IntersectFund

Entrepreneur Seeks to Expand Opportunity

Joe — Mon, 14 May 2012 14:40:18 +0000

When Suzanne Pease worked as a schoolteacher in Illinois some years ago, an involuntary sabbatical interrupted her employment: the school district for which she worked insisted she abstain from teaching for five years after becoming pregnant with her son. Pease chafed at what she saw as an arrogant attempt dictate the way in which she balanced family duties with career aspirations.

Since then, Pease has moved with her family to New Jersey, where she founded the Morganville-based Ampersand Graphics, a design firm specializing in small-business branding. As built her business, she noticed gender-based biases like the one she’d experienced before pervade the business world, hampering female entrepreneurs’ efforts to seek business financing and government contracts.
Over the years, Pease has striven to bring about a business landscape in which gender equality is the norm.

Since 1988, Pease has been active in the National Association for Women Business Owners. She served as president of the organization in the early 2000s – a role that brought her to Europe and Northern Africa to represent the United States at conferences for women entrepreneurs – and belongs today to the group’s Central New Jersey chapter.

The year in which Pease joined NAWBO was a big one for the organization: it was in 1988 that the group helped pass the Women’s Business Ownership Act, which nullified state laws requiring women to include a male co-signer on business loan applications. “It was really that landmark that basically said women business owners have the same rights as men,” Pease said. She added, though, that while the law made strides toward assuring equal rights, it fell short of assuring equal opportunity.

The Center for Women’s Business Research reports that as of 2009, women owned 40 percent of America’s privately held firms. But the percentage of federal contracting dollars awarded to women-owned businesses is miniscule. The federal government has tried to correct this: in 1994, Congress passed the Federal Acquisition Streamlining Act, which set a goal of awarding 5 percent of federal contracting dollars to “small disadvantaged businesses” (a category that includes women-owned businesses) and historically black colleges and universities.

Sixteen years later, the five-percent goal remained unmet. An Inc. Magazine article that appeared last July reported that in 2010, women-owned businesses received only 3.4 percent of federal contracting dollars.

Pease offered what seems like a promising solution to closing the federal contracting gap: she cited an experiment in which the procurement officer at a United States Air Force Base viewed bids for a certain job only after the applicants’ names had been removed. “There was a significant increase in awards for minority- and women-owned businesses when the contract officer was unaware of the bidders’ race or gender,” Pease said.

Pease said she strives to bring about a business landscape in which equal opportunity is commonplace. This sounds intuitive, but Pease said it could be a difficult goal to achieve. “It’s easier to say we’ll have the first woman on the moon or in space, or the first officer of a Fortune 500 company. Those firsts have been achieved. It’s hard to rally excitement around being average,” she said.

What a Lender Looks For

Joe — Mon, 07 May 2012 16:00:30 +0000

Entrepreneurs often think about seeking a loan, but too few know what a lender looks for.

In this post, we will offer some guidance for business owners who are confident a loan could help them, and who feel they can cover the interest payments that borrowing entails. Specifically, we’ll offer a view from the lender’s perspective:

Use of Funds

When a lender reviews an application or speaks with a potential client, one of the first things she notices the purpose: that is, what the client intends to do with the loan. The easiest loans to make are those that fund assets with re-sale value: equipment, for instance, or property.

One reason for this is that equipment and property purchases are the ones that will most likely increase a business’s income: if there’s a huge demand for the hot dogs you sell, one can reasonably assume that buying a second hot dog cart will help you sell more hot dogs. Similarly, if your factory tackles crushing demand, building a larger one may well be a wise move.

Another reason is that asset loans are the safest kind to make. If your business fails after you’ve received your hot dog cart loan, you can re-sell the cart to recoup some of its original value and (hopefully) repay your loan.

Lenders know this, so they are more willing to lend for re-sellable assets than for expenses – like rent, payroll, insurance or marketing – that they cannot transform back into cash. It’s this principle that drives down the interest rates on home- and auto-loans (the bank can repo your home or car) and drives up the rates on credit cards (they can’t repo your epic bar crawl or last year’s vacation).

The Five Cs

When a lender deems your proposed purpose viable, she must gauge whether the loan is a responsible one to make: that is, whether her bank will get its money back. Various lenders have unique, complicated ways of making this decision, but one set of guidelines pervades the industry: the “Five Cs” of lending.

The Cs are character, cash flow, capital, conditions and collateral.

To assess character, a lender will often combine gut feeling with an assessment of your FICO score and bureau reports. Cash flow is your ability to repay: a second source of income and strong evidence of your ability to earn profit help. Conditions refer to the health of your industry or the economy, and collateral is what the bank can repo in the event of default.

Remember, the best way to fund your business is with your own savings. If you decide seeking a loan is the best route for you, though, you can make the process easier on yourself by viewing it from the lender’s perspective.

Photo courtesy of PTMoney.com

Good Markets

Rohan — Tue, 24 Apr 2012 23:15:02 +0000

Some markets earn you big bucks; others disappoint. Below is a list of New Jersey markets at which some of the Intersect Fund’s most seasoned vendors have found success. If you have one you’d like to add to the list, e-mail Joe Shure to let him know.

New Jersey Association of Women Business Owners Holiday Expo: Great event at the Bethwood in Totowa, NJ. Crafts & specialty gifts do well here. For more information, visit the website of the Passaic County NJAWBO chapter. Recommended by Kim Osterhoudt

South Brunswick High School Project Graduation: The high school, located in South Brunswick’s Monmouth Junction section, hosts this event each year in late November. Organizers sell tables for reasonable fees and many vendors participate. Recommended by Kim Osterhoudt

First Unitarian Society of Plainfield Holiday Craft Fair: Generally takes place on a Saturday in December. Tables, which tend to go to food and craft vendors, are reasonably priced. Check out the church’s website here. Recommended by Kim Osterhoudt

Valenzano Wine Festival: Taking place at Valenzano Winery in Shamong, NJ, this market caters to eager shoppers. Last year, tables cost $100. “It’s in South Jersey, but worth the trip for me,” said Kim Osterhoudt, who recommends this market. Check out the winery’s website to seek more information.

Bordentown Cranberry Festival: This two-day street festival attracted approximately 6,000 last year. Organizers require vendors to bring their own tents. This market will take place in early October this year; find the organizers’ contact information here. Recommended by Kim Osterhoudt

Princeton Farmers Market: Vendors sell foods as well as art and crafts at this market. It takes place monthly from December through April, then weekly from May through November. Tables at the monthly markets cost $10; the right to vend for at the weekly markets costs $375 for the season. Vendors must seek approval from organizers. For more information, call market manager Judith Robinson at (609) 356-0558. Recommended by Kim Osterhoudt

Whole Foods Princeton: The store hosts periodic “Localpalooza” events in which local vendors are invited to set up shop in the store. Vendors must submit pictures of products. E-mail marketing manager Beth Pearson for more information. Recommended by Amatullah Lewis

New Jersey Botanical Gardens: Market organizer The Craftique hosts periodic markets at these gardens in Ringwood, NJ. Tables cost $35. Contact Nikka Kowidge for more information. You can reach her at (718) 755-2990. Recommended by Amatullah Lewis

Teaneck Conservancy: Another The Craftique market location, this market features craft and food vendors and takes place in a parking lot. Tables cost $35. Contact Nikka Kowidge for more information. You can reach her at (718) 755-2990. Recommended by Amatullah Lewis

Women’s Club of Middletown Craft & Gift Fair: Tables at this Middleton, NJ craft and food fair cost $25. The market takes place in a local church. Call Barbara Mitchell for more information. Her number is (732) 275-0460. Recommended by Amatullah Lewis

Mountainside Specialized Hospital: Various types of vendors participate in this December market in Mountainside, NJ. Vendors pay the market organizers 10 percent of their sales for the day. E-mail ltraut@childrens-specialized.org for more information. Recommended by Amatullah Lewis

Intersect Fund Holiday Bazaar: This market features a range of vendors and take place each December at a hotel in greater New Brunswick. Tables cost $35. E-mail Joe Shure or call him at (732) 917-0813 for more information. Recommended by Amatullah Lewis

Harvest Festival: This event, hosted by Union County’s Department of Parks and Community Renewal, draws 3,000 attendees each year. Amatullah Lewis, who recommends it, said she’s done well there in the past. The festival takes place at Trailside Nature & Science Center in Mountainside, N.J. To request a registration form, e-mail Margaret Heisey.
Cranbury Craft Show: The Cranbury Education Association hosts this market in March of each year at the Cranbury School. Recommended by Frank Schlesinger

Life Support Boutique & Gift Auction: The Freehold First Aid and Emergency Squad hosted this market for the first time in March 2012 and plan to host it again next year. Find information and contact information about the market here. Recommended by Frank Schlesinger

Treazure Scapes: This arts and craft show will next take place on December 15th, 2012. Vendor tables rent for between $40 and $65. To learn more and sign up, visit the market’s website. Recommended by Frank Schlesinger

What a Business Needs

Joe — Fri, 06 Apr 2012 12:44:30 +0000

Entrepreneurs who lack the right tools struggle to find success. Photo: Flickr/L. Marie

Entrepreneurs are known for working hard and dreaming big.

Too many, though, focus solely on delivering their product or service while ignoring basic, nuts-and-bolts aspects of managing their firms. Their tunnel vision places their businesses at risk of liability, financial mismanagement, and incurring high fees.

To determine which components are necessary for a business to thrive, I’ve drawn from the experience of the scores of entrepreneurs with whom the Intersect Fund has been lucky enough to work.

Here are the five prerequisites of business success:

A marketing plan: Even if it is only one page long, and even if it is written on the back of a napkin, a marketing plan is crucial. It should contain three components: a description of the business’s target market (the more detailed the better), a run-down of customers’ pain points (the difficult or inconvenient aspects of their lives that will make them pay attention to your marketing message) and your strategy – even if it’s just a few steps – for reaching them. If you lack a marketing plan, you are likely to waste your precious resources and you’re certain to miss out on new sales.

Business Registration: The specter of lawsuits lingers in the minds of all entrepreneurs. Insurance can mitigate liability-related stress, but it is insufficient: business owners must limit their personal risk by forming a Limited Liability Company (registration costs $125) or, in some cases, by incorporating their businesses.

Good Bookkeeping System: You owe it to yourself to ensure your hard work is paying off. A bookkeeping system – ideally based in QuickBooks or a similar piece of software – can generate profit and loss statements and assess your business’s solvency with the click of a mouse. It is foolish to forsake this tool.

An online identity: Every business should have a presence online. Even if you are a hot dog vendor, you’d be wise to announce your whereabouts to potential customers on Twitter. Building a rudimentary website is inexpensive, and starting a Facebook page is free. Credibility and authority are becoming more important in marketing a small business, and customers are more frequently searching online for products and services. A tech-savvy market demands online connection. Entrepreneurs should eagerly provide it.

Good credit or a plan to improve it: Over the course of a lifetime, a strong credit score – 680 or higher – can save a person tens of thousands of dollars in interest on home, auto and business loans. That said, many of us find ourselves with poor credit as a result of financial duress or past mistakes.

Visit Credit Karma to see your score, and the government-sponsored annual credit report website to see your reports from the three bureaus. Start building your credit by disputing any inaccurate trade lines you find on your reports and getting current on any delinquent debts. Your ultimate goal should be to eliminate debt entirely.

I wish I could promise that equipping your business with the tools I mentioned will guarantee success. I can’t. No one can promise you’ll succeed. But in a marketplace as competitive as the one in which we operate, entrepreneurs owe it to themselves to give themselves as strong a chance as possible of prospering.

Selling your Credibility

Joe — Wed, 04 Apr 2012 12:39:54 +0000

What do you talk about when you talk about your business?

For many entrepreneurs, the answer is the product or service they sell. If they paint houses, they mention how much they charge for a paint job, they talk about the nice materials they use, and they promise to complete the job in a timely manner.

These are all good things to mention, but they fail to sufficiently differentiate a painter from his or her peers. It’s not so hard to find someone who can paint houses for a competitive rate, who uses quality materials and can complete the job promptly.

Wouldn’t you buy from him? Photo: Flickr/Ted Lipien

In many industries – more than you might think – conveying authority and credibility is more important than touting the features of a product or service. This becomes clear when we consider the real problem that prompts a customer to seek out vendors and choose the one from which he’ll buy.

Let’s return to the house painter, this time thinking about his customers. What prompts a homeowner to have her house painted? Maybe she seeks to sell her house and wants to increase its curb appeal. Maybe the house had an unattractive color when she bought it, and she feels it’s time for a change. Maybe she suspects she can save on energy costs if she paints the house a brighter color.

Yes, this homeowner needs a painter. But the more we know about her motivation for seeking one, the better marketing message we can devise. For example, if there’s a painter whose marketing materials emphasize his expertise working with real estate agents to increase home values, he’ll appeal to would-be sellers. A painter who establishes himself as an expert in energy conservation will attract price- or environment-conscious consumers.

Marketers often refer to something called a “unique selling proposition.” It’s the detail that makes your business different and better than those of your competitors. Promising affordability and promptness will attract some, but it fails to distinguish you from everyone else. Offering experience solving the specific problem your customer faces is a far stronger method.

Let’s look at a couple of other examples: someone looking for a business that offers transportation to seniors wants a couple of things. On the surface, they want drivers who are prompt and responsible.

From a deeper level, they seek professionals who know not only how to drive a van, but who can also help passengers board and alight from the van. They prefer people who have experience working with seniors, who are patient with them and know how to make them feel comfortable. They seek compassion.

A transportation company that can convey its expertise working with this audience – perhaps through free seminars to nursing home or managed care personnel, through an active blog, or just through brochures and one-on-one conversation — has a leg up over those that talk only about their equipment and pricing.

For daily insights on marketing and running a business, become a fan of the Intersect Fund’s Facebook page.

From Small Jobs come Big Business

Rohan — Wed, 28 Mar 2012 12:15:37 +0000

Jeanne Gray has a knack for turning small businesses into big ones.

While some entrepreneurs fantasize about cashing out and settling down, Gray finds pleasure in a business’s chaotic start-up phase, a time during which anything is possible. “I love that little period of time when a company struggles with where its full potential is,” she said.

She’s transformed businesses she’s owned and ones for which she’s consulted, and she seeks to impart good business sense to countless peers through a growing network of entrepreneur-targeted news sites that include NJ Entrepreneur, NY Entrepreneur, and others, all under the umbrella of U.S. Entrepreneur Today.

Gray’s first business – a firm that designed retail cosmetics displays – took years to find its niche. At first, Gray and her co-owner brother sold their designs to brokers. The brokers would pitch the Grays’ design concepts to the big cosmetics houses, the houses would order tens of thousands for stores around the world, and the broker would have them manufactured, reaping the lion’s share of the profits.

Gray knew her firm could clean up if it pitched directly to the cosmetics companies – and manufactured the displays itself – instead of working through brokers. The trouble was the Chanels of the word already worked with big manufacturers whom they could scarcely afford to cast aside. Still, Gray convinced some junior executives at one of the big houses to speak with her.

At the meeting, Gray listened, focusing tightly on the complaints coming from across the table. The cosmetics people bemoaned their big suppliers’ inability to create small quantities of displays when needed. In addition, they sought custom work their vendors were ill-equipped or unwilling to provide. Sensing an opportunity, Gray offered to take on these minor orders. In the process, she gained a valuable business insight: “If you solve the small stuff, and do enough of it, they start giving you the big stuff,” she said.The firm gained an impressive roster of well-known clients, and Gray’s co-founder brother runs it to this day.

After leaving the cosmetics display firm in the late 1990s, Gray signed on to consult with a family-owned firm that installed the hardware necessary for schools and small businesses to connect to the Internet.

Her experience in landing corporate accounts came in handy: she helped the firm prove itself by securing clients in Manhattan before branching out nationwide. It was another example of Gray sensing latent potential: “You’re sitting in that building, working with a small mom-and-pop, and across the river there are millions to be made. So many entrepreneurs need to know that pathway,” she said.

The pathway can be as perilous and mysterious as it is lucrative, but entrepreneurs everywhere ought to arm themselves with the information they need to seek it out.

For Florist, Opening Store Means Opening Heart

Rohan — Wed, 21 Mar 2012 12:06:37 +0000

Photo: Flickr/mick/Lumix

Gold watches were once the gift of choice for corporate employers bidding farewell to longtime employees.

But when downsizing cost Barbara Jones her IBM job in the mid-1990s, Jones received something far more valuable: an entrepreneurship class. The class forced Jones to assess her skills and think critically about where her passions lay, and she settled on opening a flower shop. “I wanted to do something different,” she said, adding that she relished the chance to design aesthetically pleasing arrangements and build a following of loyal customers.

In 1995, Jones founded Flowers by Barbara, a shop at 31 Courtland Street in New Brunswick. Though eager for a new challenge, Jones scarcely realized at first just how different her new path would be. At IBM, she rose from secretary to manager to internal auditor; each of these positions valued organizational skills and cold calculation. She would soon learn the florist’s world is one that demands as much from one’s hands and heart as from one’s mind.

The “A” pin on the map above marks Jones’s shop’s location. Click the map to seek directions.

If Jones doubted her prospects for success – as many new entrepreneurs do – she wasn’t alone: friends and acquaintances questioned her pursuit of self-employment. “What surprised them was that I was leaving the corporate environment to join what they saw as a blue collar environment,” Jones said. Even the instructor at the floriculture school Jones attended made point of telling her the trade entails manual labor, sore muscles and quite literally getting one’s hands dirty.

Jones persevered through the grunt work and attracted loyal customers: many of those who supported her when she set up shop still buy from her. Florists, Jones learned, thrive on the relationships they build with those they serve. They act not only as decorators but as therapists, too, comforting customers who find themselves bereaved and vulnerable. The bonds Jones has built with her customers satisfy her, but they also tax her emotions at times.

For example, she will sell flowers to local couples for years, supplying arrangements for all manner of special occasions. Then one day, the couple will approach her distraught, saying their child has died and they need flowers for the funeral. “I really have to just get them through it. I have to build myself up to the point where I can walk them through it. It makes me emotional and it gets me going,” Jones said. “In school, they teach you to stand on your feet and be clear-eyed.”

What struck me when Jones told me this – what I hadn’t realized but which makes perfect sense – is that comforting bereaved customers is such a crucial part of a florist’s business that floriculture instructors actually teach the skill to aspiring florists.

Thankfully for Jones, though, the job involves more than consoling. “There are joyous occasions, too,” Jones said, “You feel like you’re celebrating with them.” Jones said she especially likes guiding customers toward the right arrangements for sweet sixteens and other birthdays. She also enjoys the stories that come with each order she receives. “You walk into their lives just a little bit,” she said.

How to Finance your Business

Joe — Wed, 14 Mar 2012 14:14:07 +0000

Photo: Flickr/401k

What’s the best way to finance your new business?

When I ask this question in front of a crowd, I get answers like “credit,” “loans,” “investors,” and “family.”

Good guesses, but they are all wrong.

The best way to finance your business is with your own, hard-earned, saved-up cash. Think about it: why owe money to someone else, pay interest or sell off a portion of your business if you don’t have to? Why wait for a lender or investor to deem your business viable before getting it started?

If you have the money to fund your business in its early stages, you should abstain from loans or offers from investors.

Can limiting yourself to currently available funds impede your business’s growth? Perhaps, but it will also reduce your risk considerably. And there’s no reason you can’t invest the profits that you earn back into the business, building a war chest that will eventually fund necessary expansion.

Having said all of that, it’s worth noting that many of us lack the funds to pay for the major purchases that launching a business can require. Also, business owners often reach a point at which an immediate equipment investment could quickly grow their sales. In cases like these, seeking a business loan is a valid move, albeit an imperfect one.

If you find yourself on the hunt for a business loan, you should consider a couple of guidelines: certain expenses are better to finance than others, and there are times when a loan can do more harm than good.

The best expenses to finance are those that pay for an asset – like a commercial freezer, a truck, or a hot dog cart – that has resale value. If you borrow money for an asset but your business ends up suffering, you can sell the asset and repay your loan (or a portion of it, at least). Because loans like these are safer, lenders are far more willing to make them.

A loan for an asset carries much less risk than a loan for something like rent, payroll expenses or utility bills. The money you spend on recurring costs like these leaves your business forever: you can’t very well ask a former employee to give back six months of wages after your business has tanked.

Loans for recurring costs are unwise as well as risky. If you are unable to afford your rent, payroll costs or other regular bills, there’s something wrong in your business that a loan cannot fix.

Debt that merely masks structural business problems does more harm than good.

We can say the same for debt whose payments aggravate an already distressed financial situation: if your housing costs consume more than half your income, you need no more debt. If you have failed to make your rent or mortgage payments on time during the last 12 months, you should avoid taking on more payments. If you are behind on child support payments or you have no significant source of income, borrowing money is the last thing you need to do.

Loans can clear the way for your business to thrive or they can choke your new venture to death. Feel free to get in touch if you’re unsure about what they could do to – or for – your business.

Learning from Dickens

Joe — Fri, 09 Mar 2012 12:59:48 +0000

Last month, fans of Charles Dickens honored the 200th anniversary of the author’s birth with readings, remembrances and musings on the Victorian scribe’s contribution to Western literature.

Amid the celebrations emerged a useful lesson for small-business owners and aspiring entrepreneurs.

No, I’m not talking about Dickens’ exhortation against stinginess in the form of Ebenezer Scrooge. I’m referring to the manner in which the author created some of his most famous works: Dickens wrote and published many of his novels in monthly, chapter-length installments.

People who dream of publishing a book often find the process of writing one to be taxing and tedious. The same goes for people launching the business they’d always planned to start. Even thinking of all the tasks involved in running a successful business – marketing, accounting, sales, innovation, and more – often paralyzes new entrepreneurs. Dickens’ example offers a wise strategy: instead of worrying about the entire undertaking, focus on the immediate next step.

Entrepreneurs can look to writers – who also engage in a solitary endeavor that is creative but grueling at times – for lessons on how to penetrate the haze that settles around stressful projects.

Like starting a business, writing a book is a daunting venture: the author must work numerous personalities, themes, and events into a cohesive story. Authoring a book is a lonely pursuit, but publishing one affords the writer the chance to fail in a spectacular, public way. The writer worries constantly that the work into which she’s invested countless hours will result in reproach or, worse yet, indifference, from critics and the buying public.

Like starting a business, writing a book is something almost everyone dreams of doing. Business-ownership and book-authorship both offer the tantalizing prospect of self-expression. Both seem to offer autonomy. Both attract aspirants in droves with the possibility – albeit more elusive than any dreamer would care to admit – of public renown and fabulous wealth.

The trouble is that while the prospect of wealth and eminence beckons from the worlds of authorship and entrepreneurship, it also adds harmful doses of anxiety to each. Embarking on one’s life’s work is far more stressful than, say, organizing the files at a company you work for but despise. Creative endeavors bring a prospect of failure that is real and very personal. That’s why most people avoid them.

Still, a small portion of the population writes great books and starts amazing businesses. Are they fearless? Some are, but most are as scared as the rest of us of criticism and grueling work. I lack evidence that would tell us the camp in which Dickens falls. But having read myriad accounts of writers’ and entrepreneurs’ habits, I have learned something: the successful ones are those who plod through their self-inflicted resistance and do great work, one small step at a time.

Photo:Flickr/garryknight

Re-Live the 2011 Holiday Bazaar

Joe — Wed, 07 Mar 2012 14:58:33 +0000

Videographer Will Ferguson was kind enough to shoot footage from our 2011 Holiday Bazaar and edit it into this nice montage. Check it out!