entrepreneur

8 Fundraising Steps for Building a New Business

Paul Michael — Wed, 13 Jun 2018 08:30:21 +0000

Perhaps one of the most exciting career moves anyone can make is to start a business. However, that rush of excitement and adrenaline often comes with apprehension, intimidation, and fear of failure. How are you going to get the money you need to make a go of this?

It's estimated that 50 percent of businesses fail within the first five years of operation. And while a lot of that has to do with lack of focus, motivation, and commitment, money is also an issue.

Once you've legally incorporated your business, here are some basics that will help you raise funds for your new company. Note that while angel investors, incubators, and venture capital companies are most often associated with Silicon Valley, some also work with non-tech companies.

1. Raise money in stages

You are not going to get all the money you need to operate your business in the first round. What you will do is go through different stages of funding, building up to greater amounts of money as the business becomes successful. Think of it like weightlifting. You would never go into the gym and start with the heavy rack; you work up gradually, making progress and using those gains to lift larger amounts.

The first stage will be a small amount of money you can raise through your own network. Then, you will move on to other sources of funding. In the venture capital world, funding for successful businesses usually continues through a series of investment rounds — A, B, C, D, and so on. (See also: 4 Ways to Fund Your New Business Without Borrowing a Dime)

2. Figure out exactly what you need to get started

What will it take to get your venture off the ground? This can't be some arbitrary figure plucked out of the air. It should be based on operating costs (including paying yourself a salary) for at least six months. Some expenses will be one-offs, such as purchasing manufacturing equipment, and others will be recurring. That all needs to be added into the mix. Don't forget utility bills, employee pay, and costs that can vary from month-to-month.

Consider how you will grow over that six-month period. You may need to buy a lot more inventory or supplies in month six than in month one, especially as demand booms. You don't want to be in a situation where you cannot fulfill orders or give customers what they want. Disgruntled customers will quickly move to another business.

3. Start with friends and family

It's unlikely that you're going to be able to completely fund your new business with money from friends or family. However, some new businesses have done this (it's known as bootstrapping), and it will all depend on the size and scope of your business, and just how wealthy your inner circle is.

Starting here is the best way to take your first tentative steps into acquiring the seed money you need, because these people know you, trust you, and want to see you do well. Of course, people also say that you should never mix business with pleasure, and it's true that doing so can cause problems.

If you decide to go this route, make it all official. Hire a lawyer to draw up the paperwork and the terms of the loan. You may give away shares in your business in exchange for the cash, or promise a return on the investment. Do not simply shake on it.

Also, be aware that money borrowed from friends and family does not come from accredited investors. Should your company ever get to the stage of doing an initial public offering (selling stock to the public for the first time), having money from non-accredited sources can hurt it. That is, of course, a long way down the line. (See also: 9 Times to Hire a Lawyer Immediately)

4. See if you qualify for a small business loan

Chances are, your business is in its infancy and does not need millions of dollars to get off the ground. Whether it's a restaurant or bar, a salon, a new product, or a service, you will usually be able to get it off the ground with a small business loan from a bank or credit union. However, qualifying for that loan is not always easy.

Most banks won't give you a loan backed by the Small Business Association unless you've been in business a few years, or can demonstrate experience and success in that industry. Even then, you will need excellent credit, and may be asked to secure the loan with your home or other collateral. (See also: 5 Ways to Build Business Credit When You're Self-Employed)

5. Consider a crowdfunding option

You are no doubt aware of crowdfunding platforms like Kickstarter and Indiegogo. These websites give you the tools to reach millions of potential investors around the world, and you don't have to rely on one or two "angels" (investors with deep pockets) to get your business off the ground.

Thousands of people can donate as little as $5, but you must have a product, project, or service that is compelling and innovative to make this work. Most businesses on the platforms are offering a great new gadget or device, and will give investors the chance to own it at a discount in return for getting in early and funding the initiative.

However, it's not all about physical goods. Music and movie projects have been launched via crowdfunding, as well as food products, art, and even comic books. If you have an interesting story to tell, and something tangible, you should do well. Just make sure you set a financial goal that is attainable, or your business will not get fully funded.

6. Look for "incubator" funding

Before you get to the angel investors and the venture capitalists, see if your startup would benefit from an "incubator." As the term suggests, these funds are designed to help nurture a fledgling business and help it grow. Entrepreneur defines an incubator, or business accelerator, as: "An organization designed to accelerate the growth and success of entrepreneurial companies through an array of business support resources and services that could include physical space, capital, coaching, common services, and networking connections."

Should you need it, you will be given office space at below-market rates, plus coaching and other assistance for the day-to-day operations of a small business, as well as many other advantages. Of course, all of this comes at a price, and that will usually be a chunk of equity. But if this kind of startup business model suits your needs, visit the International Business Innovation Association to learn more about incubators and accelerators in your area.

7. Find an angel investor

Unlike venture capitalists, angel investors work alone. They are independently wealthy people with a large amount of money that they want to invest. Angels are a better option than venture capitalist firms, because they bring with them a more personal approach to their investment. They will offer you advice on how to use the money, and will no doubt have a list of valuable contacts that you can tap into to help grow your business.

Angel investors want you to succeed, and not just because they will profit from it. But don't mistake their personal touch for a laid-back approach to their investment. They want you to have all your ducks in a row, and will want to know your plan. Not for the next few months, but for the next few years. Rich people don't get rich by slacking with their investments, so be buttoned up before you find one.

8. Pitch your business to venture capitalists

Venture capitalist (VC) firms will usually not get involved in your business unless it is worth their time. Venture capitalists want to invest millions of dollars and see a substantial return on that investment. Therefore, a VC is going to be an option for you once you have established your business and can show a healthy balance sheet and massive growth potential.

However you get your money, spend it wisely

Cash is king in a startup. It's also one of the key reasons a startup will fail. Whether you get $5,000 or $500,000, your approach to the money should be the same. Get spending under control. Meticulously track money coming in and money going out. If you can afford it, hire an accountant to help you keep the books in order and flag possible concerns.

And whatever you do, do not look at just the profit you are making. It can be deceptive to see that number without context. Look at cash flow, and add in all of your expenses, debts, accounts payable, and inventory if applicable. Remember, inventory stockpiled on the shelves is not making you any money.

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Is Your Small Business Targeting the Wrong Customer?

Elaine Pofeldt — Thu, 04 Jan 2018 09:30:11 +0000

You've met with a potential client, had a couple of great conversations by phone, and followed up. So why isn't your prospect ready to start work? The problem may not be you. It may be that you're talking to someone who will never buy what you're selling.

There could be many reasons. Maybe you're talking with a serial researcher who may never make a decision. Or perhaps the person has no budget to spend or an unrealistic understanding of what services like yours cost to deliver. It's easy to waste hours by spending too much time with tire kickers, so the sooner you recognize you're talking to the wrong customer and move on, the better. Here's how.

Know how to spot your ideal clients

Regardless of your industry, your ideal clients will probably have two characteristics: They're great to work with, and they're profitable. In many cases, they may also be repeat buyers.

Look beyond these factors to identify if there are any common threads in your customers' industries, company size, or location, so it's easy to spot them when they're in front of you. You can use popular accounting software programs like FreshBooks and QuickBooks to sort your clients this way. You may spot some interesting patterns you had not noticed, like one particular state where you get a lot of business.

Look a little deeper. If, for instance, you sell marketing services and most of your clients are big companies, peruse the job titles of the clients who have signed contracts with you. Perhaps buyers in these firms tend to have a certain level of seniority in their organization. This doesn't mean you should ignore prospects with more junior titles, but if those junior buyers seem to be moving slowly, you may need to involve more senior people on their team to move a project along. (See also: 8 Common Myths About Starting a Small Business)

Ask qualifying questions

Learning as much as possible about why clients are considering buying your product or services can save you from spending a lot of time with someone who is highly unlikely to move ahead or won't turn out to be a good fit.

I do this when people ask me to ghostwrite books for them — a process that takes a lot of time and energy for both the author and myself. In our first conversation, I might ask: "Why do you want to write a book?" If the author is eager to share ideas they're passionate about with the world and says they've already done a rough outline of the book or lectures on the topic, those are positive indicators.

However, if someone says that colleagues, a spouse, or friends keep nudging them to write the book, I'll suggest a smaller project first to make sure they are truly motivated. Even if someone has the budget to hire me, I don't want to work with someone who is likely to lose steam and see the project fail.

There are many other qualifying questions you can ask to weed out people who are not serious. You might, for instance, ask if they need a project by a certain deadline — which will naturally give them an incentive to hire you. You might also ask what their expectations are. If they would like to receive certain services you don't offer and that you don't want to start providing, that's a disqualifier. (See also: 6 Helpful Tools to Manage Your Small Business)

Be transparent about pricing

Many business owners hesitate to talk about what they charge because they're afraid of scaring clients away. That can be a big mistake. Many potential clients could be price-sensitive, so being direct and upfront about what you charge, by sharing it early in your conversations, can save you a lot of time.

If someone's budget is too small to afford your highest-end products or services, be prepared to suggest other creative alternatives. For instance, instead of the yearlong retainer contract you usually offer, what about a three-month version? That way you won't have to turn away clients who you might otherwise enjoy working with.

Watch out for clients who don't value your time

When you hire outside professionals — whether to do your social media or clean your house — do you expect them to donate their time? I didn't think so.

One sign that you're talking to the wrong clients is that they want you to "prove" yourself by doing a project for free. Someone who does not understand that you need to get paid for your work now will never respect your time and is likely to become a nonpaying client later. If prospects want to get a chance to see what it is like to work with you, suggest they work with you on a very small, paid project instead. (See also: How to Get a Small Business Loan)

There's one exception. If you're selling clients access to a service many people haven't tried yet, such as a specialized type of fitness class, there's nothing wrong with offering one free trial class or even a discounted monthly membership to make sure they know what they're buying. Just make sure you're offering an experience they will value enough that they want to come back when they have to pay full price.

Relying too heavily on bargain hunters for your cash flow could lead to a crowded atmosphere that drives away clients who would be willing to pay you a little extra for some elbow room and tranquillity. Experiment until you find the right approach to attract great new customers and keep your ideal ones coming back. Once you find the right balance, you'll enjoy your business a lot more.

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This article is from Elaine Pofeldt of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Life Lessons I’ve Learned from Self-Employment

Holly Johnson — Fri, 01 Dec 2017 09:30:05 +0000

In 2011, I started a side hustle that would ultimately lead to self-employment. I didn’t know at the time that I would become my own boss one day. But you know how life can be; sometimes the stars align and you end up doing exactly what you were meant to be doing all along.

And it didn’t take me long to figure out I was, in fact, in the ideal career for my personality and talents. So, after a successful year of part-time work, I quit my steady professional job in 2012 to begin a career as a blogger and online content creator.

Since those early days, my husband has come home to work with me, our profits have grown, and our business dealings (and taxes) have become a lot more complex. Where I was once a novice at all things self-employment, I feel like I finally know what I’m doing.

Of course, most of our biggest lessons were learned the hard way — by messing things up and figuring out how to fix them. I also learned a ton about what not to do just by realizing my own mistakes.

Here are some of the lessons I’ve learned about self-employment, and why I don’t think I could ever go back to my old life. (See also: 6 Moves Every First Year Freelancer Should Make)

1. With self-employment, you reap what you sow

At my old office job, there were days when I would sit and stare at the clock for hours, counting down to 5 p.m. so I could leave. Even when there wasn’t enough work to fill my day, I still got paid for being there.

But self-employment is an entirely different animal. When you work for yourself, slacking off means taking money from your own pocket. When you run out the clock or don’t do your best, you’re only hurting yourself. You don’t get paid for showing up (not to mention vacations and sick days!), nor will you automatically get a salary bump each year or be in line for a promotion. You have to reach for your potential on your own — grow your skills, raise your rate, and land your clients.

Once I became self-employed, I realized that I was the one in charge of my own destiny. If I wanted full-time results, I had to put in everything I had. So that’s exactly what I’ve learned to do. (See also: Day Job or Freelance: Which Is Right for You?)

2. You can’t avoid taxes, so you might as well plan for them

Paying taxes as an employee isn’t that painful. Although you can see how much is withheld from each paycheck you receive, the money is gone before you really see it. And as long as you set your withholdings up the right way, you shouldn’t owe too much money come April 15.

But self-employment taxes can really hurt, and they start hurting even more as your income grows. Since you don’t have money withheld from your paycheck, you have to make a payment each quarter for estimated taxes.

I hate writing those checks every three months, but it’s a lot easier to handle when you have the money already set aside. Over time, I’ve learned to set aside around 30 percent of my income as I earn it so I’m ready to pay my tax bill when the time comes. (See also: How to Budget Consistently Without a Steady Paycheck)

3. Living below your means is the best way to deal with an unpredictable income

While we always earn more than enough money to pay our bills each month, our monthly income often fluctuates by thousands of dollars. This is an inevitable part of self-employment, but it’s one I’ve gotten used to.

Since I hate owing money or feeling like I don’t have enough, I decided early on in self-employment that I wanted to keep our bills as low as possible. As a result, we live well below our means. We don’t have any credit card debt, we don’t have any expensive hobbies or toys, and our house payment is less than 10 percent of our gross income. Even though we could afford to live a little more lavishly, I’ve found the peace of mind that comes with living below our means is well worth it. (See also: 6 Moves Every First Year Freelancer Should Make)

4. When it comes to health care, you’re on your own

One of the biggest drawbacks of self-employment is the fact you don’t have any benefits unless you buy them. This means buying your own health insurance plan, purchasing your own life insurance, and paying all your dental bills out-of-pocket. (See also: How the Self Employed Can Cut Health Care Costs)

While health care has always been a struggle, we are finally at a place where we’re happy with what we have. We have tried a few different plans over the years, but we ultimately ended up in a health care sharing ministry called Liberty Healthshare after the Affordable Care Act was passed.

In terms of dental care, our local dentist offers a $799 per year for a family plan that includes two cleanings with X-rays for all of us plus a 20 percent discount on dental work.

None of this is ideal, but it’s the price we pay for self-employment and something we’ve had to get used to. (See also: 10 Work Perks You Can't Get as a Freelancer)

5. Saving for retirement is not that hard

A lot of people assume that health care and retirement are the biggest issues facing the self-employed. Personally, I’ve found that, while dealing with health care is a pain, retirement planning is a breeze.

You don’t need to have an employer to set up a retirement plan. We set up our own SEP IRA and Roth IRA plans with Vanguard when we first got started, but have since transitioned to Solo 401(k) plans instead. Either way, Vanguard funds are some of the least expensive available, and you can find all kinds of resources online to help you choose the right funds. When in doubt, you can even buy target date funds that automatically adjust for risk based on the year you want to retire. (See also: A Simple Guide to Retirement Plans for the Self-Employed)

6. You have to set limits on yourself

When you work a nine-to-five job, you can leave your work at the office and enjoy your free time at home. When your work is at home, on the other hand, it can be very challenging to separate your personal time from your work time. If you’re not careful, you end up working all the time.

I’ve fallen into the habit of working 50-hour weeks several times over the years, but I try really hard not to. These last few years, I have tried to work only when my kids are in school, or during the hours of 8 a.m. to 3:40 p.m. Once they get home, I put my computer away to do housework and spend time being a mom. It doesn’t always work out that way, but I have a much better work-life balance when I set clear limits for myself. (See also: The 5 Biggest Mistakes People Make When Working From Home)

7. Freedom is better than PTO

If I had a dollar for each time a person asked me if I missed having paid time off, I would be rich! For some reason, people assume that not having paid vacation is a huge drawback of self-employment.

While it may be a downside for some people, I am more than happy to forgo paid vacation in order to set my own hours and work when I want. With the freedom to make my own schedule, I can work ahead any time I take a trip. And I never have to ask permission, either.

At the end of the day, I value freedom over paid vacation and sick days — even if that means working during vacation or having fewer days off each year. (See also: Freelance Your Way to More Income and Flexibility)

8. I wouldn’t trade self-employment for the world

The final lesson I’ve learned from self-employment is that, for me, this was a one-way street. Even though self-employment isn’t perfect, I couldn’t imagine going back to a regular job now.

I truly enjoy the challenge of figuring out how to earn a living without a steady salary. I am used to putting my head down and working hard to achieve my goals without having to make small talk or drive to an office. And I love the fact I can earn more money by working harder, instead of relying on someone else to determine how much money I make. Even though my income varies widely and I don’t have any benefits, I have something more important — real freedom to live my life how I want.

No job is perfect, and that’s certainly true when you work for yourself. But self-employment lets me bet on myself every day of the week — and it doesn’t get any better than that. (See also: 8 Signs the 9-to-5 IS Right for You)

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Grow Your Solo Business Without Hiring Employees

Elaine Pofeldt — Thu, 12 Oct 2017 08:30:10 +0000

The conventional wisdom is that to "scale" a business, you have to do it the traditional way — by hiring employees. Otherwise, the thinking goes, you'll be limited to whatever revenue you can generate personally.

That presents a conundrum. What if you really don't want to hire employees because you're not the managerial type — or can't pull it off financially? Creating jobs does a lot of good for society, but it is a big responsibility. For very small businesses that have uneven cash flow, it can be unmanageable. You can't just opt out of cutting paychecks one month if a big client pays you late. Employees depend on getting paid on time.

Fortunately, there's another option. In the digital age, it's increasingly possible to grow revenue in a one-person business or partnership without hiring traditional W-2 employees. In researching my upcoming book, The Million-Dollar, One-Person Business, I came across many people who were approaching or breaking $1 million in revenue without adding employees. They are among the 35,584 owners of "nonemployer" businesses that the U.S. Census Bureau found were hitting or breaking $1 million in revenue in 2014. (Nonemployer businesses are those staffed only by the owners.)

So what are they doing? It runs the gamut. Entrepreneurs are breaking $1 million while running internet retail sites, professional services firms, real estate investment firms, healthy cooking online courses, and many other businesses. It's not necessarily the type of businesses they run, but the way they run them that has enabled them to scale. Here are three growth strategies they are using that anyone in a one-person business can start using today to greatly increase revenue.

Outsource

In many small businesses, your time is your currency. If you waste it on nonproductive activities that don't add to the bottom line, you'll never maximize your revenue. The conventional wisdom is you need to hire staff so you can offload tasks that can be delegated, but many of the million-dollar entrepreneurs I interviewed used another approach. They outsourced whatever they could to make their business more efficient.

One example was Camille and Ben Arneberg. They started Willow & Everett, a store with its own website and a presence on Amazon, in 2015. Neither was a retail veteran. Camille had worked in the corporate sustainability field, while Ben had been in the military. But they loved home entertaining and had a knack for selecting products other people like, such as decorative tea kettles.

The couple started small, investing $5,000 in inventory, and reinvested in new products as they went along. By April 2016, they had grown the business to $1 million in revenue, one year and four days after their launch.

One secret to their rapid growth was hiring the right kind of service to help them. After trying to pack a bunch of early orders themselves and finding their home buried in boxes of mugs, they switched to using a fulfillment service offered by Amazon. Although there is a small cost for this, the service handles tasks like labeling and fulfillment, freeing the Arnebergs to focus on growing their business.

Contract it out

One of the myths about running a one-person business is that it's an isolated affair. In reality, many smart solopreneurs rely on a team of trusted contractors to expand their capabilities. One entrepreneur I interviewed, Dan Mezheritsky, founder and president of Fitness on the Go in Vancouver, follows this model. As a former junior national champion decathlete in Canada, Mezheritsky founded his one-person, in-home personal training franchise in 2005 and grew his own annual revenue to $1.5 million in 2016. He did it by building a network of 180 personal trainers, who are all contractors.

Mezheritsky got burned out on the idea of bringing on traditional employees after finding out that many of his original hires were not motivated to help him grow the business. Because they were paid on salary, they didn't share in the financial gains the business made in a tangible way. When he switched to hiring them as contractors, that changed. Now that they had their own businesses, they saw a direct financial benefit if he brought on new customers — whom they would get to serve.

Mezheritsky provides help to the trainers that makes it more advantageous for them to work for him than on their own entirely. He licenses the right to use the company's brand name to the trainers and provides support with business management, leads, continuing education and other areas of the business for $400 a month. The company sets prices for the training sessions and the trainers keep about 91 percent. "It was a no brainer for the trainers, when they took a look at what they were receiving," Mezheritsky told me. "It was simpler than trying to do everything on their own."

Automate

Like many of the million-dollar entrepreneurs I interviewed, Mezheritsky is passionate about finding ways to automate repetitive tasks in his business. For instance, he hired a pro to help him build customized software that handles billing for all of his trainers, acts as a customer relationship management platform, handles his client rewards program, and more.

But you don't have to build your own software in most one-person businesses. For instance, you can save several hours a week on scheduling tasks by using inexpensive tools like ScheduleOnce or Calendly — scheduling programs that let you send business contacts a link to your public calendar so they can book a time to meet with you without emailing back and forth.

My new favorite app is Everlance, which tracks your mileage automatically from a smartphone. That way, you don't have to keep a written journal in your car.

Incorporate a couple of other time savers like that and you can easily free up a day every week to recharge and figure out new ways to grow your business — while enjoying the pleasures of running an ultra-lean operation.

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This article is from Elaine Pofeldt of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How One Young Entrepreneur Paid Off $40,000 in Student Debt By Age 24

Alaina Tweddale — Tue, 28 Oct 2014 19:00:05 +0000

More than 70% of graduates finish college with debt, at an average level of almost $30,000 per student. The national student debt level has reached $1.2 trillion and a staggering 7 million borrowers have already defaulted on their loans. With so many adults seeing their debt situation as helpless, it was refreshing to come across a young borrower who managed to pay off her hefty $40,000 student debt burden in just a few years.

A $40,000 debt load put Michelle Schroeder in the top 10% of borrowers. Even with a loan burden substantially higher than most young graduates, she was able to return her debt by the time she was just 24 years old. "It was hard but it paid off in the end," says Schroeder. "It's the best feeling ever. I don't have to submit a $1,000 payment every month for something I don't see." (See also: How to Balance Saving for Retirement, Emergency Fund, and Retiring Debt)

Schroeder concedes that her journey wasn't easy, but that anyone can do it, if they really want to. To reach her goal and pay off her debt, Schroeder took three simple steps. Read on to discover how you can follow in her tracks.

1. A Financial Assessment

When Schroeder reviewed her personal balance sheet, she didn't like what she saw. "I didn't want to be one of those people with $40,000 in student loan debt when their kids are going to college," she said. "I just wanted to be done with it. I made a crazy action plan to have it paid off within the year." Schroeder admits it can be scary to add up 10 different student loans and realize how much they total. Even so, she knew she'd have to face up to her reality before she could create a game plan and start to pay her burden off.

According to Schroeder, this is a step anyone can take, and yet many don't. "A lot of people are afraid to look at the total or they're just not interested in doing the work to pay it off right now." Even so, it's not a difficult task, once you bulldoze past the psychological barriers. (See also: Your Money Worries Are Holding You Back — Here's What to Do)

2. A Decrease in Spending

Schroeder's first line of attack was to figure out where she could scale back. She cut her gym membership, dropped her cable TV package, and scaled down her food budget. She also took on mystery shopping work, which would often fund dinners, snacks, and other perks. She received an annual bonus that she used to fund her emergency savings account and further reduce her debt. All together, she was bringing home $5,000 per month in salary and was cutting costs wherever she could.

Anyone can develop their own cost cutting strategies by identifying areas of excess consumption. To target where to reduce spending, check out an online tracking service like Mint or Quicken. (See also: 73 Easy Ways to Save Money Today)

3. An Increase in Income

Schroeder was already doing more to decrease her debt burden than many borrowers but even so, she wanted to speed up her debt repayment pace. To make a real dent in her burden, she started looking into ways to boost her income.

She got creative and took on a boarder, which brought in an extra $300 — $400 per month. She next started a side business, first as a virtual assistant, later as a staff writer, and finally as a blogger and website consultant at Making Sense of Cents. "I wasn't making much money for the first one to two years," she says of her online business. "Plus, I sacrificed a lot like hanging out with my friends and watching TV. Instead, I focused on growing my business."

Between her day job and side gigs, Schroeder worked 100 hours per week for three years straight. Her small side income grew and she eventually was paying $5,000 per month toward her student loan debt. In the final month, she wiped out her emergency savings account to pay the $10,000 remaining student loan balance.

According to Schroeder, anyone can build a side income, regardless of skill set. Her suggestions include a part-time job in a retail store, walking dogs, babysitting, or starting a business. (See also: You CAN Earn More Money — Here's How)

Last year, once her loans were repaid in full, Schroeder left her day job. She now lives off of what was once a side income, and works from home. When asked why more people don't take a fast-track approach to paying off their debt, Schroeder chalked it up to societal expectations. "It's not normal to pay student loans off fast," she says. "People consider it good debt and they're fine with it because everyone else has them."

"Most people can pay their loans off within a couple of years if they try really hard," she says. For her, the upfront work was worth it. "Life's not as stressful, now that I don't have student loans," she says.

Are you burdened by a mountain of debt? How do you plan to eliminate it?

This article is from Alaina Tweddale of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Business Blogs that Can Boost Your Bottom Line

Elaine Pofeldt — Wed, 15 Jun 2011 18:14:43 +0000

Link:

http://www.openforum.com/articles/5-business-blogs-that-can-boost-your-bottom-li...

No doubt, reading blogs can be a dangerous time sink if you’re not careful. But devoting 10 minutes a day to scanning a few well-selected ones — in addition to those you’ve already discovered on the OPEN Forum – is a great way to stay on top of trends that you can’t afford to ignore in your business. Here are some good ones to bookmark.

Entrepreneurial Thought in Action. Written by the faculty at Babson College — one of the nation’s leading schools for entrepreneurs — this well-edited blog will keep you in touch with interesting case studies, insights on the secret sauce that makes some business owners so successful, what Washington policy means for entrepreneurs, and more. Reading it is like getting the best tidbits from an MBA program without having to sit in a lecture hall.

The New Entrepreneur. This newsy blog from Bloomberg Businessweek will keep you abreast of key developments that are likely to have a direct impact on your company. It also delves into interesting side issues. One recent post covered new findings on dyslexia and entrepreneurs, a subject of perennial interest in the business community.

Lifehacker. You already know that maximizing every working hour is essential if you run a small business and want to have a semblance of a personal life. Lifehacker's Shortcut of the Day, focused on tech, is a great resource to help you maximize your time at the computer. One recent tip: How to use keyboard commands to call up your browser, so you don’t have to click on your desktop or type in the web address.

Freakonomics. Looking for insightful answers to questions like how much political lobbying contributed to the financial crisis – or whether the Fed is responsible for higher oil prices? Then this lively blog is a must-read. At the very least, it’ll leave you well prepared for your next cocktail party debate or panel discussion.

Gary Whitehill. Gary is the young entrepreneur behind New York Entrepreneur Week. Covering topics ranging from how to embrace your inner critic to the unanticipated challenges of bootstrapping, he draws on his experience with a wide spectrum of startups to offer interesting advice and inspiration. If you’re feeling worn out and jaded, log on for a jolt of youthful energy.

This article is from Elaine Pofeldt of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Veteran Business Owners Benefit from a Marketing Makeover

Debbie Dragon — Thu, 05 Aug 2010 13:24:22 +0000

Military members have access to an array of benefits and opportunities earned by their service. Credibility and marketability in the business world just happens to be an added bonus.

There are more than 25 million veterans nationwide. Those who become entrepreneurs and small business owners can use their military service as a springboard to new customers and repeat clients. About 7 in 10 Americans would rather patronize a veteran-owned business than one owned by a civilian, according to the National Veteran-Owned Business Association, or NaVOBA.

But scores of veterans fail to capitalize on the power of their stories and service. Part of it may be an unwillingness or uncertainty about touting that record. In other cases, it's simply an awareness issue. The reality is that veteran-owned business owners who take steps to tout their backgrounds can reap significant rewards, from government contracts to increased industry recognition.

For some, it's a matter of seeking certification and official declarations. But for thousands of others, the key is a basic shift in the way they present their business to the world.

Veteran Contractors

Veterans who own small contracting firms should strongly consider registering with the Department of Veterans Affairs. As with having a minority- or woman-owned business, a veteran-owned business has access to a dedicated pool of federal contracts.

The VA coordinates an official registration process that includes verification of a veteran's military service. The base requirements are that a veteran must own at least 51 percent of the company or its stock and directly control the daily operations. Along with that comes a long, hard look at the business's finances, management structure, inventory, tax documents and other key data.

Now, not every small contractor is in a position to compete for large government contracts. But those that are can boost their chances by obtaining formal certification as a veteran-owned business. There's also a special certification class for veterans with service-connected disabilities. Veterans with a documented disability rating have access to their own pool of contracts, which the government is required to set aside.

Small contractors must also register with the government's main contracting clearinghouse, the Central Contractor Registration.

Veteran-Only Business Loans

Veterans who qualify have perhaps the most potent home loan program on the market: the VA Loan Guaranty program. But you can't use a VA home loan to purchase a commercial building or inject capital into a business.

To help cover the gap, the U.S. Small Business Administration created a pilot program that provides funding for veterans seeking to start or expand small businesses. The Patriot Express loan program offers low-interest loans for up to $500,000, which can be used for a host of purposes, including equipment purchases, working capital and real-estate buys.

Small Steps, Major Impact

Veterans outside the construction sector might still want to take the time to register with the VA. Consider it the first step in a marketing makeover designed to broadcast your service record and credibility.

But there's certainly no requirement if you're more of a mom-and-pop operation. What's essential, though, is making sure prospective and existing consumers clearly understand they're dealing with a veteran-owned operation. That might include revamping your suite of marketing materials and signage — both brick-and-mortar and online — to incorporate that "veteran-owned business" tagline. Embrace it in emails, mailers and promotions. Heck, don't be afraid to mention it when you answer the phone.

This isn't about "cashing in" on a veteran's proud service. This is about recognizing and celebrating it.

American consumers are clamoring for the chance to support veterans and their families. Why not make it easier for them to do so?

This article is from Debbie Dragon of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Find Freelance Clients: Part Three

Debbie Dragon — Fri, 15 May 2009 13:55:47 +0000

Previously, this series for finding freelance jobs covered what you needed to do to prepare yourself for freelance life in Part One; where to find the clients in Part Two; and in the last article of this series - I'll give you some tips for actually applying or bidding on the freelance jobs you find.

How to Apply or Bid for Work

Applying for freelance work is an art form in itself – once you master the techniques, you'll be on your way to a thriving freelance business. Applying for work on job sites and contacting potential clients directly involves a different process than bidding for work on freelance bidding sites.

Bidding for Work

When you use a freelance bidding site to “bid” on jobs, you are rarely asked to provide a complete resume. The trick is to sum up your abilities and answer any questions their job specifications indicate within a paragraph or two as you are placing your bid. A sample bid response for a freelance writing job involving writing 10 articles for a blog about fish that are due on March 15^th might read something like this:

I am a freelance writer and fish enthusiast – I would love to write 10 articles for your blog on the topic of fish. I can write and deliver ten 100% unique articles on or before March 15^th, completely free from plagiarism. They will be spell checked and ready to post to your blog upon receipt. Thank you for your consideration.

Notice there isn't a ton of information in a “bid”. If you have experience directly related to the topic, you might mention that. In this example, if you have an aquarium in your home, or worked for the local fish store, that might spark interest in the buyer because you are already familiar with the topic. In most cases, you can write articles on topics you aren't familiar with simply by doing research, so it's not a requirement for the majority of writing jobs.

The most important aspects to include in a bid for a freelance bidding site are to show you understand the assignment (10 articles before their due date, 100% unique), and to write your bid without typos or spelling errors (particularly if you're applying for writing work!) There are many non-english speaking service providers bidding on the same work (and often at rock bottom prices if the buyer's currency is worth more than the providers currency), but you would be surprised at how many don't take the time to spell check or proof read their bid.

Apply for Work

On the other end of the spectrum, when you find assignments posted to job sites or when contacting a potential client directly, you need to use a different strategy for applying. These situations expect more information from you in order to consider you for the work.

It's a great idea to create a resume, summary of qualifications, or professional experience document that can be used for all freelance work you apply for. It doesn't have to be boring like the resumes you made as a high school student – and in fact, it is in your best interest to jazz it up a bit to stand out from among the hundreds of other people who may be applying for the same jobs! Here are 10 tips for landing a gig online, by Wisebread's Andrea Dickson. These tips are excellent and will help you with your applying or bidding process!

Use your freelance logo if you have one, and don't be afraid to use decorative fonts for the headings of categories on the document. If you have links to work samples that are accessible online, include a few so the prospective client can click and quickly see something you've worked on. You may want to include a small, professional head shot of yourself as well just to make it a bit more personable.

When you apply for work, write a “cover letter” email (or follow the instructions given in the job listing for how to apply), and include your resume or professional experience document. It's a good idea to paste it into the email directly as many businesses will not open email with attachments. You can always include a short note in your closing that you are happy to forward your resume or any other information upon request.

Getting the Job

After you start applying and bidding for work, you will start to get responses from the prospective clients. A freelance bidding site is your opportunity to get selected and get the just based on your “bid” alone; while most freelance jobs from a job site or direct contact will not hire you from your first contact alone. Expect to exchange a few emails and maybe even talk on the phone once or twice before you are selected as the freelancer for the assignment. Be professional with every communication you have with the prospect, and be sure to treat each client as if they will generate hundreds of new jobs for your freelancing business – because you never know which clients may turn into long term clients or your biggest referral source for new clients.

When you've gotten your first client and completed your first job – be sure to follow up with the client to see if he or she has any additional work you could provide. In fact, add the client to a mailing list and make it part of your routine to contact clients once a month or so after you do work for them, just to remind them you are still in business in case they have a need to hire a freelancer again. This is how you turn a one-time client into a repeat client – which is necessary for long term success in the freelance world.

This article is from Debbie Dragon of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Find Freelance Clients: Part Two

Debbie Dragon — Wed, 13 May 2009 14:20:10 +0000

Last time, "How to Find Freelance Clients: Part One" discussed some of the things you would need to do to prepare for freelancing. In Part Two of this article, we'll cover where to find the actual clients who pay freelancers.

Where Your First Client is Hiding

Everyone has a different level of comfort with marketing activities. Some people become freelancers in hopes of not having to deal with the public as is necessary with most other professions. Despite the fact that you might work from your home or a small one-man (or woman) office; you will need to network and market yourself to become successful.

Wouldn't it be nice if there was a rock out there that you could just turn over and find your first client's hiding place?

Instead, you need to do a little investigation to find your first client; and probably step outside your comfort zone at times.

Freelance Bidding Sites: One possible place to find your first client is through the use of freelance bidding sites. These sites are similar to auctions, in that a buyer posts the specifications of the work he or she needs doing; and then multiple service providers/freelancers place “bids” to complete that work.

Freelance bidding sites are controversial among the freelance community. Some freelancers swear by them, and get most (or even 100%) of their clients through the use of these websites. Others refuse to use the sites because of the tendency for the work to be on the low end of the pay scale when compared to the freelance industry pricing as a whole.

As a new freelancer, you might find the bidding sites to be an easy way to land yourself your first client or two, gain a testimonial from a happy client to add to your growing “proof” pile, and make a few dollars in the process.

Some of the bidding sites are free to use as a service provider, but you'll pay a fee if you land a job through the site (typically a percentage of the project price). Other bidding sites require a membership fee from providers, or a pay-per-bid price.

Take a look at a number of bidding sites to see the types of jobs that are posted, and which bids are being selected as the service provider. Not surprisingly, buyers who use freelance bidding sites are often after the lowest price; but there are buyers who use the sites for convenience and make their selection based on who they feel can provide the best quality within their deadline and price range. When you are reviewing the bidding sites and projects listed, also look to see what the winning bidder is including in their “bids” - how they are worded, what type of information they include and what they leave out, whether they are well-crafted or casually written introductions about their freelancing skills. Try to model your own bid responses on the style of bids that seem to be winning projects.

Using freelance bidding sites is a bit of a numbers game; you might have to apply for (bid) a number of jobs before you “win” one. As soon as you win a project, do your best (even if the project pays less than you intend to charge your clients moving forward) as you are starting your reputation as a freelancer with this first client.

Examples of freelance bidding sites you may want to try:

www.rentacoder.com (I found my first freelance clients here)

Getafreelancer.com (affiliate link)

Upwork.com

www.guru.com

99Designs: Are you a designer? 99Designs.com is a site which allows prospective customers to request their logos, web design, t shirt designs and other design needs as a contest through the site. You can register for a designer account with 99Designs and start entering your designs to open contests. If chosen, you win the contest fee.

Direct Contact: Use the internet to find businesses who typically use the services you offer. For example, you could contact marketing agencies to offer your graphic design skills for their brochures, business cards, and direct mailings. If you are a web developer, instead of looking for a new business without a web presence to help them get online with a site – try contacting existing web design businesses that seem to be doing very well to see if they have a need to outsource any of their work. You can make initial contact via email or contact forms on the websites of the businesses you decide to contact – or you might phone them directly. Both options are free (with the exception of your time) and are very effective for drumming up your first client (as well as finding clients regularly!)

Ask Everyone You Know: Don't be afraid to let your friends, family and co-workers know that you're starting a freelance business and ask if they know of anyone who might need your services. Word of mouth and referrals is by far the best type of marketing there is, and these people are all included in your “warm market”. If a friend refers someone they know to you, you already have the trust of that prospective client simply because their friend referred them. Having the trust of your prospects is key to turning them into paying clients.

Try eBay: eBay.com is not really designed to market yourself as a freelancer, but if you type in “freelance” in the search box on eBay.com, you'll find a few hundred people who are advertising on eBay. It only cost a few cents to list an ad, so if you can figure out how to present yourself to potential eBay users, you might be able to benefit from the hundreds of thousands of visitors the site receives each week. Keep in mind that most people are visiting eBay to buy products, not services, but there have been freelance writers and graphic designers who have done very well for themselves by adding an auction listing for their work. You can sell web content articles for $10 or $20 a piece; a single logo design for $50 – whatever service you offer as a freelancer can be listed on the eBay in an auction format. It may not be the best long term strategy for incoming business (although never say never!) but you may be able to find yourself your first client with a little auction posting of your own.

Job Sites: Even though job sites are primarily for full time and part time positions, many online job listing sites include jobs for freelancers; sometimes classified as “telecommute” or “contract work”. All of these terms basically mean the same thing – you're working from your own home or office and you're not considered an employee of the company for tax purposes. Try searching the major job sites and classified listings for jobs that are in your area of expertise and are offered on a contract, telecommute or freelance basis.

Here are a number of sites to help you get started on your search:

www.craigslist.org (under jobs category for every state and city of the US, you can find your industry and then view the listings for free. Apply to any that are contract or telecommute that you can do).

www.creativeheads.com

www.monster.com

www.careerbuilder.com

www.aboutfreelancewriting.com

www.freelanceswitch.com

www.problogger.net

www.allfreelance.com

www.allgraphicdesign.com

www.webprojobs.com

www.krop.com

www.sologig.com

www.authenticjobs.com

www.freshwebjobs.com

www.designcrowd.com

www.freelancers.net

In "How to Find Freelance Clients: Part 3", I'll give you some tips for applying for the freelance work found online.

This article is from Debbie Dragon of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The Entrepreneurial Spirit and the Economic Crunch

Sarah Winfrey — Mon, 10 Nov 2008 16:42:45 +0000

Are you thinking about starting your own business but concerned about the economy? Feeling the pull of being your own boss but wondering if that could possibly be a good decision under the current circumstances? Then you'll be relieved to find out that 92% of existing entrepreneurs say they'd have started their business regardless of the economic climate, or so say Ernst & Young's Entrepreneur of the Year finalists and winners.

But how do you do it? What do you need to do to make a new business work during an economic crunch? I talked to some people who've started businesses within the last year, and this is what they have to say.

Look On the Bright Side

Sometimes, it's better to be on your own when the economy's down than it is to be part of a company. Len Porcano, of Novisi, remembered the last time the economy had a downturn and his company cut 2/3 of their workforce. This time, slowing economic conditions actually motivated him to go out on his own because he felt like he had a better chance of maintaining income if he "could respond [himself] more quickly to where opportunities developed in a weakened economic landscape."

Being an entrepreneur can also allow you more room to learn from your mistakes. As long as you have some income to count on, you can try new things and "see very little whiplash from mistakes," says Philip Tepfer, whose sailing-and-regatta clothing company, Sail(Proud), has found success in the current market. He sees the ability to make mistakes on the small scale and learn from them as a luxury, and one that larger companies don't have.

Know Your Strengths

Knowing where you're strong is the first step toward knowing how to position yourself when the economy tanks. Philip realized that Sail(Proud) is at an advantage because they're "a small, agile entrepreneurial company. We don't have high payroll expenses, HR costs, enormous marketing fees, and the like." Their size and agility allows them to dodge 'n roll in situations where larger corporations would have to take the hit.

Jesse Levin and Danielle Caro found that integral parts of their original business plans gave them a leg up in the current climate. Jesse designed The Archer Group to specifically "cater to clients looking to invest in the emerging markets." This gives him an advantage in the current economic climate, when traditional markets are struggling. Danielle, who founded the marketing and design firm Fox & Gazelle, intentionally designed her business processes to be efficient and streamlined. This keeps her overhead low even when the economy is strong and becomes a huge asset when it's weak.

Leverage Your Strength

If you know your strengths, you can figure out how to use them to your advantage. While streamlining processes "was a core aspect of our business plan from the start," Danielle says, it "is only made more relevant by this environment." The pared-down processes are not only an advantage she can offer clients, but they also allow her to invest much of her profit back into the business.

Sometimes, it's possible to structure your company so it will not only survive but will also thrive in adverse economic conditions. Len realized that, as companies were downsizing and not rehiring for other positions, they needed a less expensive way to fill those gaps and get those jobs done. He positioned his company to step in and handle that "extra" work, and thus made his business particularly viable during a recession.

Regroup

When Philip saw that he wasn't going to be able to rely on retail sales like he'd hoped, he immediately came up with other markets for his merchandise. Knowing that even the giants of retail are suffering right now, he sought out other markets. "We still do retail sales," he says, "but now we're seeing much more positive results from our yacht club, regatta, event, boat show, and corporate sales." While his ultimate goal is still the retail market, he's ok taking it slow for now.

Regrouping doesn't always mean selling your product in different place or to different people. Christopher Jacobs points out that strategically adding services can make a huge difference when you're starting out during an economic slump. His company, Emergent Energy Group, found that many municipalities needed their cheaper, cleaner energy solutions even more as finances became tighter, but often didn't have the resources for an intitial investment in doing energy differently. They changed their approach, he says, "in that we offered a service to write grant applications."

Remember Your Motivation

Starting a business is often hard, and requires even more of a committment when the economy is rough. When you can remember why you wanted to work on your own in the first place, though, all that hard work is worth it. Several of the entrepreneurs I spoke with don't want to work in a traditional office environment. Others relished the challenge of starting a business when times are rough. Still others saw an opportunity and decided to take it, wanting to get in before anyone else did even if it meant extra hours and some lean times. Whatever your motivation, keeping your reasons before you, even writing them out and putting them where you'll look at them often, will help you when you wonder if you were suffering from temporary insanity when you gave in to the entrepreneurial bug.

Whether you start your business soon or wait for an economic upswing is up to you. Knowing that others are making it, though, can make all the difference in the world. If you're starting a business, thinking of starting a business, or waiting until things change, leave a comment. I'd love to hear your story and the thoughts behind your decision!

This article is from Sarah Winfrey of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

16 Ways To Get Money For Your Business

Julie Rains — Sat, 14 Jun 2008 18:26:38 +0000

Former kid entrepreneur, co-founder of iContact (a leading on-demand email marketing service) while an undergraduate student at the University of North Carolina at Chapel Hill, and now Chief Executive Officer of iContact, Ryan Allis, has lots of ideas for getting money to grow a business. He’s got real-world experience, which he shares in his book Zero to One Million: How I Built A Company to $1 Million in Sales... And How You Can, Too.

Using Ryan's expertise as a guide, here are ways, simple to sophisticated, to get money for your business:

Use money from a regular job, part-time job, one-time gig, or contract work.
Generate cash from your business and re-invest it (also known as bootstrapping).
Get a personal loan from family members or friends (iContact bought server equipment through a loan from a friend).
Request a loan using Prosper.
Set up a credit line with corporate credit cards (iContact has 2 credit cards with a combined $160,000 of credit available).
Use personal credit cards (I know someone who funded her business, a chain of tanning salons, with credit cards. She paid teaser rates only and kept track of when promotional offers ended, and when she needed to find a new card.)
Borrow from your bank or credit union, getting a secured loan using your personal assets (such as your home) as collateral.
Get a loan secured by business assets such as inventory, real estate, or equipment.
Find a co-signer for a loan if you don’t have assets to use as collateral.
Get a bank loan backed or guaranteed by the Small Business Administration; also see this article on SBA-backed loans from Business Week. (iContact got a credit line from Bank of America backed by the SBA.)
Factor your accounts receivable; that is sell your unpaid invoices to a factor who will pay you part of what you are owed now, and more when the full amount is collected, less a fee, helping your cash to flow.
Structure a convertible debt deal. This Inc. article describes how a software company owner designed a deal that paid its lenders a guaranteed interest rate and then paid back the principal after 5 years if the debt had not been converted to an ownership stake in the company. (iContact raised $500,000 by issuing convertible debt through a deal with NC IDEA).
Work with a venture bank such as Silicon Valley Bank. These banks may offer a variety of funding methods and tend to work with companies that have strong potential for explosive growth and profitability. (iContact has a $1 million credit line with Square 1 Bank).
Issue corporate bonds. A company may structure its own deal with a stated interest rate and term length, and then sell the debt instrument to investors.
Find angel investors who will give you money in exchange for a equity in your business (common stock or preferred stock).
Raise capital from a venture capital (VC) firm. This process requires much dialogue and culminates in a term sheet or details of the agreement prepared by the VC firm and a valuation of the company, which will ultimately determine the percentage ownership the VC firm will have in your business. (iContact received $5.35 million in funds from Updata Partners.)

Ryan recommends starting the getting-money process by preparing a business plan and pro forma financial statements (projections of profit & loss statements and cash flow). The financial information gives business owners, lenders, and investors an idea of how much money is needed, what the money will be used for, the projected return, and how much risk is involved.

The amount of money needed is a key factor in deciding the approach for finding money: for example (according to a table in the book), if you're looking for $1,000 to $25,000, then you'll likely get a bank loan or money from friends; if you need $25,000 to $250,000, a bank loan or angel investors are the way to go; if you need $250,000 to $1 million, go to a small VC firm or a network of angel investors; for more than $1 million, see a VC firm. All of these techniques require building solid relationships over a period of time and being able to demonstrate that you know what you're doing.

Note: I received Zero to One Million in exchange for a book review. This post focuses on one chapter, "Raise Funding or Bootstrap." Ryan shares general business principles but also provides insight into what it takes to build a high-value technology company. Fairly complex ideas, such as pre-money valuations of companies seeking venture capital, are covered but the book is easy to read and written in a conversational manner.

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

If you're so smart, why aren't you rich?

Philip Brewer — Fri, 21 Mar 2008 19:01:50 +0000

You don't hear it much any more, but for a long time, "If you're so smart, why aren't you rich" was a pretty effective line for the average Joe when dealing with somebody who was smarter than him. The expression has kind of fallen out of fashion lately. Nowadays, there are too many rich smart people.

The line worked because, for most of history, being smart wasn't really a big advantage in becoming rich. Aside from things like inheriting/marrying wealth, or winning the lottery, there are basically two paths to wealth:

Option #1 is the "millionaire next door" way to wealth: live below your means, save and invest, and let compound interest and the natural growth in the markets work its magic. If you do this--and you live long enough--you'll eventually be wealthy.

Option #2 is to be an entrepreneur: find some need, and then create a product or service that can satisfy it at a profit. Unlike living frugally and saving, this is not a sure way to wealth. Many new businesses go broke. Many of the rest muddle along making less money than the owner could have made working a regular job. But lots of entrepreneurs make good profits and a few become wealthy.

The downside to option #1 has always been that it took too long. Unless you lived very frugally indeed, it could take 30 or 40 years to turn an ordinary salary into real wealth. (Even then, success depends on living long enough--and if bad luck or bad choices pushed your income down, your expenses up, or weighed on your investment returns, "long enough" could turn out to be longer than you've got.)

So, for most of history, option #2 has always been the way to go if you wanted to be wealthy. But being an entrepreneur took a certain set of personality traits--a set that notably doesn't include being smart, but includes things like a tolerance for risk, a burning desire for wealth, a thick skin, and a willingness to put running the business ahead of other interests (like hobbies, friends, and family).

Over the past generation, the "knowledge economy" has made intelligence a bigger advantage than it used to be. Besides the dotcom boom (which made it possible for people with only a modest entrepreneurial bent to get rich following option #2), it's been possible over the past couple of decades to accelerate option #1 as well: an ordinary smart person, working at an ordinary good-paying job, has been able to support a family at an ordinary middle-class standard of living, and have enough of a surplus for saving and investing to become modestly wealthy in a decade or two. (Of course, lots of smart people failed to do so, but that's just because smart people are as prone as dumb people to suffer from the natural human inclination to let the cost of living rise to whatever one's income will support.)

Smart people of the world: This is your shining hour. There's no telling how long just being smart will translate into the kind of income advantage smart people have enjoyed these past couple of decades. This is very much a "get while the getting is good" kind of situation. Don't miss it.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Augment Your Income By Going To Nightclubs

Nora Dunn — Mon, 27 Aug 2007 07:09:58 +0000

Execution is the key to successful business. Good money-making ideas are rampant, but it's the people who actually take the time and energy to execute those ideas that are the world's next entrepreneurial geniuses.

If you like going to night clubs and are a decent schmoozer, here's a potentially big money-making idea for you. It has a capital investment of nothing but time, patience and charm, and a potential payout of a few thousand dollars a weekend:

Your job is initially that of a survey conductor. (Or if you're really resourceful you have lackeys - I mean friends - conduct the surveys for or with you). Either way, the people you are surveying are those standing in line for nightclubs. They don't have much else to do, and you can make answering a few questions worth their while (and yours).

Approach them by saying that you organize killer parties in nightclubs, and are conducting a quick survey to see what sorts of events people would attend. You can make up your own survey, but the general things you want to determine are:

What kind of music do they like? (ie: latin, hard rock, alternative, hip hop, etc)

What night of the week do they most prefer to go out?

And here's the big question: If you were to contact them by email with a special invite to a party that fits their interest at a wicked bar, would they consider going? If they are game, get their email address.

That's it. Just keep the survey quick and easy, so you can work your way through a line-up without troubling anybody too long and you can get lots of feedback. The big thing is you want to get email addresses, so make your pitch quick and compelling.

Here's the rub: You will need a lot of survey responses before you can go to the next step. Thousands would be good. So your initial investment in this idea is going to cost you (and hopefully your lackey friends too) a number of weekends. At least the surveys are quick and easy, and you can work your way through a 30 person line-up in no time. One night can bring in hundreds of email addresses if you turn on the right charms and work the crowd effectively. And even better, you're already downtown so once you're tired of doing surveys head into a club to relax and let loose!

You'll also need to compile all your survey answers into a database or spreadsheet of sorts; another reason to keep the survey down to two or three questions. Once you have done this, you now officially have a party invite list that bar owners would kill for.

Your next step into the world of entrepreneurial splendour is to connect your party-goers with the right bar owners.

Let's say that you have 500 people who like Latin music and Friday nights. Approach a small bar (ideally one that already has a Latin theme to it, and possibly one that is either new and trying to establish a clientele, or one that is suffering and needs a boost), and ask to speak to the owner or manager.

***An aside about speaking to anybody in the service industry: Do not, (read: NEVER) ask to speak to a bar owner during busy hours. The downtime for most bars and restaurants is in the mid to late afternoon. That is when the owner is most likely to be hanging around and available to chat with you. If he or she isn't around, get their name and ask when a good time to drop by will be.***

Once you are in front of the owner of this club, introduce yourself as a party/event co-ordinator (or whatever cool hard-hitting title suits your fancy) and that you have a database of over 500 pretty people at your fingertips who love Latin music on Friday nights. You would be happy to co-ordinate a Friday night at their establishment in a few weeks and pack the place if he or she is interested.

What's in it for them? They will have a full house that night and probably get some new regulars out of it. If it's a new or struggling bar, this will be music to their ears.

What's in it for you? Either a cut of the bar sales, or the cover fee at the door. You can work out the proper compensation that suits you both with the bar owner. (If they charge a paltry $2 cover fee and 500 people come over the night, you just pocketed $1,000).

Last step: After you have figured out a date for the party, send an attention-grabbing invite to your 500 Latin music lovers about a special party they are invited to as part of an elite crowd. Not all of them will show up, but a percentage of them will and they'll bring friends, in addition to the regular crowd at that bar. This will make for a fun-filled night for everybody and a tidy sum of money for both you and the bar owner. Everybody Wins!

This article is from Nora Dunn of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

To Start or Not: The Entrepreneurial Debate

Sarah Winfrey — Thu, 02 Aug 2007 17:51:59 +0000

Let's face it: most of us have ideas that we think might sell. And most of us think we'd love to work for ourselves. But is that really a good idea? Here are 10 things to consider if you're thinking of starting your own business.

1. Do you care?

Ok, so you have a good idea that might make some money, and you envision yourself conducting business by cell phone while watching the waves roll by in Fiji, but do you actually care? Do you want to make people's lives better, easier, more fulfilling, whatever, though your new business? If you don't care, you'll run out of steam before the long haul of starting a business even gets started.

2. Do you have what it takes?

The reality of the entrepreneur's life is, well...craziness. Long hours. Disappointments. Patience even when the bills are piling up. Basically, investing all of yourself and much of your future in the public's response to a product. If you don't have the persistence, the blasted stick-with-it-ness to keep going no matter what, you might sink when the first hard time comes.

3. Do you have the social support?

What do your family and friends think of this new idea of yours, and your dedication to it? Do they see you as haring off on a wild goose chase, or are they chomping at the bit to buy what you're offering? More importantly, are they willing to put up with your long hours, cash flow difficulties, moodiness, exhaustion, etc.? If they are, you have a much better chance of succeeding.

4. Do you have a financial plan?

Booor-iiing! And I agree. But absolutely necessary. How much do you need to start your business? When do you envision yourself turning a profit? What will you do if it doesn't happen? Who are you going to approach for the capital to get going (if you don't have it yourself)? The more of these questions you can answer, the better off you'll be.

5. Do you have a backup plan?

What happens if no one wants what you have to offer? Or if your baby gets sick and needs serious medical care before you have health insurance again? We hope these won't happen, but they're realistic possibilities. You have a better chance of making it as a startup if you've thought these through. Most likely, everything you think of won't happen. But something will, and you're more likely to survive if you've thought it through.

6. Do you have the time?

Are you willing to pour most of the time that you're not asleep (and some of the time that you should be) into getting this thing going? If you aren't, maybe you want to work for someone else for a few more years, or until you get an idea that inspires you to pour yourself, and your time, into it.

7. Are you willing to tell the truth, no matter what?

Are you willing to tell the people you're wanting to hire that most likely your business will fail. Most new businesses do, you know. Are you willing to tell possibly buyers that you don't know how your product sells? Because you don't. If you don't have an ironclad integrity, you may want to reconsider starting your own business.

8. Do you have enough experience?

Do you have any idea what it take to produce your product or facilitate your service? To run a business? To hire the people who will write good code and actually make your product do what you want it to? While experiences in everything isn't necessary, the more you (and your business partners) have, the better.

9. Do you have a niche?

Who will buy your product or service? Who are you marketing to? Where do they meet, and when, and how? What does your product offer that others don't? Why should people even look at what you're doing? The more defined (not narrow, but sharp!) answers you can give to these questions, the better chance you have for success. You will aim and fire where you want to, and not waste time and energy on a scatter technique.

10. Do you care what others think of you?

Ok, you have to care some because you want people to pay your for something. But do you care when people look at you and think you're crazy to give up your security for something that doesn't have a great chance of success? Does it bother you when people get a blank look after you tell them what you do? The more independent and sure of yourself you are in this regard, the better your chances for success.

And a bonus: Are you a lover or a fighter?

Both can succeed as entrepreneurs, but they'll do it very differently. A lover might value forming lasting relationships with her investors where a fighter would try to convince them, overwhelmingly, that their product is going to win over millions. If you don't know which you are, you can spend a lot of time and energy trying to do things in a way that is counterintuitive for you. While both are good strategies to know, it's better to go with your gut the first time out. There will be time to learn more later.

It's hard to be an entrepreneur. It's a demanding, difficult life. But it's also highly rewarding. Here are some of the best insights I've found to give you a realistic perspective that won't destroy your hope.

The Flip Side

The Lazy Way

Kill the Bargain Hunter

Weekend Entrepreneur

There are a million more! Search and enjoy.

This article is from Sarah Winfrey of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Going Freelance: The Top 10 Tips

Ed O'Reilly — Fri, 27 Jul 2007 07:57:00 +0000

So you made your move: you’re finally out on your own, earning a living on your terms.

No more commuting, no more answering to middle-management and say goodbye to bad office coffee. You’re the boss… and the salesperson, bookkeeper, janitor and receptionist; you’ll have to do your work and, in most cases, handle the other aspects of your budding business that – up until now – were handled by a co-worker at your last salaried position.

Congratulations, you’re now a freelancer, contractor, consultant, etc.

As a small business owner there will be various tasks for which you’ll be responsible and can seem overwhelming, at times. But, there are a few simple guidelines you can follow to make your time worth more. And that value can be measured by a combination of money and self-satisfaction:

Stay Organized

You’ll need tools for communication, tracking your money, writing invoices and managing your projects. One of the most comprehensive lists I’ve found that’s chock full of useful software is The Freelancer’s Toolset. Peruse the list but don’t feel you need every item; simplicity is best, so choose only what you need or you’ll just make more work for yourself playing with all the cool stuff;

Kill The Distractions

There will always be something you’ll think of to avoid starting a project, calling a client or doing paperwork. Even if you have a home-office, temptation lurks in every open newspaper, unkempt garden or messy garage.

And besides seemingly productive tasks like rearranging your sock drawer or alphabetizing your canned goods, the Internet will –if you let it – pull you in and drag you down. Your friends over at iMyTubeBlogFace will have to wait… you’re on the clock;

Set Aside Time For Specific Tasks

In a way, this is part of staying organized and killing distractions: you restrict your time for certain tasks.

Throughout the course of the day it’ll be tempting to send or reply to every email every few minutes, or chat with either friends or clients on the phone. But you are at a real job, even if you’re still wearing pj’s (yes, I’m talkin’ to you).

Unless it’s really important, most phone calls and email exchanges can wait until you have time to devote to them when you’ve completed your task. Constant interruption, spread out over small intervals over a workday, can add up to a lot of lost productivity and late evenings working to catch up;

Networking

I think everyone understands the indisputable value of this: no one knows you’re there unless you tell them you are. Join your business’s professional organization and attend some functions; also, sites like Ning and LinkedIn are just a couple of many online resources for making contacts.

Hopefully, you haven’t burned any bridges so keep in touch with ex- coworkers and, if appropriate, vendors. Contacting clients of your last employer, though, probably isn’t a great idea; your relationship with your ex-employer may prove to be more valuable in the long run;

Define Your Terms

You are a business, and, among other parameters that you’ve established, you have fees, you keep reasonable business hours and you have payment terms that keep you self-employed. Prices are (and should be) negotiable, time is flexible; but getting paid is neither of these.

Be fair with your clients, both with your prices for your service and with the time you spend working with them; but you need to get paid, and on terms you decide. Your clients should respect this or you won’t be in business for very long;

Outsource

There may be times that, to successfully complete a project, you might need to enlist the help of someone with an expertise that you don’t possess. In fact, sometimes the growth of a successful business is not measured by the hours you put in doing the labor, but by how you delegate work and manage various aspects of your project that can be handled by someone else;

Work With Your Client, Not For Your Client

Think of your relationship with your client as a partnership: you are an extension of their business, applying your particular skill to help them achieve their goal. You might be designing their web site, writing the copy for their annual report or handling their public relations; your goals should be their goals, because your success depends on their success;

Fire Your Client

A controversial statement? Maybe. But consider this: if you devote a lot of your time and effort to a client that has high demands but is never satisfied, what have you accomplished? I had a client that called me almost daily and, it seemed, gave me a lot of work. But at the end of the year, after having devoted myself to try and meet their expectations, I did a breakout of how much I earned per job from this client: it was far less than what I thought, and the reality was that it was only a few small- to medium-sized jobs I worked on, although it felt like much more when I considered the time I put in.

If you are spending a lot of unproductive (and unprofitable) time trying to please a client, it’s probably best for you both if you part company;

Do Your Work, Then Step Back…

… the only path to serenity. Wise words from Lao-tzu . If you’re passionate about your work, sometimes it can eclipse the reason you work and why you went out on your own: to have a different lifestyle. I’ve worked weekends, nights and even some holidays because sometimes there are unexpected circumstances that require you to make a sacrifice now and then to get the job done, and get it done right.

But no one says you have to work 14-hour days, 6-7 days a week; it defeats the purpose of quitting a salaried job to become an entrepreneur. Don’t feel guilty if you take some time off;

And The Last Guideline Is…

…up to you.

You decide what’s important, how you want to work and how you plan on meeting expectations – both your own and your client’s.

You started on your own for a reason; keep that reason in mind when you fill in this last guideline you plan to follow – it might be the most valuable one of all.

Other Resources:

SBA Small Business Planner
Determine Your Rate
Startup Journal (from the Wall Street Journal)
CentralDesktop

This article is from Ed O'Reilly of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: