Tag Archive: small_business

8 Tips for Starting A Business

Seniors start more businesses than people under the age of 30! I know, I was surprised, too. It may surprise you even more that the ones started by seniors have a greater chance of success than those started by the young. These two facts taken together should show you that you are never too old to start your own business, and should also suggest that there may be more opportunities for seniors looking to fund a new business.


Here then are 6 tips to help you get started:


1. Pick something you are passionate about. Don’t just jump on the bandwagon of a product or service that is supposed to be “the next big thing,” instead, pick something you are passionate about. A new business will take a lot of time if you do it right, and you want to spend that time doing something you love.



It is also true that if you are passionate about something and you know that area well, then that experience will be a big leg up. It is also a major reason why senior entrepreneurs are so successful.


2. Don’t take a big risk when funding the business: When you are older, you have less time to make up for financial mistakes. Because a startup is, of course, somewhat risky, one way to hedge against that risk is by being prudent where



So, for instance, don’t look to take out a second mortgage on your home to finance your venture, and you shouldn’t tap into your retirement account. Instead, consider these options:

  • Talk to your state Department of Commerce and see what grants and loans may be available to senior entrepreneurs; you might be surprised.
  • Also, consider crowd funding sites like Kickstarter. If you have a unique idea, getting friends, family and the public to fund it is a more preferable way to go.

3. Come up with a strategy and/or business plan: Even if your plan isn’t to become a major global corporation, you need to treat your business venture as a serious proposition. This means that you need to sit and come up with a plan and a strategy. Your business plan doesn’t need to be elaborate, but you do need to have a strategy for how you plan on getting from A to B to C.


Click here to read more articles from small business expert Steve Strauss


4.  Learn to love the Internet and social media. Like it or not, the internet and social media networks have become the place for word of mouth marketing and business promotion. Forget placing ads in print magazines or making flyers, because that is yesterday’s news. You will get a far better response using, for instance, a Google or Facebook ad. So, take some courses online or at your local community college, and research just what is available to you in internet marketing.


5. Embrace the mobile revolution. I was recently at an Internet marketing event and they said that 60% of all email is now read on a mobile device. Similarly, almost half of all searches now are done on a mobile device. Whatever business you start must be searchable and findable by a mobile device.

Mobile is not only the future, it’s also the present.


6. Become a lifelong learner. One of my favorite business authors (Barbara Winter, author of Making a Living Without a Job), says that one of the best parts of being an entrepreneur is that you have to become a lifelong learner. If you develop the habit of always learning about business and what is coming down the pike, you will be well prepared to serve your customers.


The bottom line is that as a senior, you have valuable experience that translates well into the world of entrepreneurship. Use it wisely.


About Steve Strauss

Steven D. Strauss is one of the world’s leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest,The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss.


You can read more articles from Steve Strauss by clicking here


6 Great Apps for Small Businesses

6 Great Apps for Small Businesses

The rise of mobile has certainly changed the face of business as we know it, and mostly for the better. Now that pretty much everyone has a smartphone, it is important that those phones are equipped with the right tools to keep up with the hectic life of a business professional. Having to put something off until you can get back to the office or hotel room could cost time, money, and even sales. That makes having everything you need in one mobile package a smart choice.


Take a look at these five apps that will add functionality to your phone – and life – with ease:


Audio Memos


Audio Memos is a great app that lets you record audio quickly and easily, whether you’re leaving yourself a reminder or recording a meeting or lecture.Lifehacker called it “the best voice recording app,” and it’s easy to see why – it’s simple, easy to use, and incredibly useful.


The app can even be set to start recording when it hears voices, so you can avoid long silences at the beginning of your recordings. Use the various extensions to trim your recordings, compress them for email, and upload everything to Dropbox, Box, Evernote, Google Drive, or simply send messages via email.




What do you do with those 20 or 50-odd, assorted business cards you’ve collected after you leave the conference? Most of us do a quick sort, and even then, the ones we keep often just get tucked away. Is there a better way to organize them? You bet.


With CardMunch, you just snap a picture of a business card and the app does the rest. It automatically converts the text on the business card into an address book contact using your mobile phone’s contact system. Snap a picture, ditch the card. Additionally, since CardMunch is owned by LinkedIn, you can take that contact information and add the person as a connection on LinkedIn, making it easy to view even more info through their profile right away.





MightyMeeting is a powerful tool that ensures you are never unprepared for a meeting. You can:


  • Store PowerPoint presentations and PDF files and share them any way you want to.
  • Set up online meetings that anyone can connect to using their phone, tablet, or computer.
  • Download documents to your device before you head out to a spot where you know that you are going to be without an internet connection, and use Nearcast to share them over Bluetooth between any iOS devices in the room.
  • You can even create an interactive whiteboard that everyone can use to share ideas.




I travel a lot, giving speeches and what not, and TripIt is my go-to travel app. Here’s how it works: with each travel reservation you make – car rental, flight, hotel, etc– you simply forward the confirmation to TripIt and the site combines them all and sends you back a master calendar/confirmation/itinerary. The elegant itinerary then syncs with Apple and Google Calendars. It also contains weather info for where you are going, as well as maps and directions for each stop on your travels. TripIt Pro adds real-time flight information, a flight finder, and more to an already robust app.



This is another of my favorite business apps. Hightail is a great way to share large files that might otherwise be practically impossible to send. The app lets you send files up to 2GB instantly from your computer or mobile device, and store an unlimited amount of files online. Such large attachments usually upset regular email servers.


At Hightail.com (formerly YouSendIt), you can see who has downloaded your files, and even control who can and can’t make changes to those files. Finally, you can also sign documents through Hightail and return them immediately, making sure that contracts, mocks, and other documents take as little time as possible to get approved.


These apps help make your phone or tablet the only device you need to get everything done. Do you have an app you can’t live without? Share it with us.

More apps for business http://www.businessinsider.com/50-best-business-apps-2013-8?op=1

Five Steps to Business Credit

 Operating without loans can have significant impacts on your cash flow and working capital and does nothing extra to build your business credit. Five Steps to Business Credit

Maintaining good business credit is essential, as a bad credit rating may severely hinder your business growth and expansion. Without good business credit, banks can be less likely to accept your loan applications. Operating without loans can have significant impacts on your cash flow and working capital and does nothing extra to build your business credit.


In addition, if you skirt your financial responsibilities, it’s unlikely that suppliers will extend your business a trade or credit account. That means that you may lose the ability to leverage the 30-, 60-, and 90-day terms of invoices as short-term loans. In addition, many businesses enjoy discounts provided by suppliers to encourage prompt payment; cash customers usually do not get such discounts.


If your business does not have good credit, you can take steps to repair it. The first step to building your business credit is to contact your creditors to set up payment schedules. Such schedules should be reasonable and fair to both your business and the creditor. If you have some history of paying bills promptly, you may find that creditors are willing to set up alternative payment schedules. In addition, successful completion of a payment schedule often leads to a continuing relationship between businesses and creditors.


Late payments or unpaid invoices can often be traced back to housekeeping or paperwork issues rather than cash flow problems. Even these types of mistakes can affect your business credit.

To determine the root cause of the problems ask yourself:

  • Are your creditors sending invoices to the correct address and person?
  • Are your payment checks being sent to and received by the correct department and person?
  • Are all parties clear on when payments must be made?


Additionally, listed below are steps you can take to improve your business’s creditworthiness:

  • Always pay on time. The ability to repay loans promptly has a great impact on business credit scores. You should endeavor to always pay within the terms you have with your suppliers. On-time payments are the most direct way to improve a business credit rating.
  • Pay your biggest bills first. Some business credit scores are dollar weighted, such as the PAYDEX ® Score. Therefore, if you are consistently paying all of your smaller bills but neglecting your largest, your Paydex score can suffer.
  • If timely payments to suppliers and lenders are not included in your business credit profile, your business may not get the credit it deserves for paying your bills on time. You should monitor your business credit profile at least twice per year to ensure that vendor payment relationships are included.
  • Stay on top of your business credit profile. You must ensure that your business credit profile information is complete and accurate. Address any inaccuracies immediately. Certain business credit companies offer customer services and online tools that can help you update and manage such details.
  • Contribute to your company’s credit profile. You can communicate to the credit bureaus as well. The more information you give to credit bureaus like D&B, the more robust your business credit profile will be. In addition, try to choose suppliers and vendors that report their experiences to credit bureaus, which can also boost your profile.

Many businesses are feeling the pressure of tightened credit requirements. However, by carefully planning and executing your plan, you can help fix and improve your business credit.

Google’s New Algorithm Search: How it can affect your business.

Hold on to your hats, small business owners. Everything you thought you knew about SEO and making sure your customers could find your business online may not be true anymore. That’s thanks to Google’s recent adoption of Hummingbird, its new, more dynamic method for improving search results.

“The Hummingbird algorithm is significant as it changes Google from being a search engine to an information engine,” says Mert Sahinoglu, a partner in Chicago’s Falcon Living Real Estate. He has been a digital marketing consultant for over a decade and says that for the small business owner, “This means that they will have to provide more information and multimedia content to their Google+ profile.”

“It’s important to state that Hummingbird is not just an algorithm update,” adds George Zlatin, director of operations at Digital Third Coast Internet Marketing, a Chicago-based SEO consulting and marketing firm. “It is a structural update to the algorithm that affects 90 percent of search queries. To put that in perspective, when Google releases a normal algorithm update, that usually affects anywhere from one to three percent of queries. So this is much, much larger.”

Widespread smartphone and tablet use led to Hummingbird

“In mobile search, thanks to technologies such as the iPhone’s Siri, customers are asking more questions rather than typing keywords,” Sahinoglu explains. Keyword-based searching is still practiced by the majority of desktop users, but Sahinoglu expects this to change. “As Google improves Hummingbird, questions will replace keywords as customer confidence in getting the right answer for the question increases.”
Hummingbird may already be helping your small business

“If you create a lot of good content on your website that is relevant to your business you are more likely to get more traffic from that than pre-Hummingbird,” says Zlatin. “Hummingbird does not mean that Google doesn’t use traditional ranking factors anymore, such as keywords, backlinks to your site, or content. It is just a new framework put on top of it.”

Best practices for small businesses

It’s very important to understand that Hummingbird places a high value on information from Google+ profiles and social media platforms. This means your business may have some more work to do besides the creation and sharing of keyword-rich, unique content on your website and social media platforms.

“You should provide as much detail as possible in your Google+ Local profile, including opening/closing hours,” Sahinoglu says. Images are also becoming increasingly important. Sahinoglu recommends that profile photos should always be selected with marketing in mind. “Photos are definitely becoming the first impression a new customer sees about a business in the new Google.”

Hummingbird will also push small businesses to network with their geographic area customers or with their niche group of customers more on Google+, according to Sahinoglu. Another key factor to consider is your Google + Authorship authority. Google + Authorship is a verification that links online content to the person who wrote it. The more published content you have out there, the more important you become in Hummingbird’s eyes. You will get a bigger boost from content that appears on sites you don’t actually control.
Content is still king

“The best advice I can give small business owners is to really focus on adding unique content to their websites.” Zlantin says. “Talk about what you know. Talk about what customers are asking you. This type of content is going to bring more traffic from Hummingbird.” He adds, “There is no way you can predict all of the search terms people will write, so it’s better to just focus on writing content that is important to them.”

“Start building an extensive Q&A library about your products or services,” Sahinoglu recommends. “This could be a brand-related Q&A or a non-brand product/service Q&A. Optimize a unique page for each Q&A.”

Going forward: Be prepared for change

Google is continually refining and adjusting all of the algorithms they use to determine search results. This upgrade to Hummingbird is sure to be followed by others in the future. As a small business owner, maintaining awareness of these changes and implementing recommended best practices is the best way to ensure favorable search engine rankings.

Getting Positive Reviews on Yelp

How can you get honest, positive feedback to appear on Yelp or review portions of Google, Facebook, or TripAdvisor? It may sound daunting, but some say all small businesses need to do is ask.

“If you don’t ask, the likelihood of it happening is almost zero,” says Adi Bittan, chief executive and cofounder of Palo Alto, California-based OwnerListens.com, a company with an online tool that gives customers a direct line to a business’s owners via an app or text messages. “People are actually much nicer than many people give them credit for.”

Where to start? Listen up the next time a customer pays a compliment for great service or expresses satisfaction about a mistake that was quickly fixed. Translating pleasant, in-person encounters into positive social media capital is a matter of reading the signals your customers are giving and being direct about a request for help, Bittan says. If clients praise an employee, service, or product, that’s a cue that they’re likely open to doing more.

Bittan points to a series of Stanford University studies that show people underestimate how likely others are to agree to requests for assistance. In one, researchers concluded those who are approached for a favor are under social pressure to be benevolent, because saying no might them look bad—to themselves or others. (After all, everyone is sensitive to reviews.)

It’s that perception of altruism that motivates some reviewers, and that’s some of the surprisingly good news that might make your own foray a bit easier than expected. Jon Hall, chief executive and founder of Bloomfield, New Jersey-based Grade.us, has written extensively on the topic of customer reviews and says the vast majority are positive, regardless of the product, service, industry or online community. “There is no need to ask for a ‘good’ or ‘positive’ review. Just ask for a review, ask for feedback,” he says.
Hall’s company, as well as Bittan’s, tries to steer customer reviews toward a company’s preferred online destination. Grade.us uses a platform that directs customers to a landing page, where a business owner can “funnel” their feedback to a review site they care about most, be it Foursquare, TripAdvisor, Google+, Yelp, or a dozen more. Bittan’s service provides a direct channel to the business owner, where compliments or complaints are acknowledged in real time. Both aim to take the steam out of the fieriest of missives from angry clients: first, by making the process of filing good reviews easier for happy customers and swelling those numbers; second, by giving unhappy clients the attention they need from those who can actually help them.

For businesses now, the stakes are particularly high on Yelp, in more ways than one. The site has more than 100-million unique visitors a month worldwide, via its website and apps, and a recent Nielsen survey reported four out of five of its users consult the site before they spend money. A 2011 Harvard Business School survey found that restaurants that boosted their rating by one full star on Yelp saw their annual revenue increase five to nine percent.

But there’s also a very delicate balance small businesses must maintain when soliciting glowing reports.

For its part, Yelp discourages businesses from asking customers for positive feedback on the site. In its FAQ, it says “These self-selected reviews tell only part of the story, and we don’t think that’s fair to consumers. We would much rather hear from members of the Yelp community who are inspired to talk about their experiences without a business owner’s encouragement.”

Any savvy Internet user can spot the obvious inside jobs. But along with filters that try to weed out phony reviews, Yelp has been active in pursuing those attempting to game the system. In late 2012, the site launched what it termed a sting operation, and exposed dozens of businesses that solicited positive reports from undercover “elite” Yelp users with offers of cash payments. In September, the New York state attorney general fined 19 reputation management companies for fake online reviews on several major sites, including Yelp, Google Local, and CitySearch.

All of which makes a genuine rave more meaningful. So what’s the right way to ask for a review?

Bittar says do it “in the moment,” when the goodwill is fresh and top-of-mind. Here is some advice from her and Hall on how to approach a customer:
1. Explain why you’re asking. Put it at the bottom of receipts or in signage in your shop, and say something like “Please let the rest of the world know that we did a good job. Online reviews are one of the most important drivers of our business.”

2. Link it to a customer’s identity as a local shopper, or just a good person. Use messages like “We’ve been serving the [town name] for more than two decades” or “Please show your kindness and support by letting your social media followers know.”

3. Have a tangible reminder, and try to stay unbiased. Hall’s clients hand their customers a postcard asking them to write a review. It reads: “Help us. Help others. You’re invited to review X.”

Social media has given everyone a voice, for better or worse, but for small businesses, it’s how you deal with it that matters, Bittar says. “It still all comes down to giving great service,” she says. “And the way the world is going, the bar has been raised for everyone. You have to wow them. And it’s that much harder.”

Social Media Q & A: Expert Ed Gazarian Talks About First Steps for Small Businesses

Social Media Q & A: Expert Ed Gazarian Talks About First Steps for Small Businesses
by Sherron Lumley.

Ed Gazarian is a native of Boston, a graduate of Northeastern University and Harvard, who works for Pandemic Labs in Boston, one of the oldest social media marketing and analytics agencies in the U.S. He took some time to talk with writer Sherron Lumley about what’s new in social media and the first steps a small business can take when creating a social media strategy.

SL: Tell me about the business of Pandemic Labs.

EG: Pandemic is a 100-percent social media agency; we are not in print media at all. We’re all about customizing for actual customer needs. Rather than be tied to a specific set of platforms or technologies, we’re an agency committed to the notion that marketing is a dialogue, not a monologue. Our client roster runs the gamut from top-tier luxury brands (The Ritz-Carlton), to global retail chains (Au Bon Pain), and to regional groups (Fairmont Parks Art Association and The Roaming Boomers). We’ve also run campaigns with Dunkin’ Donuts, Puma, Canon, and DIRECTV.

SL: What are the basic social media steps that you advise your clients to take today?

EG: First, identify whom you want to communicate with. Based on who a brand wants to engage, the platforms, technologies and strategies we deploy will vary drastically from client to client. Knowing your audience is the absolute first step.

Next, figure out where those people are. If it’s Facebook, you know that’s a crucial part of your overall strategy. If your consumers are more active on something like LinkedIn, or social media’s latest darling—Pinterest—then focus your efforts there. There’s enough demographic info about the major channels out there, to make an informed decision about which channels to operate on. Depending upon what platforms you choose, your methods of engagement will differ. Understand that you will have to commit some time—and money—to these endeavors.

The last of these basic steps is identifying metrics of success. Yours will not be the same as those of other brands operating on the same platforms. Don’t get bogged down in things like “The Top 3 Metrics In Social Media”—lists like that are a dime a dozen. Don’t be dazzled by ‘The Next Big Thing’—does anyone still think Google+ is at all relevant? You know your brand, and you know who you want to go after. Be thoughtful in how you define what success means for you.

PQ_QAedgazarian.jpgSL: How has this changed in the last few years?

EG: Mobile and touch-based technology are easily the biggest game changers over the past few years. The ubiquity of devices like the iPhone, iPad, and their ilk have made social media campaigns based on these things extremely easy—and extremely cost-effective—to deploy on a large scale. Foursquare is a great example of this.

SL: Why is online marketing important today and looking forward?

EG: People are increasingly connected through social channels like Facebook and Twitter. We know, both anecdotally and through vigorous research, that people’s purchase decisions are more significantly influenced by recommendations/reviews/suggestions from their personal connections, than by any brand messaging. This is never going to change. Brands that capitalize on that fact through active engagement on social channels will reap the rewards.

SL: What are some examples of niche areas or groups in social media marketing?

EG: The B2B crowd is definitely one. In the small businesses world—from mom & pop storefronts, to local restaurants, and even 15 to 20-person niche service firms—opportunities abound. Just about every eatery near our office participates in some form of social campaign, such as group buying (through services like Groupon or LivingSocial), and they’ve enjoyed success using those channels.

SL: What are the benefits of targeting small audiences in social media?

EG: The more detailed you get, the more effectively you can tailor things, from the images and copy used in a Facebook ad, to strategically timing your tweets, to the text used in your Tumblr posts. The next evolution of this would be identifying your most engaged audience members. Solutions like Offerpop and Foursquare give small brands a way to compete with the Coca-Colas of the world, without being priced out of the market.

If you’re a local clothing designer with a single storefront, and you want to spread the word about your label to women around 35 years old, that live near your city, and that are interested in fashion—then there are channels (like Pinterest and Instagram) that are uniquely suited to that demographic. The people are already there, and the conversation already exists. Your job—and what will set you apart from the novices—is to find the relevant conversation, and take part in it. Anytime you can mix the value of in-person communication with the reach of social media, that’s a win.

Think Before You Leap: Seven questions to ask before making a big decision

Think Before You Leap: Seven questions to ask before making a big decision
by Heather Chaet.

When deciding to use a beautiful photo of Mount Fuji or that funny cat picture as your screensaver or to have the Cobb salad or a turkey sandwich for lunch, a simple coin flip will do. But, for big decisions that affect the direction and success of your company, navigating which way to head when you reach that fork in the proverbial road means you need something more than the quarter in your pocket.

LookBeforeLeap_PQ.jpgWhat is your decision-making GPS system? Small business owners are confronted perhaps daily with large dilemmas or issues to resolve—having a method to make a smart choice streamlines and focuses those often daunting determinations you need to make. Here’s a checklist of seven questions to ask before making that big decision.

1. What is best in the long term?

When making a big decision, thinking beyond the “right here, right now” is a vital first step toward avoiding a big stumble. “It’s easy to make decisions based on what’s [simple] at the moment or what makes my ego feel good. But those are rarely the right decisions,” says Ian Ippolito, founder and CEO of vWorker.com, which connects employers and entrepreneurs with virtual workers. Sometimes it helps to add a specific time frame on that question, as Paige Arnof-Fenn, 
founder and CEO
 of Mavens & Moguls, a global marketing strategy consulting firm, suggests. “[One of] the main things I think about is
 will it matter six months down the road,” says Arnof-Fenn. Thinking in terms of a finite time horizon often provides better insight to the right solution.

2. What is the return on investment?

For any small business owner, evaluating how this choice will impact your bottom line is essential. Christy Cook, president and founder of Teach My, the maker of award-winning learning kits for children, agrees. “I am not a ‘numbers’ girl, but over the years, I have trained myself to ask 
the same question every time: What is the return on investment? If small business owners don’t measure
the ROI, decisions will be made that could put the business into serious
 financial jeopardy.” Fred Deblasi, cofounder and CEO of HooplaDoopla.com, the online money saving site, says ROI goes beyond just finances, “I think this is a very common question for business at any stage, as it can cost money and time to not get a return on something—[whether it is] a marketing decision or even hiring a new employee.”

3. Are there any other decisions that need to be made before this one?

All too often when running a small business, many issues must be dealt with at the same time. Prioritizing which one needs your immediate attention is as tough and as important as figuring out the right answers to those decisions. “For the last year, we’ve been implementing a raft of changes, and we
 always need to weigh the pros (and any cons) of the change and see if
 anything else is needed more urgently,” says Sandip Singh, CEO and founder of the fundraising website GoGetFunding.com.

4. What’s the worst thing that can
happen if I make a mistake (and can I live with it)?

Just as fundamental as exploring the benefits to any change, looking at the worst-case scenario can provide a prime perspective. “We use the same advice in running our [own] business as we give to the business
owners we work with,”
Jim Stewart, founder and CEO of ProfitPATH, a strategy consulting firm, “For them and us the main question is ‘What’s the worst thing that can 
happen if this goes wrong?’”
 Being able to evaluate how your company will handle a situation if projections are incorrect or unexpected additional funds are needed to complete an expansion is crucial.

5. What will happen if I don’t do this?

Stewart often asks this after tackling the doomsday situation. Envisioning the alternative—doing nothing—can lead to a more definite outlook on the issue, perhaps even providing alternative choices not considered before or a totally new path your company could take to achieve a similar result.


Understanding its advantages and disadvantages of Venture Capital Funding

Understanding its advantages and disadvantages of Venture Capital FundingUnderstanding its advantages and disadvantages of Venture Capital Funding

Understanding its advantages and disadvantages of Venture Capital Funding. Before taking on venture capital, entrepreneurs must ask themselves a fundamental question – “Do you want to be rich or be king?” As Harvard Business School Professor Noam Wasserman explains, it’s difficult for founders to maintain control over their businesses once they take on outside investors. However, without them, such businesses like Twitter and Facebook would likely have never have taken off. For those entrepreneurs who have developed a product with a large untapped market and a potential for rapid, high growth, venture capital (VC) funding makes sense if you’re willing to give up some control and most likely sell your business at the end of the investment period, or fund life-cycle (i.e. when the fund becomes due). However, if you would like to build a generational business, an angel investor may offer more favorable terms that will allow you to receive some equity while maintaining a degree of control.


Looking for that big return

“A VC firm does not invest in a business,” explains investment banker Jeff Koons of San Francisco-based Vista Point Advisors. Instead, it invests in a company that will sell for a lot more than it’s worth at the time of the initial investment. And such firms are looking for a big return (up to 20 times the initial investment) in a relatively short amount of time (3 to 10 years, depending on the fund life-cycle). “If your business is growing just 20 to 30 percent per year, VC funding is not for you,” notes Koons. Focusing primarily on the tech sector, Vista Point acts as a broker to bootstrapped entrepreneurs entering the VC world for the first time. “We help them think through the process from valuation to exit,” notes Koons.


Defending your interests 

Vista Point vets various VC firms for the best valuation and possible outcome for the entrepreneur. Unlike others in their field, Vista Point only works on the “sell side,” meaning their sole clients are entrepreneurs. They do not work with VC firms on other deals. “VC firms sometimes look for a break in the negotiations on these smaller deals for the promise of future work for the investment bank on more lucrative deals down the road,” cautions Koons. So a good rule of thumb is to ask any investment brokers if they work on the “buy side,” with VC firms, as well.


Having sound advice makes all the difference when entering the complex world of equity financing. Joshua Mag, CEO of SquareHook, a content management system provider, consulted a former professor who is an operating partner at a large VC firm before taking on equity from an angel investor in June 2012. “Potential investors want to know what market you’re targeting and its size,” notes Mag. “They’re not going to invest in something that doesn’t produce a large return, so there needs to be a big potential market for your product.” The angel investment allowed Mag to quit his full-time job to focus exclusively on building his business, which included hiring a few employees and seeking development assistance. “My decision to take on capital was a choice of acceleration,” explains Mag. “Had I not taken on the capital, this would have been a slower task.”


Equity comes at a price

Mag gave up 20 percent of equity of his company in exchange for the angel investment; however, a VC investor typically wants at least 20 percent ownership in addition to a board seat and the ultimate sale or IPO of your company upon exit. Nevertheless, how much ownership an entrepreneur gives up, whether to a VC or angel investor, is largely determined by the amount of equity the entrepreneur needs, the valuation of the business, and whether it’s the first, second, or third round of investment.


Aaron Skonnard, CEO of Layton, Utah-based Pluralsight, grew his company’s online training platform for software developers organically for about a decade before taking $27.5 million in Series A funding in 2012. “We saw periodic interest over the years from investors,” notes Skonnard. “But we thought it was too risky to give up too much control in case we needed to change direction.” It was only when Skonnard and his partners felt they had a solid business model and were set to enter a high-growth mode that they decided to take on VC funding

Shop around

“It wasn’t so much about the money as forging those strategic relationships,” Skonnard points out. “Once we decided, then it became a financial exercise –– how much do we take, how much do we want to sell, and who’s the right partner to go with.” Skonnard and his partners met with five or six VC firms several times before they decided on one they believed would add the most value to their business. “It was our comfort level with the people and personalities that drove our decision more than the financial metrics,” explains Skonnard. “Make sure you’re happy with the people that will be on your board of directors.”


Investors provide more than just cash

While the cash infusion helps grow your company, partnering with a VC firms also gives you access to new players in your industry, which in turn helps attract the top talent and increase your market presence. Pluralsight’s traditional model had been to work directly with content producers to build its online training library. But with the funding, it was able to finance the purchase of two online training companies, which doubled its content library in a matter of months. “The Series A really unlocked our ability to make those acquisitions,” Skonnard points out. “We would have never been able to consider that without such funding.”


Beyond their connections in financial and sector-specific industries, some VC investors have an entrepreneurial background as well. Brendan Anderson bought his first business in 1995 and has helped manage and invest in many more since then. In 2006, he co-founded Cleveland, Ohio-based Evolution Capital, which invests in $5- to $6-million companies that have at least $500,000 in free cash flow. “We are point-in-time investors looking for entrepreneurs/founders with a vision creating something compelling in the market,” explains Anderson. He and his partners then work with these entrepreneurs to implement the steps needed for growth.


These include getting the entepreneurs’ financials in order to develop a plan for growth, which in turn enables these businesses to attract the best people. Next is transparency, making sure the entrepreneur communicates his vision and shares day-to-day operational data with employees. Finally, holding the entrepreneur and employees accountable for tasks that will move their company forward. “Once these best practices are implemented, they’re happy with the results,” Anderson points out. “But the process of doing it is usually painful.”


“The founder/entrepreneur still owns a major piece of the business even after we invest,” Anderson points out. However, Evolution Capital typically controls the majority interest (more than 50%) and maintains the right to change management and control their exit (with a typical investment ranging from 3-7 years). “We want to build businesses that continue to grow long after our ownership,” he says.


Understanding terms, conditions, and valuation

If you’re considering taking on equity, it’s critical to understand the terms and conditions of any investment agreement. Whether the entrepreneur maintains some control is largely determined by how the deal is structured. Mag decided to go with an angel investor, who was looking for a longer investment with annual dividends rather than a large payout at the end of a VC fund life-cycle. “Taking on VC means you need to have an exit strategy: IPO, sell, or dividends,” notes Mag. “Most VCs want a full exit to collect on their return within a period that is reasonable.”

And that’s largely determined by when a business becomes part of the fund. “You want to be invested as soon as possible in the life of the fund,” explains Koons. “If there’s only two years left before the VC firm needs to return capital to their limited partners (i.e. investment occurs in year five of a seven year fund), a company could be sold for a loss or spun out even if it’s achieving its growth projections.” Understanding its advantages and disadvantages of Venture Capital Funding


Typically, investors are looking for preferred terms that will position them better than other parties (e.g. paid first upon exit, right of first refusal, put option, liquidation preference). Pluralsight has a minority interest deal with their VC investment firm, which has allowed Skonnard and his partners to only give up two seats on their seven-seat board. “The founders still control the board and the ultimate direction of our strategy,” notes Skonnard. “While we have a very healthy relationship with our new board members, we didn’t want to give up too much control.” Understanding its advantages and disadvantages of Venture Capital Funding


It’s also important to understand valuation, as you need to know what your company is worth in order to negotiate the best terms. “One way to valuate your business is to look at your competitors to see what they sold for upon exit,” explains Mag. There are a number of public sources and tools that list industry comparables. This will also help figure out how much equity you’ll need to put into your business to achieve your growth plans. “That investment defines what your business will be valued at,” explains Mag. “By taking on more than you need, your business is likely losing equity unnecessarily.” Understanding its advantages and disadvantages of Venture Capital Funding


How Much To Ask When Applying For A Small Business Loan

How Much To Ask When Applying For A Small Business LoanHow Much To Ask When Applying For A Small Business Loan

It’s a question that besets many small business owners when applying for business loans: how much should I ask for? More so than deciding on which lender to approach, not having a sound estimate of how much capital you need to borrow could lead to cash flow problems—which could lead to your business shutting down. How Much To Ask When Applying For A Small Business Loan

How then can small business owners determine how much financing they need when approaching lenders? What factors should they take into account when calculating the ideal sum of their business loan?

Be clear on the reason for the loan

Are you launching a startup? Or do you need the loan as additional working capital to make improvements in your business? Answering yes to either question is critical when deciding on how much you need.

Denise Beeson, a small business-funding consultant who previously lent her services to a local SBA-administered Small Business Development Center, a provider of mostly free resources and training to small business entrepreneurs, in Santa Rosa, California, always asks her small business clients the previous questions whenever they come to her about wanting to apply for loans. For those with startups, she does issue a caveat: “If this is a start-up, I remind them that an SBA preferred lender does not fund startups,” says Beeson “We then discuss where they may find funding, such as peer-to-peer lending options, tapping into their personal resources, or asking family and friends.”

If the small business owner is seeking to buy a business from another, Beeson notes that the seller may fund the loan. How Much To Ask When Applying For A Small Business Loan


Also, if the small business owner is seeking working capital for myriad reasons, which might include increasing the marketing budget, making renovations, or paying off debt, Beeson says she will ask clients if they can produce documentation verifying that the debt was accrued as a result of the business.


Without providing the necessary paper trail needed to accompany a loan application, small business owners could hurt their chances of getting financing from a lender, insists Beeson. To prove her point, she offers the following anecdote:


“Recently a restaurant client was interested in an SBA loan to consolidate debt based on improvements to the premises,” she recalls. “They had almost $100,000 in debt including credit card debt that was claimed as accumulated to the business during the recession. However, when we looked at the statements, the entries were not clear when and what had been done. In addition they could not produce any paid invoices from contractors or suppliers linked to the credit card statements. Unfortunately, we could not move forward because the borrower could not provide the needed documentation to the preferred SBA lender.” How Much To Ask When Applying For A Small Business Loan

Consult trusted financial professionals

If you are unsure or confused about how much you should ask for when applying for a business loan, it might behoove you to visit a financial expert such as a reliable bookkeeper or a CPA that regularly deals with small business clients. By reviewing your financials, he or she can then approximate how much financing you will need, taking into account existing debt obligations and operating revenue. And a word of caution: don’t be lax or lazy when it comes to understanding your financials. Sloppy bookkeeping or a lack of knowledge about your books or tax returns will prevent you from acquiring a loan.

Take into account your other non-related business expenses

To determine how much you’ll be able to repay and the length of the loan’s duration, small business owners need to do a cash flow analysis of all their expenses, including mortgage payments or auto loan payments. By doing so, a business owner will be able to develop a more viable estimate of how much they’ll need to borrow from a lender.


Rohit Arora, CEO of the six-year-old Biz2Credit.com, feels this is an imperative step for all small business owners to take when deciding on how much of a loan they should apply for.


“A lot of business owners don’t take [their miscellaneous non-business expenses into account when deciding how much money they should borrow,” he says. “Everything boils down to your repayment capacity. So if you feel that you can borrow some money and there’s some good opportunity that will help you make money off it, that’s good. But that calculation is not a certainty.” How Much To Ask When Applying For A Small Business Loan

Carefully consider payment terms

After you analyze your financial situation, both on a personal and business level, you will also need to decide on how long you want to pay off your loan. By following this best practice, you will be able to produce a rational figure as opposed to an amount that you will never be able to discharge in light of your finances and debts.

Arora agrees, offering a hypothetical scenario: “Let’s say a business owner is borrowing $100,000 and they have to pay back everything in one year,” he explains. “Then the amount of repayment they have to make in terms of speed is pretty steep. Typically for small businesses, the cash flow is their bloodline.”

Similarly, Arora says small business owners need to exercise extreme caution, particularly if they’re planning on borrowing from alternative lenders. “A lot of times they want their money back pretty quickly,” he warns.

Know the lender

When figuring out how much money you need to borrow, it’s vital that you research your lending options. Which banks or lenders are amenable to small business owners in your sector? Just conjuring up a random number for a loan will not help you if the lender is not open to your industry, says Beeson, who advises business owners to also explore nontraditional lending options.

If you need to figure out how much of a business loan you should ask for, you will need to know offhand all of your business and non-business expenses. Not only is this information essential for maintaining good credit—a prerequisite for getting a loan—but it will help you come up with a realistic number that will allow you to comfortably fulfill repayment terms and not disrupt your cash flow. How Much To Ask When Applying For A Small Business Loan