Mini-Biz Buzz

As the economy stumbles along and job openings are scarce, some people are deciding to take that leap of faith and start their own business.

Historically, economic downturns encourage people to start their own companies, because other options aren’t available. About half of the Fortune 500 companies listed this year were started during economic hard times. In spite of the challenges to get up and running, many startups thrive in times like these because they are nimble and lean, making them more flexible than their larger competitors. Also, it’s easy to find deals on goods and services as established companies try to keep the doors open.

There is a great article about a woman, Julie Trade, who started her own business after her husband was laid off in 2007. With a background in marketing, she launched her own marketing communications business from a spare bedroom, growing it into a thriving business.  In this same article, Tim Kane of the Kaufmann Foundation says the worst job market in 26 years may be the perfect time to start a business, especially if you've always wanted to start a company and you’re getting no where with your job search.

I’m sure if we were in an economic upswing (and we will be, sooner or later) I would be writing about how it is a great time to start a business because prosperity abounds. So I guess the real message is, always look for the opportunities around you. They will appear when you expect to see them. Check out the article here: www.money.cnn.com

I’ve received a few emails asking about angel investors, basically looking for a definition. An angel investor is typically a wealthy person who provides capital for a business start-up, usually in exchange for percentage ownership or some return on investment if there is an eventual profit.

Frequently angel investors team up into groups, commonly called angel networks. Their resources are then pooled together. Often these networks have a theme, whether it’s working with businesses of a certain size, a particular industry, or specific category of business owner.
Also, unlike bank loans, there could be restrictions placed on the use of the capital, or other guidelines put in place to minimize the investors’ risk.

In 2007, companies that received angel funding averaged a capital infusion of $450,000, but there are no rules regarding angel investment amounts. The investments can range from a few thousand dollars to a few million dollars. Just know, before you approach anyone, you will need a clear business plan and financial documents forecasting at least two years out.

It’s not necessarily easy to get angel investors, but it’s also not impossible. I know of people who have found an angel investor by getting the word out through their family and friends. I think your social network is a great place to start, but you can also Google “angel networks” and refine your search as you go.  No matter how you go, though, be confident, professional and prepared.

When creating a sales pitch for your product, I think it’s best to start with an “elevator pitch”, and build upon it when you need something a bit longer. That way you have several versions, but they will all have the essential ingredients.

An elevator pitch is a concise, thought out description of your company/product. It is a straightforward explanation that anyone can grasp in the time it would take to ride up an elevator, hence the name.  Your pitch should answer the following questions:

What is your product or service?  Briefly describe what it is you sell. Do not go into tedious detail.

Who is your market?  Again, briefly discuss who you are selling the product or service to. How large of a market do they represent?

How will you generate revenue?  More simply, how do you expect to make money?  Where are you going to sell your product?  Will you focus on wholesale or retail?

Who runs the company?  In a couple of sentences, tell about your (and any partners) background and achievements, as they relate to your company or product creation.

Who is your competition?  Again, in a couple of sentences, describe who they are and what they have accomplished. Successful competition is an advantage for you because it is proof your business/concept has a market.

What is your competitive advantage?  How is your company different from the competition and why do you have an advantage over them.  Are you “green”? Are you more affordable? Is your packaging more attractive?  Basically, what problem do you address, that your competition does not.

Once you have this basic information written down, you can expand on each section if needed. Some situations allow for a longer, more detailed explanation of your business. By building upon this succinct version of your story, you are assured to include the essential details. You now have a pitch you can tailor to fit any opportunity.

Networking is a very important (and, hopefully, rewarding) part of growing your business.  And networking skills are something that everyone should develop. There’s more to it than just passing out cards to as many people as possible. Networking is not a matter of quantity; it’s a matter of quality.

A networking opportunity can present itself at industry functions or your friend’s wedding reception. You never know when you will meet someone who can help you out with your business. If you aren’t current about the trends and developments in your industry, you could miss out on that opportunity.

Conferences and tradeshows are more than great places to network, they’re also where you will see the latest developments in your industry. When new trends are taking hold, you need to ride the wave as it crests, not while it’s crashing down. Things change up so quickly. If your designs, processes, or approach become stale, you will eventually lose your customer base.

Many people don’t attend tradeshows because it can be expensive to get a booth, etc… But you don’t need to have a booth. Register as a buyer or a guest (which is usually inexpensive, or free) and walk around and see what everyone else is doing. And bring business cards, flyers, and maybe a sample or two just in case you get an opportunity to pitch your product.

Google “tradeshows” and the name of your industry to learn about upcoming events. The more you know about your industry, the better your product or service can be. You’ll start to be perceived (rightly so) as an expert your field, and that creates trust.