Getting Startup Funds from Family and Friends: Data

I have previously written about the pros and cons of borrowing startup capital from family and friends in the post "Accepting Start-Up Capital from a Family Member: Good or Bad?" I know that a lot of entrepreneurs rely on family members, friends and even acquiantances to invest and finance their business. But I've always wondered how many entrepreneurs are actually getting funds from what is described as "informal investors."

A 2003 study made by Babson College and Kauffman Foundation under the Global Entrepreneurship Monitor project entitled "National Entrepreneurship Assessment - United States of America" has interesting data on the so-called "informal investors."

Informal investors are persons who individually invest in new and expanding entrepreneurial endeavors. The study shows that more than 50% invest in a relative's business. The breakdown in terms of the relationship of the investor to the investee is:

• Close family - 41.8%
• Other relative - 10.5%
• Work colleague - 6.1%
• Friend/neighbor - 28.5%
• Stranger - 9.4%
• Other - 3.6%

I find the study's data on when these informal investors expect to be repaid fascinating (they actually expect to be repaid!). The study shows that the expected payback period is:

• 6 months - 20.4%
• 1 year - 8.6%
• 2 years - 17.7%
• 5 years - 24.7%
• 10 years - 5.5%
• 20 years - 2.3%
• Never - 20.8%

Where are those 20.8% who said they never expect to be repaid when you need them? Why can't I have them as my family members or friends?

There are many more interesting data from the study. Read the study "National Entrepreneurship Assessment - United States of America"

Peer to Peer Small Business Loans

I am looking forward to the launching of Zopa http://www.zopa.com/ZopaWeb/ in the US, the UK site that matches up borrowers and lenders in a peer-to-peer online lending service.

Zopa is changing the way people are borrowing money across the pond -- allowing people who can never get a bank loan a chance to find lenders willing to provide them with money. Based on credit profiles and creditworthiness, the service matches consumers who need money with consumers who want to lend it.

A person can join the site as a lender or as a borrower. To minimize the risks for lenders, Zopa will not lend a lender's proferred funds to a single borrower, but will group members based on creditworthiness and lend to this pool of borrowers.

Lending rate averages at 7%, which is still lower than credit card rates or even bank rates. Business 2.0 reports that only "0.05 percent of Zopa's loans have turned into uncollectible debts."

This service can have massive implications to the small and home-based entrepreneurs who are in need of capital to start or run their business. Those who cannot get a bank loan can now have a place to go to find the money they need.

Watch out for the launching of Zopa!

Business Idea: Bridal Fitness Program

Wedding is big business. According to the Association of Wedding Professionals http://www.afwpi.com/wedstats.html 2,226,000 weddings occurred in the US from June 2004 to June 2005 (CDC) spending approximately $85 Billion.

Amidst the wedding preparations from reserving a church or place of ceremony to buying flowers to hiring a caterer, a big concern of brides all over the world is: "Will I look good on my wedding day?" All brides want to look their most beautiful self on their wedding day. They want to be able to look at their wedding day picture five years from now and say that they indeed looked their best on their wedding.

Alas, looking best sometimes takes a lot of work. In some cases, a LOT of work. Hence, many brides are looking for help to improve their looks and shape their physique.

If you are in the fitness field or looking for a niche in this area, the bridal segment can be one lucrative market. Here are some ideas of what you can do:

• Be a personal trainer to the brides -- provide one on one physical training to the bride to achieve the look the bride strives for
• Organize a boot camp for brides -- in addition to physical fitness, boot camps can offer classes in etiquette, personality and poise
• Be a diet consultant to the briders -- sort of like a health and wellness coach for the bride focusing on diet

Below are recommended books on how to develop fitness programs for brides:

• Bridal Bootcamp by Cynthia Conde
• Buff Brides: The Complete Guide to Getting in Shape and Looking Great for Your Wedding Day by Sue Fleming
• Bootcamp360 for Brides: The Few, the Proud, the Fit by Tamara Kleinberg

Obstacles to Starting a Business

Starting a business is not without obstacles. In fact, the whole process of entrepreneurship seems like overcoming one challenge after the other.

When thinking of starting a business, here are the obstacles that you may encounter:

• Going blindly into the business - Passion is not enough; you need to know what you are getting into. You don't just wake up one day and say to yourself "I want to start my own coffee shop" when you don't know an iota about the coffee shop business.
• False confidence - Even if you think you know something, think again. The adage "little learning is a dangerous thing" is so true in entrepreneurship
• Lack of faith in yourself - The lack of belief that you can make money while having fun is the number one killer of any startup business. Believe in yourself first, and your ideas and success will follow
• Lack of resources - Unless you can think of creative ways to generate resources and find investors willing to take a chance on your business, it is best to start a business when you have ample capital. Otherwise, you need to be extremely good in tightening your belt and operate on shoestring strategies.
• Too much resources - Sometimes too much of a good thing can be bad, especially if you lack creativity in how to spend the money. Remember the dot com bust where startup companies awash with venture capital and investor monies withered away? They may have money, but they didn't know how to spend it well!
• Costs of cutting loose - If you are jumping from the corporate world to self employment, you may experience a cut in pay (at least initially). You need to have saved at least 6 months or longer of your living expenses, so even if the business does not make money yet you (or your family) won't starve. The change in social environment can also be a hindrance for some who needs office chatter and interpersonal interaction.
• Burden of being the boss - If you don't do a task, it won't get done (unless you can already afford employees). Work may sometimes spill over and cut into your family life. Being an entrepreneur also means you need to wear many hats, doing marketing in the morning to bookkeeping in the evenings.
• Fear of the unknown and fear of failure - A very real and understandable fear. But do your research, learn more about the business, develop confidence in yourself, get help from the right parties and you can overcome all challenges.

Competing with Starbucks

I have previously written about the success of Starbucks and what small entrepreneurs can learn from the world's largest coffee chain in the article "Learning from Starbucks: 10 Lessons for Small Businesses."

Business 2.0 has a brief article on how smaller companies thrive under this giant's shadow. No, none of these companies come close to Starbucks right now. But they demonstrate that small companies can carve out profitable niches for themselves even if a giant dominates the market -- a lesson that small business entrepreneurs need to remember when a giant business moves in on their turf.

Here are the positioning strategies of Starbuck's competitors:

• Green Mountain Coffee Roasters = Focuses on being green and staying true to its organic roots; also focuses on the office business for the coffee market
• Coffee Bean and Tea Leaf = Has a reputation for innovation with its extensive collection of coffees and teas; also pushes its niche in Starbucks-free markets overseas such as Israel
• Costa Coffee (London) = Goes international with a twist. In India, it outsmarted Starbucks by partnering with local businessmen and adapting its taste to the Indian palate. Also has strong presence in the Middle East and launching in China next year with 300 stores
• Peet's Coffee and Tea = Goes upscale and concentrates on the taste of its coffee for its market of java connoisseurs
• Caribou Coffee = Sells a lifestyle characterized by adventure

Read the Business 2.0 article "Grinding Out Success Next to Starbucks"

Resources for Starting a Clothing Line

One of our most popular pages is the article Starting a Clothing Line or Apparel Manufacturing Business. I guess many people dream of becoming the next Donatella Versace or Tommy Hilfiger.

Aside from our article, here are resources on how to start a clothing line

Associations:
Professional Apparel Association http://www.proapparel.com
American Apparel Producer’s Network http://www.usawear.org/
Worldwide Responsible Apparel Manufacture http://www.wrapapparel.org/
American Apparel and Footwear Association http://www.americanapparel.org/
National Association of Fashion and Accessory Designers http://www.nafad.com/
SEAMS The National Association for the Sewn Products Industry http://www.seams.org/

Manufacturer Search
ThomasNet http://www.thomasnet.com
National Association of Manufacturers http://www.nam.org/s_nam/index.asp
Davison's Textile Blue Book http://www.textilebluebook.net

Other resources
Fashion Group International http://www.fgi.org
Apparel News http://www.apparelnews.net/

Blogs:
Kathleen Fasanella's blog at http://fashion-incubator.com/ (Kathleen is the author of the book "The Entrepreneur's Guide to Sewn Product Manufacturing")

10 Steps to Starting a Business

Many people want to start their own business, but have vague ideas of how to start one. Today, someone over at Yahoo Answers said that his family has great recipes handed down from several generations, and he wants to use these recipes and turn it into a business. But he does not know how and whether he could turn that into a successful business.

If you are in the same boat and unsure of how to start your business, here are my suggestions (using the YA example above):

1. Define your business first. What do you want to do with the recipes? Make a list of possible businesses you can develop from recipes and write the pros and cons of each. For example, restaurant is a possible option but restaurants require a lot of capital. Are you thinking of writing a recipe book; and if so what are the pros and cons of this idea? Do you want to publish your recipes on the Web and earn through advertising? Clarify your business model.

2. Check the feasibility of the business idea. I have previously written about ways you can evaluate your business ideas

3. Once you've determined exactly what business to start, research about the business -- how much will it take you to start the business, what do you need, who are doing it, who is your target market, how are you going to reach your market. This is your business plan. It is best to put it in writing, especially if you will be seeking loans or investors as they will require a business plan

4. Find out how much the business will cost and where you can get the money. If your resources are not enough, where will you get money? Can you get money elsewhere? If you really cannot raise the funds you need, are you willing to downscale the idea?

5. Decide if this is a business that can be done alone by you, or whether you will need a partner or you will hire employees. Aside from you, who else will be involved in the business?

6. Once you find out that you can really raise the capital you need and the personnel requirements, setup your business. Decide if you want to be a sole proprietor, partnership, LLC, S or C corporation.

7. Go to your local county to find out the steps for business registration, assumed name or DBA, and whether the business will require a license or not. Or check the Web for information on starting a business in your state, specifically from your state or local government websites. Then complete all legal and regulatory requirements.

8. Start the process of setting up the business. If this is a website, then start thinking of its contents, who will design the site, who will manage the site. If this is a restaurant, start looking for location. If this is a recipe book, start contacting agents and publishers or look into the option of self publishing.

9. Set up your office, whether at home or if you will lease an office space. Purchase the equipment you need.

10. Start developing your marketing materials such as business cards, brochures, flyers.

Breaking the Myths of Entrepreneurship

I have stumbled across the PowerPoint presentation of a New York University professor named Dr. Jeffrey Robinson entitled "Breaking Out or Breaking Through: Wealth Building through Entrepreneurship."

The presentation has loads of information, but I liked best how he presented data and facts to shatter the common myths of entrepreneurship, as follows:

Myth 1: "I need lots of money"

Looking at the Inc. 500 companies (a list of the fastest growing private companies in the US), he found that many of the companies started with so little in terms of startup capital. The Inc. 500 data shows that:

• 13% of companies in the list started their businesses with less than $1,000
• 23% had about $1,000 - 10,000 in startup capital
• 12% had about $10,001 - $20,000
• 13% had about $20,001 - $50,000
• 12% had about $50,001 - $100,000
• 13% had about $100,001 - $300,000
• 14% had more than $300,000

A third (36%) started with less than $10,000 in capital yet grew fast to become part of Inc. 500! If these companies can do it, so can you.

Myth 2: "I am destined to fail"

Using data from the SBA, he looked at the percentage of businesses still in operation. The data for companies of all sizes (including solo entrepreneurs) shows:

• After 2 years, 76% of businesses are still ongoing
• After 4 years, 47%
• After 6 years, 38%
• After 8 years, 29%
• After 10 years, 21%

Sure, there's risk and there's fall out. But why can 21% survive 10 years in business and you can't?

Myth 3: "All the good ideas are gone."

According to the professor, the opportunities are here in

• Untapped markets
• Underserved markets
• Underdeveloped markets
• Unique perspectives

Read the PowerPoint presentation from Professor Robinson's website

Protecting Your Online Content

Earlier this week, I posted about another website that copied an article I wrote word for word and changed the byline to their CEO (read the post here). I'm happy to report that the page has been taken down by the site owner.

I filed a Digital Millenium Copyright Act (DMCA) violation notice with the web host. Within 6 hours of sending the complaint, the web host wrote back that they have requested the site owner to bring the page down and if not down within 24 hours, the site will be suspended. That did it as the page was removed.

This incident is not a remote experience. I'm sure many writers and web publishers out there are aghast that their content and writings are showing up on the Web without attribution to them, or worse, claimed by another person as theirs.

As a site that accepts article contributions, I've seen instances where the same exact article is submitted for publication by 2 different authors. I even published an article contribution that turned out to be stolen from a subscriber. Upon receipt of the newsletter, the subscriber sent in a copy the page of his book where the same exact article came from. I apologized to the writer and changed the byline to him (the writer then went after the plagiarist).

So how can content publishers protect themselves from intellectual property thieves? My advice is to uphold your rights and fight content thievery with available tools.

We tried to put a script that prevent the article from being highlighted for the copy-and-paste function. We also put a script to prevent right click and hinder anyone from doing View Source. Both of these tactics failed miserably. For one, it is so easy to disable the javascript. These tactics only angered several people who wanted to copy the article for their personal use. We got a lot of feedback (mostly angry) on this one.

Until there is a fool-proof way to prevent anyone from copying your content, the DMCA is your best friend and the best route to take. File first with the site's web host. Send the search engines especially Google the DMCA complaint. The web host typically acts fast with this type of abuse and will either take down the page immediately or contact you that they have given notice to the site. Google takes about 2 weeks to respond, and they will remove the page from their database.

Here are the steps you need to take to file a DMCA complaint:

1. Contact the site owner first and let them know that they are using your content without your authorization or consent. Request them to take down the page. Give them 24 hours or so. If they do not comply, file the DMCA complaint.

2. Prepare your DMCA complaint.

3. Check the web host of the plagiarist. You can either go to WhoIs database and check the technical and administrative contacts, or use the Tracert function in your PC's Command Prompt. Check with the host listed as the technical contact - sometimes they are simply the domain registrar or the site may just have moved into a new host and the WhoIs entry has not been changed. My experience is that tech support folks are typically very helpful when they know you are filing a DMCA complaint and they will even help you identify who is the right webhost of the site.

4. Submit your DMCA complaint. Most webhosts accept DMCA submissions through an email to their abuse department. Search engines, however, are more stringent and requires you to either mail or fax the DMCA complaint. Send your complaint to:

Google http://www.google.com/dmca.html

Google, Inc. Attn: Google Legal Support DMCA Complaints
1600 Amphitheatre ParkwayMountain View, CA 94043
OR fax to: (650) 963-3255, Attn: Google Legal Support, DMCA Complaints

5. If the site is using Google Adsense, send the DMCA complaint to the Adsense team as well. Repeat offenders can have their account terminated.

Benefits of Online Surveys for Your Business

If you are running an online business, whether selling products or producing information, it is useful to do some sort of market research for your business. An easy way to do this is through online surveys.

While maybe not as scientific with sampling protocols properly observed, online surveys can help you

• Gauge the interests of your website visitors
• Determine the demographic profile of your site visitors
• Get feedback on the design, usefulness of your website and company
• Give you information on what your audience considers important
• Know the features that your target audience feels is important in your product/service
• Provide you with information on your competition, and how your target audience sees your company in the light of your competitors

If you're doing online surveys, I suggest to use a service such as SurveyMonkey http://www.surveymonkey.com . I have used this service before and it certainly took the pain out of conducting surveys.

For $19.95 per month (with additional fee per respondent if you exceed 1,000 respondents) they make it easy to create your survey in a way that is ideal for online viewing. You can opt to put a link to the survey in your site, serve it as a popup, or be emailed to your list. But the big plus for me is you get real time tabulation of the results for closed-ended questions and anyone doing market research knows that tabulation is a laborious process.

It is worth understanding whys, whats, and hows your customer visit and use your site. Online surveys can perfectly complement your web analytics in trying to provide you with a picture of your audience.

Closing the Business: When Is It Time to Move On?

Persistence and patience are important attributes entrepreneurs must have in order to keep the business going, even if the going gets tough. But how do you know when to throw in the towel? How do you know it is time to end the business?

When I was running a video store in the 80s, I knew it was time to close the business when I felt I needed to change the direction of my life. I love the business as movies are my passion and income was good. I did not just rely on walk in customers (Internet was just starting then and there was no online ordering as yet) but tapped several large offices in the city where the employees would order videos for the weekend and my girls would deliver them on Fridays and pick them up on Mondays. My inventory is almost wiped out during weekends.

But I decided to move and seek out greener pastures. Life was good, but I felt it could be better. I felt strongly that I am destined to seek a life somewhere else. So I sold off the business.

Aside from relocating to another place, how do you know that it's time to move on and close your busines? From what other entrepreneurs tell me, here are some indicators that can let you know that time's up for the business:

• You have achieved what you set out to do with the business
• The business ceased to be fun for you
• Your resources have been depleted and the business is not making any money
• Cash flow is insufficient and you have exhausted means to improve cash flow
• Your family is likely to suffer with the continued operation of the business (e.g. directing funds to the business instead of providing for family needs)
• Competition has gotten stronger and fighting them feels like banging your head on the wall
• Adverse impact of an economic downturn

When deciding to close your business, be sure to cancel the following:

• contracts with suppliers
• leases on premises or business equipment
• rental agreements
• business telephones
• utilities in your office
• business bank accounts

It is of course better to end a business on a high note - successful and all your objectives met. But sometimes, luck is simply not on your side and despite your best efforts, closing the business in the only viable solution. You'd hope that you won't reach that point but sometimes things don't happen the way you want it.

However the business will turn out, it is advisable to always have an exit strategy when starting a business so you know when it is time to move on. Be in control and think how you will leave the business you've worked hard day and night.

Merchant Category Leaders on the Web

Everyone knows that Amazon.com is the #1 online retailer today. But in terms of various product categories, here are the category leaders according to the Internet Retailer Top 500 Guide:

• Apparel/Accessories - L.L. Bean
• Books/CDs/DVDs - Netflix
• Computer Products - Dell
• Flowers/Gifts - 1-800-Flowers
• Food/Drug - Drugstore.com
• Hardware &Home Improvement - The Home Depot
• Health/Beauty - Quixtar
• Housewares & Home Furnishings - Williams-Sonoma
• Jewelry - Blue Nile
• Office Supplies - Office Depot & Staples (Tied)
• Specialty (Non-Apparel) - Oriental Trading
• Sporting Goods - Cabela's
• Toys/Hobbies - Toys "R" Us

I would love to do an analysis of these firms and share any lessons that small businesses like us can learn from them.

Article Marketing and the Problem of Stealing Other People's Article

I was going over the articles submitted to PowerHomeBiz.com today from other writers. One article sounded so familiar to me that I had to double take and re-read it.

True enough, I was reading my article that I wrote way back in 2000 entitled Evaluating Your Business Ideas and Products http://www.powerhomebiz.com/vol13/evaluateideas.htm . The first three intro paragraphs were removed, but the rest remained the same.

As proof that the article was published as early as 2000, InternetArchive.com's Way Back Machine (your best friend in proving plagiarism cases) has a record of the article for August 16, 2000

The so called writer (er, plagiarist) named Trina Newby of Womenaboutbiz.com even had the gall to publish the article in her website under HER own byline. Compare her article with MY article . The Way Back Machine shows no record of the article published on her site, which implies that she copied it fairly recently, but the InternetArchive shows that her site was launched sometime July 2002.

As such, how can she claim to be author of the article when the article first showed up on the Web in August 2000 and her site showed up only two years later?

I sent her an email warning her of her plagiarism and letting her know of the Digital Copyright Millenium Act. Web hosts and search engines such as Google http://www.google.com/dmca.html takes DMCA complaints seriously, and if you follow the process, will take down sites of those who steal your content.

If you are a writer and want to use your article to promote your site, please create your own original article. And do not be stupid enough to submit your plagiarized article to the original writer of the article! That's stupidity at its finest.

Gift Bag Inclusion: Is it for Your Business?

From swank parties to top notch events, there is one thing that shares the spotlight with the celebrities and other attendees -- the gift bags.

Gossip columns talk about the stars that got greedy with gift bags and who swiped more than one. The media dissects the contents of the gift bags given in awards and important events. Even the IRS got into the action and have taken notice of the elaborate and even ostentious gift bags that award giving bodies give to presenters and awardees.

As marketers, gift bags can become an important tool to get your product to consumers. Gift bag placement means that your product will be talked about by the media. Imagine the impact if NY Post's Pagesix reports that Lindsay Lohan asked for not one, but five of your product in the gift bag. That's worth thousands in free publicity!

I talked with Kelly-Sue Chobotiuk, creator of Boo Boo Bear herbs for hurts bears and other products, a few years ago. Her startup business got a big boost after her Boo Boo bear was chosen to be included in the gift bags given during 31st Annual American Music Awards in 2003 . That's worth a lot of gold in terms of publicity generated for her business. One of the event organizers of the music awards heard of her Boo Boo bears and contacted her, and of course, she jumped on the opportunity. That gift bag placement gave her business a lot of notice and set her off to a good start.

Think out of the box and consider gift bag placement as a publicity tool for your business. There is no centralized directory for upcoming events that need gift bag placements, so you will need to do some legwork asking around how to get your products in the gift bag. But the effort may be well worth it for your business.

Rethinking Your Search Engine Marketing Approach

If you are selling on the Web and relies on pay per click search engine marketing to get traffic, you'd know that the costs are creeping up. The BlueNile.com CEO Mark Vadon said in February

"To give you perspective, in our top five keywords, our cost per click was up over 80 percent compared to a year ago."

Target Marketing magazine in an article on "Conversion Tactics" stated that traffic alone will not be enough. The article recommends:

• Shift more resources to conversion tactics and less toward traffic generation.
• Focus on holes in the buying process (where visitors might be falling through) rather than the holes in the traffic acquisition strategy
• Commit to making your SEM efforts more relevant
• Devote time and resources to better know your customers and needs.

Getting traffic is important; but converting that traffic should be the main focus. This is especially true for small online entrepreneurs with limited resources and may not have the money to burn on PPC like big companies such as BlueNile.com. To get ideas on how to improve your traffic conversion, read the article How To Sell More on the Web: 30 Tips To Increase Conversion Rates For An Ecommerce Site

Business Idea: Passion Parties

I've met a lot of women (even men) who have made comfortable, if not fantastic, income from direct selling. From Avon to Mary Kay to Tupperware, direct selling is a low-cost business that anyone can start from the comfort of their homes.

So I find the article over at MSNBC "Tupperware parties with a twist" very interesting, not so much as to the products being sold but the enthusiastic response these types of parties are attracting. The author is even surprised at the multi-generational participation of women in these parties. Apparently, there is demand in America for these types of products sold in a more open, mainstream way (as against going into sleazy stores or websites online).

Read the article, and see if this business is for you.

Marketing Strategies that Get Results

Marketing is the lifeblood of business, as they say. A business, whether big or small, will go nowhere without customers. Small and home-based businesses are faced with a tougher challenge in getting the word out about the business given our limited resources. Hence, we need to work smarter, be more creative and find inexpensive ways of marketing our businesses.

Here are some articles that discuss low-cost marketing strategies that home-based businesses can do:

• Marketing Your Small Business through Product Demonstrations
• Using Phone on Hold Marketing for Your Business
• Trade Show Giveaways Attract Visitors
• How to Beat Your Biggest Competitor with Your Marketing

Marketing Strategies for a Successful Holiday 2006

Shop.org, the online division of the National Retail Federation, and BizRate Research have released a new study that looked at the various marketing campaigns and promotions used by the retailers for the holiday season.

The study called "2006 Online Retail Holiday Best Practices" analyzed the holiday promotions that worked best including the best sales drivers for etailers. It ranked the various promotional strategies according to effectiveness and provided a measure of the usage of said strategies.

Some of its findings include:

1. Holiday Promotions that Worked Best

• Free shipping with no conditions -- ranked 4.4 in terms of effectiveness and used by 25% of the sample
• Free shipping with conditions -- ranked 4.3; used by 79%
• Offline-online sale -- ranked 4.2; used by 39%
• Free shipping with upgrade -- ranked 4; used by 48%
• Online only sale -- ranked 3.9%; used by 59%

2. Best Sales Drivers of a Website according to effectiveness:

• Buy online and pick up store
• Product customization
• Personalized/site triggered email
• Featured sale item page
• Gift idea center

You can download a summary of the report at shop.org

Looking for an Angel Investor to Support Your Business

If you are looking for someone to help you fund your business, you may want to go and pitch your ideas where investors gather. Angel investors have been a driving force in capitalizing small businesses. To get them interested in your business, the magazine Business 2.0 has very interesting tips on How to find your angel investor

Here are some places where angel investors come and those looking for funding can come and pitch their business plans. Be sure to have a strong business plan and describe what makes your business idea stand apart:

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

Advertising Your Small Business

If you are planning to advertise your business, there are several mediums you can choose and factors you need to consider. You can advertise in radio, Yellow Pages, online directories, billboards, cable -- or even several mediums at the same time. In making your decision, you need to ask questions like:

• What is the most effective way in reaching my customers?
• How effective is the advertising medium I chose?
• What budget can I afford?

Of course, you want to use the medium that will give you the biggest bang for your buck. The best return on investment! You may want to read our article on Choosing the Right Advertising Medium for Your Small Business to learn about the advantages and disadvantages of each advertising medium.

We're highlighting today on our homepage an article submitted to us that helps separate the fact from fiction in each advertising medium. The article 33 Things Your Advertising Representatives Never Told You advises business owners to take a more skeptical approach when talking to an advertising sales rep. Of course, the objective of the sales rep is to get your business, so the rep will present data and information to you that is designed to win your confidence.

Here are my favorite tips from the article:

• According to the Yellow Page industry, Americans look in the Yellow pages about 3.6 billion times per year. Sound like a lot? That's only about 14 times a year a person.
• The average time someone looks at a billboard is about three seconds. The billboard companies tell advertisers to keep their messages short -- seven words or less. How much selling can you do in three seconds or seven words?
• Advertisers buy space in shoppers to reach customers who won't see a daily paper. In fact, readership is usually duplicated. Seven out of 10 readers of shoppers are already readers of the daily paper.
• It's difficult to reach upscale or influential customers with direct mail. Nearly two out of three persons who graduated from college or earn $50,000 don't read every piece of mail they get -- their throw-away rate is 65%!

If you are thinking of advertising, approach the process with an open mind and be aware that it may not bring you the results that you want or need. Everything in business is a risk, but take calculated risks where you know that some advertising mediums may not work for your business, or may not bring you the kind of results you were expecting.

10 Tips When You Have a Brilliant Idea

Nolo has a little book called "Your Little Legal Companion: Helpful Advice for Life's Big Events" that provides tips on how to handle situations from having a child in kindergarten to managing retirement.

The book has a section called "Having a Brilliant Idea" and here are the 10 tips that they offer:

1. Who's going to buy it? Before anything else, think of the marketability of your idea. Marketability is "the single most important factor in commercializing an idea." Before thinking of patents, research on who will potentially purchase the product resulting from your idea and how you are going to reach this market.

2. File a provisional patent application with the US Patent and Trademark Office to give you a patent pending status for at least a year.

3. Keep it secret. You need to use "reasonable methods of secrecy" to protect your idea, including non-disclosure agreements and labelling your materials as confidential.

4. Patent protection is not equal to money. Only 3% of patent applications are turned into commercial products.

5. No trade, no trademark. Apparently, you cannot get your idea trademarked or service marked until you offer the product or service for sale. But you can reserve a trademark (trademarks are confusing for me -- it is surprising that not one of Nolo's tips on this book is hire a lawyer).

6. Search, and hope you will not find. Just because you don't see your idea in stores does not mean it hasn't been invented before. Search the patent office records at USPTO or hire a professional patent searcher to check if no one has patented your idea before.

7. Patents and trademarks are only the start. Getting patents or trademarks only give you the right to go after those who infringe on your idea. You still have to go after the infringers, and that means money.

8. Is your idea feasible? The first question of anyone thinking of licensing your idea is how much it will cost to manufacture your product. If the cost per unit is higher than competing products, you are not likely to get the deal -- even if your idea is brilliant.

9. There will be deductions. If you go for licensing, watch out for a long list of deductions before coming up with your royalty amount.

10. Have any more ideas? Successful inventors come up with lots of ideas; they don't rely on just one.

Top 5 Sources of Traffic for an Ecommerce Website

In my discussions with online sellers, the best sources of traffic for an online store are as follows:

1. Offer the best products and build a solid reputation. Everything starts with creating the best products you can possibly offer. Granted that some of the best products do not necessarily translate to huge success, small online retailers cannot afford to sell mediocre products. Customers are most likely to buy a product from a reputable online company with the LOWEST LANDED (Delivered) COST.

2. Rank well in the search engines (organic search results, not the pay per click). SEs can be a big source of traffic. Check the on-page factors and be sure to get linked from authority sites in your topic area.

3. Generate good visibility and reviews from shopping comparison web sites such as Shopping.com, Epinions.com, Bizrate.com, etc. Also use Froogle. While you may have reservations on using shopping comparison sites because of its emphasis on price, many Web users rely on shopping comparison sites to find the best-value products that are most suitable to their needs and requirements. Your business needs to be listed in these sites in order to give you targeted traffic and increased online exposure without the prohibitively expensive offline brand advertising.

4. Use pay per click advertising in the search engines to reach audiences looking for your products. You can use Google Adwords http://www.google.com/adwords or Yahoo http://searchmarketing.yahoo.com

5. Utilize the growing power of RSS. One way is to send out press releases and make sure it gets to the main news sites such as Google News and Yahoo News. Press releases allow you to (a) attract media attention; (b) get more back links to your website without sending each website an email request; and (c) get more visibility especially for your products. Press releases may not bring you immediate sales - but it has the potential to give great results esp. if media picks up on your story and talks about your offerings.

Getting traffic is one thing; and another to turn your visitors into buyers. While working on your traffic, make sure to improve your conversion. I suggest you read our article How To Sell More on the Web: 30 Tips To Increase Conversion Rates For An Ecommerce Site

Send me an email if you have other tips on how to get more visitors to your online store.

Tools to Improve Google Ranking

If you haven't yet played around with Google Webmaster Tools http://www.google.com/webmasters , I strongly urge you to sign up your websites. It has a variety of tools to help you improve and understand your Google rankings.

One of the tools is a Site Diagnostic Tool that tells you how many pages of your site are in Google and when was the last time the Googlebot visited your site. To get detailed statistics, you need to either add a code in your metatag or upload a file in your server. Once that's done, you can get information on

• HTTP errors
• Not found
• URLs not followed
• URLs restricted by robots.txt
• URLs timed out
• Unreachable URLs

The feature I love most is the Query Stats which tells you the top search queries for your site as well as the top search queries clicks. The Page Analysis tool tells you the main keywords of your site both in your site's content and in external links to your site.

And of course, you can upload your Google Sitemaps to help let Google know of all the pages of your site. In creating my sitemap file, I use the free Sitemap Builder tool http://www.sitemapbuilder.net/ - it is able to get the dynamically generated pages of our forum but not of this blog.

The Points Economy of Yahoo Answers: A User's Experience

Search engines such as Google and Yahoo are looking outside the box of search for future business strategies. In Yahoo's case, one of their brightest new products is Yahoo Answers http://answers.yahoo.com, where people can post and answer questions ranging from the deep ("How do you help sustain the planet") to the inane ("Do you like my avatar").

Yahoo Answers in my view is one of the best success stories of user-generated content. It is a very efficient model that fits very well with advertising revenue-generation. Being an online publisher, I would love to have 5-million or so people around the world creating content for me, while I earn from advertising. It's just too sweet!

Yahoo Answers employ a point system to hook users into contributing and participating in the community. They reward you 2 points for answering a question, 1 point for voting for the best answer, and 10 points for getting Best Answers. When I joined in February, you can also get 1 point for rating an answer (which they have since removed).

At first, I simply racked up points by voting and rating, and occasionally answering questions. Until I discovered I can get 10 points for getting best answers, so I changed my tactic early on and decided to craft answers that will blow the asker and voters away and choose my answer as the best. And it worked. I've been the top of the Business and Finance category for months now, and in the top 20 on the global leaderboard (read my tips on how to get Best Answers).

Alas, user generated content also has its pitfalls. Wall Street journal in an August 2006 article
Portals: Success, greed in the new economy of web point payouts gave an excellent analysis of what can go wrong with the point system payouts. Apparently, people will do everything to get points -- from cheating, creating multiple accounts (one asks, the other answers - and the other account is chosen as the best answer), to writing non-answers like "I don't know" or "Thanks for the 2 points." These non-answers do not contribute anything to the community.

Take this case for example:

On a question about government grants, a level-7 user (the highest level) copied my answer word for word (not just the gist of my response, but my ENTIRE response down to the last punctuation mark) 3 days after I posted my answer -- then won in the voting! They say copying is the best form of flattery, but I say it's a slap in the face especially if the cheater wins. I complained (oh boy, how I complained!) and the person was suspended. Funny thing, a week or so after the cheat was suspended, he had the gall to ask in the YA forum why he was suspended! Talk about nerves.

Or let us look at one of the fastest rising "stars" of YA - Pullay - who is #1 in the Indian leaderboard and #13 in the global leaderboard. He just joined in July and has racked up a huge amount of points in a short period of time. His tactic? Putting in non-answers such as "I haven't the foggiest" -- which is a non answer and a violation of the community guidelines (for point gaming and for posting non-answers). It's not hard to get thousands and thousands of points going from one question to another posting "I haven't the foggiest" -- you don't even have to read the question because you don't care about the question as long as you get your 2 points. Here are some of those non-answers (some may have been removed already, hopefully) where Pullay even got the Best Answers (horrors!)

• What tax rate do you pay on the purchase of a used car in Quebec? http://au.answers.yahoo.com/question/index?qid=20060925055847AAMpCdN (already deleted)
• Applying for western universities? http://uk.answers.yahoo.com/question/index?qid=20060919230358AAub7Lu (already deleted)
• Automated paint processes to paint metal and plastic frames? http://answers.yahoo.com/question/index?qid=20060919161444AAtLUlq

And there are MORE similar non answers from this #1 points leader.

Another fast rising leader (currently #12 in the global leaderboard with 72,000+ points) is Kibagami Jubei. He also posts a lot of non-earth shattering responses, with a lot of point gaming responses such as "No clue" (which is a violation of community guidelines for point gaming and non-answers). Here are some examples:

• What is everybody's obsession with Jerry Rice tonight? http://answers.yahoo.com/question/index?qid=20060820213931AAADgEB
• How do you get cancer? http://sg.answers.yahoo.com/question/index?qid=20060831155521AABkEwt

If Yahoo Answers want to be taken seriously and improve their users' experience, they need to clean up their system fast. Imagine a user coming in and asking "How do you get cancer?" and then receiving a response "No clue, ma'm." Why bother answering if you have know nothing about the question? And yes, these are the people in the leaderboard - just goes to show how push to gain points is stronger than providing quality responses.

The Yahoo Answers team is aware of the pitfalls of their point system. I just hope that they find the best strategy for addressing it -- soon. Or they'll be the biggest case study in the failure of using community to help index search.