This is a digest and recap of highlights, quotes, and comments from articles and discussions posted on this date on the Applied Entrepreneurship, LinkedIn group site.
*Tough Terms, Tougher Entrepreneurs by Roslind Resnick
“Even in good times, it’s never easy to get an investor to hand over a check. But, in times like these, persuading an angel investor to risk even $50,000 on a startup can be like pulling teeth.”
“Entrepreneurs are going to have to seek out new types of financing structures if they want to get their ventures off the ground.”
- We have seen an increase in insiders loaning funds to their firms to bridge the gap to better times and also offering investment opportunities to existing investors through rights offerings.
- Sometimes your best financing partner is right in front of your nose.
*VC Firms Give Advice on Getting Startup Funding by Ken Sweet
“Small-business owners looking for funding should concentrate on networking and creating pitches that “wow” prospective investors, some prominent venture capitalists said.”
“VC-firm representatives said that while it remains a difficult economic environment for the general economy as well as technology-based companies, all venture capital firms said they are still looking to finance good ideas.”
“All four venture firms at a forum in New York said that networking is an important first step in presenting an idea. Very rarely will venture capitalists take cold calls or emailed proposals.”
“Referrals are extremely important. If an entrepreneur cannot find us through our own ecosystem, they probably aren’t worth talking to.”
“Once an entrepreneur has established relationships with the venture capital firms that invest in their sector or industries, the next step fund managers said is a business proposal.”
“If you cannot be clear and succinct about what value your idea brings, you need to go back to the drawing board,”
“It’s less about the idea and more about the person behind it.”
*Virtual Storefronts: Can You Go Home Again? by Roslind Resnick
“Lately, there’s been a lot of talk about mom-and-pop retailers pulling the plug on their physical storefronts and running their businesses from home.”
“It’s easy to see the appeal: No more rent, no more utilities, no more sales staff, no more fines from the city for putting out your trash on the wrong day.”
“The downside: No more customers.”
“When I started my consulting firm, I opened a storefront in Lower Manhattan offering walk-in consulting services for small business owners and entrepreneurs. While the storefront attracted hundreds of customers and rang up lots of sales, we were never able to break even after paying the landlord, the light bill and our eight-person staff.”
“Two years later, I shut down the storefront and took the firm virtual, hoping that optimizing our site for the search engines would bring in enough business to keep us afloat. My gamble paid off–but only because I supplemented our online marketing strategy with a heavy dose of networking, writing and public speaking.
“So take it from me: Before you close your doors and kiss your storefront goodbye, put a plan in place that will keep customers coming in the door. Place a fishbowl at your checkout counter to collect business cards, send out an e-mail newsletter once a month, do your homework on search engine marketing and ask your kids to clue you in about Facebook and Twitter.”
* Kiva Brings Microlending Home To U.S. Entrepreneurs In Need by Leena Rao
“Kiva.org, one of the web’s most interesting innovators in the micro-lending space, is hoping to come to the aid of U.S. entrepreneurs and small businesses by launching a pilot expansion that would allow individuals anywhere to make small loans to low-income U.S. entrepreneurs through Kiva’s platform.”
“Kiva is a peer-to-peer lending site that facilitates micropayment loans between citizen lenders and extremely low-income entrepreneurs in developing countries. Through Kiva’s platform, anyone can loan $25 or more to support an entrepreneur and the specific progress of the loan can be tracked from initial funding to repayment. Upon receiving repayment, lenders can withdraw their funds from Kiva or lend again to another entrepreneur, thereby continuing the lending cycle.”
“Since the microfinance platform’s birth in 2005, over $75 million has been loaned through Kiva.org to support more than 180,000 individuals from 44 developing countries.”
*Consulting Business Strategy: It Takes More Than Wishful Thinking by Beverley Hamilton
“Some Independent Business Consultants (IBC) whether they be in marketing, sales, IT or HR, assume that just by talking to people, just by having a website or just by having a glossy brochure they will automatically get clients. And it’s this assumption that will ultimately cause frustration, stress and despair as their consultancy flounders due to a lack of clients.”
Your consultancy is a business and a business requires a workable, systemised infrastructure to make it truly successful. The development and sustainability of a profitable consultancy requires thought, planning, trial, review and thought – in all areas of the business. Those businesses that are truly successful have numerous common factors, two of which are:
1. Clarity of who their ideal clients are
2. Sustainable client acquisition systems
Random, ad hoc and unspecific activity may give you clients in the short term but in the long run it will not.
*How to Give Your Consulting Clients What They Really Need by Beverley Hamilton
“Just because you know your clients need what you have to offer, doesn’t mean that they know they need what you have to offer. There are a number of reasons for this. The difference between need and want can be minimal but it can also be a chasm.”
You’ve made the break from the constraints of corporate life and are excited to be establishing your new business as a consultant. As an Independent Business Consultant (IBC) whether that be in marketing, HR, IT or sales, you know that what you have to offer is of high value and can create tremendous benefits for your current and potential clients.
You know that what you offer is what your clients need because you have researched your market, listened to clients and you fully understand the problems your clients have. You know that your services can provide the ideal solution.
So what’s wrong with that?
Just because you know your clients need what you have to offer, doesn’t mean that they know they need what you have to offer.
There are a number of reasons for this;
1. They are so caught up in their own world dealing with their problems, which are so immediate, that sometimes what they see as their problem is not their real problem.
2. Some clients already believe they know what the problem is and have a fixed idea of what they see as the right solution.
3. Some clients know what they want but they don’t know or won’t acknowledge what they need
The difference between need and want can be minimal but it can also be a chasm.
* How to Start a Consulting Business
“What separates a good consultant from a bad consultant is a passion and drive for excellence. And–oh yes–a good consultant should be knowledgeable about the subject he or she is consulting in. That does make a difference.”
“In this day and age, anyone can be a consultant. All you need to discover is what your particular gift is.”
Things to Consider Before You Become a Consultant
- What certifications and special licensing will I need?
- Am I qualified to become a consultant?
- Am I organized enough to become a consultant?
- Do I like to network?
- Have I set long-term and short-term goals?
This is a very nice and complete article for anyone interested in becoming a consultant.
*Mistakes To Avoid When Marketing Your Consulting Business by Michael McLaughlin
Many competent consultants risk their own success, and their bank balances, by driving straight into the same old marketing potholes again and again. Take action to avoid these ten common marketing traps:
- The curse of experience.
- Go it alone.
- Overestimate clients’ interest in you.
- Believe your services are top-notch just as they are.
- Sell too hard.
- Dabble in marketing.
- Focus on your “accounts,” not your clients.
- Take the one-size-fits-all approach.
- Dread marketing.
*Survey Says: Entrepreneurs Nix Consultants by Nina Kaufman
“A recent survey conducted by BizBuySell, the largest online business-for-sale marketplace, found that nearly 75% of business owners doubted the effectiveness of hiring consultants to improve business reputation, preferring instead to do their own marketing without external assistance. Of the survey sample, 68% of respondents said they had never engaged a consultant to help improve their business. Of those who had engaged consultants, 45% were moderately satisfied with the results. 27% felt the consultant did a great job for the business, while 24% regretted the decision to hire a consultant, stating it was a waste of time and money.”
“Sometimes, it’s worth working with more expensive consultants, because they may be more likely to have the know-how to help you. Find out if they’re on the speaking circuit. See if they’ll divulge how much money they are making/how many clients they have each year from their consulting practices and products. See who recommends them and in whose circles they travel. That’ll give you a definite sense of whether they are successful at what they do.”
*The Secret To Becoming A Great Entrepreneur by Laurie Hayes
“You may have an exceptional product that can improve the lives of many.”
“You may provide a service that is second to none.”
“BUT …if you don’t have exceptional sales skills, you will lose out on many an opportunity to demonstrate or provide value to anyone.”
“The most important, yet least developed business skill in many small and home-based business owners is selling. Lack of effective sales skills is a major contributor to the demise of a business.”
“Although you are an entrepreneur, you are also a sales person. You are in the business of selling a product or service to others.”
What I Think
I think the common thread in many of the articles posted on this date is wishful thinking. Angels and venture capitalists say they’re looking for the “wow” factor in business opportunities they review for potential investment. In nearly the same breath, they also say entrepreneurs need to find new types of financing structure.
Likewise, some bricks and mortar businesses are trying to stay afloat in rough economic waters by closing their physical location in favor of a low cost or no cost virtual presence in the market place. As one of the articles suggests, sometimes closing off your physical location will prove a roadblock to your customers finding you in sufficient numbers to keep your business alive. It is wishful thinking to believe that cutting costs to the bone can be the sole solution in an economic downturn. This may prove the reality is that you’re cutting the throat of your own business.
The wishful thinking theme also runs through the consultant’s dilemma articles. Many a consultant has tried to build a client base by posting a beautiful Web site and sending out tons of glossy brochures. This is not an alternative to hitting the streets or entering into the business with a book of business.
In consulting work, there is always a pipeline, which has to be full. If you start with no clients, cash flow can kill you before the cash matches the expenses, even if lots of business is coming in the front end of the pipe. By the time new business reaches the profit end of the pipe, quite a bit of time and expense will likely have already accumulated. If borrowing money has become a pattern for keeping the business alive while you wait for the pipeline to fill, or worse yet use/abuse of credit cards, the debt service on the loans and credit cards alone can put a profitable bottom line out of reach.
Clearly, to be a successful consultant, one should have demonstrable skill in one or more areas needed by clients who have an ability to pay for this expertise. Ability to pay, however, is not enough. Some markets are simply tougher than others. Some industries and markets are very much accustomed to working with all sorts of consultants. In other markets, however, you will find just the opposite.
The articles posted on this date indicate that being a proficient networker is an essential skill for consultants and those seeking funding from angels and venture capitalists. Both of the groups, seeking clients and financing, respectively, have been known to overestimate the interest of those they seek, and underestimate the amount of research and other groundwork necessary to bag their prize. Both consultants and entrepreneurs seeking financing must do the homework, be ready with answers for every question, be able to demonstrate the superiority of their cause above others with whom they compete, and communicate all this with clarity and brevity. Anything less will result in odds of success similar to those of one trying to pull an angel’s teeth.
If you enjoyed my impression of these articles, why don’t you read them for yourself and see what you and I missed or hit? Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.