BUSINESS MANTRA by takitizy9

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									How to start a business
T          A          B          L         E                 O             F   C   O   N   T    E         N      T       S


                                                                                           3 What’s the
                                                                                             Big Idea?
                                                                                               Getting an idea for
                                                                                               your business: It’s not
                                                                                               as hard as you think.

                                                                                           5 Get Plan
                                                                                               How to create a
                                                                                               winning business plan


                                                                                           7 Where’s the
                                                                                               Finding financing to
                                                                                               get your business up
                                                                                               and running


                                                                                       11      Spread
                                                                                               the Word
                                                                                               How to promote your

                                                                                       14      Net
                                                                                               Setting up your
                                                                                               company Web site
2       E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E
What’s the Big Idea?
Getting an idea for your business: It’s not as hard as you think.
MANY PEOPLE think it’s “oh so mysterious” to start a business. As             Next, on the other side      THINKING IT
the editorial director of Entrepreneur magazine, I often hear “I can’t     of the paper ask yourself
do it” or “I have no idea what to do.” Nonsense!                           the same question about         THROUGH
   Most people are overwhelmed by the belief they have to start            your business life. Also        Before you start a business, you have to
from scratch. They think “What can I do that no one has ever done          examine what you like
before?” In other words, they think they have to reinvent the wheel.       and dislike about your          look at what the potential is, what your
   But unless you are a technological genius, trying to reinvent the       work life as well as what       product or service is, and if there is a lot
wheel is a big waste of time. If you are another Bill Gates or Steve       traits people like and dis-
Jobs, then this is the way to go. But for most people starting a           like about you. Finally,        of opportunity to make a good deal of
business, they simply need to answer the question: “How can I do           ask yourself why you’re         money over the long run. Or is it a “hit-
something better?” or “How can I do it differently from the other          seeking to start a
guy doing it over there?”                                                  business in the first            and-run” product, where you’re going to
                                                                           place. Then, when you           get in, make a lot of money and then
G E T TH E J U IC E S F LOWI N G                                           are done, look for a pat-
How do you start the idea process? First, take out a sheet of paper,       tern to emerge (i.e., is        get out? That’s not necessarily a bad
and list five to seven things you like to do or that you are really         there a need for a              thing; fads have made some entrepre-
                                good at, such as I am really good with     business doing one of the
                                people, I love kids, I love to read, I     things you like or are          neurs incredibly successful. But remem-
   Bright Idea                  love computers and numbers, I’m good       good at?).                      ber, once you’re in business, one of the
                                at coming up with marketing concepts.
   Experts agree:                                                                                          hardest things to do is to know when
                                Just write down whatever comes to          TH E Y
   The best place to            mind; it doesn’t have to make sense.       D E LIVE R E D
                                                                                                           it’s time to get out, to let go. And if you
   look for ideas is               Now list things that you don’t think    Let me give you an ex-
   to start with                you are good at or you don’t like to do.   ample. I live and work        guess wrong, if you try to make a classic
                                Maybe you are really good at market-       in Irvine, California.
   what you know.                                                                                        out of a fad, you are going to start losing
                                ing concepts, but you don’t like to do     Most of the fast-food
                                public speaking or you don’t want to       restaurants are located       all the money you have earned. And no
                                travel. When you are finished with          where the neighborhoods one wants to do that.
both lists, ask yourself: “If there were three to five products or serv-    are. So in the office areas,
ices that would make my personal life better, what would they be?”         there are not many easily
This is your personal life as a man, woman, father, husband,               accessible places to go during a lunch hour. Several years ago, two
mother, wife, whatever your situation may be. Determine what               young men in Irvine found this lunch situation very frustrating.
products or services would make your life easier or happier, make          There weren’t many affordable choices. Sure, there were some food
you more productive or efficient, or simply give you more time.             courts located in strip centers, but the parking lots were really

                                                                                     E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E   3
                                              small and crowded, and
IS IT REALLY YOU?                             the wait was horrendous.        Bright Idea
Every year in Entrepreneur, we profile            One day, as they were       Your hobbies may lead you to business ideas. If ten-
                                              lamenting their lunch
the hottest businesses for the coming                                         nis is your game, perhaps you can think of a product
                                              problem, one of them
year. We do a lot of research and a lot of said, “Wouldn’t it be              that makes serving a snap. If that sounds too techni-
                                              great if we could get           cal, look around the courts and see if there’s a serv-
homework, and what we say is abso-
                                              some good food deliv-           ice players would pay for.
lutely true. But that doesn’t mean that ered?” The proverbial
                                              lightbulb went on! Then
it is true for everyone. After all, you may
                                              they did what too many
not be good at any of these businesses. people don’t do: They               ends, these places were occupied by dozens of little 10-year-old
                                              did something about           girls painting. Children have birthday parties at these stores; the
Or you could live in an area where the
                                              their idea. Coincidental-     studios attract Girl Scout troops.
business is already saturated or is not ly, they purchased one of              My point: You can take any idea and customize it to your com-
                                              our Entrepreneur busi-        munity. Add your own creativity to any concept. In fact, customiz-
viable. Or they simply may not suit you
                                              ness start-up guides and      ing a concept is not a choice; it’s something you have to do if you
and you’d end up hating your business. started a restaurant de-             want your business to be successful. You can’t just take an idea,
                                              livery business.              plop it down, and say “OK, this is it, and it’s gonna fit.” Outside of
Just because you own a business doesn’t
                                                  Today, their business     McDonald’s or some other major franchise concepts, very few
mean you are going to like doing it, and boasts millions in sales.          businesses will work with a one-size-fits-all approach.
                                              It’s neither a complicated       One of the best ways to determine if your idea will work in your
if you don’t like it, chances are you will
                                              business nor an original      community is to talk to people who know. If it’s a business idea,
fail at that venture.                         one. Their competition                                      talk to co-workers and colleagues. Run
                                              has gotten stiffer, and yet                                 ideas by your family or neighbors.
    Owning a business you hate is the                                       SMART TIP
                                              they are still doing phe-                                   Don’t be afraid your friends will steal
same thing as having a job you hate. It’s nomenally well. And it            Don’t overlook publica- your idea; it’s just not likely. All you
                                              all began because they                                      have to do is ask!
still hard to get out of bed in the morn-                                   tions in your search for
                                              listened to their frustra-
ing, and you are just not going to do it tions and decided to do            ideas. Books, newspapers     J U ST D O IT!
                                              something about them.                                        Ideally, by now I have somewhat de-
as well. What all this means is that you                                    and magazines all contain
                                              Recently, I read that one                                    mystified the process of determining
need to come up with your ideas first of the biggest complaints             a wealth of ideas. Your what business is right for you. Under-
                                              by American workers                                          stand that business start-up is not
and then assess your traits to see which                                    reading list should in-
                                              was the shrinking lunch                                      rocket science. No, I’m not saying it’s
ideas best suit you.                          hour. Some only get 30        clude—but not be limited easy to begin a business. But it is not as
                                              minutes, making it                                           complicated or as scary as many
                                                                            to—the latest business
nearly impossible to get out, get lunch and get back in that time. So                                      people think, either. It is a step-
while these young entrepreneurs initially thought they were re-             periodicals.                   by-step, common-sense procedure. So
sponding to a personal need in our area, they actually struck a uni-                                       take it a step at a time. First step:
versal chord.                                                               Figure out what you want to do. Once you have the idea, talk to
   That’s one way to get ideas, listening to your own (or your co-          people to find out what they think. Ask “Would you buy and/or
workers’, family’s or neighbors’) frustrations. If your brain is always     use this product or service, and how much would you pay?”
set in idea mode, then ideas may come to you from just looking                 Understand that many around you will not encourage you to be-
around or reading. For instance, if you read the article about the          come an entrepreneur. Some will even discourage you. Some will
shrinking lunch hour, and if you were thinking entrepreneurially,           tell you they have your best interests at heart; they just want you to
you would say “Wow, maybe there is an opportunity there for me to           see the reality of the situation. Some will envy your courage; others
do something.”                                                              will resent you for having the guts to actually do something. You
                                                                            can’t allow these naysayers to dissuade you, to stop your journey
MAD E TO O R D E R                                                          before it even begins.
Getting an idea can be as simple as keeping your eyes peeled for the           One of the most common warnings you will hear is about the
latest “hot” business; they crop up all the time. One recent trend in-      risk. Everyone will tell you it’s a risk to start your own business.
volved those paint-your-own ceramic studios. They started in the            And sure, starting a buisness is risky, but what in life isn’t. Plus,
bigger cities, like New York, San Francisco and Seattle. And in the         there’s a difference between foolish risks and calculated ones. If you
urban areas, they became                                                    carefully consider what you’re doing, get help when you need it,
very popular with young,                                                    and never stop asking questions, you can mitigate your risk.
single people. Some              Bright Idea                                   You cannot allow the specter of risk to stop you from going for-
entrepreneurs even paired        Is there a household chore                 ward. Ask yourself “What am I really risking?” and assess the risk.
the concept with other           that drives you up the wall?               What are you giving up? What will you lose if things don’t work
entertainment businesses,                                                   out? Don’t risk what you can’t afford. Don’t risk your home, your
like wine bars.                  (One shudders to think of                  family or your health. Ask yourself “If this doesn’t work, will I be
   When these stores hit         life before vacuum cleaners.)              worse off than I am now?” If all you have to lose is some time, en-
Irvine, a suburban family        Common sources of frus-                    ergy and money, then the risk is probably worth it.
community, entre-                tration or irritation are great               Determining what you want to do is only the first step. You’ve
preneurs aimed them at                                                      still got a lot of homework to do. But do something. Don’t sit back
kids instead of the sin-         idea generators.                           year after year and say “This is the year I’m going to start my
gles scene. On the week-                                                    business.” Make this the year you really start it!      —Rieva Lesonsky

4 E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E
Get With the Plan
How to create a winning business plan
S OME PEOPLE think you don’t need a business plan unless you’re            you’ll use to meet them, potential problems that may confront
trying to borrow money. But a business plan is much more than              your new business and ways to solve them, the organizational
a pitch for financing; it’s a guide to help you define and meet            structure of your business (including titles and responsibilities),
your business goals.                                                       and, finally, the amount of capital required to finance your ven-
   Just as you wouldn’t start off on a cross-country drive without a ture and keep it going until it breaks even. There are three parts
road map, you shouldn’t embark on your new venture without a               to a business plan:
                               business plan to guide you. A business      ❶ The first is the business concept, in which you discuss the
SMART TIP                      plan won’t automatically make you a         industry, your business structure, your particular product or serv-
Your local Small Busi-         success, but it will help you avoid         ice, and how you plan to make your business a success.
                               some common causes of business fail-        ❷ The second is the marketplace section, in which you de-
ness Development Cen- ure, such as undercapitalization or                  scribe and analyze potential customers: who and where they are,
ter can help you with de- lack of an adequate market.                      what makes them buy and so on. Here, you also describe any
                                  As you research and
veloping an outstanding, prepare your business
                                                           FINDING FUNDING
grade-A business plan. plan, you’ll find the
                               weak spots in your busi-      One of the primary purposes of a business plan is to help you obtain financing for
Call your area’s SBA of- ness idea that you’ll be
                                                             your business. When writing your plan, however, it’s important to remember who
fice to find the location able to repair. You will
                               also discover different       those financing sources are likely to be. Bankers, investors, venture capitalists and
nearest you.                   areas with potential you
                                                             investment advisors are sophisticated in business and financial matters. How can
                               may not have thought
about before—and ways to profit from them. Only              you ensure your plan makes the right impression? Three tips are key:
by putting together a thorough business plan can
                                                             1. Avoid hype. While many entrepreneurs tend to be gamblers who rely on their
you decide whether your great idea is really worth
your time and investment in the long run.                    gut feelings to make decisions, financial types are more likely to go “by the
   What is a business plan, and, more important,
                                                             book.” If your business plan praises your idea with superlatives like “one of a
how do you put one together? Simply stated, a busi-
ness plan conveys your business goals, the strategies kind,”“unique” or “unprecedented,” readers from the financial world are likely

                                                                                    E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E   5
competition you face and how you                                                        tions of your primary managers, including an
will position yourself to beat it.                                                      overview of their backgrounds and functions in
❸ Finally, the financial section con-                                                   your organization. You should also provide perti-
tains your income and cash-flow state-                                                  nent coverage of pivotal positions, such as the vice
ment, balance sheet and other finan-                                                    president of R&D in a high-tech company, in addi-
cial ratios, such as break-even                                                         tion to more mundane functions, including CFO,
analyses. This part may require help                                                    controller and so on.
from your accountant and a good                                                            Plan readers will want to see evidence of a
spreadsheet software program.                                                           well-rounded management team that can deal with
   Breaking these three major sections                                                  whatever comes up. You may want to include an or-
down further, a business plan consists                                                  ganizational chart that graphically depicts individ-
of six major components:                                                                ual responsibilities and who reports to whom.
❶ Executive summary
❷ Management                                                                            PRODUCT OR SERVICE
❸ Product or service                                                                    This is the place to explain all the key elements of
❹ Marketing                                                                             the product or service, including its design, under-
➎ Operations                                                                            lying technology and, especially, competitive advan-
❻ Financial data                                                                        tages in the marketplace.

EXECUTIVE SUMMARY                                                                       MARKETING
The executive summary is a one- or                                                      Without an effective marketing plan, it’s highly un-
two-page brief describing what the company’s up to, and is usu-          likely that you will sell anything, so
ally the first thing the reader will see. It may contain details that    this section of your plan is the place to
aren’t found elsewhere in the plan, such as a vision statement. But      tell readers about your plans for posi-
it will also encapsulate other sections of the plan dealing with the     tioning, pricing, placing and promot-       Bright Idea
market, features of the product or service, competition, manage-         ing your product or service to poten-       Still need
ment team and financial data. Many plans written for money-              tial customers.                             another reason
raising purposes also include a statement of how much money
the new business is seeking to raise and how those funds will be         OPERATIONS                                     to write a
used in the future.                                                      Wal-Mart didn’t become the world’s             business plan?
                                                                         largest retailer because it snagged the        Consider this: If
MANAGEMENT                                                               best locations or hired the best ad            you decide to
The people, especially the key managers in your company, are of          agencies. It beat out other discount re-
great interest to potential investors, partners and employees.           tailers because of its extremely effi-         sell your
   This section of your business plan will consist of brief descrip-     cient systems for stocking and distrib-        business in the
                                                                                         uting the most profitable      future, or if you
to be turned off. Wild, unsubstantiated promises or unfounded conclusions are products in the most                      become disabled
                                                                                         profitable manner.
indicators to financial sources you are inexperienced, naive and reckless.
                                                                                            It may be the case that     or die and some-
2. Polish the executive summary. Potential investors receive so many business your business is based                    one else takes
                                                                                         largely on some aspect         over, a written
plans, they cannot afford to spend more than a few minutes evaluating each one.
                                                                                         of its operations—             business plan
If at first glance your proposal looks dull, poorly written or confusing, investors manufacturing, logistics,
                                                                                         customer service, etc.—        will help make
will toss it aside without a second thought. In other words, if your executive sum-                                     the transition a
                                                                                         that plan readers will
mary doesn’t grab them right away, you won’t get a second chance.                        want to know about.            smooth one.
3. Make sure your plan is complete. Even if your executive summary sparkles, you
                                                                                        FINANCIAL DATA
need to make sure the rest of your plan is just as good and that all the necessary      In the financial section you’ll provide your income
                                                                                        statements, balance sheets, cash-flow statement and
information is included. Some entrepreneurs are in such a hurry to get financing,
                                                                                        other information on the money side of things. It’s
they submit a condensed or preliminary business plan, promising to provide more         important, of course, that the final result be some
                                                                                        kind of profit. But internal consistency is also im-
information if the recipient is interested. This approach usually backfires for two
                                                                                        perative. If you don’t stick to your assumptions
reasons: First, if you don’t provide information upfront, investors will assume the     about profit margins, selling prices, materials costs
                                                                                        or other key measures throughout this section, it
information doesn’t exist yet and that you are stalling for time. Second, even if
                                                                                        will show up immediately.
investors are interested in your preliminary plan, their interest may cool in the          For some readers, such as bankers looking for
                                                                                        balance sheet assets to collateralize a loan, the finan-
time it takes you to compile the rest of the information.
                                                                                        cial section may be the most important part of the
    When you’re presenting a business plan, always keep in mind that you are            plan. For others, such as employees looking for a
                                                                                        great place to work, it’s the least interesting. But it’s
starting from a position of weakness. And if potential investors find any flaws in
                                                                                        actually of prime importance for everybody, because
your plan, they will gain an even greater bargaining advantage. A complete and          this section is where you’ll distinguish a business
                                                                                        from a mere hobby. If the numbers add up to a rea-
well-written plan gives you greater negotiating power and boosts your chances
                                                                                        sonable return on your investment, congratulations.
of getting financing on your own terms.                                                 Your business has a reasonable chance of succeeding.

6   E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E
                                                                                                          LEARNING THE
                                                                                                          LOAN LINGO
                                                                                                          Hallelujah and yippee! You can almost
                                                                                                          hear the choirs of angels singing as your
                                                                                                          banker smiles and hands you the loan
                                                                                                          document. You got the loan!
                                                                                                             Not so fast. Before you sign that piece
                                                                                                          of paper, take a good look at what you’re
                                                                                                          getting into. Many entrepreneurs are so
                                                                                                          excited about having their loans ap-
                                                                                                          proved, they fail to read the fine print on
                                                                                                          their loan agreements. That can lead to
                                                                                                          trouble later on.
                                                                                                             It’s a good idea to get the loan docu-
                                                                                                          ments ahead of time so you have a
                                                                                                          chance to review them for a couple of
                                                                                                          days before it’s time to sign, according to
                                                                                                          the American Banker’s Association.
                                                                                                          Bankers won’t have a problem sending
                                                                                                          advance copies of the documents but
                                                                                                          will generally do so only if you specifi-
                                                                                                          cally ask for them.
                                                                                                             Most bankers will be happy to help
                                                                                                          you understand the fine print, but it’s
                                                                                                          also a good idea to have your accountant
                                                                                                          and lawyer review the documents, too.
                                                                                                             Although it varies slightly from bank

Where’s the Money?                                                                                        to bank, a small-business loan package
                                                                                                          usually consists of several documents,
Finding financing to get your business up and running                                                     typically including a loan agreement, a
                                                                                                          promissory note, and some form of
ONCE YOU’VE decided on the type of business you want to start,             cide to sell some assets
the next step is figuring out where the money will come from to             for cash or to use them        guarantee and surety agreement.
fund it. Where to begin?                                                   as collateral for a loan.
                                                                                                          •Loan agreement: This specifies, in
   Begin by taking a look in the mirror. Self-financing is the                 If you have invest-
number-one form of financing used by most small-business owners.            ments, you may be able         essence, the promises you are making to
In addition, when your search for funding takes you to other fi-            to use them as a start-up
nancing sources such as bankers, they will want to know exactly            resource. Also take a look at any personal lines of credit you have.
how much of your own money you are putting into the venture.               Some businesses have successfully been started on their founders’
After all, if you don’t have enough faith in your business to risk         credit cards, although this is one of the most expensive ways to fi-
your own money, why should other people risk theirs?                       nance yourself.
                                                 Begin by doing a thor-       If you own a home, consider getting a home equity loan on the
SMART TIP                                     ough inventory of your       part of the mortgage that you have already paid off. The bank will
                                              assets. You are likely to    either provide a lump-sum loan payment or extend a line of credit
For the SBA’s list of small-business-friendly
                                              uncover resources you        based on the equity in your home.
banks by state, visit www.entrepreneur. didn’t even know you                  Consider borrowing against cash-value life insurance. You can
                                              had. Assets could include    use the value built up in a cash-value life insurance policy as a
com/bestbanks to find top lenders and
                                              savings accounts, equity     ready source of cash.
other financial tools and services, or get in real estate, retirement         If you have a 401(k) retirement plan through your employer and
                                              accounts, vehicles, recre-   are starting a part-time business while you keep your full-time job,
it straight from the SBA at www.
                                              ational equipment and        consider borrowing against the plan. Another option is to use the           collections. You may de-     funds in your IRA.

                                                                                    E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E   7
the bank and asks you to affirm that you         ALL I N TH E
are authorized to bind your business to
                                                 FAM I LY                    Bright Idea
                                              Your own resources may
the terms of the loan. Most banks re- not be enough to give
                                                                             Looking for financing? Consider an unexpected
                                              you the capital you need.      source—your vendors. Vendors may be willing to
quire you to verify that all the informa-
                                              “Most businesses are           give you the capital you need, either through a
tion on your loan application is still true started with money from          delayed financing agreement or a leasing program.
                                              four or five different
before they disburse the loan.                                               Vendors have a vested interest in your success and
                                              sources,” says Mike Mc-
•Promissory note: This details the prin- Keever, author of How to            belief in your stability, or they wouldn’t be doing
cipal and interest owed, and when pay-
                                              Write a Business Plan          business with you. Before entering any agreement,
                                              (Nolo Press). After self-      however, compare long-term leasing costs with
ments are due. It outlines the events financing, the second
                                                                             short-term loan costs; leasing could be more costly.
that would allow the bank to declare
                                              most popular source for
                                              business start-up money
your loan in default. Knowing these is composed of friends,
events ahead of time can help you pro-
                                              relatives and business       A LOAN BY ANY OTH E R NAM E
                                              associates.                  The third most popular form of financing is getting a loan from a
tect your credit record. Look for “cure”         While squeezing           bank or commercial lender. You don’t need to pinpoint the exact
language in the default section. A cure
                                              money out of family and      type of loan you need before you approach a lender; he or she will
                                              friends may seem an easy     help you decide what type of financing is best for your needs. How-
provision allows you a certain amount alternative to dealing               ever, you should have some general idea of the different types of
of time (usually 10 days) to remedy the
                                              with uptight bankers, it     loans available so you’ll understand what your lender is offering.
                                              can actually be a much       Here are some of the most common types of loans:
default after you’ve been notified by more delicate situation.             ■ Line-of-credit loans: A line-of-credit loan is a short-term loan
the bank. If such a provision isn’t in-
                                              Your family members or       that extends the cash available in your business’s checking account
                                              friends may think lend-      to the upper limit of the loan contract. Line-of-credit loans usually
cluded, ask if it can be added to prevent ing you money gives              carry the lowest interest rate a bank offers since they are seen as
you from defaulting accidentally (in
                                              them license to meddle.      fairly low-risk. Bankers may also call this a revolving line of credit.
                                              And if the business fails,   Most line-of-credit loans are written for periods of one year and
case a payment is lost in the mail, for the issue of paying the            may be renewed almost automatically for an annual fee.
example). Also make sure you under-
                                              money back can be a          ■ Installment loans: These loans are paid back with equal
                                              problem that puts the        monthly payments covering both principal and interest.
stand what the bank can and can’t do whole relationship in                 ■ Balloon loans: Though these loans are usually written under an-
after declaring default.
                                              jeopardy.                    other name, you can identify them by the fact that the full amount
                                                 Fortunately, there are    is received when the contract is assigned, but only the interest is
•Guarantee and surety agreement: ways to work out the de-                  paid off during the life of the loan, with a “balloon” payment of the
Because start-ups generally have insuffi-
                                              tails and make the busi-     principal due on the final day.
                                              ness relationship advan-     ■ Secured and unsecured loans: Loans can come in one of two
cient operating history or assets on tageous for all parties               forms: secured or unsecured. When your lender knows you well
which to base a loan, banks usually
                                              involved.                    and is convinced that your business is sound and that the loan will
                                                 Once you have deter-      be repaid on time, he or she may be willing to write an unsecured
require the loan to be guaranteed with mined whom you would                loan. Such a loan, in any of the aforementioned forms, has no col-
your personal assets. The bank may ask
                                              like to borrow the           lateral pledged as a secondary payment source should you default
                                              money from, you need to                                     on the loan. As a new business, you are
you to secure the loan with the equity in make sure the person is           SMART TIP                     unlikely to qualify for an unsecured
your home, for example.
                                              well-informed, which                                        loan; it generally requires a track
                                                                            You don’t necessarily need
                                              starts with showing them                                    record of profitability and success.
                                              your business plan. Ex-       a lawyer to write your loan      A secured loan, on the other hand,
plain the plan in detail and do the presentation just as you would                                        requires some kind of collateral but
                                                                            agreement. You can find
in front of a banker or other investor. Your goal is to get the other                                     generally has a lower interest rate than
person on your side and make him or her as excited as you are               examples of loan agree- an unsecured loan.
about your business.
                                                                           ments in many business
   Once the person says yes, it’s time to put the loan in motion.                                         TO TH E S O U R C E
First, you must state exactly how much money you need, what                books; just write up the       When seeking debt financing, where
you’ll use it for and how you’ll pay it back. Next, draw up the legal                                     do you begin? Carefully choosing the
                                                                           same information, com-
papers—an agreement stating that the person will indeed put                                               lenders you target can increase your
money into the business.                                                   plete it and sign it. If you   odds of success. Here is a look at what
   Your loan agreement needs to specify whether the loan is secured                                       you should know about banks and
                                                                           do decide to get legal ad-
(that is, the lender holds title to part of your property) or unse-                                       commercial loan sources.
cured, what the payments will be, when they’re due and what the            vice, you can save money          Given the challenges of working
interest on the loan is. If the money is in the form of an investment,                                    with a big bank, many entrepreneurs
                                                                           by drawing up the loan
you have to establish whether the business is a partnership or cor-                                       are taking a different tack. Instead of
poration and exactly what role, if any, the investor will play in the      agreement yourself and         wooing big institutions, they are
proposed business. Most important, you need to outline the legal                                          courting community banks, where
                                                                           then giving it to an attor-
responsibilities of both parties and when and how the money                                               “relationship banking” is the rule, not
should be paid back.”                                                      ney to redraft.                the exception.

8   E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E
SMART TIP                         Even given today’s banking climate,
                              it’s easier to get a start-up loan from
                                                                         WHAT AR E YO U
                                                                         LO O K I N G AT?
                                                                                                         IN TRAINING
There are more resources
                              community banks, according to the In-      What are lenders really        If you have been laid off or lost your job,
available at the SBA than dependent Community Bankers Asso-              looking for when they
                                                                                                        another source of start-up capital may
                              ciation of America. They can be a little   pore over your loan ap-
just loans. To get the
                              more flexible, don’t have a bureaucracy     plication? Lenders (par-       be available to you. Some states have
whole scoop, locate the to deal with, and are more apt to make           ticularly bankers) typi-
                                                                                                        instituted self-employment programs
                              character loans.                           cally base their decisions
SBA office nearest you at
                                  Whether the bank you target is big     on four criteria, often        as part of their unemployment insur- or small, perhaps what matters most is              called the “Four C’s of
                                                                                                        ance systems.
                              developing relationships. If you’ve        Credit”:
states.html. While you’re
                              done your personal banking at the          ❶ Credit: The lender               People who are receiving unemploy-
there, you can also ex- same place for 20 years and know                 will examine your per-
                                                                                                        ment benefits and who meet certain
                              people who have authority there, it        sonal credit history to
plore what the Small
                              makes sense to target that bank as a po-   see how well you’ve            requirements are recruited into entre-
Business Development tential lender. If you don’t have that              managed your past obli-
                                                                                                        preneurial training programs that show
                              kind of relationship, start getting to     gations. If you have
Centers have to offer at
                              know bankers now. Attend chamber of        some black marks on            them how to start businesses.This gives             commerce meetings, go to networking        your record, the lender
                                                                                                        them an opportunity to use their unem-
                              events and take part in community          will want to hear details.
functions that local bankers or other movers and shakers partici-        ❷ Character: Character         ployment funds for start-up,while boost-
pate in. After all, a banker who takes a personal interest in you is     is hard to measure, but
                                                                                                        ing their chances of success.
more likely to look favorably on your loan application.                  lenders will use your
   Boost your chances of getting a loan by finding a lender whose         credit history to assess           Contact the department in your state
experience matches your needs. Talk to friends, lawyers or account-      this as well. They take
                                                                                                        that handles unemployment benefits to
ants, and other entrepreneurs in the same industry for leads on          lawsuits, tax liens and
banks that have helped people in your business. Pound the pave-          bankruptcies pretty seri-      see if such a program is available.
ment and talk to banks about the type and size of loans they spe-        ously. They’ll also do a
cialize in. Put in the work to find the right lender, and you’ll find it   background check and evaluate your previous work experience.
pays off.                                                                ❸ Capacity: What happens if your business slumps? Do you have
   Banks aren’t your only option when seeking a loan. The advan-         the capacity to convert other assets to cash, either by selling them
tage of approaching commercial finance companies is that, like            or borrowing against them? Your secondary repayment sources may
community banks, they may be more willing to look beyond num-            include real estate, stocks and other savings. The lender will look at
bers and assets.                                                         your business balance sheet and your personal financial statement
   Commercial lenders require a business plan, personal financial         to determine your capacity to repay the loan.
statements and cash-flow projections, and will usually expect you         ❹ Collateral: As a start-up, you’ll probably be seeking a secured
to come up with 25 percent of the needed capital yourself. For           loan. This means you must put up collateral—either personal as-
more information about commercial finance companies, visit the            sets, such as certificates of deposit or stocks, or business assets like
Commercial Finance Association’s Web site at                real estate, inventory or equipment.

                                                                                                        U N C LE SAM WANTS YO U
                                                                                                        Where can you go when private fi-
                                                                                                        nancing sources turn you down? For
                                                                                                        many start-up entrepreneurs, the answer
                                                                                                        is the SBA. The federal government has
                                                                                                        a vested interest in encouraging the
                                                                                                        growth of small business. As a result,
                                                                                                        some SBA loans have less stringent re-
                                                                                                        quirements for owner’s equity and col-
                                                                                                        lateral than do commercial loans, mak-
                                                                                                        ing the SBA an excellent financing
                                                                                                        source for start-ups. In addition, many
                                                                                                        SBA loans are for smaller sums than
                                                                                                        most banks are willing to lend.
                                                                                                           Of course, that doesn’t mean the SBA
                                                                                                        is giving money away. In fact, the SBA
                                                                                                        does not actually make direct loans; in-
                                                                                                        stead, it provides loan guarantees to
                                                                                                        entrepreneurs, promising the bank that
                                                                                                        it will pay back a certain percentage of
                                                                                                        your loan if you are unable to.
                                                                                                           The SBA can help you prepare your
                                                                                                        loan package, which you then submit to
                                                                                                        banks. If the bank approves you, it sub-
                                                                                                        mits the package to the SBA. Applica-
                                                                                                        tions submitted by regular lenders are
                                                                                                        reviewed by the SBA in an average of

                                                                                   E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E   9
                                            two weeks, certified
INFORMATION,                                lender applications are       Bright Idea
PLEASE                                      reviewed in three days,
                                                                          While not many grants are available to start-ups,
                                            and preferred lenders
The U.S. Business Advisor (                                  community development grants are worth a look. If
                                            move even faster.
gov) is an online clearinghouse for small      The most basic eli-        you believe your future business could contribute to
                                            gibility requirement for      community development or empower a group of
businesses. Instead of contacting dozens
                                            SBA loans is the ability
of agencies, you can use this one-stop to repay the loan from             economically disadvantaged people, visit your state
                                            cash flow, but the SBA         economic development office to find out what types
shop to find information on business
                                            also looks at personal        of grants may be available.
development, taxes and laws, and a vari- credit history, industry
                                            experience or other evi-
ety of workplace concerns,as well as gov-
                                            dence of management         their own documentation and procedures to attach an SBA guaran-
ernment procurement and loans.              ability, collateral and     tee to an approved loan without having to wait for SBA approval.
                                            owner’s equity contribu-    The SBA guarantees up to 50 percent of SBAExpress loans.
tions. If you own 20 percent or more equity in the business, the
SBA asks that you personally guarantee the loan. The SBA offers a       P R E Q UALI F ICATIO N P R O G R AM S
variety of loan programs for businesses at various stages of develop-   The SBA’s Minority and Women’s Prequalification Loan Programs
ment. Here’s a closer look:                                             help women and minority entrepreneurs prequalify for loans.
                                                                        Women can apply for loans up to $250,000; under the minority
7(A) LOAN G UAR ANT Y P R O G R AM                                      program, you can get up to $250,000 or more on a case-by-case
The biggest and most popular of the SBA’s loan programs is the 7(a)     basis. If the SBA approves your application, it issues a prequalifica-
Loan Guaranty Program. The SBA guarantees up to $1 million or           tion letter you submit to the bank with your loan package. With the
75 percent of the total loan amount,                                                                  SBA’s guarantee attached, the bank is
whichever is less. For loans less than                                                                more likely to approve your application.
$150,000, the guarantee usually tops
out at 85 percent of the total loan.                                                                 M IC R O LOAN P R O G R AM
SBA policy prohibits lenders from                                                                    The Microloan Program helps entre-
charging many of the usual fees associ-                                                              preneurs get small loans, ranging from
ated with commercial loans. Still, you                                                               as little as $100 to $35,000. Maturity
can expect to pay a one-time guarantee                                                               terms and interest rates for Microloans
fee and a yearly servicing fee.                                                                      vary; the loans typically take less than
                                                                                                     a week to process.
The 7(a) program also offers several                                                                 S B IC S AN D S S B IC S
specialized loans. One of them, the                                                                  Another source of financing: Small
LowDoc Program, promises quick pro-                                                                  Business Investment Companies
cessing for amounts less than                                                                        (SBICs). SBICs are privately owned
$150,000. “LowDoc” stands for “low                                                                   venture-capital firms, licensed by the
documentation,” and approval relies                                                                  SBA, that invest their own capital,
heavily on your personal credit rating                                                               along with money they’ve borrowed at
and your business’s cash flow.                                                                        favorable rates from the government. If
   Applicants seeking less than                                                                      you don’t mind giving up some equity,
$50,000 are required to complete only                                                                it pays to investigate SBICs.
a one-page SBA form. Those seeking up to $150,000 submit the               Related to SBICs are Specialized Small Business Investment Com-
same short form, plus supply tax returns for the previous three         panies (SSBICs), which serve socially and economically dis-
years and financial statements from all guarantors and co-owners.        advantaged entrepreneurs by investing in companies in economi-
   The reduced paperwork makes the process easier for banks, too;       cally depressed areas and those owned by women and minorities.
consequently, banks are more willing to make the small loans. The
SBA aims for a two-day turnaround on these loan requests.               8(A) P R O G R AM
                                                                        The SBA’s 8(a) program is a small-business set-aside program that
S BAE X P R E S S                                                       gives certified MBEs (Minority Business Enterprises) access to gov-
The SBAExpress also offers loans of up to $350,000. However, you        ernment contracts, as well as management and technical assistance.
get an answer even more quickly because approved lenders can use        The 8(a) program is envisioned as a starter program for minority
                                                                        businesses, which must leave the program after nine years. Entre-
                                                                        preneurs who participate in the 8(a) program are eligible for the
  Bright Idea                                                           7(a) Loan Guaranty and Minority Prequalification programs.
  Check out the SBA’s Women’s Business Center, a Web
                                                                        MAK I N G TH E M O ST O F TH E S BA
  site for women who want to start or expand their                      The SBA is more than a source of financing. It can help you with
  businesses. There’s free online counseling and a world                many aspects of business start-up. For more information, visit the
  of information about business practices, management                   SBA’s Web site at, call the SBA’s Answer Desk
                                                                        at (800) U-ASK-SBA or contact your local SBA district office. Each
  techniques, technology training, market research and
                                                                        state has at least one district office, which can mail you a start-up
  SBA services. Visit the site at                    booklet and a list of lenders and inform you about specialized loans
                                                                        tailored to your industry.

10   E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E
                                                                                                           MEET THE PRESS
                                                                                                           Think of a press release as your ticket
                                                                                                           to publicity—one that can get your
                                                                                                           company coverage in all kinds of publi-
                                                                                                           cations or on TV and radio stations.
                                                                                                           Editors and reporters get hundreds of
                                                                                                           press releases a day. How to make
                                                                                                           yours stand out?
                                                                                                             First, be sure you have a good reason
                                                                                                           for sending a press release. A new prod-
                                                                                                           uct, a grand opening, a record-setting
                                                                                                           sales year, a new location or a special
                                                                                                           event are all good reasons.
                                                                                                             Second, make sure your press release
                                                                                                           is appropriately tailored for your target
                                                                                                           publication or broadcast program. The
                                                                                                           editor of Road & Track is not going to
                                                                                                           be interested in the new baby pacifier
                                                                                                           you’ve invented. It sounds obvious, but
                                                                                                           many entrepreneurs make the mistake
                                                                                                           of randomly sending press releases
                                                                                                           without considering a publication’s

Spread the Word                                                                                            audience.
                                                                                                             Your press release should follow the
How to promote your business                                                                               standard format: typed and double-
J UST WHAT is public relations? And how does it differ from adver-         time again that no mat-        spaced on white letterhead with a
tising? When you advertise, you pay to have your message placed            ter how large or small
                                                                                                          contact person’s name, title, company,
in a newspaper, on TV or on the radio. In public relations, the ar-        your business, the key
ticle featuring your company is not paid. The print or broadcast           to securing publicity is       address and phone number in the
reporter writes about or films your company as a result of in-             identifying your target
                                                                                                          upper right-hand corner. Below this
formation he or she received and researched.                               market and developing a
   Publicity is more efficient than advertising for several reasons.       well-planned public re-        information, put a brief, eye-catching
First, publicity is far more cost-effective. Even if it isn’t free, your   lations campaign. To get
                                                                                                          headline in bold type. A dateline—for
only expenses are generally phone calls and mailings to the media.         your company noticed,
                              Second, publicity has greater longevity      follow these steps.            example, “Los Angeles, California,
SMART TIP                     than advertising. An article about your      ❶ Write your position-
                                                                                                          December 2, 2002”—leads into the
                              business will be remembered longer           ing statement. This
Find out the time frame
                              than an ad.                                  sums up in a few sen-          first sentence of the release.
in which the media pub-          Publicity also reaches a much wider       tences what makes your
                                                                                                             Limit your press releases to one or
                              audience than advertising generally          business different from
lication you are interested
                              does. Sometimes, your story might be         the competition.               two pages at most. It should be just
in works.                     picked up by the national media,             ❷ List your objectives.
                              spreading the word about your                What do you hope to achieve for your company through the pub-
   Magazines, for exam-
                              business all over the country.               licity plan you put into action? List your top five goals in order of
ple, typically work several      Finally, and most important, public-      priority. Be specific and always set deadlines.
                              ity has greater credibility with the pub-    ❸ Identify your target customers. For example, are they male or
months in advance, so if
                              lic than advertising. Readers feel that if   female? What is their age range? What are their lifestyles, incomes
you want to get a story an objective third party—the maga-                 and buying habits? Where do they live?
                              zine, radio or newspaper reporter—is         ❹ Identify your target media. List newspapers and TV and radio
about your business in
                              featuring your company, you must be          programs that would be appropriate outlets. Make a complete list of
the December issue, you doing something worthwhile.                        the media you want to target, then call them and ask who you
                                 Why do some companies succeed             should contact regarding your area of business. Identify the specific
may need to send in your
                              in generating publicity while others         reporter or producer covering your area so you can contact him or
idea in June.                 don’t? It has been proved time and           her directly. Your local library has media reference books that list

                                                                                   E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E   11
long enough to cover the six basic ele-      contact names and num-      four to six days after
ments: who, what, when, where, why
                                             bers. Make your own         you’ve sent the informa-        Bright Idea
                                             media directory listing     tion, then follow up your
                                                                                                         Whenever possible, tie your
and how. The answers to these six names, addresses and                   pitch letter with a tele-
                                             phone and fax numbers.      phone call. If you leave a      business to a current event or
questions should be mentioned in
                                             Separate TV, radio and      message on voice mail           trend. Does your product or
order of importance to the story to save print sources. Know the         and the reporter does not
                                             beats covered by differ-    call you back, call again
                                                                                                         service somehow relate to the
the editor time and space.                                                                               Olympics, the presidential
                                             ent reporters so you can    until you get him or her
   Don’t embellish or hype the informa- be sure to pitch your            on the phone. Do not            election, the environment, the
                                             ideas to the appropriate    leave a second message
tion. Remember, you are not writing
                                             person.                     within five days of the          hot movie of the moment?
the article; you are merely presenting ➎ Develop story angles            first. If the reporter re-       Whether you’re planning a
                                             you’d want to read in the   quests additional infor-        special event or just sending a
the information and showing why it
                                             newspaper or see on tel-    mation, send it immedi-
is relevant to that publication. Pay evision. Keeping in mind            ately and follow up to          press release, you can gain
                                             the media you are ap-       confirm receipt.                 publicity by association.
attention to grammar and spelling.
                                             proaching, make a list of
Competition for publicity is intense, ideas you can pitch to             SPECIAL EVENTS
                                             them.                       While the number of
and a press release full of typos or
                                                If you own a clothing    special event ideas is infinite, some general categories exist, such as:
errors is more likely to get tossed aside. store, for example, you       ❶ Grand openings: You’re excited about opening your new
                                             could alert the local me-   business. Everyone else will be, too . . . right? Wrong. You have to
   Some business owners use gimmicks
                                             dia to a fashion trend in   create the excitement, and a knockout grand opening celebration is
to get their press releases noticed. In your area. What’s flying          the way to do it. Your event has to scream “We’re better than, differ-
                                             out of your store so fast   ent from and more eager to serve you than our competitors. We
most cases, this is a waste of money. If
                                             you can’t keep it in        want to get to know you and have you do business with us.”
your release is well-written and rele- stock? If it’s shirts featur-        Be original. If you own an electronics store, open your doors
                                             ing the American flag,       with a remote control. If you’re opening a yarn store, unravel a
vant, you don’t need singing telegrams
                                             you could talk to the       huge knitted ribbon. If you sell sporting goods, reel in both ends of
or a bouquet of flowers to get your media about the return               an enormous bow until it is untied. Whatever your specialty, do
                                             of patriotism. Then         something unusual, entertaining and memorable.
message across.
                                             arrange for a reporter to      Also, think about other activities that go along with your grand
   If you have the money to invest, you speak with some of your          opening. Design a terrific invitation, do plenty of publicizing, pro-
                                             customers about why         vide refreshments and entertainment, select a giveaway that pro-
may want to try sending out a press kit.
                                             they purchased that par-    motes your business (and draws people into the store to get it), and
This consists of a folder containing a ticular shirt. Suggest the        incorporate ways of tracking who attended your event (contest en-
                                             newspaper send a pho-
cover letter, press release, your busi-
                                             tographer to take picture
ness card, and photos of your product of your customers wear-
                                             ing the shirts.
or location. You can also include other
                                             ❻ Make the pitch. Put
information that will convince reporters your thoughts on paper
                                             and send a “pitch letter”
your business is newsworthy: reprints
                                             to the reporter. Start
of articles other publications have with a question or an in-
                                             teresting fact relating
written about your business, product
                                             your business to the tar-
reviews, or background information get medium’s audience.
                                             For instance, if you were
on the company and its principals. If
                                             writing for a magazine
you do choose to send out a press kit, aimed at older people,
                                             you could start off with:
make sure it is sharp and professional-
                                             “Did you know over half
looking, and that all its graphic ele- of women age 50 and
                                             older have not begun
ments tie in with your company’s logo
                                             saving for retirement?”
and image.                                   Then lead into your
                                             pitch: “As a certified fi-
nancial planner, I can offer your readers 20 tips to start them on the
road to a financially comfortable retirement.” Make your letter no
longer than one page, and include your telephone number so the
reporter can contact you.
   If appropriate, include a press release with your letter (see “Meet
the Press” on page 11). Be sure to include your positioning state-
ment in any correspondence or press releases you send.
❼ Follow up. Following up is the key to securing coverage. Wait

12   E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E
SMART TIP                                   try forms, free newsletter  can attend almost any
                                            subscriptions and so on).   organization’s meetings a        YOU’RE THE
After you’ve finished talking to new
                                            ❷ Holidays and seasons:     few times before you             EXPERT
people at a networking event, take a Some of the most com-              must join. This is
                                                                                                      As an entrepreneur, it’s your respon-
                                            mon and easily devel-       another way to stretch
few seconds to jot down some pertinent
                                            oped special events are     yourself and make a new       sibility to get your business noticed—
information on the back of each con- based on holidays. For             set of contacts.
                                                                                                      which means you’ve got to toot your
                                            example, during the         ❸ Carry business cards
tact’s business card.This can be anything
                                            Christmas season, Santa’s   everywhere. You never         own horn. You need to let others know
from their business’s biggest problem Workshop can be found             know when you might
                                                                                                      that you exist and that you are an
                                            in thousands of commu-      meet a key contact, and
to the college their son or daughter
                                            nities, not just the North  if you don’t have your        expert source of information about
attends—whatever will give you a per- Pole. Or kick off the             cards, you lose. Take
                                                                                                      your industry.
                                            summer with a Beach         your cards to the gym,
sonalized “hook” to follow up with when
                                            Boys music marathon.        parties, the grocery store, •Start by making sure you know every-
you call later on.                             When planning an         even when you’re walk-
                                                                                                      thing you can about your business,
                                            event tied to a holiday,    ing the dog.
make originality your motto. If the average December temperature        ❹ Don’t make a beeline        product and industry.
in your city is a balmy 76 degrees, take a cue from your locale: Put    for your seat. Take ad-
                                                                                                      •Contact experts in the field and ask
antlers on pink flamingos and dress Santa in shorts and sunglasses.      vantage of networking
❸ Co-sponsoring: Partner with complementary businesses to host          time before you have to       them how they became experts.
an event, or you can take part as a sponsor of an established charity   sit down. Once the
                                            or public cause. Keep in    meeting starts, you won’t •Talk to as many groups as possible.
                                            mind, however, that not     be able to mingle.            Volunteer to talk to key organizations,
   Bright Idea                              every event is right for    ➎ Don’t sit by people
                                                                                                      service clubs and business groups free
                                            every business.             you know. Mealtime is a
   Sending out publicity pho-                  Think about how your     prime time for meeting        of charge.
   tos with your press release              company can benefit an       people. You may be in
                                                                                                      •Contact industry publications and vol-
   or kit? Make them fun, dif-              event. If you’re a florist,  that seat for hours, so
                                            you could provide flow-      don’t limit your opportu- unteer to write articles, opinion pieces
   ferent and exciting. Editors             ers for charity luncheons   nities by sitting with
   and reporters see thousands                                                                        or columns. (If you can’t do that, write
                                            or galas. Whatever you      friends. Remember,
   of dull, sitting-at-the-desk             do, be sure to promote it   you’re spending precious      a letter to the editor.)
   photos every year. Think of a            with press releases or a    time and money to
                                                                                                      •Offer seminars or demonstrations
                                            mention in the event’s      attend this event.
   creative way to showcase                 program.                    ❻ Get active. People re-      related to your business.
   something photogenic                     ❹ Games and contests:       member and do business
                                                                                                      •Host (or be a guest on) a local radio
   about your business . . . and            From naming a mascot        with leaders. Don’t just
   make it stand out from the               to guessing the number      warm a chair; join a          or TV talk show.
                                            of jelly beans in a jar,    committee or become a
   pack.                                    contests attract attention. board member. If you              Do all this and, by the time you con-
                                            But they pay off only       don’t have time for           tact media people and present your-
                                            when properly promoted      that, volunteer to
                                                                                                      self as an expert, you’ll have plenty
and ethically managed. So be sure your prizes are first-rate and that    help with hospitality
you get the word out in a timely and professional manner.               at the door or with           of credentials.
                                                                        checking people in. This
NETWORKING                                                              gives you a great reason to talk to others, gets you involved in the
The ability to network is a crucial skill any start-up entrepreneur     inner workings of the group, and provides you with more visibility.
must have. How else will you meet the clients and contacts neces-       ❼ Be friendly and approachable. Make people feel welcome. Find
sary to grow your business?                                             out what brought them there and see if there is any way you can
   The trick with networking is to be proactive. This means taking      help them. Introduce them to others, make business suggestions or
control of the situation instead of just reacting to it. Networking re- give them a referral. What goes around comes around. If you make
quires going beyond your comfort zone and challenging yourself.         the effort to help others, you’ll find people helping you.
Try these tips:                                                         ➑ Set a goal for what you expect from each meeting. Your goals
❶ Set a goal to meet five (or more) new people at each event.            can vary from meeting to meeting. Examples include learning about
Whenever you attend a group, whether a party, mixer or industry         the speaker’s topic, looking for new prospects, discovering industry
luncheon, make a point                                                                                 trends or connecting with peers. If you
of heading straight for                                                                                work from home, you may find your
people you don’t know.           Bright Idea                                                           purpose is simply to get out and talk
Greet newcomers (they’ll                                                                               to people face to face.
love you for it!). If you
                                 Capitalize on old-fashioned publicity stunts. No, you                 ➒ Be willing to give to receive.
don’t make this goal a           don’t have to swallow goldfish or sit atop a telephone                Networking is a two-way street. Don’t
habit, you’ll naturally          pole, but consider the landscaping company whose pre-                 expect new contacts to shower you with
gravitate toward the             cision lawn-mowing team shows off its fancy footwork                  referrals and business unless you’re
same old acquaintances.                                                                                equally generous. Follow up on contacts;
❷ Try one or two new
                                 in local parades.                                                     keep in touch with them; and share in-
groups per month. You                                                                                  formation that might benefit them.

                                                                                 E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E   13
Have you tried to visit a Web site and
waited . . . and waited until something
appeared on your screen? Industry
gurus say that people won’t wait more
than 8 or 10 seconds for a site to load,
but blame loading delays only par-
tially on poor Web site design. Your
customers’ modem speed (or lack of it)
can create the log jam as well.
     The vast majority of computer users
connect via dial-up access using a
traditional analog modem. The mo-
dem converts digital signals from your
computer into analog frequencies for
outgoing data, and vice versa, at 56Kbps
or lower, though 56Kbps is currently the
     When your customers dial to con-
                                                   Net Works
                                                   Setting up your company Web site
nect to the ISP, the modem contacts
                                            WHY PUT your business because, like similar services, it tells you if the name
the phone line, which, in turn, contacts
                                            online? Because the Net       you have chosen is taken, but it goes a step further by offering a list
the ISP and, voila, they’re connected. enlarges your business’s           of alternative names that are still available. From the available
                                            realm of possibilities. It    names, choose one that is the easiest to spell and remember.
Make sure your Web site can be loaded
                                            allows you to communi-           With your name established, you must make sure you’ve done
in seconds with a 56Kbps modem.             cate with anyone any-         everything offline to tell people about it. Every piece of paper
                                            where (or thousands of        should have your Web address on it, including business cards,
Slow modems and graphics overload
                                            people at once) with          brochures, letterhead, invoices, press releases and advertisements.
                  Continued on page 15 e-mail. You can search
for information from millions of sources covering every subject un-       WEB SITE BASICS                              SMART TIP
der the sun. Advertising your product or service, showing potential       Now you’re ready for designing and
                                                                                                                       Banks, credit card issuers,
customers your wares and allowing them to purchase immediately,           building your Web site. What makes a
doing test marketing, joining discussion groups with like-minded          good Web site? Before getting en-            airlines and office sup-
individuals, sending a monthly newsletter to customers, and linking       meshed in design details, get the big
                                                                                                                       ply stores cut deals with
with affiliated vendors are all part of what you can do with the           picture by writing a site outline. It’s a
Web. So the question isn’t “if” you should embrace it but “how?”          misconception that you have to throw         Internet-based partners,
                                                                          big dollars at an e-commerce solution.
                                                                                                                       including Web designers
THE NAME GAME                                                             You just have to be a careful shopper
Your first to-do item is to make a list of possible Web site names.        for vendors. Having a detailed outline       who offer value-added
Then run, do not walk, to the nearest computer, log on to the Inter-      makes the process more efficient. A site
                                                                                                                       services to their small-
net, go to your favorite search engine and type in “domain registra-      outline should include five key areas.
tion.” For a modest fee (about $35), you will find a list of compa-        ❶ Content: The key to a successful           business customers. Be on
nies such as that will guide you                 Web site is content. Give your site visi-
                                                                                                                       the lookout for valuable
through domain registration. One site that’s particularly helpful is      tors lots of interesting information,
                                                                          incentives to visit and buy, and ways to     freebies.
                                                                          contact you. Once your company’s site
  Bright Idea                                                             is up and running, continually update and add fresh content to
                                                                          keep potential and existing customers coming back for more.
  Although people have gotten increasingly comfort-                       ❷ Structure: Next, structure your site. Decide how many pages to
  able with the Net as a secure place for credit card                     have and how they will be linked to each other. Choose graphics
  information, a little reassurance doesn’t hurt. Have                    and icons that enhance the content.
  whoever sets up your shopping cart program pro-                            Now organize the content into a script. Your script is the num-
                                                                          bered pages that outline the site’s content and how pages flow from
  vide a message to customers detailing your firm’s                       one to the next. Page one is your home page, the first page that site
  policy on protecting their credit card information.                     visitors will see when they type in your URL. Arrange the icons de-
                                                                          picting major content areas in the order you want them. Pages two

14     E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E
                                                                                                          Continued from page 14
SMART TIP                                                                 HOST WITH THE                  aren’t the only things that make Web
Many domain registration services offer free or low-cost options                                         sites run poorly. Browsers, software
                                                                          Now how does your
such as domain parking, which holds your name until you’re ready          Web site get on the Net?      that enables Internet users to navi-
                                                                          You get online 24/7 by
to launch. E-mail forwarding lets your new domain name receive                                          gate the Web, differ in how the Web
                                                                          leasing space on some-
e-mail,while domain forwarding directs traffic to an existing Web page.   one else’s server or host     sites they access perform. Netscape
                                                                          service. A server is sim-
                                                                                                        Navigator handles Web pages one
through whatever correspond to each icon on your home page.               ply a computer that is
❸ Design: Site design comes next. Whether you’re using an outside         permanently connected         way, while accessing a site with AOL,
designer or doing it yourself, concentrate on simplicity, readability     to the Internet.
                                                                                                        CompuServe, Internet Explorer, Mosaic,
and consistency. Give your Web site’s visitors cues using graphics,          You connect to a host
color and fonts schemes that make sense to you. For example, if           via the Net using your        Prodigy and WinWeb browsers makes
your site offers pet products, should all of the cat-related text and     existing Net provider,
                                                                                                        some pages look different.
icons items contain blue while dog items are displayed using red?         then upload your HTML
Should all food text and graphics be green, toys red and accessories      files and graphics in the         Whenever you have the chance,
yellow?                                                                   rented space. From
                                                                                                        check your site using computers with
❹ Navigation: Make it easy and enjoyable for visitors to browse the       there, anyone can visit
site. Use no more than two or three links to major areas, never           your site anytime.            different browsers, and note differ-
leave visitors at a dead end, and don’t make them back up three or           There are tons of
                                                                                                        ences in appearance, ease of naviga-
four links to get from one content area to another. Design programs       hosts, so many that you
such as Microsoft’s                                                       need a strategy to sort       tion and speed.
FrontPage Express make                                                    through them. CNet’s
                                                                                                           One more thing: If you’re checking
it easy to create links to       Bright Idea                              Web site (www.cnet.
other sites. For example,                                                 com) makes comparison your site from different computers,
if you have a Web site           You won’t go wrong if you                shopping easy. It offers
                                                                                                        you may encounter computer freezes
for convention planners,         follow three basic design                ISP fact sheets that com-
make it easy for visitors        rules:                                   pare hosts on a number        and other glitches. Have your tech
to link to city sites                                                     of variables, starting
                                 1. Put the most important                                              whiz fix them. Nothing destroys your
where they can find in-                                                    with price (most begin
formation on recreation          pages near the top.                      at about $25 per              credibility like computer mishaps.
and activities in the area.      2. Eliminate extraneous                  month). Other variables
➎ Credibility: Your                                                       are: amount of disk space allocated to you, availability of access
site should look profes-         words in the copy.                       logs, number of e-mail autoresponders (automatic e-mail re-
sional and give potential        3. Use headlines, icons, bul-            sponses to anyone who has e-mailed you) and forwards (e-mails
customers the same               lets, boldface words and                 automatically forwarded to a specified address) allowed, cus-
feeling of confidence                                                      tomer support availability, database access, uptime (the percent-
that a phone call or             color to draw attention to               age of time that the service is accessible to visitors), setup and
face-to-face visit with          important content.                       monthly fees.
you would. In addition,                                                      Exactly how much disk space do you need to store your Web
be sure to remind your                                                    site? Generally, 1MB can hold several hundred text pages, or fewer
visitors that your don’t exist only in cyberspace. Your company’s         pages when images are included. Web hosts typically offer any-
full contact information should appear on your home page.                 where from 500MB to several gigabytes of free storage with a
There is a wide variety of tools available to help you improve your       KA-CHING!
Web site’s appearance. If you’re able to master HTML and write a          How will you handle sales? One option is to have your Web host
script by yourself, you should consider investing in a copy of            handle your transactions. It can collect the orders, handle credit
FrontPage for $199 to create and maintain your site.                      card transactions, send an automatic e-mail to customers thanking
   Another excellent resource is the                                                                                  them for their orders,
large online services, which all have                                                                                 and forward the order to
free online tools for Web page author-                                                                                you for handling and
ing and site design. Also check out de-                                                                               shipping.
sign tools from Tripod (www.tripod.                                                                                      Another option is to
com), with design utilities that allow                                                                                buy an electronic shop-
you to use FrontPage for free; and An-                                                                                ping cart program so site
gelfire (, a service                                                                               visitors can complete the
with Web-design tools, including a                                                                                    transaction online. How-
large graphics library. But that old                                                                                  ever, if all you need to
maxim is true: You get what you pay                                                                                   do is verify and accept
for, and many sites designed from basic                                                                               credit card information
templates are slow and humdrum.                                                                                       for transactions such as
   Services like, Elated.                                                                                 conference registration
com, and                                                                                       or selling a single item,
offer templates that make their free                                                                                  QuickBooks Pro (from
Web site design programs easy to use                                                                         may
with professional-looking results.                                                                                    work fine.

                                                                                  E N T R E P R E N E U R ’ S I N S TA N T S TA R T- U P G U I D E   15

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