Archive for the ‘For & About Entrepreneurs’ Category
How to Attract Great Advisors to Your Venture
Sunday, January 22nd, 2012Looking for wisdom? So are your competitors and fellow entrepreneurs. Here are some thoughts about how your company can increase its odds of landing in-demand advisors.
Recently, we received a question from an entrepreneur: “We are a technology startup and have got to a level of mild traction with a user base that’s engaged. Now that we know that we are creating value its time to transcend to the next level and get a great set of advisers on board and we are not looking for big names but advisers who are proactive and interested in what we do. Any tips on going about and getting great advisers on board would be useful.”
Our Thoughts:
The tactics for attracting good advisors are similar to the tactics for attracting a top team. Be prepared to compensate them.
Sometimes equity is enough of a lure, but most advisors don’t get excited about a single digit or fraction of a percent ownership to really dig into an advisory role. Compensating the advisor with even a nominal consulting fee is a strong signal that the advisor is valued and is viewed as a signal that value is expected from the advisor in return.
Good advisors are usually in high demand by many more startups than can be served; therefore, it’s important to understand that relevant wisdom isn’t a commodity, but rather a scarce resource. In today’s economy, cash is king more than it used to be. Investors want to see customers paying cash, not consuming free services. Employees want to see cash, not just stock options in expectation that a small slice of equity alone will be worth something material in the future.
Establishing a solid core advisory board – formal or informal – means choosing a select few (not trying to “collect lots of names for the letterhead”) and treating them like a co-founder. Engaging them equally. Listening to them equally. Compensating them properly. Expecting value accordingly.
Founders who don’t understand this should consider just asking an occasional cold-call question to various subject matter experts, but not expecting an advisory relationship with much substance. Too often, founders don’t manage or engage or compensate advisors properly and then blame the advisors for not being useful, helpful or valuable. Too often, the founder-advisory board relationship is structured for failure or at best, it turns out to be a mild distraction to all involved. 
You may find advisor candidates who are interested in what you do, but you still must find the right amount of equity and/or cash compensation to make those who are interested also proactive and committed.
Instead of a conventional perspective of “seed money is the first step towards validation”, the mantra today is likely the converse: “validation is the first step toward seed money.” In more than half of all startups nowadays, the initial validation comes from the wallets of the founders (i.e. first phase is bootstrapping). If the marginal costs of starting a business includes some compensation to key individuals in the budget, the prospects of beating out a competing startup for that same wisdom is very good, and this early tactic sets the pace for startup success, just like proper planning and preparation does.
In summary, wisdom is often a scarce resource. Like anything of value, be prepared to pay a fair price for the advisory expertise you need and your chances of acquiring that wisdom will increase.
Q&A: Pricing for a Startup
Wednesday, November 30th, 2011
Question:
How can a start-up business figure out what to price their service? I started an online/app advertising company for bars and restaurants. I need to figure out what to charge these businesses to be listed after their free trial is up at the end of the year.
Answer:
Pricing a new product is a common challenge of many startups; we completely empathize with your situation.
First, you may want to extend your free trial for an extra month or so if you don’t feel you have the right pricing strategy.
Now, to figure out your ideal pricing strategy, have you done any test marketing or “voice of the customer” / focus group type events? Polls? Do you have a large base of free trial users? If so, you might tap some of them for an open discussion in return for an extended free use period.
We also suggest some paid adword activity with varying “calls to action” at different price points to see what the pull is. This can be done on Facebook or Google. You can also test marketing messages this way. If you can spend some money on a direct email to a list that fits your industry, it’s also a way to test pricing in the message to see how many click-throughs you receive.
As we’re not experts on pricing, we recommend two good books (click on each title below to find each book) that address pricing as part of startup marketing:
Marketing That Works (Wharton School Publishing)
and
Real Time Marketing for Business Growth
Ask your own question to the ActSeed team here: http://actseed.com/contact-us/
Marketing That Works
Monday, November 28th, 2011
This is one of our favorite marketing reference books for entrepreneurs and startups.
Make sure this book is in your own entrepreneurial library.
This book explains how the good steak can sizzle without leaving you with just an aroma. “Marketing that Works” was written by some of the best minds in startup marketing who have held prominent positions in blockbuster startups, idealab!, Wharton and venture capital: Howard Morgan of First Round Capital, Leonard Lodish of Wharton and Shellye Archambeau, former president of Blockbuster’s e-commerce division.
This book includes practical approaches (not just theoretical!) to developing business ideas, pricing, market validation, distribution and channel strategies, product launches and more.
To buy a paper copy or download a Kindle version from our bookstore partner, Amazon.com, click here.
TEC – How One ActSeed Entrepreneur Group Member is Sparking the Economy
Friday, November 11th, 2011
Sometimes, an ActSeed Entrepreneur Group member not only has a promising business, but is also an ally in ActSeed’s mission to assist people in building exceptional companies of all types. The TEC Center is one such partner that has the potential to make a positive impact on our economy.
There are a lot of folks hurting for work and wanting an opportunity to leap out-and-up from their current economic situation. As many big companies sit on the sideline for hiring, a growing number of disenfranchised people aspire to take control of their future and create their own job by starting a business or joining a startup. The trouble is: where do they turn? Where can they acquire the knowledge to be a business owner, a business partner, an entrepreneur?
Entrepreneurship is not a reserved for a “ruling class” or exclusive to the highly-educated. At its core, entrepreneurship is about building something of value that others want to purchase and accepting the risks inherent in the process of moving from “idea to implementation”. This includes butchers and bakers, not just iPhone app makers. Just as ActSeed is dedicated to assisting regular people build exceptional businesses, TEC is committed to training regular people to become business partners.
We interviewed Jack Finkelstein, the co-founder and President of TEC – which is as much a movement for positive change as it is a promising young business. We have provided Jack’s contact information at the end of the interview so you can reach him directly and explore how to get involved.
Q. Describe your “Eureka Moment”. What was the market opportunity that drove your decision to form a company around this product/service?
A. The Eureka Moment came when we realized that every one of our graduates will be guaranteed a job. This is a powerful statement to make in the middle of a recession. We also realized that not only are there millions who need our service, but every year an additional 2 million young adults enter our target market zone.
Q. How did you fund the company to its current state?
My partner and I have self-funded the project till now. We have also formed a 501(c)3 not-for-profit corporation, held seminars with Operation Hope in Harlem to test market our program, acquired an office at 590 Madison Avenue in New York City, and started some of the businesses that our graduates will participate in.
Q. ActSeed champions the need for solid planning and preparation from the very beginning. How important is planning and prep to your company’s success? Can you share an example or two?
A. Planning and preparation is important to the success of any new corporation. The seminars we held at Operation Hope and some of the high schools resulted in the following: Young adults in the inner cities with a high school degree or GED degree desperately want and need the TEC Center Program. Not only will they be guaranteed jobs but they will also become partners in the business that they will work in. Our target market currently has an unemployment rate of close to 20%. The TEC Center Program is a valuable program that can provide them with the type of success they may otherwise only dream about.
Q. How long did it take to get your idea into the market from initial concept to first customer?
A. This has been a 3 year labor of love that not only is about a great business venture – but also a “movement.” From understanding the inner city individual to determining which businesses can be formed and remain successful in the inner city has taken up the majority of our time. The last 6 months have been spent in looking for the right nationally accredited school with the proper accreditation, and Title IV abilities that we require for our program.
Q. What influence have the internet and new media had on the way you are marketing, selling and supporting your products/services?
A. An advantage we have is that we know how to reach our target market. Every high school graduating class, every GED class, and even the colleges represent potential students for our program. It is not a surprise that these individuals all have email addresses and a cell phone. We also utilize the internet as a research tool to teach entrepreneurialism to our students.
Q. Describe the challenges you faced as you built your customer base, including defining the customer target, establishing the right price and pricing strategy and of course, closing the first few deals. Any wisdom to share with other entrepreneurs on this subject?
A. Defining and reaching our customer base is perhaps our easiest task. We decided primarily on young adults in the inner cities because they can utilize our services more than college grads. The cost of tuition is covered through Title IV Federal Student Loan Program. Students pay back the loan after they graduate and begin working. Since all students will be working for one of our company-sponsored startups, we do not anticipate any issues in paying back the loan.
Q. What techniques have you used to establish credibility in the eyes of customers, investors, partners, personnel and the general public?
A. The TEC Center Program speaks for itself. Guaranteed government funding for every one of our students (each student gets pre-qualified for the funding). Guaranteed jobs for all graduates. The government spends approximately $100 Billion dollars every year on education and we anticipate that this will continue for a long time. This is virtually a no-risk, low cost business to enter. A classroom of 32 students can be turned around 3 times a day (each class is 3 ½ hours long). This represents enough revenue to support full operations and the company-initiated small businesses. Direct overhead is approximately 20%. Investors salivate over these statistics.
Q. Have government, University, or other community / economic development programs been useful? If so, how?
A. We believe that educators are good at educating but do not make the best entrepreneurs. Most have never owned or operated a successful business. While high schools mostly concentrate on math and science to prepare students for college, we concentrate on entrepreneurship and prepare our students to become partners in a business – a business that they will enter as a partner, without being required to apply any of their own savings. Most inner city economic development offices attempt to convince large businesses to move into their district in order to create jobs (mostly low level jobs). The TEC Center Program provides the tools, entrepreneurial education, training and a myriad of jobs and businesses that students can choose from.
Q. What is the most important thing people never tell you about joining or founding an early-stage company?
A. Most people do not know enough to give sound advice about founding an early-stage company. Entrepreneurs and optimists tell you to “go for it.” Non-entrepreneurs and pessimists tell you that “most new businesses fail.” The real key to success is to keep your expenses down, understand your target market and product (or service) better than anyone else, don’t hesitate to continually challenge all of your assumptions, and have plenty of contingency plans if things do not go as expected.
Q. Is there anything else you’d like to share that we didn’t ask you in the questions above?
A. In addition to an expected healthy financial return to our investors TEC is a shining example of a social value enterprise: a profitable venture that address a major public need and gives back to the community. The success of the TEC Center Program will also help reduce the dramatic high school drop-out rate, especially in the inner cities. Nationally, the high school drop-out rate is 25% to 50%, over 50% in the inner cities. In addition, 50% of college students drop out of college – 30% the first year alone. This dropout rate is called “The Silent Epidemic” because few people are talking about it. These individuals can now learn how to become entrepreneurs and partners in a business. TEC will be instrumental in training the unemployed, single parent families, returning G.I. veterans, and individuals who have been released from a correctional institution as long as they have a high school or GED degree. Something has to be done now. The TEC Center Program takes a major step forward in solving this very serious situation. Having just 1,000 students in each state represents a major contribution to job creation and the economic growth in each stage. We are not in a high-tech business; we are in a high-value business.
Our thoughts about ActSeed: “ActSeed is very professional and I strongly believe that its CEO, Bill Attinger, truly cares about our program. ActSeed has been involved in every aspect of the processes that are required to present the TEC Center Program as good as possible. You can’t go wrong by giving ActSeed the opportunity of matching your program to possible investors.”
For more information about The TEC Center, please contact Jack Finkelstein, founder and President, at jack@theteccenter.com or visit their web site at http://www.tecmembers.com.
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Are You Three Feet from Gold?
Monday, September 19th, 2011Entrepreneurs, small business owners and founders of startups tirelessly work toward turning their business vision into a commercial reality, and possibly a metaphorical gold mine. While the destination and even the journey can be rewarding, it’s often lonely and frustrating to the point entrepreneurs often give up. If this describes you, then read “Three Feet From Gold” before making your final decision to throw in the towel. It may be a life-changing choice.
There’s no doubt that Napoleon Hill has influenced many generations of leaders with his research and writing that stems from a 1908 encounter with Andrew Carnegie.
Hill’s principals have been artfully brought into today’s business landscape with the book, “Three Feet from Gold”. ActSeed champions books and individuals who can both educate and inspire. Sharon Lechter and Greg Reid do this well.
When you buy this book, buy a notepad, too. This is one of those books that inspire you to take notes and then muster the tenacity you need to pursue your own purpose.
As the book states, the greatest reason for failure is quitting. Don’t even consider quitting until you have read this book.
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Impact Your Business
Saturday, June 11th, 2011Many entrepreneurs are “allergic to the numbers side of the business”. Part of the high failure rate of small businesses is due to avoiding and ignoring basic financial principals.
Ken Kaufman’s book explains the essentials of small business finance and how to easily apply them through the use of allegory. In other words, he uses “good ol’ fashioned story-telling” to make even the most finance-phobic business owner learn and appreciate the need for quantitative, financial management.
This is not just a story about Steve, a man struggling as a small business owner, a husband and a dad. It is a guide penned in a way we can all identify with. It goes beyond merely being clever about teaching financials.
For example, in Chapter 23, the protagonist (Steve) starts to see, from his own experiences, how anxiety and clarity are negatively correlated. This is a non-financial lesson we all must learn and respect. This book is full of well-articulated insights that we all face as business owners.
The first time you read it, Kaufman’s book is an enjoyable story that “hits home”. Then, it becomes a very useful reference guide for the next hundred times you’ll take it off your bookshelf.
You can get your copy of “Impact Your Business” here.
Where to Go to Test and Improve Your Elevator Pitch
Tuesday, May 10th, 2011Inside Pitch for Entrepreneurs and Angels:
Crowd-Based Feedback for Startup Elevator Pitches
Our new LinkedIn group is a collaborative area for “perfecting the quick pitch”.
You typically get 45 seconds or 45 words – your “inside pitch” – to articulate your business model to customers, angels, VC and other investors. Join ActSeed’s LinkedIn group to test your message on fellow group members for constructive feedback, and help other entrepreneurs scrub their pitch, too.
How to participate:
Join ActSeed’s LinkedIn Group called “Inside Pitch” – it’s free!
Post your “inside pitch” as a new LinkedIn discussion in this group.
Invite others to provide constructive feedback.
Use the comment thread to refine the pitch and interact with those who are helping you.
Who should participate:
Entrepreneurs, small business owners, angels, investors, venture capitalists, founders of startups, students, executives, business coaches. Essentially, anybody who needs help or wants help in perfecting elevator pitches.
What happens when your pitch is ready?
Go find customers and/or investors and share your message!
Of course, ActSeed.com is a good venue to find “well-informed investors” who want to engage “well-prepared entrepreneurs”.
RULES:
1. Keep it constructive and civil. Rude or arrogant comments are not welcomed. We want to cultivate a forum where we help each other improve what we say or write when we pitch our business so when we do it “live” in front of a customer or investor , it resonates.
2. This is not a forum for you present your entire business plan or executive summary. This is where you try to say “more with less”. Here, we want to refine how we open the discussion so our targeted audience asks us to share more. This forum is for each of us to metaphorically “sharpen the hook that we’ll use to catch our fish”.
3. This is NOT a venue to solicit for funding. Please do not indiscriminately broadcast a need for funding. If an investor likes your pitch or your concept, they will likely contact you. Please keep the focus on perfecting the message. We will aggressively moderate against misuse of this group.
Inside Pitch is sponsored and managed by ActSeed, an online community for startups and small businesses – a community dedicated to providing the best resources to help entrepreneurs properly plan, establish a solid operational foundation, attract investment and become highly competitive in the marketplace.
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The Realities of Being an Entrepreneur in One Book
Friday, May 6th, 2011“Most people start businesses simply because they just don’t like working for someone else.”
If this quote resonates with you, or even if you have another motive for becoming an entrepreneur, you should read this book.
Scott Shane packs this book with statistics and information that really helps you understand the realities of building a business. If you are a true entrepreneur, this book should sober your expectations and then bolster your resolve. If you aren’t quite there yet as an entrepreneur, this book will properly discourage you from burning too much of your own time and money (not to mention the time and money of others) until you are truly ready to “do it the right way.”
In this book, Shane shares statistics and data about where funding comes from for new business creation, what impact VC and angels have on new business creation, which industries receive most of their funds and who may likely be the best source of funds for your own business. He shares data about how long it usually takes to “turn the corner” with a new business and the demographics of entrepreneurship, too.
The Illusions of Entrepreneurship pulls data from a multitude of resources, including the Federal Reserve Survey of Small business Finance and the Center for Venture Research in New Hampshire. Essentially, Scott Shane has condensed thousands of pages of research into a single, coherent book.
This book is one of the first ones you should read if you are contemplating the plunge into the world of entrepreneurship.
You can purchase this book from ActSeed’s Amazon store here.
Enjoy!
Make the First Pitch Count
Friday, April 22nd, 2011Thoughts for your first pitch:
Relax and enjoy the experience.
Let your passion come through, but keep it simple and concise, and don’t get defensive if you “cross nerves” with your audience.
Make sure you can quickly and clearly explain: what customer “pain” you’re solving, why your solution will sell, how you make money (and when), and how your investor can expect to realize their return on investment.
It’s ok to not have answers for everything. If you don’t have an answer, offer that you will get back to them with the answer. You might even acknowledge that their question is a good one and ask them if they have any insights to share toward converging on an answer.
Things we suggest not saying:
- “We have no competition.”
- “Our revenue projections are conservative.”
1. Investors may only listen when you tell them about a good idea.
however…
2. Investors may “open their checkbook” if you (A) have a good idea and (B) can demonstrate that you have a plan to implement that good idea and turn it into a profitable one.
We champion all of this and more within our ActSeed.com community.
This note was originally a reply to a young entrepreneur on LinkedIn who was about to make his first investor pitch and was looking for advice about pitching.
In addition to our quick response to “making the first pitch count”, we also recommend buying the book, “Pitching Hacks“.
Now, go out there and make every pitch count!
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Plus Factory: The Difference Between Doers and Dreamers
Monday, April 4th, 2011“The difference in this world between the doers and dreamers is execution.”
– Warren Park, President of Plus Factory
Just before one of our country’s greatest economic meltdowns occurred, two seasoned industry professionals, Warren Park and Simon Tsai, launched their own digital agency. Park and Tsai are creative managers who have spent years in the world’s leading media, advertising and marketing companies. Plus Factory survived and is becoming a global digital development and production powerhouse with offices in New York City, China, and Vietnam. 
We spent a few minutes with the founders to learn their story, get their perspective on entrepreneurship and learn what it takes to start and build a business.
Q. Describe your “Eureka Moment”. What was the market opportunity that drove your decision to form a company around this product/service?
A. When working at another agency, we were working on a budget internally to send to the client and even I thought it was super expensive for what the client wanted. I worked with the project managers for days to cut down the budget. We ended up showing the client the budget and they just laughed at us, saying it was too much. We knew we could do it as well and for less.
Q. How did you fund the company to its current state?
A. Bootstrapping. My partner and I both put in $2,000 from our savings and got the company up and running. We were lucky. We landed some work right away, so we started to generate revenue from the get-go.
Q. ActSeed champions the need for solid planning and preparation from the very beginning. How important is planning and prep to your company’s success? Can you share an example or two?
A. Very important to plan and prepare. 1 is to be very realistic. 2 is to be very prudent on your finances. You need to know what you are going to spend and what you are going to bring in. We did a lot of forecasting of new business and what we were spending.
Q. How long did it take to get your idea into the market from initial concept to first customer?
A. 1 month. We literally got incorporated and started getting business and clients. We were lucky.
Q. What influence have the internet and new media had on the way you are marketing, selling and supporting your services?
A. Well our business would not exist without the internet. That’s multi-layered. Our core service/products are for brands/advertisers going on the internet, so that’s one thing. The other thing was we were able to use many tools that only existed on the web. All communication tools are now web based including voice (Skype), office tools (Google Docs) and accounting (bill.com). Basically our whole infrastructure is on the web.
Q. Describe the challenges you faced as you built your customer base, including defining the customer target, establishing the right price and pricing strategy and of course, closing the first few deals.
A. You need to play with your business model and pricing on a consistent basis till you hit the right ‘combination’. It’s an organic process and if you believe you have the right pricing/target market/model out of the gate is a big assumption.
Q. What techniques have you used to establish credibility in the eyes of customers, investors, partners, personnel and the general public?
A. It’s all about visual appearance. Every communication touch point you provide to your client represents you – good or bad. So first off, your website needs to look good (it’s a good thing we build websites for a living). Second is your phone line and your office environment. I don’t think its bad per say to have a home office, but if you’re on a client call and the dog or kids are in the background, it gives an unprofessional vibe to your clients. And then it’s you as a person. You are a brand, an avatar. You always want to control how your clients will perceive you on any given interaction (i.e. on the phone, in person at a meeting, etc)
Q. What is the most important thing people never tell you about joining or founding an early-stage company?
A. There is no stopping once you get going. It’s our fifth year of operations in 2011, and we feel we are on a train. Once you get your own business going, there is no stopping or brakes. That’s the difference between your own business and working for a business.
Q. Is there anything else you’d like to share that we didn’t already ask you?
A. Just try to fund it yourself and don’t count on outside money. If you are lucky and really hit your target, you can generate sales right away to get your company going. People who have an idea and just want to get funding for it without any leg-work or creation done is following “fool’s gold”. The difference in this world between the doers and dreamers is execution. Everyone can come up with an idea, but the question is, can you execute and make it come to a reality.
Learn more about Plus Factory at www.plusfactory.com.
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