Sharing Start-Up Advice

Women’s Entrepreneur Event – Sharing Start-Up Advice

At the Entrepreneur Center’s Women’s Coffee Series, I was interviewed by Beth Chase, CEO of C3 Consulting. Women entrepreneurs and those considering starting a business asked some interesting questions during and after the session. Below are my favorites, along with my answers.

Q. The vast majority of start-ups fail in the first five years. As the founder and president of Lovell Communications, when did you feel like you could relax and know your business was going to make it?

A. This is our 25th anniversary, and sometimes I still wake up in the middle of the night in a cold sweat. But at the end of our fifth year, I was so happy to be “over the hump” that I had stood on my desk and had my photo taken. I knew the odds, and it was time to celebrate.



Q. How would you describe your leadership style?

A. Evolving. It’s important to lead by example, but I think it’s really critical for leaders to constantly learn and evolve, because the nature and the needs of the workforce change. Frankly, in my youth I was probably too impatient and fiery. I think I have finally figured out a way to back off a little without “losing my edge.”

Q. What’s your greatest fear?

A. Losing my edge.

Q. What are you most proud of as it relates to the business you started?

A. Many times people have used one word to describe the talent we have at Lovell Communications, and I am most proud of that word. The word is, “smart.” I love that brand.

We had a good time at the meeting sponsored by the Entrepreneur Center; the meetings are monthly and open to anyone. For a schedule of speakers call the EC or review their website. They have some cool stuff over there.

by Paula Lovell 

Don’t kill your startup. Build your team. Train your team. Then let them go.

Don’t kill your startup. Build your team. Train your team. Then let them go.

Whether you’re a male or female entrepreneur, starting a company feels a lot like giving birth. You went through the planning, the pain, the emotional roller coaster of fear, excitement and anxiety and, months later, you came out of it stronger than ever.

Fast forward a year or two past the launch. Your startup is a teenager, nearly ready to step into adulthood. It has full-time employees, a 1-800 number, maybe even a blog. There’s just one problem: You’re still cutting the crusts off your startup’s sandwiches. That is, you’re still fielding phone calls from clients, working hands-on with the product, probably even writing the blog yourself. You’re babying your startup by working in the business instead of on the business.

More than likely, it’s because you’re too afraid to let go. But if you keep treating your business like a baby, it will keep acting like one — in the form of infantile profits, sophomoric growth rates, underdeveloped vendor relationships, and an overall juvenility that will cripple your ability to accomplish long-term goals.

Fortunately, there’s a solution for this: Cut the cord … as in, the umbilical cord.

But how do you let go of the fear that’s tethering you to your business?
1. Create — and hand off — a systems manual.

The first step is to facilitate the evolution of your company from a clumsy, awkward, pimply-faced teen into a capable, debonnaire young adult. Create systems for each aspect of your business so that new employees can step in and quickly take over those roles. It’s easier than you’d think.

Walk through each process, from start to finish, and write down every step. The number of steps can range from four or five up to 100 or more for each aspect of the business. This should include everything you currently do, from direct client interaction to press releases and everything in between. Just make sure you document every last piece of the puzzle.

Congratulations, you’ve just created a systems manual. Now hand it to someone else and never answer the front office phone again … ever.
2. Hand-pick and personally train your leadership team.

OK, so “handing it to someone else” might be an oversimplification. Once you have your systems documented, the next crucial step is trusting others to undertake those responsibilities. Like a 20-something learns how to do laundry, pay bills, and survive away from mom and dad’s basement, your startup needs to learn how to run itself.

That means you have to let go of the day-to-day operations.

Letting go can cause emotional discomfort and logistical friction, but the end game is well worth it if you have the dedication and focus to continually improve on your systems. To do that, it will help if you train (and possibly hire new) individuals who will be taking over the most key functions of the business, e.g. marketing, client-care, development, etc. This will be your leadership team.
3. Give your leadership team the autonomy to develop their own systems.

Once you have a team in place, they can handle all of the subsequent hiring, training, and creation/implementation of new systems. Over time, they’ll need to bring even more high-quality people into the operation as your systems continue to evolve and expand. These new team members, like the original leadership team, will create and implement systems of their own.

Essentially, it’s an intelligent design/watch-maker scenario. Build a regular wristwatch, and you’ve got a nice timepiece on your wrist. Build a wristwatch that’s smart enough to build more wristwatches, though, and you’ve got a self-sustaining business.

Your leadership team will report directly to you with regular status updates, as well as information regarding important new matters. That should help curb your anxiety over letting go of the day-to-day operations.
4. Test your team by taking a short sabbatical. (Really.)

Once your startup is, to quote the movie Swingers, “all growns up,” you’ll find yourself with a lot more time on your hands. The true test of your systems comes when you can step completely away from the business for a month and come back to a more profitable, more successful company than when you left.

(Note: As a word of hard-earned advice, you might want to start with a week or a single day and then build up to a month-long hiatus.)
5. Congratulations — you can now run your business strategically.

Now you can finally afford to look at the big picture. You can come up with ideas for long-term growth, supplemental revenue streams, new partnerships, and other big-picture ideas that you never would have had time to think through had you still been writing your company’s blog.

You’ll be amazed at what new things you can accomplish when you let go (at least partially) of what you’ve already achieved and focus on what’s next.

by Council, Nick Friedman

The 3 Jobs Your Start up Should Outsource

The 3 Jobs Your Startup Should Outsource

If you’re running an early-stage startup, chances are there are some knowledge gaps in your core team. You may be strong on the technical side or a product whiz, but what about financial strategy, administration, HR? Are you prepared to manage the day-to-day of your startup, from recruiting new talent to bookkeeping to financial planning?

If you have a knowledge gap within the ecosystem of your organization, you need to fill it. But your in-house startup team needs to focus on developing your products and service, creating partnerships, and earning revenue. Your internal resources should be focused on your core competencies, not on these side tasks.

So, what should you do? Outsource — to professional consultants or groups.

The best plan is to outsource whatever services you can so as to save on the highest business costs of all — staffing costs — while getting the support you need and the assurance that these functions are being taken care of by professionals.

Specifically, you can outsource the following 3 functions:

1. CFO: If your company has closed a seed round of funding or is earning more than $250K per year, you need a CFO to handle your financial strategy and run your accounting team. Even if you’re not yet funded or earning significant revenue, you may still be in need of CFO services. For example, if you’re in high-growth mode or have a lot of activity or expenses, you definitely need a financial professional to oversee your financials.

Depending on your needs, a consulting CFO may be able to help with financial projections, cash forecasts, operating budgets, financial plans, pricing, reporting, debt management, M&A, equity and debt negotiations and liquidations. Overall, CFOs help you with business planning, providing your business plan with essential rigor. Your business is creating a product or service; finance is not your business. Look for a professional CFO who has experience working with startups.

2. Accountant: If your financial status doesn’t warrant hiring a CFO, you still need financial support; at the very least, you’ll need help with your day-to-day accounting and regulatory compliance. Outsourcing your bookkeeping to the right firm will give you the support you need for cash management, AP/AR, financial close and taxes.

You can also hire a consulting group to provide accounting support on a project basis. So, whether you need help with audit preparation or generally accepted accounting principles (GAAP), your accounting partner can give your accounting issues the attention they need — so you can focus on other things.

3. Human Resources: Any entrepreneur can attest to the fact that HR can be a total time suck. From recruiting to managing personnel issues, from compensation to benefits, from payroll to employee policies and procedures, human resources management can take over your entire schedule. And HR costs include much more than wages — all HR functions, while non-revenue driving, have an associated cost. Outsourcing your HR functions is definitely a cost as well, but when you calculate it out per employee (and figure on the invaluable savings of staying in compliance) it becomes clear that this is a necessary business cost.

While your company is in its early stages, it’s essential to get support, but only as you need it. To outsource doesn’t mean you just hand over a function and forget about it. You’ll still want to be apprised of all aspects of your startup; hiring the right consulting groups will insure that you stay informed.

Remember, you don’t outsource to make a service disappear; you outsource to reduce your cost structure and keep your internal resources focused on your business. When you outsource necessary functions on an as-needed basis, you can concentrate your internal team efforts where they are most needed: growth. And the companies you hire will help you stay on track as your company grows to the next level.

The Story of an Accidental Young Entrepreneur

The Story of an Accidental Young Entrepreneur

An accidental entrepreneur, that's what I call myself when people ask how I started my own art/craft show and event planning business. Never would I have imagined going into business for myself at the age of 25. What started off as a passionate hobby of crafting, accidentally evolved into a full time job. To fully understand where I'm coming from, maybe I should start from the beginning.



Growing up, I attended a variety of art and craft events with my mother on the weekends. It was definitely a bonding activity we did together for "just the girls," as I grew up in a household with two older brothers. As I got older, I should have noticed my entrepreneurial spirit would end up being my life path. At 10-years-old, I would go around the house trying to sell pencils to my family members for 10 cents. Then, in high school, I would go door-to-door offering to paint addresses on the curbs of the neighbor's homes for $10 per house, a business I inherited from my older brother who just left for college at the time. Later, in high school and college, I held various jobs with sales incentives, and won nearly every sales contest. There was just something about the thrill that made me want to succeed and take on a challenge and lead the way. Funny that at the time I didn't see the entrepreneurial signs. But it was only a matter of time before we crossed paths.



After graduating college in 2008 with a degree in Communications and an emphasis on Public Relations, I worked at a couple of ad agencies specializing in event planning, social media and public relations. On the side, I also began taking cake-decorating classes at a local craft store to feed my creative energy. Upon completing the courses, I came up with the idea to sell my items at local arts and craft shows for fun (again that unknown entrepreneurial drive). Not to mention, being 24 at the time, I could use any extra income I could get living on a Ramen Noodle diet fresh out of college.



As I started to attend these shows, I noticed there was a large generation gap with the products being sold, and what appealed to me vs. the veteran craft scene attendees and crafters. It was only a matter of time before the entrepreneurial wheels in my head began to turn. I began to toy with the idea of starting a new generation of art and craft events, focusing on unconventional, funkier and out-of-the box items. Basically, a show that would wipe away the stereotypical stigma of arts and craft shows being focused on potholders, stockings and doilies. Thus, I launched my first show shortly after my 25th birthday in June of 2011, known as the Avant-Garde Art & Craft Show. The first event featured 45 eclectic vendors I had found through the power of social media, Etsy and recruiting at local handmade events.



The shows were a hit, featuring items such as: vases made out of recycled light bulbs, hand-grown herbal tea, jewelry from upsycled vintage finds, photography that looked like letters of the alphabet, home décor items, including jewelry holders made out of driftwood and wire, and much more. I quickly found as the show gained momentum, the demand and interest in the Avant-Garde show line grew. What started with 45 vendors quickly has grown to more than 135 per show in less than a year. On top of that, we were receiving anywhere from 500-1,200 customers per show, and my vendor lists grew from about 100 vendors to over 2,000 in this same time period. I quickly began to realize there definitely was a market for this, and I was excited. It was also thrilling to be able to combine my love of the arts with my event planning, social media and public relations background. Because of that, I was able to take these shows and begin to transform the local arts scene in my community.



While the process was exciting, moonlighting as an entrepreneur while working a full-time job during the week was definitely trying. My family would actually joke that I worked two full-time jobs, which actually was pretty true. Eventually something had to give, and in April of 2012 it did. After recently landing the cover of a major local magazine for their arts and entertainment issue, I was brought into the office of my-then advertising job and was told by the owners that they needed someone 100 percent committed to the agency. It was their fear that I wasn't, as my side job was taking off and at times, taking time away from my fulltime job. I was fired on April 24, 2012.



At the time, I was devastated, especially never having been fired from a job, and especially because I wasn't planning on losing my job or going solo for at least few years, if at all. It was that night, after having a good ugly cry (as I like to call it), I decided that I was going to pursue this dream and see where it took me. I figured, I'm in my 20s, I'm not married, I don't have kids, I already have a great thing going, if there is anytime to do this, it's now. So I did.



Looking back on it, losing my job was the push I needed to fly from the nest and spread my wings. Without that, I could have missed one of the greatest life adventures and opportunities I've experienced to date. Who is to say I would have never left my day job, and left behind my dream of truly pursuing a career in what I love? To this day, I may never know, but the opportunity that was handed to me that day -- or rather forced upon me -- has been the best I have ever experienced. I can take something I'm passionate about, designate my own hours, work from my home office, and also help others achieve their own goals of selling their items and launching their own businesses.



I'm still definitely a start-up, officially full time since that fateful day in April, and I still have so much to learn. I'm a one-woman show doing everything from logistics, blogging, social media, public relations, managing my books, coordinating with vendors, recruiting vendors and everything in between. I'm fortunate enough to be able to support myself financially with this new career, and have the privilege to be able to work with amazing talent each day.



In addition, I also have the ability to support local charities and give back to the communities surrounding me. From each event that is held, I donate a portion to local non-profits, to help keep money in local businesses and stimulate the economy. A list of supported charities and funds raised can be found at the Avant-Garde Art & Craft Show website.



Overall, my goal is to continue to thrive and grow as a young entrepreneur and evolve my brand. The doors of opportunity that have opened since founding the Avant-Garde Art & Craft Shows occur each day. I've since launched Rebecca Adele Events, a company that specializes in event planning, social media and public relations. I've also learned that asking for help is okay. I've recently brought on an intern, and have a great group of friends and mentors that I turn to for advice when I can't make up my mind on something, or just need someone to listen.



I've never been a numbers person, so hiring a great accountant to triple check my work has also helped tremendously -- something I recommend to anyone who is starting a business. I've also joined Ladies-who-Launch, a networking organization for female entrepreneurs. This has also been a great learning tool and allows me the opportunity to meet like-minded women entrepreneurs. I also make it a point to regularly read books on female businesses, start-ups and the industries in which I work. Each week, I also make it a priority to set aside an hour to read online articles that are relevant to both of my businesses to stay up-to-date and relevant on industry trends.



It really is amazing how far I've come in even just a little over a year. Prior to being a full-fledged entrepreneur, I always thought that I would continue in my career path working at an advertising agency doing event planning, social media and public relations for someone else. I actually used to say I would never want to work for myself because of the stress and responsibility that comes with running your own business. My tune has definitely changed. While it can be stressful, I've actually come to learn that I do my best in leading and making executive decisions, rather than being told how to do something and working under someone else. Paired with the fact that I get bored in doing the same thing every day, working with different vendors at the art shows, and different clients in my event company, allows me the flexibility to be as creative as I want in my day-to-day job. For that reason alone, pursuing my career as a young entrepreneur is something that I would never change, even if it was an accident!

The Future of Jobs

The Future of Jobs

We need jobs in America, which means we need to unleash our entrepreneurs. Companies less than five years old have accounted for all of the net job growth in our country between 1980 and 2005. Our job creators aren't corporations, or government, or even small businesses. They are the founders of high growth startups. Creating millions of jobs means having thousands and thousands of new entrepreneurs taking risks and persevering past obstacles to create many more successful startups.

The formula seems simple. And yet there's a paradox. The jobs these startups are creating aren't like the jobs they're replacing. The single greatest challenge facing startups across America today is that they cannot find enough talent fast enough to grow to their potential. We have tens of millions of Americans unemployed and underemployed and yet the most vibrant businesses in our economy are starving for people to hire. What is going on?

The entrepreneurs building our high growth startups aren't looking to hire workers. Instead, these entrepreneurs want to build their companies with more entrepreneurs. They need team members who are motivated more by upside than salary, who are continuously learning new skills without being sent to training, who have sophisticated knowledge of the latest technologies, and who identify fuzzy, unstructured problems on their own and then solve them without being told what to do. In short, they need people who can get shit done.

The paradox is this. We need entrepreneurs to create the jobs our country needs. And yet the faster this occurs, the faster we shift from industrial economy jobs to these new entrepreneurial jobs, which many American are unprepared to fill. Whether we like it or not, in some elemental way, we're all going to have to become entrepreneurs.

Or perhaps I should say we're all going to have to become entrepreneurs again. Our revolutionary founding fathers built the greatest startup in the world. The pioneers who conquered the land set out, took risks, and wagered their prosperity and lives on their ability to produce. Entrepreneurship is central to the arc of American history.

For the last six or seven decades though, we've lived through this historical anomaly, where we were all told that we could simply be workers. If we developed a specific expertise, followed the rules, and did what we were told, then corporations and government would insulate us from risk and ensure our prosperity.

Being a country of workers isn't working anymore. I don't believe in that compact and I think more and more Americans are becoming disillusioned as well.

Change is scary, but regardless of what any politician or pundit tells you, we can't go back. The industrial economy is gone, we've already blasted through the knowledge economy, and we're building the networked economy as we speak. And yet we have an education system structured around an agrarian calendar that's teaching industrial era skills. Our children are taught to memorize facts and rewarded for their ability to fill in bubbles on a numbing array of multiple choice exams. What do standardized tests have to do with the skills that our startups are desperately looking for?

Startups need people who are constantly figuring things out on their own, learning from their peers, and reaching out to mentors for guidance rather than rote instruction. It's not about whatthey know, it's how they learn, think, and communicate. And despite what many pundits say, it's not simply about STEM skills. Someone who has learned to code but cannot think is less useful to a startup than an English major who can hustle and make things happen.

As I've shared in this blog, I had a unique education, getting expelled from two public schools before high school, graduating from the Thomas Jefferson High School for Science and Technology with remarkably bad grades, and then passing up college to build two startups before I was 25. The final element of my formal education as an entrepreneur, however, didn't occur in some super cool technology hub. It occurred at an 800-year-old institution.

After leaving my startup in 2001, then watching America go through 9/11, I had something of a quarter life crisis. I had a deep sense that our country was moving in dangerous directions, but I lacked the tools to explain and defend those positions. I began studying the big ideas of prior generations. While I was surfing the web at 3 a.m. one night, I wandered to the Oxford University website. In September 2002, I packed up and headed to England to study philosophy, politics, and economics at St. Catherine's College, Oxford.

Oxford was an intellectual revelation. There were no classes. Lectures were more a suggestion than a requirement. Each week for the next three years, I'd receive a paradoxical question and a list of books longer than I could ever read in a month. I'd absorb as much as I could and sit around in the pub debating the ideas with my friends. Then I'd show up for a one on one meeting with my tutor with a 2,000 word essay in answer to the question. My tutor would beat the snot out of my argument for an hour and send me off with another question and another list of books.

At Oxford, my tutors were upfront about the fact that they considered it irrelevant what facts I knew when I left. Rather, their job was to teach me how to learn rapidly, how to think critically, and how to communicate effectively -- and then leave me to spend the rest of my life filling my mind with knowledge. I had no meaningful exams until the end of my three years. At that point, I sat with a paper and pencil for eight three-hour essay exams that tested my ability to think in the areas I studied. The irony of Oxford is that by spending less time in the classroom with less exams, I rounded out the skills necessary to excel in the emerging economy. Several weeks after I put my pencil down on my last exam I found out that I finished with a First Class degree.

The Thomas Jefferson High School for Science and Technology gave me a tremendous foundation in technology, but delivered through a numbing array of standardized tests that were the antithesis of critical thinking. Rowing taught me discipline, the endurance of discomfort, and how to lead a team, but it was only a sport. Raising $1 million at 19 and building a startup taught me how to hustle and get shit done, but not how to really impact the world.

It was Oxford, though, which brought it all together and taught me to synthesize, analyze, think in a structured manner, and share the results with others in a compelling way. Of course, there's a reason that Oxford produces more academics than startup founders. The fact that exams still occur with paper and pencil is an indication of how much innovation has pervaded the culture.

To really build a strong foundation for America, it's not about jobs per se. As we unleash our entrepreneurs, we can create plenty of awesome jobs. The real challenge is to educate our children for these jobs. A strong America requires teaching children to challenge authority. It requires making technology central to everything they do. It requires emphasizing the ability to learn, to think, and to communicate rather than regurgitating facts and algorithms on standardized exams. It requires STEM and liberal arts and social sciences and fine arts taught holistically rather than forcing our children into industrial era silos. We need to borrow the best ideas from around the world--from ancient universities to modern charter schools to Khan Academy -- mix them together with strong emphasis on letting students learn by doing and then experiment until we find the models that work for our emerging economy.

We have no time to waste reinventing how we educate our children, but we also have to help those already in the workforce, who are struggling to adapt to the rapid changes in our economy.

Luckily you can already see what the future looks like. The really interesting institutions preparing people for the jobs of the networked economy aren't schools or universities or even community colleges. Instead, entrepreneurs themselves are stepping into the void. If you want to see the future of learning, go to 500 Startups, TechStars, Udemy, General Assembly, Code Academy,Hungry Academy, or the Boston Startup School. None of these existed a few years ago. None of them require you to rack up tens of thousands of dollars in debt. And all of them teach you not only skills, but more importantly how to get shit done.

5 Steps for Managing Disaster Recovery for Your Business

5 Steps for Managing Disaster Recovery for Your Business

Once the worst of a natural disaster is passed, the struggle for survival may have just begun for your business if your operations have sustained damage. From filing insurance claims to keeping customers informed, here are five steps to take after you count your blessings.

1. Contact your insurer immediately. Inform yourinsurance company before cleaning up any damage so you can get an accurate estimate. After a disaster, many insurers have a quick-response team that will come out to survey the situation. If your business cleanup includes removal of items such as water-damaged merchandise, flooring or insulation, keep it all. The damaged materials are all evidence of the impact of the disaster on your business.

2. Seek assistance. The Small Business Administration may be able to provide some financial help. Through the agency's Office of Disaster Assistance, any business, regardless of size, that is located in a declared disaster area can apply for low-rate, long-term loans to help recover from physical damage. Even if your property was not damaged, you can apply for a working capital loan from the SBA to relieve the economic injury caused by the disaster.

Eligible businesses may borrow up to $2 million for up to 30 years to repair and replace property, machinery and inventory at a 4 percent interest rate. For uninsured or under-insured losses, the loan may be increased by as much as 20 percent of the total amount of disaster damage to protect the property against future disasters of the same type.

The SBA can also help you repair your home – renters and homeowners can borrow up to $40,000, also at 4 percent for up to 30 years to repair or replace personal property damaged or destroyed in a disaster, and up to $200,000 for home repairs.

More information about these loans is available on the SBA website. 

3. Stay on top of communication. Once the worst is over, let your customers and clients know what’s happening. Update the home page of your company’s website to let customers know if your ordering, shipping or inventory is affected, and if or when you expect to be open for business, also consider sending a message of well wishes and concern with a status update on your company’s Facebook or Twitter pages.

Be honest about what is happening, how long you except it to be before you are running at full capacity, and give a detailed as possible operating plan for your recovery period. People will realize that yours is a company that knows how to deal with its problems, and then you will have their trust.

4. Don’t count on FEMA for quick help. If your business is in a federally declared disaster area, federal aid will be available, but it can move slowly, especially when many claims are being filed. It might provide homeowners with temporary shelter and eventual money to rebuild. But for a business owner, your private insurance or an SBA loan will be your best chance at receiving money fast.

5. Create a backup plan. Your company should have a business continuity plan in place already, but if not, now is a good time to get ready for the next time a disaster of any kind affects your business. A business continuity plan outlines how your company will respond to a disaster, including such crucial questions as: How will we keep filling and tracking orders? If vendors aren't operating, do we have a backup? What if employees can't make it to work? To get started, or update your current plan, check out this Business Continuity template.

If you don’t already, also consider putting a data recovery plan in place for your most important files. Research data recovery vendors, and cloud services now, while the topic is fresh in your mind, so you’ll be prepared the next time disaster strikes.

5. Beef up your insurance coverage for the future. Many businesses aren't protected in the event of an earthquakes or flood -- especially if they aren't located near fault lines or floodplains. Businesses should note that many standard policies don't even cover wind damage from a hurricane or utility disruptions from a storm, so review your policy's fine print to understand your coverage.

You may want to consider adding a rider or a separate policy to cover losses from severe weather that aren't included in your existing insurance policy.

BY KATHLEEN DAVIS

Set a New Company Up for Success in 5 Ways

Set a New Company Up for Success in 5 Ways

Starting your own business forces you to face your limitations, test out every idea in the real world and accept that sometimes what looked great on paper can be downright difficult to execute. But if you can, you should try your hardest to land an early success. After all, doing so can help boost your credibility, encourage potential investors and give you some money to build other businesses down the road.

So the question is, what can you do to encourage a more successful outcome? Here are five ways to set up your new venture for success:

1. Set low expectations. You may believe that your new product will change the face of the industry, and it very well might. But if you start talking up those expectations even a moderate success won’t measure up. By starting with a conservative approach, a modest success will be noticed and you will be perceived as even smarter than you are.

2. Start local. By developing and testing your idea or product in a local environment, you have substantial advantages from the start. Marketing and distribution costs will be much lower. Your most powerful network — that is, people you know — will be engaged, and you can do any polishing you need to do before spending big bucks on an untried process in a larger market. It’s also easier to get publicity locally, and, with luck, the buzz will spread as your company expands.

3. Grab low-hanging fruit. Pretty much every product or service has at least one super-strong potential buying group. Focus your efforts on that group with everything you’ve got. Market, distribute and support them, and, chances are, your sales will soar. That win will encourage you to expand to more difficult buyer groups. The other advantage to this approach isn’t particularly fun to acknowledge, however. If the low-hanging fruit doesn’t drop into your hand the way you expected, maybe there are problems with your business that you haven’t foreseen. You can find that out before you do a full market push.

4. Start with a single, likely client. Suppose your product would be a great fit for a variety of retailers such as Costco, Sam’s Club, Walmart and Target. It might be tempting to go after all of them at once, hoping that one will pop. This choice scatters your energy, and, if you fail, you have nowhere to go. Instead, choose only one possibility; the one you think is most likely to say yes. Visit the stores, determining where your product would belong and how much shelf space would be needed. Research their customer base and determine which customers would be the most interested and why. Consider options such as Costco’s road shows where you don’t get permanent space but instead have a week to sell what you can — moving from one location to another. Put together a presentation that shows you did your homework. Your chances of a yes are improved by this approach, and, if the answer is no, find out why and use that feedback to hone your presentation to selection No. 2.

5. Partner with another successful firm. Suppose a complementary and not competing company has the visibility and attention you want for your company. See if you can come up with a temporary partnership that will allow you to benefit from their strengths. For example, if your company offers a revolutionary knee brace for runners, talk to a local shop that caters to that group about offering a presentation on your new product. Consider giving the shop owner 50 percent of your sales dollars. It may be a wash for you in terms of revenue, but you’ve gotten your product in front of real customers.

BY ADAM TOREN

Three Traits of Successful Entrepreneurs

Three Traits of Successful Entrepreneurs

Sometimes when you're wondering what to do next in life, good advice can come when you least expect it — like when you're getting your hair cut.

Joan*, the hairstylist giving me a trim, mused aloud about what she was planning to do with her career. Cutting hair was just one part of her livelihood; she was also a professional caregiver as well as the owner of a rig that her husband operated. But her husband was about to retire from the road, and now they were wondering, "What next?"

Over the course of our brief conversation, in no more than the time it took Joan to cut my hair, I picked up on three attributes of her success that are helpful for any entrepreneur:

Practical. Listening to her brainstorm reminded me that successful entrepreneurs know how to keep their feet on the ground. First, they get inspired through personal observation, developing ideas from needs they see in the world around them. Second, they develop a concrete plan. They may work the plan, changing it as they go, but always with an eye towards getting a good return.

Purposeful. People with a practical outlook seek opportunities that add value, as opposed to opportunities that just seem "cool." (It's easy to forget this distinction, especially in well-established organizations.) Their focus is offering products and services that customers need and will pay for. For instance, Joan's second job as a caregiver: that's a service for which there is always a need.

Impatient. Sure, patience is a virtue in some cases. But for an entrepreneur, so is impatience. Joan is eager to make things happen so that she can continue to earn a good living. When it comes time for her husband to leave the trucking business, she will be ready with another venture. Her gumption and ambition make her impatient for success, and that drive increases her chances of getting there.

by John Baldoni

Smart move to start business in recession

Smart Move to Start Business in Recession

Starting a new business is not for the faint of heart. For those who possess the entrepreneurial spirit, though, now might be the perfect time to begin a venture.

In the midst of the worst recession in decades, it might seem prudent to postpone a launch. But there are some compelling reasons why now is actually a good time to start a business.

Beginning a venture in lean times will force the entrepreneur to pay close attention to planning, market research, cash flow and other critical issues at the heart of failures in the first five years. Tough times encourage start-ups to protect assets and invest more cautiously to avoid the “irrational exuberance” that Alan Greenspan warned would lead to financial collapse.

In tough economies, you understand from the start that you’ll need to use the first several months to position your company for success. You’ll need adequate funding to sustain a slower growth, and a more targeted approach to marketing. When the economy is booming, it’s easier to realize early success. A company that can grow early successes in a weak economy is poised to surge ahead when the situation improves.

The costs of starting a new business are lower than they have been in recent years. Many of the products and services you’ll need are available at discounted rates: professional services like accounting and legal services, real estate, office furniture, and other goods and services.

During hard times, you as a consumer are in a stronger position to negotiate favorable terms than you would be if you wait for the economic rebound.

With the presidential campaigns bringing new focus to the government’s role in business development, it seems likely that the current uncertainty in the business environment will be replaced with regulatory and tax conditions that will truly promote job growth, along with real opportunities for both new and existing businesses. If you’ve already begun laying the groundwork for a well-planned and marketable business, these policy changes could enhance your efforts with some genuine support from local, state and federal governments.

The impact of regulations on business are likely to be defined so that businesses can plan and make decisions on known conditions. As that takes effect, your business could be in position to benefit from “the rising tide that lifts all ships”.

Naturally, these hard times will require some meticulous attention to detail as you develop the plans for building your dreams and starting your business. You’ll need to be certain you have the operating capital to sustain your business and your family while you develop your customer base. And you’ll need to have a robust and realistic budget for marketing and promotion. Careful planning, adequate funding and attention to detail are cornerstones of any successful venture, regardless of the economic environment in which they are born. If you have what it takes to be successful, starting a business now could position you for greater success when the economic environment improves.
By Marianne Carlson

10 Tips When Making Quick Business Decisions

10 Tips When Making Quick Business Decisions

Making a decision based on gut feel alone is not only lazy but also likely to be a dud. However, recent books like the best seller “Blink” give the impression that you just have to rely on your instincts. For most business decisions, this approach will get you fired or drive your company into bankruptcy.

However, there are many times when you have to make a business decision quickly and when there is no more time to do a thorough study, you must be ready with an abridged but reliable process that you can depend on to come up with a sound decision. I have come up with a short list of steps to improve the chances of getting it right even if there is little time:


1. Think first how you will approach the problem. This involves several things starting with problem definition, the time frame and budget within it must be solved. Consider too what will happen if you take no action. There are some problems that are best left ignored – they may be trivial or resolve themselves in time.


2. Research the problem. Most problems have already been encountered in the past. It would be more economical to first learn what was tried in similar situations. Even if you find out that a particular approach did not work then you have one less alternative to consider.


3. Get the opinion of key people from affected departments. In your haste to make the decision you may forget the consequences on other aspects of your company’s operations. More minds on the matter may bring better alternatives. Another good consequence of getting more opinions is that you will get stronger support. You will also bear less blame if things didnot work out well!


4. Consider out-of-the-box ideas. In a crisis or if we are in a hurry, we usually fall back on just the old solutions. This may be a prudent decision since it is already tried and tested. However, this should not prevent you from exploring unconventional ideas that may be far better. In fact, if it is a crisis situation, it is usually easier to institute radical changes since it will be clear to everyone that there is no other choice to survive.
5. List down the viable options. Some people just go through the motions of listing the alternatives but neglect the effort to provide truly feasible alternatives. Usually there is only one serious option provided. This is a waste of time and will not enhance your efforts to obtain the best solution. Genuine alternatives must be brought to the table.


6. Evaluate both the pros and the cons. Very often we are so excited by an idea that we forget to examine its negative aspects. If all the people around you are “yes men”, this is very dangerous for it blinds you to the potential dangers. If it all seems one-sided, get one capable person to play devil’s advocate to balance the discussion.


7. Counteract the tendency to be loss-averse. Studies have shown that people will strongly prefer the safety and comfort of not losing 1000 pesos rather than gaining 2000 pesos. In actual practice people usually chose not losing rather than gaining double! People prefer avoiding losses than making gains; this puts the timid at a great disadvantage. Be bold enough to be objective in computing the most advantageous option.


8. Do not consider sunk costs. Sunk costs are expenses that have already been incurred and can no longer be recovered. Unfortunately, while most managers know that this is the rational thing to do, there are two major factors that hinder this logical course. The first is the emotional barrier of admitting to oneself that the previous investment which he approved was a blunder and the second, if the decision maker is an employee, is the career damage caused by having wasted company resources. Nevertheless, the best policy is to cut your losses.


9. Quantify the peso value of your alternatives. When there is little time there is a tendency to be swayed more by the number of arguments rather than its peso value. There may be only be one argument in favor and ten arguments against but if the one argument is bigger in value than all the ten combined, then it should prevail.


10. Select a decision that will be good for the long term. There are many decisions that are profitable for now but may bring on irrevocable harm later on. Examples of these are reducing the quality of products to save on costs, cutting the marketing budget, neglecting safety procedures, etc. Such acts risks destroying the company’s brands and reputation.


The steps mentioned above are just a guide to stimulate you to design your own system that is appropriate for your business and position. You should develop your own professional approach. Making a quick business decision must not mean guessing the answer.

7 Keys to Positioning Your Competitors to Investors

7 Keys to Positioning Your Competitors to Investors

Every entrepreneur should spend plenty of time thinking about competitors, and how they relate to your business, but you need to be very careful what you say out loud about them to your team, your investors, and your customers. What you say speaks volumes about how you think about your startup, how smart you are, and your personal integrity.

I’ve spent hours talking to startup founders, and heard a thousand startup pitches, and I always listen carefully to what is said (or not said) about competitors. Everyone has a view on competitors, so you will likely get some off-the-cuff questions on this subject as well. Here are some common pitfalls or traps to avoid:


1. Above all, don’t say you have no competitors. This statement is a huge red flag to investors, who will take it to mean that there is no market for your offering, or you haven’t bothered to look. Both conclusions will kill your credibility, and usually preclude any further funding interest.


2. Avoid degrading or demeaning your competitors. Talking about competitors is your opportunity to make positive statements about the advantages of your own product. For example, “Compared to product x, my solution will get the job done in half the time, and at half the price.” Don’t say “Product x is more expensive and hard to use.”


3. First-mover advantage is a double-edged sword. Being first to offer something is often used to cover the fact that you have no patent or intellectual property. Investors will conclude that you are highly vulnerable to the deep pockets of big players who will wake up and kill you when you show traction. The best defense is a dynamic product line.


4. Don’t be caught not recognizing a potential competitor. Do your homework ahead of time on all potential competitors you can find on the Internet, from industry magazines, advisors, and team members. Great momentum in a meeting can be killed instantly by apparent ignorance or bias against a proposed competitor.


5. Don’t forget to mention alternatives and substitutes. Make it clear that you have considered competition in the broadest sense, including indirect competitors and alternative solutions available. You won’t get any credibility for refusing to admit that airplanes are competition for trains. Always present a balanced and honest picture.


6. Watch the timeframes implied in comparisons. Making a big point that your competitor is missing a big feature today that you will have when you come out next year is not very convincing and doesn’t make you look smart. If it’s important, he’s probably working on it also, and has a big head start on you.


7. Competitors exist now and in the future. You can make real credibility points on this one by suggesting future competitor directions, and what you are doing to head-off these initiatives and advantages. Remember that the world is a small one these days, and international considerations, as well as technologies, are important.

Remember that investors invest in people first. They are looking for you to be smart, but present a balanced, realistic, and honest view of competitors. Trying to finesse investors who have real questions about competitors is not the way to close an investment deal, or even convince a customer to buy from you.

In the real world, you will never have perfect answers to questions about competition, because you can’t know what they might do before or concurrently with your delivery. Your challenge is convincing investors and customers that the risk of following you is less than the risk of relying on competitors. That’s a lot easier if you believe it yourself, and present a balanced view with integrity and conviction.

Marty Zwilling

3 Pieces of Startup Advice

3 Pieces of Startup Advice

I’ll tell you something that no one told me when I started up: somehow, putting up your own shingle also means putting up a sign that you’re open to advice. All sorts of people start offering their words of wisdom — experienced executives, college students, and even people who’ve never actually done anything with that good business idea they won’t tell you about, because you’ll steal it.

While people generally do mean well, their advice often misses the mark. Here are three bits of advice that I’ve received or incorporated that have never led me wrong:

1. Build from your strengths. In today’s fast-paced and crowded market, being good simply isn’t good enough. Rather than building a business that will have you cap out at “good,” take the time to assess your team’s core capabilities and build from what you can be truly great at. It’ll galvanize your team and your market, and give you early momentum so that you won’t get by merely being good. Every business mistake I’ve made can be traced back to not getting our business out of the comfort zone of our strengths.

2. Fanatically focus on your customers. Your business really isn’t about you; it’s about how you provide a solution to your customers that is worth paying for. Growth comes from serving more customers better, and the fastest way to get there is to get to know the conversation going on in your customers’ heads. Note: This doesn’t mean that your customer is always right, but it does let you know what your customer needs and values are so that you can determine how and where you’re going to serve them best.

3. Failure is necessary for learning. As frustrating as it is, we usually don’t learn as much from success as we do from failure. Fortunately for us, success is usually harder to come by, so we therefore have a lot of opportunities to learn. To be an entrepreneur is to chart unfamiliar territory, and to turn opportunities with uncertain outcomes into economic value. To do that well, you’re going to have to try some things that may not work out. But to not try at all because there may be failure is worse than trying and failing, for you learn nothing from what you don’t try. Seth Godin has been saying “fail fast and fail cheap” for a while, and Jim Collins advocates a similar approach in Great by Choice when he show that great businesses “fire bullets, then cannonballs.” Find a growth opportunity in your business and start a small experiment — a big win is absolutely worth a few small failures.

5 Entrepreneur Antidotes to Negativity in a Startup

5 Entrepreneur Antidotes to Negativity in a Startup

Throughout my career in small companies and large, I’ve always been appalled by the number of people who seem to complain all of the time. These people don’t seem to realize that they are hurting themselves, as well as other people’s productivity, and the company they are working for.

I’ve always thought that I might be overly sensitive, until I saw an old survey done by badbossoloy.com, which claims that a majority of employees spend 10 hours or more a month complaining or listening to others complain, and nearly one third spend 20 or more hours. No startup can afford that huge cost in emotional capital, as well as productivity!

In the survey, negativity is seen as an indictment of bad managers, but I believe it is also an indictment of whiners. Ten to twenty hours a month is a lot of time to waste, not to mention the indirect time lost of the listeners, and the morale impact.

What does all this mean, and how do you correct it, or prevent it in your startup? Here are some recommendations from experts for proactive and recovery actions by all parties to minimize the problem in both employee and management ranks:


Executives have to be the role model. If you as the founder, or other members your executive team are chronic complainers, the disease will spread rapidly through the rest of the organization. Don’t play the blame game, give negatively charged emotional speeches, berate employees in public, or wear an angry face at the office.


Use the hiring process effectively. Too many startups give short shrift to the hiring process, because they are too busy, don’t want to pay market prices, or have no experience. It’s actually easy to spot whiners during the interview process, by listening to them run down previous employers and not accepting accountability. Don’t hire them.


Encourage regular self-assessment. Encourage your management team and employees to always check themselves before making unsolicited comments against the following criteria: “Will this comment add value to our company, our customers, the person I am talking to, or the one I am talking about? If not, don’t say it.”


Openly reward positive suggestions. Maybe it’s time to establish or re-activate the old-fashioned “suggestion box.” Make it work by regularly handing out real accolades, as well as real money, to people who add value or reduce costs in your business. A positive can-do attitude should also be recognized in job performance feedback.


Quietly deal with people who won’t change. Some whiners have been that way all their life, and don’t know how to change their stripes. With proper counseling, they need to be moved out of your business before they do more damage. How quickly and quietly you deal with these problems will be the loudest message you can send to others.

Some people will use “honesty” as the excuse for negative and insensitive comments. In fact, the most honest and productive comments are always positive recommendations on how to fix a problem, rather than the complaint that someone or something is a problem. Even if some of your co-workers are jerks, you have no moral, ethical or legal obligation to broadcast this view.

Everyone needs to understand that complaining about salary or pay, criticizing colleagues and bosses, or vendors and customers, will generally just reflect negatively on the whiner, rather than accomplish any positive results.

The truth is that optimists lead better lives, and startups with positive teams are more successful, simply because they believe that what they are doing is going to work. Negativity also is a self-fulfilling prophecy, with an outcome that can be the demise of your startup.

Marty Zwilling

10 Keys to Real Entrepreneur Mentoring Satisfaction

10 Keys to Real Entrepreneur Mentoring Satisfaction

Every entrepreneur can learn from a mentor, no matter how confident or successful they have been to date. Even one of the richest, Bill Gates, still values his friend Warren Buffett as his mentor. Yet these relationships require special efforts on both sides to be productive and satisfying. Mentoring is not as simple as one person giving the other all the right answers.

Some of the best mentoring relationships don’t involve monetary compensation, but none are free. The first cost is networking to find a mentor who is willing and able to give adequate focus to the relationship. In any case, it is good form to offer compensation, such as a small monthly stipend, plus expenses, and perhaps a 1% ownership in your startup, to show your commitment.

From my experience, here are ten basic principles for both the mentor and mentee to remember in getting the most out of any mentoring relationship:


Good mentoring requires building a relationship first. A positive business or personal relationship between two people normally requires a high degree of shared values, common interests, and mutual respect. Remember that good relationships take some time to develop, so don’t assume that your first discussion will seal the deal.


Agree on specific objectives and time frames. Mentoring that consists of random discussions is not very satisfying for either side. I recommend one or more early discussions of mutual objectives, with a written summary of goals and expectations from the mentee to the mentor, with timeframes and milestones.


Make efficient use of time for both parties. This means being respectful and diligent about scheduling and keeping appointments, and returning emails and phone calls. Don’t attempt to multitask, or allow constant interruptions, during meetings. Book follow-up sessions, with an agenda, rather than fill time with random discussions.


Identify strengths and weaknesses early. Both the mentor and mentee should put their cards on the table, to avoid surprises later. Then both should look for opportunities to leverage strengths, and shore up weaknesses. This avoids wasted time and speculation, and provides the motivation to bring in other experts or mentors as required.


Mentor feedback must be thoughtful, specific, timely, and constructive. An important aspect of a mentoring relationship is how the mentor provides feedback to the mentee. Formulate negative feedback in a constructive fashion. Using open-ended questions that start with “how” or “what” help the mentee to arrive at their own solution.


Mentees should avoid any defensive reaction to feedback. The right response to most mentor feedback is a thoughtful question for clarification. Immediately responding with “reasons and rationale” to every feedback will be read as insincerity, and will likely end the mentoring relationship quickly.


Practice two-way communication and candid feedback. Mentoring is not a series of monologues and lectures, from either side. But candid feedback means not pulling punches when they are deserved. Both sides need to practice active listening and thoughtful questions. Constructive conflict is good.


Agree to deal with unforeseen challenges openly. The most common challenges involve time and accessibility demands on either side, or the level of help expected. Both sides need to honor business boundaries, and not stray into personal relationship issues. Agree up front on how to end the relationship if other unforeseen circumstances arise.


Celebrate successes, and deal openly with failures. This will help the learning process and build the mentee’s confidence. With patience and time, the partners should develop a good rapport and become more comfortable with openly and freely conversing with each other.


Evaluate mentoring requirements on a regular basis. The mentee, as primary beneficiary, should be proactive in making sure the review process occurs on a regular basis, perhaps quarterly. This allows for frank discussion of unanticipated changes, and the potential for discontinuing the process and declaring success.

The end of a mentoring relationship should be seen as an opportunity to review what did and didn’t work, and more importantly, to reflect on the results, so that every lesson that can be learned from the relationship is recognized.

Both the mentor and mentee should celebrate the successes, review the learning from failures, and conclude the relationship with positive feelings. To bring it full circle, mentees should now consider passing on their new knowledge and skills by entering a new mentoring relationship – as a mentor. That’s the ultimate satisfaction.

Marty Zwilling

Starting Business In The Philippines

Starting Business In The Philippines

There’s been so much good news coming out of the Philippines in recent months — three upgrades by international ratings agencies; Finance Secretary Cesar Purisima was named 2012 Finance Minister of the Year by Euromoney; the economy is forecast to be the sixth fastest-growing in the world between 2010 and 2050; there’s a new, credible peace agreement in the south; IT-BPO looks set to attain its stretch target of $25 billion in revenues in 2016; and, competitiveness is on the rise according to the World Economic Forum — that it was a bit of shock last week when the International Finance Corporation (IFC) and The World Bank announced that it’s still too difficult to set up a business here.

And it got tougher this year, not easier.

According to the IFC report, Doing Business 2013: Smarter Regulations for Small and Mid-Size Enterprises, the Philippines fell to 138 of 185 companies in the report, down from 136 of 183 companies in the previous report. Of the 10 categories, the Philippines scored more poorly than last year in seven. Particularly notable was the number of procedures to start a business — 16 — up from 15. In Malaysia, there are just three. In New Zealand, it takes a day to set up a business.

Why, you have to ask, can’t the Philippines do in three procedures what Malaysia does? Not unexpectedly, the National Competitiveness Council (NCC) took issue with the IFC report, particularly the days required to perform the 16 procedures, arguing that it takes “just” 27 days to set up a business in the Philippines, not the 36 — up from 35 — claimed in the IFC report. NCC co-chairman Guillermo “Bill” Luz added that, “‘we will continue to make changes in the (number of) days (it takes to start a business) and cut it back,’” according to one report.

“‘We have a fighting target to take that down below 10 days next year and to also drastically reduce the steps from 16 to fewer than 10 also in the coming years,’” he said. The Philippines is competing with Malaysia for jobs and investment — including in the high-stakes IT-BPO industry. Malaysia reported foreign direct investment (FDI) of $4.4 billion in the first six months of the year, compared to less than a billion dollars for the Philippines.

There are many reasons for this contrast in investment receipts, but don’t underestimate the impact of a stubborn, change-resistant bureaucracy that is loath to see any revenue opportunity pass it by — no matter the stakes involved. While Mr. Luz has his work cut out for him battling, cajoling, and pleading with the bureaucracy, the goal should not be 10 days or 10 procedures. It should be one day, and one procedure.

But there are six other urgent ways the Philippines needs to make setting up a business easier. First, the shocker. The Philippines not only has the most expensive electricity cost in Asia, it’s way too difficult to get connected to the grid, and it’s getting worse. The Philippines fell to 57 from 53 in this category. How about registering property? Not easy. The Philippines fell to 122 from 120.

And forget about getting credit. The Philippines is 129, down from 127. So bring your own cash and leverage your international banking network. But oh, that’s kind of hard for local entrepreneurs. For international investors, protecting your investment through good corporate governance is also iffy. The Philippines fell to 128 from 124. Wonder why the Philippines doesn’t have more resources available for infrastructure? The Philippines ranks 143, down from 136 in paying taxes.

Enforcing contracts is another challenge, thanks to a troubled judiciary and a toxic, litigious legal environment in which cases take decades to wind themselves through the courts. While the Philippines has a lot going for it, it’s not hard to understand why investors are shy. Even in categories the Philippines improved, its showing is poor. Resolving insolvency? 165, 5.7 years, and the most costly. Trading across borders, 53. Dealing with construction permits, 100, mostly as a result of a process that involves 29 procedures.

These results show that no matter how swimmingly things are going, there’s always something left to fix. While the administration of President Benigno S. Aquino III understandably must prioritize reforms, those impacting investment and job creation should be at the top of the list. To be fair, in many respects they have been. But the Philippines is still not addressing the bureaucracy and the roadblocks it erects to prosperity.

That needs to change.

By MICHAEL ALLAN HAMLIN

Buying a franchise

Buying a franchise

Overview

Taking on a franchise is an option worth considering for anyone who wants to run a business but doesn't have a specific business idea or prefers the security provided by an established concept.

The right franchise can give you a head start. Instead of setting up a business from scratch, you use a proven business idea. Typically, you trade under the brand name of the business offering you the franchise, and they give you help and support.

Successful franchises have a much lower failure rate than completely new businesses. However, you will still need to work hard to make the franchise a success and you may have to sacrifice some of your own business ideas to fit in with the franchisor's terms.

This guide will help you decide whether franchising is for you. It shows how you can find the right franchise, and highlights the key issues you need to consider.


What is franchising?

The term 'franchising' can describe some very different business arrangements. It is important to understand exactly what you're being offered.
Business format franchise

This is the most common form of franchising. A true business format franchise occurs when the owner of a business (the franchisor) grants a licence to another person or business (the franchisee) to use their business idea - often in a specific geographical area.

The franchisee sells the franchisor's product or services, trades under the franchisor's trade mark or trade name, and benefits from the franchisor's help and support.

In return, the franchisee usually pays an initial fee to the franchisor and then a percentage of the sales revenue.

The franchisee owns the outlet they run. But the franchisor keeps control over how products are marketed and sold and how their business idea is used.

Well-known businesses that offer franchises of this kind include Prontaprint, Dyno-Rod and McDonald's.

Other types of arrangement

Different types of sales relationships are also sometimes referred to as franchises. For example:

Distributorship and dealership - you sell the product but don't usually trade under the franchise name. You have more freedom over how you run the business.
Agency - you sell goods or services on behalf of the supplier.
Licensee - you have a licence giving you the right to make and sell the licensor's product. There are usually no extra restrictions on how you run your business.

Multi-level marketing

Some businesses offer franchises that are really multi-level marketing schemes. This is where self-employed distributors sell goods on a manufacturer's behalf. You get commission on any sales you make, and also on sales made by other distributors you recruit.

Be aware that some multi-level marketing schemes may be dishonest or illegal.

Advantages and disadvantages of franchising

Buying a franchise can be a quick way to set up your own business without starting from scratch. But there are also a number of drawbacks.

Advantages

Your business is based on a proven idea. You can check how successful other franchises are before committing yourself.
You can use a recognised brand name and trade marks. You benefit from any advertising or promotion by the owner of the franchise - the 'franchisor'.
The franchisor gives you support - usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice.
You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same territory.
Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation.
You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in the network.

Relationships with suppliers have already been established.

Disadvantages

Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor.
The franchise agreement usually includes restrictions on how you can run the business. You might not be able to make changes to suit your local market.
The franchisor might go out of business.
Other franchisees could give the brand a bad reputation, so the recruitment process needs to be thorough
You may find it difficult to sell your franchise - you can only sell it to someone approved by the franchisor.
All profits (a percentage of sales) are usually shared with the franchisor.

Should I buy a franchise?

As with any new business venture, you need to consider carefully whether you have got the right skills and attitude to run a successful franchise. You need to consider how much you enjoy managing people, selling to the public or working alone - as these are common requirements of different types of franchise. This page will help you decide whether franchising is right for you and which type of franchise plays best to your strengths.

Assess yourself

You must be prepared to sell and you will need entrepreneurial flair. A franchise gives you a business blueprint - but it won't automatically give you customers.
You'll need to work hard, probably for long hours. Do you have the necessary dedication?
Running your own business can be stressful. Think how you react to pressure.
You may be starting up in business because you want to be your own boss. If so, would you be happy with the restrictions imposed by a franchise arrangement?
On the other hand, you may want to limit your risk. You might be more comfortable with a franchise than starting a new business from scratch.

The right franchise for you

Do you like office work? Or would you prefer a business that involves physical labour or using a particular skill?
Are you happy working on your own? Or would you be good at recruiting, training and managing employees?
Do you like dealing with members of the public? Or would you prefer a franchise where you sell to business customers?
Are you weak in particular business skills such as finance? Can you find a franchise that offers the support you need in those areas?

The costs of a franchise

When calculating the likely cost of a franchise, you need to take both initial and ongoing fees into account.
Initial costs

The franchisor - the business that sells you the franchise - usually charges an up-front fee. If the franchisor relies mainly on taking a percentage of your sales revenue, rather than on a high initial fee, it is usually a good indication that they have confidence in the value of their product or service.

Your largest initial costs are usually your investment in:
premises
equipment
initial stock

You will need to establish a business entity. Although a franchisee holds a contractual agreement with the franchisor, each franchisee is an independent business - and it is this business entity that will enter into the franchise agreement. Your chosen business structure could be a limited company, partnership or sole trader - each of which will involve different costs - or your franchisor might have specific requirements. 

You usually pay a percentage of the sales revenue to the franchisor by way of a management service fee. Alternatively, you may pay a fixed management fee of some kind.

Under the terms of the franchise agreement, you may have to buy stock from the franchisor. Check what they charge. They may mark up the prices - or they may be able to offer them to you at a discount because of their buying power.

You also have to pay the usual business costs - for example, rent for premises, utility bills or the costs of any employees you take on. Again, check if the things that you pay for through the franchisor have a realistic cost.

Check too if the agreement includes additional charges. For example, you may be required to pay for training, or to contribute to the cost of national advertising campaigns.

How to purchase a franchise

There are a number of key things you need to consider when planning to buy a franchise. It is worth thinking about the following:
Assess yourself to see what kind of franchise, if any, will suit you.
Find out what franchises are available and draw up a shortlist.
Assess franchise opportunities carefully, ask questions and talk to other franchisees.
When you find a business, investigate its financial prospects. Base this on thorough research of performance figures. Include an analysis of three years' accounts - if they have been trading for that period - and management figures.
If you'll need to raise finance, ask your bank if it will consider a loan for the type of franchise you're considering.
Do your own market research into the business and the competitors in your area.
Draw up a business plan.
Check the franchise agreement and get professional advice.

However, it is advisable to make sure you don't:
take up the first opportunity before investigating alternatives
allow yourself to be hurried into making a decision
pay any non-refundable deposit
commit yourself before you're completely sure
assume a business will work in your area just because it works elsewhere
rely on the forecasts provided by the business selling you the franchise
sign any agreement without legal advice

Tips on franchise agreements

The franchise agreement is crucial. Don't sign any agreement, or pay any fees or deposit, until you have taken legal advice from an experienced franchise solicitor accredited by the British Franchise Association. Get a specimen contract for them to review.
Areas covered by a typical agreement
Term - how long does the franchise last? Will you have the option to renew it, and on what terms?
Territory - what area does your franchise cover? Do you have exclusive rights to sell within it?
Fees - what initial fee will you pay? What percentage of sales revenue will you pay? Will you pay a regular management fee - and if so, what does it cover? Will you have to pay other costs? How are the costs worked out?
Support - how much help will you get starting the business? What continuing support will you get?
Restrictions - what restrictions are there on what you're allowed to do and how you must run the business?
Exit - what happens if you can't continue in the business for some reason - perhaps due to ill health? What happens if you want to sell your franchise?

13 Tips for Starting Up in a New Industry

13 Tips for Starting Up in a New Industry

Don't be afraid to explore foreign territory. We asked successful young entrepreneurs for their most poignant pieces of advice for founders starting up in an unfamiliar industry.


The Young Entrepreneur Council asked 13 successful young entrepreneurs for their best tips for starting a new business in an unfamiliar industry. Here are their best answers.

1. Don't Be Afraid to Ask Questions

If you're new to an industry, don't cower at networking events or do the "smile-and-nod" when you're speaking to someone with deep industry expertise. Instead, use every interaction as an opportunity to learn. People will be excited to answer your questions--while you may worry that your queries will come off as ignorant, most likely, the other person will interpret them as engaged interest! --Doreen Bloch, Poshly

2. Study Top Direct Response Advertisers

Find the top direct response advertisers--the companies spending money every month--in your industry and study their ad copy. Respond to the ads and document their entire sales process. The top advertisers have already figured out the best method(s) to generate leads and sales and maximize lifetime value, so start with what's working for them.
--Phil Frost, Main Street ROI

3. Find a Mentor

A mentor is pretty much your most powerful asset in any new industry. By finding a mentor willing to work with you, you can learn from their mistakes, accelerate your growth using their knowledge, insight and strategies, and get pre-qualified introductions to big players in your space.
--Travis Steffen, WorkoutBOX

4. Leverage your Fresh Perspective

Get rid of all preconceived notions and fully immerse yourself in every aspect of the industry to gain a true understanding of the market and opportunities. Take advantage of the fact that you're not biased and that you bring a fresh perspective and viewpoint, potentially providing you with a strong competitive advantage. --John Berkowitz, Yodle

5. Talk to Customers and Partners Every day

In any start-up, you don't know what you don't know. This is especially true when you're entering an unfamiliar industry. Get started through research, studying the compeition and talking to mentors. But in order to refine your business and make sure that you are providing great value, you must chat with your customers every day. Figure out their greatest pain points and deliver against them. --Aaron Schwartz, Modify Watches

6. Presume Ignorance

If you're starting up in an unfamiliar industry, do not presume that you know the answers. In fact, assume the opposite and open yourself up to learning. Talk to as many people in the industry as possible, ask lots of questions, get to know key players and connectors, and marinate in this new knowledge.
--David Ehrenberg, Early Growth Financial Services

7. Reconsider Whether It's the Right Industry

There are pros to tackling an industry you're unfamiliar with (fresh perspective, for example), but mostly, it's cons. Without an understanding of how an industry works, who matters in the space, and what competition already exists, succeeding in entrepreneurship just becomes more impossible (though, hey, don't let that stop you!). --Derek Flanzraich, Greatist

8. Attend a Trade Show...

There is usually a national or international trade show or conference in every industry, where the "who's who" all gather in one place. This is an event that you should be at. You'll have the chance to learn the lay of the land, meet hundreds of people in person and learn about what's new in your industry. It's also a great place to form new partnerships. Bring lots of business cards! --Luke Burgis, ActivPrayer

9...And Meet Your Match There!

Go to a trade show or networking event of the industry and notice who seems to have a strong presence, who knows everyone, and who is everyone talking about. Become friendly and close with that person, if they will let you. You can cut off a lot of trial and error time with the expert guidance!
--Andrew Bachman, Scambook.com

10. Hire a Trustworthy Lawyer

A few years ago I started my first business after over 10 years of working for non-profits. I found myself so lost. I was signing documents and agreeing to things left and right. Because I didn't have my own personal lawyer or legal team advising me, I agreed to some of the dumbest terms in the history of the world and it eventually came back to bite me in the ass. I'll never do that again. --Shaun King, HopeMob

11. The Devil Is in the Details

Make sure that you try and plan as much as you can, but don't let it get you so bogged down that you don't actually do something. Know that there will be something you miss, accept that, and move forward.
--Jordan Guernsey, Molding Box

12. Learn Why Others Have Failed

People naturally want to emulate success by analyzing successful business models, but I think it's more important to learn from companies that failed. There can be thousands of factors that contribute to business success, but when a business fails, it's often easy to pinpoint the the reasons...and avoid making the same mistakes yourself.
--Nick Reese, Elite Health Blends

13. Accept Help from the Experienced

Reach out to your advisors. They want to help you in your new adventure, and it is your responsibility to let them.
--Caroline Ghosn, The Levo League

Business Start up Common mistakes and how to avoid them

Business Start up Common mistakes and how to avoid them

Overview

Launching a small business can be risky and success is not always guaranteed. Businesses are most vulnerable to failure during the early years of trading, with 20 per cent of new businesses folding within their first year and 50 per cent within their first three years.

These figures should not scare you off, but should prepare you for some of the challenges entrepreneurs face when starting a business. With hard work and an awareness of the issues, a new business can be a great success.

This guide looks at the most common mistakes new business owners make and, more importantly, how you can avoid them. It also shows you how to improve the chances of your business idea succeeding.Poor or inadequate market research

Research and planning are vital to ensure that your business idea is viable and that your pricing is both competitive in your market place and provides an adequate return.

A common misconception is that entrepreneurs who have failed simply lacked sufficient funding or did not put the right team in place. However, many fail because they have not spent enough time researching their business idea and its viability in the market.
Lack of in-depth market research

Lack of proper market research is one of the key problems for new businesses. It's easy to get carried away with a business idea and set up a business without testing its viability.

It is also important to consider what your audience or customer needs are and to use market research to test them, and to then factor feedback into any products or services you are designing.
Keeping your business ideas to yourself

Failing to share your business ideas with people you trust means that you will miss out on objective feedback.

Brainstorm with colleagues to give you valuable perspective. Note down any good ideas you get from brainstorming and use them when developing your business.

For more information, see our guide on how toresearch and develop your business ideas .

Asking potential customers what they think of your plans or allowing them to examine a prototype can be invaluable. It can help you discover whether your product offers a solution to customers' problems or something new and unique that they would purchase. Positive feedback will give you the confidence to proceed and could help you attract investment funding. On the other hand, negative feedback will alert you to the need to rethink your plans and could help you avoid wasting time and money on a product that will not sell.

If you want to keep your ideas confidential, consider using a non-disclosure agreement, also known as a confidentiality agreement. This is a legal contract between you and another party not to disclose information you have shared for a specific purpose.
Not knowing your clients or marketplace

If you do not complete adequate research, you are in danger of selling to the wrong people or of not understanding your marketplace. To avoid this:
use information, such as free government data or your own network of contacts
carry out field research to explore customers' profiles and discover buying trends
swap ideas with people in the same sector

Think Outside the Box in 3 Ways

Think Outside the Box in 3 Ways

When employees arrive at a brainstorming meeting at MBooth, a communications agency in Manhattan, they see confetti strewn across the table, posters with prompts like, "Tell me an idea inspired by the word electricity," and a picture of Ryan Gosling with the caption, "Hey girl, what would get me to shop here?" They are given a marker and ten minutes to write ideas on the walls.

The unusual experience is carefully designed to help them think outside the box.

Andrew Rossi, MBooth's creative director, is responsible for making the agency a hub ofinnovation. He stepped into the role in 2009 when fresh ideas were starting to run dry. "Clients stay with us for a long time," he says. "We were thinking about the same clients over and over and (our ideas) were just getting stale."

Rossi started researching how creativity works and overhauled MBooth's creative process, earning an award for '2012 Creative Agency of the Year' from the Holmes Report.

Here, Rossi shares three tips that can help your company come up with original ways to reach your business goals:

1. Set parameters to focus your ideas. Ironically, too much freedom can hinder your creativity. Boundaries help your memory function, giving your ideas more depth and breadth. "Too many times, people start off really broad," Rossi says. "That's a lot of pressure. It's easier to anchor an idea somewhere."

As you brainstorm, focus your thinking by asking specific questions. For example, if you're looking for new marketing strategies, list ten things you could do on Facebook or five ideas that involve crowdsourcing. Play with a variety of prompts and write down whatever comes to mind, no matter how loosely associated.

2. Search for random inspiration. To think outside the box, you need to trigger your brain to make connections it normally wouldn't make. To do that, look for inspiration that seems entirely unrelated to the problem.

Rossi often prompts his team with unexpected words, like pineapple or sparkles for a car company. "Nine times out of 10, the ideas people are excited about are generated by the ridiculous random prompt," he says. To find prompts, look at popular photos on Pinterest and trending words on Twitter, or click 'I'm Feeling Lucky' in a Google search.

3. Aim for quantity, not quality. While you're generating ideas, turn off your internal editor. Exhaust your good ideas and start throwing out suggestions that seem absurd or wrong. Remember, you can always make a bad idea better after the fact.

Rossi finds that speed and friendly competition help people churn out ideas without judgment. Once, he put 100 one dollar bills in the center of a table and told his team they could take one every time they said an idea. "In 15 minutes, we came up with 100 ideas," he says. "Fifty of them were really interesting."

BY NADIA GOODMAN

Startup Advice - How Entrepeneurs Gain Credibility

Startup Advice: How Entrepeneurs Gain Credibility

While talking with young founders in Europe and the US over the last couple months, I have been asked the same question repeatedly -- how can an entrepreneur just starting out gain the necessary credibility to attract capital? It is an important question because, at its heart, a startup investment is an investment in the entrepreneur. And the earlier stage the investment, the more so this is true.

We all know the allure of the elusive "serial entrepreneur" -- the rare breed who has done it before (successfully) and will not fall victim to the same business pitfalls (he'll have to discover new ones). I have backed serial entrepreneurs before and will continue to back them. They have valuable startup knowledge to bring to bear on the company building process that we in the venture business clearly covet. But I have also backed first time entrepreneurs, sometimes just out of school. I did not back their extensive startup knowledge. I did not back their record of success. In many cases, I did not even back their domain expertise. In fact, some of the very best entrepreneurs with whom I have worked lacked any of the standard indicia of success that a venture investor might look for in a successful founder.

So how does an entrepreneur with little or no track record gain credibility? In my experience, they gain credibility in two ways -- they borrow it and they demonstrate it. Borrowed credibility runs on the same principle as guilt by association. If entrepreneurs surround themselves with people who have credibility, they gain credibility themselves. In the business world, reputations are paramount. As a result, when well-respected individuals vouch for an up-and-comer, it is meaningful. There are lots of ways someone can vouch for you as an entrepreneur. They can provide services to your company (awesome lawyers, accountants, recruiters, etc. are in great demand -- if they work with your company it means they were willing to bet on your success). They can lend their name to the company as an official advisor (ideally you will be able to clearly explain how they are working with your company other than merely lending you their name). They can invest in the company (if industry experts or startup/product/marketing gurus invest in your company, it is a huge vote of confidence in what you are doing). They can go on your board (business leaders have no more valuable resource than their time, so if they go on your board it is a huge recommendation of you and your company).

When it comes to borrowed credibility, there is perhaps no more important act than the initial introduction you are given to an investor. If you have no track record and you cold call an investor, you have huge reputational obstacles to overcome. This is particularly true because many investors will assume that you were either unable to find someone to make the introduction or too naive to realize the importance of an introduction. Either way, your likely success as an entrepreneur will be sharply discounted. On the other hand, if you are introduced to an investor by someone he or she trusts and respects, you are well on your way to a trusted relationship yourself.

The other way first time entrepreneurs gain credibility is to earn it. I don't mean this in some sort of hazing way. There isn't a clear path to earning credibility. You don't produce a particular amount of diligence. You don't deliver a particular number of industry reports. You don't call or email to followup a particular number of times. What you need to do is be really smart and well informed about the business you are pursuing.

The best way to earn credibility with investors is to have good answers to the questions you are asked. At August we want to invest in people who know more about their business than we do. We want to be excited about what you're doing and get more excited as you thoughtfully answer questions about your business. That doesn't mean that you need to have all the answers. You don't. You just need to be thoughtful when you don't and explain 1) how you intend to get the answer, 2) what you predict the answer to be, based upon what you do know, and 3) how you expect to gain the answer over time. Domain experts are best positioned to answer questions about a domain specific business. But being a domain expert does not require direct experience in a particular business. It may be sufficient to borrow the knowledge of those who have worked in the industry. In fact, oftentimes the most interesting ideas come from people who are not mired in traditional ways of thinking about an industry but know everything there is to know about how things are done today.

Credibility also comes from doing what you say you are going to do. Sometimes that means following up on a question from a meeting (If you say you'll get back to an investor with an answer and you do so promptly, you'll gain credibility; if you don't, you are done). Sometimes that means hitting numbers you say you will, or closing on a customer you expect you will. I once gave a term sheet to an entrepreneur because he delivered on a number of assertions he'd made about his business at a meeting three months earlier. There's nothing better than an entrepreneur who delivers the goods.

If one of these techniques for garnering credibility is good, all of them together are great. Get introduced to an investor by someone he or she trusts. Build an advisory board and board of directors of industry experts and admired professionals. Do your homework -- know everything there is to know about the market you are pursuing. Welcome questions about your business -- answer them well when you know the answer and admit when you don't. And always do what you say you are going to do -- whether that is delivering promised followup materials or hitting your numbers. In combination, these techniques can give any entrepreneur, no matter how young and/or inexperienced, the credibility necessary to attract great investors.

Affiliate Marketing Super Tools

Affiliate Marketing Super Tools

Produce Your Own Website:

How successful you are at affiliate marketing will depend on your ability to produce a great website. It is extremely important that you build a professional looking site to give visitors the assurance that you are a credible person to buy from.


Your business website must be user friendly so that your visitors find it easy to navigate the links to the products and services that are advertised, and it also must be attractive and focused on the kind of products and services that your potential buyers want. This way, you will receive appreciation and sales from your visitors and you will become successful as an website affiliate.


Most people do not log onto the Internet in order to buy something, this is well known. They are usually just looking for some information or for entertainment purposes. It is for this reason that you want to fill your website with the information and entertainment that they require.


You will increase your sales when you encourage them to click on your affiliate links that lead to your affiliate products and services. You need to provide original content by putting some interesting articles on your website pages, this will encourage your visitors to visit time and again, this in turn will increase your page rankings within the search engines.

Learn how to make a web page here

Visitor Incentives:


Over recent years, those starting out in affiliate marketing have grown hugely in numbers and competition is now fierce. If you really want to stand out from the crowd and grab your share of the target market, then you really need to keep an eye on what your competitors are doing.


You need to be able to use every possible way of encouraging targeted traffic to your website more often and make sure, that once they are there, they have an easy way to view and navigate your site and positive encouragement to click on your affiliate links to take a look at the products and services that you are offering.


An opt-in email list is a great way of capturing your visitors names and addresses so that you can keep them up to date with new products or news and you can encourage them to join your opt-in list by offering attractive incentives. Free software or e-books are usually the best incentives.


Link Popularity:


The more you can drive traffic to your business website, the more income you will earn and the more successful your affiliate business will be. It is essential that your website ranks highly with the search engines and link popularity is the determining factor which is used to make a high page rank.


Link popularity quite simply means how popular your website link is. The more related, easier to remember and shorter your website link is the better likelihood that you will receive link popularity.


There are many other ways that you can use to increase your earnings as an affiliate marketer but using the above tools will give you a great start in your affiliate marketing career.
By Karen Thomson