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How UrgentRx Crashed the Party at the Cash Register

August 7, 2013 by

At a time when it can seem as if all retailing is migrating online, many consumer staples still live or die based on their placement in the detailed schematics that stores like Duane Reade use to maximize the profitability of their shelf space. For an upstart brand with no track record, securing any spot in these schematics, or plan-o-grams, as they are known, is difficult. To stake a claim to the prized ground near the registers is all but impossible, akin to a struggling young artist moving his milk crates into a Park Avenue co-op.

Or so it seemed until Jordan Eisenberg came along.

Mr. Eisenberg, 31, is the founder of UrgentRx, maker of single-dose foil packets of flavored, powdered over-the-counter medications with the same active ingredients found in products like Bayer, Pepto Bismol, Benadryl and Excedrin. Designed to be taken without water, the UrgentRx versions have been selling well enough that the company expects revenue this year of more than $3 million. Based in Denver, with 10 employees, the company has attracted more than $7 million in financing from investors like Sam Zell and Herb Simon, real estate moguls; David Bonderman, a private equity billionaire; and Hilary Swank, the actress.

But what really seems to have propelled the company’s early success are the inroads Mr. Eisenberg has made with major retailers. In the three years since the company’s debut, he has placed UrgentRx products near the checkout counter at 2,700 retail outlets across the country, including those of Duane Reade, Walmart and Kroger. Recent agreements and continuing negotiations, he estimates, should put the products in 27,000 stores by the end of the year. Merchandising fees — when big chains do take a flier on a new brand, they often charge stiff first-time stocking fees — have been less than $100,000, he said.

How has he done it? With a simple insight: Mr. Eisenberg realized that while most small brands cannot break into the plan-o-gram, they can persuade retailers to give them access to the unused space in the margins beyond the plan-o-gram. This insight has earned Mr. Eisenberg a reputation as a kind of “store seer,” a master at finding wasted spaces hidden in plain sight. Employing a variety of custom-fabricated display units, the burly former engineering major has designed lazy susan-like trays that spin atop the stanchions of queue lines, racks that hang off the ends of display walls, and oddly shaped shelving units that seem to levitate above sale counters.

“What he’s doing is one step beyond audacious,” said Kim Feil, chief marketing officer for OfficeMax, which recently signed an agreement to allow a horizontal UrgentRx display to sit atop the candy, mint and gum rack at the front of its checkout lanes. A 30-year merchandising veteran, Ms. Feil likened Mr. Eisenberg’s tactics to when 5-Hour Energy got its individual shot-size bottles into the racks by developing a carton of 12 with a tear-off lid and the precise dimensions of a candy, mint or gum slot. “But there haven’t been too many others,” she said.

On a recent afternoon, Mr. Eisenberg was visiting Manhattan, testing his latest prototype for Duane Reade. Although the chain has already installed his lazy susan queue-line display in two-thirds of its locations, its older and smaller stores do not have queue lines. So Mr. Eisenberg asked his fabricator to fashion a different sort of display — a 2-by-12-inch, white powder-coated strip of metal with three clear acrylic pockets affixed to the front.

Near 44th Street and Ninth Avenue, Mr. Eisenberg entered an older Duane Reade, clutching his prototype filled with packets of UrgentRx, to scope out spots near the front of the store. At the register, a cashier surrounded by razors, cigarettes, nicotine replacements, candy and gum was ringing up a customer. Next to the register, a stack of chocolates took up what little counter space was available. Then the UrgentRx rack popped into view, Mr. Eisenberg holding it up to show how it could be fastened to the back of the arm supporting the register screen. Suddenly, it was the most prominent point of sale in the store.

A moment later, he was standing by a metal refrigerated case in a prime location across from the counter. He held the same rack flush against the side of the case. “Put some magnets on the back and it could also go right there,” he said. On the other side of the case, where a clear acrylic rack of Lifesavers mints was attached, he showed how his rack could go on the side of the Lifesavers rack. “This is why my wife won’t go into stores with me anymore,” he said.

He is clearly something of an obsessive. After reading “Secrets from an Inventor’s Notebook” in college, he talked his way into an apprenticeship with its author, Maurice Kanbar, the originator of both Skyy vodka and a type of lint remover, calling on Mr. Kanbar’s office at least once a month for two years before landing a meeting. He eventually assisted Mr. Kanbar with the start of four companies.

By the time Mr. Eisenberg was 27, he had founded two companies on his own: CollarCard, maker of a credit-card-size shirt stay holder given out as a premium by men’s wear chains; and PMS Buddy, an app that reminded men when their wives or girlfriends were having their periods. The app received 30,000 downloads the day Ashton Kutcher, the actor and Twitter sensation, tweeted about it.

The inspiration for UrgentRx came to Mr. Eisenberg, who is severely allergic to raw fruits and vegetables, while disinterring a Benadryl pill that he used to wrap in cellophane and carry in his wallet in case his throat swelled up. The idea solidified when he realized that his father, then 61, was doing the same thing with aspirin, which is known to improve one’s chances of surviving a heart attack. Soon after test-marketing began in Colorado, Mr. Eisenberg became the subject of local news reports when a Denver man claimed that the UrgentRx’s aspirin formulation had saved his life.

Mr. Eisenberg says he believes that many brands can learn from his unorthodox merchandising methods. Walking into a Staples outlet on Broadway, he said that a lot of brands made the mistake of skimping when designing display equipment. He pointed to the counter where a dented plastic container was nearly drained of hand sanitizer bottles. “See, as soon as those are gone,” he said, “that’s going to get thrown out because it looks cheap.”

In the next block, Mr. Eisenberg came across another Duane Reade, this one in a newer location. Inside, he noticed that half of the UrgentRx packets in a display were either upside down or in the wrong slots. “It’s a constant battle,” he said, pulling out all of the packets, re-sorting them and then placing them in the appropriate slots. He noticed a woman waiting in line with a box of Benadryl.

“Here, you should try this instead,” said Mr. Eisenberg, handing her a packet of UrgentRx Allergy Relief To-Go. “It’s much better than that other product.”

She took the packet, read the back of the package, and returned the Benadryl, before turning to the cashier: “I’ll try one of these.”

“I have no shame,” Mr. Eisenberg said.

Article source: http://www.nytimes.com/2013/08/08/business/smallbusiness/how-urgentrx-crashed-the-party-at-the-cash-register.html?partner=rss&emc=rss

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Small-Business Guide: Seeking Capital, Some Companies Turn to ‘Do-It-Yourself I.P.O.’s’

July 31, 2013 by

Mr. Ahmadi , the founder of People’s Grocery, a nonprofit focused on food justice issues, hoped to open a commercial grocery store that would offer fresh produce in West Oakland, Calif., a so-called food desert, meaning its 25,000 residents have few healthy food options. A public-private loan fund, California FreshWorks Fund, had issued a letter of intent to lend Mr. Ahmadi two-thirds of the $3.6 million he needed to open the People’s Community Market. There was just one condition — he would first have to raise the remaining $1.2 million from investors. Mr. Ahmadi spent a year pitching to angels, social investors and private equity firms, but most were looking for double-digit returns and a clear exit strategy.

Mr. Ahmadi’s lawyer, however, suggested an alternative, something known as a direct public offering, or D.P.O., which is a way to raise money from the public without the inconvenience and expense of going public on a stock exchange. The term direct public offering does not have a precise legal definition, but it is used to describe a public securities offering similar to an initial public offering, or I.P.O., but with one big difference: There is no need to hire an investment bank. In fact, D.P.O.’s are known as “do-it-yourself I.P.O.’s.”

Although obscure, they have been around for decades. Most famously, in 1984, two young entrepreneurs raised a first round of capital for their fledgling ice cream company in an intrastate offering. With the slogan “Get a scoop of the action,” Ben Jerry’s raised $750,000 from 1,800 ice-cream-loving Vermonters, allowing them to build a new plant and expand, and setting the stage for a $5.8 million initial offering the following year. Annie’s Homegrown, the maker of packaged macaroni and cheese, raised $3 million in 1996 through a direct offering, advertising the offering in coupons tucked into each box. And more recently, tight credit markets and the rise of social media have fueled interest in the alternative financing system, especially among companies that have enthusiastic customers who can be converted into shareholders.

In a typical initial public offering, a Wall Street underwriter markets shares to wealthy clients and institutional investors, taking a cut of the proceeds. In a direct offering, shares are marketed directly by the issuing company, typically to customers, supporters and, these days, social media followers. The companies may advertise the offering freely and accept funds from an unlimited number of unaccredited, or nonwealthy, investors. And the companies are not subject to the quarterly reporting requirements and comprehensive registration process that come with an initial offering.

On the downside, business owners must be prepared to invest a substantial amount of time and effort in the process and to deal with hundreds or even thousands of small investors. And most direct offerings require assistance from a knowledgeable lawyer. Not surprisingly, however, cutting out the middleman and streamlining the process lowers the cost considerably. A direct offering might cost around $25,000 in legal fees, while a formal initial public offering can cost $1 million or more. That makes direct offerings an increasingly attractive option for companies that need a substantial amount of capital — typically between $500,000 and $5 million — but not enough to justify the cost of an initial public offering.

With traditional sources of capital still out of reach for many small businesses, and with the future of investment-style crowdfunding uncertain, direct offerings can offer a compelling alternative. In recent months, companies including pickle makers, department stores, food cooperatives and service firms have found a ready market. “There’s a huge trend of people wanting to invest locally, and people are looking for ways to make that happen,” said Jenny Kassan, president of Cutting Edge Capital, an Oakland, Calif., consulting firm that has helped seven companies raise money this way since 2010, including People’s Community Market. California has some 150 to 200 direct offerings annually, Ms. Kassan said.

Direct offerings were a hot topic at a Business Alliance for Local Living Economies conference held in Buffalo in June. “I’m seeing a huge disconnect between the investment products available and the desires and values of investors,” said Michelle Long, executive director for the organization, a network of 30,000 entrepreneurs and community leaders. “D.P.O.’s represent an opportunity to put your money into something real and tangible.”

Companies typically qualify for a direct offering under one of three federal securities exemptions, each with its own parameters and considerations. The exemptions include Regulation D Rule 504, for offerings up to $1 million; Regulation A, for offerings up to $5 million (scheduled to be raised to $50 million under the JOBS Act); and the intrastate exemption, for companies that do business primarily in a single state and limit the sale of securities to investors in that state. The offerings are filed with state securities regulators and are subject only to state regulations, which can vary greatly. (In addition to these three main exemptions, there are also exemptions for nonprofits and farmer cooperatives.)

After about eight months of preparatory work, People’s Community Market introduced its direct offering campaign last November, offering shares of nonvoting preferred stock with a minimum investment of $1,000. In return, investors were promised an annual 3 percent dividend plus an annual store credit equal to 1 percent of their investment. Because the grocery business is cash-intensive and Mr. Ahmadi wanted to ensure enough operating capital, the deal was structured so that accumulated dividends would be paid to investors in a lump sum after the seven-year term of the loan. Investors have the option to sell their shares back to the company with 60 days’ notice.

The offering has yet to close, but People’s Market has raised more than $630,000 from more than 150 mostly unaccredited investors — and potential customers. “We have a critical following,” said Mr. Ahmadi, who plans to use the money to build the store, purchase inventory and open by fall 2014 (details are in the prospectus). “Ultimately,” he said, “it’s about leveraging social capital and turning it into financial capital.”

Direct offerings seem to be popular among food companies. In addition to People’s Market, others that have conducted such offerings recently include Farm Fresh to You, a farm in California’s Capay Valley, and Arroyo Food Coop in Pasadena, Calif. Real Pickles, in Greenfield, Mass., recently raised $500,000 in just two months to finance a transition to a worker-owned cooperative. Why food? One reason, Ms. Kassan said, is that “people are passionate about food, so it’s a pretty easy sell.” But, she added, “I believe this can work across many industries.” Her firm, for example, Cutting Edge Capital, recently raised $150,000 through its own direct offering.

Or take GruntWorks, a business based in Portland, Ore., that acts as a concierge for homeowners in need of anything from housekeeping to plumbing to roofing services. GruntWorks solicits bids from its network of 120 or so vetted service providers and guarantees every job.

Since opening last year, GruntWorks has grown quickly. It generated $500,000 in sales its first year and expects to double that this year. To finance its expansion, Scott Fouser, the founder, has applied to Oregon’s state authorities for a direct offering. By engaging his customers and turning them into shareholders, Mr. Fouser said he would be free from having to rely on search engines and other marketing.

“I think it’s a terrific vehicle to engage the community and bring some profitability back to your supporters,” he said. “That’s the real juice here.”

Article source: http://www.nytimes.com/2013/08/01/business/smallbusiness/seeking-capital-some-companies-turn-to-do-it-yourself-ipos.html?partner=rss&emc=rss

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Small-Business Guide: Sell a Business to Cover Retirement? Don’t Count on It

July 24, 2013 by Leave a Comment

Still, he did not realize just how much of a toll running a business would take on his personal finances. For four years, Mr. Lewis, the founder of eHealthcare Solutions, an online advertising network that is based in Ewing, N.J., and represents health care Web sites, took home about $20,000 a year and had to deplete his retirement savings account.

“It was draining to watch that savings go down,” he said.

But as soon as he was able, he started saving again. Unfortunately, many business owners never reach that point. One study found that 40 percent of business owners had no retirement savings. For many reasons, saving for retirement is difficult for owners, but perhaps the biggest mistake many make is assuming that they do not need to save — that one day they will sell their businesses and live off the proceeds.

Many businesses simply cannot be sold, and others end up being sold for far less than expected, said Randy Gerber, founder of Gerber L.L.C., which helps business owners manage their personal finances. And even if a business can be sold, he said, owners often have an unrealistic notion of how much it might be worth. That is why a potential sale should not be an owner’s only plan for retirement.

PLAY IT SAFE By definition, business owners take a lot of risk in their professional lives because much of their net worth is tied up in one asset, typically as much as 65 to 85 percent, according to Rob Pettit, a high-net-worth planner at TD Wealth.

For this reason, they are often advised to follow two rules with the money they manage to save: invest conservatively and diversify. Following that advice, however, does not come naturally to all business owners. Many are eager to invest in stocks and do not want to consider fixed-income securities.

When Mr. Lewis started investing in the stock market, he bought mostly health care and pharmaceutical companies, industries he is exposed to through his business — a common mistake.

“It seemed to make sense for me to invest in health care because I know it so well,” he said. “Most of my business is tied up in that sector.” He eventually realized that it would be wise to change that approach, and he now owns shares in technology, oil and gas and financial companies.

Mr. Gerber, whose financial management firm is based in Columbus, Ohio, said he believed that assets that are liquid, have low volatility and generate income were generally an entrepreneur’s best bet. Many of his clients own corporate bonds that can either be sold quickly or held to maturity, and mutual funds that invest in equities and pay dividends. He avoids mutual funds that invest in bonds, he said, because when interest rates rise, they lose value.

CUT YOUR OWN PAY? When times get tough, many owners stop saving for retirement. They either forgo salary altogether or reduce their pay. That can be a mistake, said Ellie Byrd, founder and chief executive of ForumSherpa, a business based in Atlanta that offers executive leadership and training courses.

Ms. Byrd used to run a software training company. In 2000, she stopped taking a salary, and a year later, she found herself $500,000 in debt. With no income, she could not contribute to a savings plan — or pay her bills. When a business struggles, deciding not to pay yourself may seem a natural reaction, but it can obscure larger issues.

In retrospect, Ms. Byrd says she believes she should have laid off staff members and made other adjustments before stopping her own pay.

Mr. Gerber said owners should stop saving only if it is clear the business can be turned around. If not, there probably are bigger problems, and stopping saving isn’t going to solve them. “You often have to do some real soul searching to figure out why the business is struggling,” he said.

Of course, there are times when it makes sense to hold off on saving personally to invest more in the company. In these instances, Mr. Gerber said, the business should be running smoothly, and the investment should promise a healthy return. He likes to see an investment, like a new piece of equipment, generate a return that is three times greater than can be gained in stocks or bonds. If it cannot do that, he advises putting the cash in a personal account.

BUY THE BUILDING Although Lenny Verkhoglaz invests in an individual retirement account, he thought he should hold more than just stocks and bonds in his overall portfolio. In 2006, Mr. Verkhoglaz, the founder of Executive Care, which is based in Hackensack, N.J., and provides in-home health care to the elderly, bought the building that holds his offices.

When he retires, he plans to sell his company and the building together. He holds the building in a separate company for rent-related purposes but thinks he will get a better price by selling the two assets together. “If I sell the company without the building,” he said, “the value of the real estate may go down if the company moves out and another tenant doesn’t take its place.”

Even so, Mr. Gerber suggests keeping ownership of the company and the building separate. That makes it possible to sell the company and keep the real estate, collecting rent from a new occupant. A separation can also limit liability, Mr. Gerber said.

There is another advantage to owning your own building: you do not have to deal with a landlord, rising rent of eviction threats. And you have a dream tenant: yourself.

KNOW YOUR BUSINESS’S WORTH If selling your business is any part of your retirement plan, Mr. Gerber said, it is essential to know what your business is worth. And it is important to start tracking its value long before you plan to sell.

Mr. Gerber suggests hiring a professional who can figure out the current value of your company. Then determine how much money you will need to live the lifestyle you want. Most important, think about whether you will be able to increase the value of your business enough to match that retirement number.

At age 43, one of Mr. Gerber’s clients decided he wanted to retire at 50. To do so, he determined, he would need to build his business to $20 million in revenue from $10 million. Doing that meant finding new channels to sell his products. It is working, Mr. Gerber said, but if not, he would have to think about retiring later. “It’s about the math,” he said. “It needs to be clear.”

Business owners also must be prepared to sell early if their business or their industry starts to slip. Another of Mr. Gerber’s clients was in a sector that was consolidating quickly. She received an offer on her business that was far less than she believed it was worth, but she decided to take it, knowing that it would be tough to compete against the big players beginning to dominate the market. “If you think the number will get worse and not better,” he said, “then get out when the getting’s good.”

Article source: http://www.nytimes.com/2013/07/25/business/smallbusiness/sell-a-business-to-cover-retirement-dont-count-on-it.html?partner=rss&emc=rss

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You’re the Boss Blog: When the Customer Is Not Right

July 22, 2013 by Leave a Comment
Thinking Entrepreneur

An owner’s dispatches from the front lines.

I have a friend who has an 18-year-old son. He is a big kid, with a friendly disposition and a kind and respectful demeanor. He has a very good part-time job at a respected restaurant in an affluent suburb of Chicago. He works at the carryout counter where he reviews customer orders, asks the customers if there is anything else he can get for them, and then asks if they need help carrying their food to their cars. He has worked there for more than a year, and I’m sure the training and support he has received will serve him well in future jobs.

Recently, I happened to ask his mother how the job was going, and she gave me a disappointing report. Last week, she said, a customer came in to pick up an order, looked at her son and asked him to say, “What’s happening!”

Did I mention that the young man is African-American? And for those too young to remember, there was a well known character on a 1970s sitcom called “What’s happening,” who was black and obese, wore a red beret and suspenders, and would go around saying, “What’s happening!” His name was Rerun, and he was played by an actor named Fred Berry.

Now some of you may think, “What’s the big deal?” — but I hope not many. To most people, this is offensive, and whether you consider it stereotyping, ignorance or racism doesn’t matter. What does matter is that this teenager went home, related the story to his mother and cried. He doesn’t understand why someone would ask him to do that, as if he is there for their amusement.

But here is the worst part, the part that makes me sick as a boss, as a father and as a friend. He felt obligated to say the line, because he was trained to take care of customers, to do whatever he has to do. His mother told him that he should have said, “I’m not really comfortable with that.” And that is certainly a better answer than I came up with. But her son is not sure what the company would think of that response.

And I understand why he feels that way — even though I happen to know the owner of the company, and I am pretty sure he would be horrified to hear the story. I believe the owner would give him advice similar to his mother’s.

This is not the only uncomfortable situation he encounters. His mother tells me that about once a week, after he reviews an order with a customer in his charming and pleasant manner, and leaves the room (but remains within earshot), a white customer will say to the white cashier something like, “He’s so nice! I didn’t expect that.”

I’m not sure what’s worse, thinking it or saying it. But I’m very sure the cashier is uncomfortable, and I’m pretty sure these customers are clueless about what they are doing. Granted, no one is getting shot, pulled over or accused of a crime, but there is damage done. I asked his mother what she says to him when this happens? She said she tells him that there is racism in the world and that it will always be there. I cringed. I asked if she was sure it was racism and not ignorance. She said it really didn’t matter — it hurts either way. She said that for the first 14 years she did say it was ignorance, but at some point she got tired of defending ignorance and painting a rosy view of her world. It gave me a different perspective.

As a boss, I believe I have a responsibility to make sure my employees understand the difference between dealing with an angry customer and dealing with abusive behavior — or perhaps in this case, ignorant and rude customers. The white cashier could ask “Why would you be surprised?” This might actually do the customer a favor. As for the “what’s happening?” customer, I’m sure that he’ll be back, and I’m sure he will do it again — because he probably thinks he’s being funny and friendly. I am hoping my friend’s son will muster the nerve to say, “No, I’d rather not.” I think he needs to speak with his boss.

What would you tell your employee?

Jay Goltz owns five small businesses in Chicago.

Article source: http://boss.blogs.nytimes.com/2013/07/22/when-the-customer-is-not-right/?partner=rss&emc=rss

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You’re the Boss Blog: This Week In Small Business: Mibblio, Kaggle and Shodogg

July 22, 2013 by Leave a Comment
Dashboard

A weekly roundup of small-business developments.

What’s affecting me, my clients and other small-business owners this week.

Must-Reads

Ryan Tate says you can hear the screams of crushed start-ups echo across Silicon Valley. Here are five reasons undergraduate entrepreneurship courses aren’t producing entrepreneurs. Anil Dash offers 10 rules of the Internet.

The Economy: Manufacturing Is Sexy

Retail and food service (pdf) sales for June increased slightly, and consumer prices rose 1.8 percent over last year. Tim Mullaney reports on why the economy is not yet a pretty picture, Michael Lombardi explains why a recession is inevitable within 12 months, and Fabius Maximus is confused. But American manufacturers are seeing domestic growth, industrial output rose by the most in four months, and a Penn State University professor proclaims proclaims that manufacturing is sexy again. Conditions in the New York region improved modestly, and the Philadelphia area showed solid expansion. Builder confidence increased to its highest in seven years. Ben S. Bernanke tells the world the Federal Reserve is still easing. Shawn Tully explains why the interest rate party is over. Small businesses created 45 percent of the new jobs generated in June.

Finance: $92 Quadrillion

AmeriMerchant announces a new $60 million credit line to finance small businesses, HSBC starts a $1 billion loan program for small exporters, and a Paypal glitch debits $92 quadrillion from a guy’s account. Tracy Kellaher lists four ways banks alienate small-business customers. Here are the 13 biggest Kickstarter projects ever — and where they stand now. Amrik Randhawa suggests three accounting habits to practice weekly, and a new cash-flow tool promises to help businesses improve their forecasting.

Start-Up: Mibblio, Kaggle and Shodogg

Here’s why so many start-ups have silly names, like Mibblio, Kaggle and Shodogg. A start-up wants to help freelancers earn more. Here are 16 essential skills for freelancers. Google and Blackbox, a global start-up accelerator, team up to help selected start-ups. A study reveals how to spot future entrepreneurs (hint: it’s not about the grades), and one entrepreneur makes millions doing the chores we all dread. Nathan Beckord explains how he hacked the start-up conference circuit.

People: Unlimited Vacation

Justin Fox makes the case for paying people more. Bryan Goldberg explains why seeing employees get rich is awesome. The chief technology officer and co-founder of HubSpot says employees should get unlimited vacation, and this company is advertising for a happiness engineer. A business owner offers employees the use of a financial adviser. The difference between how employees are are treated at a company can boil down to which ones have children. Victor Cheng suggests five ways to keep employees from checking out on the job. Christine Comaford shares her thoughts on using psychology to engage employees. A restaurant owner fires all of his employees by text message.

Management: Crazy, Successful People

Here are some tips for making it in the art world. Carolyn Gregoire shares the one thing that many “crazy successful people” do every morning. A Sage survey finds small-business owners continue to work longer hours and take less vacation. Srikanth An says doing foolish things with enthusiasm is one of 10 traits of a successful entrepreneur, and Valerie Balester lists seven habits of highly effective communicators. Lin DeBeaulieu shares a few fitness tips for business travelers, and Paul Mah shows how to transform your hotel room into a productive workspace. Prasad Kaipa explains to tell if you’re suffering from “Superman syndrome.” Jason Piatt suggests eight steps to improve operational processes.

Marketing: Selling in Asia

Jeff Bullas points out seven marketing trends you should not ignore. Sean D’Souza says there are three core elements of good storytelling (and says your business needs them). Sonia Simone says there are five things you can do this week to fix your marketing. Craig Briggs has 12 answers to help Western marketers sell in Asia. Some retailers are tracking their shoppers’ cell phones, and research finds that mobile accounts for 85 percent of gas and convenience store searches.

Social Media: Twitter Power

Stephanie Miles shares seven strategies for maximizing the success of your social media. This infographic reveals the marketing power of Twitter. Dave Matthews hitchhikes to his own show. Bridget Ayers wants you to implement these simple security settings for your social media activities. Becky McCray explains what to do if you hate your Web site. Andy Hayes shares three Web trends that customers (and business owners) will love.

Around The Country: Boot Camp for Women

Detroit files the largest municipal bankruptcy in American history. Moody’s downgrades Chicago’s debt. Miami is experiencing a rise in start-up activity, and Phoenix small businesses are seeing a growing economy. Angered by the Zimmerman verdict, some are calling for a boycott of Florida businesses. An entrepreneur finds a niche in the San Francisco rental market. The Community College of Philadelphia is offering free small-business training. An online event will feature a panel of women entrepreneurs who have received financing from United States Special Operations Command. American Express Open will hold a boot camp for women entrepreneurs in September.

Around The World: Hitting the (Great) Wall

The world’s largest building opens for business in China even as the country’s economic growth slows (and Paul Krugman suggests it’s about to hit the wall). Central bankers in India and Brazil tighten liquidity. The infamous Russian oligarch Sergey Veremeenko shows how the .00001 percent lives in Moscow. British retailers are coming up with creative ways to capitalize on the royal baby buzz. The Middle East tops the West in female founders of tech companies.

Red Tape: Planning for Bunny Disasters

Microsoft is backing a small-business lobby to ease immigration laws. The Feds want a disaster plan to protect magic-hat bunnies. Here’s how Hurricane Sandy affected local taxes. Richard Posner says the sequester has been a failure. The Internal Revenue Service cancels one of its furlough days. A report finds that two of every three small-business executives say they’re not ready for the Affordable Care Act. Still, the new law is bringing good news about insurance premiums. Hamilton Nolan reports that part-time is the new full-time, but Matthew Yglesias says “Obamacare” is not to blame. Privacy fears over the legislation are looming as agencies begin to link up. More doctors are bailing out on their practices.

Technology: Five Million Smartwatches

A research firm says $2.1 trillion will go into information technology spending in 2013. Paid apps are on the decline. Five million smartwatches are expected to ship in 2014. Ramon Ray has 10 tips for staying safe and virus free. New Mac malware is confusing users. Here are the eight best apps for team collaboration. Samsung continues to dominate Android. Microsoft’s introduction of the Surface was “a disaster,” but Tony Bradley says the device can help small businesses reduce tech costs. Sameer Doshi, who is blind, shows how he uses a computer. Researchers have developed a phone that can be recharged with urine.

Tweet Of The Week

‏@SalesLeaderTodd – Is there a silver bullet for sales? Nope. If you have forgotten the basics get reacquainted and sell more.

The Week’s Best Quotes

Seth Godin believes more people are marketing badly: “The cure? Notice what is working in the real world and try to figure out why. Apply it to your work. Repeat. Learn to see, to discern the difference between good and bad, between useful and merely comfortable.”

Adrienne Asselmeier says failure really is an option: “Instead of proclaiming that you’re not afraid to fail, it’s important to contemplate challenges you may face, how you will handle them, and what you will do if ultimately you do fail. If you’re prepared for failure as an option, then you won’t end up in the gutter because you will be vigilant and flexible while still working toward your business goals.”

This Week’s Question: Are you prepared to fail?

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/07/22/this-week-in-small-business-mibblio-kaggle-and-shodogg/?partner=rss&emc=rss

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You’re the Boss Blog: Why We Fire Lenders (and Borrowers)

July 19, 2013 by Leave a Comment
Searching for Capital

A broker assesses the small-business lending market.

As a loan broker, I have to balance the needs and demands of buyers and sellers in order to get deals done. In my world, buyers are small-business owners who want to borrow money, and sellers are firms who want to lend money for a return. Transparency and honesty from both sides always helps us get to the finish line faster.

With borrowers, this process can be frustrating sometimes. Often they withhold certain information that they think will hurt their chances of getting a loan. As a result, my team members and I have to keep peeling back layers of the onion until we find their particular hidden red flag or flags.

I wish that borrowers would recognize that they are doing themselves a disservice by hiding information from us and from their prospective lenders. They’re simply wasting everyone’s time, because the information will always come out somewhere in the loan process. Sometimes months into a process, we need to go back to the drawing board and start again.

I can count the few times that we’ve actually fired borrowers who we represent. I won’t tolerate any misrepresentation to lenders. But the issue isn’t only with borrowers. Recently, I found myself firing lenders as well. In our work, we’re constantly testing new lenders to evaluate their rates and processes.

If we’re working with a new lender, we disclose it to our client that we don’t have previous experience with them. And sometimes, these lenders don’t fit our mold.

We recently helped a business owner try to get a loan from an established asset-based lender. This company, which has a sales force across the country, lends money to small businesses and uses their accounts receivables and inventories as collateral.

The lender issued a term sheet to our client that laid out the terms of the loan and the requirements that would have to be met to obtain it. My client accepted the terms after struggling to find the down payment of $1,500.

Four weeks into the due diligence process, my client had met every requirement initially laid out by the lender. Then, the lender changed the terms and demanded another $7,000 for additional due diligence. The lender insisted that, because my client was in the mining business, it would have to comply with additional lien searches and take liens on the company’s real estate.

At my advice, the borrower decided not to proceed with this lender. For one thing, the company simply didn’t have the $7,000. And second, there was already an existing lien on the real estate.

My efforts to get the client’s initial deposit refunded have been ignored by the lender. The client has negotiated some temporary relief from its current lender that may give the company some monetary respite.

In another instance, I took a potential borrower to a firm that we were testing that provides cash advances.

We presented the package to the lender, explained the time urgency and described all the potential pitfalls in the deal right up front. The sales representative took the information to their underwriting department, and encouraged us to proceed. We were presented with offers, and then the client was presented with loan documents to sign.

After signing them, there was further underwriting, a merchant interview and a landlord interview. I was advised that everything checked out fine. Then, nearly at the end of the process at a final credit committee meeting, I received an e-mail advising me that the deal had been declined for the precise risks that were laid out to the representative at the very beginning of the process.

Legally, I am sure there were grounds in both cases for the lenders to walk away. In the case of the mining company, I imagine that somewhere in the lender’s term sheet, it stated that the deposit was not refundable. In the second case, I am sure that in fine print on the loan document, it said that the lender could back out of the deal.

That said, the legal documents are far less important to me then the principles of being forthright and honoring your commitments. I would have no issue with the lenders’ actions in either of these cases if they had discovered some fraud or misrepresentations. But that was not what happened. Everything that was disclosed up front was 100 percent accurate.

We won’t use either of these lenders again in our work. We’ve fired them, just like we occasionally fire clients. Unfortunately, I suspect they will continue their practices.

Ami Kassar founded MultiFunding, which is based near Philadelphia and helps small businesses find the right sources of financing for their companies.

Article source: http://boss.blogs.nytimes.com/2013/07/19/why-we-fire-lenders-and-borrowers/?partner=rss&emc=rss

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You’re the Boss Blog: The Worst Two Weeks of My Business Life

July 18, 2013 by Leave a Comment
Creating Value

Are you getting the most out of your business?

In the spring of 1990, before e-mail, Twitter and instant messaging, if you were going to get information quickly it came by phone. This has led to a favorite saying, “You’re only one phone call from disaster.”

For me, my business disaster started with a phone call from a client of my food service company in Vermont. The client told me about an employee who had just become sick after eating some food from our vending machine. I didn’t believe it. We made 13,000 pieces of food a week and had been doing so for years. Never in all of that time had our food made anyone ill.

I continued on with my day and then the phone rang again. This was a second client calling to say that an employee had become sick. Now, I started to worry. This was not going to be a good day. When the third call came, I knew I had a problem.

These phone calls were a harbinger of a huge problem. It was the beginning of the worst two weeks in my business career. The problem was so bad that I knew that if we did not handle it well, we would be out of business.

Most food businesses do not survive a breakout of salmonella food-borne illness. That was what I was dealing with. This was a problem that was about to grow and involve all our operations in four cities in two states, covering more than 40 accounts.

I knew I had to do two things. First, I had to contact all of our clients that had food machines. Second, I had to call my insurance agent and get him on board with our plans quickly.

I knew these were the first two things I needed to do because our management team had thought about this issue during one of our strategic planning sessions. Every year we spent a couple of hours talking about the really bad things that could happen to our business. Our big three were an armed robbery in our facility or with a route driver; the death or serious injury of someone caused by one of our vehicles; or the biggie, a food-borne illness.

Unfortunately, we got the biggie, the food-borne illness. Those three phone calls started us down a road that we had thought about but never in a million years thought we would ever have to take.

Here is what happened. The commissary manager who ran our food production facility decided he was going to help us save some money. He decided that we could substitute ground turkey for ground beef. He never bothered to tell me. He just made the change.

The problem with using ground turkey is it needs to handled much more carefully than ground beef. In 1990, most of the ground turkey you could buy had salmonella in it. If you didn’t cook and handle it properly, you could get sick. We did not handle it properly and 27 people became ill.

After about four hours, more bad news came rolling in. The health department descended on our facility. We abruptly went from having a rating of 96 percent two weeks earlier to one in the low 30 percent range. This caused our food production facility to be closed down.

The local news media decided we were the top story of the day. We had reporters and television news trucks outside our warehouse, all wanting a story. If we could not provide them with some information, we knew they would have only one side of the story to report.

I had to get our insurance company on board and I needed to personally call all of the companies that we had supplied with infected food. I decided the first call had to be to our insurance agent, Peter Prescott from Cool Insuring Agency. Mr. Prescott turned out to be my personal star over the next two weeks. He personally took over all of the claims and spoke with anyone who had been infected and their families. He assured all of the people who became sick that they would be taken care of and insurance would cover it.

My job was to take responsibility for what our company had done. I called all of our clients and explained what had happened. I told them that this was our fault. We had handled the food improperly. I told our clients that we would make sure anyone who became sick would be dealt with fairly. I asked for our clients’ help in identifying anyone who could have become sick from the food we sold.

Our next step was to post notices at all our clients that we had sold tainted food. We asked that anyone who had become sick or thought they might have become sick to contact us. We did not try to duck our problem. We did not try to blame anyone else or justify our behavior. We had decided during our strategic planning sessions that being truthful was the only way to go.

While our nightmare went on I received several calls from friends in the industry. Bad news travels quickly and many friends called to offer support. There was only one problem with their support. They kept talking about damage control. That was the last thing in my mind. My thoughts kept going to how to communicate our problems and how to make sure that those who became sick were treated fairly.

As it turned out, my thought process was the correct one. We took responsibility for what happened. We communicated clearly about what the issues were. We asked for help in identifying those who might have become sick. We got our insurance company on board. I personally talked with all our food clients and kept talking with them during the crisis.

The combination of all of the things we did helped us stay in business. We did not lose a single client. We had an opportunity to walk our talk. We had unbelievable help from Mr. Prescott and Cool Insuring Agency. All of these things helped us learn seven lessons:

  • Telling the truth is always the best way to go.
  • Don’t hide from your problems. Bring them out in the open.
  • Ask for help and ask quickly when things go wrong.
  • Be responsible for what your company and you do. No excuses allowed.
  • Plan for the worst things that can happen. You never know when your nightmare might come true.
  • Learn from your mistakes and let those affected know what you have done to change.
  • Be transparent in what you are doing and what you are thinking.

I believe these seven things helped us stay in business. I think the most important step we took was to hold the situation-planning exercises. Having a salmonella breakout is not something I would recommend as a character-building exercise, but I had real proof that thinking about what could go wrong is an important step in keeping a company healthy.

What were the worst two weeks in your business life? What lessons did you learn?

Josh Patrick is a founder and principal at Stage 2 Planning Partners, where he works with private business owners on creating personal and business value.

Article source: http://boss.blogs.nytimes.com/2013/07/18/the-worst-two-weeks-of-my-business-life/?partner=rss&emc=rss

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Case Study: A Bakery Is Relieved to Have the Employer Mandate Delayed

July 17, 2013 by Leave a Comment

Rachel Shein: Courtesy of Baked in the Sun Rachel Shein: “I think most of my young and healthy workers won’t buy any insurance.”

Case Study

What would you do with this business?

With President Obama pushing back an important start date for the Affordable Care Act, giving companies with 50 or more full-time employees an extra year before they are required to offer health insurance to their workers, we decided to check in with Rachel Shein and her wholesale bakery, Baked in the Sun.

In March, Ms. Shein and her bakery, based near San Diego, were featured in a case study that looked at what she would have to do to comply with the new health care law. With insurance companies still developing their offerings for businesses like hers, Ms Shein was delighted to learn that the employer mandate was being delayed. “I was thrilled when I heard we had the extra time to watch and wait,” she said.

At the time the case study was written, Ms. Shein had been quite concerned about the potential effects of the law’s implementation. “We saw it as a significant cost to our business, one we hadn’t built into our business model,” she said. Her participation in the case study led to appearances on several TV news programs, including on Fox Business and CNBC.

Initially, Ms. Shein estimated that she would have to pay $108,000 a year to include the 90 employees who are not currently covered by her company’s health insurance. Her insurance broker now believes that when the final rates are published for next year, the cost will be higher than that.

Ms. Shein, though, will have to pay for only those employees who sign up for the plan she offers, and so far, the plans she has seen have not seemed terribly attractive. One sample plan, she said, included a $4,500 deductible, which Ms. Shein said “is too high for low-wage workers, so my employees may be better off going to the state-run market for individuals, which seems to have more options and better prices.”

Insurance company offerings for businesses like hers are expected to evolve, Ms. Shein said, and she hopes better plans and choices become available, as they have on the individual exchange. Right now, Ms. Shein doesn’t know the final costs or how many of her employees will sign up, so she has not been able to  estimate her expenses with any confidence. “It’s still very messy,” she said.

The delay is an opportunity for both companies and employees, Ms. Shein said, because it gives business owners more time to shop around and workers can take the year to see what is available on the exchange before they decide if they will take company-offered insurance.

Ms. Shein is also interested to see if the managers who are covered by her company’s insurance plan find a better deal on the state-run market. She said she believed all workers should have health insurance, and she and her husband have wrestled with the problem for years. In her experience, she said, many of her employees are resistant to coverage that requires an employee contribution. “They are mostly young and healthy,” she said, also noting that the individual penalty for not carrying insurance is low, “and they would rather have a bit more in their paycheck than health insurance.”

For now, she plans to focus on running her baking company. “The recession has made us more efficient,” she said. “We’ve automated more and focused on the most profitable parts of the business. I can’t control the insurance rates, but I can make a great espresso mocha scone.”

This post has been revised to reflect the following correction:

Correction: July 17, 2013

A previous version of this post reported incorrectly that it was Congress that had delayed the employer mandate.

Article source: http://boss.blogs.nytimes.com/2013/07/16/a-bakery-is-relieved-to-have-the-employer-mandate-delayed/?partner=rss&emc=rss

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Small-Business Guide: With Sales Collapsing, an Owner Turns to a Consultant

July 17, 2013 by Leave a Comment

Here is a quick recap of our sales process at the time the trouble started. Inquiries were coming to us in two forms: as e-mail or as phone calls. We would ask a series of technical questions meant to reveal the functional aspects of the potential client’s table needs. We would also ask about the budget. If we received answers, we prepared a proposal, a PDF that contained images of the options we recommended and information on wood choices, power/data options and pricing.

We saw these proposals as a good way to demonstrate our engineering skills and craftsmanship. I had developed the format myself, and we had used it to good effect, with more than $16 million in sales since 2003. I also developed an assembly-line method for the proposals: ask questions, design like crazy and send them off. Next!

When I promoted one of my bench guys, Nathan Rossman, to sales representative, I taught him the same method. And when I added another sales representative, Don Wuest, a year later, he worked in the same manner. We were brilliant at responding to requests, but we did no follow-up. The funny thing is that it was working. At least it was until it wasn’t.

At the beginning of 2012, I set a sales target of $200,000 a month, and in the first two months of the year, we hit it. But March came in weak: we sold only $135,732. April was almost as bad. And May was even worse. I hired five people in 2011 to ensure that I could get $200,000 worth of work out the door each month. That was now looking like a mistake.

Naturally, I spent a lot of time thinking about what was happening and eventually I decided my problem was the economy. In spring 2012, there was a lot of chatter about poor job growth and the possibility of a double-dip recession. I latched on to that story and convinced myself that the problem was out of my hands. Then, in May 2012, I expressed my concerns to my Vistage peer group and got some good advice from the other business owners — namely, that the problem was not the economy and that I needed to look within my own organization. One of the members of the group, Sam Saxton, owns a company, Salter Spiral Stair, that is in many ways similar to mine. It manufactures custom items and sells them over the Internet. He told me that he had hired a sales consultant who had helped him double his sales volume in two years.

Being told that my selling methods might need improvement was a blow to my pride. I had been closing deals for 24 years, and I thought I had a pretty good handle on how it should be done. But I called the consultant Mr. Saxton recommended, Robert Waks. And to be frank, he came on a little strong. I was not prepared for a sales professional unleashing his skill set on me. While my main method had been to let my product speak for itself, to tell the story of how we designed and built tables, Mr. Waks suggested a different approach. His pitch was that we first needed to understand selling, pure selling.

Ultimately, I found him convincing. His ideas made sense to me. On the other hand, I was aware that I was getting the full treatment from an ice-to-Eskimos kind of salesman. And his services were not going to be cheap. He recommended a three-part contract: first, evaluations of me, my sales staff and our methods. Then a 10-week training course for me and my staff. And throughout that, and continuing for a year, monthly consultations. One meeting would be one-on-one with me, and the other with me and my three salespeople. All of this would cost $37,000 — $8,000 to start, the rest spread out in 12 payments.

We began with the evaluations. My three sales staff members and I were given psychological profile assessments along with a test to gauge our attitudes toward selling. I was given an additional set of questions designed to reveal my capabilities as a sales manager. Mr. Waks also spent a morning listening in as we talked to clients on the phone.

A couple of weeks after the evaluations, I received a thick report with the results. The good news is that we all had potential to be sales professionals, although some work would be involved. The bad news was that I scored a zero, literally, as a sales manager. I was not performing any of the practices that defined the role. No regular meetings. No continuing training for the salesmen. No consequences for failure to meet goals. No data gathering, other than the gross sales amounts.

Soon after the evaluations, we started classes. These were group sessions, and most of the attendees came from small companies like mine. I was one of the few boss-level attendees. We were taught the Sandler method, which focuses on understanding whether the person we are talking to has power and how to get to the decision maker. It also teaches techniques of influencing interactions with potential customers, to maximize our chance of closing a deal. I realized that we had been making some classic mistakes.

In particular, we were giving away our design and engineering expertise and revealing our pricing way too early in the process. It was an easy task for a potential buyer to hand our proposals to our competitors and ask them to beat our price. Also, we were making no attempt to figure out where our customer contacts sat in their company’s hierarchy. We had no idea whether the person we were speaking with could make a decision, and we made no attempt to work our way up the power structure so that we could make our case to the people who would actually choose a vendor. We did not have good systems for keeping track of inquiries, and we were not keeping good records of what the sales staff was doing all day.

By the middle of last July, we started to deploy the new techniques, and we started to close deals again. We also introduced a technical modification to our sales process. Instead of sending out PDFs to clients, we started presenting our ideas in Web chat sessions, using screen-sharing software to show potential buyers a 3-D interactive model of our proposed design. This is very cool to see, but it leaves the client without a set of images to hand to our competitors.

Our sales started to recover in July, and in August we hit our target, closing deals worth $200,607. Even better, we kept up the pace for the rest of the year and, somewhat to my surprise, we have continued to do so. We have exceeded my $600,000 sales goal in every quarter since beginning our sales training.

Paul Downs, owner of Paul Downs Cabinetmakers, is a regular contributor to the Times small-business blog, You’re the Boss. This article is adapted from a recent five-part series.

Article source: http://www.nytimes.com/2013/07/18/business/smallbusiness/with-sales-collapsing-an-owner-turns-to-a-consultant.html?partner=rss&emc=rss

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You’re the Boss Blog: Welcome to the Life of a Sales Consultant

July 17, 2013 by Leave a Comment

Robert Waks: Jessica Kourkounis for The New York Times Robert Waks: “This is very common with business leaders.”

Staying Alive

The struggles of a business trying to survive.

We’ve just published a condensed version of Paul Downs’s series about his sales problems last year. As you may recall, sales of Mr. Downs’s custom conference tables took a catastrophic fall in the spring. Things were so bad that he even considered laying off employees.

Instead, he took two actions. First, he reworked his Google AdWords campaign, a process he wrote about last fall. And then he hired a sales consultant, Robert Waks, to review the company’s sales processes and see what could be improved. You can read Mr. Downs’s article to learn more about how that worked out, but we also thought it would be interesting to get Mr. Waks’s perspective on the experience, especially Mr. Downs’s decision not to renew Mr. Waks’s contract.

In business for more than 20 years, Mr. Waks, 51, runs a sales consulting firm based outside of Philadelphia that has eight employees. It specializes in working with small and midsize businesses. The following conversation has been condensed and edited.

In his posts, Paul was open about his discomfort with the whole notion of selling. He even made reference to sensing “snake oil” in the room when he first met with you. What did you make of that?

So, I would say to him that, No. 1, listen, he’s dealing with the best when he’s dealing with me. I would say this comfortably and confidently, that he’s dealing with a sales killer, someone who is extremely skilled at converting opportunities into closure. What I would disagree with him on is the snake oil — I  don’t even know what he meant by that. But to me, snake oil is pitching product at you, and that’s not at all what happened. I was focused on his issues, his concerns, his problems, his pain. There wasn’t even a sale that occurred in the first meeting. In fact, I told Paul why he might not be a good candidate for me.

Why did you say that?

One of the reasons is because Paul is the guru there, the expert. Even in our initial meeting, he was trying to impress me with some of what he was doing even though some of it didn’t make sense. I told Paul, maybe you don’t even want a coach.

Do you find that small-business owners can be stubborn?

There were more than a couple of times where I would make a suggestion to Paul or his team and Paul would too quickly shut it down and say that doesn’t work in our world, even though I know it does. Once again, this is very common with business leaders.

Were Paul’s issues unusual?

It’s something I see all of the time — small- to midsized business owners are our sweet spot. A lot of times we work with a business owner who started the business, who has lived the business and who is passionate about it. Man, when Paul gets on that phone and talks to a client, he can close that sale. The problem is, he doesn’t really know how he does it. He can’t teach or coach someone how to do it. When companies start to grow, they have a hard time replicating that success.

What do you suggest?

Being a sales manager is a tough job. Most business owners fall into that position by default. At a company of Paul’s size, you don’t really need a full-time sales manager. Paul has significantly enhanced his skills, and he knows what he has to do, but his commitment and his passion is not to be a sales manager.

We tested his whole sales team — his sales team really are not sales people. He hired guys that were really good in the wood-working area and have some decent people skills and brought them into sales. When we assessed them, they assessed lower than what I would hope for. But we still had good results. In the heat of battle, people don’t always do what they are supposed to do. When I stay involved in the relationship, they continue to execute much more consistently than if I go away.

Were you surprised he didn’t renew your contract?

Yes. I can’t tell you how many times he said to me, “Man, I owe you. You helped turn the business around.” I got him the results he was looking for, and he did not renew. Welcome to the life of a consultant. But who knows, that may still happen. Paul and I had a very comfortable, warm relationship.

Article source: http://boss.blogs.nytimes.com/2013/07/17/was-the-sales-consultant-surprised-to-not-be-renewed/?partner=rss&emc=rss

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