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.

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/

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.

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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A. This question is one of the most frequently asked from entrepreneurs. It’s not just about finding investors, but convincing them to invest in you. Of course, you need a compelling business idea. That’s step one. The next step is equally critical, though. You must convince the investor that YOU are able to transform that compelling idea into a profitable or sustainable business. What you must do: speak the “language” of investors – be able to express your business model in numbers, words and pictures. Make sure you have covered all of the issues investors typically want to know. How to do this: while there are many approaches, we suggest you join ActSeed’s Entrepreneur Group where we guide you through all of these issues, and you can tackle the issues at your own pace and in the order you choose. Here’s a link to a 5-page overview of the issues investors want to know, with a link on how to join ActSeed’s Entrepreneur Group at the end of the document: http://bit.ly/PrepMatters_WP. You only get one chance to make a first impression with an investor; let ActSeed help you make the best first impression.

Q. How important is having a separate business account for accounting if your are a sole proprietorship and will it affect taxes at the end of the year?

A. We strongly suggest having a separate business and personal checking accounts, even if you are a sole proprietor ship. It will make it much easier for you and your accountant to separate your business expenses from your personal ones, and you want to make sure you are getting all the deductions available to you.

Ask your own question here: http://actseed.com/contact-us/

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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 As the Managing Partner of Moore Venture Partners, LP, Terry sees up to 500 deals per year. From this list, he may seriously review a dozen of them and make an investment in about four of them.

Moore Venture Partners has established a unique niche in venture investing.  Moore doesn’t seed or lead transactions, but the firm does source and qualify deals that fit the interests of the top VCs in Silicon Valley and beyond. Then, they participate in deals with top VC firms.  Through this approach, Moore Venture Partners enables its limited partners to participate in investment opportunities to which they might not otherwise have access.

The Fund’s focus is technology and life sciences, particularly in southern California - companies with strong intellectual property (e.g. patents) in the early growth stages, and sometimes even in the expansion stage.

Terry has a solid track record of investing with returns coming from both acquisition opportunities and IPOs. His own operational experience helps him assess deals and their management teams.  His extensive relationships with top VC and corporate investors enable his portfolio companies to have the best chance to grow and succeed.  His leadership as Chairman of The VC Roundtable further indicates his commitment to bringing best practices and a collaborative spirit to venture investing.

ActSeed is glad to have firms like Moore Venture Partners involved in its Investor Group.

ActSeed provides Terry with visibility into a community of innovative startups – each having a series of ActSeed Scores that provide an indication of the company’s “investment-readiness”.  The scores calculated for each startup in ActSeed’s Entrepreneur Group enables Terry to immediately get a sense of whether the startup has established a solid foundation on which to grow and where gaps in the business might exist. Gaps won’t necessarily kill an investment opportunity, but not knowing what issues need attention may become quickly fatal for both entrepreneur and investor.  ActSeed’s contribution to the VC process is to bring any issues to the front of the conversation.

Moore Venture Partners is on track to provide great value to both its portfolio of startups and its limited partner investors. Terry Moore leads this effort by leveraging his experience and administering a thorough due diligence.  Each year a few startups may become part of the Moore Venture Partners’ investment portfolio and benefit further from Terry’s guidance and extensive network.  The hundreds of deals that don’t quite make the cut will need to look elsewhere for their capital needs.  ActSeed is glad to help Moore in his quest to find appropriate deals for his fund and provide a resource for the deals he sees that may not be ”investor-ready” and need to find funding elsewhere.

To learn more about Moore Venture Partners, please visit the Moore Venture Partners web site.

To learn more about how ActSeed can help your startup become investor-ready and find VC or individual investors who may be interested in your venture, please

1. Download ActSeed’s 5-page white paper,
2. Register on ActSeed.com and
3. Join ActSeed’s Entrepreneur Group.

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A great way to grow your business: find new customers using daily deals from GroupPrice.  ActSeed likes Group Price because they enable you to increase your sales with no upfront marketing expenses while cutting your costs with daily deals from other small businesses.

Problem

One of the growth problems for startups is getting more cash coming in than is going out. Cash is the fuel that powers a business. Not receivables or IOUs, but cash in the bank. You must positively impact your cash two ways:

• Increase revenues by attracting new paying customers
• Reduce expenses by finding great deals for the business services you need

Solution

ActSeed has partnered with GroupPrice to help you tap this innovative marketplace to boost your business in two important ways:

• Spark an increase in sales by tapping new customers without any upfront marketing or advertising expense.
• Find daily deals on products and services aimed at your start up or small businesses with discounts up to 80%.

How to Maximize the Benefits from the ActSeed-GroupPrice Partnership

Two steps.  Both are free.

1. Register with GroupPrice so you can buy and sell on the GroupPrice marketplace.

2. Register with ActSeed where you can access exclusive promotions and discounts from our leading partners like GroupPrice.

Like Fox Business TV, we think Group Price is like Groupon® – but dedicated to entrepreneurs, startups and small businesses.

 

Summary

ActSeed and GroupPrice are aligned in a commitment to helping you find sources of capital and streams of revenue. Cash is king. Heck, cash is also queen, prince and the whole royal court.

Forrester Research has identified that “daily deals for business is a persistent and growing trend.” Startups and small businesses – the backbone of the US economy – have been badly weakened by the recession, but sites like Group Price are helping them recover and grow.

Raise your revenue. Cut your costs. Do both using GroupPrice.

…Now that’s an obvious partnership that ActSeed can champion.

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Click here for details.

This month, Parand Darugar will be speaking. Parand is the founder and CEO of Xpenser a mobile expense management solution: manage time, expenses, and receipts via email, SMS, voice (call and say your expense), Twitter, iPhone, IM (Yahoo, MSN, AIM, Google Talk), or the web.

Prior to Xpenser he spent 4 years at Yahoo! as one of the core architects of the Panama project, as manager of the platform groups (Yahoo! wide centers of expertise providing Java, Database, and other platform technologies), and as the scaling / grid architect for the Apex/Apt project.

Before Yahoo!, he was co-founder and Chief Architect of Blue Titan Software, a venture backed Web Services infrastructure company. Blue Titan was sold to SOA Software in 2005.

Prior to Blue Titan, Parand was co-founder and Chief Architect of VelociGen Inc, a venture backed Web application acceleration and scaling software company.

Navigating legal issues is a challenge — a time-consuming and costly component of launching a business.  Small businesses need legal guidance from many angles: corporate law, securities law, employment law, patents, trademarks, privacy, finance, litigation, tax… and the list goes on.

Interpreting and applying the law often deals with “shades of gray” more than “black and white”.  In other words, a handful of very smart attorneys may offer very different perspectives and legal advice on a given issue. 

So, wouldn’t it be incredible if an entrepreneur or small business owner could throw out a legal question to 10 attorneys who have a relevant background and receive responses from each – all for just a few bucks? 
The founders of LawPivot thought so, and ActSeed agrees.

LawPivot is one of those “no-brainer” services for a startup or small business budget.  Being able to tap legal knowledge like this is invaluable.  ActSeed is more than a strategic ally of LawPivot; it’s also a happy client.  Consider this a very warm referral for all ActSeed members.

If you’d like to try LawPivot, they will give you a free trial. 

If you become a member of the ActSeed community (register for ActSeed here to receive the LawPivot bonus code; it’s free!), ActSeed will give a Promotional Code to extend your free LawPivot service through the end of 2011.

Not all of a company’s legal needs can be boiled down to a crowd-sourced response.  Attorneys and legal work will still need to be in the budget, but having access to a breadth of legal minds for a small monthly fee is invaluable.  To receive this service for free during 2011 is, literally, priceless.

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