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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.

 

Steve-Strauss--in-article-Medium.png

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

possible.

 

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.

http://www.smallbusinessonlinecommunity.bankofamerica.com/people/Steve%20Strauss/content

You can read more articles from Steve Strauss by clicking here

 

November 4, 2014 Today's Business, , , , , , , , , , , , , , , , , , , , 0 Read more >

When Approaching Investors Here are Some Things to Be Mindful of

When Approaching Investors Here are Some Things to Be Mindful of

 

It’s a scenario that viewers see every week on the popular reality TV show, “Shark Tank.” Aspiring entrepreneurs pitch their company or product to a panel of tough-minded investors that include billionaire mogul/Dallas Mavericks owner Mark Cuban and real estate magnate Barbara Corcoran. Offering a percentage stake of their business at a certain valuation, entrepreneurs will often encounter resistance from the “sharks” who may either not be interested in their startup or want a higher equity in the business to justify their investment.

Although the show’s fans might consider the entrepreneur/investor dynamic to be exaggerated and full of histrionics created to appeal to a TV audience, the truth is that it’s not that far from the reality. Yet there is one glaring difference. Where the show’s investors tend to gravitate toward companies that have proven profit potential as demonstrated by six- or seven-figure sales, very often in the real world that isn’t the case. Sometimes, an idea is all it takes to catch an investor’s interest.

John Frankel, a founding partner at the New York City-based venture firm ff Venture Capital, has funded many startups and early-stage firms and says it’s a fallacy to think that investors will only back companies generating healthy revenue streams. In fact, he says, small business owners should approach investors early on.

“We believe you should talk to investors early to get a sense of what they’re looking for,” he maintains. To illustrate his point, Frankel cites the $80 million in venture funding that was recently raised by Quora, a five-year-old question-and-answer website that he says, “still doesn’t have a revenue model.” (Translation: It has yet to generate revenue or even create a plan on how to do so).

Find investors who have an interest in your industry

Just as you would investigate a company thoroughly before a job interview, you should also learn all you need to know about a potential investor and their history before you even consider phoning him or her.

“Do your homework. Don’t waste your time or theirs on meeting someone not interested in you,” advises Panu Keski-Pukkila, CEO and co-founder of Caktus, a startup that provides “optimal hydration” solutions for health-conscious consumers. Recently, Caktus received $200,000 in seed funding where the lead investor was European venture firm Kima Ventures.

Frankel strongly agrees. “If you’re trying to approach an investor, find out everything about them,” he urges. “What do they like? What interests them?”

Investors_PQ.jpg

Get referrals

Ask trusted colleagues and friends for names of investors you should approach. Solicit feedback from industry peers who are familiar with these investors.

“This works so much better than cold-calling,” says Keski-Pukkila. “If someone is ready to give you an introduction, the investors will be willing to find that 10 to 20 minutes to review your deck [from your PowerPoint presentation] or executive summary.”

Because Keski-Pukkila’s company Caktus was part of an accelerator program, which offers resources and advice that help small businesses grow, he says they were constantly being introduced to potential investors as well as being mentored by them.

In addition to asking people you know for referrals, Keski-Pukkila also recommends having a presence on AngelList, a website that helps startups raise funding from accredited investors (defined in the U.S. as having a net worth of at least $1 million or an income of at least $200,000 for the last two years).

“Investors will contact you if they like what you do,” he says. “That’s how our lead investor got into touch with us.”

Be truthful

Whether it’s overstating your company’s revenue projections or obscuring a detail concerning your product, never mislead potential investors when meeting with them. Chances are more than probable that your deception will be discovered, which will be the end of your ever securing funding from these backers. Many of them are shrewd and savvy and will ask for evidence to support your claims. Avoid the temptation to lie to impress. You will only hurt yourself in the end.

Keski-Pukkila echoes this sentiment, qualifying it with a warning.

“[Investors] will call your bluff, sooner or later,” he cautions. “The word will spread in the investor circles and you won’t get any further meetings.”

Adjust your pitch to your audience

In general, your pitch should contain the basics: brief company history and overview that explains why you are keen about this product or business, market projections, and exit opportunities for investors (how the investor will recoup their investments). However, depending on the audience, you might want to tailor your pitch based on what you think will resonate with them.

For instance, if your company is a tech startup and you’re meeting with investors that have a history of backing these types of firms, then you’ll want to play up the tech components of your company. However, if you’re meeting with early-stage investors that are far more eclectic in their investments, you may do a general pitch that either de-emphasizes the technology or puts it on an equal footing with the other elements you’re covering.

Although he admits it’s an ongoing challenge, Ben Hertzog, president and CEO of Procyrion, a Houston-based medical device startup that recently raised $2.9 million, finds this best practice to be an imperative for all entrepreneurs who are serious about getting outside backing.

“Do your best to tweak your pitch to the audience,” he counsels. “But don’t get caught in the endless cycle of reactionary edits. Just because a potential investor on Monday told you that your presentation was too technical, doesn¹t mean that the potential investor on Tuesday will agree.”

Pay attention to feedback or lack thereof

If an investor thinks you’re not ready to raise funding for your company, then you will need to respect that. Don’t overstay your welcome. Thank him or her for their time and leave. You will not help your case if you press on, notes Frankel.

“Sometimes investors might say this is not a good fit for them and [the entrepreneurs will] carry on and be like a broken record,” he adds.

If investors offer you constructive criticism, listen to them. Use the takeaways as invaluable lessons learned the next time you meet with investors.

However, if they do like you, make sure you remain on their radar, exhorts Keski-Pukkila.

“If you like a potential investor and get useful feedback, ask him to join as an advisor,” he says. “That way he is more committed to your startup, but does not have to invest money yet.”

Approaching an investor can be an exciting and heady proposition for a small business owner. Do your due diligence and always be honest in your meetings. And who knows, you might end up securing a considerable amount of funding.

May 18, 2014 Today's Business, , , , , , , , 0 Read more >

Things To Think About When You Are Approaching An Angel Investor

Things To Think About When You Are Approaching An Angel Investor

 
t’s a scenario that viewers see every week on the popular reality TV show, “Shark Tank.” Aspiring entrepreneurs pitch their company or product to a panel of tough-minded investors that include billionaire mogul/Dallas Mavericks owner Mark Cuban and real estate magnate Barbara Corcoran. Offering a percentage stake of their business at a certain valuation, entrepreneurs will often encounter resistance from the “sharks” who may either not be interested in their startup or want a higher equity in the business to justify their investment.

Although the show’s fans might consider the entrepreneur/investor dynamic to be exaggerated and full of histrionics created to appeal to a TV audience, the truth is that it’s not that far from the reality. Yet there is one glaring difference. Where the show’s investors tend to gravitate toward companies that have proven profit potential as demonstrated by six- or seven-figure sales, very often in the real world that isn’t the case. Sometimes, an idea is all it takes to catch an investor’s interest.

John Frankel, a founding partner at the New York City-based venture firm ff Venture Capital, has funded many startups and early-stage firms and says it’s a fallacy to think that investors will only back companies generating healthy revenue streams. In fact, he says, small business owners should approach investors early on.

“We believe you should talk to investors early to get a sense of what they’re looking for,” he maintains. To illustrate his point, Frankel cites the $80 million in venture funding that was recently raised by Quora, a five-year-old question-and-answer website that he says, “still doesn’t have a revenue model.” (Translation: It has yet to generate revenue or even create a plan on how to do so).

Find investors who have an interest in your industry

Just as you would investigate a company thoroughly before a job interview, you should also learn all you need to know about a potential investor and their history before you even consider phoning him or her.

“Do your homework. Don’t waste your time or theirs on meeting someone not interested in you,” advises Panu Keski-Pukkila, CEO and co-founder of Caktus, a startup that provides “optimal hydration” solutions for health-conscious consumers. Recently, Caktus received $200,000 in seed funding where the lead investor was European venture firm Kima Ventures.Frankel strongly agrees. “If you’re trying to approach an investor, find out everything about them,” he urges. “What do they like? What interests them?”
Get referrals

Ask trusted colleagues and friends for names of investors you should approach. Solicit feedback from industry peers who are familiar with these investors.

“This works so much better than cold-calling,” says Keski-Pukkila. “If someone is ready to give you an introduction, the investors will be willing to find that 10 to 20 minutes to review your deck [from your PowerPoint presentation] or executive summary.”

Because Keski-Pukkila’s company Caktus was part of an accelerator program, which offers resources and advice that help small businesses grow, he says they were constantly being introduced to potential investors as well as being mentored by them.

In addition to asking people you know for referrals, Keski-Pukkila also recommends having a presence on AngelList, a website that helps startups raise funding from accredited investors (defined in the U.S. as having a net worth of at least $1 million or an income of at least $200,000 for the last two years).

“Investors will contact you if they like what you do,” he says. “That’s how our lead investor got into touch with us.”

Be truthful

Whether it’s overstating your company’s revenue projections or obscuring a detail concerning your product, never mislead potential investors when meeting with them. Chances are more than probable that your deception will be discovered, which will be the end of your ever securing funding from these backers. Many of them are shrewd and savvy and will ask for evidence to support your claims. Avoid the temptation to lie to impress. You will only hurt yourself in the end.

Keski-Pukkila echoes this sentiment, qualifying it with a warning.

“[Investors] will call your bluff, sooner or later,” he cautions. “The word will spread in the investor circles and you won’t get any further meetings.”

Adjust your pitch to your audience

In general, your pitch should contain the basics: brief company history and overview that explains why you are keen about this product or business, market projections, and exit opportunities for investors (how the investor will recoup their investments). However, depending on the audience, you might want to tailor your pitch based on what you think will resonate with them.

For instance, if your company is a tech startup and you’re meeting with investors that have a history of backing these types of firms, then you’ll want to play up the tech components of your company. However, if you’re meeting with early-stage investors that are far more eclectic in their investments, you may do a general pitch that either de-emphasizes the technology or puts it on an equal footing with the other elements you’re covering.

Although he admits it’s an ongoing challenge, Ben Hertzog, president and CEO of Procyrion, a Houston-based medical device startup that recently raised $2.9 million, finds this best practice to be an imperative for all entrepreneurs who are serious about getting outside backing.

“Do your best to tweak your pitch to the audience,” he counsels. “But don’t get caught in the endless cycle of reactionary edits. Just because a potential investor on Monday told you that your presentation was too technical, doesn¹t mean that the potential investor on Tuesday will agree.”

Pay attention to feedback or lack thereof

If an investor thinks you’re not ready to raise funding for your company, then you will need to respect that. Don’t overstay your welcome. Thank him or her for their time and leave. You will not help your case if you press on, notes Frankel.

“Sometimes investors might say this is not a good fit for them and [the entrepreneurs will] carry on and be like a broken record,” he adds.

If investors offer you constructive criticism, listen to them. Use the takeaways as invaluable lessons learned the next time you meet with investors.

However, if they do like you, make sure you remain on their radar, exhorts Keski-Pukkila.

“If you like a potential investor and get useful feedback, ask him to join as an advisor,” he says. “That way he is more committed to your startup, but does not have to invest money yet.”

Approaching an investor can be an exciting and heady proposition for a small business owner. Do your due diligence and always be honest in your meetings. And who knows, you might end up securing a considerable amount of funding.

May 13, 2014 Today's Business, , , , , , , , 0 Read more >

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.

February 8, 2014 Today's Business, , , , , , , , , , , , , , , , , , 0 Read more >

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.”

May 16, 2012 Today's Business, , , , , , , , , , , , , , 2 Read more >