Over the years of working with startups and small businesses, we have come to realize there are a couple of common misunderstandings about starting a business that can seriously impact one’s chances for success. Knowing that you must address the following two key tasks upfront allows you to avoid a crisis down the road. Continue reading
For many people, owning their own business is a dream they’d really like to make into reality—sometimes, all that is needed is a little more information. We’re halfway through 2014, but there is still time to get the ball rolling. If you are still reticent in making that final decision, here are five great reasons to start your own business this year. Continue reading
Starting a new business is an exciting venture! That is, until the realization of just how much money you will need takes you down a few notches. Before you get too discouraged, know that you have several options available to you.
One of those options is crowdfunding. Crowdfunding is the process of raising small amounts of money from a large amount of people- this can be with the help of friends and family as well as people you don’t know. If you approach it correctly, attracting crowdfunding investors can be just what you need to get your business up and running, as long as you’re careful.
Now, the safest way to go about something that has potential legal implications is to know exactly what is allowed and what isn’t. Law enforcement has never taken “I didn’t know I was doing something wrong!” as a valid excuse.
So what should I steer clear of when crowdfunding?
According to Biz Journals, a crowd funder may receive a reward for their donation once the company is up and running, but they cannot claim any ownership or financial gain in the business. For example, would-be authors can promise crowd fund investors copies of their signed books or acknowledgements for donations, but business owners can’t exchange equity for investments.
If you want to give away equity in exchange for funds, you need to work with accredited investors—people who make over $200,000 and have over $1 million in assets.
Forgetting about Taxes
The funds you get from your crowdfunding efforts are considered taxable income. Don’t forget that you must follow the federal and state tax laws you are subject to. If you plan to go the crowdfunding route, calculate taxes into your financial goals.
The typical crowdfunding effort is set up in a way that the person asking for funding promises rewards (not equity) to people who invest. Some crowdfunding sites use an all-or-nothing system where if a person reaches their goal, they keep the funding and must follow through on their promises. If they don’t reach their goal, the money goes back to the investors.
If you reach your goal and fail to follow through with your promised incentives, you could be considered in breach of contract. Unless you want to face a class-action lawsuit, follow through on any promises made during the crowdfunding process.
Where should I look for funding?
If you want to start a company or dive into a project that needs funding, sites like KickStarter or IndieGogo are useful mediums for making money. These have been especially great resources for artistic projects, such as publishing a book, starting a food truck, creating an art exhibit, or designing a new product.
Are there any other rules to keep in mind?
Crowdfunding is subject to rules placed by the Securities and Exchange Commission (SEC) and the Jumpstart Our Business Startups (JOBS) Act- these rules are under constant discussion. As seen on Forbes, here are the rules you must follow if you plan on utilizing crowdfunding for your startup:
- You can only accept up to $1 million dollars per 12-month period through crowdfunding.
- If you are starting an investment company or a public-reporting company, you cannot use crowdfunding.
- Crowdfund investors are only allowed to give a certain amount of money during a 12-month period. For investors who make over $100,000/yr., they can only give 10% of their income or net worth. For those who make less than $100,000/yr., they can only give up to 5% of their income (or up to $2,000, depending on which is greater).
- You can only find crowdfunding through registered broker-dealers or “funding portals.”
- You cannot advertise except to direct potential investors to your broker or funding portal.
- If you complete a crowdfunding crowd, make sure you file the correct reports with the SEC.
The laws surrounding crowdfunding and business startups are complicated. To be absolutely sure you don’t cross any legal lines, talk to a lawyer who works with business law.
Originally from San Jose, California, Erika Remmington is a recent graduate of the University of California, Berkeley in linguistics with a minor in business administration. She enjoys spending her time with her husband and 18 month old daughter. She also enjoys rock climbing and outdoor activities. Legal information from this article was provided by Kitchen Simeson Belliveau Llp.
In the early days of the internet, the extent of digital marketing for most businesses was deciding whether to bother setting up a company website or not. These days it’s rare to find a business of any size without its own website and the rise of the social media has brought with it a new way to engage with existing and potential new customers. Make social work for you by using these 7 tips to take your business from a good online presence to a great one!
1. Spread brand awareness
According to research from the Pew Research Center, 73% of online adults now use at least one social media site. Facebook remains the undisputed leader with almost one and a quarter billion monthly users – more than 1 in 6 of the global population. Other sites like Twitter and Instagram are also huge and 42% of adults online now use multiple social networking platforms. A social media marketing campaign or presence offers the potential customer to reach a vast new audience across a range of demographics and expand your customer base.
Whether your firm is small and speaks to niche-based needs or you are a large company that is trying to be everything to everyone, you won’t get far if you lose designers along the way! A good UX designer is hard to come by, and if you find them and keep losing them, you may need to consider some of the factors going into play as to why you’re losing quality professionals.
You’re Not Paying Enough
Everyone likes to talk about how a great work environment and perks really matter in the workplace, but at the end of the day, it’s all about money. If you are not paying a competitive wage, you are going to find that great professionals may end up at your company, but aren’t going to stay there. Design is an industry that is notorious about underpaying the people who work in it, and if you are guilty of this, word will get around. Make sure that you know what the industry standard is. Depending on the designer that you hire and what their experiences in the field might be, you can be looking at anywhere from $40,000 to $100,000 a year. Good designers expect to get paid for their efforts, and if you do not step up, they’re going to step out!
If you’re a brand new small business owner just bursting out of the starting block, how you decide to save money matters. Even if you’ve gotten off to a good start, and revenues are flowing in, every dollar you save goes directly to the bottom line. In order to maximize your savings, keep the following six tips in mind.
1) Score Free Office Supplies
If you typically pick up your office supplies from your local office supply retailer, understand that there are ways to score supplies for free. Enroll in the store’s rewards program and wait for 100% cash back sales. You buy the supplies at full price, then receive the amount you spent in the form of a rewards certificate, usually issued the following quarter. Common free items include printer paper, pens, notebooks, folders, staplers, and scissors.
If you need quick business loans to help you out of a short-term cash flow crisis, what you don’t need is hassle when making these loan arrangements. We know all too well that any delay in making those funds available can lead to an operational headache, or threaten the survival of your business.
Reasons you may need a quick business loan
There could be an unexpected interruption in sales such as a delay in the delivery of stock that slows the flow of money coming into the business. It could be that you need quick business loans to pay for expensive new equipment or machinery in order to maintain production or cope with a sudden increase in demand. In difficult trading conditions, the customer has also become savvier, and more reluctant to make an immediate purchase, if they even make a purchase at all. As a result the retailer is late in paying you, the distributor. They, in turn, seek extended payment terms in order to assist their own cash flow. Suddenly, your usually strict 30 days terms of credit are being extended to 45 days or even 60 days. You will be paid, eventually, but later than you were expecting.
A short term business loan does not always have to be used to plug cash flow; it can be used as a tool to speed up business turnaround. Taking the right loan at the right time can be a great tactic to help you take advantage of business opportunities that come your way. The speed in which you can secure funding may determine how quickly you can push out in front of your competition or equally ensure your business does not plummet further into uncontrollable cash flow problems.
User-generated content (UGC) refers to any content that is produced by consumers or users. It can take the form of social media updates, reviews, blog posts, Q&A forums, photos or videos. Many businesses use different kinds of UGC as part of their overall marketing strategy and the benefits getting involved with UGC provides are nearly endless for your business.
- Enriched user experience – UGC allows your customers and prospects to interact with like-minded people and share their opinions – this could be through posting comments on a blog, on discussion forums or status updates.
- Enhanced understanding of your audience – User-generated content offers you an excellent opportunity to listen to your customers and be able to better understand their needs.
- Established trust – Consumers usually base their buying decisions on what other people are saying. Having positive reviews on your site enhances the chances of prospects using your service or buying your product.
- Search engine optimization – Search engines like Google rank sites based on how unique and relevant their content is. Having user-generated content on your site can play a major role in improving your search engine rankings and even make your site more visible.
- Cost effectiveness – Hiring designers and writers to create content for your business site can be very expensive, but if you work with an in-house team instead, it’ll help you save on money and time.
What are the defining characteristics of a successful entrepreneur? Passion, tenacity, and flexibility all make the list, for sure, but how about being a bit of a control freak? That probably figures somewhere in there too. And undoubtedly, the determination to constantly succeed can make it difficult for entrepreneurs to let go of the reins, even a little.
However, learning to loosen your grip marks a coming of age for any business owner; it’s an essential part of growing a business. It’s those who cling on to controlling every last operational detail that are often the ones holding their business back from reaching its full potential.
So why is it beneficial to detach yourself from your precious business venture? The main reason – and it may seem a little at odds with itself – is that while you may be a veritable business-building machine, part of becoming a truly great business leader is recognizing that you possess neither the time nor the expertise to do everything by yourself.