Archive for November, 2008

Weekly Round-Up: Giving Thanks That It’s Friday – On Wednesday.

Wednesday, November 26th, 2008

-Hindsight may be 20/20, but that doesn’t mean you can’t learn from it. Or at least that’s the thinking behind the Dot Com Archive, a neat compilation of circa-1999 business plans from start-ups that succeeded and others that flopped during the bust. The free site provides a useful history lesson for anyone working on their business plan.

-When one of the great businessmen in the world speaks, we listen. So when Warren Buffett said earlier this week that the only way the ailing Big 3 automakers can survive is with a good business plan, we took it as an endorsement of just how critical business plans are. (So should you.)

-What’s up with our need to continually “prove” to you guys that funding is still flowing, you might ask? Consider it your daily counterbalance to all the negative news. Now read this.

-This week we answered the question you’ve all been dying to know: just how much start-up capital is $7.6 Trillion dollars, the amount the government has pledged in rescue money? Depending on how you look at it, it’s $100K in start-up cash for 76 million entrepreneurs or $25K for, well, all 300 million of us Americans. Kind of gets you thinking about the bailout in a new light, doesn’t us?

-This week the Fed finally did the right thing by every man and announced that they’re rolling out a $200 billion program intended to increase the flow of consumer and small business loans. The question, of course, is whether it will actually do any good, so we asked you to weigh in on the topic for this week’s survey question. Your response was cautious, but clear. It may work, but you’re not ready to start patting Uncle Sam on the back just yet.

-No one likes to kick big business when they’re down, but it’s hard not to gloat just a tiny bit over a new government report indicating that small business are more innovative than the big guys. Take that Apple!

-Maybe it’s because it’s a short week. Maybe it’s because it’s a holiday. Or maybe it’s because layoffs are actually tapering? But this week we saw the fewest layoffs we have over any time in the past month. That’s something we can all be thankful for.

Tags: weekly round-up
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Does My Business Plan Need A Marketing Section?

Wednesday, November 26th, 2008

How can you even begin to think about marketing or advertising if you don’t yet have anything to market, let alone an operational business? So asks reader/entrepreneur Matt, who wants to know whether he really needs to include a marketing strategy section in his business plan.

The truth is that a marketing section isn’t the most critical part of a business plan. It’s secondary to strong financial projections, a great product description and a solid executive summary. But it’s still important. Here’s why: you need to show an investor that you’ve come up with a way to actually bring your product to market. You may have the greatest product in the world, but unless you figure out how to market it so people will 1) become familiar with your product and 2) actually purchase it, you’ve got nothing.

So, just how detailed does your marketing strategy need to be? The good news is that it doesn’t have to be terribly developed. It’s true that it’s difficult to figure out how to market a product or service that doesn’t yet exist. Investors get it. Much of your marketing strategy is going to rely upon trial and error—figuring out what works and what doesn’t while you’re doing it. No one expects you to know exactly how you’re going to get your product sold. Still, you should have a basic framework laid out that shows them that you’ve got some idea where you’d like to start.

One word of caution, though. Marketing often uses a lot of jargon and a lot of bull phraseology. Don’t think that by throwing around this terminology that you’ll trick investors into thinking that you know what you’re doing. As VC Guy Kawasaki noted, using expressions like “we’re going to go viral” or saying that you plan to leverage “word of mouth” doesn’t demonstrate that you’re hip to marketing. It shows you don’t know what you’re doing.

Tags: business plan, q&a
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Turkey Day Pink Slip Free…Almost.

Wednesday, November 26th, 2008

Maybe it’s because it’s a short week. Maybe it’s because it’s a holiday. Or maybe it’s because layoffs are actually tapering? But this week we saw the fewest number of layoffs than any other time in the past month. Now you can actually enjoy your turkey tomorrow rather than crying into it. At least some of you can, that is:

-Technorati, the tech blog search engine, announced yesterday that they’re laying off six staff members. Management is taking a 10-15% pay cut, and the remainder of the staff will have their paychecks slashed by 10%. They made the announcement via their official blog. Writes company CEO Richard Jalichandra:

“There’s not much I can say about the economy that hasn’t been said a hundred times already. We’re facing the worst crisis of our lifetimes, and no one can say with certainty what lies ahead or how long it will last.”

-Google—yes, Google (death breath)—announced Monday that they’re making cuts to their workforce, according to CNET. While they’re not laying off full-time employees, they are cutting up to 10,000 contracting positions.

-The world’s largest steelmaker, ArcelorMittal, revealed yesterday that they intend to lay off 16% of their U.S. workforce, reports Reuters. That’s not a huge surprise given that the company has been forced to reduce output in North America by 40% because of decreased demand.

-In what’s got to be one of the most twisted tales this week, Silicon Valley-start-up Sezmi announced that they raised $27.7 million in third round funding. At the same time they also revealed that they’re laying off more than a fifth of their staff, about 20 employees. We’re guessing that fact that they didn’t secure the $51.5 million they were actually going for may have had something to do with it.

-Eclipse Aviation, a start-up that makes low-cost personal jets, filed for bankruptcy on Tuesday, reports the Wall Street Journal. That’s not a huge surprise to the company’s 1,100 employees who Eclipse failed to pay earlier this month.

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Tags: failures
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The Fed’s New Rescue Package? It Just Might Work.

Wednesday, November 26th, 2008

As you’ve likely heard by now, yesterday the Fed announced that they’re providing a new $200 billion package that’s intended to take the frost off the secondary credit markets and to free up loans for consumers and entrepreneurs with business plans. While all that sounds simply rosy, being the cynics we are, we wondered: will a flood of cash into the lending system actually spur banks to start lending? This question is particularly relevant when it comes to Small Business Administration-backed loans, which have ebbed over the past month.

The primary concern is that the money actually won’t end-up translating into loans or reaching Main Street. It’s not an unfair doubt to have. Remember, part of the rationale behind the main federal bailout package was that the cash would help ease up the credit crunch and stimulate lending. That hasn’t happened as expected.

Of course, the truth is that nobody really knows what’s going to happen. But naturally that didn’t stop us from asking you to speculate. For this (short!) week’s survey question, we decided to ask whether you felt this new program would make a difference for small business owners and entrepreneurs.

According to the current results, the majority of you are cautiously optimistic. You agreed that it “may work,” but that you’re not ready to start awarding any medals quite yet. That strikes us at the right attitude, given the giant question marks hanging over what could be a terrific deal for entrepreneurs. The remaining half of you were split. 25% of you said that the only way the government could provide relief to small business owners and entrepreneurs would be with a check made out in their name (which, theoretically, they could provide if they had their druthers—about 300 million times over, as we mentioned the other day). Finally, the remaining 25% of you responded with blind optimism. You say this program will help. Period. And to those readers: we’d like a little bit of whatever happy juice you’ve been drinking.

Tags: bank lending, economy, survey
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Can The Government’s New Plan Really Help Entrepreneurs?

Tuesday, November 25th, 2008

So, as we reported earlier today, the Fed has finally decided to offer some quasi-direct relief to consumers and entrepreneurs in the form of a $200 billion package aimed at defrosting the secondary credit markets. The plan is for the New York Fed to offer non-recourse loans to the holders of asset-backed securities, which should offer greater liquidity to the issuers of these securities. The bottom line is that it’s supposed to provide small business owners, entrepreneurs, and consumers greater access to small business loans, credit card loans, and auto loans. Even better, Treasury Secretary Henry Paulson says that the $200 billion figure is just a “starting point,” according to the Wall Street Journal.

While all that sounds like pretty awesome news, we’re a jaded lot. So for this week’s survey question, we thought we’d ask your opinion on the new program. Do you think there’s anything the government can actually do to help small businesses and start-ups, short of whipping out their checkbook and writing individual checks? And if so, do you think this new program hits the sweet spot?

For a simple response, click to answer below. If you’ve got more to say, use our handy (and under used!) comments section.

poll by twiigs.com

Tags: bank lending, survey
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More Money: No Cash Shortage Here.

Tuesday, November 25th, 2008

Another week, another round of business plans that scored funding:

-Magnify raised $750,000 in first round funding. The NYC-based start-up provides a web video platform along with a variety of free publishing tools to web users. So far they say they have about 47,000 customers and that they received 30 million video impressions just this month alone, reports the Alley Insider.

-Clear Standards, a start-up that provides corporations an inventory system allowing them to track their greenhouse gas emissions, secured $4 million in first round funding, according to VentureBeat. While currently such systems simply allow the corporations that use them the right to flash their green credibility with consumers, it’s likely that they’ll soon become a neccessity should a carbon cap be put in place. The idea is that by developing technology like this early, Clear Standards will be at the front of the pack when carbon emission restrictions become firmer.

-KickApps (ha), a social media/video player/blog platform, negotiated $14 million in third round funding this week, says MarketWatch. They say they’ll use the money to continue expanding their product line, which already includes tools that allows web users to create their own widgets and to syndicate their content. Their clients include HBO, Budget Travel, Rachel Ray, and Vibe magazine.

-Awarepoint, a start-up that makes one of those creepy, ahem, neat real-time location systems scored $13.3 million in Series D funding, reports PEHub. More specifically, the company’s tool offers the “location, status, and movement visibility of both equipment and people,” allowing to you watch people, stuff, and things from afar. Sounds a lot like a tricked-out GPS to us.

-PlaySpan, a company that allows gamers to purchase games directly from publishers or from other players, announced this week that they secured $16.8 million in second round funding, says MarketWatch. The start-up says they’ll use the new capital to continue their expansion into Asia and Europe. So far the company has raised a total of $24 million.

-StillSecure, er, secured $5 million in venture debt financing this week for their secure network infrastructure platform. They specifically raised the cash to “better insulate” themselves from the “current and future economic climate.” Honest!

-FanSnap, a ticket search engine, nailed $5.5 million funding this week. They’ll use the money to continue the build out of their engine, according to CNET.

-Project Frog raised $8 million for its unique, energy-efficient prefab homes and other modular structures. One look and it’s immediately evident that these aren’t your grandparents’ trailers we’re talking about:

pf1

(Image via VentureBeat)

Tags: funding, more money
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Today In Start-Up History: Dynamite.

Tuesday, November 25th, 2008

Speaking of entrepreneurial innovation, today in 1867 Alfred Nobel, the great Swedish chemist, inventor, and namesake of the award, patented dynamite. Nobel originally named his product “Nobel’s Blasting Powder” and marketed it (marketing mattered then too!) as a safer alternative to the much more dangerous gunpowder and nitroglycerin, which often had the nasty side effect of blowing peoples’ hands off. Interestingly, Nobel was more inventor than he was business man. He is said to have tightly controlled his patent, although competition became so fierce in the U.S. to create something similar (or better) than dynamite that Nobel was actually turned off by it, leaving American and selling all his interests in American businesses. He wrote:

“The exaggerated chase after money is a pedantry which spoils much of the pleasure of meeting people and destroys a sense of honor in favor of imagined needs.”

While he doesn’t sound much like an entrepreneur we know (the exaggerated chase after money?), his invention is still important for a myriad of reasons, not the least of which is that it was the first relatively safe explosive), but also because we wouldn’t have this:

Tags: history
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We Hate To Kick Big Business While They’re Down, But…

Tuesday, November 25th, 2008

Let’s push our business plans aside for a moment and have a happy feel-good moment, shall we? A new study out today from the Small Business Administration’s Office of Advocacy indicates that not only are small businesses more innovative than larger companies, but that their innovation is more impactful. Says the report:

“Small businesses develop more patents per employee than larger businesses, with the smallest firms producing the greatest number of patents per employee. Furthermore, small firm patents tend to be more significant than large firm patents, outperforming them in a number of categories including growth, citation impact, and originality.” And they add, “This suggest that the patents of small firms in general are likely to be more technologically important than those of larger firms.”

Snap!

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(Image via Wired)

Tags: big business, sba, small business
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Your Odds At Securing A Small Biz Loan Just Got A Whole Let Better.

Tuesday, November 25th, 2008

The biggest gripe most Americans have had about the government’s bailout of the financial system is that it props up the very people that screwed things up—not the rest of us. The good news is that today the Fed announced a new program that not only helps consumers, but entrepreneurs seeking a loan with their business plan. While the new program is two-pronged, the part of that is most relevant to those of you with business plans is the new lending facility that’s designed to help the asset-backed securities market.

“Today’s initiative to support the small business and consumer finance market is similarly aimed at increasing the availability of affordable lending,” said Treasury Secretary Henry Paulson at a press conference earlier today.

So here’s how the new plan will work: the New York Fed will offer as much as $200 billion in “non-recourse loans” (i.e., loans that are secured by a pledge of collateral) to the holders of asset-backed securities backed by highly-rated consumer and small business loans. In plain English: this should increase the availability of auto loans, student loans, credit card loans, and most importantly (for entrepreneurs, at least) small business loans backed by the Small Business Administration.

The question, of course, is whether any of this will work. Part of the federal bailout money that was doled out to banks earlier this month was intended to ease up the credit freeze and to stimulate lending. So far, that hasn’t happened as readily as the government experts anticipated. Nonetheless, it’s hard to see this new move as anything other than a step in the right direction—particularly for those of you with business plan in hand.

Tags: bank lending, economy, government
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How Much Start-Up Capital Is $7.6 Trillion?

Monday, November 24th, 2008

Earlier today media gossip blog Gawker asked an important question in light of the government’s bailout of Citi: just how much is a jillion dollars?

Seriously—at this point the difference between the $7.6 trillion government has pledged over the past 15 months and a jillion dollars just strikes us as pure semantics (or just a few zeroes). As Bloomberg notes, $7.6 trill is roughly half the value of everything produced in the U.S. last year. And Gawker helpfully points out that it’s also enough to buy the ailing New York Times Company not once, not twice, but 86 times over.

That got us thinking about it from the perspective of an entrepreneur with a business plan. $7.6 trillion is enough to give 76 million entrepreneurs $100,000 in start-up capital. And given that nearly a quarter of start-ups launch with anywhere from $20K-$50K in their pockets, that means Uncle Sam could actually fund up to four times that number, or roughly 300 million entrepreneurs—which is almost the exact population of the United States.

Kind of gets you thinking about the bailout in a new light, doesn’t it?

bailoutairplane