March 17, 2014
There’s really no right or wrong answer to the question of whether you should have a partner in your business. I must admit, though, that I’m biased, as I chose 10 years ago to become a partner in a digital application development and professional web services firm.
Having a business partner is a lot like a marriage – in fact, I probably see my partner more during the week than I see my wife! Similar to when people say that marriage is hard work, so is having a business partner – but in both cases it’s worth it. Here are some quick advantages I see to having a business partner:
- Access to capital – debt and equity: Credit worthiness and, for some startups, credit cards, get you more mileage with two people and preferred treatment by VCs and investors.
- Coverage in areas you’re not particularly strong in: We can’t all be good at everything, but partners usually have different strengths that complement each other.
- Avoid inertia and paralysis: Having a partner helps you move forward in the deliberation and decision-making processes.
- Nobody is as invested in the outcome as an owner: It’s the old principle of having skin in the game. No one cares more than the folks who are invested financially in the success of the business.
- Brainstorming: There’s nothing like the free flow of ideas with someone who knows the business as well as you do.
- Sense of responsibility: When someone else is relying on you or expecting something from you, you’re more likely to perform without hesitation.
- Pick you up when you’ve hit the floor: You could argue that friends and family could do this as well, but no one is going to understand how you’re feeling like your partner.
So it’s easy enough to say that having a partner is better, but how do you find the right person? That part isn’t so easy. Here’s what I suggest you look for in a partner:
- Someone who complements your skills
- Someone who thinks enough like you to make planning and execution go smoothly, but is not a clone
- Someone with a shared vision
- Someone whom you can trust completely
- A really hard worker
- Someone who is smart - even better, someone who is smarter than you
- Someone who is passionate
- Someone you enjoy being with… a lot!
As I said at the beginning, there’s no definitive answer as to whether or not everyone should have a business partner. You can find wildly successful examples of people in all industries who got there with – and without – partners. My advice is that you explore your options and pick what’s right for you and your business. You just may agree that “two heads are better than one.”
Chris Karlo is partner at Mercury New Media (www.mercurynewmedia.com), a leading digital application development and web professional services firm. You can reach him at email@example.com.
March 03, 2014
As soon as you are certain you want to start a business, it’s time to decide on the type of business it will be. At the risk of appearing to be self-serving, I want to add that this is when you should consult an attorney and accountant. The decisions you make then will have an impact throughout the course of your business and you will benefit from some wise advice.
Each type of business structure has its own implications for liability, taxation, ease of operation and exit, capital structure and other factors. Let’s take a quick look at the most important characteristics to see what might be best for your business:
- Sole proprietorship: This is an unincorporated business with one person who owns and controls it. The owner is personally liable for the business’s obligations; tax obligations flow directly to the owner’s personal tax return.
- General partnership: Similar in a number of ways to the sole proprietorship, this unincorporated business features two or more persons who co-own it. Partners control it equally and share tax and other liabilities equally, with tax obligations passing directly through to owners. Each partner has personal liability for the partnership’s liabilities.
- Limited partnership: This is similar to a general partnership except that limited partners enjoy limited liability but have little or no control. Again, tax obligations pass directly to owners. The general partner has personal liability for the partnership’s liabilities.
- Limited liability company: This structure offers the “best of both worlds” -- pass-through tax obligations (avoiding double taxation) along with limited liability for all owners.
- C Corporation: This incorporated business is a separate legal entity with double taxation (both corporate and personal) and limited liability for its shareholders; along with more formal governance requirements.
- S Corporation: This structure combines a number of C Corporation features with pass-through taxation.
- Professional association: This is a corporation formed by professionals such as lawyers and doctors, providing some of the tax advantages and liability protections of a business corporation.
Which is the right structure for you? As you’ve seen, it depends on a number of factors, including how many owners there are and how important the liability and tax implications are to them. Once you’ve made these decisions, the process itself is relatively simple and painless.
John Connery of Hill Ward Henderson is a shareholder and co-chair of the firm’s Corporate & Tax Group. He also leads the firm’s General Taxation area. John serves on the board of directors and is immediate past president of the Association for Corporate Growth (ACG) Tampa Bay Chapter. You can reach him at firstname.lastname@example.org
February 17, 2014
More entrepreneurs are using this alternative to a standard business plan
Just about every entrepreneur knows the first step after your big idea is to draft a business plan. Too often long, tedious and relatively static, a business plan typically covers the mission statement, description of the business and its products/services, differentiators, market description and competitive environment, marketing strategies, operations and management, SWOT analysis, financial statements, including cash flow statement and revenue projections, and a conclusion. Formats vary, but generally all these points should be covered.
But in business, we often find there are hurdles to jump, opportunities we didn’t know existed and conditions we never anticipated. Enter: the Business Model Canvas. Created by Alexander Osterwalder, coauthor of the book, Business Model Generation, the Business Model Canvas is appealing to entrepreneurs for its acceptance of change.
The canvas, often depicted as one large image rather than multiple pages, is divided into nine blocks including key partners, key activities, key resources, value propositions, customer relationships, channels, customer segments, cost structure and revenue streams. The canvas is intended to be used collaboratively, allowing different ideas, sketches and plans to be jotted on sticky notes and placed in the blocks. Most important, the Business Model Canvas is dynamic, allowing the company’s plans to change and adapt to new opportunities and changing market conditions.
No one is discarding the idea of the traditional business plan, but if you’re an entrepreneur, most likely you’re always looking for a new and hopefully better way. The Business Model Canvas may well offer a less structured, more flexible alternative that will make it easier for you to distill your thinking and get ready to present your idea to funders, partners and prospective clients.
Have any of you created a Business Model Canvas? Let us know about your experience.
Tonya Elmore is president and CEO of Tampa Bay Innovation Center. She can be reached at email@example.com.
February 03, 2014
Entrepreneurs are sometimes known to be brash, impulsive and driven. They tend to be action-oriented and are famous for a “ready – fire – aim” approach to planning for the future. We would all agree that being action-oriented is good. But we also recognize that there is room for research and planning when an aspiring entrepreneur wants to launch a new company.
One piece of the planning puzzle involves researching the best industry to enter. Whether you have a product/service prototype already built or just some intellectual property, you would be wise to think about the best place to launch it. Did you know that there are some industry characteristics that are more favorable for new venture success? On the other hand, there are also some characteristics that can work against new ventures. There is a lot of academic research on what kind of industries provide more fertile grounds for new ventures.
- Industries with high “R&D intensity”: In other words, industries where a lot of research money is being spent are usually a more favorable environment. This doesn’t mean the new venture must spend a lot of its own money on R&D. Instead, R&D intensity is an indicator that a lot of innovation will be happening in the industry. When an industry has a strong norm of innovation, it is more welcoming of entrepreneurs and new ventures.
- Industries that are highly segmented: Segmentation refers to the number of distinct versions of the products and services in the industry. A highly segmented market is one where customers’ demands vary widely, so that there is never a “one size fits all” solution. When there is high segmentation, entrepreneurs are more likely to succeed because they can identify a small group of customers and provide a perfect solution to their needs. On the contrary, markets with low segmentation favor giant companies that can serve most of the market with one solution. Think of the table salt industry.
- Industries that are young. New ventures are more likely to find success in the early stages of the industry life cycle than in the mature stages. In younger industries, competitors tend to be less competent and less experienced. It’s usually better to compete against a beginner than an expert! Second, industry wide sales tend to grow the fastest in younger industries. Third, a dominant design has not usually emerged in a young industry.
These three generalizations might help if you are considering what kind of market to pursue. They are not perfect rules, but they do reflect current thinking among the researchers who are studying the field of entrepreneurship.
George H. (Jody) Tompson, Ph.D is professor and director of the Naimoli Institute for Business Strategy at Sykes College of Business, University of Tampa. An entrepreneur himself, he is also the founder of CitriClean of Florida, LLC (www.CloudyDishes.com). He can be reached at firstname.lastname@example.org.
January 10, 2014
By many accounts, 2013 was the year of innovation, or at least the use of the word “innovation.” Particularly in the technology sector, nothing was viewed as important if it couldn’t be labeled as innovative. In fact, overuse of the word was written about in publications ranging from Wired to The Wall Street Journal, which also said it was “rapidly becoming devoid of meaning.”
We think there’s more to it than that.
When we rebranded the STAR Technology Enterprise Center (STAR TEC, founded in 2003) as the Tampa Bay Innovation Center in 2011, it was because we understood that innovation is at the heart of entrepreneurial success. And, with a mission of “accelerating entrepreneurial success,” we believed then – and still do – that Innovation Center is a much more accurate description of what we do.
Innovation has been described as an entrepreneurial undertaking that may create radical or incremental changes to products, services and processes. As such, it spans the range of creators from inventors to intrapreneurs; from originators to adopters. Wherever the concept originates, it must create new economic and/or social value. We believe our role is to help guide and support these creators in achieving these types of value.
So…we don’t think innovation is losing its meaning. If anything, as people continue to create, using different media, innovation will be increasingly harder to achieve, making these accomplishments even more impressive.
In our coming blog posts, we’ll be introducing topics that describe operational elements of both entrepreneurship and innovation. We welcome your comments and suggestions for additional topics.
Tonya Elmore is president and CEO of Tampa Bay Innovation Center. She can be reached at email@example.com.
April 01, 2012
Tampa Bay Innovation Center recently hosted a TECH Talk session with Nathaniel C. Roland, shareholder at Trenam Kemker, who discussed the Jumpstart Our Business Startups (JOBS) Act. Following is a summary of his presentation on the crowdfunding part of the legislation and how it will affect small businesses.
Many small business and startup business owners are familiar with the Jumpstart Our Business Startups (JOBS) Act signed by President Obama in April. One of the goals of the JOBS Act is to reduce securities law burdens on startups and small businesses and make capital more accessible to them.
One way is through “crowdfunding,” a term that generally describes a group of unaffiliated people who pool their money, usually via the internet, to support the financing needs of another person or organization. Prior to the JOBS Act, a company could not promote its stock publicly or raise money from a large number of “unaccredited investors without first registering its stock with the Securities and Exchange Commission (SEC) and becoming a publicly-traded company – that is, without “going public.”
Enter the JOBS Act, and, in particular, Congress’s directive to the SEC to draft a set of rules and regulations to permit companies to raise money via crowdfunding. With crowdfunding, a company will no longer be confined to raising funds quietly among wealthy friends and acquaintances or hiring a registered broker-dealer to do so on its behalf. The legislation does provide some general rules and limitations for crowdfunding, and these general rules will form the structure around which the SEC’s more detailed regulations will be built.
A company cannot raise more than $1 million annually from crowdfunding.
A company can only accept certain amounts from investors. The amount that an investor can allocate across all crowdfunding investments that he makes in a given year cannot exceed $2,000 or five percent of his annual income if his annual income or net worth is less than $100,000, or ten percent of his annual income if his net worth or annual income is $100,000 or more.
All sales of stock or other equity and advertising for the offering must be conducted through a registered broker-dealer or an authorized funding portal. The company cannot conduct the crowdfunding on its own.
The company must comply with disclosure requirements, which include providing basic financial information before seeking funding.
In addition to the restrictions above, there is uncertainty about how crowdfunding will work in practice. It is still unclear whether companies that utilize crowdfunding will be able to use other methods to raise additional funds from investors without going public. Also, companies that use crowdfunding will need to file certain financial reports with the SEC and it has not been determined if those reports will be made available to the public.
The answers to these questions will remain unclear until the SEC moves further along in its rulemaking process. However, those regulations are not expected until early next year.
March 01, 2012
Tampa Bay Innovation Center recently hosted a TECH Talk session with Antony Francis, founder and chief executive officer of Head of Lettuce Media, a social/new media company that provides businesses with the tools needed to join the online social conversation, including coaching, training and social media management. We’ve summarized his take on the future of social media for business.
As the sale of smartphones and tablet computers rapidly increases, so does the importance of social media for business. These mobile devices – immediate, interactive and at least for now, controlled by the user -- are critical to how social media is evolving. Users can choose what they see and when, although as we learned from our conversation with March’s TECH Talk speaker and social media expert Antony Francis, this will begin to change as technology progresses.
Being social for business
Social media is an online conversation. Think of it as online networking. It is a tool that every business can benefit from and should be utilizing. While not every social network will be right for a company, identifying priority audiences and the social networks they use frequently can help establish where a company should be present. The goal is to connect with decision makers, whether that is a consumer, a referral source or another company.
Social media is different from traditional advertising or marketing. A company can use social media to develop a relationship with its audience, giving them the opportunity to learn about the product or service and, more importantly, maintaining top of mind awareness for those who aren’t ready to make a purchase.
Avoid common mistakes
Social media should not be considered a separate part of the company. Marketing, advertising, public relations and even operations should be considered in their relationship to the social media plan. A common mistake companies make is not realizing the importance of social media, and then hiring someone outside the company to handle their online accounts. The person in charge of posting and interacting with social media audiences should be an effective communicator who is well versed in the company. This person will protect the brand, reputation and overall online presence.
Also, monitoring all social networks, regardless whether there is a company account is critical. Consumers now have the freedom to post whatever they want about a business, good or bad, online. Watching the conversation and interjecting when necessary can help reduce the risk of damage from negative online messages.
Facebook and the future
Like it or not, Facebook is the 900-pound gorilla of the social networking world. It will be hard to unseat. With more than 900 million users worldwide, businesses, television shows, news networks and even celebrities are logging in to connect with their audience. But there could be some big changes in store for Facebook users over the next few years.
In February, Facebook filed papers with the Securities and Exchange Commission to become a publicly traded company. While the initial public offering equals big money for Facebook creator Mark Zuckerberg and his employees, it could also create problems for the social network. As a public company, Facebook will be accountable to shareholders and board members -- people who will most likely want to monetize the social network. Users can expect to see more changes to their timelines, additional advertising and apps allowing companies access to their personal Facebook account information. This could force many users to jump ship. In addition, being a publicly traded company brings reporting requirements to ensure transparency – requirements that will be new and probably uncomfortable for this previously private company.
Enter Google+, one of the newer social networks. It has the potential to become the next big social media craze. Unlike other newcomers, Google+ has a well-established brand behind it. That alone has helped the online community score 25 million unique visitors in just over one month’s time – faster than any other technology has been adapted, ever.
Google+ has a user-friendly format that is easy to navigate. It also has some features that make it stand out from other social networks. Their hangout feature offers a faster and cleaner video teleconferencing option, compared with Skype. And the Google+ mobile app automatically uploads photos from the phone to the site, and then allows users to select which photos to share and with whom.
Geo-tracking services like 4Square and SCVNGR also have potential for growth in the future, but it will likely be slow. The process of checking in at a location needs to become more engaging for users. In addition, there will need to be some kind of payoff or special offer to entice them to share their location. This will become critical as the augmented reality technology (the overlaying of digital data on the real world) improves. For example, mobile users can point the phone’s camera down a street and augmented reality apps, like Layar, will display events, deals and other insider information for that area.
This is where the future of social media is going. Instead of having the experience controlled by the user; technology will become ubiquitous. It will adapt and alert users to what is happening in their surroundings instantaneously. Social media will be everywhere, from mobile phones and computers to household appliances and televisions. We might even say that the term “social media” will become irrelevant because it will be so commonplace as to be part of our everyday activities – without needing a name.
February 01, 2012
Tampa Bay Innovation Center recently hosted a TECH Talk session with V. Michael Eitler, managing partner and co-founder of Group125, a management consulting firm that helps business owners sell, grow and operate their companies more profitably. We’ve summarized his advice for creating the perfect “elevator pitch.”
Making a good first impression is crucial in the business world, especially for entrepreneurs trying to build profitable business partnerships with investors. One of the best ways to stand out in a matter of seconds is with the perfect pitch or elevator speech.
The perfect pitch should be quick and to the point. No longer than a minute. It’s not about getting an investor to sign over a check, it’s about getting that person interested enough to seek additional information or request a follow up meeting.
It’s important to start strong. The first sentence should be engaging, including a person’s name, the name of the business and a brief explanation of what that business does. This information should take no longer than 10 seconds to articulate. In some instances, when time is limited, people can be cut off after just a few seconds. It is vital to make that time count.
The remainder of an elevator speech should fill in the blanks about the business. It should be clear and concise, answering the questions:
• What is the product or service?
• What is the market for sales?
• What is the revenue model?
The delivery should be conversational. Avoid using technical jargon or overly detailed explanations of the business or industry. That’s a sure fire way to turn off a prospective investor.
Once the message has been carefully crafted, it’s time to practice. Recite the speech out loud while alone, but also with family and with friends. Practice makes perfect. It will help curb nerves when it’s time to give the pitch to an investor. Knowing the speech inside and out will also help if any adaptations need to be made mid-pitch.
Above all, it’s important to achieve a good balance when pitching the idea. An elevator speech should not be an overt sales pitch, nor should it be too passive. It should be a confident presentation of a business, highlighting the value proposition and how the business will mature and grow with the assistance of additional capital.