “Two thirds of all the people that have ever pitched to me don’t show me how I am going to make money,” says Corcoran. Provide one to three year projections. If you say sales revenues, you have put yourself out of the game. “What do you think we do with the profits; we put them back into the business to meet greater demand,” says Corcoran. “Investors don’t want to jump in bed with you and be your partner for life.” Most angel investments take seven to eight years to reach an exit where they are sold to another company or go public. Dig Deeper: Exit Strategies: What’s Yours? How to Pitch to Angel Investors: Steer Clear of Common Errors Common reasons for rejecting a deal are that the valuation is too high, the management team is too thin or inexperienced, and there is no unfair competitive advantage, says Bryant. Other common reasons for rejecting a deal are insufficient growth potential and indebtedness—the entrepreneur owes a lot of money. Dig Deeper: Top 10 Mistakes Entrepreneurs Make When Writing a Business Plan How to Pitch to Angel Investors: Sign, Seal, Deliver the Deal Just because your pitch went well and an investor is willing to buy into your business, doesn’t mean the deal is done. “The really hard part is closing the deal,” says Williams, “tenacious follow up is critical. Return phone calls right away.” Having that second date is important to getting that check written. “Satisfy all questions and concerns. Ask for the order—the money,” says Bryant. Be mindful there are obstacles that can get in the way such as a poorly written business plan or lack of the proper securities documents. Negotiating the terms of a deal will always be tricky, and disagreements about operations can be difficult to hammer out. The longer the days are spent in closing the deal the less likely it will get done. About 66 percent of angel investments fail to return any money at all. Investors constantly have potential deals on their plate, says Corcoran, so, for every day that goes by other entrepreneurs are moving in on the investor to replace your offer with their juicier deals. Dig Deeper: What is the professional thing to do if you do not hear back from a company after several follow-up attempts? Venture capital – Angel investor – Shark Tank – Business – Entrepreneur Continue reading →

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Would You Buy Underwear By Subscription?

Posted on March 21, 2012 by Nitasha Tiku

Ken Johnson and Andrew Draper are on a mission to save the world’s men from worn-out underpants. “When guys buy these basics, they hang on to them forever, and it’s usually our mothers, wives, and girlfriends who replenish them,” Johnson says. In January, Johnson and Draper launched Manpacks, a Providence-based company that sells men’s underwear, socks, and undershirts on a subscription basis. Men sign up to get a delivery of new undergarments every three months. Each pack costs about $14 to $70, depending on the number of items and the brands customers order. So far, 500 people have subscribed. Johnson and Draper hope to make Manpacks the go-to service for men who don’t want to have to think about shopping for the basics. To that end, Manpacks has promoted its services mostly through social networking sites and online ads. The company has also received mentions in Maxim and The New York Times and on several blogs. How can Manpacks get more guys to try mail-order underwear? We asked four entrepreneurs to weigh in. NO. 1: Target women Clint Greenleaf, founder of Greenleaf Book Group, an independent book publisher in Austin The type of guy who would sign up for this service is probably the same type who would go out and buy himself underwear anyway. Manpacks could reach a larger market by going after the moms, wives, and girlfriends who buy this stuff for the men in their lives. Hire a consultant who knows the industry from the perspective of female buyers. Market to women’s groups, hit up editors at women’s magazines, and reach out to female bloggers who write about fashion, lifestyle, and parenting. NO. 2: Play up the products Andy Dunn, founder and CEO of Bonobos, an online men’s clothing company based in New York City Manpacks is heavily pushing the convenience of its service, but it also needs to market the products it’s selling. The first thing visitors to the Manpacks website see is generic pictures of socks and some old-school underwear. A guy who clicks on this site doesn’t get an idea of what the products are like in terms of brand or quality. Revamp the homepage to highlight the brand names as well as features like fine-grain cotton. Manpacks should also include this information in its advertising. NO. 3: Make ‘em laugh Duncan Mitchell, CEO of Someecards.com , a New York Citybased e-card site Manpacks is trying to solve the problem of guys not going out to buy underwear and socks. It should accentuate that in a funny way. On the homepage, give men the option of sending their friends a quirky message about waiting so long to buy these basics. Have messages like “the hair hello” or “cheesy socks” along with illustrations of a T-shirt that has chest hair peeking out through a hole, sagging underwear, or socks full of holes like Swiss cheese. At the end of the message, pose Manpacks as the solution. Trash talking among guys is big, and using this type of locker-room humor will work well to build the brand. If the message is catchy enough, word about Manpacks will spread quickly. NO. 4: Get aggressive Terry Pillow, CEO of Tommy Bahama, a Seattle-based apparel company I don’t think Manpacks is the type of thing that guys are going to seek out on their own. So, Manpacks needs to find them and get in their faces. Do an aggressive direct mailing program. Partner with credit card companies, phone companies, and cable companies to insert ads inside the bills they mail to customers. The more people find out about Manpacks, the better its chance of success. Feedback on the Feedback: Johnson likes most of these suggestions but says Manpacks can’t afford to implement some of them, such as launching a direct mail campaign and hiring a consultant. “We don’t have the money to hire a consultant,” he says, “but we can certainly reach out to bloggers and editors on our own.” Johnson took the feedback into account in revamping the Manpacks website, but he still prefers to emphasize the service rather than the brands the company offers. Manpacks has had some success with injecting humor into its marketing message, and Johnson likes the idea of letting visitors send funny messages poking fun at their pals. “Ours is a sticky concept, so humor works well in selling it,” he says. “We will look into finding ways to do that.” Undergarment – New York Times – Duncan Mitchell – Manpacks – Clothing Continue reading →

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Getting Your Resumé Ready for Google

Posted on March 20, 2012 by Nitasha Tiku

With old Facebook pages, forgotten blogs, tagged photos, and other casual online activity floating around the Internet like so much space junk in orbit, a person never quite knows what a search of his or her name might spit up. Reputations are at constant risk, thanks to sites like Unvarnished, where both friends and foes can post anonymous comments about others. Job seekers are at special risk: Almost 80 percent of recruiters surveyed in a recent Microsoft study checked out applicants online, and 70 percent of those eliminated candidates based on what they found. But whenever this many people have a problem, it’s a sure bet that entrepreneurs are working to fix it. Here are four young companies vying in the business of polishing online personas. ReputationDefender The site, launched in 2006, offers four subscription services, with monthly fees starting at $8.25. MyReputation generates a monthly report showing every reference to you on the Web; MyChild notifies subscribers when their children are mentioned online; and MyEdge pushes positive Web content toward the top of search engines. MyPrivacy finds and deletes personal information online from direct-mail lists. ReputationDefender can also seek out and remove specific information about you on the Web. Paid Subscriptions: 20,000 Naymz Even if you manage to get your online persona popping up on a Google search just as you want it, readers won’t necessarily believe what you are telling them. Naymz provides a layer of legitimacy by allowing invited friends and colleagues to post references on your Naymz profile page. The free site, which has 1.8 million users, also has a scoring system, based on a background check as well as what people say about you. A paid version, at $144 a year, includes options to track visitors to your page and monitor in real time how and where your name shows up on the Web. Paid Subscriptions: 10,000 Schakra After developing software for companies like Microsoft, Schakra launched a Parental Guidance Facebook application in June. The app alerts parents when their children make potentially damaging changes to their profiles — like posting obscenities or inappropriate photos, or becoming friends with someone outside their age group. The service is free, but a paid premium version is set to launch next month. It will give parents the ability to know when specific words or phrases they have banned show up on their children’s Facebook pages. Paid Subscriptions: None. The paid service launches next month. Brand-Yourself After many unsuccessful job interviews, Pete Kistler realized he was being mistaken for an ex-convict with the same name. Struck with the importance of online reputation, he joined two other students at Syracuse University to form Brand-Yourself in 2008. The service, at $9.99 a month, creates a personalized website that shows up high on a Google search of the user’s name. It walks the user through search-engine-optimization techniques and suggests blogs and social sites he or she should link to or comment on in order to improve online visibility. Paid Subscriptions: 5,000 The Line: ReputationDefender has set itself apart by patrolling and removing information from the Web. Its multiple-product model may help it pull in revenue. Naymz’s reputation score and recommendations — and the 1.8 million users who have joined its free site — make it a LinkedIn on steroids. The challenge is persuading those users to opt for the paid version. But Schakra will never run out of parents who are concerned about what their children are posting on Facebook, and Brand-Yourself is marketing to recent college grads, perhaps giving these two late starters the long-term edge. ReputationDefender – Microsoft – Pete Kistler – Google – Facebook Continue reading →

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Start-Ups 2010: A Dog Lover Builds a $5 Million Business

Posted on March 15, 2012 by Nitasha Tiku

Stella & Chewy’s Founder: Marie Moody, 43 Location: Muskego, Wisconsin Employees: 66 (40 full time; 26 part time) Funding: $650,000 SBA-backed loan 2009 Revenue: $5 million Start-Up Year: 2003 Breakeven: After one year, when annual revenue hit $120,000 Insider Insight: Find a new angle on an old trend. Moody saw that dog owners — just like foodies — would pay extra for high-quality organic products. Blind Spot: Hidden costs. Moody didn’t anticipate how hard it would be — and how much money it would take in the form of free products and fees for field reps — to persuade retailers to push her products. Marie Moody knew her dog wasn’t well, but it was still a shock to hear the vet say that Chewy, the mutt she had recently adopted, wouldn’t live long unless she started giving him some extraordinary care. Most important, she needed to pay meticulous attention to the dog’s diet. Moody hadn’t known that most conventional dog food is made from cereal shavings and renderings from meat packers, with some vitamins and minerals thrown in. So, despite abstaining from meat herself, she was soon making weekly trips to Whole Foods for bags of organic beef. A few months later, Chewy’s recovery was striking, and Moody’s other dog, a terrier mix named Stella, seemed healthier, too. A business idea was born. After working in New York City’s fashion industry for a decade, Moody had been feeling burned out and decided to take a flier. Some online research led her to a Wisconsin-based manufacturer who, for $1,200 plus $900 shipping, would sell her frozen and freeze-dried dog food under the name Stella & Chewy’s. In March 2003, half a ton of dog food arrived at her New York City apartment. At first, Moody had no idea who, if anyone, would buy it. She began by giving away samples on New York City street corners. “I’m sure people thought I was crazy,” she says. By 2004, thanks to a lot of footwork, Stella & Chewy’s was in about a dozen New York City stores, and sales were $10,000 a month. Still, Moody was only breaking even. She decided she needed her own packing plant to expand the business and at the same time maintain tighter quality control. She took another leap. First, she needed a formal business plan so she could apply for a Small Business Administration loan. After taking a class and slaving away at a plan for a couple of months, she finally paid the class instructor $2,000 to pump out the plan for her. “It would have taken me 10 times as long to write it myself,” Moody says. “I really believe in doing what you’re good at and delegating the rest.” Meanwhile, she packed up and moved back to her native Wisconsin. Proximity to the state’s meat industry was a plus, Moody realized. She would be able to develop relationships with suppliers who could sell her organic and antibiotic-free meat several thousand pounds at a time. And she would be able to tap the state’s agricultural experts. Moody soon hired two scientists from the University of Wisconsin’s renowned animal science department, who helped her develop recipes and food-safety technology. In October 2006, Moody closed on an SBA-backed loan of $650,000 — nearly all it earmarked for resellable equipment, which minimized the risk for her lender. The plant opened in January 2007. Moody had a tough time meeting her obligations during the five long months she waited for an industrial freeze-dryer to arrive. By then, though, she and her consulting scientists had developed a technology that guaranteed a pathogen-free product. Several companies had been forced to recall pet food for safety reasons that year, so distributors quickly took notice. Moody signed her first big-time distribution deal in the fall of 2007 and eventually landed Stella & Chewy’s in 750 stores on the East Coast. Other distributors quickly followed; Moody had $5 million in sales in 2009 and hopes to hit $10 million in 2010. “I love my dogs,” says Moody, who recently adopted a third pooch to surprise her 5-year-old son. “So I always knew that people who love their pets would buy them better food if it was out there.” New York City – Pet food – Dog – Small Business Administration – Business Continue reading →

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Start-Ups 2010: Finding an Audience Online

Posted on March 14, 2012 by Nitasha Tiku

The Passion Greg Stallkamp was always a fitness freak. An avid triathlete, he trained at least five times a week and was always sharing advice on workout routines with friends. The Plan Three years ago, as Facebook and MySpace were becoming household names, Stallkamp, 32, saw the need for a fitness-based social network — a forum in which users could share training tips as well as marathon times. Stallkamp pitched the idea to two similarly fitness-obsessed friends. They felt that, with a small initial investment of about $15,000, they could build the website in their spare time and that once launched, it would be sustained by its audience. The Strategy In addition to the social networking features that let amateur athletes connect and share information, Holos Fitness would also feature blogs by professional trainers offering tips on yoga as well as weightlifting. Revenue would come from targeted ads based on the information provided in members’ profiles. What Went Wrong The efforts to get the website built on the cheap failed. Rather than using off-the-shelf or open-source software, the founders insisted the website be designed from scratch, which cost far more in developer time. Additionally, they were unwilling to contract a developer for more than a month at a time, resulting in, over a two-year period, more than five developers quitting midproject to take better-paid or longer-term jobs. Eventually, Stallkamp quit his financial-consulting gig to work full time on the website, which finally launched in early 2009. But the problems didn’t end there: Stallkamp was relying on word of mouth to popularize the website, but users were slow to sign up. Lesson Learned “There was a real naivet Continue reading →

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Start-Ups 2010: Gourmet Ice Cream, Served From a Truck

Posted on March 13, 2012 by Nitasha Tiku

Van Leeuwen Artisan Ice Cream Co-Founders: Ben Van Leeuwen, 26; Pete Van Leeuwen, 33; and Laura O’Neill, 28 Location: Brooklyn, New York Employees: 40 Funding: $80,000 from friends and family 2009 Revenue: $900,000 Start-Up Year: 2008 Breakeven: Their first summer. They grossed about $425,000, with about $125,000 as profit. Insider Insight: Low overhead and high quality is a good model. Good Humor trucks are highly profitable, but nobody was selling premium ice cream from a truck. Blind Spot: Manufacturers prefer the status quo. Few commercial dairies were used to making ice cream without industrial stabilizers and conventional ingredients. The recipe was simple and pure. The first ingredient: three summers spent driving a Good Humor truck in college. “I realized that a truck is less risky than a storefront and costs less to start,” says Ben Van Leeuwen, who traveled the world on what he made while passing out King Cones and Strawberry Shortcake bars. The next ingredient: an obsession with food, especially of the locally sourced, sustainably grown variety that had long attracted serious foodies and environmentalists and is increasingly being sought by mainstream consumers. “Good food just makes me really, really happy,” Van Leeuwen says. The third ingredient: assembling the right team. He recruited his then-girlfriend (and now wife) Laura O’Neill and his brother Pete. Together, they started grappling with the realities of selling ultrapremium ice cream out of a truck on the steamy summer streets of New York City, where they all lived. Ben had breezed through a college class on writing a business plan, but the real thing took three months to complete and ran about 60 pages. Ben’s sister, a financial adviser, volunteered to check the numbers before they mailed out a few dozen packages to family and friends. The effort pulled in $80,000, with one of the biggest chunks coming from one of Ben’s former professors. Ben and Pete’s dad co-signed on a $20,000 line of credit in April 2008. The money was quickly put to work. They bought a truck on eBay for $5,000. But it needed plumbing, a freezer, a generator, and big windows. And because they wanted the truck to reflect the quality and old-fashioned values of their ice cream, they installed new chrome grilles and gave the truck a butter-yellow paint job. Even with Pete’s girlfriend doing the hand-painted menu for “mate’s rates,” the total cost was $45,000. Meanwhile, the team was taking on an even bigger challenge: No wholesaler sold ice cream of the quality they wanted in the quantities they needed, so the partners would have to make the ice cream themselves. Months of painstaking at-home recipe testing ensued. Setting up a factory was financially out of the question, and most of the commercial dairies the team approached used the same stabilizers and conventional ingredients the partners were intent on avoiding. Eventually, they contracted with Mercer’s Dairy, in upstate Boonville, New York. The first run, almost 500 gallons, cost $8,000. Ben and Laura married in Central Park on June 20, 2008; Pete was the best man. The next morning, they pulled up to a street fair for their New York City debut. That first day, they sold about 500 scoops (one of them to a Whole Foods manager, who later helped them get their products onto the store’s shelves). There were glitches, of course: Turns out it’s virtually impossible to scoop ice cream if the freezer is set just a few degrees too cold. The three founders, plus one friend they hired on, worked virtually around the clock that first summer, scooping, fixing the cranky truck, and angling for the best corners on which to set up shop each morning. Still, Van Leeuwen Artisan Ice Cream was a hit virtually from the start. One influential blog, Gothamist, called it “a taste of creamy ecstasy.” More media attention followed. That first summer brought in about $425,000, of which some $125,000 was profit. In 2009, with two more trucks in circulation, sales were $900,000, with profit of $300,000. So far, nearly all their earnings have been plowed back into the business. The partners originally planned to head to warmer climates in the off-season. Instead, they have tried their hand, with modest success, at selling high-end coffee and pastries in winter. In February, they opened a storefront in Brooklyn. This year, with 40 employees during peak season, they hope to bring in $1.5 million to $2 million in revenue. Now that would be sweet. Ice cream – New York City – Brooklyn – Business – Van Leeuwen Continue reading →

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SBA: U.S. Slipping in Entrepreneurship

Posted on January 5, 2012 by Nitasha Tiku

The U.S. is no longer tops in the world for entrepreneurship — and large companies are partly to blame, concludes a new Small Business Administration study released Thursday. The report – titled “Global Entrepreneurship and the United States” – compares U.S. entrepreneurship and performance against 70 other countries. It found that large companies account for an ever-increasing chunk of business activity, which “made it harder to new businesses to get started and for existing ones to prosper,” study authors Zoltan Acs and Laslo Szerb wrote. The U.S. ranked a respectable third overall, behind Denmark and Canada. Additionally, the U.S. still ranks first for entrepreneurial aspirations, or the degree to which entrepreneurial activity is directed toward innovation, high growth, and globalization. However, it comes in at No. 6 for entrepreneurial attitudes — how the population thinks about entrepreneurs, opportunity potential and the risk of failure. The U.S. has also slumped to No. 8 for entrepreneurial activity, defined by this study as technology firms created to respond to business opportunities in a competitive environment. The authors found the U.S.’s relatively low score on entrepreneurial activity “a surprise and a possible cause for concern.” “It is an indicator that over the last decade the United States may have been lagging behind in terms of opportunity startups and quality of the workforce, as well as its activities within the tech sector,” Acs and Szerb wrote. “It is not just that the rest of the world has caught up, the United States seems to have abandoned [the tech sector].” Why the slowdown in the sector? The bursting of the dotcom bubble, plus the September 11 terrorist attacks, which caused the U.S. to roll up the welcome mat for skilled workers from other countries. And while the U.S. was closing its doors, other countries “have been more pragmatic by giving strong incentives to attract educated, skilled workers to their shores – whether doctors, engineers, or academic researchers – and to keep them there with offers of residency and citizenship,” the study says. It doesn’t help that there’s less cultural support for entrepreneurship, which means the “best and the brightest individuals” bypass entrepreneurship for another profession. (The odds that the average American knows a entrepreneur “is no more likely than in a developing country,” says the study.) Also, fear of failure in the U.S. is increasing, something the authors suggest may be rooted in changing demographics: as the population ages it becomes more risk averse. The study distinguishes between small business and entrepreneurship, with the authors arguing that the development of a “small number of extraordinary high-growth entrepreneurial ventures” – which it refers to as “gazelles” – is more important for job growth than “the creation of numerous tiny businesses.” Wrote Acs and Szerb: “The United States does not simply need more new businesses; it needs more highly productive ventures.” Business – United States – Small business – Entrepreneur – Small Business Administration Continue reading →

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Engineering a Better Cup of Coffee

Posted on December 23, 2011 by Nitasha Tiku

An industrial engineer and former Starbucks executive (as a “director of profit improvement”) Mike Caswell has long thought that there were things in the coffee industry that were just never offered to customers, namely freshness and choice. Historically, he says, companies marketed their coffee as fresh off the basis of when their coffee was brewed or how freshly ground it was. However, that’s not really what makes the difference. “For a long time, everybody was ignoring how long ago the beans were actually roasted,” Caswell says. “Industry insiders will acknowledge how important that is to quality, much like the freshness of bread. But because there hasn’t been an industry-wide adoption of how to best provide fresh coffee, people don’t want to talk about it.” That’s when Caswell’s engineering background came into play. He began tinkering with disassembled vacuum cleaner parts in his basement in 2003, and with a lot of time and some help from some mechanical and electrical engineering friends, he created what has officially been patented worldwide as the Javabot. The Javabot combines every aspect of the coffee roasting experience, transporting beans through Caswell’s store via a maze of clear tubes and pressure, sending raw green beans to a roaster, roasted beans to holding chambers, and small amounts of precisely measured roasted beans to Swiss-made brewers for grinding and eventually brewing. When the Javabot was ready for public consumption in 2007, he opened his first store, aptly named Roasting Plant , in Manhattan’s Greenwich Village. Many early investors asked Caswell why they should invest in his shop, which is located less than a block away from an existing Starbucks. What would keep customers coming back instead of walking right down the street to the familiar chain? “My answer then was that you have to offer a differentiated and legitimate experience for the customer,” Caswell says. “And I wouldn’t answer differently today. I was convinced this business would work in New York because the city just has a really active coffee culture. At the time, Starbucks was just cranking along and opening stores every day. But I saw vulnerability because they weren’t focusing on freshness or choice. Additionally, New Yorkers are one of the few populations on the planet that are always looking for something better, newer and more interesting, a higher contribution to a higher quality of life I guess you could say.” The entire experience at Roasting Plant is unique. When you enter, you’ll be greeted by friendly baristas (Caswell says a non-intimidating employee defines his “legitimate experience”). Then it’s time to make a choice—deciding from 11 different types of beans onsite—before watching your selection fly through the Javabot above your head and into the roaster. Depending on the roast, you’ll have your drink within a few minutes. If hungry, you can opt for award-winning pastries from the locally revered Tom Cat Bakery or settle into one of their many modern seating areas, including long couches, high stools and individual tables, with plenty of outlets and free wi-fi for the computer-toting clientele. Roasting Plant now has two locations in lower Manhattan, and many of the regular customers consider Roasting Plant’s coffee the best they’ve ever had. According to a recent Yelp review by Jeni Y., “dorky engineering + delicious coffee = love!! I gravitate towards Roasting Plant whenever I’m within a five block radius, pulled in by the wonderful, gadgety, and incredibly genius way that my coffee is prepared. I’m now spoiled rotten and demand that ALL coffee I drink in my future be first flown above my head.” Financially, Caswell is projecting growth of 51 percent, year-over-year, in 2010. From an on-the-ground retail perspective, the businesses are doing great, it’s just a matter of growing to more locations. On the other side of the equation, Starbucks has seen unprecedented competition in the market in recent years, with Dunkin’ Donuts, McDonald’s and other fast-food chains offering a similar grab-and-go product. According to a company spokesperson, Starbucks opened their 182nd franchise on Manhattan’s Upper East Side this week, so clearly they are not going to cede their market share. They still drive the industry because of their reach and their take-home and brew business, but independent shops are in a completely different segment of the market. “In the last few years there’s been a leap forward here in America for an understanding of coffee, what makes good coffee and what the proper preparation techniques are,” says Andrew Hetzel, an industry expert and founder of Cafemakers , a consulting business for the coffee industry. “As a result of the economic downturn, the overall number of coffee shops has probably declined as has the number of businesses starting. But that’s not a bad thing, because the shops who are doing a good job have survived and are prospering.” In the ultra-competitive coffee market, low-cost operations and successful branding are important to maintain profitability, due to the obvious low margins in a single cup of coffee. But as Americans continue to learn more about java, about what they like and don’t like, the smaller shops that focus on quality, freshness and customer experience are the ones that are continuing to succeed. So while Starbucks and independent coffee shops exist in different segments of the market, much of the credit for wetting Americans’ palettes (or perhaps it was a re-introduction) to stronger, bolder, European-style coffee goes to the Seattle-based behemoths. Unfortunately because of the limited supply of high-end beans in the market, Starbucks is unable to buy some of those batches. And that’s where smaller shops hold the advantage. If you think about it like fine wine, there just are not enough aged bottles to be sold in bulk, which is what drives up the price but also the quality. Coffee is quite similar. “Many independent coffee shops across America actively seek out those locations where Starbucks operates, as it will have already done the ground work of establishing a coffee shop culture in that area,” Billy Hulkower, a spokesman for consumer intelligence insight at Mintel , said in 2005. “Starbucks’ rampant expansion has created an ever increasing demand for premium coffee, while opening the market up for competitors as well.” For Caswell, he learned a lot of entrepreneurial lessons along the way that are not specific to the coffee industry, struggling to raise capital with potential investors early on by convincing them his business could succeed. “As I reflect back now, the critical things I learned were to have passion, persistence and patience,” he says. “You have to believe with all of your being that what you’re trying to achieve and what you’re pitching to people is legitimate and will succeed. That’s something you need to do over and over again, and then to learn to deal with the many rejections that will come and not to take them personally. I kept my end goal square in sight and kept going, and I think regardless of the industry you’re in, you need to commit yourself with unending effort and passion.” As premium coffee and a passion to attain it grows here in the U.S., independent shops like Caswell’s will continue to succeed. And while his immediate goals remain on maintaining a high quality experience for his two stores in New York City, Caswell has fielded calls from every part of the world to both franchise his stores or to license out the Javabot. He admits that the company’s next challenge is their growth and how to handle it, but as an entrepreneur, that’s not a bad problem to deal with. And to answer the question of how fresh your coffee should be is a matter of opinion and preference for each individual consumer, says Caswell. “Somewhere between one day and seven days is optimal. Again, coffee is like a really good wine in that it improves a little bit with age. If we’re talking about my personal preference, I lose interest once the coffee has been out of the roaster for seven days. After that, it just doesn’t deliver the flavor any longer.” Starbucks – Business – Dunkin’ Donuts – Coffee – Upper East Side Continue reading →

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