What Entrepreneurs Can Learn From Kim Kardashian

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By Gene Marks

Recently I was asked if I could name one entrepreneur that I looked up to the most. It was an easy question. To me, that entrepreneur is Kim Kardashian. Yes, Kim Kardashian.

The Kardashians have been making news once again. Just last week it was reported that the “Kendall & Kylie” mobile game has earned $3.5 million. Kendall is 20 and Kylie is 18. Their older step-sister is Kim Kardashian. Earlier this month Kim publicly boasted that she’s earned $80 million from her own mobile app “Kim Kardashian: Hollywood.” Forbes has estimated Kim’s 2015 earnings to be about $50 million. Some estimates put the net worth of the entire Kardashian clan at over $300 million. Who’s to know how much of this is true. All I know is that the family seems to be living pretty large on their reality show “Keeping Up With the Kardashians” — and yes I’m a fan, OK?

Kim’s detractors call her a talentless phony. They accuse her of being a self-centered publicity hound. They say she’s only famous because of a sex tape and a larger than life derriere, of which she seems to have zero problem showing to the universe. They put her at the center of what’s wrong with America.

But as I see it, she’s actually the opposite. Kardashian is what’s right with America. She is smart. She is savvy. She is hardworking. And she is very, very entrepreneurial. So instead of hating her, why not learn? This is a business woman who has the same characteristics that make up every successful entrepreneur I know.

Contrary to those that think that running a small business is all about “passion” and “changing the world,” the most successful entrepreneurs I know simply have a passion for making money. This is not something that’s taught. Kardashian caught the bug early. As a teenager, she worked at a clothing store for four years. She then designed accessories and started her own eBay store at the age of 16, selling shoes and other fashions. She used this experience to start another business that cleaned out and redesigned closets and took the clothes from her customers and sold them on eBay, too. Sure, her father, a successful and famous attorney, loaned her money for her various entrepreneurial ventures. But he always required that she sign contracts (he once bought her a car in return for her washing it every week – she ultimately paid it off with the profits from her other businesses).

Kardashian catapulted to fame because of that famous sex tape she made back in 2003. But instead of withdrawing from the world she, like any entrepreneur, capitalized on the moment and set about leveraging it to make more money. She persuaded a very skeptical E! network to temporarily run her reality show and, 11 seasons later, KUWTK is clearly making  her and the network a ton of money – it’s the network’s most watched show and earned the Kardashians a 2015 renewal deal for $100 million.

But that’s only the beginning. Kardashian has a chain of clothing stores. She has a string of endorsement deals (some successful, some not…welcome to entrepreneurship) for products ranging from diet pills to nail polish to debit cards. She charges hefty fees for speaking appearances. And of course there’s the mobile app. Is she exploiting her famous name? Darned right she is. And why not. This is what entrepreneurs do. They profit from opportunities. Her fame, her brand, her style, her attitude…that’s her product. This is why she has 42 million Twitter followers, and counting. There is a huge audience of people who she entertains. This is not because of a sex tape. It’s because she’s a driven entrepreneur who’s providing a service to her customers.

She’s also smart enough to realize that she wouldn’t be so successful without others helping her. Every product endorsement and every deal – from her DASH stores to the mobile app – involves a commercial partner. She’s smart enough to know what she doesn’t know. She’s not a retailing guru or a mobile app developer. She licenses her name to companies and lets them do what they do best. Yet, she stays deeply involved in her projects because she’s also smart enough to know that any failure from these ventures will reflect poorly on her, and her brand.

But her best partners are family. And the Kardashians are a true family business, complete with rivalries, bickering, love and arguments. The no. 1 reason why KUWTK is so successful is because — it’s NOT all about Kim. Her sisters and mother and Caitlyn all contribute to the storylines. And they’ve all benefited. Khloe has her own talk show and book. Kourtney blogs about food and style and sells accessories. Caitlyn’s used the show as a launching pad for her transgender agenda. Kendall and Kylie (30 million Twitter followers between the two) are raking in the bucks from their mobile app. And Kris, the manager-mom, takes a percentage of it all. The best entrepreneurs I know delegate, partner and share the wealth. They enjoy making others successful. Kim does this well.

So stop judging. And learn. Why did Kendall and Kylie’s mobile app earn $3.5 million so far? They deserve credit.  But the real credit goes to their older step-sister. It’s Kim that drives it all. A successful entrepreneur doesn’t have to make excuses for what she does. The Kim Kardashian brand provides a release, enjoyment, entertainment and fun for millions. And, like the founders of Facebook and the makers of Star Wars, she profits.  Good for her.

Original Post: https://genemarksblog.wordpress.com/2016/03/22/what-entrepreneurs-can-learn-from-kim-kardashian/

The Home-Based Business: Basics to Consider

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A Doty Group CPA Article

More than 52 percent of businesses today are home-based. Every day, people are striking out and achieving economic and creative independence by turning their skills into dollars. Garages, basements, and attics are being transformed into the corporate headquarters of the newest entrepreneurs–home-based business people.

And, with technological advances in smartphones, tablets, and iPads as well as rising demand for “service-oriented” businesses, the opportunities seem to be endless.

Is a Home-Based Business Right for You?

Choosing a home business is like choosing a spouse or partner: Think carefully before starting the business. Instead of plunging right in, take the time to learn as much about the market for any product or service as you can. Before you invest any time, effort, or money take a few moments to answer the following questions:

  • Can you describe in detail the business you plan on establishing?
  • What will be your product or service?
  • Is there a demand for your product or service?
  • Can you identify the target market for your product or service?
  • Do you have the talent and expertise needed to compete successfully?

Before you dive head first into a home-based business, it’s essential that you know why you are doing it and how you will do it. To succeed, your business must be based on something greater than a desire to be your own boss, and involves an honest assessment of your own personality, an understanding of what’s involved, and a lot of hard work. You have to be willing to plan ahead and make improvements and adjustments along the way.

While there are no “best” or “right” reasons for starting a home-based business, it is vital to have a very clear idea of what you are getting into and why. Ask yourself these questions:

  • Are you a self-starter?
  • Can you stick to business if you’re working at home?
  • Do you have the necessary self-discipline to maintain schedules?
  • Can you deal with the isolation of working from home?

Working under the same roof that your family lives under may not prove to be as easy as it seems. It is important that you work in a professional environment. If at all possible, you should set up a separate office in your home. You must consider whether your home has space for a business and whether you can successfully run the business from your home. If so, you may qualify for a tax break called the home office deduction. For more information see the article, Do You Qualify for the Home Office Deduction? below.

Compliance with Laws and Regulations

A home-based business is subject to many of the same laws and regulations affecting other businesses, and you will be responsible for complying with them. There are some general areas to watch out for, but be sure to consult an attorney and your state department of labor to find out which laws and regulations will affect your business.

Zoning

Be aware of your city’s zoning regulations. If your business operates in violation of them, you could be fined or closed down.

Restrictions on Certain Goods

Certain products may not be produced in the home. Most states outlaw home production of fireworks, drugs, poisons, sanitary or medical products, and toys. Some states also prohibit home-based businesses from making food, drink, or clothing.

Registration and Accounting Requirements

You may need the following:

  • Work certificate or a license from the state (your business’s name may also need to be registered with the state)
  • Sales tax number
  • Separate business telephone
  • Separate business bank account

If your business has employees, you are responsible for withholding income, social security, and Medicare taxes, as well as complying with minimum wage and employee health and safety laws.

Planning Techniques

Money fuels all businesses. With a little planning, you’ll find that you can avoid most financial difficulties. When drawing up a financial plan, don’t worry about using estimates. The process of thinking through these questions helps develop your business skills and leads to solid financial planning.

Estimating Start-Up Costs

To estimate your start-up costs include all initial expenses such as fees, licenses, permits, telephone deposit, tools, office equipment and promotional expenses.

In addition, business experts say you should not expect a profit for the first eight to ten months, so be sure to give yourself enough of a cushion if you need it.

Projecting Operating Expenses

Include salaries, utilities, office supplies, loan payments, taxes, legal services and insurance premiums, and don’t forget to include your normal living expenses. Your business must not only meet its own needs but make sure it meets yours as well.

Projecting Income

It is essential that you know how to estimate your sales on a daily and monthly basis. From the sales estimates, you can develop projected income statements, break-even points, and cash-flow statements. Use your marketing research to estimate initial sales volume.

Determining Cash Flow

Working capital–not profits–pays your bills. Even though your assets may look great on the balance sheet, if your cash is tied up in receivables or equipment, your business is technically insolvent. In other words, you’re broke.

Make a list of all anticipated expenses and projected income for each week and month. If you see a cash-flow crisis developing, cut back on everything but the necessities.

If a home-based business is in your future, then a tax professional can help. Don’t hesitate to call if you need assistance setting up your business or making sure you have the proper documentation in place to satisfy the IRS.

Original Post: http://www.dotygroupcpas.com/newsletter.php?date=082016#3

7 Questions to Ask Your Advisor Before Getting a Small-Business Loan

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A Nerd Wallet Article

Small Business Development Center advisors can offer you experienced advice, unbiased opinions and the invaluable market knowledge that you need to prepare your small-business loanapplication — all for free.

The U.S. Small Business Administration sponsors hundreds of these centers around the country, each with advisors who provide one-on-one business counseling. When you meet with an advisor, he or she will have plenty of questions for you. (Why do you need a small-business loan? What’s your credit score? How will your business be profitable?) Here are seven things you should ask them.

1. Do I have a feasible business idea for my market?

Business advisors can help you do market research to ensure that your business idea will thrive in your particular area. They have access to databases that provide insights including the average revenue of local businesses in your industry and market saturation statistics.

For example, data might show that consumers in your area spend $30,000 a year on coffee. If there’s only $6,000 worth of java being sold by local businesses, your coffee shop has a higher likelihood of success, says Tim Holtkamp, a business advisor at the McLennan Small Business Development Center in Waco, Texas.

2. How much capital do I really need?

In trying to keep their costs down, small-business owners typically underestimate the amount of money they need to borrow, Gary Smith, director of the Small Business Development Center at the University of Wisconsin-Platteville, says via email. Business advisors can help business owners realistically estimate how much capital they’ll actually need, taking into account the unexpected costs that are bound to pop up, Smith says.

3. Am I prepared to approach a lender?

A business plan alone isn’t enough when you approach a lender to ask for a loan. You’ll need to put together a loan package, and advisors can help you do that, Suzanne Darden, a finance consultant at the Greater Birmingham Small Business Development Center in Birmingham, Alabama, says via email. Once you’ve assembled your loan package, you can shop it around to several lenders, Darden says. A loan package should include the following:

  • A business plan
  • Business financials and projections (balance sheets, income statements and cash flow statements)
  • Personal financial statements
  • Personal and business tax returns
  • Personal and business credit reports
  • Legal documents (i.e. articles of incorporation, partnership agreement, licenses, leases, franchise agreements)
  • A description of why you need the loan and specifically how you’ll use the funds

4. What type of loan is best for my business?

Business advisors can help make sure you take out the right type of loan based on the needs of your business. For example, if you need to purchase inventory or cover a gap in your accounts receivable, you should take out a short-term loan that’s one year or less, Bruce Morse, regional director of the Wyoming Entrepreneur Small Business Development Center, says via email.

If you need to buy equipment, supplies or a large amount of inventory, you should take out a loan with a term of up to three years, Morse says. If you’re purchasing large equipment or real estate, you should finance it over a longer period of time: seven to 25 years, Morse says.

5. What funding options are available to me?

When it comes to small-business funding options, advisors know the lay of the land; they’re familiar with all of the federal, state and municipal loan programs, and have relationships with local microlenders and community bankers. Lenders are more likely to consider lending to businesses that have worked with a Small Business Development Center advisor, says Richard Sifuentes, assistant director of the University of Texas-San Antonio Small Business Development Center.

“They give [the loan package] a whole lot more credence,” he says. “We won’t send a client to the bank if we don’t think they’re ready.”

Although online lenders such as Lending Club and OnDeck have become more common in recent years, Small Business Development Center advisors typically don’t recommend them to small-business owners.

“I don’t refer clients to programs that I’ve not physically spoken to a loan officer,” Debra Hamilton Farley, associate executive director of the Hampton Roads Small Business Development Center in Hampton, Virginia, says via email.

6. Are the loan terms a lender has offered me good?

Before you sign a loan agreement, business advisors can help you read the fine print and understand the terms and conditions, says Mark Rentschler, a finance and technology specialist at the Kutztown University Small Business Development Center in Reading, Pennsylvania. For example, if you apply for a bank loan and a bank is interested, it will issue a commitment letter offering you the loan under certain terms. Bring that commitment lender in to your local Small Business Development Center and have an advisor review it before you close on the loan, Rentschler says.

7. What resources do you have that I can use in the future?

Just as it’s smart to go to the doctor for checkups even when you’re healthy, it’s important to meet with your business advisor even when your business is running smoothly. Business owners should make monthly or quarterly appointments to check in with their advisor, says Pamela Lankford, director of the Ohio Small Business Development Center in Marietta, Ohio. Whether it’s helping you market your business or helping you better understand your business’s cash flow cycle, business advisors can continue to work with you to improve.

Original Post: https://www.nerdwallet.com/blog/small-business/small-business-loan-advisor-questions/

7 Small-Business Loan Application Terms That You Need to Understand

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A Nerd Wallet Article

If you’ve applied for a small–business loan, you might have thought that the fine print on your contract sounded like another language. Yet, it’s crucial for you to understand your loan’s terms and conditions.

“[Small-business owners] should know what they’re signing off on,” says Eyal Lifshitz, founder and CEO of BlueVine, an invoice financing company. “The smarter they are, the better decisions they can make.”

The following are seven terms you should know before agreeing to a loan:

1. Origination fee: Financial institutions often charge an origination or application fee to “help defer some expenses that go into evaluating credit requests,” says Jim Salmon, vice president of business services at Navy Federal Credit Union. “Anyone that’s going through the business credit application process will see the information required … can be substantial.”

The cost may be expressed either as a dollar amount (for example, $500) or a percentage of the loan (such as 0.50% of $100,000). You may be able to negotiate the fee with a lender, and you likely won’t have to pay the fee until the deal is approved, according to Salmon.

Origination fees vary among online lenders. Kabbage doesn’t charge the fee. OnDeck short-term loans carry an origination fee of 2.5% on the first loan and 1.25% on the second, with fees waived on subsequent loans. Funding Circle charges a 3% origination fee, while Dealstruck charges 4%.

However, the lender with the lowest origination fee isn’t always giving you the best deal. To get the true cost of a loan, borrowers should ask lenders for the annual percentage rate (APR), which factors in all fees.

2. Fixed rate: A fixed interest rate means just that: The interest rate you pay on a loan doesn’t change during the repayment period. For example, if you have a 30-year, fixed-rate mortgage, you’ll pay the same interest rate and have the same monthly payments for the life of the loan.

When interest rates are historically low — as they are now — it’s often better to take out a fixed-rate loan than one with a variable rate, since you can lock in the low rate over a long period of time. LendingClub, Prosper and Dealstruck all offer fixed-rate small-business loans. SBA 7(a) loans, offered through banks and credit unions, also have a fixed rate.

3. Variable rate: A variable-rate loan is the opposite of a fixed-rate loan. The interest charged on the loan  — and your monthly payments — can rise and fall with market fluctuations.

“You have to be comfortable with the fact that your business will … deal with an additional cost if rates go up,” Salmon says.

Business term loans are generally fixed-rate loans, since they’re tied to a specific repayment period. Business credit cards and lines of credit tend to carry a variable rate, since there’s no time frame to repay the entire balance, according to Salmon.

4. Default interest rate: This term refers to the higher interest rate lenders can charge if you fail to make timely payments on your loan. It’s a common feature of credit cards: If you miss payments or go above your available credit limit, you can trigger a higher penalty rate, typically 29.99%.

“In my experience, it’s an interest rate the lender reserves the right to charge, but … usually doesn’t because they want to keep the relationship,” says Craig Coleman, CEO of ForwardLine, a small-business lender and payment processing provider. “But they reserve the right to do it if they really feel like someone isn’t making any effort to pay.”

5. Contract duration: Small-business owners should be aware whether a loan comes with a contract duration, Lifshitz says. This is common with invoice factoring, a financing option in which you sell your accounts receivable at a discount in exchange for cash.

Most lenders that use this technique require you to factor invoices for a specific period of time, typically six to 12 months, according to Lifshitz.

“If you leave them before … the contract ends, they can have a pretty high penalty. It could be 10%,” Lifshitz says.

6. Prepayment penalty: You might expect that repaying your remaining balance early will save you money in interest. But some lenders will slap you with a prepayment penalty for doing so.

You don’t want to get a loan with a prepayment penalty if you want the option to refinance it later on with a lower-cost loan, Coleman says. “Having no prepayment penalty gives you maximum optionality,” he says.

“It all boils down to costs,” Lifshitz says. “When you think about it, you want to get two things: Make sure you’re not paying more than you should, and that you have flexibility.”

Online lenders such as BlueVine, Prosper, Funding Circle, Lending Club, Kabbage and OnDeck don’t charge prepayment penalties.

This fee is prohibited by federal credit unions, as stated in the Federal Credit Union Act.

7. Covenants: There may be covenants, or legal provisions, in a loan agreement that require you to fulfill certain conditions, according to Salmon.

“For example, a loan with a bank may require you to maintain all of your business accounts with that bank,” he says. “You have to decide whether that’s right for you or not.”

Another possible covenant might require you to provide financial information whenever the bank asks for it, or require you to maintain a certain level of cash in a bank account, Salmon says.

 

Original Post: https://www.nerdwallet.com/blog/small-business/7-small-business-loan-application-terms-to-understand/

How to Decide if Entrepreneurship is Right for You

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by Colleen DeBaise (Three Rivers Press, Dec. 29, 2009).

Starting a business is a lot like becoming a parent. Not only do you have to prepare for your start-up emotionally and financially, but you have to be committed to its constant needs until it’s mature enough to hum along on its own. And even then (much like a child) it will always need you in some capacity, no matter how old it gets.

Here are five questions to ask before you start your own business:

1. Am I passionate about my product or service? Let’s face it: the start-up phase is stressful. You will find yourself questioning whether you’ve made the right decision, especially when the hours are long and the initial profits (if any) are lean. As the business owner, you’re also chief salesperson for your company. Your enthusiasm for your product or service— whether it’s hand-knit sweaters or top-notch tax preparation— is often the difference that hooks customers, lands deals and attracts investors. It’s unwise to start down the path of entrepreneurship unless you’ve got a zeal that will get you through rough patches and keep you interested long after the initial enthusiasm has faded.

2. What is my tolerance for risk? Whether it’s quitting your day job or signing a lease on a new space, nothing about starting a business is for the faint of heart. Just ask Ina Garten, who bought a specialty-foods store called The Barefoot Contessa in East Hampton, New York, in 1978 and has since branched out into cookbooks, television and a line of products. Garten tells aspiring entrepreneurs that you have to “be willing to jump off the cliff and figure out how to fly on the way down.” Even with enough passion to launch a thousand ventures, you could find any number of circumstances hastening your failure: a location that turns out to be less than ideal, a problem with city or state zoning boards or a kink in the supply chain that can’t easily be ironed out. There’s no guarantee of success, or even a steady paycheck. If you’re risk-averse, entrepreneurship probably isn’t the right path for you.

3. Am I good at making decisions? No one else is going to make them for you when you own your own business. Consider how you might handle these early decisions: Do I work from home or do I lease office space? Do I hire employees? Do I pursue high-end clients or sell to the masses? Do I incorporate? Do I advertise? Do I borrow money from friends or family? Do I use my entire savings? Keep in mind that the decision-making process only gets more complicated as time goes on, once you have employees or clients depending on you. The choices you make can lead to success or downfall, so you must feel confident in your ability to make the right call.

4. Am I willing to take on numerous responsibilities? While a corporate employee focuses on a special skill or role within the larger corporation, a business owner must contribute everything to the business. Solo entrepreneurs in particular must be versatile and play a number of roles, from chief salesperson and bookkeeper to head marketer and bill collector. If juggling many roles doesn’t suit you, entrepreneurship probably won’t, either. The recent economic downturn has made it more important than ever for business owners to have a good working knowledge of their companies’ finances. While you will undoubtedly learn much on this topic from getting your hands dirty, the more knowledge you have in advance, the better prepared you’ll be.

5. Will I be able to avoid burnout? Working seven days a week, losing touch with friends, abandoning old hobbies and interests and not making time for loved ones can quickly lead to burnout in the midst of starting up— and ultimately to business failure. That’s what happened to James Zimbardi, an entrepreneur in Orlando, Florida, who says he didn’t know any better when he started his first company in 1997 and worked as hard as possible, for as long as possible, until his creativity, enthusiasm and energy were sapped. By 2002, he was a broken man— the business took a downturn, and so did his personal life. Now Zimbardi is at work on his second company, Allgen Financial Services, and sticking to better habits to maintain work/life balance, such as not working on Sundays, making time for hobbies such as sailing and salsa dancing, and building close ties with other business owners through a faith-based support network.

Take some time to mull over these questions, do some soul-searching, and then if you think you have what it takes, go for it.

Original Post: http://guides.wsj.com/small-business/starting-a-business/how-to-decide-if-entrepreneurship-is-right-for-you/

The Difference between Business Loans and Consumer Loans by Paul Long

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By Paul Long   August 2016

When I talk with business owners there are always questions and assumptions that get brought up when talking about loans. Most Americans understand basic consumer loans, there are your traditional term loans, lines of credit and mortgage loans. Now even though businesses have those same types of loans they can look very different. Here are some of those differences.

Application process

Many consumer loans these days are done on a scoring system.  Banks, car dealerships and vendors all use programs where they submit your social security number and get your credit score, analyze your income and the computer spits out a yes or no within minutes.

For businesses though the most common thing I hear is “Geeze there is a lot of paperwork” and yes depending on the bank and product, there can be. Businesses are complicated and it is the banks job to make sure that we are making a good loan. We have to understand how your business lives and breathes so therefor we will ask for more documentation….sorry.

Loan Terms- Mortgages vs Commercial Mortgages

Let’s take a look at a mortgage loan. On the consumer side you want a loan to purchase a house. You can get a great fixed rate for 30 years. This is because most loans are sold to Fanny Mae and Freddie Mac. These are government sponsored programs that allow homeowners to get low long term rates. Without those organizations there would be no 30 year fixed rate. When banks lend money on a fixed term they are taking the interest rate risk. For example if you get a 4% fixed rate and then rates jump up to 9% you are getting a deal and the bank is losing money.

On the business side when dealing with Commercial Mortgages the terms are different. You will never find a 30 year fixed rate and term on a commercial mortgage. Why? Because there is no government sponsored program like Fanny Mae and Freddie Mac that can guarantee those rates, therefor banks have to determine their own interest rate risk. This is why most commercial loans have a 5 year fixed rate with a 10 year maturity, but the payments are based on 25 or 30 years.

Also when comparing terms on mortgages consumer mortgages have no balloons (usually) and no renewal periods (thank Fanny and Freddy for this too.) On commercial mortgages a bank is going to want to see how the property is doing after 10 years. Can you still afford the payment? Is the building still worth at least what the mortgage balance is? These terms make the bank feel better about the loan but can also cause some issues with the borrower if your situation had changed since you took out the original loan.

If you look into the consumer mortgage market in Canada they run there mortgage loans like we run commercial mortgages here in the USA.

Lines of Credit

Getting a line of credit for you personally is usually done by a scoring model as described above. There are no conditions on how you use the funds or when you pay them back. In most cases if a borrower wanted to have a line of credit and borrow $10,000 and make minimum payments for 5 years, then that is no problem. There are no renewal periods so you don’t have to worry about the bank calling the note. However, if you have a large downturn in your credit score chances are a bank will “term out” your line of credit. Term out means the bank will turn off any available credit and turn what you owe on the line into a loan where you make fixed payments until the balance is paid.

On the business side lines of credit are pretty risky to a bank. Most banks want to see a borrower “rest” their line of credit for a certain amount of time each year. A “rest” means that the balance on the line must be at $0.00 for a minimum of at least 15 days or the line will not be renewed. There are also terms on a line of credit where the bank will re-underwrite the line each year or 2 to make sure that the source of repayment is still solid.

Overall make sure to ask your banker questions when applying for a loan. You are signing on the dotted line so make sure you know what you are signing. It is also our job as a lender to make sure that you are informed and making the best decision possible too.

Happy Lending!

 

 

How to Get Funding from Angel Investors

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Small businesses looking for financial help from an “angel” often turn to individuals willing to invest in promising, start-up opportunities. Angel investors can be a good funding source to consider after you’ve tapped your friends and relatives. But angels usually don’t write blank checks. They’ll want to see progress and a way to exit the deal down the line with meaningful profits. So expect angel investors to do a lot of research and careful investigation into your business plan.

Be thoughtful in approaching potential investors. Biotech investors, for example, don’t want to hear about a clothing manufacturer. A scattershot approach is likely to turn them off. Industry associations, local trade groups or, in some states, business-incubator centers can help point to potential angels.

Angel investors often invest through groups or networks. These provide due diligence, extra research, access to potential deals and shared expertise that one person operating alone generally doesn’t have. For instance, one member of an angel group might have background in a particular industry or the know-how to set up deal terms, sharing that knowledge with the other investors.

Angel investors are usually thorough, so don’t expect to get your money quickly. It could take several months to meet with different individuals or groups and answer all of their questions. (There are exceptions, including the case of Google, which got funding from an angel before its cofounders finished their presentation to him.)

Because they’ll own a part of your company, they’ll likely want a say in major decisions, and they’ll watch to see whether you listen to them. Don’t expect them to write a check and walk away. Many angel investors are former business owners who want to help people like themselves. They may be able to provide good advice based on their previous experiences.

Getting funding from angel investors isn’t easy, but it can be done if you take the right approach and are a good match with their interests. And the benefits can beyond the money for your business, but their expertise in both in business operations and your industry niche.

 

Original Post:http://guides.wsj.com/small-business/funding/how-to-get-funding-from-angel-investors/

How to Borrow from Family and Friends

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Budding entrepreneurs often turn to a lender that overlooks weak points, provides flexible terms, and offers a dream-come-true interest rate: the Bank of Mom or Dad. Without an established track record, start-ups often have trouble getting a traditional bank loan or funding from venture or angel investors. So after tapping their savings, founders often turn to informal investors, which usually means family members and friends.

Such arrangements combine best wishes, a pay-me-when-you-can attitude, and few expectations of a meaningful return. That might be the most realistic view of family and friends financing. So in many cases, it might be wise to not formalize the loan since doing so can raise expectations that it will be repaid in full.

Many people will opt for a loosely structured deal in which, for example, repayment may start only when a company has reasonable cash flow and can afford to make payments — a position many businesses don’t reach until three to five years down the road, if at all. Such an arrangement doesn’t raise expectations of prompt repayment. But such vagueness can lead to problems and confusion later on, prompting some experts to urge putting into writing whether funds are a loan, a gift or an investment. Still, terms of the agreement need close attention. Failure to collect interest or a repayment might prompt the Internal Revenue Service to decide the “loan” was actually a gift and impose gift tax and other penalties.

Online services, such as Prosper Inc. and Virgin Money, a unit of Virgin Group PLC, offer to structure arrangements between borrowers and individual lenders, who are often relatives or friends. For smaller loans, Virgin Money, for example, provides documentation and a payment schedule. For larger business loans, it will service the loans, send payment reminders and provide year-end reports. A more formal plan for larger loans services the loan — including setting up electronic fund transfers, sending email reminders and providing online account access. It also sends out year-end reports to the borrower and lender. The loans are flexible, usually offering lengthy grace periods and interest rates and payment schedules favorable to the business owner.

Some planners note that family members can provide money as an annual gift, helping reduce the size of an estate subject to taxes. Gifts also ease worries of conventional lenders who might be concerned that family loans could impair their ability to collect. One other thought: Some family members who provide loans or gifts think the funds come attached with the right to have a say or participate in the business. Documentation can spell out such issues.

Original Post: http://guides.wsj.com/small-business/funding/how-to-borrow-from-family-and-friends/

How to Register a Trademark for a Company Name

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Original Post: http://guides.wsj.com/small-business/starting-a-business/how-to-trademark-a-company-name/

Registering a trademark for a company name is pretty straightforward. Many businesses can file an application online in less than 90 minutes, without a lawyer’s help. The simplest way to register is on the U.S. Patent and Trademark Office’s Web site,www.uspto.gov.

Before completing the online registration form, check the site’s Trademark Electronic Search System (“TESS”) database to make sure another company hasn’t already registered an identical or similar mark for the same categories of goods or services you offer. U.S. trademark protection is granted to the first entity to use a particular mark in the geographic area where it operates, regardless of whether the mark is registered. But if your chosen mark is already registered by another company — even if you used it first — your registration will be rejected and you’ll probably want a lawyer to help you proceed.

Online trademark registration costs between $275 and $325 and requires information such as the categories of goods and services for which the mark will be used, date of the mark’s first use in commerce and whether there’s a design component to the mark you’re seeking. Internet businesses registering their names should generally refrain from registering their Web extension, such as .com or .net, with their name, unless they’re planning to register the mark both with and without. Getting a trademark without the domain extension will help prevent other businesses from registering the same name by just adding a different extension. Don’t designate a specific design of your trademark in order to get the broadest protection.

You should receive a response to your application within six months of filing, according to the U.S. Patent and Trademark Office Web site. There are some scenarios where registering through an intellectual-property attorney — or at least seeking legal advice beforehand — makes sense. If your desired mark is similar to another registered mark, or similar enough to confuse people, there’s a decent chance your registration will be contested.

What’s more, it’s difficult to register names deemed too generic or descriptive (think “The Ice Cream Shop” or “We Sell Plants”). A trademark lawyer perhaps can help you find a way to get at least some protection.

How Safe Is Your Small Business From These 3 Icebergs?

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by Harry Red

Once your business thrives with real customers and solid revenue, what’s next? A straight line to success?

 

Not quite. Just like on the Titanic, look out the window and you will spot icebergs, dead ahead. Tough problems which can deplete your time, energy and capital.

To dig deep on this, I talked to nine small business owners and learned what they struggle with. You’re about to learn how they tackle some of their biggest problems.

And guess what? Most of it boils down to three key challenges.

 

Iceberg #1: Hiring the right team

Yes, hiring is complex.

First of all, what kind of person are you trying to hire? And can you see your business evolving such that your new hire will no longer be a good fit?

Steve Ryan, founder of digital marketing agency RyTech, points out how the way you hire today might need to change as your business evolves.

“The challenge is: do we focus on building a team for what we have now, or where we could be in a year, or in 5 years?”

Say, if you hire a team of developers to build features which you later discover your customers don’t care about, you’re left with a team of idle and costly developers. Ouch.

It gets tougher. Even when you know who to hire, you’ll need to train them. Provide teaching on how you do things in your company. Onboarding.

Casey Meehan, founder of Epic Presence — also a digital marketing agency, focused on content — wrestled with this problem. They need good writers to create this content, but teaching them the ropes takes time.

“When we get a new writer on and they’re good, they just don’t know all the stuff we know. And that can take months of trial and error, edits, and frustration of them not really knowing how to do some of the things that are second nature to our head writer.”

Sounds difficult. But perhaps with the right focus, you can avoid some of this.

Ali Valdez, founder of online yoga school Sattva Yoga Online, and a top-performing former Microsoft executive, told me how you should not ignore your own skills when hiring.

“My biggest mistake was, I hired people to do the work that I’m best qualified to do, instead of focusing my hiring efforts on people to fill the gaps on skills I don’t have.”

Smart move. Because if you discount your own capabilities, you weaken the impact you can make in your business.

Which leads to the next big challenge for your small business. How can you take it to the next level when you still act as a linchpin for daily operations?

 

Iceberg #2: Picking the right priorities

Take Derek Hales, founder of Sleepopolis — an in-depth mattress review site. People reach out to him every day to ask personalized questions about which mattress to buy.

“I don’t ever tell someone I’m not gonna answer their question, and I never ignore their question. As a result, my right-hand man Chris and I field a lot of questions — usually between 50 and 80 questions per day. It definitely consumes a large amount of time.”

Makes sense. As a small business, you want to grow as fast as you can — but you still have to do some grunt work. Hence, the challenge.

Andrew Wicklander, founder of yoga studio software company Tula Software, shares a different perspective. His challenge is to grow at the rate he wants and yet avoid outside investment.

“For us, it’s a balancing act between deploying capital that we know will bring us more customers, while also remaining profitable and running the business operationally in a healthy way.”

Two key words here: balancing act. And hence the dilemma: when you try to balance multiple things, prioritization gets more difficult.

Michael McCurdy, cofounder of Testing Mom — an online test prep school — gives us a valuable lesson here.

Namely, priorities are strict.

“Set down priorities, and don’t jump from priority to priority without finishing the first one.”

Yes — this matters, because if you allow yourself to skip priorities, nothing will get done.

McCurdy says: “For us, it’s about prioritizing not only what will have the biggest customer impact, but also what’s going to help the revenues.”

Call it a shortcut to prioritization: focus on tasks which impact your customer and grow your revenues.

Speaking of your customers, who are we really talking about?

 

Iceberg #3: Serving the right customers

Every new business faces a key challenge: how can you jump to where potential customers hang out and convert some of them to your company? Call it outbound lead generation.

Dodd Caldwell, cofounder of digital recurring payment solution MoonClerk is hard at work on this question. Right now, he thrives off inbound leads, but reaching the next level of scale requires some outbound.

Hard to do when you have many customer segments.

“The blessing of having customers across industries is you can lose customers and it doesn’t hurt you that much. All these people can use your service…but the problem is outbound lead generation.”

And once you do get some outbound leads, expect more hurdles. Because just like employees, customers also need onboarding.

On a daily basis, Nina Ivanichvili, founder of translation services provider All Language Alliance faces problems onboarding new customers. She shares an example:

“Sometimes clients would ask for a Haitian Creole interpreter. And then prior to the appointment they say it’d be nice if that Creole interpreter would also originally come from Sierra Leone — a country with a language that sounds like Creole, but which is completely different. Clients don’t know what they don’t know.”

She nailed it: customers don’t know what they don’t know about your industry. You have to educate them.

But sometimes, you do your business zero favors if you take any customer you can get.

Andres Hernandez knows this well, as cofounder of Wingman Legal Tech, a company that provides technology services to law firms.

“Our biggest focus right now: finding law firms with the same philosophy that we believe in, in terms of technology. Because certain law firms are set in their ways. That’s an uphill battle.”

Smart move. Since everything in your business connects to customers, when you pick the wrong ones, you effectively make your business work against you.

Watch out for all the above. Hire the right team, pick the right priorities, and serve the right customers.

Ignore one of these and like the Titanic, you will hit an iceberg. Eyes sharp, entrepreneur.

Original Post: http://www.huffingtonpost.com/harry-red/how-safe-is-your-small-bu_b_10277754.html