Creative Tool for Bootstrap Marketing

Small Business Trends has an article by Kare Anderson on the growing trend for businesses large and small to partner together to reach common customers.
“It reflects a growing trend of organizations joining forces with others who serve the same kind of consumer. Together, they have discovered that they can act quickly to offer extra value, convenience or other stand-out benefit.”
How does it work? Here is an example of two businesses partnering to reach the same customers while spending fewer total dollars:
“T-shirt designer Tami Minatelli was able to exhibit at nine street fairs this summer without paying for her booth space. A new manufacturer of a unique, no-stain suntan lotion paid for Tami’s booth.
“Why? Because she wore their lotion and her T-shirts, with a sign above her head, describing her original painting-on-cotton method and the lotion’s ‘do no harm’ guarantee. Next to burn protection, that’s the biggest concern of people who use suntan lotions.”
It is a great tool for bootstrappers who want to get the most out of tight marketing budgets. And, both partners win by saving money, enhancing their messages with the possible synergy of each others’ product or service, and by reaching more customers.

Try, Try Again: Tech Boom 2.0

I am proud to say that none of the students who studied with me in the late 1990s fell into the get-rich-quick scheme that was known as the dot.com craze. My students knew that my view of true entrepreneurship was that it was not just a mechanism to feed off of greed and raise a bunch of money that had no real purpose just because you could.
True entrepreneurship is about addressing real needs, building value, creating jobs, fueling the economy, building strong communities, and creating real wealth for those who take on the risk of investment. I told my students that they could start a dot.com if they like, but if they wanted my support (and a reasonable grade) they had to start one that met those criteria. None ever did. At the time I took some heat from many of my fellow academicians, but I stuck to my guns on this one and I think that time proved me right.
Om Malik, who has had his work in a variety of business publications including Forbes, writes a piece in Business 2.0 titled “The New Road to Riches:
How to get ahead in the postbubble world: Build a company cheap. Flip It fast. Repeat.”
When I first read this title, the words of Pres. Reagan came to mind, “Here we go again!” But read on. The techies finally are beginning to understand true entrepreneurship in Version 2.0 of information technology start-ups.
“(It) is part of an emerging breed of here-today, bought-tomorrow startups that are sprouting with minimal funding, flowering briefly, and being gobbled up by far bigger companies. In many instances, these built-to-flip outfits forgo — or sometimes can’t get — money from venture capitalists. They instead create shoestring operations focused on the rapid development of narrow technologies to plug gaps in existing product lines or add useful features to existing products. Then they look to a deep-pocketed patron to scoop them up.”
Instead of raising money just because they can, these folks are now looking for real opportunities, bootstrapping them, and finding a way to help them grow. While I am a little concerned about the “flipping” part, at least they are getting the first steps right this time.
How big is this trend? “By the end of September, there will have been more than 5,300 tech acquisitions in 2004, based on research from Mergerstat.”
My hope is that those who get bought up and then are locked into employment deals with big tech companies will begin to become restless with the corporate life. Maybe Version 3.0 of the tech boom will actually see entrepreneurs who actually want to build companies that have legs and will build value over the long term. Then we may really see a Renaissance of technology companies fueling sustainable economic growth. True techie entrepreneurs: what a concept!

Advice for Collegiate Entrepreneurs

Travis McMenimon is a fellow blogger who happens to be a college senior at Villanova (what a wonderful and open media this is). He has been blogging about his personal “Odyssey of the Mind” at his blog site of the same name. He polled a few of his fellow bloggers who were much topamax mail order longer in the tooth and grayer in the beard than he is to see what we thought about the issue of when is the right time to start your first venture. As you can imagine, we all have different thoughts on this question….You can read about what each of us said Travis’ blog.

IPO Activity Strong in Q3 of 2004

An article in Inc.com reports the strongest IPO activity since 2000 for VC backed firms. This is an important leading indicator for the strength of the entrepreneurially driven recovery.
“The third-quarter number brings to 48 the total of IPOs so far this year, a figure that already exceeds the sum of IPO activity for 2002 and 2003 combined, according to the report.”
M&A activity is also strong, which is another sign of renewed growth in the emerging venture sector.
“Ninety venture-backed U.S. companies were merged or acquired in the third quarter, for a total of $5.89 billion, with information-technology companies representing the majority of those deals.”
These activities will further enhance the base of funds that venture capitalists will have to invest, so this should support strong growth in new VC investment into 2005.

“Archaic Laws” May Not Be All Bad

This was one of those weeks. Everyone looked tired here at Belmont University. The students looked tired, the staff looked tired and the faculty looked tired.
When I asked my students about their weekend plans, I hoped (as a parent of two college age children) that I would hear them tell me that they were going to rest this weekend. They all were dragging so much this week. Who could blame them with the first round of tests and papers for the semester just getting over and their jobs, and their businesses, and their sports practices, etc., etc. But what I heard from each was a weekend that sounded even more hectic than the past week.
This got me thinking about an article in Inc.com I read during this past summer. It was about an effort in Virginia to once and forever “rid the state’s code of ‘blue laws,’ or laws intended to restrict activities and commerce on Sundays.” But, in a legislative snafu “Virginia legislators accidentally repealed exceptions to the archaic laws.” There would actually be two weeks of even stricter “Blue Laws” due to this oversight.
Now as I read this article, I was struck by the author’s choice of language. Rid is a word that often is used to describe the process of casting out something undesirable, bad or even evil. Archaic, well let’s be honest, it’s a word that refers to anything that predates the Internet, CDs, and unleaded gasoline.
But, what’s wrong with a culture that decides to rest for one day? God even rested on the seventh day, after all. Maybe this isn’t something we need the legislature to force upon us, but is it a bad thing?
When I grew up, Sunday was just accepted as a different day than the rest. Most of us would get up more leisurely, have a nice family breakfast and go to church. Then we’d go home, spend time with our families and neighbors and have a nice family supper. We didn’t do yard work, as that was what Saturday was for. We didn’t clean the house and do laundry, as those tasks were taken care of during the week. We didn’t shop, as very few, if any, stores were even open. We just enjoyed each other (OK, so my brothers and I still fussed at each other a bit even on Sundays), praised God, and just slowed down.
Now Sunday is a day to catch up on work. It is for many, their day to gain a competitive advantage in their businesses.
When my wife and I first moved to Kentucky, Blue Laws were still in effect. Our Sundays had already gotten more like any other day by this time in our lives. The shock of the “Blue Laws” was immediate. What, no Mall shopping on Sundays?!? I remember that I had the same reaction that the author of the article in Inc had to this aspect of Kentucky culture. This was archaic!!
Looking back, however, I now see the wisdom in the old ways of treating Sunday as something different in our week. A day of rest. A day of praise. Do I follow the old ways? Sadly not really. Should the old Blue Laws be brought back? Probably not, since we don’t need government fooling around with anything more in our lives.
But, as I read about the pace of our lives today, the stress we create for ourselves, and the alienation we have from our families and neighbors, I can’t help but wonder. Maybe there was some wisdom in our old ways. I am tired. My weekend will be at least as busy as this past week was for me. And then I go back to work….

One Small Step for Entrepreneurs….

The Office of Advocacy of the SBA reports on another positive development in the fight to get government out of the way of entrepreneurs.
“Small businesses will find it easier to comply with complex and confusing federal regulations, if a bill recently introduced by Senator Olympia Snowe (R-ME) becomes law.
“The Small Business Compliance Assistance Enhancement Act of 2004 (S. 2834) amends the 1996 Small Business Regulatory Enforcement Fairness Act, a law that bolsters the Office of Advocacy’s ability to reduce regulatory barriers that can stifle entrepreneurial growth. S. 2834 places new emphasis on compliance guides that agencies are required to write so that small businesses can better understand complex rules and regulations.”

Q2 Shows Stronger Growth Than Originally Reported

The Bureau of Economic Analysis (BEA) announced today that GDP grew at a seasonally-adjusted annual rate of 3.3 percent during the 2nd quarter, up from a previous estimate of 2.8 percent growth. Major contributors to the growth in GDP were business investment, consumer spending, and private inventory investment. Business investment, the lack of which drove the economy into recession in 2001, increased by 12.5 percent in the 2nd quarter and has now increased for five consecutive quarters. GDP has increased for eleven consecutive quarters.
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Highlights:
* During the 2nd quarter of 2004, GDP grew at a seasonally-adjusted annual rate of 3.3 percent. Over the past year, GDP has increased by 4.8 percent.
* Business investment was stronger than expected, growing at a robust 12.5 percent annualized pace in the 2nd quarter.
* Export growth was strong and the revised 2nd quarter trade deficit was slightly smaller than previously estimated.
* Residential investment, primarily home building, was also revised up and is now estimated to have grown at a very strong 16.5 percent annualized rate. This is the second strongest quarterly growth in home building in eight years.
Source: Congressional Joint Economic Committee

Tips on Selling Your Business

Entrepreneur.com has a great article on selling a business. They offer several suggestions and a few issues to be aware of as you enter into this potentially exciting, always stressful and often frustrating time for you and your business. As I tell me students, I had a full head of hair before we began the process that finally resulted in the sale of our business (see picture on this blog site to see the humor in this joke!). We went way down the road toward a sale twice before it finally occurred on the third attempt.
Here are the main suggestions that David Worrell offers in this article:
1- “It’s never too early to start thinking about selling. ‘The day you start building a business is the day you should start designing your exit,’ says Minor, who has counseled thousands of business owners through the process.”
I tell folks that if you are planning to sell your business in five to ten years, you should consider this short-term planning when it comes to an exit. Decisions you make today can have a huge impact on the options for selling your business and the price you get for its sale years from now.
2- “A business will fetch the best price only when buyers believe they can take advantage of significant future growth potential.”
Most businesses are valued based on some multiple of current cash flow. The size of the multiple is, in part, on growth potential for the business. The more future growth that is anticipated from the business, the higher the multiple and therefore your price.
3- “(H)aving a Plan B is a vital step in the sale process….Having a strong and visible alternative makes any acquirer sit up and take notice.”
As my father, the wise entrepreneur, always reminded me, “Never sit down to negotiate unless you are willing to walk away from the table”.
4- “A strong team, clear policies and procedures, and a broad customer base are the underpinnings of value. The business should not just run without you, but be positioned to grow without you.”
Most entrepreneurs want to leave their business sometime soon after a sale. And most of those who do not think they will want to leave, end up leaving fairly soon after the sale any way.
5- “While you’ve been focused on selling the company, who’s been making sure the company stays focused on selling your product?… Many deals have been quashed when financial results from the last month or the last quarter are off target. Even if the buyer doesn’t walk away, the price is likely to take a last-minute tumble.”
Also, the majority of deals never make it to closing and as many as half that do get to closing, actually never close. Since you may end up keeping your business much longer than you anticipated, make sure it is running well.
6- “The amount of disclosure that buyers require can be mind-boggling. Putting it all together in a reasonable fashion is just one reason to consider hiring outside help. An intermediary, such as a business broker or an investment banker, can relieve you of some of the work while also keeping the buyer engaged.”
Selling your business is not a time to cut corners in costs. It is a complex process that can come back to haunt you long after any sale due to the warranties that you will have to provide. Hire good help!