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A Serial Entrepreneur Becomes A Millionaire From An Accidental Startup

Monis Rahman, serial entrepreneur, accidentally launched Rozee.pk when he needed to find more programmers for his startup.

Getting A Mentor

I had a strategy session with a business start-up owner a few months ago. She was six months into her start-up and needed some ideas during her development stage.

Simple Steps To Creating Your First Website

When you make that decision to start a business, you immediately become a multi-tasking maniac. Let's face it, you will have a lot of work on your hands.

Why 'Core Competency' Is Important To A Startup

Well, I like the answer that Norm Brodsky gives in his book, The Knack: "It was the one thing we had that our competitors couldn't offer, and by the time they caught up, we had a foothold in the market and were known for providing that service."

Thursday, August 25, 2011

5 Things To Know About The Current State of Startups

So the start-up world is constantly evolving. And it's time you kept up with it.

For you start-up founders so in love with your small business that you can't get your nose out its you-know-what, here are some things you might want to know about the world outside of your love affair (we dig your love affair by the way):

Investors still want in on your startup action. Y-Combinator's latest startup event was proof. 63 startups pitched for two minutes each, to a room of investors! What does this mean? In case you're not aware, Y Combinator is an incubator that gives seed funding to startups. Seed funding is what pays your expenses while you continue to work on developing your product and brand. Twice a year, the incubator has a bragging day--where they introduce their startups to potential investors. 

This year, their demo day included 63 companies; although the incubator usually hosts about 40 companies for these events. So what's cooking? I'm sure we'll be hearing more soon; but any news of hiked investor interest in startups, is good news.

Check out the companies that pitched: Y Combinator Demo Day.

Start-Up America: what is it and how is it doing?  Startup America is a movement that was launched as a result of countless meetings between President Obama and entrepreneurs (I'm sure most of you can remember when Twitter's co-founders were all excited about going to the White House). The initiative kicked off with different programs and events catering to startups. 

Eight months in and you're wondering how the program is faring? No, sorry that was an understatement. You're wondering how it can help YOUR startup. Here's a great Startup America update for you.  

There is still startup optimism. If you don't believe me, hear it from this global entrepreneur and founder of The Founder Institute; startups will come out ahead. 

Social Media for your small business start-up. Now this is an ever-changing industry that baffles most small business owners. And I hate to be the bearer of bad news here but it's not getting any better; for social media introverts that is.

If you thought that getting on Facebook for business was new territory, or that testing out Twitter was a little difficult at first, be aware that Google + is here to stay. While some call it just another version of Facebook, with its model built around interaction and online hangout, Google + SEO may affect how your business' website gets found on Facebook. Learn about how your business can get started on G + by taking the tour to get acquainted with how it works.

Free Facebook Custom Tabs. Tech geeks salivating yet? This one is a brand new application created by startups for startups. If you need to design an experience on your Facebook business page, GOSO has made it easy for you to do it FREE of charge. So you html geeks, read about how to easily create a custom tab for your Facebook fan page

The state of food startups. Food startups continue to be a hugely underrated part of the startup industry, so I applaud 500 Startups for their recent event. The New Food Chain: Investing in Food Startups was an event hosted to bring together food startups and investors to explore the new trends in food apps. You gotta admit, food and healthier choices is a big deal these days (numbers don't lie). So click here to get all the details about what unfolded at this event. 

Your thoughts: Anything else that we could add to the list? Look out for similar posts soon. And if you like what you see, don't forget to subscribe to StartupBizTalk below. 

Cheryl Isaac is a business strategist and entrepreneur who has been in love with startups and their idiosyncrasies for years. She is a former investment and small business banker who believes in making business personal, an author, international business contributor to Forbes, and the founder of StartupBizTalk. You can find her here on Twitter and Facebook. 

Tuesday, August 23, 2011

How To Push For Cash When You're In The Service Business

One of the well-known cons to owning a service business is that your business depends on your work in order to receive money. It can be a burden sometimes, the business and your clients are depending on your expertise. So most times, service business owners find themselves doing labor, with a promise to be paid.

But what about the smaller bills you have? The ones that you wouldn't mind getting paid while you continue to work?

You don't work, you don't get paid. 

While this may not be necessarily a bad thing; particularly when you have clients you're fond of and can build good working relationships with, it still can prove to be difficult at times. Especially when you have picky, hard-to-satisfy, disgruntled, I-want-it-NOW-or-I'll-tell-you-how-bad-of-a-person-you-are type of clients.

What Do You Do?

Payment Plan. If you want to cash in quickly, offering a payment option that allows a client to pay you in several installments as the project continues, may be your best bet. Get them paying while you work; especially if it is a big ticket item.

Deposit Option. A small deposit never hurt anyone. The key is to keep it small silly, don't try to gorge people. When I started my first business, I was in the business of getting funding for small businesses. Here I was, a business banker fresh off the bank market and the banking industry had yet capsized and taken the turn that it has now. I could find anybody any kind of money: $5000 or $250,000. I had relationships with bankers, middle men, SBA agents...you name it. But getting the funding packets together was no easy matter. I had to find a way to have people pay me for the amount of hours I was putting in. Deposits helped tremendously.

Automatic Payment. A small business client of mine argued with me incessantly about this point, until he finally tried it. Since then, his cash receipts have been sailing smoothly. He was having a hard time collecting payments from clients, and his business model was such that he did work every month, on a consistent basis, and had to collect payment each month. If you have to work with clients for extended periods of time, on a monthly or quarterly basis, find a way to have an automatic payment plan set up. All it takes is a credit card number, a planned date and amount, and money into your bank account.

Establish Project Phases. Helping your client understand, can get you paid even faster. If you will be working on a project that takes a couple of months or more, set time-frames for completion of certain phases within the project. This way, the client sees the project moving forward. You could then incorporate a payment schedule with each phase.

Meet Deadlines. None of this would be possible if you weren't meeting your deadlines. No one wants to pay you if you don't deliver on a promise. If you want to push for cash sooner, find some method or  project software that will help you meet your deadlines.

More Meetings. Communication is key to anything in life. Let's say you were unable to meet a deadline or complete a project phase, a meeting or conversation with your client could make he or she feel better about this. Meetings also make you look like you're working. Don't get me wrong, the key is to actually work. But when you're constantly in touch with a client, going over the project phase, giving your recommendations, giving them visuals, you could actually get paid even if you've made a mistake or two.

Anything else I could add to this list?

Cheryl Isaac is a business strategist and entrepreneur who has been in love with startups and their idiosyncrasies for years. She is a former investment and small business banker who believes in making business personal, an author, international business contributor to Forbes, and the founder of StartupBizTalk. You can find her here on Twitter and Facebook. 

Tuesday, August 16, 2011

4 Simple Ways To Accept Payments For Your Test Product Or Service

I'm in the line at Starbucks with my client and he's on the phone with one of his mentors. The mentor tells him that he was considering purchasing his (the startup client) product, but his assistant didn't know where to send the check. 

"Does she have all the account details?" my client asks. 

"Yep!" his mentor responds. 

"Well can you transfer me to her and I can take the payment now." He gets transferred and the next thing I know, we're ordering lattes and he's taking a credit card payment right there on his Ipad.

The product is two weeks old and still in beta. This guy is brand new to business and doesn't even know what a "merchant account" means. But he's collecting payments while getting coffee. Pretty neat if you ask me.

You know how that idea takes over your thoughts and focus until you find yourself wondering what if? What if this could be a seller? What if this was IT? Well, you'll never know if you didn't come up with a method that allows people to pay for your product or service during the test phase.  

One way you can make this happen is by coming up with an easy method to collect payments for your test product or service.

Payment Processing Tools: The Pros & Cons:

Google offers a quick merchant checkout that can be added to your website or blog. You start by signing in with your Google account, or create one and the steps are pretty simple after that. The transaction fees depend on how much you sold during the previous month. So if your sales were less than $3000, you're charged 2.9% + )$0.30 for each transaction.

Benefits: Google users will have a quick and hassle-free checkout. Also, the Google checkout badge helps your product appear in search listings. 

Downside: Shoppers may have to sign up for Google checkout if they don't already have an account.

Square gives you a really convenient way to accept payments from your cell phone or Ipad. 
You sign up and get:
  • A free credit card reader for your phone
  • An account to manually enter your credit card number via your Ipad


Low transaction costs. 2.75% per swipe. This is the only figure--lower than other checkouts-- that you have to worry about paying. 

Convenience. Once you have your phone or Ipad, you can accept a payment in the food line or at the airport. 

Smart Receipts. You can actually turn your Ipad into a checkout register, have your client sign their receipts, and email it directly to them.

Downside: In the past, you had to wait a while to get approved, and receive your card reader. It seems that Square now has a "fast setup" option (one that we haven't tried yet). One thing to keep in mind is that if you're receiving bigger payments from clients, you may get $1000 deposited into your account, and there is usually a 30-day wait for the rest.

By now, you're familiar with PayPal. But have you gotten acquainted with PayPal for Business? With PayPal Merchant Services, you can design your website to accept payment online, or you can accept the payment on the phone (if you choose the Paypal virtual terminal option). Or, you could also send email invoices to your customers. 

What you pay PayPal: $3.20 per $100 transaction.


The design factorYou or your graphic designer, can design your paypal button to fit your website branding (this way you don't have to have the generic paypal button on your website).  

PayPal Virtual Terminal. A lot of small business owners wish they had the option of simply collecting payment on the phone or in person (when necessary). When a client hands you a credit card, you don't want to pass up the opportunity because you need to "go home and send them an email with your Paypal payment site." Paypal virtual terminal acts like a regular "merchant service credit card processing." I was really impressed when I saw a business owner do this: you can simply sign on to your own website and take the person's credit card number and address. Then boom! You're paid.

Downside: If someone already has a PayPal account and they're trying to use another card or option, sometimes the system keeps recognizing them and it may cause some checkout hassle. 

Authorize offers you a POS (Point of Sale System) that attaches to your cell phone or Ipad. In addition, there's a merchant site for checking payments, etc. 

Benefits: Customer service department for potential issues. Lower transaction fees.

The setup: You need a merchant services account on the back-end (so you end up paying more since you have merchant services fees) and you need to contact a reseller to inquire about pricing and setup. 

Use Authorize if you already have a merchant services account and need to be able to contact someone directly if something goes wrong. 

Your Thoughts: Things change quickly with technology, so is there something I missed with any of these tools? Have you had any experience with any of these? Feel free to leave a comment with your thoughts. 

Cheryl Isaac is a business strategist and entrepreneur who has been in love with startups and their idiosyncrasies for years. She is a former investment and small business banker who believes in making business personal, an author, international business contributor to Forbes, and the founder of StartupBizTalk. You can find her here on Twitter and Facebook. 

Thursday, August 11, 2011

3 Costs Your Retail Start-up Should Avoid Paying

In previous posts dedicated to the retail business, I've briefly discussed, 10 Tips To Follow When Searching For Office Space, and 7 Ways For the Retail Start-up To Get Traffic. 

Today I wanted to focus on the thing that most retail business owners miss during the excitement of launching a new business.

Costs. They hang on to retail startups. And they can add up.  

You're starting a retail business and opening a storefront location to service walk-in clients. This means that unlike the bootstrapping businesses out there that sometimes get started out of a garage, kitchen or bedroom, you can't afford to skim some of the costs that they can. There are quite a few things that you'll need to look evaluate.

In my previous business, I owned a business planning agency that worked one-on-one with retail and service-based businesses. We helped during the start-up planning phase. Our clients had start-up funds, but they also had start-up costs that added up. My job was to help them lower those costs.

These are just a couple of ways we helped them do that:

3 Things You Don't Want Your Retail Start-Up To Pay For

Don't Pay For Build-out Costs 

This is the term used for the type of remodel or restructuring that will have to be done to the space before you can operate a business there. For instance, if you're renting a space that was previously used as storage for another business, you may have one big room that may need to be turned into a few separate rooms. Or if you're starting a spa, your state will require that you have rooms that meet certain specifications. You should not be paying for all of this yourself. The landlord has some duties and responsibilities within a down market.

I had this discussion with a banker who was financing a deal for one of my retail customers. "Whatever she does, she should not be paying upfront for any build-out costs. We'll make sure that this doesn't happen," was his response when I ran the scenario by him. He went on to say that his past five landlords were coming through on deals. This guy specialized in business banking and had funded a few of my clients.

The owner of the property may come in at half of the build-out costs, or they may pay for it in full and charge you a portion on the back-end of the lease. Whatever the scenario is, be sure to save your start-up cash for the stuff that may cause your business to close down quickly if you weren't careful--like operational expenses.

Don't Pay Rent... 

As soon as you walk into the door.

It's no secret that everyone has to pay rent, after all no one gets a space free of charge right? However, retail startups want to do all they can to avoid paying rent the very first month. Don't even think that you're crazy for requesting this from the property owner because this is standard (with minor exceptions for a couple of states). Think about this way, there are so many other miscellaneous costs that will smack you in the face and tell you to wake up to the world of retail ownership: like getting utilities turned on, ordering your first batch of inventory, signage for your location, retail CAM charges, etc. Adding rent to that could be disadvantageous to your business.

And most building owners understand this. When working with retail clients, my team and I have been able to negotiate three, six, and twelve months free rent (the twelve months was a big deal, but there were reasons for that one).

Don't Pay If The Business Doesn't Take Off

Ahh the worthwhile "contingent upon _______" clause. Some retail startups find themselves having to act as a business in operation even when they are in the pre-start phase. For example, a trade school has to get a location, set it up as if it's ready to open for business, and then wait to get the go-ahead from their state (state certifications) before formally opening to the public. Well what happens if the state decides against licensing the school? Should the start-up owner still be liable for a lease that does not have a business running?

The same thing applies regarding business financing. What if a start-up owner gets the lease and is hopeful that an investor will be helping to fund the business? The investor goes bankrupt and the start-up owner decides that he/she may not have enough to continue with the business. A "contingent-upon-financing" clause may mean that he/she will not be held liable for the lease.

How To Get This Done

Get a lawyer and a commercial realtor. In the past, my agency never closed a retail deal without these two principals communicating with each other, with us, with the business landlords, and with the client. Here's how I see it, a good lawyer will lessen your liability, a good commercial realtor (notice I stressed 'commercial') will make sure the landlord takes some responsibility.

You can't do this alone.

Cheryl Isaac is a business strategist and entrepreneur who has been in love with startups and their idiosyncrasies for years. She is a former investment and small business banker who believes in making business personal, an author, international business contributor to Forbes, and the founder of StartupBizTalk. You can find her here on Twitter and Facebook. 

Wednesday, August 3, 2011

Does Lending Club's $25 Million Late Stage Funding Solidify The State of Business Funding?

Ir's only fair that a peer-to-peer lending site gets the money it needs to get other people the money they need, don't you think? Today, Lending Club announced its $25 million funding it received from Union Square Ventures, led by none other than Fred Wilson, VC to Twitter. 

What, if anything, does this say about the state of business funding?

In 2007, investor Fred Wilson stated his preference for seed investing; adding that seed investing--when someone invests in a company early on in the game--was better than late stage investing. He didn't think that VCs could impact the development of a company with late stage investing, that they would simply have to accept the direction of the company.

Why now? Well Union Square reached out to Lending Club precisely for the very reason Wilson was leery of late stage investing in the first place--Lending Club had already set the pace for their company. They had a direction and that direction was working well for them. 

When interviewed by Forbes' Nicole Perlroth, Wilson admitted that their company liked Lending Club's lead within their industry: the lower rates, better returns, and sophisticated investors. Undoubtedly, they liked their revenues too. Lending Club expects $20 million in revenue this year, and has grown by180% each year.

Late stage investing has become popular since 2008, so much so that in the first quarter 2011, it surpassed investments in clean tech startups.

With the state of the economy, perhaps investors feel better investing in companies that have:
  • Tried and tested business models
  • Target clients that make the business model work 
  • Consistency 
  • Core competency
And of course, having a solid revenue track record never hurt anyone.  

Cheryl Isaac is a business strategist and entrepreneur who has been in love with startups and their idiosyncrasies for years. She is a former investment and small business banker who believes in making business personal, an authorbusiness writer, and the founder of StartupBizTalk. You can find her here on Twitter and Facebook. 

Tuesday, August 2, 2011

How To Sell Your Tech Startup

You could start by following the example of startup founders who have been there, done that.

Pyra Labs (A.K.A. Blogger.com)

Evan Williams started Pyra--what was supposed to be a personal and project information management system. He then partnered with his friend, Meg  Hourihan--someone who had a management consultant background. While working on Pyra, they decided to start Blogger as an additional incentive for the companies they helped.

Blogger is started in 1999 and takes off unexpectedly (while they're pouring all of their efforts into Pyra). The founders then decide to focus on Blogger full-time. By 2003, Blogger had one million users and Google bought Pyra (the first Google acquisition).

Interesting fact

The co-founders meet at Google's offices to discuss a partnership of some sorts. When they start to present their ideas and Google's executives tell them this:

"Yeah, there are lots of ideas, but it's hard for someone like us to really partner with someone so small as you; why don't you just come here and do all that stuff?"

Important Facts

Full-Time Gig: The founders decided to dive into their start-up. Although Evan worked as a HP contract web developer from time to time, his focus was on his startup. Meg left her job within two months of Pyra being launched.

Money: Blogger was not a revenue-maker in the beginning. But the founders managed to raise half a million dollars from O'Reilly, Advance.net, Meg's parents, Borthwick of AOL, and two other people.

Groove Networks

Ray Ozzie, former founder of Lotus Notes, founded Groove Networks as an internet-based work-group collaboration software. Microsoft acquired Groove in 2005 and Ozzie became chief technical officer for Microsoft. In June 2006, he took over as chief software architect from Bill Gates.

Important Facts

Before he starts a company, Ozzie says that his business plan looks something like this:

  • A scenario-based document. This describes the challenge that he's trying to address so that potential funders and employees are knowledgeable.
  • A bottom-up document. Describes the different technologies that will have to be assembled in order to get to the vision.
  • Whiteboards. For working through difficult algorithms and making key decisions.

Sabeer Bhatia and Jack Smith came up with the idea for Hotmail out of frustration--their employers had firewall that prevented them from accessing their emails. They first started Javasoft and it morphed into Hotmail.

In 1996, Hotmail was the first web-based free email to be offered. Less than 2 years later, they had grown their user base faster than any media company. On New Year's Eve 1997, Microsoft acquired Hotmail for $400 million.

Important Facts

They didn't quit their jobs at first. Instead, they spent weekends and nights building the product. When it was time for somebody had to work on the business full-time, Jack quit his job and Bhartia split his paycheck with Jack.

Funding Challenges. Their first round was $300,000 with a 15 percent split. But they signed a contract with the VCs having the right of first refusal. Unbeknownst to them at the time, this meant that they couldn't go to any other VC without their VC being contacted. This hurt them in the short-term; particularly when they were hearing from other VCs that their VC didn't want to fund them because he wanted a higher valuation. They finally had to settle for a lower valuation and move on. 

The Pre-launch efforts: They get funded in February, the site launches in July. They get 100,000 subscribers in the first 3 months by launching a PR campaign, talking to journalists, doing an east coast and west coast press tour, etc.

Talks with Microsoft. This started after their first year in business. The founders had 7 million subscribers and Microsoft was intrigued. Microsoft had a problem providing email to their 2.5 million users, so they needed Hotmail's expertise. At first they talked partnership, until Microsoft saw that Hotmail planned to be similar to them. This is when acquisition talks began.

As you can see, there are so many lessons to be learned from these real-world examples. Take what you will. 

What are your thoughts surrounding these examples and true stories? Let us know what you think in the comment box below. 

Cheryl Isaac is a business strategist and entrepreneur who has been in love with startups and their idiosyncrasies for years. She is a former investment and small business banker who believes in making business personal, an author, business writer, and the founder of StartupBizTalk. You can find her here on Twitter and Facebook. 

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