Thursday, June 30, 2011

Killer Ways to Finance Your Business

I rarely promote products. Shucks, I haven't even promoted mine here yet. A marketing guru I am not. Nor do I claim to be. What I do understand is finance and strategy..and operations. Does it drive the bottom line? I understand it. Does it only drive the top line as sales and marketing does? Then I can craft the strategy but implementing it? No. Fortunately, through the last company I owned, I do know how to hire and motivate salespeople and provide them with the resources to be successful. But that was a very (and I do mean very) frustrating lesson.

Back to the financing. I came across an ebook, 27 Killer Ways to Finance Your Business, that I highly recommend. It's targeted at start-ups, aspiring entrepreneurs considering starting or buying a company, and small business owners aspiring to be medium-sized business owners. I like what it says, "The fact is, lenders WANT you to start a successful business.  Investors WANT you to show them a good investment opportunity." I agree. Many have the money to lend or invest but finding an appropriate vehicle to lend to or invest in can be highly frustrating for them. (You may not believe me but I have friends and associates on both sides of the equation. It's absolutely true. When private equity firms or angel investors find a company that fits their criteria that's seeking investment, they get excited.)

I believe that business owners can find the financing they seek if they have a strong business model and know how to package their business according to the type of investment they seek. This ebook focuses on 27 ways to do just that. It provides in-depth information on why, how, and where to access the financing. And it's REALLY easy to understand. You can check it out yourself and be the judge. Let me know what you think. Again, the ebook is 27 Killer Ways to Finance Your Business. (Is that $1.00 per way?)

To visit the ebook's site, Click Here!

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Wednesday, June 29, 2011

How a Lifestyle Business Approaches Financing

I read an article in the New York Times about a bicycle store owner and found myself inwardly cringing. In the article the owner complained about all the paperwork he had to do to comply with his SBA loan's ongoing requirement stating, ' “I just didn’t want to dedicate hours of time putting together annual statements for them,” he said. So XXX refinanced with Washington Mutual (“I sent them a copy of our tax return, and that’s all they wanted,” he said)'  {Note: I inserted the X's. I don't want to embarass anyone, just make a point.}

In this blog I primarily write about financing and cash management. You must approach debt financing from the lender perspective. Why would I lend to you if you cannot prove that you are fiscally responsible...and will remain fiscally responsible? Granted, the SBA does require more paperwork and that paperwork can be a pain. But I think requesting financial statements should be a given. I would never lend to a company without them. Others would. I just wouldn't. When I invest in start-ups, I still want to see financial statements. Yes, they are projections but they are financials nonetheless.

And here's some additional comments that made me cringe even more.

' “When I get the books done at the end of the year, if I break even — if I don’t show any loss, and I show a little profit — as long as my guys are getting paid, all my bills are getting paid, and I’m getting paid, then I’m O.K.”'

He waits until THE END OF THE YEAR to determine if he's making money or not!!! Cash flow management, what's that? No wonder he was upset about providing financial statements to the bank for his SBA-guaranteed loan. Everyone is entitled to do what they want (within legal limits, of course). Yet this is a perfect example of what I mean by a lifestyle business. He's not concerned about building a business he can sell later. He's obviously not concerned about budgeting for large expenses or capital expenditures. Expansion into other neighborhoods? Why do that? As long as he can live a nice enough lifestyle, he's fine. AND THAT'S OK. If that is what you want, then continue to run your business the same way the owner in this story does.

If you want something more, then pay attention to the other topics I write about. For more indepth financing stories and management insight, check out my blogs: Cash for Impact ( and The Resourceful CEO (

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More on IPOs

I've written before about IPOs and venture capital. So that the majority of you who do not have tech companies do not feel left out, I am sharing with you an excerpt from an article I read on It talks about the continued rise of the IPO market. (Hah! The majority of the investment bankers agree with me.) It also discusses how the majority of the IPOs and the funds raised are for more mature, stable companies (i.e., not technology wunderkinds). Many of these are backed by private equity firms looking to cash out. Notice the theme here? Private equity firms like to cash out and recoup their investments just liike venture capitalists do. When the stock market is strong, which leads to a stronger IPO market, private equity firms have the additional option of using a standard IPO as a means of cashing out. The more options for selling their stakes they have, the sooner they can realize their investment, the sooner they can raise a larger fund and invest even more money into growing companies.

Here is the excerpt from's IPO Market to Stay Strong, Say Bankers:

-----------------------While new-media companies such as LinkedIn and Pandora have received most of the hype, many of the larger IPOs have in fact been those of well-established firms that were backed by private-equity investors. One company in that category, hospital chain HCA Holdings, raised $3.79 billion; another, energy-pipeline firm Kinder Morgan, raised $2.9 billion. By contrast, LinkedIn raised $352 million in its debut. Bankers were most likely to cite the continued presence of such PE-backed firms as a reason they expect deal size to go up. Several, including Toys "R" Us and Dunkin Brands, have already filed to go public.

"These are not necessarily new start-up companies," says Wendy Hambleton, a partner in the capital markets practice of BDO USA. "Investors are looking for more stability and profitability."----------------------------------------------


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Tuesday, June 28, 2011

Venture Capital Tips for Nailing Presentation

So you've made it past all the elevator pitches, general presentations, emails, and myriad phonecalls to the final chapter. Congratulations! You've come a long way. (There may be a few who jumped right to the final chapter but that's rare.) Here's a great tip from an actual venture capitalist on what to focus on when you make that presentation to the venture capitalist partners. (Taken from the Mashable article, Venture Capital: 5 Tips for Nailing the Full Partnership Pitch.


Dream the Vision, But Live the Numbers

CEOs and entrepreneurs are typically good at communicating their big-picture excitement for their company and its market opportunity. In fact, this ability to “sell” others on your big vision probably played a key role in your initial success with employees and investors.

During the partnership pitch, be sure to complement your qualitative vision with a firm grasp of your key numbers. As companies evolve and grow, investors expect them to become increasingly data-driven and grounded in quantitative facts. As my colleague Dan Nova is fond of saying, “You can fly an airplane at low altitudes by looking out the window, but when you’re above the clouds, you need control panels and instrumentation to avoid veering off course, or worse, crashing into a mountain.” Demonstrate your data-driven management by exhibiting fluency in the key numbers of your business. What constitutes “key numbers” will differ depending on the nature of your business, but it is safe to say that historical and forecasted financials, capital structure, important operational metrics, terms of key contracts, major expense categories, etc. are fair game.


If you don't know the numbers well, you can have your CFO available to answer the more in-depth questions regarding your venture's financials. However, as the CEO, the one leading the company, you MUST understand the basic financials and those that are critical to helping move your business forward. If you don't, sit down with your CFO (or whomever is handling your finances and modeling, if you don't have a CFO) and have him or her give you a primer course. Not only will this help you in your presentation, it will help you as you move your venture forward.

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Small Business Growth in Germany

As I've mentioned before, I am an avid reader of the Wall Street Journal. I read an excellent article yesterday in the WSJ that talked about how Germany's small businesses are the drivers beyond its surging economy. Sound familiar? According to the article, Engines of Growth, "small and middle-sized businesses represent 99.7% of of all German companies." These companies have been driving the economy "for more than a century". Here are some statistics from the article:

  • 3.5 million small and middle-sized companies with <500 employees and <€50 million in annual revenues
  • Employs 78.5% of the German workforce
  • Contributes 53% of the German GDP
  • Most are family owned

Das ist wunderbar! Kudos to the world's small and medium businesses!


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Monday, June 27, 2011

Bootstrapping: Prepare to Hire

I saw an article on about bootstrapping. I admittedly disagreed with some of the details in the article. Why? I view bootstrapping as a means of keeping expenses low and cultivating a laser-like focus on the business. That means, as a self-funded entrepreneur you still approach the business the same way you would if you had access to lots of cash. You want to view your business as an entity independent from yourself. Eventually it will truly be because you will continually work towards that goal. Here's an excerpt from the article, Five Rules for Bootstrapping:

In the beginning of a company’s life cycle, the entrepreneur must be the chief salesperson, chief marketing offi¬cer, chief fulfillment officer, chief financial officer  and the person in charge of cleaning the toilet every day. To bootstrap successfully, entrepreneurs must sacrifice their own vanity and do all of the jobs that previously had been done by a large support team."

Obviously that last sentence assumes you came from a large corporation. Smaller organizations do not have a large support team.

Okay, I agree that in the beginning, often the start-up entrepreneur handles all roles. But no one is good at everything. The quicker you can outline the process for roles you are not particularly good at or that take up a lot of time, the quicker you can offload those roles and responsibilities. YOU CANNOT GROW DOING EVERYTHING YOURSELF. It is impossible. There is only one of you and you don't want to adopt the mindset that you must do everything. If you do so, you will be the bottleneck that hinders your company's growth. As a start-up entrepreneur, you may have to for a short period of time. However, there are so many entities out there that you can outsource to, why not do so? If you are a great salesperson and, by focusing on sales can drive revenue for your company, why not focus on sales? The best way to ensure that things get done in the manner you like is to document how you do it. Then you can better explain what you need, how you want it done, and the deliverable(s) you expect.

So yes, with bootstapping and as a self-funded entrepreneur, you should understaff. You should have an organization chart showing the different departments and positions. At first you (or you and a co-founder) will handle all the roles. Then, as your business allows, you fill the positions with freelancers, outsourced entities, part-time personnel, etc. Eventually you hire full-time personnel. You hire behind the work. That means the work is there and is done by someone else (i.e., you), then you hire (or outsource) when that work takes up too much time. When that same work reaches the point where it's a full-time job,  you hire someone on as an employee. (The exception to this is executive management or a critical role to the business that you just don't do even moderately well. If you can entice someone to join your team who can really help drive the business, get them when you can. You may be able to convince them to work part-time or weekends or "consult" to  you until you can pay for them to join full-time.) 


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Coping with Rising Health-Care Costs

From the article, Five Ways Businesses Are Coping With Rising Health-Care Costs: Some owners have found innovative ways to manage change amid health-care reform, by Marcus Erb.


----------------------Consider supporting high deductible plans.
An increasingly common health-care plan among the best small workplaces is a high deductible preferred provider organization (PPO) accompanied by a health savings account (HSA). This approach typically gives more control to employees in managing their health care and lowers costs for the company.

Take Heinfield & Meech for example. The firm began contributing to HSAs for employees who participate in the high-deductible PPO plan -- $500 per year for any single employee and $1,000 for any employee with dependents. The firm also pays the administrative costs for the HSAs.

Benefits are a core piece of the employee-employer relationship. While costs are increasing and forcing change, organizations that take a respectful and communicative approach can realize an opportunity to strengthen employees' commitment and dedication.-----------------------------

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Sunday, June 26, 2011

Data analysis drives results


I just read an excellent article in the weekend edition of the Wall Street Journal entitled, School Reform, Chicago Style. I thought it applicable here because the article focuses on how the collection and analysis of data is helping schools in Chicago drive some impressive results. I often ask business owners how do they know something is or is not working if you can't measure it? Read this article for ideas on what you can measure in your business to drive performance. And remember, as with this article for me, inspiration and insight can come from anywhere. Sent via BlackBerry from T-Mobile

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Saturday, June 25, 2011

Women CFOs in Corporate America

As a woman who has served as a CFO for several small to medium companies, I found the article on women CFOs of interest. (

According to the article, Women CFOs: Still at 9%, "When it comes to women in CFO roles at Fortune 500 companies, the faces may change, but the overall number stays essentially constant. As of June 1, there were 45 female finance chiefs in the Fortune 500. That's just one more than in 2010 and 2009, for a percentage of 9%.

Ten women dropped off the list since last year and 11 joined the ranking, either because they were promoted or hired or because their companies made the Fortune 500 this year. Two companies, SuperValu and TIAA-CREF, replaced their departing female CFOs with other women.

Of the 11 women who joined the list, some were internal hires. Others came from outside.

Although women make up 56% of undergraduate accounting majors and almost 62% of accountants and auditors, they rarely make it to high-level finance roles like treasurer, controller, or CFO."

My question: How long have women comprised the majority of undergrad accounting majors and accountants / auditors? It typically takes 15-20 years to crack the ranks of upper level accounting and finance positions in corporate America so of course there will be a lag if, for instance, women have been dominating in those areas for only 10 years. And what about finance majors? The article didn't mention that statistic. How many are women? Some controllers become CFOs but often CFOs in corporate America come from finance-related operating positions. CFOs drive bottom line results. A Controller tracks what has happened in the past and so can be viewed as a staff position not responsible for driving bottom line results. I'm just curious. Women often dominate in staff positions (i.e., look at all the women in HR) but rarely dominate in operating positions. My advice to women who are in accounting and want to be CFO? Pursue a controller position at a small to medium business. SMBs tend to be more focused on taxes and tracking performance and are thus more likely to promote an accounting-focused controller into a CFO position. Then get as versed as you can in strategy and operations.


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Friday, June 24, 2011

Look to Credit Unions for Business Loans

Credit unions are a source of small business loans that many business owners overlook. True, a good percentage of credit unions don't offer business loans (according to an article, that percentage is 33%). Then those that do often have a narrow selection of loan options. But credit unions are stable and have been stable for some time. More credit unions have opened up their membership to a broader base as in friends, neighbors, family members. As an example, I have a car loan for my business vehicle through one of the credit unions associated wtih IBM. I never worked for IBM but a good friend of mine did. Consequently, I was able to join and take advantage of their low vehicle financing rates.

Here's an excerpt from the article, '"While only offered at approximately one-third of credit unions, business loans are the fastest-growing segment of these member-owned institutions' loan portfolios, with double-digit growth reported in three of the past five years. In 2009 and 2010, however, this growth dipped to 9.9 percent and 6 percent, respectively.

Part of the reason is that credit unions are saddled with a 12.25 percent asset cap, which has been in place since 1998. The cap means that they can't extend more than 12.25 percent of their total assets in business loans. According to the Credit Union National Association (CUNA) in Washington, D.C., 360 credit unions are at or quickly approaching the cap, accounting for about 60 percent of credit union business lending.'

I have seen numerous requests on how can credit unions reach out to the business community. So I know that many more credit unions are considering offering business loans but aren't sure how to get the word out. Others offer them but have few customers who take advantage of them. If you are in the market for business financing, contact your credit union or one that you are eligible to join and inquire about their business loan programs. Your qustion just may make someone's day!

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Get Your Customer's Information

As a retail business owner, how do you acquire your customers’ information? is a mobile marketing application and service that lets you send text messages to your customers via the Internet. It enables you or a member of your team (such as a marketing rep, customer service associate, or an assistant) to communicate with your customers’ mobile phones via the web. It’s relatively easy to do. First, you set up a account. Then you select a keyword. Finally you promote your campaign.

Click here to read the remainder of this post on my Cash for Impact blog.

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Thursday, June 23, 2011

Business Plan Competition Video

Yes, I am biased. I went to Wharton for my MBA (Finance AND Entrepreneurial Management) so I am a huge advocate of the Business Plan Competition at Wharton. Unfortunately, it's only open to Wharton students and alums. However, here is a video which shows excerpts from the companies presenting their business plans. These are the same type of presentations you'll have to make to venture capitalists or angel investment groups if that's the financing route you choose to pursue. There are also a few excerpts of the types of questions you're likely to receive. I, of course, found it helpful and entertaining. Let me know if you do the same.

I'm not embedding it. Instead I'm including the link: It's for the 2011 Wharton BPC (Business Plan Competition) Venture Finals.


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Consider Self-Funded Health care

Is your company's health insurance costs steadily rising at an egregious rate that really has you concerned about your ability to continue offering health care benefits to your employees? If you have a large enough employee pool (100+ employees), you may wish to consider self-funded health care benefits. I recently read an article on that discusses one company's self-funding of health care benefits as a means to significantly reduce its annual health insurance costs. The company's actual yearly savings? 15-20% since the switch. Click on the title, Case Study: Paying Employee Health Claims Out-of-Pocket, to read the entire article.

Another companion article by the same author weighs the pros and cons regarding self-funding of health care benefits. That article, Should You Self-Fund Your Employee Health Benefits, provides a good overview on the subject. If you have a relatively in-shape and/or young group of employees, self-funded health care may be a viable option for you to pursue. Or if you offer health and fitness programs that encourage and motivate employees to get into and remain in optimal health, this option may be a great fit. As the article states, if you have employees in really poor health, the risk of a catastrophic illness is likely too high to consider self-funding of health care benefits. Of course, there's always the risk of a debilitating accident, no matter what the average health of your employees is. There are ways to mitigate this risk. You could provide catastrophic insurance coverage for your employees through a health insurance provider and provide self-funded health care for everything else.

Whatever your initial thoughts on the subject - even if your company is currently too small (and thus the risk too large) to even consider self-funded health care, I think it's worth your while to read both articles. It's always good to know what options exist.


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Wednesday, June 22, 2011

Trait of a Serial Entrepreneur

---------------------------------------What's the most important character trait for a serial entrepreneur? One of the most important characteristics is perseverance., for example, went through three different iterations before it found its way. It looked very hopeless for a number of years where we didn't know what the business was and we couldn't figure it out. We finally figured it out and it took off. And that was in its third year of existence! Had we not persevered or had we not had sufficient capital or a loyal team, we would not have succeeded.----------------------------------------

(The italics are mine.) My takeaway: Perseverance is key. But it's not just surviving, it's constantly evaluating and creating. If option A doesn't work, you try option B. As you go along  you may discover an option C. Stay open. You may be ahead of the curve. You know the market is there but exactly how you best serve that market may take some time to figure out. Finally, make sure that you project your cash needs as far out as your capability allows. Then do what you can to find the funds to cover that cash need.

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Tuesday, June 21, 2011

The Economist' Franchise Fair

I copied this VERBATIM from an email I received. Here's a great opportunity to explore franchises, if you've ever considered owning one. It's a free online franchise fair.

Meet with franchisers at The Economist’s free Franchise Fair, online June 28th-29th 2011. At this online fair for first-time investors and multi-unit franchise owners, you can:

  • Meet franchisers by joining webinars, chat sessions and one-on-one discussions
  • Browse virtual booths to explore a variety of franchise brands
  • Access all the information and advice you need on investing in the right franchise opportunity

… and much more, conveniently from your home or office computer.

Plus, you could win a free iPad 2* when you visit 5+ exhibitor booths at the fair. Visit Maid Brigade's ® booth to qualify for another chance to win an iPad 2, courtesy of Maid Brigade ®.

Register free today, space is limited.

We hope to see you there.

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Monday, June 20, 2011

Keep This in Mind When Choosing an M&A Banker

By definition, CFOs have a fiduciary duty to their companies to do what's in the best interest of the company. If you have a Board of Directors, that Board has the same fiduciary duty to act in the best interest of the company. (Note: Advisory Boards are informal entities with no real documentation. Hence they are not subject to the same requirements as an actual Board of Directors.) I saw an article on that I found interesting. Here's an excerpt from that article, Keeping Your M&A Bankers Honest.


The Del Monte ruling sends a strong message that CFOs and other board members need to have an honest, open conversation with their prospective bankers about conflicts of interest. If a board wants to avoid breaches of fiduciary duty, the "beauty contest" for selecting an investment banker or financial adviser now needs to include "blunt questions about [the bank's] potential conflicts of interest," say Davis and Parramore.

That may require negotiation, because the first draft of engagement letters from investment-banking firms typically says the banker can and may represent other parties involved in the transaction and may in fact at the time of the auction sale be engaged by them, says Libby Kitslaar, a partner in the corporate practice at law firm Jones Day. Says Kitslaar: "As a client you need to go back and say, 'Look, that's really not acceptable. If you're working for us as our banker in the sale, you cannot be compensated or be engaged by another party in this transaction. On this deal you're our banker.'"

If a conflict arises in the middle of a sale, Kitslaar says the seller should engage a second investment banker to "do the backstop work on a fairness opinion" and perhaps evaluate competing bids. The selling company's board could demand that the first bank split its fee with the second.


The article analyzed two court rulings in a Delaware court and the implications for CFOs and Boards of Directors. Interesting insights. If you are considering engaging an investment banker, M&A banker, merchant banker, etc. the takeaway is ask your banker if there are ANY POTENTIAL conflicts of interest...and what those conflicts are. If you really like the banker and believe the entity will still provide the best and fairest service, then you should DOCUMENT why you believe this and what steps you and/or the banker is taking to ensure this. The main reason for documenting is to decrease the probability of a shareholder/investor/co-owner suit or at least to reduce the probability that the suit filer would win.

To read the entire article, go to Keeping Your M&A Bankers Honest.

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Mindset Shift = Business Saved

Shift Your Mindset, Save Your Business is a good article on active steps you, as a small business owner, can take to save your business when low or declining sales is your issue. The article includes some good marketing and promotion tips. If you are a consummate sales person or promoter of your business and declining sales isn't your issue, there's still some good information for you.  

Here's a couple of excerpts I thought were particularly helpful.


Be social, even if you don't feel like it.
Shutting yourself away from everyone is a common mistake too many business owners make when times are tough, says Debra Condren, a New York-based business psychologist and author of Ambition is Not a Dirty Word (Broadway, 2008). "Sometimes you can be your own worst underminer," Condren says. "You start feeling like a fraud."

When Oliver's business slowed down, she started going to more networking events for women and small business owners, while raising awareness of her business through social networks and daily-deals sites.

"[Business] started to pick up because I kept fighting the recession and I kept promoting myself and getting my name out there," she says.

Keep learning and stay on top of industry trends.
While solving day-to-day problems can be all-consuming, taking the time to learn about new aspects of business is an important way to stay focused on solutions -- not just your problems. Condren suggests starting simple, like reading an article related to an area of business that's been giving you trouble, taking a half-day workshop or attending an industry conference.


If you'd like to read more of the advice given in the article, go to the Shift Your Mindset, Save Your Business article.

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Saturday, June 18, 2011

Finance Your Company, Manage Your Company Finances

Here are some websites and web applications that can help you finance your company and manage your company finances. They span the gamut from crowdfunding entities to peer-to-peer lending entities to online bill management and invoicing applications.

Finance Your Company: Profounder & Prosper

Manage Your Company's Finances: FreshBooks &

To get the 411 on all of these sites, visit my Cash for Impact blog post at

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Friday, June 17, 2011

Preparing for an Acquisition

I'm a big advocate of acquisitions as a means of business growth. But it really depends on your industry, background, interests, goals, and strategy. Growth via acquisitions is a strategy, just as pure organic growth is a strategy, growth through partnering is a strategy, and growth through licensing is a strategy. If you do decide to acquire another compan, because it's part of your overall strategy or simply because an opportunity to do so came up that's so good you can't pass it up, you must not only know how to make sure it's a good deal financially for your firm, but you must also ensure that it's a good deal financially for your firm. What's the difference? The first is doing the front end analysis on the company - running the numbers, assessing the industry and competition, and confirming the infrastructure behind those numbers. The second is integrating the acquired company with your company's management team, culture, infrastructure, and strategy. When you don't begin the integration from the day after the deal closes, you increase the probability that you won't come close to realizing the financial bump you expected. How do you go about fully integrating the acquired company? Craft an acquisition integration plan to help you answer this question yourself.


According to the Inc. article, Prepping Your Team for An Acquisition, ' "Integrating an acquired business is always a challenge, and poor integration is the leading factor for a failed acquisition," says Neil Shroff, managing director of Orion Capital Group in Menlo Park, California...'

'The key to successful integration, Shroff says, is getting your management team involved in planning properly for what happens after the deal is closed. In other words, buyers tend to get stuck thinking about how to close the deal rather than thinking ahead in terms of how they plan to integrate their new acquisition so that it can deliver on all the spreadsheet promises. Waiting makes sense at one level because many buyers want to wait until the deal closes and "the ink is dry," says Shroff, before they spend the time and social capital involved in completing the merger. But waiting too long can spell disaster...'

In addition to your regular business plan, you must create an acquisition integration plan. This acquisition integration plan will include steps such as when and how to notify staff (incoming and existing), an ongoing communication plan, a software switching and/or integration plan (the bigger the companies, the less likely they use the same software for their various functions),.. The earlier you involve the whole management team in the process of integrating the acquired company, the better. As I've stated repeatedly, people like to feel they are a part of the process. When they do, they embrace the process and its outcomes. When they do not feel they are a part of the process, they offer up a lot of resistance. Think about yourself. Don't you do the same thing?


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Wednesday, June 15, 2011

The Bottom Line Impact of Wellness Programs

I read an article, Healthy Returns from Wellness Programs, and was inspired. Having worked at three major companies that had on-site gyms and health and wellness programs - Honda, Enron, Siebel - I've been a big believer in such programs as a means of keeping employee health expenses at a minimum. The smaller companies (i.e., non-Fortune 500 like the companies I mentioned were) interviewed in these articles measure and quantify the positive impact on their respective bottom line. Here's an excerpt I particularly liked:


The sweating and the checkups pay off: indeed, Hunziger can quantify the benefits. Lincoln's wellness program saves the company some $2 million a year, he estimates, with about half of that coming from lower-than-average health-insurance costs. (Lincoln is consistently about $3,000 below the national per-employee average.) A big part of the balance comes from the reductions in workers' comp insurance rates that have occurred as the program has taken off over the past seven years, and from an estimated $4,000 savings per year per employee who quits smoking. Below-average absenteeism and turnover also contribute to the savings.

All told, Lincoln reaps "a 5-to-1 ROI" on its wellness program, says Hunziger. That includes the costs of employing a wellness staff, various incentives, and activities like the mountain climb with the CEO, which is a reward for employees who achieve a certain level of fitness.


To read the entire article and get more details, read the article Healthy Returns from Wellness Programs in its entirety.

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Tuesday, June 14, 2011

Angel Investor Market Up

Excerpt from article, Angel investor market rebounded in 2010, up 14 percent from 2009, from TechJournal South.

DURHAM, N.H. – The 2010 angel investor market saw a robust increase in investment dollars following a considerable contraction in investment dollars in 2008 and 2009, according to the 2010 Angel Market Analysis released by the Center for Venture Research at the University of New Hampshire.

Total investments in 2010 were $20.1 billion, an increase of 14 percent over 2009 when investments totaled $17.6 billion. A total of 61,900 entrepreneurial ventures received angel funding in 2010, an increase of 8.2 percent over 2009 investments, and the number of active investors in 2010 reached 265,400 individuals, a small growth of 2.3 percent from 2009.

Healthcare services/medical devices and equipment accounted for the largest share of investments, with 30 percent of total angel investments in 2010, followed by software (16 percent), biotech (15 percent), industrial/energy (8 percent), retail (5 percent) and IT services (5 percent).

Note from Tiffany: I bolded the latter categories to show that angels DO invest in other sectors besides tech, biotech, and medical.


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How much money should you raise as a startup?

I saw a good article by Bill Clark on Mashable which asks the question: How much should your startup raise? The article provides the pros and cons of both initially raising a small amount of funds and of raising a larger amount of funding. Both sides have merits. One of the merits of raising a smaller amount, as the article mentions, is that you retain a larger equity stake in the company. Another one not mentioned in the article is that bootstrapping forces you to pay close attention to your operations, who you hire, when you hire, etc. Having less money forces you to build a strong business from the ground up. Just like recessions weed out weaker companies with poor systems in place, having less expansion capital does the same. Of course, if you are more sales oriented and less operationally focused, having too little money won't allow you to make the mistakes you may need to make to build the business that your company is meant to be. As the owner or one of the owners, you need to understand your strengths...and weaknesses and act accordingly.

If your company doesn't seem to have any appeal to investors (and so this question begins to seem moot), you need to ask yourself how scalable your business is and how fast? Investors are attacted to ventures they can cash out of in 3-5 years. Some may have longer scenarios (5-7 years or more) but they still want to cash out and at a higher level. Focus on making your business - or at least positioning it as such - a scalable enterprise that could foreseeably generate millions in revenues in a few years.

Read the article How Much Money Should Your Startup Raise? for more general insights.

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Monday, June 13, 2011

The Millionaire Mindset

I read a great blog post on Yahoo! Finance. The blog post was entitled, Don’t Worry, Be Wealthy: Easiest Time Ever to Make Millions, Author Siebold Says. I'm copying the last portion of the blog post here because I think it's important for business owners to keep this in mind at all times. Some of the statements refer to employees instead of business owners but some business owners still have an employee mindset. (i.e., The owners run their companies as lifestyle companies instead of viable, sustainable entities wholly separate from themselves.) Notice the point about finding problems that are profitable to solve. Isn't that what the successful businesses do? Solve others' problems? The bolded items are from the blogger, not mine.


The Millionaire Mindset

There are key differences between the way rich people look at money and the way the rest of us do, according to Siebold:

  • Wealthy people look at money in positive terms and as an opportunity, where as most of us live in fear of being laid off or not having enough money for retirement.
  • Instead of worrying about running out of money, soon to be millionaires are thinking how to make more money. World-class performers are finding problems that are profitable to solve. They know that just because a solution hasn't been discovered yet doesn't mean it doesn't exist.
  • Millionaires tend to move towards what they want, rather than move away from what they don't want, which is what the masses most often do.
  • World-class thinkers have the guts to be optimistic right now in these shaky times and reject the middle-class cynicism that plagues the masses. It's not comfortable for a millionaire in the making to forge ahead when everyone around him or her is negative, cynical and unsupportive, yet the great ones push forward and are rewarded with riches for the rest of their lives.

Siebold's bottom line: "Take inventory of your consciousness and the way you think about money and ask yourself: Is this the way a rich person thinks or someone in the middle class thinks about money?"

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Mashable: 5 Ways to Raise Startup Funds


5 Ways To Raise Funds for Your Startup, Startups generally offer preferred shares when they raise money. Common stock is typically given to founders and reserved for options. The reason to offer preferred shares is that they often come with provisions like rights and liquidation preference. They are also senior to the common stock. This will make the investment more attractive and assure the investor he or she will be paid out first. After all, they are some of the first people to put up money to help your startup succeed."

, you will understand that having preferred shares and associated preferred voting rights is very important to angel investors. Venture capitalists, who tend to be more savvy than angel investors, insist on preferred shares.

To read the article in its entirty, go to 5 Ways to Raise Funds for Your Startup.

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Sunday, June 12, 2011

Who's funding B2B start-ups?

Join the IPO Party (Eric Markowitz, is a great article about a resurgence in IPOs that feeds into my previous blog about how IPOs were not dead... Except that the IPO and venture capital focus appears to be increasing for B2C (business to consumer) startups, and decreasing for B2B (business to business) startups. Here's an excerpt from the article:

Who's funding B2B start-ups? No one, it seems. Good luck getting funding for your start-up if your business model targets other businesses—you'll need it. According to The Wall Street Journal, start-ups targeting other businesses as their main customers are struggling to find venture dollars. "The shift away from business-oriented technology start-ups has been gathering steam over the past few years," The Journal notes. "Venture investment into such companies was $11.9 billion in 2010, down 35 percent from $18.4 billion in 2006." Funding for start-ups that cater to consumers, well, that's another story completely. In the first three months of this 2011, "venture-capital investment in consumer tech companies nearly tripled to $874 million from $310 million a year earlier…The disparity is stark."


Ok, the above excerpted assessment could be read another way. The B2B investment size is still multiples larger than the B2C (if you annualize the $874 million, which of course may not be accurate but will suffice for this example, the B2C annual market for 2011 will be $3.5 billion). So, unlike the above excerpt implies, B2B investment is not dead, just lower. You will note that the new investment in B2C has not replaced the decrease in investment in B2B. So keep your chin up, B2B start-ups (tech and related, that is). Venture capitalists are still interested in you. Although they just may get distracted by the flashy B2C startup tech companies, they continue to show you love.

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Friday, June 10, 2011

Tech IPO filings continue

The tech companies that started a few to several years ago continue to add themselves to the IPO queue. This trend will continue as companies, such as LinkedIn, enjoy such successful IPOs. What's in the queue now? (meaning, who has filed with the SEC for an IPO?):

Pandora - the online radio station. Good for them. They've been around for a while and struggled several years ago. They just increased their subscription price by ~50%. (The subscription price is the price at which they will offer shares to go public.)

CafePress - the promotional gifts, t-shirts, and other fashion site that enables online entrepreneurs to setup stores with products at minimal upfront costs. Cafepress was founded in 1999, at the height of the tech boom. It obviously survived the tech meltdown a couple of years later and is now flourishing.



Yelp - the online retail outlet (restaurants, hair salons, etc.) community ratings provider.

Facebook - Does this one need a description? Facebook made public statements in January of their intent to file for an IPO in the first half of 2012.

Zynga - a "social network game developer". This company was apparently pursuing the the investment bank, Goldman Sachs, to lead its IPO. Zynga was founded in 2007.


I'll keep tabs and update you on more rumored and actual filings of tech IPOs. Why is this important to you? As I've stated before, when venture capitalists can cash out relatively quickly and easily at higher multiples from their investments, they are more willing to invest. So they become more receptive targets for your investment pitches. The effect continues to trickle down over time to angel investors.


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Thursday, June 9, 2011

Need to Find a High Level Corporate Contact?

I just discovered the website, The Official Board, when I was trying to find the corporate organizational structure of a very large multi-national Fortune 500 company. I read a couple of the company's 10Ks and 8Ks, searched the web, searched LinkedIn, etc. and was still having difficulty making sense of what are the major divisions and what sub-divisions report into who. If you are seeking a partnership with or strategic investment from a large corporation, knowing who to talk to and why can help you make inroads fast. Otherwise, you could flounder around for months trying to get to the right person.

Check out The Official Board. I think it's a wonderful resource. And it's free for up to 15 searches. It shows the top level corporate executive management team, the next tier of executive management, and the vice presidents that report into them. It also shows who is on the Board of Directors. Let me know what you think.

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Wednesday, June 8, 2011

Where to Find Angel Investors

I read a great article on Mashable. It's targeted at angel investors but it's a good read for those who want to find angel investors. Remember, when you are pursuing a type of customer - in this case an investor - you need to study their behavior, where they go, what they read, and how to get to them. This article contained some elucidating insights and highly specific information for people who wish to become angel investors or for those already acting as angel investors who want to expand the range of companies they invest in. The article,7 Resources for Startup Investment Opportunities

Did you know that you can invest in private companies like Facebook, Twitter and Zynga online? In the past these opportunities did not exist, but recently, two websites have been posting offers to sell shares from insiders whose shares have vested. You can go to Secondmarket or Sharespost and look through the private securities offerings. Most of the postings require you to buy tens of thousands of shares, so if you don’t have $350,000 lying around for 10,000 shares of Facebook, you might be out of luck.

There have been some new opportunities in the last few months for those who want to invest in companies like Facebook and Groupon. People are creating investment funds specifically for purchasing shares in private companies. The fund will hold those shares for you until the company goes public and liquidates them. This will allow you to invest in these companies for a fraction of the cost.


Note: This article was posted on May 18, before Groupon's SEC filing. Therefore, the opportunity to invest in Groupon as a private company has likely passed. But, if you wish, you'll soon be able to buy shares of Groupon in the public markets.

I recommend you read the article,7 Resources for Startup Investment Opportunities . (Click on the title link to do so.) If you are on the other side of someone seeking investment opportunities, namely your company is an investment opportunity, and you want to find angel investors, you'll want to know where the angel investors are and how to reach them. This articles provides the answers. Go where the investors go. Just remember to perfect your elevator pitch first!

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Legal Expenses: Capital Expenditure or Business Expense?

Here is an interesting excerpt from a CFO magazine article on The article, When Are Legal Costs Nondeductible by Robert Willens discusses a specific court case. However, the decisions provided by the court (and later supported on appeal) to clarify nondeductible legal fees are applicable to many businesses. See the excerpt below. The emphasis is provided by me.
In its analysis, the appeals court explained the difference between a capital expenditure and an ordinary and necessary business expense via examples. The cost of buying a building, for instance, is a capital expenditure because a building has "a useful life substantially beyond the taxable year," which is the legal definition of "capital expenditure."

A capital expenditure isn't deductible as a business expense in the year in which it's made. Instead it must be depreciated over its useful life, and the amount of depreciation each year is all that's deductible that year, according to the appeals court. Thus, as required by tax law, cost is matched temporally with revenue.

In contrast, the court reasoned, business expenses incurred in the course of day-to-day operations are ordinary business expenses. If they're also "necessary" (meaning "appropriate and helpful"), they're deductible from the business's taxable income in the year in which they're incurred.

Thus, in the court's example, repairs to a building that preserve but do not enhance the building's value can be expensed. On the other hand, improvements intended to boost the building's value must be capitalized.
Like repairs that prevent a building from collapsing, expenses paid out to defend title to the building are incurred to protect the building against what, from the owner's standpoint, might be a loss equivalent to its collapsing. "But such expenditures, because incurred to defend (or assert) the ownership of a capital asset, cannot be expensed," the court stated in its decision.
What this means is that the origin of the legal claim being defended against is important, as is the intent behind that legal claim. If you incur legal fees in the daily operation of your business, those fees can be expensed. Defending your company against an employee wrongful termination suit or against the city in which you operate who sues you for unpaid taxes or against a customer or supplier for contractual non-performance are all deductible business expenses. However, if you incur legal fees to defend the company against another shareholder who disputes the business' valuation or you are sued for contractual non-performance on the sale of a significant company asset such as land, real estate, or manufacturing equipment, then those are nondeductible legal fees. Instead they must be treated as a capitalized expense, added to the balance sheet, then depreciated over its useful life. The depreciation amount is all that can be expensed on a yearly basis.

What's the underlying difference? What determines whether or not your legal costs are nondeductible? If the intent behind the suit or legal expenses is to maintain or increase the value of a major asset, then the legal expense is a capital expenditure (and thus nondeductible legal fees). For all other legal expenses incurred to keep your business humming along and operating smoothly, those legal expenses are operating expenses and fully deductible in the year incurred.

One caveat: All the legal fees eventually flow through the income statement. The timing of that flow is the issue here. Whether all the legal fees can be expensed in one year or depreciated (and that depreciation amount expensed) over ten or 15 years...or more.
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Monday, June 6, 2011

Reverse Mergers: Beware of Foreign Entities

With the venture capital market strengthening and IPOs making a mild resurgence, companies are re-visiting using reverse mergers as a way to go public. In an article entitled, SEC Cracking Down on Foreign Shell Companies (David M. Katz,, I read the following excerpt, "Broadly speaking, a reverse merger refers to a private operating company's acquisition by a public shell company. Reverse mergers typically result in the owners and management of the private company having voting and operating control of the combined company. In effect, the private company becomes an SEC reporting company with registered securities without having to file a registration statement." I couldn't give a better definition so I didn't. I let (CFO magazine) do the work!

Reverse mergers are a viable way to go public. If you are looking for a way to raise capital and/or access the public markets, consider this method. I'll write more on the topic of reverse mergers later. For now, if you are seriously considering one and have a target identified, pay close attention to anything that seems out of kilter that could trigger the suspicion of the SEC, especially if you or the entity you are acquiring is a foreign shell company. The SEC is culling 8-K reports and checking to see that auditors are doing their homework. If the 8-Ks show an auditor resignation, the SEC is now delving more deeply. (i.e., If the auditor resigned soon after the reverse merger was completed, why did this occur? Do they not stand by their numbers and not wish to be associated with those numbers going forward?)

For all of you who don't have a clue as to what I'm talking about, skip this post.

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Stretch Your Business Budget - Airfare Discounts

I am a huge fan of such sites as Expedia and Hotwire. I also am a big AirTran user. I'll see if that changes now that they're part of Southwest. I've even used Spirit Airlines for vacations. I had a couple of awesome deals to/from Bogota, Colombia and to/from San Jose, Dominican Republic a couple of years ago. On the business side, the Internet and email are wonderful tools. They allow for more frequent communication and enable such options as video conferencing, webinars, CRM-based tools, and other technology that helps build and strengthen customer relationships. But sometimes there is nothing better than meeting with a customer face-to-face. When your customers need to feel the "love", perhaps because there's been an ongoing issue or they just haven't seen a human in a long time, there is no substitute for a visit.

If you have customers out-of-state or several hours away (i.e., I can pass through five states in the time it take me to drive from El Paso, TX to Houston, TX!), you may need to hop on a plane. One way to stretch your business budget is to take advantage of airfare discounts. Sometimes the best deals come up when you don't necessarily have specific travel plans. One way to catch all the deals on a weekly basis is to use an entity like Airfarewatchdog. It's a great business bargain because the service is free! Let's say you have a customer in Denver whom you need to visit in the next 2-3 months. You see a great deal on Airfarewatchdog for a RT flight to Denver in the next two weeks. You call your customer and say you'd love to visit, what about the end of next week. They are pleasantly surprised and say yes. Money saved. Business relationship strengthened. And you didn't spend an hour (or have someone else spend an hour) searching all the sites for the best prices to Denver.

I do use Airfarewatchdog and have for ~ one year now. Admittedly, however, this post was inspired by the article "Get the Best Airfare Deal" by Lou Dobbs of This is what he had to say, "Airfarewatchdog is one of the best websites to filter through the madness and get the best deals on your next business trip." Click here to read his article. Just another tip from your friendly cash management cfo. Have business bargain tips of your own? Please comment or send me an email.

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Friday, June 3, 2011

Elevator Pitch Contest - Canadian Residents Only

What better way is there to stress the importance of perfecting your elevator pitch than by creating a contest that awards the winner with $10,000 for the best elevator pitch? None I can think of. I just saw this via a group I belong to. It's a fantastic idea, in my humble opinion.

Here are the details, copied verbatim from the website:



the $10,000 Elevator Pitch

Get your elevator pitch ready. If you're selected as a finalist, you'll only have 49 storeys to convince Matthew Corrin and our judges to award you with $10,000 to help grow your small business. Entries close June 20, 2011 at 11:59:59 pm ET.


Go for the elevator pitch contest details. If you are a self-funded or start-up entrepreneur and a Canadian resident, this contest could give you the money you need to help build out your business. The exposure you'd get from participating in the contest could, at the very least, stretch your business budget by providing free PR.

Yes, the spelling of "storeys" instead of "stories" is a key give away that it's not a U.S. contest. 

If you enter and make it to any level, please drop me a line. Good luck!

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Groupon IPO

Okay, my last post was on Groupon so it may seem that I have a Groupon theme. Yes, I was thinking about Groupon when I saw an article about its IPO (initial public offering). As with my mention of LinkedIn's IPO, I think it's important to mention Groupon's. I know most small and medium businesses never make it to the IPO phase. But you can see that the IPO market is warming up again. Look at MySpace. It was purchased by NewsCorp in an environment where IPOs were difficult to do. (This means that it was difficult to obtain the desired valuation with a full subscription.) Ditto for YouTube. Those were both Internet and media darlings but the road to cashing out AND obtaining expansion capital for them was to be purchased by a large, strategic buyer.

First the IPO market opens up for the tech darlings, then it opens up for a lot of other industries. And Nasdaq (and the NYSE) are experiencing heightened competition from a few European exchanges. So I expect to see more IPOs over the next two years.

My final suggestion: If you have at least $10 million in revenue and a decent EBITDA and are looking to cash out and monetize some of your ownership in your current business, take another look at IPOs. No, most likely you wouldn't want to go public on Nasdaq but there are other, related viable options. One option is to use PIPEs (public investments in private equities). That's a discussion for another day.


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Thursday, June 2, 2011

Groupon: Try it for business bargains...or great business exposure.

I just took advantage of a deal on Groupon. I was thinking "It's hot. I need more shorts. I need to go to Old Navy." Then I checked my email and saw a $10 for $20 Groupon (like a coupon but different) from Groupon. Sale items included. I promptly took advantage of it. (You can check out the same deal at Groupon.) I am a big fan. I used it to get great Atlanta Falcon tickets and a hat, a photo to canvas print, yoga studio deals, and beauty treatments. (I know I may be fine as I am but a little pampering always helps!)


A representative from Groupon also spoke at the Team Ivy Breakfast Networking event in May in Atlanta at the City Club of Buckhead. (I must note that I am the president of this association.) The speaker focused on what Groupon's strategy is and how it's rolling out across the U.S. and other parts of the world. Groupons focuses on driving business to small, local, retail-oriented businesses via offering consumer-oriented business bargains. Yes, they do sometimes use larger businesses like this Old Navy one but that's the exception, not the rule. In lieu of coupons, you get Groupons. (Cool, eh?) If you have such a business, the exposure you can get from one Groupon offering could far outweigh many or most of your other advertising and marketing initiatives. Contact Groupon. You need to be able to service several hundred to several thousand purchasers within a designated period of time. Groupons typically expire after 2-6 months so you'd have to service the purchases within this redemption period. Yes, Groupon has grown like gangbusters. Why? Because it serves a market need in a highly efficient way. We all like to experience great deals but who likes constantly looking through the mailers to see what deals are out there? Groupon aggregates those deals and sends them to you one day at a time.

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Wednesday, June 1, 2011

SEC Considering Expansion of "Fan Funding"

I saw the excerpt below on an composite news article on by Allison Fass. (I have been traveling and put my WSJ on pause. WSJ is apparently where the article originated.) To read her other news bites, go to Crowd Funding Eyes Shift.

I found it interesting because I've written about companies fan-funding sites that help small business owners and individuals solicit and obtain donations or loans for their businesses. I consider it a viable funding alternative for start-ups and micro businesses. I think peer-to-peer lending is an even stronger viable option for entrepreneurs and small business owners. Apparently the SEC (Securities and Exchange Commission) is reviewing SEC rules that currently prohibit similar behavior to obtain equity investors. Read below for more information. If you want this rule reversed, perhaps you should write to the SEC as 150 others apparently did. Stay tuned...


"Crowd-funding websites eye regulatory shift. The Securities and Exchange Commission is reviewing rules that prohibit social network websites from helping investors buy equity stakes in startups. While a slew of sites already help small businesses pitch and connect with people in an online network—to facilitate donations—those sites are currently restricted from allowing the purchase of equity stakes. SEC Chairman Mary Schapiro said this week a review of these "strategies" is underway and wrote that 150 organizations and individuals are behind a petition that calls for crowd-funding share issues of up to $100,000. For more on the pros and cons of this regulatory shift, read The Wall Street Journal's coverage."

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Make Mine a Million: Supporting Women Entrepreneurs

I've written about Make Mine a Million (M3) before. Last fall M3 held a one-day conference in Denver that was open to all women entrepreneurs. (No, I was unable to attend.) If you are a woman entrepreneur and you have not yet broken the $1 million in revenues mark, I highly recommend you check them out. Make Mine a Million is actually short for Make Mine a Million Dollar ($) Business. It's a program whose goal is to elevate more woman-owned businesses from the micro-level above the $1-million dollar level over the next several years. Through competitions and other venues M3 provides financing to winner recipients. It also provides coaching/mentoring, marketing assistance, access to software and other technology tools to these individuals.

Make Mine a Million Dollar ($) Business is run by OPEN from American Express and a national non-profit, Count Me In for Women's Economic Independence. The program provides business skills training, community building and confidence-building tools online (via webinars) and in-person (often via one-day conferences) to women entrepreneurs on an ongoing basis (i.e., not just those that one a competition). Membership is free. Visit


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Financing Options for Minority Entrepreneurs

Below is an excerpt from an article entitled, "6 Capital Funding Sources for Minority Businesses" by Carolyn M. Brown of Inc. Magazine. Click on the title to read the article in its entirety. The article is interesting but is most targeted at tiny minority businesses or start-up minority entrepreneurs. It speaks of hybrid loan grants ranging from $3,000 - $9,000. That's only good if you are a start-up or a micro business. If you are doing $1 million or more in revenue, $3,000 is not going to do much for you. However, if you are a micro business or a bootstrapping start-up, please read the article for sources that may be of benefit to you. Only two of the six capital sources cited are minority-specific or have a minority-specific component. Because this blog focuses on small AND medium businesses, I chose to include the discussion on new market tax credits, which I also have some experience in.


New Market Tax Credit

For companies looking for commercial ownership or to own their own facility, Ough suggests exploring new market tax credits. This federal program is administered by the U.S. Department of Treasury Community Development Financial Institutions Fund. Designed to provide investments to projects and businesses in low-income communities, the program has expanded to include investments in minority business. NMTC permits taxpaying investors to receive a credit against their federal income tax liability for making qualified equity investments in designated Community Development Entities (CDEs). The credit is spread over seven years, amounting to roughly 39 percent of the investment made in a qualified entity. Many states have passed a tax credit for minority business. The provisions and limitations of these credits vary from state to state. Many of them resemble the New Market Tax credit and give tax credits against state income tax to investments that are used to support minority building projects or encourage minority business ownership, which includes women-owned businesses. However, these credits are extremely tough to get and are highly competitive.


I think the last statement refers to the states' programs that resemble the federal New Market Tax Credits (NMTC). The NMTC program is highly specific but it is not overly competitive. Because the NMTC program has such specific requirements (pursuit of a building project, within certain geographic areas, need a bank willing to partner), it automatically weeds out many of the entities that would normally pursue such funding. If your company is a minority-owned business or woman-owned business and you are thinking of acquiring property as part of your expansion strategy, I highly recommend you look at NMTCs as an option.

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