I woman I met inherited a spring and decided to start a bottled water company, selling bottled water to businesses in a large city. She couldn't compete on price, so she emphasized her water's great taste. She's not doing well...yet she is an African-American woman in an urban market that has substantial minority supplier goals for its government offices and local businesses. But she refuses to market her company as a minority-owned company! She wants people to buy it because it tastes good. Yet she could be helping dozens (hundreds?) of companies meet their minority supplier goals by becoming their exclusive bottled water supplier. Noble, perhaps, but wise?
I have always jumped on every potential advantage I might have. I am enrolled in an entrepreneurship program at a local university, so I am a student and I am entitled to a lot of student discount programs, such as half-price software. Most universities have libraries that are linked online to hundreds of other libraries, including the Library of Congress. I have obtained ALL of my market research reports from there--many of which would have cost thousands of dollars to purchase. My state and local government offer dozens of programs for women-owned companies, many of which I've used. My husband's company is in a designated "empowerment zone" which entitles him to tax advantages and all he has to do is fill out a form. I own a medical technology company, and my state offers loans for both technology companies and life science companies, and I've taken advantage of both programs.
Take a 360 degree view of your company and take advantage of all the services and programs that could help you. And keep an open mind about your true status! Building a business is hard work, and you could find the help you need by exploring these opportunties.
Friday, August 29, 2008
Tuesday, August 26, 2008
Get Your Financials in Shape
I suppose it seems obvious to say that every entrepreneur should have a top notch set of financials, but I'm surprised how many don't. Of course everyone puts some numbers down on a spreadsheet, but to really move your financials from good to great, you have to spend a lot of time on them, and sometimes a lot of money.
I am not a financial person, I am the strategist and the implementer. I couldn't create a set of financials from scratch, so I decided to do what I do best - write. I actually wrote out my financials in words, one expense on each line of a spreadsheet. Things like:
Rent - first 2 years, $500 per month in a business incubator; year 3, 14 employees, rent $3800 per month; year 4, 17 employees, rent $4300 per month; year 5, 21 employees, rent $5500 per month
and I wrote several pages out like that. Every expense I could anticipate, I wrote it out. It took a long time, several weeks. I had to research everything (I didn't make the numbers up) and I had to talk to people in my industry to get a sense of how much I could sell and how fast I would grow. Of course I did a ton of market research, and made estimates about my company's size and growth rate. I made a lot of phone calls, for example I called three web companies to get an estimate on how much it would cost to create my website, then I chose a median figure from those estimates. I researched salary figures for future employees, and product development costs for similar products in my field.
Then I gave the whole thing to an accountant, and paid her $150 per hour to create the financials. It took her about 4 hours, $600. It was a lot of money at the time, but I ended up with a professional looking, accurate set of financials that I was proud to show to any banker or investor. My financials have gotten a lot more detailed since then, but I am still using the originals she created. It was worth the time and the expense, and it impressed the people and the government agencies I was looking to for funding. And best of all, I could explain every single line item on there, because I had done all the original research and I knew where every figure came from.
I am not a financial person, I am the strategist and the implementer. I couldn't create a set of financials from scratch, so I decided to do what I do best - write. I actually wrote out my financials in words, one expense on each line of a spreadsheet. Things like:
Rent - first 2 years, $500 per month in a business incubator; year 3, 14 employees, rent $3800 per month; year 4, 17 employees, rent $4300 per month; year 5, 21 employees, rent $5500 per month
and I wrote several pages out like that. Every expense I could anticipate, I wrote it out. It took a long time, several weeks. I had to research everything (I didn't make the numbers up) and I had to talk to people in my industry to get a sense of how much I could sell and how fast I would grow. Of course I did a ton of market research, and made estimates about my company's size and growth rate. I made a lot of phone calls, for example I called three web companies to get an estimate on how much it would cost to create my website, then I chose a median figure from those estimates. I researched salary figures for future employees, and product development costs for similar products in my field.
Then I gave the whole thing to an accountant, and paid her $150 per hour to create the financials. It took her about 4 hours, $600. It was a lot of money at the time, but I ended up with a professional looking, accurate set of financials that I was proud to show to any banker or investor. My financials have gotten a lot more detailed since then, but I am still using the originals she created. It was worth the time and the expense, and it impressed the people and the government agencies I was looking to for funding. And best of all, I could explain every single line item on there, because I had done all the original research and I knew where every figure came from.
Wednesday, August 20, 2008
Stop Making Your Bed
Shortly after I started my company, I realized that my life was getting very complicated. Not only was I struggling to juggle family, chores, errands, and finances, but each day was an intense intellectual challenge that left me exhausted at the end of the day. I had to figure out ways to make my life easier--or at least less complicated.
I started to let go of things that I could live without, or without doing. I didn't comprehend at first what was happening, but over time I noticed that as I dropped items off my "to do" list, my life was becoming slightly easier, less complex.
The first thing to go was my bed - I stopped making it. (Yes, my spouse could have picked up this chore, but my goal wasn't to make other people's lives more onerous, but to make mine easier.) I haven't made it several months, and it feels good. I do less laundry/ironing, and a lot less yardwork. Instead of planting flowers this spring, I divided some of last year's perennials and stuck in a few tomato plants. Very low maintenance, but still nice to look at. I mostly walk to work, so car maintenance has all but disappeared. My home is not perfectly neat, and the windows are a little dirty, but my life is easier, and I'm just a little bit less stressed. And right now, every item I can cross off my "to do" list is a blessing.
I started to let go of things that I could live without, or without doing. I didn't comprehend at first what was happening, but over time I noticed that as I dropped items off my "to do" list, my life was becoming slightly easier, less complex.
The first thing to go was my bed - I stopped making it. (Yes, my spouse could have picked up this chore, but my goal wasn't to make other people's lives more onerous, but to make mine easier.) I haven't made it several months, and it feels good. I do less laundry/ironing, and a lot less yardwork. Instead of planting flowers this spring, I divided some of last year's perennials and stuck in a few tomato plants. Very low maintenance, but still nice to look at. I mostly walk to work, so car maintenance has all but disappeared. My home is not perfectly neat, and the windows are a little dirty, but my life is easier, and I'm just a little bit less stressed. And right now, every item I can cross off my "to do" list is a blessing.
Friday, August 15, 2008
Be Patient (or, All Good Things Come to Those Who Wait)
This week my first major investment closed. I was able to deposit a 6-figure check into my business account. It felt good. Even the bank teller said "you've had a good day!"
But it took over 4 months to close the deal. It was painfully slow. At one point, we were so far apart on the terms I walked away. The investors urged me back to the table and made some compromises. Ultimately they moved very close to center, and it said a lot about their commitment and enthusiasm. But several times I thought it wasn't going to happen, and I had to muster every ounce of optimism I had to wait out these months and keep positive. I had a few other funding options, but not many. I needed this deal.
Through it all, I was nice, professional, respectful, and responsive. (At least on the outside. Inside I was fearful and grumpy.) I waited and I waited. I reduced my monthly burn while I was waiting, placing a few consultants on hiatus and eliminating every other possible expenditure. And it paid off. Some entrepreneurs might not have 4 months of patience inside them, but if you want something badly enough, you have to find it.
But it took over 4 months to close the deal. It was painfully slow. At one point, we were so far apart on the terms I walked away. The investors urged me back to the table and made some compromises. Ultimately they moved very close to center, and it said a lot about their commitment and enthusiasm. But several times I thought it wasn't going to happen, and I had to muster every ounce of optimism I had to wait out these months and keep positive. I had a few other funding options, but not many. I needed this deal.
Through it all, I was nice, professional, respectful, and responsive. (At least on the outside. Inside I was fearful and grumpy.) I waited and I waited. I reduced my monthly burn while I was waiting, placing a few consultants on hiatus and eliminating every other possible expenditure. And it paid off. Some entrepreneurs might not have 4 months of patience inside them, but if you want something badly enough, you have to find it.
Tuesday, August 12, 2008
Stop Trying to Relax
People keep telling me to relax, take a vacation, stop thinking about the business for a little while. But you know what? I CAN'T stop thinking about it. I've read all about the importance of R & R, and how you can burn out and exhaust yourself if you work too hard, and then your decision-making skills suffer, etc. But my entire financial future -- and my family's -- is on the line with this venture, and I can't relax and stop thinking about it. Besides, I love what I'm doing. It's not painful to think about it constantly, it's pleasure (mostly.)
So I give myself small windows of relaxation. An hour here, an afternoon there. I spent a week at the beach this summer, but in order to actually enjoy myself, I had to work a few hours each day. So I got up, exercised, and got out my computer and my phone and worked till about noon each day. Then I put it away, and I was actually able to enjoy the rest of the day, content that I had done all that needed doing, and that any remaining items could wait 18 hours until I got my laptop out again the next morning.
On the weekends, I work a little each day. It is not a chore, but satisfying work that makes me feel ready to face anything on Monday morning. I also have fun, relax, and rest on the weekends, but I can't stop what I'm doing for long periods and call it relaxing. I HAVE to accomplish something every day, even if it's just writing an email to a business partner, or updating my website, or sorting through old emails and making a "to-do" list for the coming week. I have given up trying to relax, and accepted the fact that "relaxing" for me means accomplishing something related to my business, every day.
So I give myself small windows of relaxation. An hour here, an afternoon there. I spent a week at the beach this summer, but in order to actually enjoy myself, I had to work a few hours each day. So I got up, exercised, and got out my computer and my phone and worked till about noon each day. Then I put it away, and I was actually able to enjoy the rest of the day, content that I had done all that needed doing, and that any remaining items could wait 18 hours until I got my laptop out again the next morning.
On the weekends, I work a little each day. It is not a chore, but satisfying work that makes me feel ready to face anything on Monday morning. I also have fun, relax, and rest on the weekends, but I can't stop what I'm doing for long periods and call it relaxing. I HAVE to accomplish something every day, even if it's just writing an email to a business partner, or updating my website, or sorting through old emails and making a "to-do" list for the coming week. I have given up trying to relax, and accepted the fact that "relaxing" for me means accomplishing something related to my business, every day.
Saturday, August 9, 2008
Surround Yourself with Supportive People
This may seem a little cold, but I actually "let go" of a few friends after I started my company. There's no question that my life changed. I threw myself into the most difficult intellectual and emotional challenge of my life, and I needed support. Many of my friends were supportive, some in a sort of curious way "You did WHAT? Why?" Some might have even been a bit jealous, knowing that I was pursuing my dream while they were pursuing a paycheck. But most are excited for me, and eagerly await updates from me.
But a few were not supportive. They couldn't have cared less what I was doing. Asked me no questions, showed no interest in discussing it. A few couldn't relate at all - they didn't know any entrepreneurs, didn't understand it. At one dinner with one of these friends, I was swept by a feeling of "WHY on earth am I sitting here with this person?" It made me realize that with the limited time I had, and the limited emotional capacity, I could no longer spend time with people who gave me nothing. Not support, nor interest, nor help. They merely took up my time.
So I stopped calling, stopped responding to emails, didn't send them a Christmas card. I needed to spend my limited free time with people who made me stronger. People who liked that I had decided to try something new. I am now surrounded by strength, which is the best thing any friend can give me.
But a few were not supportive. They couldn't have cared less what I was doing. Asked me no questions, showed no interest in discussing it. A few couldn't relate at all - they didn't know any entrepreneurs, didn't understand it. At one dinner with one of these friends, I was swept by a feeling of "WHY on earth am I sitting here with this person?" It made me realize that with the limited time I had, and the limited emotional capacity, I could no longer spend time with people who gave me nothing. Not support, nor interest, nor help. They merely took up my time.
So I stopped calling, stopped responding to emails, didn't send them a Christmas card. I needed to spend my limited free time with people who made me stronger. People who liked that I had decided to try something new. I am now surrounded by strength, which is the best thing any friend can give me.
Wednesday, August 6, 2008
Enter Business Plan Competitions Often
A good reason to keep my business plan current is so that I can use it to enter business plan competitions frequently and easily. Every few months, I google "business plan competition" and I see what's available. You'd be surprised how many competitions are out there, and how many you actually qualify for. If you're a student, there are (at least) dozens out there. In specific industries, such as green technologies or life sciences, there are many more. For most competitions, all I have to do to enter is email my business plan.
In the past year, I have won $15,000 in cash and $5,000 in marketing services from business plan competitions. All of them come with a substantial amount of PR as well, plus of course the connections you make by networking at the events. It's definitely been worthwhile for me to enter. And I didn't necessarily win them all -- I got $5,000 at one competition for coming in sixth! Even if you don't win any prizes, it's a chance to hone your pitch, practice your presentation, and get feedback on your business plan from professional investors and advisors. It's worth the time to look for competitions and enter the ones for which you're qualified.
In the past year, I have won $15,000 in cash and $5,000 in marketing services from business plan competitions. All of them come with a substantial amount of PR as well, plus of course the connections you make by networking at the events. It's definitely been worthwhile for me to enter. And I didn't necessarily win them all -- I got $5,000 at one competition for coming in sixth! Even if you don't win any prizes, it's a chance to hone your pitch, practice your presentation, and get feedback on your business plan from professional investors and advisors. It's worth the time to look for competitions and enter the ones for which you're qualified.
Friday, August 1, 2008
Keep your Business Plan Current
One of the wisest things I've done (yet) as an entrepreneur is keep my business plan completely up-to-date. There is a sentence toward the front that says "This business plan was prepared for you on //today's date//" so that I always know when it was last updated. About once a month, I go through it and update it. The strategy, funding required, financials, etc. are always completely current.
Some people think you only need a business plan when you're raising money, but I have found it useful for dozens of purposes. When I am applying for a grant, it's easy to cut and paste from my business plan. If I see a business plan competition I want to enter, I just submit my (always current) plan. If there's someone I want to attract to the company as an Advisor or Board member, I send him my business plan. If I want to submit myself for an award, or if someone wants to submit me, all the information needed for that award application is in my business plan.
It only takes a few minutes to update it if I do it frequently enough. And when a potential investor DOES come along, it looks smart and professional to be able to shoot him your business plan immediately.
Some people think you only need a business plan when you're raising money, but I have found it useful for dozens of purposes. When I am applying for a grant, it's easy to cut and paste from my business plan. If I see a business plan competition I want to enter, I just submit my (always current) plan. If there's someone I want to attract to the company as an Advisor or Board member, I send him my business plan. If I want to submit myself for an award, or if someone wants to submit me, all the information needed for that award application is in my business plan.
It only takes a few minutes to update it if I do it frequently enough. And when a potential investor DOES come along, it looks smart and professional to be able to shoot him your business plan immediately.
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