Tag Archives: industry

Business incubator expansion gets $2.2 million

Posted on November 8, 2011 by

WILKES-BARRE – At a press conference thsi afternoon, Willie Taylor, the regional director of the U.S. Economic Development Administration’s Philadelphia Regional Office, U.S. Rep. Paul E. Kanjorski, and U.S. Sen. Bob Casey, announced $2,263,500 for the Greater Wilkes-Barre Chamber of Business & Industry’s Innovation Center at Wilkes-Barre II. Continue reading →

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What Kind of Entrepreneur Are You? Part 3

Posted on October 6, 2011 by Nitasha Tiku

Most growth-oriented entrepreneurs are wired for starting, not running, a business. I call these folks “on-base hitters” because, unlike baseball’s “sluggers,” they focus on earning lots of little wins in the form of starting many small businesses instead of seeking out rare but fantastic successes. (Read more about “on-base hitters” and “sluggers” in Part 1 of this series.) Yesterday, in Part 2 , I described the Kolbe personality test, which allows you to measure yourself on four personality attributes that are predictive of your success and happiness in running a business. People with a high Quick Start score on the Kolbe test thrive in the chaos of a start-up. One of the reasons Quick Starts rarely grow large businesses is because all of that creativity makes them bad managers. If you’ve ever watched a 230-pound slugger try to lumber his way to first base, you know it’s not a pretty sight. Neither is watching a Quick Start entrepreneur try to manage a large team of employees. When the boss is a Quick Start, employees get frustrated trying to keep up with all of the new ideas. Employees have trouble determining which brainchild was just a passing thought and which needs their most urgent attention. People with high Fact Finder scores often see their Quick Start boss as an impetuous, superficial risk taker. That’s why most growth-oriented entrepreneurs are happiest—and most successful—in the start-up phase. In a start-up, new ideas are valued at a premium, and there are only a few employees to manage. To follow our baseball analogy, these types are happiest with the quick, regular success of getting on base a lot rather than hitting a rare home run. Here’s an informal quiz to identify whether you’re best suited to be an on-base hitter or a home run slugger. Answer each question with a simple “agree” or “disagree.” I get bored easily.I feel overwhelmed by complexity.I have higher employee turnover than is normal for my industry.I like proposing new ideas that some people think are “off the wall.”I started lots of little businesses before getting into the one I’m running today.I’m a big-picture person.I started a little business when I was in high school or university.I burn out when my business gets too complex. If you answered “agree” to more than four of the questions above, you’re probably a person who thrives on the variety of the start-up and would flounder running a larger business. Focus on just getting on base by launching the business and creating revenue and a positive cash flow; then either sell it or install a manager. Clearly, you won’t earn as much from the sale of one small business than you would if you hung on and built it up further, but by getting out quickly, you’ll retain the energy and creativity to devote to a new business. Collectively, a portfolio of successful start-up businesses in a career could easily surpass the financial success of one home run, and you’ll be infinitely happier along the way. John Warrillow is the author of Built to Sell: Turn Your Business into One You Can Sell. He has started and exited four companies. Most recently John transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which was acquired by The Corporate Executive Board. In 2008 he was recognized by BtoB Magazine’s “Who’s Who” list as one of America’s most influential business-to-business marketers. Business – Small business – Quick Start – United States – High school Continue reading →

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10 Things to Do Before You Start Your Start-Up

Posted on September 27, 2011 by admin

Is your great idea good enough? Can it grow in this slow economy? Can it become profitable, and return on any investments it requires? Well, there’s no way to know until you try, right? Hardly. There are some ways to prepare yourself, test your idea, and improve it before you actually found a company around it. We’ve compiled the best examples from recent Inc. articles and Inc.com guides of tips for the very early steps of building a start-up. 1. Scope out your industry. Or, if you’re just starting to think about entrepreneurship in general, find the best industry to fit your style and talents. For example, this year’s burgeoning industries include interactive technology (from mobile app design to tech-savvy translation), wellness (healthy beverages), and little luxuries, such as baked goods. When you start honing in on a specialty area, seek out counselors and talk to industry veterans. You can go to SCORE, the SBA, the Women’s Economic Development Agency , or scores more. The Internet, your local library, the U.S. Census Bureau , business schools, industry associations, can be invaluable sources of information and contacts. For instance, you might approach business schools in your area to see if one of their marketing classes will take on your business as a test project. You could potentially get some valuable market research results at no cost. Read more . 2. Size-up the competition. Study your competition by visiting stores or locations where their products are offered. Say you want to open a new restaurant. For starters, create a list of restaurants in the area. Look at the menus, pricing, and additional features (e.g., valet parking or late night bar). Then check out the diners those restaurants appeal to. Are they young college students, neighborhood employees, or families? Then, become a customer of the competition. Go into stealth mode by visiting its website and putting yourself on its e-mail list. Read articles written on them. Sign up for e-mail alerts about search terms of your choice on Google News, which tracks hundreds of news sources. After you study it, deconstruct it using Fagan Finder , a bare-bones but very useful research site. Plug the address into the search box. You will be able to quickly learn, for example, the other sites that link to it, which can reveal alliances, networks, suppliers, and customers. Business data aggregators such as Dun & Bradstreet and InfoUSA provide detailed company information, including financials, although the services are not cheap. Your aim is to understand what your competition is doing so you can do it better. Read more . 3. Second-guess yourself. “The biggest mistake I see these days is thinking that a business idea will automatically turn into a viable business model,” says Terri Lonier , president and founder of Working Solo , a New Paltz , New York -based business strategy consultancy, and author of Working Solo: The Real Guide to Freedom and Financial Success with Your Own Business . Then again, what if the idea really is viable? “A lot of people start with a kitchen table idea,” says Marla Tabaka , a business coach who writes The Successful Soloist blog for Inc.com . “It’s a great idea you come up with your cousin at dinner. But then the business booms, and your growth gets out of control. You need a plan.” Another important consideration is your personal financial resources. Make sure you have a considerable amount of capital set aside, especially because in a sole proprietorship you assume personal liability for all activities of that business. If you borrow money and can’t repay it, your personal assets are at stake. Read more . 4. Think about funding. A lot. Can you bootstrap your company? Or are you going to need a small business loan? Might an entrepreneur in the family be able to invest, or should you look for venture capital or an angel investor? Money is a big topic for entrepreneurs, and you’ll want to know your options early on. In order to get investors to open up their checkbooks, you’ll need to convince them that your idea is worthy and also be willing to subject yourself to increased scrutiny and give up a percentage of your company. That’s why it’s a good idea to first ask yourself whether you really need a professional investor at all, says David Henkel-Wallace , a serial entrepreneur who has raised $60 million from VCs. “If you’re starting a web software or mobile software company, you might be able to bootstrap it, which has the advantage that you get to keep all the money you earn,” says Henkel-Wallace. “You could also look into borrowing from friends and family – or even take out a second mortgage – for the same reason.” If you decide your business can only get to the next level with the aid of a professional investor, then you need to figure out what a potential backer looks for in a budding company, says Martin Babinec , who raised six rounds of funding through the business process outsourcing firm he founded, TriNet, which now boasts annual revenues in excess of $200 million. Start doing your research now, and don’t talk to investors until you have a strategy that involves foreseeable future liquidity. Read more . 5. Refine your concept. Adrienne Simpson initially intended to run a traditional moving company out of her home in October 2002. The idea came to her after relocating her mother from Georgia to Michigan . “I thought I’d put everything in a box, put it on a truck and send her on her way. Oh, no! Mom started walking me through her home, pointing at things saying, ‘I’ll take that, let’s sell that, and I want to give that away,’” she recalls. By the second year of operation, Simpson shifted gears to make her Stone Mountain, Georgia -based company, Smooth Mooove, specialize in transporting seniors—and their beloved pets—and providing such value-add services as packaging, house cleaning, room reassembly, antique appraisals, estate sales, and charity donations. Her crew does everything: put clothes in the closets, hang drapes, make the bed, fill the refrigerator. But even still business was stalling. “I knew how to run an existing company, but I didn’t know how to run a start-up,” says Simpson, who worked 20 years for Blue Cross/Blue Shield and 10 years with Cigna Healthcare . Seeking money and marketing advice, Simpson went to the U.S. Small Business Administration (SBA) office in Atlanta and was connected to SCORE (Service Corps of Retired Executives) counselor Jeff Mesquita . “When you position your company you have to think outside of the box in terms of what makes you different from the competition,” says Mesquita. “Adrienne described that what she does is move seniors from A to Z, so, when they arrive to their new home it is like walking into a hotel room.” The only thing her clients have to bring is the clothes on their back (and maybe their pet under their arm). That’s when Mesquita suggested the business name change to Smooth Mooove Senior Relocation Services. That same night, Simpson went to a networking event. When people asked ‘what do you do?’ and her response was ‘I have a senior relocation service.’ Right away people said ‘Oh, you move seniors.” The business took off from there. Read more . 6. Seek advise from friends, mentors … or anyone, really. A mentor can be a boon to an entrepreneur in a broad range of scenarios, whether he or she provides pointers on business strategy, helps you bolster your networking efforts, or act as confidantes when your work-life balance gets out of whack. But the first thing you need to know when seeking out a mentor is what you’re looking for from the arrangement. What can your mentor do for you? Determining what type of resource you need is a crucial first step in the mentor hunt. Lois Zachary, the president of Leadership Development Services, a Phoenix, Arizona -based business coaching firm, and author of The Mentee’s Guide: Making Mentoring Work for You, recommends starting with a list. You may want someone who’s a good listener, someone well connected, someone with expertise in, say, marketing, someone accessible. Ideally you could find a mentor with all of these qualities, but the reality is you may have to make some compromises. After you enumerate the qualities you’re looking for in a mentor, divide that list into wants and needs. Who’s best as a mentor? Look within your family, friends, business community, academic community, and even at your competitors – well, not your direct competition, but you get the idea. Read more . 7. Pick a name. Naming your business can be a stressful process. You want to choose a name that will last and, if possible, will embody both your values and your company’s distinguishing characteristics. But screening long lists of names with a focus group composed of friends and family can return mixed results. Alternatively, a naming firm will ask questions to learn more about your culture and what’s unique about you – things you’ll want to communicate to consumers. One thing that Phillip Davis , the founder of Tungsten Branding, a Brevard, North Carolina -based naming firm, asks entrepreneurs is “do you want to fit in or stand out?” It seems straightforward. Who wouldn’t want to stand out? But Davis explains that some businesses are so concerned about gaining credibility in their field, often those in financial services or consulting, that they will sacrifice an edgy or attention-getting name. “However, in the majority of cases, clients want to stand out and that’s a better approach when looking at your long-term goals. Even the companies that say ‘I just want to get my foot in the door’ will usually begin wishing that they stood out more once they pass that first hurdle.” Read more . 8. Get a grasp on marketing strategies. You don’t need to be a marketing whiz, but if you’re trying to build an idea from the ground-up, you’ll likely need to build an accompanying marketing strategy from the ground up. In doing so, you need to be clear on who your customers are, because you don’t have any time to waste on marketing to those who aren’t. “That’s really the biggest challenge, determining who exactly your customers are,” Lonier says. “Many times [business owners] think they understand who they are, but you need to be willing to interview and test potential customers, particularly in the early days of a company, in order to be able to build those relationships.” One way to make marketing easier is through joint-venture marketing, Tabaka says. When she owned a coffeehouse in Naperville , Illinois, she realized that her company and a major drugstore in the same shopping center could work together and support each other’s marketing goals. Another important and relatively easy way to get your name out into the market is building your web presence through social media like Twitter and Facebook . Be sure you familiarize yourself with and utilize Search Engine Optimization (SEO) to make it easier for people to find your website. Read more . 9. Do a little test-run. “The best way to test your idea is if you’re employed full-time and can sell your product or service in the marketplace on weekends,” says Sapp. If the business is already your day job, then you have to move quickly to test, verify, and tweak your model,” he adds. Try surveys, polls, and focus groups to gain insight into attitudes about your business idea. Solicit feedback on the cheap by using online survey tools available through such services as Zoomerang.com , Surveymonkey.com , and Constantcontact.com . The goal is to get to know your customers intimately. What turns them on? What causes them to tune out? Are they impulse buyers or do they like to deliberate over their buying decisions? There are a lot of products that people like but don’t buy, says Sapp. The price might not be right, for example. “Use social media to hone in on certain groups that can become your focus group,” says Susan Friedmann , a nichepreneur coach , in Lake Placid , New York and author of Riches in Niches: How to Make it Big in a Small Market . “Check out chat rooms, communities on social networks like Ning or Facebook , industry groups within LinkedIn ,” she says. “What are people discussing? Letters to the editor or articles in trade publications are resources for finding out about challenges in that particular industry. What are people writing about? What do people want to know about?” Knowing the answers to these types of questions may help you refine your idea. Read more . 10. Start searching for future talent. This might sound premature, but don’t forget that your business is supposed to grow someday. Keep your eyes peeled all the time for people who might fit into your organization – even if you can’t afford to pay them yet. No matter how small the internet has made the world, experts still recommend in-person networking as the No. 1 way to recruit talent. “I’ve done a lot of placing people into positions, and I have never used a job board as a way to do that,” says Rich Sloan , co-founder of StartupNation. ‘Personal [interaction] is so much more powerful and important to me.” So, if you meet someone interesting or knowledgable at a networking event, or even if you get particularly impressive service somewhere, be it a museum gift shop or helpline, ask that person a bit about themselves, what kind of business they see themselves in in five years – and the best people around will stick in your mind for when you need them. Read more . Business – Small business – Google – Entrepreneur – Venture capital Continue reading →

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How to Find Willing Investors

Posted on September 11, 2011 by

Most entrepreneurs who dream big simply don’t have access to the kind of money it takes to realize their aspirations. Enter the professional investor community. But, in order to get investors to open up their checkbooks, you’ll need to convince them that your idea is worthy and also be willing to subject yourself to increased scrutiny and give up a percentage of your company. That’s why it’s a good idea to first ask yourself whether you really need a professional investor at all, says David Henkel-Wallace, a serial entrepreneur who has raised $60 million from VCs. “If you’re starting a web software or mobile software company, you might be able to bootstrap it, which has the advantage that you get to keep all the money you earn,” says Henkel-Wallace. “You could also look into borrowing from friends and family – or even take out a second mortgage – for the same reason.” Dig Deeper: How to Pitch Your Business to Family and Friends Understand What Investors Want If you decide your business can only get to the next level with the aid of a professional investor, then you need to figure out what a potential backer looks for in a budding company, says Martin Babinec, who raised six rounds of funding through the business process outsourcing firm he founded, TriNet, which now boasts annual revenues in excess of $200 million. For one, he says, many entrepreneurs mistakenly think talking to investors involves loans or debt. “It should be clear that when you talk to an equity investor, you’re trading shares of your company that an investor can later sell,” he says. To that end, you need to show how your company is on a path to a “liquidity event,” industry parlance for an IPO or acquisition where the investors get a return on their money. Since not every company will actually go down such a path, “many investors use a portfolio approach, where they hope to spread their risk among several bets,” says Babinec, who now heads up Upstate Venture Connect, an organization that connects emerging technology companies in upstate New York with investors. “An investor may, for example, invest in ten companies, knowing that more than half of those companies will fail to capitalize on their potential. But, if just two of those bets pay off, and pay off big, then everyone comes out ahead.” Babinec says an investor will evaluate a company’s potential along four key criteria: 1. Does the company’s product or service address a large and growing market need? 2. Can the company scale quickly enough to take advantage of that market opportunity? 3. Does the company have a defensible competitive advantage? 4. Can the management team execute on the potential outlined in the first three criteria? In other words, the risk of investing in your company must be offset by the potential reward that can be delivered when your company experiences a liquidity event. “If you want a lot of capital, you’ll need to demonstrate that your company has rocket-ship growth potential,” says Babinec. Dig Deeper: 9 Ways to Make Your Business More Attractive to Investors Look for the Best Fit and Make Connections If your company passes those four tests, your next assignment is to prune down the list of investors who might be interested in your company. To do so, you’ll need to understand that the private company equity markets have become very fragmented, says Healy Jones, a former venture capitalist who now heads up marketing at OfficeDrop, a start-up that offers digital document scanning and filing and raised venture capital late last year. “There used to be just venture capitalists, now there are angels, super angels, micro-VCs, VC, and growth investors,” he says. “As an entrepreneur looking for capital you need to know where on the spectrum of investors your business falls – and target the right potential investors.” VCs, for instance, typically look to invest $3 million to $5 million. Angel investors, on the other hand, may invest just a few thousand dollars. Private equity groups may have tens of millions to invest. So how do you know what the right fit for your business is? Start by networking and building relationships even before you set out to acquire funding as a way to both determine who investors in your area might be as well as to develop connections to them. “VCs highly prefer introductions to new ideas from people they trust as opposed to receiving cold calls from companies looking for money,” says Jones. “The best introductions come from successful entrepreneurs, especially ones that have worked with the VC before.” Your networking should include professionals working for companies similar to yours, says Marc Wright, a serial entrepreneur, VC investor, founder of an incubator and an advisor to early-stage companies. “Look for news in your industry about investments and acquisitions involving companies in the spaces closest to yours,” says Wright. “The goal should be to target investors and even large companies who look for opportunities in your space.” Another suggestion from Babinec of UVC is that you can research who originally backed the public companies in your space. “This is a multiple step process that works you back to the investors who have made money in the space,” he says. This is essential because investors like to invest in areas where they have developed expertise, says Eric Lefkofsky, the co-founder of Groupon who, in addition to founding two companies that went public, has now started a venture fund of his own called Lightbank. “We only look to invest in early-stage tech companies,” says Lefkofsky. “If you had the best idea for a new restaurant, I’m the wrong guy to approach about it. We focus only on the things we know.” Investors, especially in early-stage ventures, also tend to place their bets close to home, according to Don Rainey, a general partner in Grotech Ventures, a VC firm in Washington, D.C. “Being closer geographically is better, but it also differs on where you are,” says Rainey. “In Silicon Valley, you might need to be 15 miles from your investor. In Dallas, it might be 300 miles.” And don’t be bashful about using social media tools to boost your networking efforts, says Wright, who is the CEO of Martinez & Wright, a business media and market data company in Laguna Beach, Calif. “I frequently use news sources and LinkedIn to find people who are connected to an investor target and then tap them for feedback and input on the business and ask what they think investors or buyers might like and dislike,” he says. “If the chemistry is right I’ll ask them for an intro. And if it’s really good, I’ll mention the possibility of a formal role as an advisor.” Dig Deeper: An Insider’s Guide to Venture Capital Financing Share Your Vision Once you’ve finally made some connections to investors who likely understand the kind of company you’re trying to build, you then need to whittle it down to those who share your vision of what’s possible. “As an entrepreneur, you need to find investors that buy into the assumptions you have made about the future,” Rainey of Grotech Ventures says. If you don’t share the same common view of what’s possible, an investor won’t invest with you.” Resources The Internet contains many websites dedicated to helping entrepreneurs navigate the investment community. Here are a few of our favorites: Startable : A blog penned by Jones of OfficeDrop which focuses on the early stage VC and angel environment and the Internet start-up market. Venture Hacks : A good source for fund-raising advice that also includes a list of active angel investors. StartupCFO : A source of advice from a veteran CFO. VC Ready Law : A blog with good resources for entrepreneurs looking to raise capital. Angel Capital Association : A great resource for understanding what an angel investor looks for as well as for finding angels near you. The following blogs written by investors also provide worthwhile information to capital seekers: Fred Wilson : A well-known NYC-based VC. Brad Feld : A good source on angel investing, venture capital and term sheets. Mark Suster : A VC and former start-up CEO, offers advice on raising capital and pitching VCs. Venture capital – Business – Angel investor – Entrepreneur – Investment Continue reading →

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How to Break Into the Fashion Industry

Posted on August 17, 2011 by Lauren Folino

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.” Dig Deeper: Fashion Entrepreneurs Capitalize on High-End Rentals 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. Dig Deeper: Creating a New Online Fashion-Buying Experience 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. Dig Deeper: Revamp Your Fashion Marketing Plan Business – Design – New York City – Fashion – Fashion design Continue reading →

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How to Attract Talent to Your Start-up

Posted on August 3, 2011 by Nitasha Tiku

Employees are valuable . So are referrals. That was the thought behind Meebo’s decision to offer a $5,000 reward to anyone who referred qualified potential employees to the company that launched in 2005. The only stipulation? People would only get paid if the candidates got hired. As an instant-messaging and social media service, Meebo never really had trouble finding and attracting talent. They offered employees referral bonuses, posted on job boards and committed themselves to so-called “guerilla recruiting.” But they realized, some time in May of this year, that they had 10 high-level jobs to fill and they hadn’t been using all of the resources available to them to find the best talent. They hadn’t yet reached out to their massive user network. So, Vice President of Human Resources Tom Perrault and his team decided to offer the public the $5,000 prize. “Good talent is going to make the difference in the growth of our organization and in the future,” says Perrault. “So we’re willing to pay for good talent.” The referrals the company got, especially from vendors and external partners were, in Perrault’s words, “spot on,” and the experiment was a success. The moral of the story, though, is not that you have to throw money around to attract top talent. Instead, the takeaway message for recruiting is: play to your strengths (in Meebo’s case, it’s networking), be active, not passive, and get your name out there. This guide will provide a few recruiting tips, as well as what to look for in a new hire and how to entice the best talent. How to Attract Talent to Your Start-up: Face-to-Face Interaction No matter how small the internet has made the world, experts still recommend in-person networking as the No. 1 way to recruit talent. “I’ve done a lot of placing people into positions, and I have never used a job board as a way to do that,” says Rich Sloan, co-founder of StartupNation . ‘Personal [interaction] is so much more powerful and important to me.” Start at your local Chamber of Commerce, which should list information on industry events happening in your area. Don’t stop there, though. Research local industry groups and associations. “Every type of business has their own meetings,” says Martin Zwilling, founder and CEO of consulting group Startup Professionals . “You’ll find people who know your business and are looking for opportunities.” Even if you don’t find employees at these industry events, you will at least make contacts who understand your needs and will put you in touch with other people they know. Or, you could create your own networking events, as Meebo did. Perrault says the company started scheduling Meebo meetups around the world and asking fans and users to come out to rub elbows with the Meebo staff. “We’d say, “Hey, we’re going to be in Chicago. We’re going to be in Japan. We’re going to be in New York. If you’re interested in Meebo, come to XYZ coffee shop,’” he says. At these events, they hand out cupcakes and t-shirts. Once, one of Meebo’s founders even played JavaScript bingo with people who showed up. They wanted to give guests a memorable experience because, says Perrault, “It wasn’t just about recruiting. It was about building a community, and people who show up to those things have a heightened interest in Meebo.” Even if you don’t have a huge network of people to advertise your meetups with, you can always try becoming an official Meetup group to get the word out. And don’t forget about schools and universities. Job fairs abound, so it’s wise to get in touch with career counselors at both local schools and schools that have high-performing graduates in your field to see how you can get involved. “Every university makes efforts to get interconnected with the entrepreneur community,” Zwilling says. “They have outreach programs, and the people who are involved are the people who will find you interns and people who will be graduating soon.” Meebo judges and sponsors programming competitions at schools like MIT, Stanford and Berkeley, so they can see firsthand where the real talent is. Dig Deeper: How to Improve Your Hiring Practices How to Attract Talent to Your Start-up: Use the Internet Wisely No one wants to sift through endless responses from a job board listing. You may find the right candidates in the end, but you’ll waste precious time separating what Perrault calls “the weak from the champs.” This is not to say, however, that you can’t find good talent for your start-up online. In the era of social networking, there are tons of sites dedicated to matching qualified applicants with the right employers, including Startupers , VentureLoop and Startuply . You can even try InternshipIN to find people while they’re still in school. Make sure, when you register for these sites, that your profile reflects the spirit of your company. That goes for your Facebook presence, too. If your business is casual and fun, you’ll need people who are attracted to that type of environment, and your time will be best spent if you find these people from the very beginning. Dig Deeper: How to Use Social Media as a Recruiting Tool How to Attract Talent to Your Start-up: What to Look For “There are certain kinds of people who thrive in an environment with the risk profile and anarchy of a start-up,” says Sloan. “Start-ups demand great working relationships. There can be no issues.” This means the cultural fit is equally as important as what’s on a person’s resume. Zwilling recommends looking for people who are results-oriented, people who can tell you what exactly they’ve done in their careers. As you probably know already, responsibility gets pretty evenly distributed in a start-up with a small staff. You need to know that people can produce when given that responsibility. “I hear a lot of people talk about what their job description is, but I’m looking for results,” Zwilling says. He also recommends looking for someone who is “attracted to the promise of a big win.” The road may be rough at first, but someone who’s ready to see your business through and can tell you why it’s worth it to them is someone you want on your team. If your business requires long or odd hours, look for someone whose other commitments aren’t going to prevent them from contributing. And, most importantly, you should steer clear of people who list being tired of the corporate world as one of their main reasons for applying. That doesn’t automatically mean they’re ready for the start-up world, either. Preempting these issues is key, so Sloan suggests putting all potential employees through a training session. He says, “The test period will reveal what the dynamics really are.” Dig Deeper: The New Rules of Hiring How to Attract Talent to Your Start-up: What to Offer As a start-up, you might not be able to offer top talent all the benefits and employee perks that a big corporation can, but what you can offer is the promise of purpose and independence. According to Sloan: “People get involved in a start-up for three reasons. One, they like creating, being part of something new. Two, they want to participate in the upside. Three, they want to live a meaningful life, and the closer you are to the success or failure of a business, the more meaning and purpose you feel.” Without a corporate ladder to scale, employees at start-ups can also start out with higher job titles, which can be a big incentive for driven individuals. No matter how driven a person is, though, he or she will still want to be reassured that the company will be around a few years from now. Sloan suggests being open about your financial situation, discussing your business plan and demonstrating knowledge about your place in the industry. You don’t want your new hire to face any surprises during the first few weeks. In addition to promising purpose and more important roles, many start-ups have another secret weapon to help them secure top talent: a casual and fun working environment. If you’ve got one, don’t be afraid to show it off. Meebo puts all its new hires through a three-hour work simulation, in which new hires not only get to demonstrate their skills, but they get to see how the office operates day-to-day. “If we get them in the door, we have a fighting chance,” says Perrault. “When we do the debrief, every single person says, ‘It’s so easy to see the enthusiasm of your employees, and it’s infectious.’” Dig Deeper: 10 Employee Perks We Love How to Attract Talent to Your Start-up: Always Be on the Lookout Don’t lose recruiting momentum just because you’ve filled all current positions. “Even if you don’t have an opening right now, eventually you’ll have an opening, and you need to get people interested, so by the time you’re ready, they’ll want to join you,” Perrault explains. “If you’re not recruiting all the time, you’re not doing it right.” Sloan suggests keeping a running list of all the people you meet or hear of who impress you. He calls it a ” Superstar list .” “It’s good to always keep track of outstanding people,” he says, “because you never know how or where you can plug them in.” Even when you’re not actively recruiting, you can still engage talented people in non-traditional forums. Meebo posts JavaScript puzzles on its site, and every once in a while, when someone does particularly well, Perrault’s team may contact that person to discuss job opportunities at Meebo. “It’s so clear to everyone here that recruiting is not just an HR job. Everybody here understands recruiting is the lifeblood of our organization,” Perrault says, “and that makes for a richer and stronger recruiting process.” Dig Deeper: Never Read Another Resume Meebo – Instant messaging – Employment – VentureLoop – Facebook Continue reading →

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Revitalizing the American Dream

Posted on August 3, 2011 by admin

We need more start-ups. A lot more of them. New companies mean new ideas, new approaches, new products and services, and new jobs. What’s more, in the wake of the Wall Street meltdown and the catastrophic oil spill in the Gulf of Mexico, a wave of start-ups could spark a new sense of optimism about what businesses can actually accomplish — something else this country sorely needs. We are not just talking about the fast-growing “gazelle” companies that expand at double-digit rates — though we could certainly use more of them. Nor is this solely about sparking, say, a green business boom or the creation of more tech companies or a bunch of cool new iPhone apps — though we like all of those, too. Instead, what we are seeking is a kind of rebooting of the entrepreneurial ideal — the notion that starting a company is a viable option for all Americans, regardless of where they come from. This country has long been a haven for entrepreneurs. Ten years into the 21st century, it’s time to rethink exactly what that means. Given our anemic and largely jobless economic recovery, this is more important than ever. Young companies — those younger than six years old — provide the bulk of new jobs; in 2007, they accounted for 64 percent of them, according to a 2009 survey by the Kauffman Foundation that looked at start-up formation since the 1970s. John Haltiwanger, an economist at the University of Maryland, came to a similar conclusion in a more recent study: His research found that start-ups account for only 3 percent of total U.S. employment but almost 20 percent of gross job creation. Unfortunately, creating new companies is easier said than done. The rate of business creation has remained stubbornly constant over the years. Since the early 1990s, the number of start-ups has hovered at about 500,000 a year, according to a survey by the Kauffman Foundation. This has been the case during booms and busts, whether taxes were rising or falling, and whether venture capitalists were irrationally exuberant or largely recalcitrant. Clearly, some new thinking is required. That’s what Inc. aims to provide in the pages that follow. We spent months talking to economists, entrepreneurs, academics, politicians, and policymakers about what can be done to spark a renaissance of American entrepreneurship. What we ended up with was a game plan to help revitalize the American economy. This is not just a matter for elected officials. Sure, issues such as immigration and tax policy need to be addressed. But we also need action by schools, corporations, nonprofits, investors, and entrepreneurs themselves. The good news is that you don’t have to look too hard to find approaches that work. Indeed, we discovered an entire infrastructure of programs, policies, and ideas designed to stimulate business formation. These programs need to be studied, emulated, fine-tuned, and scaled. And their leaders need to be acknowledged and brought into the national conversation about the economy. Step 1: Take Entrepreneurship Out of the Business Schools Arts and humanities and science students need entrepreneurship education every bit as much as b-schoolers. Universities as diverse as MIT and the University of Miami have created model programs for training students in the fundamentals of business formation. More programs like these should be created. Read more Step 2: Tap the Best and the Brightest Wherever They May Be Entrepreneurs from all over the world want to start companies in the United States. Our immigration policy should reflect that, by offering short-term visas to would-be entrepreneurs who are in the country on H-1B or student visas. If those visa holders create companies that create jobs, then we should offer them green cards. Read more Step 3: Our Education System Should Foster Entrepreneurship Among the Young Putting ideas into action may be the biggest challenge for entrepreneurs. Teaching youngster–especially middle-school students–how to start businesses is one of the best investments we can make. Programs such as the National Foundation for Teaching Entrepreneurship offer a good model; educators should also take small steps such as adding the biographies of great entrepreneurs to the standard curriculum. Read more Step 4: Speed the Start-up Process Most start-ups don’t need much money to get started. But that doesn’t mean they don’t need help. That’s where incubators and seed accelerators such as Y Combinator in San Francisco and TechStars in Boulder, Colorado, come into play. Investors, entrepreneurs, and city officials across the country should jump on the bandwagon. Read more Step 5: Give Manufacturers the Tools They Need to Get Started Plenty of Americans have the desire to make actual stuff, not just software. What they often lack are the tools to get their ideas off the ground. Shared manufacturing spaces such as TechShop in Menlo Park, California, can provide aspiring manufacturers with access to sophisticated prototyping equipment. We need more of these facilities. Read more Step 6: Cut College Graduates Some Slack The rising level of student-loan debt among recent college graduates may well inhibit them from starting businesses, driving grads into stable corporate jobs that will allow them to pay down their loans. The government should find a way to let college graduates who start businesses postpone loan payments for a few years while they get their ventures off the ground. Read more Step 7: Give Angel Investors a Tax Break A number of states including Wisconsin, Minnesota, and Ohio, offer angel investors a tax credit for backing early-stage ventures. More states should follow their lead, and so should the federal government. As Stephen Spinelli, co-founder of Jiiffy Lube, observes: “If I get an immediate tax credit, I get an immediate return. I know I would increase my investing if there was a tax credit.” Read more Step 8: Reward Innovation Through Business-Plan Competitions A revved-up contest economy will harness the competitive spirit to launch a wave of businesses. Programs such as New York City’s NYCApps and the nonprofit X prize should be expanded and encouraged. Read more Step 9: Cut the Incorporation Red Tape In New Zealand, an entrepreneur can register a business with one filing and be legal and legit in one day; in the U.S., it takes about six steps and six days. We need to make it easier for founders to register their start-ups. Hawaii’s approach, which involves an online step-by-step guide to registering a new business, should be adopted across the country. Read more Step 10: Pass an Energy Bill, Already Markets–and investors and entrepreneurs–abhor uncertainty. So let’s get serious about the emerging energy economy by creating an actual energy policy. Only then will companies be able to make informed investment decisions. Read more Step 11: Revamp the SBIR The Small Business Innovaton Research Program is a good idea that unfortunately supports a small number of companies that seem to excel only at getting SBIR grant money. The government should revamp the agency’s mission so that it provides seed capital and contracting opportunities to younger companies, and not just small companies. While we’re at it, let’s rename it the New Business Innovation Research Program. Read more Step 12: Grow Local Investment Communities at the State Level It’s foolish to try to duplicate Silicon Valley, but smart governments can do a lot to lure investors to their states. Since 1993, for example, New Mexico has committed funds to venture-capital firms with the requirement that they open an office in New Mexico and pledge that investments equaling the amount provided by the state were made in state. The results have been encouraging, and suggest that other states should nurture local VCs. Read more Step 13: Bring Government into the 21st Century Government entities have more resources–generally in the form of data–than officials realize. They need to follow San Francisco mayor Gavin Newsom’s lead and hand that raw material over to entrepreneurs. Read more Step 14: Fund Big Science As a percentage of gross domestic product, funding for scientific research has dropped from 2003 levels. What’s more, the federal contribution to R&D is now below 1 percent of GDP, a commonly accepted minimum goal for economically developed countries. Meanwhile, our global economic competitors are seizing the opportunity. We should reverse course, and fast. Read more Step 15: Stop Enforcing Noncompetes Midcareer executives are a rich source of entrepreneurial talent. But studies indicate that in states and in industries where noncompete agreements are commonly enforced, workers are forced to make career detours, finding their next positions outside the industry in which they had expertise. Noncompetes make it hard for people to start companies, and hard for start-ups to attract seasoned talent. Let’s follow California’s lead and stop enforcing noncompetes nationwide. Read more Step 16: Bank the Unbankable With Microfinancing Over the past few years, many mainstream banks have beefed up loan requirements or significantly cut back on small-business lending. Nonprofit microfinance lenders have come to play an ever more important role in bridging the funding gap. Cities and states should embrace these kinds of programs. Businesses that seem unbankable are often anything but–if you know what to look for. Read more It’s difficult, if not impossible, to say how many new companies Inc.’s 16-point plan would help create. We went over our proposals and performed some back-of-the-envelope calculations and estimate that implementing these ideas would spur the formation of at least 300,000 additional start-ups over the next decade or so. The number, we admit, is speculative. But blue-sky thinking is fine with us. The point is that the old models are no longer working. We need bold thinking about how a new wave of entrepreneurship can transform the American economy, spark innovation, and provide new jobs, new vibrancy, and new opportunities. That’s where you come in. What do you think of our plan? Is there anything missing? What do you think needs to happen to make this country more start-up friendly? We want to hear from you. Please post a comment below. United States – Business – Venture capital – Entrepreneur – Education Continue reading →

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10 Ways to Finance Your Business

Posted on July 29, 2011 by Nitasha Tiku

Finding financing in any economic climate can be challenging, whether you’re looking for start-up funds, capital to expand or money to hold on through the tough times. But given our current state of affairs, securing funds is as tough as ever. To help you find the money you need, we’ve compiled a guide on 10 financing techniques and what you should know when pursuing them. 1. Get a Bank Loan Lending standards have gotten much stricter, but banks such as J.P. Morgan Chase and Bank of America have earmarked additional funds for small business lending. So why not apply? Read more on what you need to know about filling out a loan application . 2. Use a Credit Card Using a credit card to fund your business is some serious risky business. Fall behind on your payment and your credit score gets whacked. Pay just the minimum each month and you could create a hole you’ll never get out of. However, used responsibly, a credit card can get you out of the occasional jam and even extend your accounts payable period to shore up your cash flow. Read more on financing your business with a credit card . 3. Tap into Your 401(k) If you’re unemployed and thinking about starting your own business, those funds you’ve accumulated in your 401(k) over the years can look pretty tempting. And thanks to provisions in the tax code, you actually can tap into them without penalty if you follow the right steps. The steps are simple enough, but legally complex, so you’ll need someone with experience setting up a C corporation and the appropriate retirement plan to roll your retirement assets into. Remember that you’re investing your retirement funds, which means if things don’t pan out, not only do you lose your business, but your nest egg, too. Read more on financing a business with your 401(k) . 4. Try Crowdfunding A crowdfunding site like Kickstarter.com can be a fun and effective way to raise money for a relatively low cost, creative project. You’ll set a goal for how money you’d like to raise over a period of time, say, $1,500 over 40 days. Your friends, family, and strangers then use the site to pledge money. Kickstarter has funded roughly 1,000 projects, from rock albums to documentary films since its launch last year. But keep in mind, this isn’t about long-term funding. Rather, it’s supposed to facilitate the asking for and giving of support for single, one-off ideas. Usually, project-creators offer incentives for pledging, such as if you give a writer $15, you’ll get a book in return. There’s no long-term return on investment for supporters and not even the ability to write off donations for tax purposes. Still, that hasn’t stopped close to 100,000 people from pledging to Kickstarter projects. Read more on using Kickstarter for business . 5. Pledge Some of Your Future Earnings Young, ambitious and willing to make a bet on your future earnings? Consider how Kjerstin Erickson, Saul Garlick and Jon Gosier are trying to raise money. Through an online marketplace called the Thrust Fund, the three have offered up a percentage of their future lifetime earnings in exchange for upfront, undesignated venture funding. Erickson is willing to swap 6 percent of her future lifetime earnings for $600,000. The other two entrepreneurs are each offering 3 percent of future earnings for $300,000. Beware: the legality and enforceability of these “personal investment contracts” have yet to be established. Read more on trading future earnings for funding now . 6. Attract an Angel Investor When pitching an angel investor, all the old rules still apply: be succinct, avoid jargon, have an exit strategy. But the economic turmoil of the last few years has made a complicated game even trickier. Here are some tips to win over angel interest: Add experience: Seeing some gray hair on your management team will help ease investors’ fears about your company’s ability to deal with a tough economy. Even an unpaid, but highly experienced adviser could add to your credibility.Don’t be a fad-follower: Did you start your company because you are truly passionate about your idea or because you want to cash in on the latest trend? Angels can spot the difference and won’t give much attention to those whose companies are essentially get-rich-quick schemes. Know your stuff: You’ll need market assessments, competitive analysis and solid marketing and sales plans if you expect to get anywhere with an angel. Even young companies need to demonstrate an expert knowledge of the market they are about to enter as well as the discipline to follow through with their game plan. Keep in touch: An angel may not be interested in your business right away, especially if you don’t have a track record as a successful entrepreneur. To combat that, you should formulate a way to keep them in the loop on big developments, like a major sale. Read more on finding an angel investor . 7. Secure an SBA Loan With banks reluctant to take any chances with their own money in the wake of the credit crisis, loans guaranteed by the U.S. Small Business Administration have become a hot commodity. Indeed, funds to support special breaks on fees and guarantees on SBA-backed loans have run out a number of times. And while SBA-backed loans are open to any small business, there are a number of qualifications, including: Under law, the SBA can’t guarantee loans to businesses that can obtain the money they need on their own. So you have to apply for a loan on your own from a bank or other financial institution and be turned down.In order to qualify as a small business, your firm needs to meet the government’s definition of a small business for your industry. Your business may need to meet other criteria depending on the type of loan.After determining that your business meets the qualifications, you need to apply for a commercial loan from a financial company that processes SBA loans since the SBA doesn’t provide loans directly. The bank’s qualifications can be more stringent. Read more on getting an SBA loan . 8. Raise Money from Your Family and Friends Hitting up family and friends is the most common way to finance a start-up. But when you turn loved ones into creditors, you’re risking their financial future and jeopardizing important personal relationships. A classic mistake is approaching friends and family before a formal business plan is even in place. To avoid it, you should supply formal financial projections, as well as an evidence-based assessment of when your loved ones will see their money again. This should reduce the likelihood of unpleasant surprises. It also lets your investors know you take their money seriously. You also need to seriously consider how the arrangement will be structured. Are you offering equity? Or will this be a loan? Perhaps most importantly, you need to emphasize the risk involved. Offer up a strong business plan, but remind them there is a good chance their money will be lost. It’s better to mention that upfront to Aunt Gladys rather than over Thanksgiving dinner. Read more on raising money from family and friends . 9. Get a Microloan The lack of a credit history, collateral or the inability to secure a loan through a bank doesn’t mean no one will lend to you. One option would be to apply for a microloan, a small business loan ranging from $500 to $35,000. Microloans are often so small that commercial banks can’t be bothered lending the funds. Instead of a bank, you need to turn to a microlender. a non-profit organization that works differently than banks. Microlenders offer smaller loan sizes, usually require less documentation than banks, and often apply more flexible underwriting criteria. There are a few hundred microlenders throughout the U.S. and they often charge slightly higher interest rates for loans than banks. “Microloans are really for that startup entrepreneur or an entrepreneur in an existing business facing a capital gap who needs to secure capital for new equipment or to service a contract,” says Connie Evans , president and CEO of AEO, which represents 400 mostly non-profit microlenders and microenterprise organizations. Read more on getting a microloan . 10. Consider Factoring Factoring is a finance method where a company sells its receivables at a discount to get cash up-front. It’s often used by companies with poor credit or by businesses such as apparel manufacturers, which have to fill orders long before they get paid. However, it’s an expensive way to raise funds. Companies selling receivables generally pay a fee that’s a percentage of the total amount. If you pay a 2 percent fee to get funds 30 days in advance, it’s equivalent to an annual interest rate of about 24 percent. For that reason, the business has gotten a bad reputation over the years. That said, the economic downturn has forced companies to look to alternative financing methods and companies like The Receivables Exchange are trying to make factoring more competitive. The exchange allows companies to offer their receivables to dozens of factoring companies at once, along with hedge funds, banks, and other finance companies. These lenders will bid on the invoices, which can be sold in a bundle or one at a time. Read more on financing your business with factoring . Business – Small Business Administration – Small business – Credit card – JPMorgan Chase Continue reading →

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Taking Your Green Business Idea to the Next Level

Posted on July 12, 2011 by

Starting a green business isn’t easy, but these days even the most established companies are trying to find ways to go green. The market is open to entrepreneurs with big ideas. When it comes to green business, no one has … Continue reading →

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Making Giant Leaps in Aerospace

Posted on July 11, 2011 by

By analyzing and directing future space technologies, SpaceWorks helps decide which aerospace projects should take flight and which should stay grounded. As we process applications for the 2011 Inc. 500 | 5000, we thought it would be worthwhile to shine … Continue reading →

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