Crowdfunding

The ORIGINAL "crowdfunding" sites started as a way to make a donation to support an arts project/investigative reporting/documentary film or other "worthy cause". Initially the "rewards" were things like being listed in the credits of the documentary. This has evolved (in many cases) into something much more like placing an order for a product that has yet to be produced; hence the reference to game designers "not really delivering" and there are other cool products at the prototype stage that have raised money in this way by promising to produce and send the donor the item once the requisite funding is received for them to be able to produce it.

The NEW "crowdfunding" as covered by the JOBS Act is an equity offering and there are already a ton of rules (including having to go thru an "approved portal") built into the law. The corresponding regulatory framework is now being set up and was to go into effect on January 1st but rules have not yet been adopted by the Security Exchange Commission (SEC). It is interesting that one of the companies that has set itself up to be and "approved portal" says they are targeting companies with sales of between $3 million and $15 million, because this is the size/maturity of company that is big enough to deal with the expense/bureaucracy of the new crowdfunding procedures, but small enough to be unable to obtain debt financing for a major scale up. Thus the term is used for two entirely different processes. ( Kevin Hoult, WSBDC)

There are four basic forms of crowdfunding:

Original Crowdfunding includes:1. Gift-Donation -- often used on the art funding sites where everyone tosses in a small amount of money.

2. Prepaid Purchase – future customers are paying today for something they hope to receive later, like community supported. Revenues are considered sales and subject to taxes.

New Crowfunding includes:
3. Loan - Borrowing money and will pay it back, usually to a fund rather than to the individual contributors.. May be viewed as an offering under security rules.

4. Equity – The SEC must complete rule-making before the ban on general solicitation in Rule 506 offerings is lifted or before crowdfunding can commence. That rule-making is not complete. The SEC has published a warning to this effect on its website at: http://www.sec.gov/spotlight/jobsact/crowdfundingexemption.htm

A recent Internet search revealed hundreds of websites offering crowdfunding many specializing on topical area such as: non-profits, social causes and issues, arts and entertainment, consumer product development, or technology development.  Before registering examine funding website to identify the purpose and types of projects that site want to promote, read rules and identify all the fees.

Posting on a crowdfunding site is only the beginning. Raising funds will be more successful if you also have a social media marketing strategy spreading the word about your proposal. 

Starting a Business Expense Budget

Before you can open the doors of your new business do you know your Start up Expenses?

This list is provided as a simple start up budget planning tool.  Pre-opening typically costs more and takes longer than planned.  Estimates should be on the high side, you can always spend under budget, but it is very difficult to obtain more money when you run short. Plan a contingency fund of 20% of your start up budget and enough working capital to last to cover operating expenses for six months. 

Capital Purchases Buildings/Real Estate

Leasehold Improvements

Item 1 -$
Item 2 -$
Item 3 -$
Item 4 -$
Total Leasehold Improvements $-

Moving and Set up

Labor -$
Decorating-$
Moving Expenses -$
Total Moving & Set up -$

Capital Equipment Purchases 

Furniture - $
Equipment - $
Fixtures - $
Machinery - $
Other - $
Total Capital Equipment $- $

Prepaid Expenses 

Location and Admin Expenses

Rent - $
Utility deposits - $
Legal and accounting fees - $
Prepaid insurance - $
Pre-opening salaries - $
Permits and Licenses - $
Other - $
Total Location and Admin Expenses $-

Opening Inventory

Category 1 - $
Category 2 - $
Category 3 - $
Category 4 - $
Category 5 - $
Total Inventory $-

Advertising and Promotional Expenses

Advertising - $
Signage - $
Printing - $
Travel/entertainment - $
Other/additional categories - $
Total Advertising/Promotional Expenses $-

Other Expenses

Other expense 1 - $
Other expense 2 - $

Total Other Expenses $-

Reserve for Contingencies - $

Working Capital - $ 

Summary of Start up Expenses

Buildings/real estate - $
Leasehold improvements - $
Moving & Setup - $
Capital equipment - $
Location/administration expenses - $
Opening inventory - $
Advertising/promotional expenses - $
Other expenses - $
Contingency fund - $
Working capital - $

Total Start up Expenses - $                                   

Security and Collateral for Loan Proposal

Collateral for Loans

Real estate
Other collateral
Other collateral
Other collateral

Owners Investment

Your name here, amount of investment and source
Other owner, amount of investment and source
Other owner, amount of investment and source

Loan Guarantors (co-signers other than owners)

Loan guarantor 1
Loan guarantor 2
Loan guarantor 3

Branding Includes A Customer Experience Promise

A brand helps people identify their expectations about your business. A strong brand includes a customer experience promise that helps new customers choose your business, strengthens customer loyalty, ultimately increasing repeat sales and profitability. Customer experiences become your brand’s reputation creating your unique competitive advantage enabling your business to standout with distinction from competitors.


Businesses that have earned a strong brand reputation understand the customer’s total experience includes non-monetary concerns for customer interaction and trust. By creating a total customer experience they help potential customers to clearly set expectations for a purchase and for after-the-sale use of products and services. When expectations are met customers are happier and more likely to be repeat purchasers.

To improve your brand’s customer experience promise determine which monetary and non-monetary factors you can control and those you cannot control then:

• Use price strategies like price points, discounts, sales or specials to control monetary values.

• Influence non-monetary issues with customer interactions and listening to customers, offer warranties, level of quality, staff knowledge of products and services, loyalty programs.

• Create a vision of what customer experience should include promote this vision as a company culture, with staff authorized to resolve any customer problem.

• Set goals for customer experience outcomes that align with the vision. Trainings and continuous reinforcement of a customer service culture.

• Measure outcomes against goals by collecting customer feedback. Celebrate and reward achievements.

• Use customer feedback to continuously improve customer loyalty.

Creating a total customer experience that builds on and strives to exceed customer expectation will enhance your reputation and brand value with increased repeat customers.

Health Care Excise Taxes Effective in 2014

I received this link to an article by Grant Thornton regarding businesses with 50 or more FTE employees.   Excise Taxes under health care reform  The requirements are getting more challenging to follow, calculating the FTE includes all employees who average 30 hours per week; hours worked during 2013 will be the base for calculating 2014 FTEs.  Sever Excise Tax penalties.

Very few people can explain how this all fits together, thus it is best to seek advise from several sources including: HR specialist, CPA, insurance program managers, attorneys.

Mobile Marketing Basics

People are using mobile phone to purchase almost everything and they are doing so at their convenience. According to Chetan-Sharma Consulting during 2012 consumers purchased $7 Billion in goods and services using Mobile devises and Paypal. Plus $5 Billion in purchases using a Mobile phone adaptor called Square.

If your customers cannot find your business on their Mobile devices they are possibly shopping someplace else. A few basic steps can at least get your business a presence:

Create A Mobile Web Page

Small screens display less information than a traditional web site. Graphics and pictures will not look good on a small screen. Text that was easy to read may become illegible. Mobile devices are about convenience and what the customer wants to know immediately. Some of the most frequently searched information are street addresses, store hours, phone number, list of services and link to your website.

Post Your Business Location

In addition to your street address, get your business location on Google maps. It is estimated that one third of all mobile searches are looking for a local source. Location will influence the results on Google search to show the closest stores to the customer’s present location. To place or update your business location on Google Maps go to www.google.com/places

Customer’s Convenience

Mobile devices enable people to check their email at any time and place. People sitting in a waiting room, on a bus, airport terminal, or walking in the park can keep in contact. This implies that email messages should be short and focused to be easily read and understood. Unfortunately, this also implies customers what more information faster, if they cannot get an immediate answer to their question they are likely to try someone else.

Texting is Big

Texting is compatible with all mobile phones and is the most often used form of communication on a mobile phone. Allow you customers to sign up to receive text messages a method to receive notices of specials, announcements or reminders of their appointment. Integrate texting codes into your entire marketing strategy. Whatever media you choose for advertising should include your text address

Mobile Apps

Apps are much more than games. A business App can enhance customer relationships and loyalties. Business Apps essentially place the entire business on the customer smart phone speed dial. At present the use of Business Apps appears to be strongest with very frequent customers.

Before you Sign That Lease

There are countless items that business owners should consider before signing a lease and starting a business, (like making sure the revenues and cash flow support it!) but here are six details to be aware of in negotiating a commercial space.

Read and understand the entire lease.

A lease is a legal document and what you don’t know will hurt, ask for clarification on everything you don’t understand. Once signed, the written word is binding, verbal statements are not.

A typical commercial lease may have almost 40 sections, not including any riders or addendum's, and it can be difficult to comprehend what the terms and different options mean. Taking the time to read through and analyze a prospective lease can save you time and money in the long run. It may also allow you to add in items that clarify and give you better control of your costs.

Obtaining legal counsel now may save stress and much bigger legal costs later.

Everything is negotiable.

It is important to understand that all things can be negotiable (within reason): rent, base rent, square footage, improvements, lighting, signage, lease terms, options, deposits, possession dates, and more. You may have more success if you look for a few important items that influence your costs.

The full cost of rent, maintenance, parking, utilities must fit within your budget. Above all...if you have not developed a cash flow budget, balance sheet and projections, do not sign anything until you are sure that the business revenues can support a lease payment.

Seek to limit your share of Triple Net costs including: Common area maintenance charges; Property taxes passed through; and Insurance on the overall building and property that is owned by the landlord including common area liability insurance.

Define all proposed tenant improvements, as well as square footage (usable is typically less than actual) be certain that all uses common to your business are allowed. Tenant improvements that are professionally installed, such as lighting, walls, plumbing, built in equipment, typically become the property of the landlord. However, you may be required to remove and restore the space at your expense upon termination of the lease.

Make certain that all of your business activities are specifically allowed. Understand that some uses can be prohibited because another tenant has a non-compete clause.

Get an exit clause in case the business fails. Consider short term leases, with options to renew so you have options if your business s outgrows the space or the economy gets worse.

Be objective.

The space is available, but may not be the correct location for your business. A tenant can be so in love with a space that they fail to see fatal flaws in the location or costly extras. There will always be another option. It might not be exactly what you are looking for, but there is always another choice. Pause and consider, if this site is so good, what happened to the previous tenant?

Business Succession - Just Closing Is Not A Plan.

You have invested a lot into your business. You invested sweat, cash, worry, hard work, and more cash, what happens to your investment when you are ready to retire? A succession plan is a predetermined strategy specifying the best way to exit your business. Preserving your legacy and your retirement income may depend on identifying how ownership will be transferred. A succession plan should also identify what will happen to your business if you have an accident or serious illness. Will your business just close or is there someone who can operate the business until you return?

Plan Ahead

If you are approaching retirement start planning at least three years ahead. It takes time to select and train a successor. Of if you sell find a buyer who is capable of continuing operations and hence qualify for financing. Preparing key customers and suppliers to work with your successor will protect sales revenues and vendor terms. Address family issues and expectations to provide an orderly transition. Prepare for your retirement financial needs.