Grants for Starting a Small Business (Again)

Today, I got a heartwarming email from an official of the Department of Health and Human Services. The email was in response to the advice I wrote in our Consult Your Guides section entitled "Free Government Grants to Start a Small Business." . HHS is one of the member agencies collaborating on Grants.gov, the government portal for federal grants.

The email reads:

I truly appreciate your response to the question regarding where to find grants for small businesses. As a member of Grants.gov, we consistently receive these type of inquiries. It is really hard to dispell the myth that there aren't many offers for grants for small businesses and people aren't satisfied to hear about the low-interest loans. Thank you for your efforts to get that right information out there.

I never realized the extent of the myth of availability of grants to start a business until I became actively involved in Yahoo Answers. A lot of people believe that the government is giving away free money so they can start a hair salon business, a daycare business or a restaurant. In fact, one of the reasons I am now the #1 Best Answerer for the Business and Finance category (yipee!) is because of the large number of people asking about grants to finance their businesses.

The official followed up her email by saying:

I am borrowing some of the content you put into that response for future questions on small businesses. It was just a great frank answer, that provided sound information for small businesses and also provided them with go-to places within the government/foundations to garner more information.

She really made my day.

7 Steps for Improving Your Email Marketing

The success of your email marketing campaign is often based on a set of complex factors. However, a number of these issues can be proactively managed to ensure an optimized response. When developing your next email campaign, consider the following guidelines.

1. Your list. Certainly one of the most important aspects of any email marketing campaign, your list is directly correlated to your success. Are your names recent? Have they agreed to be marketed to? Have they shown an interest in products or services similar to your own? Make sure that you are using a house list (names you collected on your own) or have been purchases from a reputable broker.

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Learning from the American Inventor

I encourage every business person to watch the show The American Inventor. It celebrates creativity and ingenuity of entrepreneurs, young and old. From the totally brilliant to the downright stupid, American Inventor showcases the best (and well, lamest) results of creative thinking.

The show is also highly educational: it feels like MBA education in action. You learn how best to pitch your product, how a potential investor may judge your product (whether you agree to what they say or not) and how the market may see a particular product. It provides lessons on determining product viability, and what challenges the product may face when it is produced (some contestants were dismissed by the judges for having great products but are very costly to produce and mass market). Oftentimes, the inventor is so wrapped up with their creations that they fail to see the whether it is something that the market would actually buy.

What I did not expect to see from the show is how touching the back stories behind the inventions. Unlike American Idol (show is from the creators of that show so it follows the same elimination process) where I couldn't care less if the person is not chosen to go to the next round, I find myself emotionally engaged with these people. Moreso if the inventor invested so much of their life, of their time and resources into turning their dreams into reality yet did not get a pass to the next round. You can just feel the pain of the ousted contestants as they walk away from the room. More than the fact that they were not able to get through, what hurts the most is that the judges are telling them that their product is a bust or does not stand a chance in the marketplace. Truth hurts sometimes, but it hurts more if you spent $80,000 of your money or sold everything you have to create a prototype of your invention.

Catch the show every Thursday. If you want to present your invention, sign up now at The American Inventor or call 1-877-255-8009 toll-free for more information.

10 Entrepreneurial Mistakes

One of the new articles we have for March is entitled "Ten Entrepreneurial Mistakes" by Paul Lemberg. While I strive to minimize putting in PowerHomeBiz.com articles that have already been widely syndicated elsewhere, I just feel that this is such an informative article that every reader planning to start a business should read. From focusing on single customers to lack of capital to failing to consider return of investment, the article looks at various reasons why small businesses fail.

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Investor's Money or Own Capital?

One of our subscribers sent us an interesting question -- which is preferable, start a business with own capital or investor's money? He said that he has been thinking of the right approach for his business, given that he has no resources to start his business. He is confused whether he should go start a business now through the help of an investor, or wait until he has saved enough to start the business on his own.

I don't think there's a right or wrong answer to this; it just depends on your own goals and ambition. Some wants full control of their business and do not mind whether they start small and more slowly. Others want to start full steam ahead, and would welcome assistance to anyone who believes in them.

Read the advice I gave the reader.

Best Home Business to Start

We get a lot of questions from our readers on what is the best home business for them to start. Even over at Yahoo Answers, I see this question asked almost every day.

The thing with this question is that the "best" home business that one consider may not be the best for the other. Take for example a daycare business. There may be people who loves the idea of starting their own daycare business, while others may just freak out at the idea of taking care of 50 kids! Or that one may enjoy operating a bed and breakfast business, while others do not relish the idea of sharing their homes to total strangers.

Read our response to this common question.

Email Marketing - Open Rates, Clickthroughs, etc

Exact Target has released its 2005 Response Rate Study, based on data from 4,000 organizations, 230,000 email sends and 2.7 billion email messages. The study includes interesting data on the overall open, click-through and unsubscribe rates, as well as day of week comparisons, list size and target audience.

Here are some of the findings of the study:

• Open rates are declining -- no surprise there with the email blocking, spam filters, etc.
• Friday was the best day for email opens, and strong for clickthroughs -- this one is a surprise having been conditioned that early part of the week was supposed to be the best day to send emails
• Sunday was the best day for clickthroughs -- I suppose people are more relaxed and have more time to read emails
• Smaller lists generate higher response -- maybe because smaller lists share more common characteristics

You can read full study here

Video Rental Business - Is it a Good Small Business?

Someone sent a question whether a video rental business can be a viable business for a small scale operations.

My first major business was a video rental business, long ago when Betamax and VHS were still in vogue (and DVDs were non-existent). I started it mainly because of my passion for movies; I was a big movie addict and watched all the movies shown during the week. The business went well for several years until I sold it off, but had I known what I knew now about the business, I wouldn't do it.

For one, the video rental business is a low-margin business that relies heavily on volume, which of course relies on the size of your local market. It has huge inventory requirement that can be a cash flow drain, as you need to purchase every single movie released (and several copies at that).

I was able to make the business work because I found a whole new market -- corporate offices. I gave my contacts in several big offices a list of my available inventory, and they send me their orders, and the movies are personally delivered to them on Fridays (they have the movies over the weekend). I found a very nice niche by offering corporate workers convenience where the movies they want are sent to them. This was before the Internet, before NetFlix and online ordering became the vogue.

But there is a great demand for videos as the 2005 Video Software Dealers Association annual report indicate:

• In aggregate, consumers spent more than twice as much money buying and renting DVDs and VHS cassettes in 2004 than in purchasing tickets at the theatrical box office.
• Consumer spending on home video in 2004 exceeded $24 billion.
• Sell-through accounted for over $16 billion, an increase of 15% over 2004.
• Rental generated $8 billion, remaining flat with 2003.

The question of course is whether this business is viable for a small business. This is one business that you cannot start with only a couple of thousand dollars or less. And now with Netflix and Blockbuster Online competing with the mom-and-pop video stores, it is definitely much harder. But of course, there is always a chance that a small entrepreneur can beat the big boys in this game!

Link Development and Yahoo Answers

I have been spending a lot of time lately over at Yahoo Answers, answering questions mostly in the Small Business and Advertising/Marketing categories.

And it is paying off! I am now #8 in the Business and Finance category in terms of having the most number of answers rated as the best. Answers are rated as best either by the asker, or by the voters (if the asker has basically abandoned the question).

More than the rankings, however, I get visitors interested in what PowerHomeBiz.com offers. I get more people to discover and learn about our website. I get targeted visitors by becoming an active member of the community. I answer questions on how to start a daycare business and refer them to our daycare business article. I answer questions on how to avoid unwanted calls while working from home, and I refer them to our article on how to avoid the top 10 distractions of working from home. I answer questions on how to finance a business, and I refer them to our section on financing a business.

The icing on the cake is that the search engines indexes Yahoo Answers. This means I get backlinks everytime I post a Powerhomebiz.com URL! This strategy is so much more effective than going around commenting on blogs (which mostly have rel=nofollow tags anyway so why bother?).

Try it for yourself ...

Getting the #1 Ranking in Google

One of the best articles I have read on the topic of how to get top ranking in Google is Brett Tabke's (of WebmasterWorld.com) "26 steps to 15k a Day" . This guide was originally written in 2002 and updated in 2005, but still rings very true today, even after various Google updates.

If you want to rank high in Google, start by reading the article.

Getting the #1 Ranking in Google

One of the best articles I have read on the topic of how to get top ranking in Google is Brett Tabke's (of WebmasterWorld.com) "26 steps to 15k a Day" . This guide was originally written in 2002 and updated in 2005, but still rings very true today, even after various Google updates.

If you want to rank high in Google, start by reading the article.

Grants for Starting a Small Business

I've been hanging out a lot at Yahoo Answers, and one of the most common questions asked in the Small Business section is "How can I get government grants to start my business?" This is a question that is asked over and over again everyday.

I have combed through the Catalog of Federal Domestic Assistance to find a single grant that provides money to would-be entrepreneurs and I have yet to see one. It seems that you'd be hard pressed to find any grant that would support a for-profit venture, let alone an individual.

Most of the federal grants are given to specific target groups with specific requirements (e.g. minority business owners involved in transportation related contracts emanating from DOT - Grant#20.905 Disadvantaged Business Enterprises Short Term Lending Program). Grants are also often given to non profit groups or organizations involved in training or other similar activities (grant 59.043 Women's Business Ownership Assistance that are given to those who will create women's business center that will train women entrepreneurs).

For private grants, I have yet to check the Foundation Center's Foundation Grants for Individuals Online, but I know Foundation Center and they are the go-to place of all fundraising/development staffers of thinktanks in the DC area so I reckon they are a very reliable source. Their database is available only by subscription ($9.95 per month) but their opening blurb only says that the database is ideal for "students, artists, academic researchers, libraries and financial aid offices." Entrepreneurs are apparently not one of them, so I take it they also don't have listings of private foundations who give grants to would-be entrepreneurs.

I can certainly understand the allure of grant monies. Afterall, who does not want "free" money? It's just that some people string together grant information and package it along the lines of free money-for-all-your-needs (including starting a business), even though the grants they list do not include entrepreneurs as target beneficiaries.

A year or so ago, I had a terse email exchange with a website publisher offering information on daycare, and one of the topics she covers include grant funds for starting a daycare business. I looked at her list of grants, and while she has many listed, none of the grants are for starting a for-profit daycare center! I pointed it out to her that she better check the grant information she's putting out because she is packaging them as if all the federal agencies and private foundations she was listing actually gave money for creating a daycare business. Last week, I checked out her website and saw that she has put an explanation that there are hardly any grants for starting a for-profit daycare. I'd like to think that I had a hand in making her change her stance in her website :o)

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Where Angels Meet: Finding Angel Investors for Your Business

I am currently writing a success story article for WomenHomeBusiness.com based on the interview I made with Jenny Lefcourt, one of the founders of WeddingChannel.com and now Bella Pictures.

Of Jenny's various accomplishments, one of the things that amazed me was how seemingly easy she got WeddingChannel.com off the ground when she was in her early 20s and in school. Jenny was then an MBA student at Stanford University when she and her friend joined in a business plan competition in her school. One of those who heard her presentation was an associate of a Silicon Valley venture capital firm. The person liked what he heard, and the venture capital firm gave her funding. WeddingChannel.com soon became one of the top online businesses in the wedding niche!

But for those of us who are not Wharton or Stanford graduates who hobnobs with venture capitalists and investors, where and how do we get their attention? The March 2006 issue of Business 2.0 Magazine lists some of the places where you are most likely to meet an angel investor, and these are:

• Angel Capital Association www.angelcapitalassociation.org
• Angel's Forum www.angelsforum.com
• Band of Angels www.bandangels.com
• Common Angels www.commonangels.com
• Keiretsu Forum www.k4forum.com
• Launchpad Venture Group www.launchpadventuregroup.com
• New World Angels www.newworldangels.com
• New York Angels www.newyorkangels.com
• Prairie Angels www.prairieangels.org (charges $125 to submit idea)
• Robin Hood Ventures www.robinhoodventures.com (charges $250)

Watch for Jenny Lefcourt's success story article over at Women Home Business