Franchising has been characterized as a way to be in business for you without being by yourself. Rather than having to “reinvent the wheel”” a franchise owner can take advantage of tested concepts and proven operational and marketing strategies, as well as the franchisor’s institutional knowledge and guidance.
But franchise ownership isn’t an easy shortcut to success. As with any other kind of small business, it’s up to you to commit the finances, time, and effort to meet both the franchisor’s goals and your own. That’s why it pays to weigh the pros and cons of franchising to make sure it’s right for you.
According to the International Finance Association (IFA), franchised businesses are growing at a rapid pace. Some 400,000 franchised businesses now employ nearly 10 million people with a payroll of $230 billion. There’s always a hot new franchise on the scene.
As you research franchises, ask about the required experience, if any, as well as the expected hours and personal commitment necessary to run the business. You also should learn about the franchisor’s background. For example, what is the company’s track record and how are other franchisees in the system doing? The upfront cost of buying the franchise is crucial, of course, but also how much you’ll pay for the continuing right to operate the business and what products or services you will be required to buy from the franchisor.
The “Franchising Basics” section of IFA’s Web site, www.franchise.org, offers extensive information on how franchising works, online discussion forums that cater to prospective owners, and a searchable database of more than 1,100 plus franchise opportunities.
And, don’t forget about your financing. If you’re considering applying for a loan backed by the U.S. Small Business Administration, visit the SBA’s Franchise Registry at www.franchiseregistry.com. This service lists names of franchise companies whose franchisees enjoy the benefits of a streamlined review process for SBA loan applications. A faster review means better, faster service, allowing you to get your franchise off the ground sooner. Even if the franchisor is not a Franchise Registry participant, your loan application will still be reviewed individually by the SBA or its lenders.
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
Tuesday, November 9, 2010
Wednesday, November 3, 2010
How can networking improve my business?
Use Networking to Build Business Visibility
Word-of-mouth is the most effective form of marketing. But people can’t spread the word about you and your small business if they don’t know you.
That’s where networking comes in. Whether it’s through a professional association for your industry, a local business group, or a conference, networking offers a valuable forum for prospective customers and colleagues to learn about you and the services or products you provide.
Successful networking is more than simply exchanging introductions and business cards, then waiting for someone to call. In fact, professional marketing coach Charlie Cook at www.charliecook.net says that most people waste the few precious moments they have with new and existing contacts by focusing on themselves.
“It’s better to spend most of that time asking questions and collecting information,” he says. “Then you can make quick assessments as to whether they would have any interest in the solutions you provide.”
Cook recommends that every entrepreneur should have a succinct “elevator speech”—a 30-second description of the problems his or her business solves. After that, the focus of the networking conversations should be entirely on other people: their primary business concerns, problems they want solved, and unmet business needs. As the conversations unfold, you may find areas that overlap with the solutions you provide.
“If not, you can still make an impression by referring them to other people in your network who can help,” Cook says. “They’ll see you as a problem solver, and be more likely provide you with referrals in return.”
Networking also doesn’t end with the conversation. Cook recommends maintaining a data file of networking information (several software programs are available to track networking contacts), and updating it as soon as possible after every contact.
“Make note of their interests, what you’ve shared with them, and when to contact them next,” he says, adding that regular follow-ups are essential. “People have short memories and may forget that you exist and more importantly, that you’re the best person to help them with their business needs and problems.
Finally, while valuable business contacts can happen anytime and anywhere; don’t leave your strategy to chance. “Identify the people you want to make contact with, whether prospects or potential marketing alliance partners, and make carefully researched efforts to build relationships,” Cook says. “This approach takes more time on your part, but it gets results.”
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
Word-of-mouth is the most effective form of marketing. But people can’t spread the word about you and your small business if they don’t know you.
That’s where networking comes in. Whether it’s through a professional association for your industry, a local business group, or a conference, networking offers a valuable forum for prospective customers and colleagues to learn about you and the services or products you provide.
Successful networking is more than simply exchanging introductions and business cards, then waiting for someone to call. In fact, professional marketing coach Charlie Cook at www.charliecook.net says that most people waste the few precious moments they have with new and existing contacts by focusing on themselves.
“It’s better to spend most of that time asking questions and collecting information,” he says. “Then you can make quick assessments as to whether they would have any interest in the solutions you provide.”
Cook recommends that every entrepreneur should have a succinct “elevator speech”—a 30-second description of the problems his or her business solves. After that, the focus of the networking conversations should be entirely on other people: their primary business concerns, problems they want solved, and unmet business needs. As the conversations unfold, you may find areas that overlap with the solutions you provide.
“If not, you can still make an impression by referring them to other people in your network who can help,” Cook says. “They’ll see you as a problem solver, and be more likely provide you with referrals in return.”
Networking also doesn’t end with the conversation. Cook recommends maintaining a data file of networking information (several software programs are available to track networking contacts), and updating it as soon as possible after every contact.
“Make note of their interests, what you’ve shared with them, and when to contact them next,” he says, adding that regular follow-ups are essential. “People have short memories and may forget that you exist and more importantly, that you’re the best person to help them with their business needs and problems.
Finally, while valuable business contacts can happen anytime and anywhere; don’t leave your strategy to chance. “Identify the people you want to make contact with, whether prospects or potential marketing alliance partners, and make carefully researched efforts to build relationships,” Cook says. “This approach takes more time on your part, but it gets results.”
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
Tuesday, October 5, 2010
Can Angel Investing Work for Me?
Financing Your Business via Angel Investors
David Plucinsky, SCORE counselor and international financial expert, provides some focus on Angel investment. Many SCORE clients ask about this, hopeful of locating a person who is interested in funding their venture. This article provides background material; the next will cover the process and what Angel investors seek when examining an opportunity.
Angel investors are typically successful business people who have made money in life and look to deploy a certain amount of their wealth backing start-up and early stage businesses. They are accredited under SEC Regulation D, Rule 501, meaning that they pass a wealth test. This is important to entrepreneurs as it means you can engage with them without having to provide the substantial documentation required by the Securities and Exchange Commission if the investor does not meet the requirements of Regulation D. Anytime you speak to potential investors in your business, you must determine if they are accredited. Angel investors generally invest in industries they know well, for example software, oftentimes where they made their money. Many like to bring not only money to the table but also their experience, a valuable resource when utilized properly.
Professor Jeffrey Sohl of The Center for Venture Research, University of New Hampshire provides the following information. In 2009 57,225 entrepreneurs received $17.6 billion from 259,480 active Angel investors. From this we can infer that the average investment was $307,000 and the average amount invested by an Angel was $67,800, meaning that the entrepreneur was funded by 4 to 5 angels. Software ventures received 19% of this investment, healthcare 17% and Industrial/Energy 17%. Of the amount invested, 35% went to start-up companies, 62% to early stage and expanding companies, those already in business with a product or service. The yield rate was 14.5% meaning that for every seven business plans that made it to full review, 1 received funding. Women accounted for 21.3% of all requests for funding, 9.4% of these were successful. Minorities represented 6.2% of entrepreneurs requesting money, 14.5% being successful. With respect to minority applications, it is interesting to note that the yield rate was the same as the overall average, this means that minorities applied much less for funding, however when they did, they had the same success rate, one out of seven. This is not the case for women whose 9.4% yield rate was some 5% behind the average.
In today’s market, Angel investors band together in what is called a network. A network has a leader who manages the process of finding companies seeking funding, creates the review disciplines, locates investors interested in funding companies and brings them together.
An upcoming article will examine the process of obtaining Angel investment.
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
David Plucinsky, SCORE counselor and international financial expert, provides some focus on Angel investment. Many SCORE clients ask about this, hopeful of locating a person who is interested in funding their venture. This article provides background material; the next will cover the process and what Angel investors seek when examining an opportunity.
Angel investors are typically successful business people who have made money in life and look to deploy a certain amount of their wealth backing start-up and early stage businesses. They are accredited under SEC Regulation D, Rule 501, meaning that they pass a wealth test. This is important to entrepreneurs as it means you can engage with them without having to provide the substantial documentation required by the Securities and Exchange Commission if the investor does not meet the requirements of Regulation D. Anytime you speak to potential investors in your business, you must determine if they are accredited. Angel investors generally invest in industries they know well, for example software, oftentimes where they made their money. Many like to bring not only money to the table but also their experience, a valuable resource when utilized properly.
Professor Jeffrey Sohl of The Center for Venture Research, University of New Hampshire provides the following information. In 2009 57,225 entrepreneurs received $17.6 billion from 259,480 active Angel investors. From this we can infer that the average investment was $307,000 and the average amount invested by an Angel was $67,800, meaning that the entrepreneur was funded by 4 to 5 angels. Software ventures received 19% of this investment, healthcare 17% and Industrial/Energy 17%. Of the amount invested, 35% went to start-up companies, 62% to early stage and expanding companies, those already in business with a product or service. The yield rate was 14.5% meaning that for every seven business plans that made it to full review, 1 received funding. Women accounted for 21.3% of all requests for funding, 9.4% of these were successful. Minorities represented 6.2% of entrepreneurs requesting money, 14.5% being successful. With respect to minority applications, it is interesting to note that the yield rate was the same as the overall average, this means that minorities applied much less for funding, however when they did, they had the same success rate, one out of seven. This is not the case for women whose 9.4% yield rate was some 5% behind the average.
In today’s market, Angel investors band together in what is called a network. A network has a leader who manages the process of finding companies seeking funding, creates the review disciplines, locates investors interested in funding companies and brings them together.
An upcoming article will examine the process of obtaining Angel investment.
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
Tuesday, August 31, 2010
How can I keep my business growing?
After a fast start, your small business seems to have lost momentum. What happened? And more importantly, what can you do about it?
Given the interconnected nature of today’s economy, even small, largely local businesses are influenced by trends and events in other industries, and even other continents.
But your internal approach to generating and managing growth could well be the source of your sales slowdown, even in the face of what seem to be bright opportunities. The detailed business plan you’ve followed since the outset may no longer be applicable in a marketplace where changes—both expected and unforeseen—happen on a daily basis.
A growth plan that acts like an internal compass can be a helpful tool for getting things back on track.
Start with your day-to-day actions. If you want your business to grow, that should be the focal point of everything you do. Gather the financial details about what’s happening internally. Then put your plan in writing. It does not need to be lengthy and ultra-detailed. Just the basic points will do. For example, how has your business done in fulfilling your original mission? Did you start with a bang only to see things flatten out? Perhaps you aren’t delivering what you first promised to your customers. Fix any problems or shortfalls quickly.
Keeping up with changes in your marketplace is crucial, so you might have to conduct some new research to stay up to date. This doesn’t have to be formal research. You might start with a simple customer survey, for example, or check for available research online. Make adjustments as needed in your approach.
Communicate your growth vision to others involved with your business, including outside vendors and contractors as well as partners, investors and employees. Don’t just dream—delegate specific actions to reach those goals.
Find out what objections customers are raising to your sales effort—why they have purchased or declined your product or service. Adjust your sales process to place greater emphasis on closing.
You can find some valuable guidance for growth planning in two books: Strategic Planning for Small Business Made Easy, the latest in the “Made Easy” series from Entrepreneur Press, and The 7 Irrefutable Rules of Small Business Growth by small business growth expert Steven S. Little. Both are available in bookstores and online.
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
Given the interconnected nature of today’s economy, even small, largely local businesses are influenced by trends and events in other industries, and even other continents.
But your internal approach to generating and managing growth could well be the source of your sales slowdown, even in the face of what seem to be bright opportunities. The detailed business plan you’ve followed since the outset may no longer be applicable in a marketplace where changes—both expected and unforeseen—happen on a daily basis.
A growth plan that acts like an internal compass can be a helpful tool for getting things back on track.
Start with your day-to-day actions. If you want your business to grow, that should be the focal point of everything you do. Gather the financial details about what’s happening internally. Then put your plan in writing. It does not need to be lengthy and ultra-detailed. Just the basic points will do. For example, how has your business done in fulfilling your original mission? Did you start with a bang only to see things flatten out? Perhaps you aren’t delivering what you first promised to your customers. Fix any problems or shortfalls quickly.
Keeping up with changes in your marketplace is crucial, so you might have to conduct some new research to stay up to date. This doesn’t have to be formal research. You might start with a simple customer survey, for example, or check for available research online. Make adjustments as needed in your approach.
Communicate your growth vision to others involved with your business, including outside vendors and contractors as well as partners, investors and employees. Don’t just dream—delegate specific actions to reach those goals.
Find out what objections customers are raising to your sales effort—why they have purchased or declined your product or service. Adjust your sales process to place greater emphasis on closing.
You can find some valuable guidance for growth planning in two books: Strategic Planning for Small Business Made Easy, the latest in the “Made Easy” series from Entrepreneur Press, and The 7 Irrefutable Rules of Small Business Growth by small business growth expert Steven S. Little. Both are available in bookstores and online.
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
Tuesday, August 24, 2010
Should I consider outsourcing order fulfillment?
Handling the fulfillment responsibilities yourself may seem like a good, cost-saving idea when you’re just starting out. But as demand for your products grows, so too will your fulfillment backlog. Unless you stay on top of it, your sales will suffer along with your company’s reputation for quality and responsiveness.
This may be a good time to consider using an outside order shipping and fulfillment service to take the burden off of your shoulders. Outsourcing fulfillment can save you time. Your products, labels and other unique packaging can be stored in the fulfillment company’s facilities. When orders are placed, the fulfillment firm packs and ships the items and perhaps handles customer service and returns as well. Orders can come through you via your usual methods, or can go direct to the service.
Plus, a good shipping and fulfillment service will have the latest tools and technology for efficiently packing, shipping, and tracking orders. By letting them handle this responsibility, you can devote more time to managing and growing your business.
There are many different ways to approach shipping and fulfillment solutions based on the type, weight, size and destination of the items you ship, along with your customers’ needs and expectations. Outside fulfillment involves a cost, but you should also consider the costs you are avoiding such as storage space, payroll and your own time. If you charge customers for shipping and handling, you may be able to recover all or a portion of it.
When selecting an order fulfillment firm, be sure to align your needs with the services they offer. Ask about minimum and maximum order quantities, error rates and restrictions on the types of products they will ship. Some, for example, only ship via UPS and the Postal Service and don’t handle oversize items. If you have special packaging, ask if they will use it.
A great source of information is the Mailing and Fulfillment Service Association, a national trade association for the mailing and fulfillment services industry. Their website (www.mfsanet.org) offers tips for evaluating, selecting, and working with a fulfillment service, postal and legislative information, and a search feature for locating a locating a company that’s right for you.
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
This may be a good time to consider using an outside order shipping and fulfillment service to take the burden off of your shoulders. Outsourcing fulfillment can save you time. Your products, labels and other unique packaging can be stored in the fulfillment company’s facilities. When orders are placed, the fulfillment firm packs and ships the items and perhaps handles customer service and returns as well. Orders can come through you via your usual methods, or can go direct to the service.
Plus, a good shipping and fulfillment service will have the latest tools and technology for efficiently packing, shipping, and tracking orders. By letting them handle this responsibility, you can devote more time to managing and growing your business.
There are many different ways to approach shipping and fulfillment solutions based on the type, weight, size and destination of the items you ship, along with your customers’ needs and expectations. Outside fulfillment involves a cost, but you should also consider the costs you are avoiding such as storage space, payroll and your own time. If you charge customers for shipping and handling, you may be able to recover all or a portion of it.
When selecting an order fulfillment firm, be sure to align your needs with the services they offer. Ask about minimum and maximum order quantities, error rates and restrictions on the types of products they will ship. Some, for example, only ship via UPS and the Postal Service and don’t handle oversize items. If you have special packaging, ask if they will use it.
A great source of information is the Mailing and Fulfillment Service Association, a national trade association for the mailing and fulfillment services industry. Their website (www.mfsanet.org) offers tips for evaluating, selecting, and working with a fulfillment service, postal and legislative information, and a search feature for locating a locating a company that’s right for you.
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
Tuesday, August 17, 2010
I can finance my business myself. What are the implications?
Self-Financing Has Its Rewards…and Risks.
Loans are a great, affordable way to get a small business off the ground. But they’re not for everybody. Personal sources of financing can work just as well, and may be the entrepreneur’s “Plan B” if attempts to secure a commercial loan are unsuccessful.
Although self-financing options may give you more control and flexibility over your start-up capital, special care is essential to make sure they are used wisely. A misstep puts more than your small business at risk. It can also endanger the long-term security of you and your family.
Before you dip into your savings or tap the equity in your house, make sure you have a realistic plan to meet your existing obligations, such as mortgage, utility bills, vehicle payments, insurance, and daily living expenses. Be sure to consider “worst-case” scenarios, such as a spouse losing his or her job, major car repairs, or serious health issue. The likelihood of such events may be remote, but the consequences on your financial security will be very real if they do occur.
A good preventive measure is to designate certain funds as “off-limits” for use in your business. Certain retirement accounts may also be “untouchable” due to the tax consequences and heavy penalties associated with early withdrawals.
Friends and family members can be good sources for start-up capital. However, history is full of ruined businesses and personal relationships because money was not repaid as expected, or the investor demanded a say in how the business was run.
Even if your benefactors place no conditions on the money, make sure everyone clearly understands how the funds are to be used; the repayment terms and amount of interest, if applicable; and what role, if any, contributors will play in the business. Then, put everything in writing and have all parties agree to the terms.
Credit cards can also be a source of quick cash for your business, but low limits and high interest rates usually make them useful only as a last resort, or as a short-term cash flow bridge. It’s best to use them only if absolutely necessary, and you have the ability to pay them down quickly. Otherwise, that debt can quickly spiral out of control. Also carefully scrutinize equipment financing offers from retailers and manufacturers. Their terms may be more restrictive and expensive than credit cards.
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
Loans are a great, affordable way to get a small business off the ground. But they’re not for everybody. Personal sources of financing can work just as well, and may be the entrepreneur’s “Plan B” if attempts to secure a commercial loan are unsuccessful.
Although self-financing options may give you more control and flexibility over your start-up capital, special care is essential to make sure they are used wisely. A misstep puts more than your small business at risk. It can also endanger the long-term security of you and your family.
Before you dip into your savings or tap the equity in your house, make sure you have a realistic plan to meet your existing obligations, such as mortgage, utility bills, vehicle payments, insurance, and daily living expenses. Be sure to consider “worst-case” scenarios, such as a spouse losing his or her job, major car repairs, or serious health issue. The likelihood of such events may be remote, but the consequences on your financial security will be very real if they do occur.
A good preventive measure is to designate certain funds as “off-limits” for use in your business. Certain retirement accounts may also be “untouchable” due to the tax consequences and heavy penalties associated with early withdrawals.
Friends and family members can be good sources for start-up capital. However, history is full of ruined businesses and personal relationships because money was not repaid as expected, or the investor demanded a say in how the business was run.
Even if your benefactors place no conditions on the money, make sure everyone clearly understands how the funds are to be used; the repayment terms and amount of interest, if applicable; and what role, if any, contributors will play in the business. Then, put everything in writing and have all parties agree to the terms.
Credit cards can also be a source of quick cash for your business, but low limits and high interest rates usually make them useful only as a last resort, or as a short-term cash flow bridge. It’s best to use them only if absolutely necessary, and you have the ability to pay them down quickly. Otherwise, that debt can quickly spiral out of control. Also carefully scrutinize equipment financing offers from retailers and manufacturers. Their terms may be more restrictive and expensive than credit cards.
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
Tuesday, August 10, 2010
How can I make sure my business data is secure?
Locks, alarms, and cameras can help safeguard your facilities and equipment. But what about your computer databases—the places where valuable, sensitive, and potentially irreplaceable assets of your small business are stored?
It may be easy to assume that Internet firewalls and PC passwords are enough to prevent unauthorized access. But according to Fredric Paul, publisher and editor-in-chief of bMighty.com, an online resource that specializes in the IT needs of small and medium-sized businesses, database breaches from both external and internal sources are increasing at an alarming rate.
“Small businesses face a higher risk because they usually lack the IT security infrastructure and expertise of larger, but no less vulnerable, corporations,” Paul explains. “Because small businesses also lack the resources and expertise to detect and respond quickly to a breach, the consequences of unauthorized access are greater as well.”
Here are some steps for keeping your small business database as safe as possible:
Enable security capabilities. Many off-the-shelf databases have only limited default security controls. Make sure that all authentication controls are enabled, and avoid using common passwords for user and administrator accounts.
Give the database a security check-up. Before entering any data, make no unwanted or unnecessary sharing features are activated by default. Check the software developer’s website every few months to ensure that your version is up-to-date with all the latest security patches.
Restrict database access. Even if you have a small, trusted staff, access to the database should be limited to a need-to-know basis. This will prevent passwords and other important information from being misused or unintentionally shared. It also provides an extra measure of safety in the event today’s colleague becomes tomorrow’s competitor.
Make regular backups. Depending on the size and extent of your small business databases, back-ups should be made on a monthly, weekly, or even daily basis. The data should be stored in encrypted format to further minimize its value to a data thief. Back-ups should also be kept at a secure, off-site location in the event your normal place of business become inaccessible due to weather, fire, or natural disaster.
Keep track of trends. Even if you don’t consider yourself a computer whiz, safeguarding IT resources is easier when you take a proactive approach. Resources such as bMighty.com can provide valuable information and tips for ensuring your system stays in step with your small business’s needs.
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
It may be easy to assume that Internet firewalls and PC passwords are enough to prevent unauthorized access. But according to Fredric Paul, publisher and editor-in-chief of bMighty.com, an online resource that specializes in the IT needs of small and medium-sized businesses, database breaches from both external and internal sources are increasing at an alarming rate.
“Small businesses face a higher risk because they usually lack the IT security infrastructure and expertise of larger, but no less vulnerable, corporations,” Paul explains. “Because small businesses also lack the resources and expertise to detect and respond quickly to a breach, the consequences of unauthorized access are greater as well.”
Here are some steps for keeping your small business database as safe as possible:
Enable security capabilities. Many off-the-shelf databases have only limited default security controls. Make sure that all authentication controls are enabled, and avoid using common passwords for user and administrator accounts.
Give the database a security check-up. Before entering any data, make no unwanted or unnecessary sharing features are activated by default. Check the software developer’s website every few months to ensure that your version is up-to-date with all the latest security patches.
Restrict database access. Even if you have a small, trusted staff, access to the database should be limited to a need-to-know basis. This will prevent passwords and other important information from being misused or unintentionally shared. It also provides an extra measure of safety in the event today’s colleague becomes tomorrow’s competitor.
Make regular backups. Depending on the size and extent of your small business databases, back-ups should be made on a monthly, weekly, or even daily basis. The data should be stored in encrypted format to further minimize its value to a data thief. Back-ups should also be kept at a secure, off-site location in the event your normal place of business become inaccessible due to weather, fire, or natural disaster.
Keep track of trends. Even if you don’t consider yourself a computer whiz, safeguarding IT resources is easier when you take a proactive approach. Resources such as bMighty.com can provide valuable information and tips for ensuring your system stays in step with your small business’s needs.
Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties
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