Way to Grow

What about Copyrights and Trademarks?

I'm behind on this one: Small Business Trends held a twitterchat yesterday with a couple of experts on the subject of copyrights and trademarks. BUT, even if you missed it as I did, you can go back and see what they said on their SMB Chat page -- and you don't even have to be a Twitter user to view it. It takes some scrolling and going to older pages, but if you do it soon enough you can still follow the thread (albeit in reverse if you're going front to back). This is worth checking out, because it's a topic that is not well understood by many small business owners.

It's Free to Ask

Why is it that so many people have an aversion to asking for something --- anything? People who know me well, and certainly my (now adult) kids, have heard me often say, "It's free to ask." If there's one gift I've given my children, it's that understanding.

What do you want to know?  Who knows the answer? Why don't you ask them?

Truth is, one of the things that distinguishes entrepreneurs from others is that they're not afraid to ask for what they want or need. I was reminded of this by Usha Sekar on The Startup Ethos. In a recent post, he told how amused his family was when he solved the problem of groceries for the weekend outing, when the convenience stores had closed in a small resort town, by asking to buy a few basics from a restaurateur who was open. Ballsy? If you're entrepreneurial, no.

Sekar reminds us:

For an entrepreneur the end result of growing a successful venture should overcome any qualms about getting turned down, ‘looking funny’ or, even more likely, the perception that you’re giving up power by asking for something. So it is imperative that s/he gets comfortable with the fact that asking is pretty much the surest way to getting. And a ‘no’ is not life-ending.

And it's free to ask, Oh, and yes, my adult children are now entrepreneurs.

Show Your Passion When You Need to Ask for Money

Few budding entrepreneurs have sufficient funds of their own to start a business. The more complex the business, the more money needs to be raised. Whether you go to friends and family, a banker, or an investor for startup money, you need to be able to explain clearly what your plan is and why you believe it will succeed. Martin Zwilling, founder of Startup Professionals, Inc., gives an excellent outline for an Executive Summary. Use it well and you're halfway there. His six-point outline for a killer executive summary:

1. The problem and your solution. These are your hooks, and they better be covered in the first paragraph. State your value proposition, and what specifically you are offering to whom. Skip the acronyms, history of the company, and the disruptive technology behind your solution.
2. Market size and growth opportunity. Investors are looking for a large and growing market. Spend a few sentences providing the basic market segmentation, size, growth and dynamics - how many people or companies, how many dollars, how fast the growth, and what is driving the segment. Skip the comment that you are conservatively estimating your penetration at 1%.
3. Your competitive advantage. Identify your sustainable competitive advantage, like unique benefits, cost savings, or industry ties. Don’t kill your credibility by saying you have no competition. At a minimum, you compete with the current way of doing business. Most likely, the investor has already seen multiple plans with similar solutions.
4. Business model. Who is your customer, what is the price, and how much does it cost you to build one? Do you now have real customers, are just starting development. Outline your sales and marketing strategy (direct marketing, sales channel, viral marketing, and lead generation). Identify key quantities, such as customers, licenses, units, and margin.
5. Executive team. Remember that investors fund people, more than ideas. Why is your team uniquely qualified to win, and what have they done before? Explain why the background of each team member fits, by naming roles and names of relevant companies. Include outside advisors if they have relevant experience.
6. Financial projections and funding. You need to show your summary revenue and expense projections for three to five years. Investors need to know the amount of funding you are asking for now, and what they get. This should generally be the minimum amount of equity you need to reach the next major milestone.

But you're not done yet. Zwilling goes on to remind the reader that, assuming you'll be sending your executive summary by email, what you say in that one-paragraph email is critical:  "Less is more here, so include the grabber, show your passion and commitment, and be sure and ask for something (like a follow-on meeting or specific feedback)."

You've Heard It Before: Make Lemons Out of Lemonade

In crises, there are opportunities, according to an old Chinese proverb. In a downturn, there can be ways to start your business at significantly lower cost than during boom times. During the dot-com bust in 2002, a chemist acquaintance of mine was laid off by a disk drive manufacturer. She was able to start her own chemicals analysis lab by buying test equipment at bankruptcy auctions at a fraction of their actual value. Starting that business would have been prohibitively expensive in a good economy, so the poor economy actually helped her get started.

A recent Wall Street Journal article on starting a business on a shoestring included a section on finding creative deals. It quotes Ken Yancey, chief executive of SCORE:  "With so many businesses suffering these days, many suppliers are willing to accept nontraditional deals to keep themselves afloat. For instance, if you have purchase contracts for your product, some suppliers are now willing to help with upfront capital needs if it means they’ll get your business."

The article goes on to discuss barter deals. Several young men I know are starting a microbrewery in the back of a cafe, rent-free in exchange for heavily discounted beer the cafe will resell to customers. They would be unable to get financing to start a business in this economy but have found a creative way to get started at relatively low cost. If you can devise a creative barter deal, make sure you have a detailed agreement that explains who gets what in exchange for what.

Each business is different. Think about ways you can make the most of the times we're in to equip your business.

Focus Now on What You Can Win

It is so tempting for young companies to try to serve a broad market, thinking that they can make more money where there is a gigantic opportunity. But a one-size-fits-all product or offering doesn't really work anywhere, and the cost to support different offerings for different segments (say, small businesses vs. enterprises, or high-end consumers vs. bargain shoppers) is just too high for a growing company.

The big guy competitors that serve different markets didn't start out that way, either. If you dig into their histories, you will inevitably find they started in a niche, and when they had built up some cash reserves, worked their way out into other markets -- either organically or by buying other businesses.

Take some time, do some research, and ask your advisors: Which is the one market where we can get the best traction now? Then make the hard choice -- narrow your target market, offer the best products or service you can for that market, and figure out the best way to communicate with those prospects.

Greg Head in New Avenue blog tells a story of two entrepreneurs, one who focused and one who couldn't. Believe him when he says, "Of course, it’s hard to decide to narrow your focus as a company: hard on the ego, hard on short-term sales, hard on the customers you leave behind. But it quickly makes your business easier to run: easier to communicate to the market, easier to execute, easier to please your customers, and easier to grow in the long run."

Music to Your Ears! (Or Not...)

You've launched your business and are getting some traction. You introduce yourself to someone, and when they say "I've heard of you before," that can be music to your ears. A guy named Scott Ginsberg gives some good advice on what to do when you hear that. It could be good news. Or not so much. Ginsberg advises asking:

• “How did you hear about me?”
• “What – specifically – did you like most about (x)?
• “Can you give me an example of how (x) has been helpful to your world?”

As he puts it, "That way you can find the rock that created the ripple. And then you can go throw more rocks."

If what the person heard wasn't so good (although you're less likely to be told about this), ask the same questions. "How did you hear about me/us?" "What did you hear?" That's an opportunity to learn, too.

(Belated hat-tip to @curtisfinancial on Twitter.)

Building Your Sales Team

Do you think you've made enough headway to bring in one or more sales people to help you grow your business? Congratulations!

Do you know enough about building a sales team to get started? Dharmesh Shah, founder of HubSpot, offers 14 valuable tips on building your sales team on Entrepreneur Corner. Let me just focus on a few, here. They're all important and I recommend you read the rest yourself:

3. Don’t hire several sales people at once. Your goal is to figure out the “pattern” of what kinds of people are best based on what you’re selling and who you’re selling it to. You need some feedback from the system so you can continue to iterate on your hires.

7. Sales people will generally act in mostly rational (but often surprising) ways based on incentives. The rules of the game define the behavior of the players. You were warned. [Important if you haven't ever been in sales, yourself.]

13. Once you get beyond three or so people, running your sales in a spreadsheet will become painful. Start looking at CRM systems (like Salesforce.com).