FINANCING
Q: Where is the best place to look for startup financing?

Q: One of my business contacts mentioned something about business interruption insurance recently. What is this type of insurance, and why would I need it?

MARKETING
Q: I keep hearing a lot about how blogs can help my business. Do I really need one? It seems like a pain.

Q: I recently attended a networking event and heard someone talking about an “elevator pitch.” I’m embarrassed to admit I don’t know what this is.

Q: I’m looking for a good source of new leads that won’t take up a lot of time.

PRODUCTIVITY
Q: My business is growing fast but I feel like I’m falling behind. With so much more to do, I can’t keep up. How can I manage my time better?

Q: My business has been doing well as a one-person operation, but I’m getting to the point where I need to hire some help. How can I do this without adding a lot of overhead?

Q: How can I compete with bigger companies for employees? My company has specialized needs for skilled workers. It’s getting discouraging because every time I find a great candidate, they end up taking an offer from a bigger firm. What am I doing wrong?

STARTUP
Q: Writing a business plan seems overwhelming. Is it really necessary?

Q: Where is the best place to look for startup financing?
A: Do what I did when I started SMB Connects, my new business: Start looking in your own backyard. The best source of financing for most entrepreneurs is friends and family. But before you approach these potential lenders, you need to have your own house in order. Start by assessing all your own sources of capital—you may have more money available than you think. Do you have personal savings? Do you own anything that could be sold to raise money (a collection; a boat?) You’ll need to show any potential investor—whether it’s Uncle Ralph or the bank—that you’re willing to put your own money on the line, too.

Next, make sure you can explain simply and clearly what your business will do, that you’ve thought your idea through thoroughly and can answer the questions investors are likely to ask, such as how it will make money and the potential risks to their investment. (Ideally, you’ll want to create a business plan, which not only explains your idea but shows you are serious about making it work.)

Brainstorm a list of all the people you know who might be interested in investing. Focus on those who can afford to lose money—you don’t want to take your retired Aunt Edna’s life savings, even though she may be willing to give it to you.

Approach them casually at first, mentioning that you have plans to start a business and are looking for individual investors. Don’t be pushy, but if they express interest, set up a time to discuss it with them in more detail.

The key to successfully handling investment from friends and family is to treat it as seriously as if you were getting money from a bank. That means drawing up loan papers and terms for how and when you will repay the money. Get help from an attorney or accountant to make sure everything is in order.

Q: I keep hearing a lot about how blogs can help my business. Do I really need one? It seems like a pain.

A: Starting and maintaining a blog is actually quite simple, and can pay off big in terms of publicity and exposure for your business with just a little investment of time. Blogs are particularly helpful if you’ve got a service business and are trying to establish yourself as an expert to potential clients.

Blogging software is widely availble and most can be used for free. The most popular blogging platforms are Blogger, WordPress, TypePad, Live Journal and Movable Type. Once you've set up your blog, put a link to your blog prominently on your web site. What do you blog about? Anything that’s relevant to your industry and interesting to your customers. A blog needs to be a bit opinionated, but keep it professional. For instance, IT consultants could post opinions of new software or hardware products that their customers may be curious about; their thoughts about industry trends or developments. A clothing store owner could comment on current trends, hot colors and how to best coordinate outfits. Keep your entries short and sweet.

To get your blog known, it’s also important to visit related blogs in your industry and post comments on their entries. Include a link to your own blog when possible. If done right, this doesn’t have to take a lot of time—a few quick posts on your own blog per week, plus an hour a week trolling other blogs and responding, should keep your content fresh.


Q: My business is growing fast but I feel like I’m falling behind. With so much more to do, I can’t keep up. How can I manage my time better?

A: Many entrepreneurs find the time management habits that worked for them as employees or when they first started out don’t work so well as the business grows. If you’re like most entrepreneurs, you’re reluctant to delegate—but doing so is key to keeping your business growing.

Assess your duties and clarify which ones are most important, which ones you’re best at, and which ones you most enjoy. As the business owner, you need to focus on those tasks which deliver the most ROI. Decide what can be delegated and train someone else to handle it.

Once you’ve got a handle on your key tasks, plan your day so that you’re working on the most important things at the time when you have the most energy. That may be 5 in the morning, or 4 in the afternoon.

Email and mobile devices are great for productivity on the one hand, but can easily become time-sucks if you let them. One strategy that works for many entrepreneurs is to block out time—perhaps the first 2 hours of your morning—that is devoted to difficult thinking, without checking email or voice mail. Others find that only checking email and voice mail every couple of hours helps them focus. (Though, I have to admit, I'm not capable of doing that.)

Finally, remember to keep your energy levels high with a good diet and regular exercise. One benefit of being your own boss is that you can make time for health and fitness. The health of your business depends on it.


Q: I recently attended a networking event and heard someone talking about an “elevator pitch.” I’m embarrassed to admit I don’t know what this is.

A: An “elevator pitch” is something every entrepreneur should have. Basically, it’s a one-or two-sentence description of what your business does, how it helps customers and why your listener should care. It’s short enough that you could tell it to someone during a ride up in an elevator.

A good elevator pitch must grab the listener’s attention. To craft yours, you must know the special angle or edge your business possesses. What is your market, what do you do differently from your competitors, and how does that help your customers? Telling someone “I’m an IT consultant” will garner a big yawn. Instead, your elevator pitch might be “My business helps retailers find affordable hardware and software solutions so they can increase profits. Our average client sees sales increase by 25% in the first year they work with us.”

Try your elevator pitch on friends and family. You’ll know you’ve got a good one when people not in your industry express interest in what you’re saying.


Q: I’m looking for a good source of new leads that won’t take up a lot of time.

A: Referrals are one of the most powerful lead-generation tools in sales, but few entrepreneurs use them to their fullest potential. So put the power of referrals to work for you.

Once you’ve completed a sale, follow up with the customer to make sure they’re satisfied with the purchase. (This is already part of your sales process, I hope!) Make it a regular part of your follow-up to ask the customer for a referral. You can say something like this: “I’m glad the purchase is working out for you. I’d love to be able to provide solutions to some of your colleagues. Can you think of anyone who might be interested in hearing more about my product/service?” To increase your chances of getting referrals, you can offer customers a discount or reward—for example, 10% off their next purchase if a customer they refer to you ends up buying.

When you call the referral, you’ll have an edge because you can say “Your colleague so-and-so referred me to you because he thought our products/services would be of value.” People do business with people they know, so being able to show a connection in common makes the prospect more disposed to listen to your proposal.


Q: My business has been doing well as a one-person operation, but I’m getting to the point where I need to hire some help. How can I do this without adding a lot of overhead?

A: Hiring a full-time, permanent employee does add a lot of overhead. In addition to the person’s salary, benefits can add as much as 30% to the total cost. Plus, you’ve got to provide workspace, equipment and the like for the new hire. Fortunately, there are more options than ever for getting the help you need without making that type of commitment. Consider these options:

Part-time employees: A part-time worker costs less than a full-time hire—not only because salaries are lower, but because part-timers generally aren’t entitled to benefits.

Interns: Local colleges often have internship programs where students will work for local businesses for free or minimum wage in order to earn college credit. Check your state laws; some states require interns to be paid.

Independent contractors: Hiring independent contractors on an as-needed basis can be an ideal solution for a business whose staffing needs ebb and flow.

Virtual employees: If your concern is adding office space, consider virtual employees who work from their homes and interact with you by email and teleconference. Some companies become very successful with an entire staff spread all across the country.

Temps: Are your needs constant or cyclical? Using temporary workers might help ease the strain during peak periods, while not costing you during the slow times. Work with one or two staffing companies, so they can better get to know your needs.

Whenever you are hiring, be sure to consult your state’s employment regulations and speak to your accountant to make sure you are classifying employees properly. Otherwise, you could be running afoul of laws or tax statues.


Q: How can I compete with bigger companies for employees? My company has specialized needs for skilled workers. It’s getting discouraging because every time I find a great candidate, they end up taking an offer from a bigger firm. What am I doing wrong?

A: Small businesses do face big challenges in competing with deep-pocketed corporations. Hopefully, you’ve been listening when your desired candidates told you why they chose the bigger company over you. Was the reason professional development opportunities? Greater chance for advancement? A bigger salary? Better benefits? You can’t compete on all of these levels, true—but you can compete on some.

Figure out what seems to be most important to the type of candidate you’re looking for. If you’re seeking older, experienced workers, they are likely to have families, so perks such as flexible hours, job-sharing work-at-home days or time off to attend their kids’ school events may be what matters most.

If you’re looking for young tech workers, on the other hand, you may find the best candidates are single and willing to work long hours, but what they value are things like a casual atmosphere, the ability to set their own schedules, and the chance to make a difference in the company without having to work their way up a corporate ladder. Show them they’ll get ownership of important projects, not just busywork, and that you’ll really listen to their ideas.

Whatever the type of worker you’re seeking, a good way to boost your chances of a successful hire is to ask existing employees for referrals. If your staff is happy at work, their friends will know about it and will see the benefits of working for you.


Q: One of my business contacts mentioned something about business interruption insurance recently. What is this type of insurance, and why would I need it?

A: Suppose your business was involved in Hurricane Katrina. While your business insurance policy would cover rebuilding or replacing your office and equipment, most likely you would still be losing money during the time when your business was out of commission and unable to operate.

Business interruption insurance payments can cover your expenses and overhead costs during the time when your business can’t operate due to disaster or other event. This ensures you don’t get further and further in debt during this time. Often, the reason many businesses end up going out of business after a disaster is not that their equipment and facilities weren’t adequately covered, but because the lack of income during the rebuilding period puts them so deep in debt they can never get out.

Talk to an insurance agency specializing in business coverage to find out more about business interruption policies.


Q: Writing a business plan seems overwhelming. Is it really necessary?

A: Many businesses successfully start without a plan—but that doesn’t mean yours should. If you’re planning to seek any outside financing, potential investors will want to see your business plan. But a business plan is useful not just to outsiders, but to you. Writing a plan forces you to truly think through your business ideas, and can identify any weaknesses now, while they’re still easy to address. A good business plan acts as a road map guiding you through the stages of startup.

A business plan includes 3 primary section—the business concept section, which explains what your business will do and why it will be successful; the marketplace section, which identifies your target market, how you will reach them, and the competition you’ll face; and the financial section, which lays out your financial projections and other information about the money you’ll need, what you’ll use it for and your projected income and profits.

There are various business plan software programs and hundreds of books on the market (I highly recommend you try Business Plan Pro--go to www.bizplans.com to check it out) that can help you write your plan. Whatever tools you use to help create the plan, the most important ingredient is putting a lot of thought into it. It may seem like hard work now, but your efforts will pay off later.