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You’re the Boss Blog: Debating How to Market an iPhone App

May 24, 2013 by Leave a Comment
Site Insight

What’s wrong with this site?

My most recent post highlighted the struggles of one start-up to persuade customers to download and use its iPhone app. Based on the comments we received, this is a common challenge — and one that is not easily resolved.

Marcela Miyazawa, a founder of the start-up, Wanderable, said the honeymoon gift registry has exceeded her expectations in attracting users, but she is disappointed in the response to the app. She was thankful for all of the reader suggestions, which she discussed in a conversation that has been edited and condensed.

A number of comments questioned why you decided to focus on honeymooners. They expressed concern that the market is too small and that people enter it only once — they hope — in their lives.

Our biggest challenge is our limited audience. We are only relevant to couples getting married in the near future and are currently irrelevant to our users post-wedding and -honeymoon. Still, there are many apps that appear to be marketing themselves successfully to these same couples: Gift Registry 360 allows couples to scan the bar codes of registry items on their iPhones, and Appy Couple is a start-up that allows couples to create seamless wedding Web sites and app integration for planning around their big day. Our challenge is to get in front of this niche audience in a cost-effective manner.

We see a huge opportunity in the emerging honeymoon registry market as couples are getting married later in life and have already accumulated many of the household goods that are common in traditional registries, but we also see an opportunity to broaden our scope beyond honeymoons and already have the functionality for this in place. Wanderable.com and our app already allow for couples to register for anything — from a snorkeling expedition in Fiji, to a new set of china, to pots and pans — and couples can utilize the app to ask for gifts and to send thank-you postcards for items that are not travel-related.

One commenter provided a seven-step guide on how to plan and build your app to increase the chances of its being seen and downloaded. His list includes creating a video and a Spanish version, working with ad networks, and improving the screen shots to include faces. Do you agree with his suggestions?

There are some great points here. A video teaser would be a great announcement of the app, as would paying to have the app featured on relevant wedding sites. However, as a very small start-up we did not have a budget to commit to creating a video for the app — we haven’t had the budget to create a video for our site yet, which would be our first priority. Advertising to the niche market of engaged couples is extremely expensive. Paying for a sponsored post about the app on a major wedding blog like Style Me Pretty costs $3,500 for a weekday run date. It costs $5,000 to be included in a single newsletter sent to Martha Stewart Weddings couples, and you share the newsletter real estate with additional advertisers. With our small budget and tight margins, neither were possible for the app release.

In response to translating the app to Spanish, the vast majority of our current Wanderable honeymoon registry users are in the United States, and so while we would love to expand the app to multiple languages it is not a priority right now. Utilizing an ad network with a revenue-sharing model instead of a pay-per-install model is a great angle for us to explore, and we are doing so because of the feedback from the article. However, it will likely be a challenge given our tight margins and the low amount of revenue to share.

The feedback on the screen shot quality and content has also been useful to our team, and we are using it to take action to create more clear and attractive visuals to promote the app.

One commenter was adamant — judging by his use of exclamation marks — that you were misled about the price for reviews in wedding blogs.

Smaller blogs will run guest posts for free or at a small fraction of this cost, but larger blogs like Style Me Pretty, 100 Layer Cake and Wedding Chicks charge upwards of $1,000, moving into the $3,000 range. While the blog audience is extremely relevant for us, the cost becomes prohibitive. Since we only take a very small fee from transactions from our Wanderable honeymoon registries, we are not able to come close to our target cost per acquisition though these channels. The smaller blogs that are free or low-cost provide very limited traffic to our site (under 20 clicks) and have yet to prove worth the time and resources that go into them.

I know how hard it is to find the perfect name for a business. A few readers were vocal in their belief that the name Wanderable does not describe what you do, limits your potential and is not memorable.

We think the name fits the solution because Wanderable is about making a gift meaningful by being able to give a couple a variety of experiences on their first travels together. The name Wanderable evokes those experiences and the desire to choose the gift of a memorable experience.

How do you feel about the recommendation to work with the various vendors — caterers, photographers, etc. — that are involved in weddings? And what do you think of trying bridal expositions?

This is a great point. We are already in the midst of networking with wedding planners and photographers to capitalize on vendor relationships. For example, we offer wedding planners discounts to provide to their clients who use Wanderable. We have tried bridal expositions in the past but did not see a strong return on investment. It costs upwards of $1,000 to participate, but we only got around 70 leads as a result, and only a small percentage of these leads converted into actual registries.

Richard Demb is co-founder of Abe’s Market, an online marketplace for natural products that is based in Chicago.

Article source: http://boss.blogs.nytimes.com/2013/05/24/debating-how-to-market-an-iphone-app/?partner=rss&emc=rss

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In Tax Overhaul Debate, It’s Large vs. Small Companies

May 23, 2013 by Leave a Comment

Some of the biggest and most powerful companies in the United States are fighting for a cut in the official corporate tax rate, arguing that it is necessary to allow them to compete more effectively in the global market. But the nation’s millions of small businesses fear they will be the ones paying for it.

“We are in favor of comprehensive tax reform that includes both corporate and personal tax, but we are not happy with anything that raises the rate for us,” said Chris Whitcomb, the tax counsel for the National Federation of Independent Business, the leading small business lobbying and advocacy group, representing about 350,000 members.

The conflict, which in some ways is even larger than the controversial issue of how to properly tax multinational corporations on their global profits, arises because the vast majority of American businesses, including some large, well-known companies and prominent Wall Street firms, actually do not pay corporate taxes at all.

Beginning in earnest in the 1980s, millions of businesses shed their traditional corporate status to become what are known as pass-through companies. That led to a boon for business, but was a drain on the Treasury.

But what began as a typical Washington dispute between big and small business has been transformed into a fierce lobbying battle that pits some of the richest firms in the country against one another. Some big pass-throughs “are trying to conflate themselves with smaller pass-throughs,” said one official working on tax reform in Washington — so much so that they could be accused of “small business identity theft.”

Business executives have long complained that a traditional corporation’s profits are taxed twice, first at the corporate level, and then again on the dividends received by shareholders. Pass-throughs, by contrast, are allowed to distribute their profits directly to their owners and investors, who then pay federal taxes on their personal income tax schedule.

This arrangement, previously used almost exclusively by partnerships, very small businesses and the self-employed, proved especially attractive after the major 1986 tax overhaul, which cut personal rates below corporate ones. That spurred a vast migration to pass-through status, a shift that has continued up to the present day.

Of the 34 million business tax returns filed in 2009, the most recent data available, 32 million were pass-throughs, representing about 70 percent of net business income, compared with about one-quarter in 1980.

“Most businesses are pass-throughs,” said Eric Toder, institute fellow at the Urban Institute in Washington. “They dominate the business landscape.”

Companies that switched said the simpler, generally lower single-tax rules gave them a leg up and helped them grow.

McGregor Metalworking Companies, a family-owned business in Ohio and South Carolina, had 80 employees when it converted in 1986 and now has a work force of 370.

“It has been a real force for reinvestment,” said Dan McGregor, 69, chairman of the company, which has seven shareholders.

Even though the top personal income tax rate of 39.6 percent once again exceeds the maximum corporate rate of 35 percent, the pass-through arrangement remains attractive to companies like McGregor Metalworking, analysts say, by avoiding double taxation. And it is even more appealing to firms that are able to treat some of their income as long-term capital gains, which are taxed at no more than 20 percent.

In the 1990s, the introduction of “check the box” tax return procedures sped the growth of pass-through businesses. Other rule changes, allowing companies with more shareholders to qualify and affording investors increased protection against personal liability for their business’s debts, made pass-throughs even more popular — and not only among smaller companies.

Article source: http://www.nytimes.com/2013/05/24/business/in-tax-overhaul-debate-its-large-vs-small-companies.html?partner=rss&emc=rss

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You’re the Boss Blog: Figuring Out How to Help Small-Business Owners

May 23, 2013 by Leave a Comment
Staying Alive

The struggles of a business trying to survive.

I get a fair number of e-mails from my readers. A couple of weeks ago one arrived from a gentleman named Michael Bloch He wrote:

I am a senior at the University of California, Berkeley, studying Business Administration Political Science. Three months ago I founded an organization at Cal called Consult Your Community, which provides low-income, small business owners in college communities with pro bono consulting services. We believe that by helping these business owners improve the performance of their companies, we can create tangible, lasting benefits for both their businesses and our community at large.

Although we have enjoyed tremendous growth in the last few weeks (we have chapters opening at schools like Stanford, Harvard, Yale, Notre Dame, UVA, UNC, UMich, and more) I feel that our members don’t fully understand the small business environment in which we operate. After reading your NYT’s article from this month, I wanted to reach out to see it would be possible to speak with you directly to learn from your wide range of unique experiences, so that our members could be better equipped to serve our clients.

Michael and I did speak on the phone, a conversation that started with my congratulating him for getting his organization off the ground. He also outlined what he wants his organization to do. Consult Your Community has very grand goals. It wants to address income inequality and help rebuild the American economy, while providing a way for large corporations to act in a socially responsible manner. And it plans to do all of this by deploying business students to provide free consulting to local businesses.

I agreed to help. Then we discussed the point he raised in his query, how to prepare his student volunteers for the messy reality of running a business. I know nothing about what business students learn in school, and it’s been a long time since I started my business, but I’m going to throw out an idea based on my own experience. Here’s what everyone needs to know about very small businesses: they have very few resources. Particularly when starting up, entrepreneurs have no money and no time.

Forget what you hear about venture capital financing and software start-ups — those are very unusual situations. (My son Peter has been working at a technology start-up in San Francisco, and it’s a different universe from anything I’ve experienced.) My sense from talking to Michael is that he’s more interested in working with business owners who are trying to start a corner store, or a copy shop, or a coffee shop. Most people start companies like this with their own money — and run through much of it just getting the doors open. The owner’s time is completely wrapped up in trying to get the business going — it takes a lot of time to establish basic operating procedures — and also doing the work. For this person to spend even 10 minutes with a student volunteer may be a lot to ask. No matter how well intended, a misguided approach won’t help anyone.

In more than two decades running a business, I have encountered all kinds of unsolicited input from outsiders. When considering these, I have learned to separate them into two categories: advice and actual help. These are very different. Advice is well meant, and often would be terrific if implemented, but is given without any commitment from the giver. It sounds like this: “You should do some difficult project with lofty goals!” I’ve always been a little grateful to get advice, as it does express some concern for my well-being. But I have rarely been able to act on it, as I have been overloaded with existing responsibilities.

Actual help has been much rarer but a lot better. It generally appears only after some effort on the part of the helper to understand what is really happening in the business, generally through time spent with the owner. Actual help sounds like this: “You are weak in some area of concern, and I’m going to take on a specific task for you.” In other words, the actual helper provides not only a thoughtful, customized analysis, but also the resources to put the plan into action.

In my own business, my greatest weakness was understanding my finances. The most useful actual help I received was having my partner’s wife set up my QuickBooks properly. She spent time with me, understanding my make-shift system, rolled up her sleeves, and got it done. This took several months of part-time work. Having my books set up in a conventional manner allowed me to hire a bookkeeper to maintain them. I was still a long way from real profit, but that one act set me on the road to sustained success.

Consult Your Community’s Web site lists four services that it intends to deliver: marketing, finance, environmental, and human resources. Michael and I did not discuss where this list came from, but let’s assume that it reflects course work that the students have done. Presumably, they have an academic understanding of these concepts, and now they have to apply them to real businesses. This, in my opinion, is where it might get tricky. Are those the primary problems that a small-business owner faces?

Based on my own experience, I would immediately remove environmental issues from the list — my clients simply do not care how green we are. And I would change marketing to selling, a related but different problem. Finance and human resources are always good to think about but maybe not in the way they are taught in school. My experience with finance has been about living simply, begging help from relatives, and running a large credit card balance now and then. H.R. has been easy except when it’s dreadful: disciplining and firing workers for things they have done, and sometimes having to lay them off because of bad business conditions.

Every business is different. The problems depend on the particular skill set of the owner. I hope that Michael’s volunteer helpers will work with business owners to identify areas of weakness and then provide actual help, not just advice. But that’s just me.

What would you tell Michael? If some bright-faced young business students showed up at your door, what would you want them to do?

Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside Philadelphia.

Article source: http://boss.blogs.nytimes.com/2013/05/23/figuring-out-how-to-help-small-business-owners/?partner=rss&emc=rss

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You’re the Boss Blog: How We Train Employees to Analyze the Business

May 23, 2013 by Leave a Comment
Building the Team

Hiring, firing, and training in a new era.

“Be direct.”

This is one of our core values at H.Bloom. It stems from another one of our values, which is to care deeply about our colleagues, and from the shared ambition to become as good as we can possibly be in this business. The only way to achieve this is to be direct with each other about areas of improvement. Otherwise, how will any of us know what to improve?

In my last two posts, I have written about the importance of practice, the formal training that we have set up, and shared the details of a specific management class that I led recently on data-driven decision-making. In this post, I want to walk through some of the projects our managers presented as part of the assignment from that class, and the direct feedback that I gave them so that they could work on the continued development of their skills.

After the training class, I gave the following assignment to our market managers and sales managers:

  1. Identify a problem or opportunity in your market.
  2. Analyze any available data about that problem or opportunity.
  3. Use the evaluation of data to draw a conclusion.
  4. Present your findings to the group.

The class participants could work on this assignment individually, or in teams, and they were given two weeks to complete the project. Here are four examples of what the participants presented, and how we used the presentations as an opportunity to give direct feedback on the skills they had learned.

Automate a Process

One of our market managers presented the need for a new piece of software that would automate the process of fulfilling same-day orders. Today, these orders are guided to completion in a relatively manual way. There is no question this process needs to be automated. However, as a three-year-old start-up, almost everything we do still needs to be automated. The presentation skipped over the data analysis and jumped right to the conclusion. While the conclusion was sound, the presentation missed the mark because of the lack of supporting data.

In our company, there is tremendous opportunity to derive competitive advantage by automating manual processes, but the trick is in deciding which processes to automate first. I gave this market manager direct feedback: First, when the assignment is data-driven decision-making, don’t forget the data! Second, and the important lesson in this interaction, was that because everything needs to be automated, the only way to determine what to do next is to compare the potential return of one project to that of another. With this filter, we work on the highest-value projects first, and eventually, we will get to everything. I asked this market manager to redo the presentation.

Buy Some Equipment

Another presentation, this time from a current SEED participant, suggested that we purchase a piece of equipment to deliver a particular corporate service in a more efficient manner. The numbers were sound: the presentation showed cost, a detailed potential return, and months to break-even. The return on investment was compelling, except for one other piece of data – this new business, one we had just introduced, was not yet profitable. I suggested to the presenter that we should drive the business to profitability first – which was only a couple of months away – before investing further in the line. While the presentation analyzed data, I thought it missed the analysis of contextual data (in this case, the profit and loss of the business line itself). The presentation provided a good opportunity to share with this future market manager my philosophies on investing limited capital, introducing new lines of business, and investing in those businesses for scale and efficiency.

Eliminate Wasted Effort

Two sales managers presented a detailed analysis of our sales pipeline. They enumerated activities by account executive, conversion rate and closed deals. They conducted an in-depth survey with current account executives, and identified a situation in which our sales people were duplicating efforts by entering the same data into two different systems. They calculated the potential uplift in sales if this wasted effort were removed and concluded that our engineering team should build the required functionality. My reaction was not what they expected. In the process of presenting their findings, they highlighted the number of activities that our account executives complete on average per day. When I asked the sales managers if they thought it was conceivable that our account managers could do more activities per day, the answer was a resounding, “Yes.”

In fact, these sales managers believed that our sales people could execute twice the number of activities per day even without implementing their suggestion. When I then asked them to compare the potential value of a) increasing the number of activities per account executive per day to b) removing the duplicative process, they saw that the former would provide a much larger return. My feedback to them was simple – if the data is there, make sure to draw the most rewarding conclusion. As a result of the presentation, the sales managers met as a group and instituted a new minimum number of activities a day, supported by our incentive program, and that has now been introduced to our entire sales force.

Try a Loyalty Program

One of our most seasoned sales managers analyzed our corporate subscription business. She proposed the introduction of a customer loyalty program, whereby we would systematically deliver something extraordinary to our customers as a thank-you for their loyalty during the previous year. This program could do two things: 1) surprise and delight our customers and 2) help ensure that they continue their subscription. The team compared the cost of this program to the potential benefit and proposed a pilot program that would contain our costs while enabling us to see any positive results in just two months. I gave the sales manager my feedback: it was a great presentation; a thorough analysis of the data; and a thoughtful decision to propose a pilot program. As a result of the presentation, I approved the program, which is in process right now. We will be able to assess the results in a couple of months.

Bryan Burkhart is a founder of H.Bloom. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/05/23/how-we-train-employees-to-analyze-the-business/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

You’re the Boss Blog: Training Employees to Analyze the Business

May 23, 2013 by Leave a Comment
Building the Team

Hiring, firing, and training in a new era.

“Be direct.”

This is one of our core values at H.Bloom. It stems from another one of our values, which is to care deeply about our colleagues, and from the shared ambition to become as good as we can possibly be in this business. The only way to achieve this is to be direct with each other about areas of improvement. Otherwise, how will any of us know what to improve?

In my last two posts, I have written about the importance of practice, the formal training that we have set up, and shared the details of a specific management class that I led recently on data-driven decision-making. In this post, I want to walk through some of the projects our managers presented as part of the assignment from that class, and the direct feedback that I gave them so that they could work on the continued development of their skills.

After the training class, I gave the following assignment to our market managers and sales managers:

  1. Identify a problem or opportunity in your market.
  2. Analyze any available data about that problem or opportunity.
  3. Use the evaluation of data to draw a conclusion.
  4. Present your findings to the group.

The class participants could work on this assignment individually, or in teams, and they were given two weeks to complete the project. Here are four examples of what the participants presented, and how we used the presentations as an opportunity to give direct feedback on the skills they had learned.

Automate a Process

One of our market managers presented the need for a new piece of software that would automate the process of fulfilling same-day orders. Today, these orders are guided to completion in a relatively manual way. There is no question this process needs to be automated. However, as a three-year-old start-up, almost everything we do still needs to be automated. The presentation skipped over the data analysis and jumped right to the conclusion. While the conclusion was sound, the presentation missed the mark because of the lack of supporting data.

In our company, there is tremendous opportunity to derive competitive advantage by automating manual processes, but the trick is in deciding which processes to automate first. I gave this market manager direct feedback: First, when the assignment is data-driven decision-making, don’t forget the data! Second, and the important lesson in this interaction, was that because everything needs to be automated, the only way to determine what to do next is to compare the potential return of one project to that of another. With this filter, we work on the highest-value projects first, and eventually, we will get to everything. I asked this market manager to redo the presentation.

Buy Some Equipment

Another presentation, this time from a current SEED participant, suggested that we purchase a piece of equipment to deliver a particular corporate service in a more efficient manner. The numbers were sound: the presentation showed cost, a detailed potential return, and months to break-even. The return on investment was compelling, except for one other piece of data – this new business, one we had just introduced, was not yet profitable. I suggested to the presenter that we should drive the business to profitability first – which was only a couple of months away – before investing further in the line. While the presentation analyzed data, I thought it missed the analysis of contextual data (in this case, the profit and loss of the business line itself). The presentation provided a good opportunity to share with this future market manager my philosophies on investing limited capital, introducing new lines of business, and investing in those businesses for scale and efficiency.

Eliminate Wasted Effort

Two sales managers presented a detailed analysis of our sales pipeline. They enumerated activities by account executive, conversion rate and closed deals. They conducted an in-depth survey with current account executives, and identified a situation in which our sales people were duplicating efforts by entering the same data into two different systems. They calculated the potential uplift in sales if this wasted effort were removed and concluded that our engineering team should build the required functionality. My reaction was not what they expected. In the process of presenting their findings, they highlighted the number of activities that our account executives complete on average per day. When I asked the sales managers if they thought it was conceivable that our account managers could do more activities per day, the answer was a resounding, “Yes.”

In fact, these sales managers believed that our sales people could execute twice the number of activities per day even without implementing their suggestion. When I then asked them to compare the potential value of a) increasing the number of activities per account executive per day to b) removing the duplicative process, they saw that the former would provide a much larger return. My feedback to them was simple – if the data is there, make sure to draw the most rewarding conclusion. As a result of the presentation, the sales managers met as a group and instituted a new minimum number of activities a day, supported by our incentive program, and that has now been introduced to our entire sales force.

Try a Loyalty Program

One of our most seasoned sales managers analyzed our corporate subscription business. She proposed the introduction of a customer loyalty program, whereby we would systematically deliver something extraordinary to our customers as a thank-you for their loyalty during the previous year. This program could do two things: 1) surprise and delight our customers and 2) help ensure that they continue their subscription. The team compared the cost of this program to the potential benefit and proposed a pilot program that would contain our costs while enabling us to see any positive results in just two months. I gave the sales manager my feedback: it was a great presentation; a thorough analysis of the data; and a thoughtful decision to propose a pilot program. As a result of the presentation, I approved the program, which is in process right now. We will be able to assess the results in a couple of months.

Bryan Burkhart is a founder of H.Bloom. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/05/23/how-we-train-employees-to-analyze-the-business/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

You’re the Boss Blog: What It Takes to Start a Company: Sleeping in a Van?

May 22, 2013 by Leave a Comment
Dashboard

A weekly roundup of small-business developments.

Ever feel the need to get out of the office more? You may want to consider the example of Kevin Hong and Evan Pham.

As noted in Monday’s Dashboard summary of the week’s small-business news, the two 20-something co-founders of Dealflicks — “it’s a Priceline for movie tickets” — are traveling the country and living out of a van in an effort to sign up new customers (we first wrote about the start-up in November). So what’s life really like on the road for the ultimate bootstrappers? We had the following conversation, which has been edited and condensed.

Priceline for movie tickets? Please explain.

Our movie ticket deals are up to 60 percent off on our Web site, our iPhone app, and our Android app, and they’re available 24/7/365. We partner directly with movie theaters — over 88 percent of theater seats are currently empty — and negotiate to bring customers deals on tickets, soda, and popcorn. We’re in 150-plus locations, and we’re looking to expand to 500-plus locations before the end of the year.

Are your other partners jealous of the road warrior life? 

We’ve never asked, but if they are, it’s probably for the weekends. Every weekend we’re in a new city, and it’s fun to explore each city’s nightlife.

Starting a business can be risky, but have your lives ever been at risk sleeping in a van around the country?

Not yet.

Couldn’t you have just picked up the phone?

The theater business is a relationship-driven business. We actually had a meeting analyzing our data once we reached 100 theater locations. Out of the 100 locations we signed up, 94 of them had some type of face-to-face interaction. We were shocked, and that became the genesis of our odyssey.

When you meet prospective customers, do you tell them what you are doing? Is full disclosure a good idea in this situation?

We definitely don’t lead the conversation by explaining our housing situation. But after sharing a few drinks, the whole story usually all comes out. It definitely helps earn their respect and seal the deal. Living in a van not only puts a roof over our heads, but when we need to meet our clients, we can take turns driving and cover a massive amount of ground. The flexibility is imperative for a start-up since game plans can change day-to-day. The van never stops. If we spend time renting cars and checking into airports, we lose out.

So why not just use commission-based outside sales representatives to sell your services?

We’ve done this too — and still are doing it — but it’s simply not as effective as what we’ve have been doing.

It all sounds tiring. At what point will you get off the road?

There aren’t any particular financial goals that we must meet to get off the road. If you’re a founder of a company, you want to do everything possible to give yourself the best shot at success. You are also burdened with the responsibility of developing your company’s culture. We wanted to set the tone, to set the bar high. We believe that one day we’ll be managing a company of over 100 employees, and we wanted to ensure that we developed a can-do spirit for everyone to follow.

When you eventually hire sales reps, what advice will you give them?

Never believe a deal is sealed until you get someone’s signature on the dotted line.

What’s your best road story so far?

It had to be the time we were down in Mississippi. We ended up parking in someone’s backyard behind their barn. We sometimes sleep in our boxers, and we figured we could wake up at 6 a.m. and no one would notice. Sure enough, at 5 a.m. I see a grandma and grandpa peeking through our window. After a moment of frustration, fatigue kicked in and we went back to sleep. An hour later, and they were still there! It’s as if they’d never seen two men sleep in a van! We finally summoned the courage to get up, and we boldly introduced ourselves, still wearing our boxers. Despite the awkwardness, they were surprisingly nice. They actually offered some blankets and invited us over for breakfast.

Would you ever see yourself taking a corporate job again?

We’d rather live in a van and work on another start-up than take on another corporate job.

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/2013/05/22/what-it-takes-to-start-a-company-sleeping-in-a-van/?partner=rss&emc=rss

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Hidden in Plain Sight, Tiny Mall Kiosks Make a Surprisingly Big Impact

May 22, 2013 by Leave a Comment

Typically bound by short-term leases, displaying products made by others, and run by first-time entrepreneurs with limited capital, shopping mall carts and kiosks have long been considered an unsophisticated small-business underclass. More recently, however, these small-footprint retailers have come to be seen as possessing surprising potential.

“We’d been in business five years at one of our Atlanta kiosks,” said Taki Skouras, chief executive of Cellairis, which sells chargers, batteries, decorative cases and other accessories for wireless devices. “A lady bought something and asked, ‘Hey, are you guys going to be here after the holidays?’ We just celebrated our 13th anniversary at that location.”

Today, employing a corporate staff of 130, manufacturing 70 percent of its 60,000 distinct products and shipping from nine warehouses, Cellairis has 720 retail locations. Most are no bigger than 150 or 200 square feet, but systemwide revenue now exceeds $350 million a year. For Cellairis and others, kiosks have become a very big business.

“Ten to 15 years ago, this was an opportunity for someone to take in a million dollars,” said Patricia Norins, chief executive and publisher of Specialty Retail Report, which covers the 50,000 carts, kiosks and automated vending locations in the nation’s more than 2,300 malls. “Now, I think you could point to 50 who are at least $10 million in annual sales and maybe five who are doing upwards of $100 million.” Ms. Norins is no stranger to the middle of a mall. In the 1970s, her parents sold Christmas ornaments from atop four folding tables pushed together in malls in New Jersey and on Long Island. Eventually, they expanded to 300 malls.

Much has changed since 4-foot-by-8-foot carts with wagon wheels — known as retail merchandising units, or R.M.U.’s — had their debut some four decades ago. Realizing the value of their mini-merchants, malls installed electrical outlets and better lighting in the middle of their shopping concourses. More recently, Wi-Fi-enhanced laptops and tablets have enabled merchants to maximize their tiny selling spaces. Thanks to Square and other credit card swiping apps, many operators display more merchandise where a countertop register once sat. Others use an iPad to showcase merchandise they do not have room to stock, and the close sales remotely, with real-time instructions to the warehouse to ship the goods to the buyer’s home.

But several advantages of specialty retailing remain constant and help explain the $8 billion in annual mall sales that Ms. Norins attributes to this often-overlooked venue.

“We call it 360-degree retail,” said Ted Kaminski, senior vice president of specialty leasing for The Westfield Group, owner of 47 malls in America and 104 around the world. “It’s your product, your presentation, your service exposed on all sides.”

Whereas conventional mall stores need window displays to coax customers across their thresholds, carts and kiosks are retailing islands awash in a constant flow of potential customers. “That’s the best advertising money can buy,” said Mosin Khan, vice president of operations at S.h.a.p.e.s Brow Bar, an eyebrow threading alternative to waxing and plucking. “This saves us thousands of dollars on advertising. We don’t send any mailers to houses. We just count on the people who come to the mall.”

Starting with a cart in a Chicago mall in 2004, S.h.a.p.e.s effectively road-tested the brow treatment offered by Mr. Khan’s wife in her full-service Chicago salon. And it did so cheaply, paying only $2,100 in monthly rent. Success with a second cart led to a kiosk the next year, which increased rent to $4,600 — still about half of the cost of an in-line store. Mr. Khan points to the added savings on construction: $25,000 to $30,000 for a kiosk versus a minimum of $100,000 to build out a store. Moreover, operating in what malls call “temporary leasing spaces” also lowers labor costs. Most carts can be run by a single employee per shift. Kiosks typically position two employees inside the structure.

Mr. Kaminski said carts and kiosks served as retail incubators, noting: “We often incubate a tenant from an R.M.U. to a kiosk — and sometimes the progression is from kiosk to in-line store.” But even when they make the leap into stores, many cart and kiosk merchants maintain their roots. S.h.a.p.e.s now has some two dozen full-fledged stores that offer more chairs, additional services and a more private experience — an important consideration, especially for the male customers who account for nearly 10 percent of the business. But the company also has 42 kiosks, some of which build the brand and send overflow business to a nearby store in the same mall. Mr. Khan plans to expand mostly through franchisee-run kiosks, which are made in Asia for as little as $5,000 apiece. “One of my selling points to franchisees,” he said, “is I can put you in business for as little as $30,000.”

Article source: http://www.nytimes.com/2013/05/23/business/smallbusiness/hidden-in-plain-sight-tiny-mall-kiosks-make-a-surprisingly-big-impact.html?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

You’re the Boss Blog: Why Alternative Lenders Should Set Some Standards

May 22, 2013 by Leave a Comment
Searching for Capital

A broker assesses the small-business lending market.

In my loan brokerage, the phone often rings with small-business owners who want cash quickly for a wide variety of reasons. They may be in a desperate situation, or they may be so fed up with the local banks that they don’t even want to try that route. Or perhaps they’ve been told by friends how frustrating it can be to apply for a Small Business Administration loan.

In many cases, these owners are calling to because they want to know more about merchant cash advance loans, which can be very appealing. They can get money in a few days, and they pay it back with payments that come out of their revenue, typically over a six-month period. “We will lend you $30,000, and you will pay us back $36,000 over six months,” the sales representatives say.

The business owner is enticed, thinking, well, it will only cost me $6,000 — and the interest rate is only 20 percent. The reality, though, is that the interest rate is more than 40 percent, because the term is only six months. And because the term is so short, the business owner is often forced to renew the loan before it’s paid off. If owners do this more than once, their debt expenses can spiral out of control.

These alternative lenders have received a lot of publicity of late. OnDeck Capital, for example, recently announced big investments from the likes of Peter Thiel and Google Ventures. The company borrows money from investors, including Goldman Sachs, and then turns around and lends it in the small-business market at much higher rates. Another alternative lender, Kabbage, which has a different business model, recently announced that it is the first lender to use QuickBooks data to underwrite small-business loans. A Kabbage loan works more like a short-term line of credit, with the merchant making payments monthly instead of daily. On its Web site, Kabbage states that its fees run between 2 percent and 10 percent percent in each of the first two months of a typical loan and then 1 percent a month for the last four months.

As I read these articles, I am torn between being genuinely impressed by the innovation and technology spawned by these companies and feeling the pain that I know their interest rates can cause. I feel these emotions even more strongly when, other options exhausted, I put my own clients into these types of loans — after first advising them of the risks.

I understand that there will always be a broad range of supply and demand in small-business lending. There will always be people or companies willing to lend to almost anybody for the right price. And I also understand that regulators will often be years behind the changes that occur in the industry. And whenever a new set of regulations takes hold, the high risk lenders are likely to shift directions any way. I don’t think this will change. But I do think it’s important to ask whether it should be considered acceptable for established corporations and reputable brands to invest in these lenders and lend them money that will in turn be loaned to small businesses at much higher rates.

The annual percentage rate on an On Deck loan can be as high as 60 percent, which is high enough to make most rational business people shake in their boots and has been termed “near usurious” in Forbes. When the mayor of New York recently honored On Deck with a visit to its new offices, I wondered whether his staffers had briefed him on the interest rates the company charges small businesses. On Deck argues that its prices are considerably lower than those charged by other players in the cash-advance industry, and that is true.

Companies like Advance Me and RapidAdvance charge rates that can exceed 100 percent. And they are backed by Wells Fargo, which mystifies me. I don’t understand how a federally regulated bank can borrow money from the government and then turn around and lend to alternative lenders that charge small businesses those kinds of rates.

Again, though, I do think there is a place for accredited, reputable lenders that innovate and that are willing to take more risk then banks take. And these alternative lenders should be paid more for the risk they take and the additional service they provide. I  know many of the entrepreneurs who started these companies, and I don’t believe that their agenda is to try to damage small-business owners. They are technologists who set out to build platforms to try to make the lending process more efficient and to open up opportunities. And in many cases, they have done just that. They have accomplished things that would have taken the big banks decades to develop.

I also know many of the investors behind these companies, and their focus is not on the high annual percentage rates. These investors are thinking about disruptive technologies and big opportunities. Alternative lending to small businesses fits perfectly into their sweet spot. They are doing their jobs, answering to the people who invest in their funds.

What I wish these companies would do is to set some standards. This would include a commitment for clear and transparent loan pricing and plans to help their clients graduate out of their financing, so it does not become permanent. I would also like to see them leverage their entrepreneurial spirit to try to drive rates down for creditworthy small-business owners. And they could do a better job reporting on their loan volumes.

By coming together, setting standards and striving for improvement, the alternative lenders could bring credibility to an industry that needs it.

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/2013/05/22/why-alternative-lenders-should-set-some-standards/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

You’re the Boss Blog: The Real Meaning of Corporate Culture

May 21, 2013 by Leave a Comment
Creating Value

Are you getting the most out of your business?

The term is overused, but I believe corporate culture is important. In particular, understanding how your culture works can help you decide who is a good fit for your company.

When I coach people on hiring, I always start with culture, which I define as what you value, what is important for you and your company. Culture always starts with the owner. In companies where culture is well-defined, it is reflected in every hiring decision. But it can be complicated. I see problems when companies do not pay attention to the traits that make people successful in their companies. Do you want people to work independently, or do you think teamwork and collaboration are more important? Is working lots of hours essential? If you don’t know the answer to these questions, you may have problems.

I recently had a conversation on this topic with Tom Gimbel of the LaSalle Network, which is in the temporary staffing business. The company serves 2,500 companies in the Chicago area and produces more than $30 million in annual sales. Since 2008, LaSalle has been growing at about 20 percent per year. Mr. Gimbel credits much of this growth to a strong culture. When asked what that meant, he talked about creating a humane place to work that is attractive to people in their mid-20s. He told me that his belief system was what was important in the company, and he spent lots of time thinking about how to share that system with those who work with him.

At first, his focus on culture sounded a little loose to me. I asked him what his biggest problem was. He told me that his new employees would often mistake a humane culture for one where it’s all fun and games — as if hard work and results were not important. At a company with significant growth, hard work is always part of the deal. But Mr. Gimbel believes that high growth and being humane can be compatible. His challenge has been how to communicate those separate needs.

Mr. Gimbel’s goals are to reach $100 million in revenue and to go public. To accomplish this, he will have to reinvent his company several times. Running a $35 million private company is very different from running a $100 million public company. It will be easier to hit these targets if the company’s employees share the same basic beliefs about what is important — and that is the mission of his human resources department. Mr. Gimbel calls his H.R. department a human concierge department. Unlike most employers, he expects his H.R. people to help employees not just with the usual stuff but with life problems as well.

Doing this, he said, has earned his company committed employees. He believes that being a good place to work has a real business benefit. His recruitment costs are small, because he has little problem finding people who want to work at his company. Instead of recruiting, his H.R. people spend their time making sure that those who join the company are a good fit.

To attract people who share your belief system, it’s important to have a system. Learn to ask good questions. Learn to ask follow-up questions that allow potential employees to talk. I recommend that you make a list of traits that everyone in your company must possess. In Mr. Gimbel’s case, he might look for employees who are self-starters, who work in a collaborative manner, who have high people skills and are personally responsible.

There is an art in searching for fit. During the interview process, it’s important to give potential employees the opportunity to tell you how they live the traits you’re looking for. You don’t want to ask a direct question like, “Tell me how you’re personally responsible in your life.” Instead, you might ask candidates to talk about a problem they have solved. Precisely how they solved the problem isn’t as important as their attitude about the problem. As they talk, listen carefully. If you can’t figure out whether the person is responsible, ask what prevented the problem from being solved or what solved it. The answers should allow you to hear the candidate either taking responsibility or blaming others. Sometimes it’s subtle, but subtle differences can determine fit.

Potential candidates should have several interviews with different people at different levels in your company. To do this well, though, you have to train your current employees how to do an interview that focuses on listening.

And in the end, no matter what technical skills your candidates possess, you cannot let them join your company if they do not fit in. Technical skills can be taught. I don’t think belief systems can.

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/2013/05/21/the-real-meaning-of-corporate-culture/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

Creating Value: The Real Meaning of Corporate Culture

May 21, 2013 by Leave a Comment
Creating Value

Are you getting the most out of your business?

The term is overused, but I believe corporate culture is important. In particular, understanding how your culture works can help you decide who is a good fit for your company.

When I coach people on hiring, I always start with culture, which I define as what you value, what is important for you and your company. Culture always starts with the owner. In companies where culture is well-defined, it is reflected in every hiring decision. But it can be complicated. I see problems when companies do not pay attention to the traits that make people successful in their companies. Do you want people to work independently, or do you think teamwork and collaboration are more important? Is working lots of hours essential? If you don’t know the answer to these questions, you may have problems.

I recently had a conversation on this topic with Tom Gimbel of the LaSalle Network, which is in the temporary staffing business. The company serves 2,500 companies in the Chicago area and produces more than $30 million in annual sales. Since 2008, LaSalle has been growing at about 20 percent per year. Mr. Gimbel credits much of this growth to a strong culture. When asked what that meant, he talked about creating a humane place to work that is attractive to people in their mid-20s. He told me that his belief system was what was important in the company, and he spent lots of time thinking about how to share that system with those who work with him.

At first, his focus on culture sounded a little loose to me. I asked him what his biggest problem was. He told me that his new employees would often mistake a humane culture for one where it’s all fun and games — as if hard work and results were not important. At a company with significant growth, hard work is always part of the deal. But Mr. Gimbel believes that high growth and being humane can be compatible. His challenge has been how to communicate those separate needs.

Mr. Gimbel’s goals are to reach $100 million in revenue and to go public. To accomplish this, he will have to reinvent his company several times. Running a $35 million private company is very different from running a $100 million public company. It will be easier to hit these targets if the company’s employees share the same basic beliefs about what is important — and that is the mission of his human resources department. Mr. Gimbel calls his H.R. department a human concierge department. Unlike most employers, he expects his H.R. people to help employees not just with the usual stuff but with life problems as well.

Doing this, he said, has earned his company committed employees. He believes that being a good place to work has a real business benefit. His recruitment costs are small, because he has little problem finding people who want to work at his company. Instead of recruiting, his H.R. people spend their time making sure that those who join the company are a good fit.

To attract people who share your belief system, it’s important to have a system. Learn to ask good questions. Learn to ask follow-up questions that allow potential employees to talk. I recommend that you make a list of traits that everyone in your company must possess. In Mr. Gimbel’s case, he might look for employees who are self-starters, who work in a collaborative manner, who have high people skills and are personally responsible.

There is an art in searching for fit. During the interview process, it’s important to give potential employees the opportunity to tell you how they live the traits you’re looking for. You don’t want to ask a direct question like, “Tell me how you’re personally responsible in your life.” Instead, you might ask candidates to talk about a problem they have solved. Precisely how they solved the problem isn’t as important as their attitude about the problem. As they talk, listen carefully. If you can’t figure out whether the person is responsible, ask what prevented the problem from being solved or what solved it. The answers should allow you to hear the candidate either taking responsibility or blaming others. Sometimes it’s subtle, but subtle differences can determine fit.

Potential candidates should have several interviews with different people at different levels in your company. To do this well, though, you have to train your current employees how to do an interview that focuses on listening.

And in the end, no matter what technical skills your candidates possess, you cannot let them join your company if they do not fit in. Technical skills can be taught. I don’t think belief systems can.

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/2013/05/21/the-real-meaning-of-corporate-culture/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,
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