Monthly Archives: November 2015

Don’t Burn Any Bridges – The importance of relationships

Entrepreneurs can thrive through the relationships that are developed prior to, or during the development of a business. The relationships that are formed can play a one-time role in benefitting you as an entrepreneur, or that relationship can benefit you multiple times throughout the course of your businesses. This is why, no matter the circumstances, that you should never burn any bridges if possible. It doesn’t matter how negative of an experience you had with someone, at some point down the road you may wish you still had that certain contact.

Relating back to my Week 3 post of “Accumulating Capital”, it is important to build up all types of capital, especially social capital. Stated in the book “The Founder’s Dilemmas” by Noam Wasserman, “the accumulation of one type of capital can be a virtuous cycle”. Research has proven that people who collect more social and financial capital are able to start their business venture that much quicker. With that being said, don’t get rid of any of social capital, continue to build it, even if you have negative experiences with someone. People do change, sometimes for the better or worse, but you never know which direction they may go in and how beneficial it could be to know them.

At some point you will encounter someone who will disappoint you in some way, it is inevitable. As easy as it may be to just blow this person off and never talk to them again, this person that caused disappointment can still benefit you in some way in the future. You always need to cautious with everyone, but with someone that has disappointed in the past, just be extra leery of them in the future. In the book “It’s A Jungle In There” by Steven Schussler, Steven gives a very personal example of his father walking out on his family when he was a child. Steven started to rekindle his relationship with his father once he got older was in the process of developing his restaurants. His father actually made it possible for Steven to meet the future investor of the Rain Forest Café restaurant chain. If Steven had never rekindled that relationship with his father, the famous restaurant chain may have taken that much longer to secure funding or may have never have came to fruition at all.

Steven says to not burn any bridges, just make sure that the next time you go to cross that bridge, do so carefully. Steven also emphasizes to not like your ego get in the way of a business transaction or any form of a relationship. It is important for entrepreneurs to have a healthy ago, and make sure that before you walk into that big meeting, to check your ego at the door. The saying “its not what you know, who you know” is a lot of the time very true in the business world. Keeping this in mind, don’t destroy any relationships that can make a difference in your business.

Sources:

Schussler, Steven. It’s A Jungle In There. New York. Sterling Publishing Co. 2010.  Print.

Wasserman, Noam. The Founder’s Dilemmas. Princeton. Princeton University Press.   2012. Print

Positive Press – The power of media

There are multiple outlets in which someone can get their business noticed. Most of these outlets are pretty expensive for a business to pursue, but there is one method that only costs a person is time and a lot of people have mixed feelings about this outlet. This outlet is through the media. There are so many different media outlets in the world today and they are can be very easily accessed with the power of social media. All of these media outlets are constantly putting out new information about something, find that media outlet that can relate your business and do your best to give them a reason to get your story/business noticed.

It is important to be portrayed in a positive image when in the media. Always do whatever you can avoid negative publicity, but don’t be afraid of getting your name out there. Generating just a little buzz on your company can give it just the boost you need to take your business to the next level. Steven Schussler in his book “It’s A Jungle In There”, states that you should always go out of your way to give the media a story. They may just being doing a quick Q & A with you, nothing substantial enough to get a full story out of you. Steven says give them enough to make a full-page article out of what is said. Go out of your way to provide interesting, unique, or personal information about the company (obviously this should all be positive and nothing that could have a poor outcome on the company) and make sure they get something that they’ll want to publish. Businesses can live or die by this. The amount of free advertising that can come out of the media can be the difference between the business thriving or dying, people need to realize the media is your friend.

With the impact and possibilities of social media in today’s world, you can create your own media outlet and paint a picture of your business however you want. It is important to build up your business’ identity through social media and make sure that you are getting as much positive press as possible. Social media outlets allow for the business to sell their products or services, become a valuable resource for a customer or potential customer, and provide quality customer service. Doing all three of these things well will produce a positive perception of the business and only help it grow.

Media outlets should always be pursued in order to help grow a business. Whether it is through traditional media outlets like newspapers or magazines, or through the world of social media, make sure your utilizing the media to the best of your ability. There aren’t any other outlets that can create awareness to millions of potential customers for free. Just as positive media can have such a great impact on a business, remember that negative media can have just the opposite effect. Businesses are so much more accessible with todays technological capabilities, make sure that these are used to your business’s advantages, not disadvantages.

Sources:

Patel, Neil. 3 Ways to Use Social Media for Business. Socialmediaexaminer.com. 14       September 2014. http://www.socialmediaexaminer.com/social-media-for-           business/

Schussler, Steven. It’s A Jungle In There. New York. Sterling Publishing Co. 2010.  Print.

Learning From Failures – Its only a failure if you didn’t learn anything

In the world of entrepreneurship it is very likely that at some point you will experience some form of failure. When starting a business you’re very likely to be starting something brand new, or a new twist to something that already exists. The “new” aspect of starting this business is more than likely not going to be perfect from the very beginning, something that will need to be perfected. It is almost guaranteed that before the business is perfected that it will fail, but what most don’t realize is that is what’s needed in order to find out how to be perfect something. Good things do come from failure. The most important to do with failure is to learn from it.

Failure will lead to success; you just can’t give up before the success can be reached. Steven Schussler in his book “It’s A Jungle In There” provides three things that entrepreneurs need to remember. First, an entrepreneur must remember that failure is not permanent. Don’t let failure paralyze your dreams, let it be a building and learning block for improvement. Secondly, an entrepreneur needs to learn humility from failure. Steven says “ you need to be humbled by your mistakes, not crippled by them”. Thirdly, an entrepreneur needs to appreciate success. You must appreciate success by knowing how difficult it is to achieve it, as well as maintain it. When it comes to failing, it is all about persisting through the adversities that life throws at you, learn from it, and better yourself and your business.

It is obvious that success for any business is very rewarding and this is often all you see when you hear about a successful company. What most people don’t realize is the failure that came before the success. Failure can be very demoralizing, but it can be the necessary tool needed to get the success in the end. In the article “ Do Entrepreneurs Learn from Failure?” by Paul Brown, it states that all entrepreneurs experience failure, including serial entrepreneurs. Paul gives a list of four behavioral traits that serial entrepreneurs have when building their companies to reduce failures or quickly learn from them.

  1. They must really have the desire to put their best efforts forward with their new venture. It can’t be pursued with minimal desire (This ties into the persistence needed to be successful).
  2. Take small steps forward and don’t move to quickly.
  3. After taking small steps forward, always review and analyze the “path” taken. Pay close attention to what the markets are telling you about your business.
  4. After analyzing what you’ve done to this point, continue taking small steps forward to build the business.

When starting a business it is important to realize that some failures are likely to be encountered, but always know that these failures can be stepping blocks to your company’s ultimate success. Be persistent when it comes to building your business. You may not get it right the first time, but as so many of the great entrepreneurs that came before taught us, failure can teach success.

Sources:

Brown, Paul. Do Entrepreneurs Learn from Failure? Forbes.com. 29 March 2012. http://www.forbes.com/sites/actiontrumpseverything/2012/03/29/do-entrepreneurs-learn-from-failure/

Schussler, Steven. It’s A Jungle In There. New York. Sterling Publishing Co. 2010.  Print.

Lender and Investor Perspectives

In order for a company to grow, at some point they’re going to need more money to make this growth occur. This money can come from a variety of places including personal savings, friends and family, existing company cash flow, or lenders or investors. It is very common for a company to reach out to a lender or investor in order to obtain the necessary money in order to grow. Unfortunately the business can’t just pick the lender or investor they desire and have them automatically give the needed money. There is certain criterion that investors and lenders look for before investing money into a business.

Any type of investment plays a major role in the company being able to take their business to the next level. According to an article in the Harvard Business Review titled “How Venture Capital Works”, it states that venture capitalism plays a big part in the after innovation stage of the company, the stage in a company’s life when they start to commercialize on its innovation. It is estimated that 80% of venture money goes into building the infrastructure required to grow the business. The money goes towards expenses like manufacturing, marketing, and sales. The money will often go towards balance sheet items like fixed assets and working capital. With the money going towards fixed assets and infrastructure, the goal is that the business will grow to a sufficient size in order to be bought by a larger corporation, or be able to go public and liquidate their investment in the IPO.

In order for any business to be able to obtain funding, the investor is going to be looking into many different facets of the business in order to determine if they’re going to be able to make a significant return on investment. According the article “The Four Main Things Investors Look For In A Startup” by Mark Suster, it states that there are four key factors that investors look for, and they’re easy to remember because they all begin with M. The four factors are Management, Market, Money, and most importantly Momentum.

The management team should be one of the first things a potential investor is made aware of. Mark Suster, an entrepreneur turned venture capitalist, says that he bases 70% of his decision to invest based on the management team and 30% based on the product. If you have a really good management team in place and that is introduced in the very beginning of the pitch, there’s no way the investor will not be intrigued.

No matter the size of the investment, or the investment company itself, they all want to believe that the business they’re investing in has potential to be huge one day. Venture capitalists care about investing in big markets, with ambitious teams. With this being said you should never talk about early exits, quick flips, previous acquisition interests, and so on when meeting with investors.

Most investors are going to want to have enough equity in the company in order to see a big return on investment for their money and efforts going into the company. The amount of money being sought after, and the amount of equity the business owner is willing to give up all plays a major role in the investors mind. It is important to have an understanding of the minimum amount of equity the investor is looking to acquire.

Momentum is what investors look for the most because it shows a proven tract record of success or potential success. Having certain metrics that indicate the business will be successful like sales, users, subscriptions and so on. It is important to show that it will be valuable to invest in the infrastructure of a business and help in the commercialization of whatever business innovation you have come up with.

Knowing what a lender and investor are looking for in a company is very important. Understanding these aspects will assist in obtaining funding that much more. With the different perspectives provided of what is being sought after by the investor, make sure you’re able to provide the many things desired. It is very important to know the industry inside and out in whatever business you have, but it is also very important to have an understanding of the lender or investors background, as to know how to best pitch your business in order to grow your business.

Sources:

Suster, Mark. The Four Main Things Investors Look For In A Startup. Bothsidesofthe                table.com. 6 October 2010.             http://www.bothsidesofthetable.com/2010/10/06/the-four-main-things-    that-investors-look-for-in-a-startup/

Zider, Bob. How Venture Capital Works. Harvard Business Review. November –           December 1998 Issue. https://hbr.org/1998/11/how-venture-capital-works

Understanding Intellectual Property

As an entrepreneur you want to make sure that you are as protected as much as you can possibly be. In the business world you’re always going to have someone that is going to try and out do you, especially if you have a successful business. Sometimes when it comes to competition all you can do is try to out perform them, but there are things you can do to legally protect your idea so that people can’t directly duplicate your idea or business.

According to IPwatchdog.com, intellectual property can be defined as creations of the mind from a conceptual stand point that are given a legal right often associated with real or personal property. The rights that are obtained by the creator are a function of statutory law. The statutes may be federal or state law, and in some circumstances both depending on the nature of the intellectual property.

Where intellectual property is something that is a creation of the mind, it is not a tangible asset, but this creation of the mind can be an extremely important asset to someone and can make a large difference in someone’s financial gain. There are three different types of intellectual property in the United States. The three different types are Patents, Copyrights, and Trademarks. Per entrepreneur.com in the encyclopedia for intellectual property the three types are defined as below.

Patents – Patents protect processes, methods and inventions that are “novel”, “non-obvious” and “useful”. If the patent is issued, that allows for a 20-year timeframe to sell, use, make, or import into the US. Patent protection requires full public disclosure in detail.

  • The work must be novel. It can’t be known, used, patented here or abroad, or public use or for sale in this country more than one year prior to patent application.
  • The work must be non-obvious.
  • The work must be useful. Must have current, significant, beneficial use as a process.

Copyrights – Copyright protection gives the holder the right to copy work, modify work, distribute, perform and display publicly. Protects the following categories.

  • Literary works
  • Musical works
  • Dramatic works
  • Pantomimes and choreographic works
  • Pictorial, graphic and sculptural works
  • Motion pictures and other audiovisual works
  • Sound recordings
  • Architectural works
  • Computer programs

Trademarks – Trademarks are like a brands name. Any word(s) or symbol(s) that represents a business. This trademark distinguishes them from other competition on the market. A trademark can be registered in three ways.

  • Filing a “use” application after the mark has been used.
  • Filing an “intent to use” application if the mark has not yet been used.
  • In some circumstances, the use of a foreign application may be needed.

Sources:

Entrepreneur Staff. Intellectual Property. Entrepreneur Encyclopedia.            http://www.entrepreneur.com/encyclopedia/intellectual-property

Quinn, Gene. What Is Intellectual Property? IPwatchdog.com. 19 July 2014.      http://www.ipwatchdog.com/2014/07/19/what-is-intellectual-            property/id=47109/

Credit Impact on Funding

A person’s credit can have a very positive or negative impact on their life. This is the same when it comes to business credit and how a business can potentially be prevented from funding. A person’s credit impacts their ability to obtain housing rentals, mortgages, utility services, auto loans, bank accounts, employment, and much more. The personal limitations that credit can cause for an individual can also have the same impact on what a business is able to obtain and how it can grow.

A credit report becomes a statement of an individual’s ability to pay back debt. A business credit report operates in the same capacity, just that business credit, or business trading is the single largest source of lending in the world. An individual’s credit report is determined through their social security number, where a business’ credit report is determined through their federal tax identification number (FIN), or employer identification number (EIN).  It is important to maintain both a high personal and high business credit score in order to be able to acquire funding (The ABCs of Business Credit).

According to the article “Is Bad Business Credit Stopping You From Getting Business Loans” by Marco Carbajo states that in a recent study 63% of business owners looking to acquire funding would pursue banks. The percent of these business owners successfully acquiring funding from banks was 27%.  The article states that the access to capital can be the number one roadblock when it comes to growing a business. The good news is that the traditional banks are starting to provide more loans to businesses that do have good credit. The bad news is that a lot of small businesses don’t have good credit.

There are four different major business credit bureaus, Dun & Bradstreet, Equifax Business, Experian Business, and Business Credit USA. It is possible that business transactions that can potentially improve your business credit score are not reported, so it is important that all information is provided to the bureaus so that information is as updated as possible. The article “5 Ways To Improve Your Business Credit” provides a list of what a business owner can do to improve their business credit.

  •      Make prompt payments.  This directly impacts the terms and rates that lenders will provide.
  •      Increase Credit Limits. Most traditional lending institutes will allow you to request a credit limit increase after 6 months. Even if not planning on using the increased credit, it can help impact your credit ratio.
  •      Add Trade References. You can manually add trade references to ensure that they are listed on your business credit profile.
  •      Improve Credit Ratio. Lenders heavily rely on the credit ratio in order to determine how a business is going to repay requested financing. It is recommended that you utilize about 30% of your existing credit lines.
  •      Keep Business Profile Updated. Make sure areas of excellence stand out.

The ability for a business to grow by expanding marketing efforts, hiring additional staff, purchase or upgrade equipment can all be impacted by their credit. Don’t allow your businesses potential for growth be limited by the inability to obtain funding.

Sources:

Bray, Jason. 5 Ways To Improve Your Business Credit. Businessfundingamerica.com.   13 August 2015. https://www.businessfundingamerica.com/blog/improve-       your-business-credit-score/

Carbajo, Marco. Is Bad Business Credit Stopping You From Getting Business Loans.        SBA.gov. 11 March 2014. https://www.sba.gov/blogs/bad-credit-stopping-        you-getting-business-loans

The ABCs of Business Credit. Entrepreneuar.com. 24 March 2005.         http://www.entrepreneur.com/article/76886

First Impressions – One chance to make a first impression

It is very important to remember that you’re always representing your business and having an impact on how your business is perceived. A business owner always needs to make a good impression, especially a first one. The first impression can make a major difference in many different circumstances when it comes to being a business owner.

A first impression can be the differentiating factor in obtaining funding. Most investors will know if your business idea is a good one within minutes of being pitched, the other thing investors of looking at is the pitcher. Investors don’t just invest in a business, they invest in the person. What can be perceived as small, irrelevant tendencies can deter an investor from investing in a business. Steven Schussler in his book “It’s A Jungle in There” states it is very important to maintain your physical appearance, have a firm handshake, and have the proper body language for the business interaction.

Steven recommends wearing suits to all business interactions, doesn’t matter if he is in the hot Florida weather, always dress professionally. As well as maintaining proper dress code, make sure that you’re well groomed and present a nice aroma. Not doing these things can make a big impression, and leave a negative connotation in someone’s mind. It is always important to have a firm handshake. This displays confidence and you may only have one chance to make the first handshake, so do it right. Body language also goes a long way. Making proper eye contact and facial expressions is something to be aware of. You can easily offend someone by making certain facial expressions like rolling your eyes or seemingly not interested in what someone has to say.

In the article “How To Make a Powerful First Impression” by Robert Jones, it states person-to-person marketing is more important than ever. The article refers to Lillian Bjorseth, a communications consultant, and how people decide several things about you within the first 10 seconds of seeing you. She says that people put off an aura, and that aspects such as dress code, body language, and just overall appearance determine this aura that others perceive of you. Everything from the initial handshake, the eye contact, and the conversation all matter when making an impression. It is important to be confident and portray a positive aura.

First impressions don’t just matter to potential investors; they matter to your potential and existing customers. Customers will notice a person’s aura and have their notions about the business owner and employees, and that will have an overall impact of the business’ product or service. It is always important that all aspects of your business make a positive impression, and shed a good overall light on the business. This goes back to my prior post about “Sweating the small stuff”, little things like appearance, body language and hand shakes may seem like they’re not a big deal, but they really do have an impact on the business as a whole.

Sources:

Jones, Robert. How To Make a Powerful First Impression. Entrepreneur.com. 16          November 2008. http://www.entrepreneur.com/article/198622

Schussler, Steven. It’s A Jungle In There. New York. Sterling Publishing Co. 2010.  Print

The Next Big Thing

In order for a business to be successful, the business needs to be solving a problem or an inconvenience for the consumer. This is what entrepreneurs and aspiring entrepreneurs need to be on the look out for. Finding unique ways that make consumers lives easier. When solving a problem in someone’s everyday life, this person is going to be willing to pay for it. In this day in age, time is money, and the consumer will be willing to pay for something that makes their life better in some way.

On a daily occurrence, people are faced with tasks and obstacles that in some way prevent them from doing something they’d like to be doing, or something they could be doing more efficiently. Steven Schussler provides an example in his book “It’s A Jungle In There” about when he was a kid working at a pool. Steven observed the pool goers activities, and noticed their habits. Steven noticed that there were always a group of people playing cards on make shift tables. Capitalizing on the fact that most of the money he made during this summer job was based on tips, he started to cater to these card players and their families. Steven would provide legitimate card tables, supply their favorite decks of cards, making sure he had their favorite drinks, an ample supply of ice, and just catered to their every need while at the pool. By making the peoples lives at the pool that much more hassle free, convenient, Steven was generously rewarded with tips. Every small task earned him a nice tip. For the decks of cards, he would go directly to the manufacturer and get them at wholesale price and make a profit on selling the cards. Steven was able to make a lot more money than the other pool workers, even the pool manager by doing what he did.

Consumers are always going to have problems, with these problems they will be searching for the best solution. In the article “Don’t Just Start a Business, Solve A Problem” by Thomas Oppong, he states to focus on something that is a must have, not something nice to have. The amount of choice on the market can over whelm consumers. Consumers expect and demand something better and different, and that is what you should strive to provide them. Try to solve real life problems that have a significant impact on their lives. If your product or service isn’t solving something significant in consumers’ lives, try to repurpose the business to emphasize what it is solving.

In life we are always faced with problems and inconveniences. Always be on the look for the next big thing. You never know where you might discover the solution to a problem and be able to turn it into a successful business.

Sources:

Oppong, Thomas. Don’t Just Start a Business, Solve A Problem. Entrepreneur.com. 15             August 2014. http://www.entrepreneur.com/article/236522

Schussler, Steven. It’s A Jungle In There. New York. Sterling Publishing Co. 2010. Print

Sales Planning

For any business to survive, it is a necessity to be making money. Without money going into a business, the business will eventually fail. In order to make money the business needs to be selling their product or service, and it is important to strategically plan on how this is going to be accomplished. Having a well-executed sales plan will make a difference when starting or growing a business.

There is a lot that goes into the planning of generating sales. Michael Carter in his article “Strategic Sales Plan, The Five Key Components” lists the top components to use when creating a sales plan.

  • Define your ideal customer – It is extremely important to break down your ideal customer as specifically as possible. When the spectrum is to wide when identifying new customers you often struggle locating the best customers who will actually purchase what you have to offer. Analyze existing customers, knowing their traits and industries they’re in.
  • Know your Unique Sales Proposition – Know what makes your product or service unique to what is already on the market.
  • Analyze your territory – Once the ideal customer is defined, know the territory in which you plan on targeting this ideal customer.
  • Know the competition – It is very important to understand all competitors and how they function. Understanding the competition can provide advantages when pitching your product or service.
  • Sales Expectations – It is important to forecast and analyze sales and costs on a monthly, quarterly, and annual basis. Make sure that when forecasting sales that the goals aren’t set to unachievable standards, but are also high standards to reach for, putting the business in the best place possible.

As important as it is to have a well-executed sales plan, this plan won’t do the business any good unless the right sales people are in place. According to the article “A Guide to Hiring the Right Type of Salesperson for What You’re Selling” by George Deeb, he states that it is very important to know what you’re selling. There can be very good sales people, but how something is sold can vary from product or service. Sales can be broken down by enterprise vs. small business selling. Enterprise selling can involve working with multiple sectors of a business in order to close the deal. Small business sales usually don’t involve as many people and is quicker to get a decisive decision. There is also simple vs. consultative sales, where consultative sales involves removing the fear of the unknown with a product or service that may be more complex and create concerns in the purchasing process.

These are very important aspects to consider when hiring sales personnel. It is also important to realize the type selling that is going to be needed when it comes to training a new hire. It is important to make sure that the sales person understands every in and out of what they’re selling, so that to the best of their ability they’re able to close the deal. The experience level of who is hired also needs to be considered. A more experienced sales professional may require a higher salary, but may be able to accomplish more without the continuous need to assist a lesser experienced sales professional. Once the team is in place, compensation becomes the next major concern for any company.

Sources:

Carter, Michael. Strategic Sales Plan, The Five Key Components.    Salesmanagementworkshop.com. Web. 28 February 2012.             http://www.salesmanagementworkshop.com/strategic-sales-plan-the-five-   key-components/

Deeb, George. A Guide to Hiring the Right Type of Salesperson for What You’re Selling. Entrepreneur.com. Web. 14 August 2014. http://www.entrepreneur.com/article/236163