Tag Archives: investment

How to Find Investors for Your Business Idea

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Having a great business idea is just the first step. Getting funding for your new company is the more challenging task that follows up. Often, individuals are discouraged from making their dream a reality because of the limited funding opportunities that are available.

It is possible to find investment for a business idea, even if the economy is slow. Presentation of your idea and having a highly professional business plan will show potential investors that you are serious and that you have what it takes to succeed. The following tips will help you present yourself well and capture the interest of potential investors.

A Great Business Plan is Prerequisite Number One:
Investors are busy people. They have many years of experience in corporate management and they can immediately recognize people who are serious about starting a business and the ones that are making amateur attempts.

To impress a potential investor, you need a solid business plan. Good business plans require a lot of research and hours of preparation. You have to be familiar with the market, with your financial needs and with the specifics of the product that will turn it into a success.

A poorly written business plan will be discarded immediately, which means that your business attempts end before you will have even gotten the chance to prove yourself.

Offer Something Unique and Market-Worthy:
Even if you have the greatest product idea, you may still find it difficult to get funding. The investors will analyze the idea’s revenue-generation potential.

Choose the right market niche. It has to be relatively empty. Trying to compete against major, well-established players will make it difficult for you to get a market share and to begin making money.

Great product ideas are the ones that can be sold easily. Think about practicality and about finding the right target audience. This is the product development you will need to follow, in order to attract investment.

Have Realistic Expectations:
Having realistic expectations and understanding that failure is a possibility will help you negotiate and present your business plan in a solid, professional manner. Investors avoid working with dreamers. Although having a grand vision is great for a start, you will have to learn how to keep it real.

Just think about it! Investors meet dreamers and new entrepreneurs on a regular basis. Realistic expectations and understanding of business processes will help you set yourself apart and achieve the main goal – finding funding for your business idea.

Learn How to Negotiate:
Finding investment for your project will often mean that you will have to negotiate. Learn how to do it in a way that does not alienate people and that helps you achieve your investment goals at the same time.

Very often, interested investors will be willing to offer something but their conditions may be tough. You will have to talk it over, reaching an agreement that benefits both of the parties involved.

Good communication and negotiation skills will help you create a great first impression but they will also keep the integrity of your business idea. The experience that investors have could work against you and this is why you need to have an idea about the compromises you are willing to make and the parts of the process you will remain inflexible about.

Maintain a Healthy Amount of Skepticism:
Understand one very important part of the investment seeking process – if something appears too good to be true, than it probably is a trap.

Investment scams target young, inexperienced entrepreneurs. You could fall for such an offer, finding it impossible to recover and regain your financial integrity.

Refuse investment offers that have very unusual demands, that will bind you for many years to come and that will take away your financial freedom. If you have some concerns, talk to a forensic accountant about the investment option. The forensic accountant will do research instead of you, figuring out whether the funding is legitimate or a fraud scheme.

Author Bio: This is a guest post written by Nick Anderson. He is an experience finance writer and works for Forths Forensic Accountants.

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How to Get the Most Out of Your Marketing Dollars

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Don’t let your marketing dollars get stuck in the vending machine.

It happens to everyone. It’s like a rite of passage. You go to the vending machine to get your chocolate fix and buy a bag of Raisinets. You put your money in the machine but your candy gets stuck on its way out.

You’re bummed out. You weren’t expecting this to happen. You’re faced with the decision of putting more money in the machine to get what you want – or calling some number to complain, (do they ever answer?) knowing you will never get your money back.

Doesn’t it stink when you spend money and you don’t get what you pay for? Or you have to pony up more money when you thought you wouldn’t have to? Especially if it’s for your business!

First off, when you spend money in your business, think of it as an investment. Don’t just think of it as an expense. That way you will be in the mindset of getting a return on your money, which is really what you are paying for.

Let’s pretend you are considering hiring a marketing consultant to redo your whole brand. Here are 5 things you can do as a business owner to make sure you get what you set out to get in the first place.

  • Is the fee a one-time fee or will you pay as you go? How much time does the fee cover? One week, six months, 20 years or as long as it takes to get what you want? It’s important to be really clear about the length of the engagement. That way, there will be no surprises.
  • Does the fee cover advice and implementation? Sometimes you will get advice to do something, and then you will have to go implement the advice and pay again. For example, your marketing person may advise you to create a company brochure. But what if the fee didn’t include the cost to actually create it? You’d have to pay again. Total stinker. You wouldn’t even get your Raisinets.
  • Rounds of edits. Most marketing plans include 2 or 3 rounds of edits. Find out the pricing for each additional round (the 3rd or 4th). Use your edits wisely so you don’t have to spend extra money.
  • Communication updates. So many marketing people are highly creative and have amazing ideas. But occasionally they seem to fall off the face of earth and are nowhere to be found. Make sure your marketing person gives you weekly status updates, so you can track your progress. It’s the worst feeling in the world to pay for marketing, and get no status updates! Try paying as you go for marketing help. That way the marketing person has skin in the game and will need to show up.
  • The scope of the project. You need to be clear on what you are specifically paying for. For example, if you are paying for a website design and a logo, that is all you will receive. If it turns out that you need a Facebook business page, that will be more money. Just make a list of what you are paying for, so you can get what you pay for and stay on track. Wait a minute – don’t make a list. Ask your marketing person to give you a proposal and an outline of what you will get.

There you have it. No more marketing money getting stuck in the vending machine. It’s time for you to get your Raisinets.

Justin Krane, is a Certified Financial PlannerTM professional and the President of Krane Financial Solutions.  His savvy, holistic approach to financial planning allows clients to unite their money with their lives and businesses with sound financial decisions. Using a unique system developed from his studies of financial psychology, Justin partners with entrepreneurs to create a bigger vision for their business with education and financial modeling. Follow Justin on Twitter @justinkrane.

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A Sense of Security: The Ins and Outs of Small Business Security Systems

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Like most small business owners, you are undoubtedly familiar with the nagging desire to be everywhere all at once where your business is concerned. Even if you are secure with the trust you have in the crackerjack team you employ, there is nothing quite like increasing that sense of safety with a security system in place.

Historically, traditional security systems have required investments that can often be a deal breaker for a small business owner, and as a result, the business is forced to go without. Hiring and paying for a monthly service to set up their cameras and monitor suspicious activity is simply beyond the reach of many small companies.

Luckily, all of that is changing! With the advent of smartphone technology and enhanced network integration, small business owners have a world of security right at their fingertips for a fraction of the cost. Do-it-yourself options are now available that remove the middleman from traditional building security packages, allowing a business owner to keep tabs on their office, warehouse, or property from their own mobile device.

Work with your surroundings. The first step in your journey is to assess your individual situation. This is especially true if you lease the property, rather than own the building. There are rules, which should all be spelled out in your lease agreement, regarding permanently attaching a fixture to the structure itself. Even if you are allowed to install something, like mounting a wall-camera or running alarm wires through the walls, chances are you will not be permitted to remove it. And what good is investing in a system only to have it remain in the landlord’s hands once you move out?

You will want to keep transportability in mind and hone in on systems that can be easily attached/detached and moved from place to place. A great DIY option is the Q-See Alarm, which includes an entire system that includes infrared detectors and magnetic motion sensors that can be placed on windows and doors It can be just as easily removed and the system can be accessed using the internet or your smartphone – no matter where you are, 24/7!

Know your target market. The type of small business you have is a huge factor in figuring out what security system will work best for you. For service-related industries (like retail stores, food service establishments and repair shops), you will want the security to focus more on the protection of the customer and will do well by displaying whatever security system you choose. Make sure your cameras and sensors are clearly visible to anyone looking around – for example, pointing a camera right at the front door and at least one camera in the direction of the cash register and credit card machines.

Offices and other businesses not receiving heavy foot traffic will want to go with a system designed to monitor employees and may choose a closed-circuit or hidden surveillance system. For either target market, there is now a WiFi accessible webcam available from Belkin that includes night-vision! For under $150, you can monitor live video feeds using your smartphone whenever you are away from the office.

Take charge. The best part about the available DIY small business surveillance options is that certain ones can be synced up to your smartphone and you can set up the method of notification (email, text, call) when a possible trigger occurs. Since YOU are the one monitoring your system, as opposed to an outside “call center” or direct link to the police station, you can avoid the hassle and embarrassment of dealing with authorities in the case of a false alarm.

Perception is reality. There are ways to enhance the appearance of security without actually expanding your system. For example, dummy cameras and motion detectors strategically placed throughout your property provide a powerful deterrent to committing a crime. This technique works best when you have one or two functioning pieces of equipment mixed in with the fakes. If you regularly rotate the working ones, you can cover different sections at any given time, but you always have at least something keeping an eye out.

An old school sign (“Warning: You are being videotaped, etc.”) is still quite effective at making any potential threats think twice about messing with your establishment. Even if you don’t actually have any equipment to back it up, criminals don’t know that. Given the fact that you can create this sign for free on a sheet of paper, there’s no excuse NOT to have one displayed.

Finally, as small business owners, we know we cannot be present within our business all the time. When the entire office must close for an extended period of time such as during the holiday season, keep up appearances via online security apps on your smartphone. These apps allow you to monitor your business no matter where you are. Some also allow you to control supported equipment and remotely perform functions ranging anywhere from turning lights off and on to opening and closing blinds.

No matter what you’re looking for in small business security today, there’s a pretty good chance that there’s an app available for it to ensure the safety of you, your team, your customers, and your business!

Jay Harris is a Home Depot sales associate and contributes regularly to Home Depot’s blog. His electrical interests in the home include solar panels and home automation.

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6 Ways to Cut Overhead Expenses in Your First Year of Business

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In the first year of your business’ life, the success of a small company hinges on lowering its overhead expenses which can make all the difference between insolvency and survival. To ensure that your business stays as financially lean as possible, take the following six tips into account when creating and establishing your company budget.

Cut Your Staffing Costs

Make sure that you retain the smallest staffing commitment needed to deliver on your business model. Taking on full-time staff is a serious financial and managerial decision, and commits you to paying salary even in periods when cash flow is poor. And while you can get away without paying yourself for a month, it is illegal to withhold salary from your staff. Consider employing temp workers at first, to provide your business with more flexibility. Finding skilled and enthusiastic interns can be even better, as you can provide valuable work experience in return for their efforts.

Reduce Your Office Overheads

Some businesses need to hire some space in order to store inventory or house equipment. Offering telecommuting options with your staff is worth considering as well. Reducing the amount of money that is spent on office space can create significant savings and improve morale within the business by allowing the staff to work from home and avoid a stressful or long commute. Some of the most reputable companies in the world, such as Sears and Citibank, now operate largely on telecommuting, and there is no reason that a small business should not follow suit.

Track Your Finances

It’s very difficult to reduce your overhead costs if you don’t know what you are spending your money on and when you’re spending it. Choosing to work with an accountant not only enables you to maximize your tax savings and reduce the amount of money you pay out to the government, but can also ensure that you keep better track of your spending throughout the rest of the year. A good financial professional will also help you to forecast any potential cash flow blockages or investment opportunities, which will allow you to spend your existing income more effectively.

Reduce Every Bill

Given the competitive nature of today’s utilities market; there is no excuse for sticking to a deal which doesn’t deliver the best saving for your business. With many suppliers offering incentives to switch services and the advent of price comparison websites, analyzing your current situation and making the switch to increase your savings is a smart move. You should also investigate the possibility of investing in order to make long-term savings, for example going green with technology such as solar panelling, the excess energy from which can often be sold back to energy companies.

Shop Online

Price comparison websites are not the only way in which the rise of e-commerce has helped to reduce your business overheads. Sites like eBay can put you in touch with excellent deals on second-hand or even brand new products, resulting in huge savings when compared to buying at wholesalers.

Don’t Forget Government Support!

As well as reducing your overheads, it would be smart to keep up to date with the support provided by both central and local government for startup businesses. With the economic recovery being driven largely by the small business sector, politicians are keen to encourage new companies, and you may be able to secure financial help for your activities.

Daniel N. is a UK blogger who writes on a wide variety of topics including business and marketing. He is currently working on behalf of Rajapack.

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Guest Post: Where Do You Get Stuck With Money?

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As a Certified Financial Planner™ practitioner, new clients come to me because they want advice on specific issues like:

What can I do to get better control of the cash flow in my business?
How can I develop a budget that allows me to spend and save?
Can I afford to get office space?
Am I on track to retire?
How should I invest my portfolio?
How can I get ahead in my financial life?

I bring up the definition of insanity – doing the same thing over and over and expecting a different result. As I begin to answer these questions, my clients realize that most financial decisions they must consider somehow relate to making a change. They become more aware of what’s getting in their way and begin to reflect on the notion that something has to change.

Our human brain is wired to resist change because we like the status quo. But sometimes making a change is the right thing to do.
Financial planning forces us to prepare and anticipate for change – which usually can improve our financial lives. Financial planning also gets us closer to reaching our goals – buying that vacation house, feeling financially secure in retirement, starting a new business, or even starting a new hobby.

James Prochaska, a Ph.D., writes about the 6 stages of change in his book Changing for Good (James Prochaska, John Norcross and Carlo DiClemente. New York, NY: William Morrow and Co. 1994). Take a peek below and think about some issues that you are stuck on – and which stage of change you think you may be in.

1. Precontemplation – We have no intent to change. We are in denial. People are putting pressure on us to change. We think its too late to change. For example, we need to quit smoking, save more, take less risk, spend more time talking about our finances with our financial planners, or spouses.
2. Contemplation – We are getting around to acknowledging that we have a problem and are willing to think about what we should do to solve it. This could still take us months or years to make a decision. We may even know what we need to do but we aren’t ready to do it yet. For example, we know that we need to renew our gym membership and get back in an exercise routine.
3. Preparation – We are almost there. We will be making this change in a few weeks. We are developing an action plan and may even rehearse it. For example: We are going to ask for a raise by the end of the year. We are going to do our financial planning by the end of this month.
4. Action – We are taking action based on some type of gameplan we developed. We are making our move and doing something about it. An example would be meeting with our estate planning attorney to create a family living trust, or rebalancing our portfolio based on our financial goals.
5. Maintenance – This stage is where we need to stay in the zone, keep the same new routine, and maintain our desired level of change. It’s where we need to meet with our financial planner every quarter to make sure we are on track and moving towards reaching our goals.
6. Termination – This is where this new change is so deeply rooted in our lives that we don’t go back to our old ways of doing what we changed. It’s a new routine behavior like balancing our checkbook every week, or stretching before and after we exercise.

Life is a journey and change is a constant in your life. The next time you are trying to make some type of transition, especially a financial one, consider reviewing these 6 steps. You’ll be more aware of where you are with regard to change in any direction, and you will understand what it will take for you to get to the next level.

Justin Krane is a Certified Financial Planner with Krane Financial Solutions. Follow Justin on Twitter @justinkrane.

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5 Things Employers Should Consider When Offering a 401k

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Starting this July, 401k participants will receive more disclosures about the fees they are paying inside their 401k plans.

The Department of Labor wants more transparency and disclosure on what kind of fees employees are paying inside their 401k plans. Why? Because many employees have no idea how much they are paying in mutual fund fees. A recent survey by AARP said that 71% of people saving for retirement thought they didn’t pay any investment fees whatsoever.

The fees inside a 401k are either paid by the plan sponsor (you – the employer) or by the participants, which are the employees. Over the last few years more of the fees have been paid by the employees. According to a report issued by the Investment Company Institute and Deloitte, employers are moving more of the plan charges onto their employees. For instance, employees are now paying for 91% of plan expenses, which is a substantial increase from 2009 when they paid 78% of such charges.

So how does this happen? Say an employer wants to start a 401k and calls a bunch of mutual fund families to get some pricing quotes to see how much it will cost to set up and administer. Most of the bids come back at $5000 a year. But one comes back at $1000 a year. Why is this one so much cheaper? Because the fund is making the money on the back end – higher mutual fund fees. So the employer goes with the cheaper option, and the little guy ends up paying more in fees.

A report issued last month by the U.S. Government Accountability Office highlighted that many employers aren’t really aware about the fees charged by retirement plan providers (the mutual funds). The most obvious known fee is the expense ratio inside the mutual funds offered inside the 401k plans. Many 401k plans do not offer enough low cost mutual funds such as index funds. That’s because they are usually not as profitable (to the fund company) as an actively managed fund is.

Not sure what the difference between an index fund and actively managed fund is? Further explanation along with the five things to consider if you offer your employees a 401k program and what it means for them are below.

1) Offer index funds inside your 401k plan (for an explanation of index funds vs. actively managed funds, click here)

2) Be proactive. Tell your employees about the upcoming information they will receive about the fees they are paying.

3) Calculate the average expense ratios of the funds in your 401k.  Shop your pan and see how competitive your current 401k is.

4) Remember that if you are most likely a plan fiduciary, which means you are personally liable if you breach your duty as a fiduciary to the plan participants and beneficiaries.

5) Consult with 3rd party professionals like plan administrators and ERISA attorneys to make sure your 401k plan is compliant.

Some Additional Statistics to Keep in Mind…

In the 1990s, when the average stock mutual fund was making 10% year after year, no one was complaining about mutual fund expenses inside 401k plans.  Everyone was making money.  But today, stock market returns have averaged 3.77% for the past 10 years.  Mutual fund fees inside 401ks have decreased over the past 10 years.  According to the Investment Company Institute, the average expense ratio for a stock fund in 1997 was 1.04%.  In 2011, the average fee was 0.93%.

Remember: higher fees mean lower returns for 401k participants.

If the average investor made 3.77% net of fees and the average fee paid by the investor was 0.94%, the average investor paid nearly 20% of his/her profits in fees.

The trend is for more transparency in 401k fees that people will pay.  Get in front of this and be proactive.  Remember what Wayne Gretsky said – “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”

Justin Krane is a Certified Financial Planner with Krane Financial Solutions. Follow Justin on Twitter @justinkrane.

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Kickstarting a Weird and Wonky World

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Kickstarter has quite a bit to celebrate. It has now seen three projects that have sought funding through its site break the million dollar mark, and is posed to surpass the NEA in total money distributed to approved projects for 2012. Kickstarter’s business model is nothing new – micro investment has been used for years, primarily in developing economies to help start small businesses. But the sheer size of Kickstarter’s user base means that all sorts of project are able to find an amazing level of support. The most recent million dollar project, for example, started as an effort to publish a webcomic’s archives in a physical format.

But Kickstarter’s hands-off approach to funding has meant that some slightly odder projects have found investors for products or ideas that, typically, few would be willing to touch. These range from your run of the mill oddity, more suitable in a sky mall catalog than a booming investment site, to the philosophically obtuse. In honor of Kickstarter’s third million-dollar project, we present three slightly more off-kilter products that have found success through Kickstarter.

Stackable Soap

Many of us face this problem every time we step into the shower. Piled up in a small corner are little shards of soap, tossed aside due to a blatant unwillingness to use a bar of soap once it gets to a certain size. Some have the tenacity and sheer willpower to throw away these little soapy lumps, but for the rest of us just think about how trashing an otherwise perfectly good bit of soap brings back memories of our mothers yelling at us about the starving children in Africa and how happy they would be to have the product/food/material we want to put in the garbage.

In an attempt to quell the guilt stirring in us, the creators of stackable soap designed a way to meld old, used pieces of soap with a larger, new block. Essentially it’s soap with a chunk cut out of it, but the idea is that we will put our old soap where that gash has been made and meld the old and new together.

Now the question remains of how economical this process will all be. At a certain point I just throw away the leftover soap or press all the old slivers together as hard as I can to make a new bar, and for some reason I think that I’d rather save money doing that than buy special soap. However, this project did earn over $14,000 so there are obviously people who are willing to pay for convenience.

The +Pool

This has been one of the grander projects to come through Kickstarter, and while it seems to have run out of steam investment wise it is still and interesting premise. The basic idea is that the creators of this project will drop a pool with huge filters in its walls into the Hudson River. The filters will let in a stream of clean water, sourced from the river, so that the community can swim in water that isn’t full of sewage and medical waste.

The first $25,000 will go to testing out the filtration system with the ultimate goal being building a full-scale mockup of the pool to show New York City that dreams can come true.

A lofty goal, but an interesting premise. The whole idea has also attracted quite a bit of attention, especially from green initiatives who love the idea of using water from the river instead of treated tap water to fill the pool. The feasibility of the project remains to be seen, but if nothing else it is an amazing effort.

The Present… philosophically speaking.

Yeah… I’m not too sure what I can say about this one. It is a clock, tuned to the seasons, to remind you to remain in the present. Because it’s hard being in the moment for more than a few seconds.

Apparently.

The entire project sounds like it was cooked up by a college freshman taking their first philosophy course in an attempt to totally blow the mind of the evil TA who keeps failing them, but it has raised money. A lot of money. Over $90,000 of it.

To sweeten the pot, donate more than twenty-four dollars and you get a piece of black plastic labelled ‘something’. Because we all need something to change our lives.

Or something. I really have no idea – the entire premise seems very tongue in cheek, but I am willing to bet this little season clock will be proudly displayed in lofts all across San Francisco, Brooklyn and Chicago in an ill-fated attempt to make the owner seem more interesting than they actually are.

But if there is one thing all of these show, it is the sheer unpredictability of the consumer. I don’t think I’d ever have thought people would pay into any projects like these, but maybe that’s why I’m writing a blog post instead of designing a $100,000 clock.

After all, if an idea is stupid but makes money, it isn’t stupid anymore.

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Five Tips to Avoid Costly Mistakes

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New businesses often risk shooting themselves in the foot as they’re getting started. It’s not easy to be an entrepreneur! Not only are you getting your business up and running, your operations solidified, and your marketing strategy off the ground, but you are also trying to make sure you’re managing your business properly and minimizing liability. Below are some tips to help you navigate the tumultuous waters you might face when starting your business:

1. Incorporate before doing business: For liability reasons, it’s wise to make sure you incorporate or form an LLC before the business takes off. This can help protect personal assets by separating the business from your personal affairs. If anything were to go wrong with the business, it’s wise to make sure your house, car and personal effects are properly protected.

2. Consult a tax professional: If the type of business entity you should form is not clear to you, it’s wise to speak with a CPA. CPAs can help you understand tax implications and how the different structures can help you protect your assets, as well as save money on taxes.

3. Learn your market: It’s wise to know your market. Understand who your customers are and target them. One of the best ways to do that is to emulate a business in your industry that you believe is doing a good job. Take the items that are successful and combine them with that which makes your business unique. You don’t have to reinvent the wheel entirely. If your business idea is novel, leverage the expertise of other entrepreneurs and business owners within the same genre as your offering. Getting out there and talking with people can be one of your greatest assets early on. Plus, you may generate customers in the process.

4. Be creative: No matter what industry you’re in, don’t be stagnant. Stay ahead of the curve and constantly be on the cutting edge. Communicate with the youth to see what’s up and coming in terms of marketing and social networking. Don’t rest on your laurels, and make sure you’re on top of the next steps for your business.

5. Spend your funds wisely: Many small businesses make the mistake of spending too quickly. Either they spend what others have invested in their business, or they spend everything that comes in the door. That can be helpful in the initial growth stages, but it may not be the recipe for long-term success. Make sure to invest more heavily in areas in which you get a higher return, and take smart risks otherwise.

Mycorporation can help you incorporate your business or start your LCC easily and effectively. Learn how HERE

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