• When you purchase a franchise, you get to do your due diligence before you buy. In the U.S., Federal and State laws require franchisors to fully disclose all of the pertinent details about a franchise before you buy.
• A franchise, unless it is a new one, is a proven model or system. By the time you buy your franchise, all of the bugs should have been worked out.
• Most franchises are existing brands that many people have already heard of, so when you hang your sign and open your doors your prospective customers know about you and know what to expect. In addition, you get marketing assistance from the franchisor.
• When you buy a franchise, the franchisor has the responsibility of providing training and on-going support. That is one of the key things that you are paying for through your upfront franchise fee and royalty payments.
• If you are in a retail business that requires a physical location, a franchisor will be able to provide assistance with site selection, real estate services, and construction.
• Franchisees have purchasing power when they source inventory and supplies through a corporate-wide buying program.
• Some franchisors will provide access to capital.
• Many communities will provide benefits to franchisees that are willing to locate in their community and hire their residents.
• Franchisees who wish to sell their businesses will often have a quicker and more lucrative exit because the business they are selling will often have an established market value and name recognition.
• Franchisees usually experience reduced risk of failure and increased chances of success due to the fact that they will have been properly trained by the franchisor and the franchisor has provided the franchisee with a proven operating system.

It is important to remember that the benefits of buying a franchise are all dependent on the franchisor being successful. Not all franchisors are equal. Branded franchise concepts can be great business opportunities or can be catastrophic business failures in which you have invested your time, passion, energy, and capital. In next week’s blog post, “Consider these Criteria before You Buy a Franchise,” we will offer our thoughts on the important criteria a franchise should meet before you buy. You may also want to visit the Business Plans for Franchisees page on our website.

Today’s marketer needs to be part artist and part scientist. Artist, because creativity is still a valuable commodity. Scientist, because analytics rule in the modern world of marketing where everything can be tracked and measured.

Recently we came across a very interesting infographic in a blog on Salesforce.com (click on the image to view full size). It depicts the dual personality of the modern marketer: part artist, part scientist.

The Artist in a marketer is involved with:

• Written content: Your website needs to tell a compelling story. Every piece of collateral you produce needs to convey the same message in a way that moves your audience to action.
• Visuals: Attention grabbing visuals help you rise above the noise. Your prospect is being bombarded with marketing messages every second. You need to stand out with memorable visuals.
• Social media: This 21^st century innovation is becoming one of the main ways businesses interact with their customers. Consumers are able to provide real-time feedback to businesses using social media, and businesses need to respond deftly.
• Email marketing: It is still the predominant way to reach your customers. It is critical to be concise, persuasive, and informative.

The Scientist in a marketer does the following:

• Performance tracking: It used to be said that half of all marketing budgets are wasted; managers simply had no way of telling which half. Given the rise of Internet as a predominant marketing medium, it is much easier to track performance and decide which tactics work better than others.
• Operations: Marketers need to be operations savvy. They need to understand the nuts and bolts of the four P’s of marketing: product, price, place and promotion. Marketing is so much more than mere communication.
• Analytics: Data mining is the greatest new weapon in a marketer’s arsenal. Now you can target your customers with greater focus than ever. It is important to keep on top of trends and figure out how to ride new trends.
• Campaign performance: Companies such as salesforce.com can help marketers analyze campaign performance in detail. You can track how customers are reacting to your company’s message in social media, online, radio, and TV, via modern campaign performance tools.

The ideal marketer combines the two personas – artist and scientist – in a way that blends the best of both worlds. It is not about being left-brained or right brained. It is about using your whole brain.

The reason is that investors, bankers, and other interested stakeholders usually believe that the strength of the team is the most important factor in predicting the success of an enterprise.

Yes, even more important than product or market.

“A great team can fix a mediocre idea, but a mediocre team can’t execute a great idea,” as the saying goes.

Not surprisingly, it is very difficult to write someone else’s bio simply because we do not know the individual’s background, experiences, and strengths. Even if they provide an up-to-date resume full of dates, activities, and accomplishments. Only the subject of the bio has a true sense of herself that will allow her to project credibility and trust. A biography will always be more interesting and compelling if at least the first draft is written by the subject.

We usually ask our clients to write the first draft of their own bios. We tell them what to include and what not to include. Once we have a first draft, we can usually do a pretty good job of making it more readable, interesting, and credible.

And yet, time after time, drafting a bio proves to be a considerable challenge for many clients.

Before we get into specific tips, let us explain why a compelling bio is so important:

• Your bio is your brand. It allows you to position yourself in the market. It allows you to shape how the reader perceives you – which is critical, because perception often becomes reality.
• Your bio is the heart of your online presence. Today your potential customers, employers, investors, dates, and others are checking your bio on sites lilke LinkedIn and Facebook to determine whether or not you’re a good fit.

There isn’t a single “best” way to structure a bio, but here are some guidelines we often find successful:

• Keep it short – certainly no longer than around 500 words.
• It should begin with a chronological listing of what you did to get to today in terms of jobs or assignments of increasing responsibility. Mention organization names and titles, and certainly mention accomplishments.
• Don’t tell the reader how great you are – let them come to that conclusion because of the results you’ve produced.
• Include your educational accomplishments.
• Write in the third person perspective to give a sense of impartiality and professionalism.
• In a final paragraph, describe your role in the organization and why your background makes you the best person for the role. If you are responsible for new customer acquisition, describe the home runs you’ve hit in landing customers for a previous employer.

Remember, your bio is your brand; your way to make a great first impression. Keep it relevant, compelling, and brief. Don’t just use it to provide information. Use it to sell yourself in a professional and credible way.

The pitch you make needs to be well prepared and rehearsed. You need a succinct six-sentence summary of your customer value proposition, and what you are asking for.

What are the six magic sentences?

1. Hook: You need a one-sentence hook that will catch the prospect’s attention. Your business idea may not be greatest thing since sliced bread, but it needs to matter to the prospect. It needs to be conveyed in terms that appeal to the prospect. You may enjoy chocolate mousse, but if you plan to go fishing, you will catch more fish with worms as bait rather than the finest Swiss chocolate.
2. Need: What problem is your customer trying to solve? A customer needs a quarter-inch hole, not a quarter-inch drill bit. People want to build a home or a driveway, they do not want to buy cement, per se. Step into your customer’s shoes and feel her pain. Then describe that pain in the customer’s terms.
3. Approach: How are you alleviating that pain? Are you going beyond merely a faster or cheaper solution? Do you have a substantially better way to solve the problem? Vinod Khosla, ex-partner at Kleiner-Perkins and now founder of Khosla Ventures, looks for 10x solutions: solutions that are 10 times better than what is currently available in the market. When I was VP of marketing at Corvis, a Kliener-Perkins funded startup, Vinod pushed us to think big. Don’t just be slightly better than the competition — be an order of magnitude better.
4. Benefit: Most entrepreneurs think in terms of features. What matters to the customer is the benefit.What customer benefits does your solution provide in customer’s own terms? Most car buyers don’t care how many cylinders a car has, or whether or not it is turbocharged – but they do care about having enough power to pass safely and to have an enjoyable driving experience. Always describe the benefit in terms of how it meets user needs, and not in terms of product features.
5. Competition: Why are the benefits you provide better than those of the competitive offering? Customers have choices. You need to be able to connect with the customer in terms of a substantial competitive advantage. Just being slightly cheaper or faster is not going to cut it. A customer needs a significant reason to switch brands or solution providers.
6. Ask: This is the most important piece many entrepreneurs forget. What are you asking for? Make it short and memorable. “We are seeking $1.5 million in first round of funding” is a better way to state your “ask” than just saying, “we are currently raising our first round.”

Once you have written down these six sentences, practice delivering the pitch until it becomes second nature. Seek feedback from your colleagues and mentors. Iterate until you have the perfect pitch. Now you are ready for that chance encounter with your dream prospect.

As you know, most venture capital funds specialize by market or product, geographical area, and stage of development. So, for example, some only do early stage B2B technology deals in Silicon Valley, while others only invest in health care technology companies around Boston that have a minimum of $10 million in annual revenue. Once you have identified a VC who you believe invests in your kind of deal, you will want to closely examine the fund’s portfolio to find companies that have something in common with your enterprise. Most funds list their portfolio companies on their website. If they don’t, you usually find them using Google or tools like ChubbyBrain.

The next step is to check out the management team members on each portfolio company’s site and see if you happen to know any of those individuals. If you do, call them and see if they will introduce you to the investor at the venture fund that sits on their Board, or with whom they have the most contact. That’s it!

Chances are, you probably don’t know anyone who works at one of these portfolio companies. But that’s ok. You can still meet them. How? Virtually everyone in business (including you, we hope) is on LinkedIn. So locate these people on LinkedIn and see if you have any acquaintances in common who can introduce you. If not, you can use LinkedIn to send them a message. Let them know that you run a company similar to theirs, and that you would like to have a brief conversation. Hopefully you can get them excited about your startup and willing to make an enthusiastic introduction to their investor. It’s time consuming, but it’s a great way to build your network and you’ll probably identify some new opportunities that have nothing to do with being introduced to a VC.

Before you begin networking and seeking introductions to fund managers, however, you must be certain that your company is “investor ready.” It’s not enough just to have a brilliant idea. You need, at a minimum, a strong team, a working prototype, and preferably some actual paying customers. You will also need to prepare some materials to help investors understand and evaluate your business. At a minimum you will need a well-developed pitch deck, executive summary, and business plan that explain where you are going with this business and how you are going to get there. You will also need a 5-year financial forecast based on defensible assumptions. When preparing these materials, be sure to avoid these common mistakes.

For additional information and advice on raising capital, please see the Funding Your Business resources on our website. Good luck!

While the art museum may seem an unconventional venue for business professionals, consider that the works on display in an art museum are the result of countless individual lives dedicated to creation and expression.

It is this—and the kind of creative thinking that artworks embody and help viewers to develop—that has led companies such as Pepsi, DDB, and The University of Chicago Hospitals to take part in museum–based workshops co-led by art educators and corporate trainers.

The approach has even been adopted in formal business education: at the Harvard Business School, for example, discussions around works of art (donated to the school by alumnus Gerald W. Schwartz) have been incorporated into a course on moral leadership—because through art, Schwartz says, “sometimes you think about a problem differently.”

So how, exactly, do works of art promote creative and innovative thinking? Experts emphasize that creativity involves certain thinking behaviors, and it is these that are developed while viewing and discussing art:

• Reframing problems. Marcel Duchamp’s famously reframed a urinal as art by literally putting it on its side in his Fountain sculpture. Being able to look at a problem from a different perspective is one of the keys to expanding the field of possible solutions, according Tina Seelig, author of inGenius: A Crash on Creativity.
• Challenging assumptions. Revealing the assumptions that underlie our initial, quick answer is essential to generating new ways of thinking about and seeing a problem, says Seelig. Cindy Sherman, in photographs where she depicts female stereotypes from the silver screen, forces us to confront our assumptions about femininity, sexuality, and gender roles.
• Discovering unexpected connections. Creative people connect and combine things in surprising ways. Jasper Johns’s Flag combines a recognizable and honored symbol with incongruous materials, and sparks new ideas when we apply the same “What if” question to other domains.
• Seeking out new experiences and knowledge. Our ability to make connections and think differently hinges on the breadth of our experience and knowledge, upon which creative thinking is based. Confronting challenging works of art and the diversity of others’ perspectives stretches what we know and how we think.
• Enhancing powers of observation. “Pay attention,” Seelig says, because close observation is essential to knowledge and therefore creativity. We are quick to interpret visual cues, and being asked to ground interpretations of painting with visual evidence forces us to pay closer attention to what we observe.
• Take risks. Proposing a new idea, approach, or project is challenging for many, but essential in innovation. Gaining practice in a low-stakes setting—in discussions about a puzzling sculpture—facilitates risk-taking in a more important one.

More and more museums are developing programs designed to cultivate creativity. Art-Work, a program of the Art Institute of Chicago offered in partnership with Catalyst Ranch, Chicago’s creative conference center; the Columbus Museum of Art, which has a new Center for Creativity; and the Virginia Museum of Fine Arts are just a few museums that have launched programs specifically for the business community. The next time you want to inspire inventive thinking in your team, a workshop at an art museum might be just the solution.

The IMF forecasts that sub-Saharan economies will grow at 5.7%, and the region is home to nine of the world’s 20 fastest-growing economies. That is the central theme of Dealmakers Dream of African Riches, an article appearing in the January 21-January 27, 2013 issue of Bloomberg Businessweek.

The authors of the piece report that Citigroup, Barclays, and Standard Chartered are expanding their presence in Africa in the hopes of taking advantage of agricultural, mining, and telecommunications deals. Cayenne Consulting has completed several telecommunications engagements in Africa in the past year, and is in fairly serious discussions with several other telecom entrepreneurs who plan to access the capital markets in 2013. Other observations that come from the article include:

• According to Barclays, “Africa has emerged as the world’s second-fastest growing region, after Asia and ahead of Latin America and Eastern Europe.”
• “We saw sub-Saharan Africa as being where China was 15 years ago,” says Genevieve Sangudi, the Lagos-based managing director for Carlyle Group’s regional fund.
• According to the Emerging Markets Private Equity Association, private equity transactions jumped 19% in sub-Saharan Africa in the first 9 months of 2012.

Of course, sub-Saharan Africa still has many challenges as the piece points out. Unstable politics, nascent capital markets, and mostly inferior infrastructure such as poor roads, ports, and flight connections are commonplace. Electric grids that often fail during heavy usage are more the norm than the exception. And yet, the opportunity and the increase in activity are, in many ways, very exciting.

So, what does this portend for entrepreneurs in the region who may not be ready for the institutional capital markets but are ready to build meaningful businesses?

The aphorism ”A rising tide lifts all boats” applies very well to the level of economic and business activity in Africa. In this context, it means that capital doesn’t just flow to the larger, more established companies. Indeed, we have seen investments from a range of development banks as well as early stage investors moving into attractive, well planned telecommunications, IT, payments, health care, and real estate deals. The entrepreneurs who sponsor these projects are well-educated and have experience in the industries in which they are participating.

Here are some tips for early stage entrepreneurs in Africa that will require external capital in order to launch or expand their enterprises:

• Assemble a great team of individuals, each of whom has an established a track record of success and the ability to execute.
• Have a clearly defined, credible market opportunity and be able to show how that opportunity will be achieved.
• Develop a business plan that will communicate in a very professional way the business and investment opportunities that will accrue to financial and strategic investors.
• Build an awesome network from your attendance at regional and international meetings, from social networking, and from participating in online groups of entrepreneurs with similar goals.

Clearly, the opportunities in Africa for both entrepreneurs and for investors are extraordinary. In a Bain & Company report published in November 2012, A World Awash in Money, the authors point out that “In today’s capital-abundant times, the ability to identify owners of good ideas and help them achieve their full potential will be the hallmarks of investing success.” So, for entrepreneurs in sub-Saharan Africa and beyond, be one of those owners.

This past summer, CNBC ranked all 50 states according to how open they are to business. To do this they used 51 metrics of competitiveness developed with input from groups such as the National Association of Manufacturers and the Council on Competitiveness. They then grouped the 51 metrics into 10 broad categories:

• Cost of doing business
• Workforce
• Quality of life
• Infrastructure & Transportation
• Economy
• Education
• Technology & Innovation
• Business friendliness
• Access to capital
• Cost of living

According to CNBC, here are the 10 most and 10 least business-friendly states:

That analysis was very informative but we thought that it would be useful to have a look at one or two other sources to see how they compare. We stopped by The Tax Foundation, a non-partisan tax research group formed in 1937 to see what they had to say. We realized that they would rank states primarily on the basis of business tax burden, and yet the rankings turned out to be very similar to CNBC’s. They concluded that “a state that raises sufficient revenue without one of the major taxes will, all things being equal, have an advantage over those states that levy every tax in the state tax collector’s arsenal.”

In December 2012, Forbes ran a story titled Utah Tops Forbes 2012 List of the Best States for Business. Their ranking is based on six vital factors for businesses: costs, labor supply, regulatory environment, current economic climate, growth prospects, and quality of life. It should be obvious from the title that Utah won. The other states that made the top 10 included 2) Virginia, 3) North Dakota, 4) North Carolina, 5) Colorado, 6) Nebraska, 7) Texas, 8) Georgia, 9) Oklahoma, and 10) Iowa.

What did we conclude from all of this? Well, of the three samples that we took, only Utah and Texas scored among the 10 most business friendly states in all three. Wyoming, Nebraska, and Virginia appeared in two of the three top-10 lists so they were worthy of consideration. North Carolina also was among the top 10 in two of the polls, but was among the least business friendly in The Tax Foundation survey. So, we decided to disqualify North Carolina.

Our client will be importing low-cost commodity products from Asia and will then be selling these products to wholesale distributors in major markets. We needed to be near a port and we needed interstate freeway access to major markets. We decided that the port requirement disqualified Utah, Wyoming, and Nebraska. The State of Virginia (Norfolk) is home to one of the best deep water ports on the East Coast. Ultimately, however, we decided that Houston was the best place for our client to locate because of the business climate, the Port of Houston, and the ability to get to all major markets within 15 hours.

You may have different criteria to consider when you decide where to locate or move your business. Nevertheless, it is good to know what the professionals are thinking when they do their rankings.

The Kauffman Foundation also produced a brief video that highlights how foreign-born entrepreneurs might have a different view of the startup landscape than domestic entrepreneurs.

You can see Kauffman’s full report here.

But whether we’re sitting in a conference room around a fancy polished table or dialing in from our home office, we’ve all attended meetings that felt like a huge waste of time. There’s nothing like watching the hours slip away irretrievably as your fellow meeting participants struggle to find the right spreadsheet to share, drone on about information that has nothing to do with your objective, or rehash exhausting debates that never get resolved. In the meantime, you’ve got a ton of legitimate work that is begging for attention.

Meetings will never go away. But with a few simple tricks, you can make your meetings more productive while freeing up valuable time for all involved:

1. Draft internal meeting policies and school your staff on them. Request that the meeting moderator speak for only 25% of the meeting and that all participants contribute, with no one person dominating or withdrawing entirely. All input should be succinct and relevant, with the moderator cutting off tangents and meandering conversations. Most importantly, every meeting must result in an outcome.
2. Make sure the right people – and ONLY the right people – are invited to attend. Too many meeting owners invite every person peripherally attached to a project, when many of them aren’t necessary for brainstorming a marketing plan or developing a launch timeline.
3. Always have a written agenda and be realistic about what you can accomplish in one meeting. If you’ve scheduled a one-hour meeting, don’t list every issue you can possibly think of. Most of them won’t get addressed, which creates a feeling of futility. List only your top agenda items and try to resolve the minor stuff one-on-one.
4. For all-day or multi-day meetings, assign a fact-checker who tracks down answers in real time to the questions that arise during the discussion. Being able to resolve those questions during the meeting eliminates follow-up action items and advances the conversation while everyone is present.
5. Schedule Q&A or “sidebar” time at the end of all meetings. This ensures the discussion stays on track, while allowing people to express any related thoughts that arose during the meeting.
6. Follow up even minor meetings with a summary and list of action items including the names of the accountable individuals and due dates. Then follow up on the action items.
7. Schedule downtime between meetings, so you have a few minutes to check your voicemail and recharge. It’s hard to stay attentive and engaged when back-to-back meetings blur into each other without a break.
8. Ask that your staff follow virtual meeting etiquette. Meeting remotely can make scheduling easier and eliminate travel expenses, but communicating clearly requires certain skills. Ask that all participants introduce themselves at the start of each meeting and that each speaker identify themselves when speaking.
9. Also make sure your staff understands how to use web conferencing technology. Given the video and netmeeting tools available today, there’s no reason to fumble through conference calls where everyone has to page through reports on their own. And too many meetings waste time trying to resolve technical issues.
10. Finally, consider scheduling a “no meeting” day each week. It’s rarely productive to dive into projects in the 30 minute increments between meetings; usually the wheels are just starting to crank in your head when it’s time to shut your laptop and move on. But designating an entire day as meeting-free can allow everyone to immerse themselves in work for blissfully uninterrupted hours. Conversely, if you have telecommuters, consider designating an “office meeting day” when everyone comes in for face-to-face time.

Ultimately, the key to both productive meetings and productive work time is respect. By respecting the time and input of your partners, staff, clients, and customers, you will conduct efficient meetings that deliver high-value outcomes – while freeing up more time for other pursuits.

Do look for quality when hiring. Resources can be tight for small businesses, especially when you are funding everything out of personal resources, and it can sometimes be tempting to hire based on cost. However, according to Ken Abosch of human resources consulting company Aon Hewitt, “above-average performers contribute almost twice the value of average performers to an organization.” A high return on investment is crucial, especially with your limited resources, so hire the best talent that your company can afford. In the long run – it will offer the greatest return and the greatest value.

To help you identify quality candidates, consider working with a recruiter. For many small businesses, recruiters aren’t within their budgets, but as one Inc. 500 company owner has attested, the ease and speed of working with a recruiter —10 pre-screened applicants received, 3 interviewed, and 1 top-notch candidate hired within a month—made the cost more than worthwhile.

Do look for flexible options. About 40% of small business owners report that payroll is their largest expense, according to MasterCard. So being judicious about how you staff your business will be instrumental in managing your bottom line. Consider flexible options, such as part-time and seasonal staffing, staffing through a temp agency, and independent contractors that will help to keep your payroll expenses aligned with your sales. For odd jobs, online task services like TaskRabbit.com can help you find able helping hands.

Another option that you might consider is hiring an intern. Internships have traditionally been offered by larger businesses and organizations, but small business owners and entrepreneurs are starting to adopt the practice. When you don’t have any flexibility in your budget, hiring an intern can help fill a staffing need while also giving you an opportunity to test out a potential hire.

Do consider outsourcing. When you are running a small business, it may be tempting to handle all aspects of your business in-house. However, if the task lies beyond your core competencies or is a discrete project, outsourcing is often the better option.

For tasks that require specialized skills (for example, IT, design, web development, taxes, and accounting), it is more cost-effective to find an expert who can complete the task for you. This can be for non-discrete tasks such as accounting, as well. Some accounting firms charge a flat monthly fee (usually depending upon the number of hours or the number of employees), which can work out to a fairly low hourly rate.

Another area that you might consider outsourcing is general administration. Even though administrative tasks don’t require specific expertise, they can be time-consuming, and outsourcing theses tasks to a virtual assistant can help minimize overhead.

No small business owner can do everything herself, so consider all of these options when you need a helping hand.

I recently attended one hosted TiE Arizona, the local chapter of a global association for entrepreneurs. There were six panelists representing a variety of firms: Eric Shiozaki of Apposite Capital in San Francisco, Robert Pothier of Renewable Tech Ventures in Idaho, Roman Kikta of Mobility Ventures in Texas, Sarah Ham of DBL Investors in San Francisco, Curtis Feeney of Voyager Capital in Menlo Park, and Brian Armstrong of Point B Capital in Denver.

Let me classify the key takeaways into three categories:

Some Things Haven’t Changed

• Home Runs: Out of ten deals funded, the panelists still expect only one or two home runs. And the consensus still defined a home run as a 7x to 10x return on their investment.
• The Team: The quality of the founding team is still one of, if not the, most important thing they look at.
• Control: When talking about valuations, they kept repeating that they didn’t want to take control of the firms they fund. Founders must continue to feel motivated to build their companies, and deals must be win-wins to work.
• Involvement: They all emphasized that they stay involved with their portfolio companies. They don’t believe that simply writing checks and reading quarterly status reports are enough.

Some Things Are Back

• Small Deals: With one exception (a specialized biotech firm), they all claim to have recently done deals as small as $200,000 to $500,000. Remember, these were venture capitalists – not angel investors. This is a reversal of a trend away from seed fundings that had been prevalent in recent years.
• Revenues: They all emphasized the importance they place on demonstrable, sustainable, growing revenues.

Some New Trends

• Angels: There was a lot of talk about the evolving relationships between Angels and VCs. None are reluctant to do deals previously funded by Angels, and several said they have recently done deals with Angels as syndicate partners. They no longer look at all Angels as single-round investors, but instead consider many as potential partners for the long haul.
• Crowdfunding: They anticipate that sooner or later, they are going to be looking at deals in which previous rounds were crowd funded. They are concerned about the governance issues of dealing with hundreds, maybe even thousands, of small existing equity investors. But they expect this will eventually get sorted out.

Probably the most striking thing was the apparent willingness of VCs to participate in seed fundings again – for good teams with good traction executing on a realistic business plan.

It got us to thinking how we should advise our clients who may face an even more difficult time raising capital than in the past. We’ll pass along a few suggestions later, but first, here are some highlights from the article:

• Brian O’Malley of Battery Ventures is quoted as saying that, back in the day, “entrepreneurs didn’t need a real monetization strategy” because companies would use their investment capital instead of customer revenue to fund their operations. Today you need to get to revenues as fast as you can.
• Ms. Perlroth points out that investors are growing nervous about “start-ups and applications that rely entirely on Facebook, Twitter and LinkedIn for customers.” This makes sense to us because the sustainability of these types of businesses is really dependent on another company’s continued success. You don’t really control your own destiny, do you?
• Our favorite quote in the article was from David Lee at SV Angel: “It has never been easier to start a company, and never harder to build one.” As we have said on numerous occasions, it’s not about the idea, it’s about the execution.
• While some of the views expressed in the piece were somewhat negative about the prospects for creating and funding new companies, the article did quote Marc Andreessen of Andreessen-Horowitz as saying that he felt that the opportunities for start-ups were “unending.” We agree.

So, what are the common sense things that entrepreneurs must pay particular attention to if they wish to raise capital these days?

• You must have a tightly defined target market.
• Don’t try to be all things to all people.
• You must know your space as well as or better than anyone else.
• Start small and be very, very efficient – use Lean Startup principles.
• Get paying customers or at least engaged users as fast as you can. Think freemium business model.
• Get them to return as often as possible. Make them sticky.
• If at all possible, be global.

One more thing: no investor will believe that you can build a great business unless you can communicate that you really know what you are doing. Don’t attempt to fund something that seems like a really good idea unless you’ve lived it day after day for a very long time. In fact, don’t even try to self-fund a business unless you really know it. Now go out there and make something good happen, and chances are, funding will come.

In other words, you need good insurance. Below are the 6 most essential insurance policies for a small business or startup:

1. Liability Insurance. Hopefully you’ll never have to face any lawsuits in your career. But if you do, this is the policy that will protect you if you are found responsible for damage done to other people or their property. Make sure your policy will cover your legal fees, settle claims, and pay damages. If you manufacture products, be sure your coverage includes product liability in the event someone sustains injury as a result of using your product. If your business offers services, you’ll want to focus on “professional liability” instead. This coverage will protect you if a customer charges you with negligence or errors.
2. Workers’ Compensation Insurance. Depending on your state, you may be required to offer your employees Workers’ Compensation insurance. As you probably know, this provides benefits to employees who are injured or sickened on the job. Check your state laws to make sure you’re in compliance.
3. Property Insurance. This coverage protects your office and the assets inside in the event of theft and damage caused by fire, vandalism, accidents, or natural disaster. If you run your business from home, you might think your homeowner’s policy will cover your business inventory and equipment – but that isn’t always the case. Check to see if you need additional financial protection. You may be asked to choose between a Replacement Cost policy, which compensates you for the current costs of replacing your building, equipment, and inventory, and an Actual Cash Value policy, which covers those costs minus depreciation.
4. Business Interruption Insurance. Unforeseen disasters can bring business to a halt – but as the business owner, you will still be responsible for expenses like payroll, rent, and other fixed costs. This addendum to other policies will pay your bills while you’re out of commission and will pay you based on an estimate of the profits you would have earned during the disruption.
5. Commercial Auto Insurance. If your business involves transportation, even if just transporting supplies, you will need to insure the company vehicles. In some states, this can include the family car if used for company duties. Just like a traditional personal car policy, your commercial policy will cover liability, collision, comprehensive, medical payments, and uninsured motorists.
6. Life and Disability Insurance. Who are the rock stars in your company? Would an untimely death or serious long-term illness cripple the success of your company? If so, you may want to consider life and disability insurance for key principals – including yourself.

Rather than work with multiple agencies to manage your policies, your best bet is to find a full-service insurance brokerage who understands small business needs. Otherwise you might find yourself paying for overlapping policy coverage, or worse, be liable for coverage gaps because no one has a big picture of your needs.

A good insurance broker will develop a comprehensive insurance package that covers your needs while seeking ways to save you money by offering volume discounts and eliminating extraneous coverage. Then you can stop worrying about any random calamities and focus on the business at hand: making your company a success.

Early stage deals dominated the mobile sector, with Seed and Series A funding comprising nearly 75% of all deals in the sector. This means that VCs see mobile technologies and applications as the new sweet spot.

Most of the deals in the mobile space were in the areas of wireless, video, CRM, health, gaming, and advertising. As the mobile market matures, with smartphones comprising over 80% of total device sales in the U.S., the market is ripe for mobile applications. The Android and iOS platforms comprise nearly 90% of the mobile market, with Blackberry (RIM), Nokia, and Microsoft left fighting for the remaining 10%.

The message for mobile app developers is clear: Develop for Android and iOS first. Unless you get specific funding from Microsoft or RIM, it may not be worth your while to go after the minority platforms.

Most of the $2.6 Billion invested in 2012 went to consumer apps, followed by enterprise apps, e-commerce and mobile payments, advertising, and video, according to Rutberg and Co. – a research firm in Silicon Valley:

Illustration courtesy of Rutberg & Co.

Investing in Apps, Not Companies

There is a new twist in investing in apps, launched by an ex-Nokia executive Tero Ojanpera. His firm Vision+, armed with $30 million in funding from Nokia and Microsoft, seeks to invest not in the companies per se, but in the apps themselves. It provides go-to-market funding to app developers, in exchange for future royalty streams. The benefit for entrepreneurs is clear: they do not have to give up a part of their company. The fund is looking to invest in up to 200 apps. Typical investments will range from $100,000 to $700,000.

The fund is focused on investments in Europe initially, with plans to enter the hot US market in the near future. It is platform agnostic. Even though the fund gets most of its funding from Nokia and Microsoft, it will invest in Android and iOS platforms.

The Path to Success

So how do you attract VC funding for your app startup? Here are a few pointers:

Most apps fail not because they have too few features, but because they have too many features. Try to find the sweet spot of features for your target audience. Select a demographic that is well-defined and easy to reach. Trying to be all things to all people is a sure road to nowhere.

Startups need a minimum viable product, not an all-singing, all-dancing version. Test this product with a select audience. Watch people use your app. Don’t ask them what they want. Steve Jobs famously said, “It is not the customer’s job to tell us how to design a product. It is our job to understand what will delight a customer.”

Recently Tim Cook, CEO of Apple, said: “Our job is to design products that you did not think you needed, but now can’t live without.” Think of the apps you use on a daily basis. Then design apps that will become part of the daily lives of your users.

VC’s are investing in mobile apps because that is where the growth is. Now is the time to think of an application, or a game, that will delight your users. Apple has paid out more than $4 Billion to app developers. Do you deserve some of that money in the future?

Over the years, hundreds of entrepreneurs have hired us to help communicate the business and investment opportunities represented by their businesses. Many of them are scientists and innovators, and really need both management talent and capital to achieve their goals. So, working with PBA might just be the one stop source for capital and management that many entrepreneurs are looking for. And, don’t think that PBA only works with executives and entrepreneurs in the U.S. In fact, they have been very active in a number of other countries throughout the World.

A testimonial from the PBA website reads “I would like to offer this letter of recommendation to you and the entire team of advisors at Personal Business Advisors. Raising funds and finding executive talent to join the start-up team at our software company is extremely challenging on our own and in these difficult economic times. I have been so pleased with the quality of service and the caliber of potential candidates presented to us over the last 3 years.”

According to ExecuNet’s 2012 Executive Job Market Intelligence Report, the “top 10 industry growth sectors for executive hiring show continued strength in healthcare, technology and life sciences, but major gains are also expected for the manufacturing, business services, and consumer products sectors in 2012.” These industry groups correspond very closely with the profile of the entrepreneurs who visit our website every day.

We heard about Personal Business Advisors from Don Johnson who is, himself, a former senior executive with a major NYSE listed Fortune 50 company. Don is now an Executive Senior Advisor with the firm. He mentioned that “this is a terrific opportunity to bring together very talented senior level executives and just the right entrepreneurial experience.”

If you are a senior executive looking for an entrepreneurial opportunity where you can bring management experience and capital to an emerging company, or if you are a young company in need of experienced management talent, you should contact Don at donwjohnson (at) cox (dot) net.

When you’re new in business, sometimes any potential revenue can sound rewarding. The idea of discarding the less appealing customers might sound petty and pointless. But the reality is that you spend energy and money to attract and retain customers – and inevitably, some of them could be costing your business more in resources than they give back. By withdrawing your efforts from problem customers, you free up time and budget resources to woo more profitable clients.

Step 1: Categorize your customers

Your first job is to figure out who’s paying off and who isn’t. If you work in a field where you manage only a handful of clients at a time, your accounting books should help provide a quick answer to that question. Take into consideration your clients’ personalities as well. Who demands a lot of hand-holding and phone calls for even minor jobs? Who provides steady business and always pays their invoices on time?

If your business involves many customers, such as retail or hospitality, you will need to group them into categories. A café owner could divide his clientele into college students and professionals, the afternoon crowd and the night crowd, or by location. Look at the variables in your customer base and categorize accordingly.

Step 2: Calculate profitability

Your accounting software should help you match sales to customer groups. But that’s only part of the equation. Once you know what revenue each group is bringing in, you’ll need to calculate what each group is costing your business. To get an accurate idea, add up the following expenses. First you’ll want to calculate the amount you spend acquiring those customers through marketing. Next you’ll add the amount you spend on servicing and retaining them through staffing, facility costs, and follow-up service.

To make your cost analysis truly granular, you might want to hire an analyst. But even rough estimates should give you an idea of which customer categories are truly profitable, and which are wasting your staffing and marketing dollars.

Step 3: Cull the herd

Armed with this information, you have several choices for boosting profits. For your unprofitable customers, you might create policies to make them more lucrative, such as limiting free resources or restricting your services. Or you might decide to cut ties with them altogether by closing down a location, or no longer marketing to a specific demographic.

But the real advantage lies in having identified your profitable clients. Now that you know who’s pumping money into your business, you can devote more resources to engaging them and tailoring your offerings to their preferences and needs. You can also devote more of your marketing budget to courting new customers just like them.

Never assume you know right off the bat which customers and clients are your “best” ones. A basic analysis of customer cost and customer revenue can always yield some surprises. But once you do know, you’ll be eliminating needless waste from your budget – and positioning your company for higher levels of success.

Check the web sites of most major companies and you’ll see content highlighting the work they’re doing to protect the planet or support their local communities. That’s because smart businesses embed their charitable projects in their marketing plans, using their community relations or sustainability efforts to engage customers and boost site traffic through clever promotion.

Yet while many big corporations have endowment arms, such projects can be a challenge for start-ups who lack the budget for grand philanthropic gestures. But even a modest effort can pay dividends in both positive publicity and customer loyalty – through a few simple actions:

1. Define your messaging. Don’t strike blindly at different goals, such as preserving rainforests one quarter and then investing in a community project the next. Come up with causes that resonate with your business culture, research the kind of support they need, then pick one and stick with it. One is enough for a small business – and don’t feel pressured to donate more funding or assistance than you can afford.
2. Involve your customers. If you haven’t picked a cause yet, come up with a list of alternatives and ask your web site visitors and Facebook fans to vote on which one they would like to see you support. Or actively seek their assistance, such as bringing old but usable technology into your store so that you can donate them to students in underfunded schools. Make sure you offer a potential reward, such as holding a raffle for all participants.
3. Create a scorecard. Make sure it features achievable and measureable goals and keep it visible on your site, tracking your progress. Be honest about any setbacks – you want the tone to be authentic, not promotional.
4. Use social media. Don’t just tell your customers what you’re doing; solicit their ideas, experiences and concerns to get them invested in your projects. Make sure you use multiple digital platforms – such as blogs, Facebook, Twitter, and a YouTube channel – to reach people with different media preferences.
5. Partner with a third party. Forming an alliance with a non-profit will not only lend credibility to your efforts, but let you benefit from the non-profit’s greater experience in fundraising and philanthropy. The alliance will also offer an opportunity to blend customers and networks.
6. Seek publicity. If you’ve never sought media coverage for your business before, this might be the time to start. Send out a press release about any contests, events or fundraising drives – and reach out to media outlets that present on green topics as they’ll be apt to give you positive coverage.
7. Repurpose your CSR reports. Using charts, stories, and photos in your annual reports and newsletters will appeal to stakeholders and shareholders alike.

Most corporate social responsibility projects won’t deliver an immediate boost in your company’s financial performance. But leveraged cleverly, they can bring positive publicity, enhance your corporate reputation, and deepen customer engagement – in addition to giving you the satisfaction of knowing you’ve truly assisted someone in need.

Many of the available courses relate to business or technology and represent a great opportunity for entrepreneurs who wish to broaden or deepen their experience in, say, organizational management or computer science. With MOOCs, students will not get college credit or be able to earn a degree, but still, “this might be attractive as a way to check out the latest developments in their career fields” wrote Ms Ryman. Many of the courses are self-paced, while others have a specific beginning and ending date.

Private companies that may or may not be affiliated with a university act as consolidators “by offering online platforms where the courses are housed.” Coursera is a perfect example, offering access to hundreds of classes. Here are three examples:

• Networks: Friends, Money and Bytes – Princeton University. “A course driven by 20 practical questions about wireless, web, and the Internet, about how products from companies like apple Google, Facebook, Netflix, Amazon, Ericcson, HP, Skype, and AT&T work.”
• Social Network Analysis – University of Michigan. “This course will use social network analysis, both its theory and computational tools, to make sense of the social and information networks that have been fuelled and rendered accessible by the Internet.”
• Organizational Analysis – Stanford University. “In this introductory course, you will learn multiple theories of organizational behaviour and apply them to actual cases of organizational change.”

We visited two other websites. One is EdX, a not-for-profit enterprise founded and owned by Harvard University and MIT. The site says that it “features learning designed specifically for interactive study via the web. EdX points out that in return for offering the courses for free, they will use the student experience to ‘research how students learn and how technology can transform learning.’”

Another MOOC site we reviewed is called Udacity which seems to offer a terrific number of business and technology classes similar to the ones highlighted above. The Udacity site says that it was “founded by three roboticists who believed much of the education value of their university classes could be offered online.” It goes on to say that over 160,000 students in over 190 countries enrolled in their first class, “Introduction to Artificial Intelligence.”

One more great example is Codecademy, a site dedicated to teaching web coding skills to beginners. The interactive tutorials walk you through the basics of HTML, CSS, JavaScript, jQuery, Python, and Ruby. Most lessons only take a few minutes and are accompanied by a discussion forum so you can get help from fellow students if you get stuck.

We realize that most entrepreneurs will say that they don’t have enough hours in the day to run their businesses let alone take a course. That may be true, but we thought that we ought to at least expose you to this very cool, very free opportunity.

[tweetherder]If one of your resolutions for 2013 was to learn something new, there are a lot of great opportunities for you to choose from![/tweetherder]

When you’re passionate about your company, keeping accurate business records can seem like a boring chore. It’s not the most glamorous or engaging task, and it requires patience and good organizational skills. But while dealing with paperwork can seem burdensome, a thorough and up-to-date record system can save you headaches and work down the road – and best of all, save you money at tax time.

It can also help you improve your client relationships and accurately assess your company’s performance. In fact, maintaining immaculate business records is critical if you want to:

• Prepare financial statements and tax returns
• Track and substantiate deductible expenses
• Monitor your business profitability and plot growth strategies
• Maintain attentive relationships with vendors and customers
• Protect yourself in the event of lawsuits

While specific industries sometimes have specific recordkeeping regulations, the practices described below are fundamental to all businesses.

What business records should you keep?

• Legal Records: Make sure you keep the following documentation organized and accessible: articles of incorporation, permits, by-laws, state filings, trademark registrations, patents, licenses, insurance policies, and employee records. And of course you’ll keep all of your own client contracts on file, along with the contracts you’ve signed from your suppliers and distributors.
• Accounting and Tax Records: Your financial records will usually represent the bulk of your records and involve the most complexity, so spend some time developing a comprehensive system. Many small businesses are launched with just a spreadsheet for their books, but most eventually move onto accounting software such as QuickBooks to help organize records and prepare financial statements. Do be aware that you will need a rudimentary knowledge of accounting basics like debits, credits, and journal entries. In addition, you should understand your profit-and-loss statement, balance sheet, and cash flow statement.Beyond recording your income and expenses, you will need to maintain these types of financial records: bank and credit card statements, annual tax returns and quarterly filings, inventory, sales records, invoices, purchase orders, and payroll.
• Client Files: Here’s where some legwork really pays off in client relationships. Not only should you maintain accurate records of work performed, contracts signed, and bills paid, but you should maintain a file of the client’s preferences, culture, dislikes, and goals. Recording this in a customer relationship management (CRM) system will help you accurately tailor your work to their needs and avoid strategy misfires.
• Strategy and Business Planning Records: While these won’t be as formal as your other records, it’s helpful to document your business decisions, initiatives, and goals. Date these records, just as you would with any invoice or transaction, and document the results. You will be able to quickly chart your company’s evolution, determinate the most effective strategies, and create a more profitable roadmap for the future.

What’s the best system for maintaining business records?

The recordkeeping system you choose should be tailored to the size and purpose of your company. Generally it is best to separate your official records – those required by the Secretary of State’s office in order to maintain your business’ legal status – and your financial documents. Your day-to-day documents, such as payroll and purchases, should be yet a third and highly accessible category. File hard copies in three-ring binders with index tabs for quick consulting – but whenever possible, preserve your records digitally as well.

Finally, make sure you schedule record maintenance on a recurring basis. Receipts pile up, contracts get lost, and client files get neglected. It’s easy to let paperwork devolve into chaos while you’re chasing “real” business. So stay organized, stay current, and perhaps most importantly – keep your digital records backed up.

Good business records are much more than a filing system. They’re the foundation of your company’s success. Devote some time to creating a comprehensive system now and you will thank yourself in the future.