Tag Archive: entrepreneurs

The Silent Partner: Boon or Bane?

The Silent Partner: Boon or Bane?
by Erin McDermott.

Psst. Is that silent partner you’re seeking really the best move for your small business?

When it comes to finding additional funding these days, it’s sometimes a tough road. As a result, people are looking at other avenues of capital, taking on all types of new partnerships, and even tapping into money through crowd-funding sites such as Kickstarter, Indiegogo, and AngelList.

Traditionally, silent partners have been the go-to investors, often family and sometimes friends, who pump in funding but also agree to stay out of day-to-day operations. They get a share of the profits and—unless there is a limited partnership agreement that rules out liabilities—risk taking a hit if an enterprise runs into trouble. Their presence is no secret to people familiar with a company, and often they are prized for their industry contacts or standing in a community.

So why choose to remain silent? There can be several reasons. For some investors, it’s a way to avoid the unwanted entreaties of others who also are seeking capital. Others might use a silent partnership to keep quiet about the extent of their business portfolios or to stay one step removed from a venture that they don’t want to be publicly identified as backing.

So, is this silence really golden for a small-business owner?

PQ_SilentPartners.jpgWhat you don’t get for your money

Mitchell D. Weiss doesn’t see much value in the proposition. He’s a longtime financial-services executive and entrepreneur who now teaches finance at the University of Hartford and is the author of Life Happens: A Practical Guide to Personal Finance from College to Career. To him, owners who recruit the strong, silent type of partners are missing a critical opportunity to gain knowledge from others who know the stakes and have years of experience and connections that are priceless for an entrepreneur.

“I wouldn’t want money from people who aren’t going to help me. I want someone who isn’t just a checkbook, but someone who’s in a position to mentor me and offer advice,” Weiss explains. “What’s more important for entrepreneurs is to seek out people who can give you good feedback. Not someone who hasn’t made a payroll, or can’t relate because they’ve never faced the pressure of running a business.”

Weiss himself has been there with business relationships both silent and not so silent. He recalls dealing with a principal at one of his early ventures who declared that he “likes his partners limited” and made clear that he wanted little advice from others, even while seeking investors. “That’s also known as ‘Give me the money and shut up,’” Weiss says now, laughing. “In the end, I learned a lot of good things and a lot of lessons about what not to do.”

Jaine Lucas also sees many entrepreneurs missing the boat.

“One of the issues with crowd-funding is you get the money, but not the advice, coaching, and mentoring you’d receive from angels, VCs, or others who might financially back your company,” says Lucas, an entrepreneur, former Fortune 50 marketing executive and now executive director of the Innovation & Entrepreneurship Institute at Temple University’s Fox School of Business in Philadelphia. “Most entrepreneurs will tell you that access to coaching and other people’s networks are just as important, if not more so, than the money.”

There’s always an exception

But Lucas does see the value of silence with one often-tapped group of investors: friends and family.

“They are often too involved emotionally and cannot see things objectively,” she says. “I see these things all of the time with our younger entrepreneurs who have very little access to capital other than credit cards and friends and family, so they take money from Mom and Dad. The problem is, to Mom and Dad, this promising entrepreneur is still their baby—and they don’t know anything! I see so many family relationships really impaired by money—and money has a way of blowing things up.”

One way to avoid that conflict Lucas says, is to make sure terms are clearly outlined well before any funds are invested, including whether the friend or family member will have any right to input in the venture. “Sadly, it isn’t treated as seriously as it should, and agreements need to be put in place before any money exchanges hands,” she says.

Today, most investments come with an extra two cents

“I see [silent partners] as something that’s becoming a thing of the past,” says David Luk, the 33-year-old chief executive of Quewey, a startup online network of experts that facilitates business expertise via free question-and-answer platforms and paid phone-consulting sessions. As people become more sophisticated about investing, Luk says they should feel the urge to provide advice so they can contribute added value to their investment.

“If you asked me to go out and search, in this early funding round, for investors who want to be silent, I think it would be hard to find that. And frankly, I don’t want that,” Luk says. “If I have a choice between an investor who has a willingness and ability to help versus someone who prefers to stay silent and on the sidelines, I’d rather have the person who can add value and not just the capital. We’re a startup and it seems like a waste of a potential resource.”

Often, it’s elusive resources like experience that are most important for growing small companies—and sorely needed at crucial turning points—such as getting down to the business of suing that new capital wisely and making money for all of your investors, silent or not.

Weiss says he’s seen entrepreneurs get an overzealous sense of “We’ve got it!” when funding does arrive. “Investors want that money back, and want their investment to grow—you’re just renting it,” Weiss points out. “It doesn’t just come with a lipstick kiss on the bottom of a Hallmark card.”

6 New Year’s Small Business Resolutions

 6 new year's business resolutions

2012 New Year Small Business Resolution

While we are all familiar with the making of personal New Year’s resolutions (maybe too familiar!) a recent and emerging trend is to make New Year’s small business resolutions. The challenge of course is that, like personal resolutions, we want our small business resolutions to stick.

So how do we do that? Experts say that people who are able to make and keep resolutions know not to bite off more than they can chew. Here are a few simple, easy-to-implement, small business resolutions that can make a big difference this year:

1. Create a board of advisors: Small business entrepreneurs generally like to help each other. By creating your own small business board of advisors you can give the people in your life a way to help you. Your lawyer, small business colleagues, or even your friends can all be part of an informal board. Even if it is as simple as hosting a dinner twice a year, you can create an invaluable way to receive important feedback, spark some new ideas and have discussions that could help your small business. For example, I have a friend who hosts a pizza party whenever he has a new idea; he uses the opportunity to share his thoughts and gauge the reaction of his panel.

2. Find a mentor: While, like a board, mentors can also offer valuable feedback, they can do so much more. Mentors make introductions, open doors and teach valuable lessons. If you don’t have a mentor, finding one should not be difficult; it is just a matter of asking. Last week, an associate asked me to mentor him and I was flattered. Whomever you ask will likely feel the same way.

3. Get bigger and better clients: With budgets continuing to be tight, consider looking for clients with bigger budgets – such as government contractors or corporate clients. You may think that this wouldn’t work for your business. Consider this: even mini-marts whose customers are almost exclusively individual consumers could try and land some commercial accounts.

Why not you too? Target some businesses that need what you sell. Make a presentation and pitch them. Try some more. Think differently. Get out there.

4. Give yourself a raise: With the economy being what it has been, many small businesses have kept a lid on fees and prices for years. Well, maybe this is the year to raise prices a bit, nothing dramatic, but enough so that you can increase your bottom line.

5. Create a referral rewards program: It is simple, yet so effective. Your best business often comes from referrals. Check out the option of creating a consistent system for staying in touch with current customers, and then rewarding them when they send new business your way.

6. Bust a move: Many small businesses have been retrenching, waiting and holding back the past few years. While it might be a smart strategy right now, it is against our nature as entrepreneurs. There just may be pent up demand for something new, different and better this year. Find those new customers and attack new angles.

If you like these small business articles, we ask that you google 1+ this article to say you like it so we can continue offering them. Apple Capital Group has a small business daily show on blog talk radio. Check it out at http://www.blogtalkradio.com/applecapitalgroup.

10 Ways to Sneak Fitness In While You Work: Small Business Owners Benefit From a More Active Staff

While small business entrepreneurs may be disproportionately under represented among competitive runners and tri-athletes, they should also consider helping their employees work fitness into their work weeks. The possible benefits are legion; less

Small+Business+Owner

Small Business Owner

absenteeism, higher productivity, a positive impact on team building and lower health insurance premiums.

In fact, a recent study from the American Journal of Health Promotion says that wellness programs result in a 27 percent reduction in sick time and a 26 percent reduction in healthcare costs. Further, the healthiest employees are thought to be three times as productive as the least healthy, according to a recent Australian study. All for a return on investment that has been estimated at as much as $5 for every $1 invested.

The following are 10 ways small business employees (and owners) can sneak fitness into the work week whether they like the zen of solo exercise; the motivation of a group weight loss program or the competition of company-against-company sports.

Offer extended lunch hours once or twice a week for employees who may be training for anything ranging from a 5K race to a marathon
Encourage standing breaks as often as every 15 minutes in order to improve circulation and lower heart-related risks
Blast through calories while brainstorming on the move with a walking meeting
Respectfully promote weight loss, as well as perseverance, through a companywide “Biggest Loser” competition
Reap the benefits of a staff with increased confidence and stick-to-itiveness by putting them through a weeklong fitness boot camp
Foster teamwork through corporate sports leagues against other companies in the same industry or office park
Light a fire under the sedentary by creating an incentive program to get at least 10,000 steps a day, monitored by a pedometer
Lower office stress by teaching employees to meditate throughout the day, while standing at the copying machine; riding in the elevator; or taking a taxi to a business meeting
Allow employees to close their office doors to indulge in stretching sessions, including neck rolls, torso twists, toe touches and deep breaths
Promote adherence to exercise routines during business travel by investing in innovative equipment, including travel yoga mats; hollow dumbbells that can be filled with water and collapsible hula hoopsTo implement office-wide wellness initiatives, you may have to earmark extra dollars for organized fitness programs and allow some flexibility with work hours. However, helping your increasingly busy employees get and stay fit can reap benefits in the long run.

How to Create Interesting Twitter Content

Let’s face it, when you first come across Twitter, it seems a little strange. It definitely is a more challenging social media platform to grasp than Facebook or LinkedIn, and even when you get a handle on it, the question becomes: What should you tweet? Originally, Twitter got a bad rap as a platform where people would tweet the most mundane things – what they had for breakfast, where they were headed at that moment, that sort of thing. And while that may have been true previously, it is far less true today, especially for businesses that use Twitter.

To help understand how to use Twitter, and what to tweet, visualize the platform as a river – a continuous stream of tweets, links, information and conversations floating by. As such, your job is to make your tweets so interesting and valuable that they stand out in the ever-swelling river.

That means the content you tweet has to be not just OK or good – but great. It has to bring value to others. It is content your customers, viewers, friends, fans and followers would find interesting and useful. It is content that is fun, funny, intriguing, quirky or fascinating. It is an article that would help people in their own business, or a video that they would find appealing or a free e-book. With your ongoing stream of useful information, your followers will find you to be a valuable and worthwhile online addition to their busy day.

Example: One of my favorite tweeters is Guy Kawasaki. Guy’s Twitter handle tweets fascinating stuff all day long (Guy admittedly does not tweet it all himself, but that is not the point.) I often check out his tweets because there is always something interesting there – either something to help my business grow or something that is just, well, different. Here are a few recent ones:

10 TV medical conditions that are rare in real life
How iPhones are revolutionizing one restaurant company
10 surprising facts about Steve Jobs
The world of photo sharing [infographic]

So that is the basic idea. You can stand out in the continuous flow of information on the River Twitter by tweeting things that other people will find valuable in some way. It could be an industry tip or a success story or whatever, but it has to be what I call “great content.” Great content gets you followed and builds your brand. Great content impresses people and gets them to want to know you better.

Where do you find all of this great content? Here are a few places:

You: You can post interesting content on your blog or create videos and post on YouTube, etc.
Websites: As you surf around the Net, you can tweet those articles and pages that you find interesting. Industry sites are especially good for keeping people up to date in your line of business
Business sites: Sites like this one, or Business Insider, Smart Brief and USA TODAY Money all have great general business articles.
StumbledUpon and Alltop: With StumbledUpon, you sign up and indicate your topics of interest. The site then helps you stumble upon new sites about those things. Alltop is Guy Kawasaki’s site and is an online version of a magazine rack covering 900 subjects.

But note: Posting articles and other interesting content is only one thing you can and should post on Twitter. The other main idea is to engage your audience, and to do that, you should do more than just post articles. Consider some of these ideas:

Offer a freebie: Tweet the special of the day. People will sign up to follow you just to find out and get the daily deal.
Have a contest: Re-tweeting is the 21st century version of word-of-mouth advertising. By re-tweeting others tweets, you spread the love.

One last tip: When tweeting, keep the 80-20 Rule in mind, only for Twitter modify it like this: 80% of your tweets should be for your followers direct benefit, and only 20% should be about you and promoting your business.

Family-Run Businesses: Challenges and Opportunities

Most family-owned businesses tend to operate by the rule of thirds– only a third of them make it to the second generation, and only a third of the businesses in that group remain in business by the third generation, and so on.

If you are currently running a family business, considering joining your family’s business, or weighing the pros and cons of bringing your children into the fold, the following are some thoughts that you may want to consider, as you begin to think about what challenges you may encounter – and what opportunities could lay ahead.

Challenges

If you bring your children into a family business at a young age, you may have to walk a fine line between teaching them about hard work, working as a team and allowing them to pursue their own separate dreams.
Older members of the family may not understand or value concepts such as market share, database marketing or social networking.
Family members may have to play multiple roles, ranging from manual tasks like painting and repairs, to executive duties like negotiating partnerships or securing bank loans.
While new family businesses may require flexible work roles at the beginning, eventually you will need to outline every person’s responsibilities, compensation level, long-range goals and line of command.
Certain patterns of behavior or types of communication between family members, like one-upmanship or a tendency to correct someone’s grammar, may be played out in the business realm as well.

Opportunities

Cross-generational entrepreneurs tend to pass on traditional values such as perseverance, a willingness to get your hands dirty and ways to build trusting relationships with customers and self-sacrifice.
The choice of how much to grow your business is up to you. If you are in a family business because you enjoy the flexibility and camaraderie, you may want to keep your company small and local. If you’re in business for big profits, you may want to strive to take your business international or spin off subsidiaries.
Family-owned businesses foster resiliency as they center around a close-knit management team, which has a vested emotional and financial interest in the company’s survival.
Without pressure from shareholders, family-run businesses may be able to take more time to achieve profitability and take business risks without needing to justify decisions to others invested in the company.

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