#h#Potential Pitfalls in Dream Partnerships#/h#
Just imagine the excitement. After years of struggling to perfect an innovative software package in your garage office — and draining your savings along the way — a big company agrees to take on the marketing and distribution of your product. Its 1,200-person, international sales force will demonstrate your software to decision makers around the globe.
Oh happy days! Your problems are over. Well, maybe not.
Debra Dorfman, partner at tech-focused law firm Hale & Dorr at 650 College Road, has seen dream partnerships turn into nightmares. "What happens if you give exclusive marketing rights to a company, and it doesn’t perform?" she asks. It happens. All the time. Entering into a strategic partnership can be very risky business indeed, and that the risk falls disproportionately on the younger company with the new technology.
Strategic alliances come in all shapes and sizes. "It runs the gamut," says Dorfman. "It can be as simple as an Internet linking agreement or as complex as a joint venture." The former could involve two companies with complementary products or services getting together to call customers’ attention each other’s offerings. The latter could involve forming a whole new company, with its own offices, employees, policies, and corporate structure.
In between the two extremes fall any number of arrangements. A joint development agreement is a common form of strategic alliance. It commonly involves a young company with know how, and perhaps access to patents, and a more established company, maybe one with manufacturing facilities and process expertise. There could even be three — or more — partners involved. One might have the tech patents, one the manufacturing facilities, one the sales force, and one the distribution network.
Here are some key considerations, no matter what the form of the alliance:
Guard your equity. One reason that strategic alliances are so popular now is that venture funding has dried up. Many entrepreneurs, says Dorfman, have gone through their own money, and have tapped out their entire friends and family network. They badly need the boost an alliance with a more established company can bring.
In any deal, the more senior company is likely to want equity in exchange for its cash or services. Don’t give away more equity than is necessary, advises Dorfman.
Focus clearly on exactly what each party needs, and craft an agreement to deal only with those needs. If the big company’s needs involve only a small part of the company’s products or expertise, it may be happy with a smaller equity stake. At the same time, if the payment or service the larger partner will contribute to the neophyte is enough to get it to the next stage, perhaps it should not pursue more in the deal.
Don’t get voted off the island. After the strategic alliance ends, the young company has to be left with what it needs to survive. Be very careful in giving away exclusive rights to core technology, says Dorfman. Technology may be your company’s main asset, and perhaps its only marketable asset. Consider putting only part of it in play in the deal, or only for a limited time, or maybe only in a restricted geographic area. Likewise, make sure that key clients and key employees are not being given away. You will need them when the term of the alliance is over.
Get the metrics in place. It is not enough to agree to have a marketing company take your software to the world. If the product is complex, you need to specify how the sales force will be trained, and who will train them. You need to put in writing the results the marketing effort must achieve — in each market. If your software isn’t moving as well as you were led to believe it would on the West Coast or in Malaysia, you need to retain the right to give those territories to another marketing firm.
Prepare for a stalemate. Many strategic alliances are 50/50 deals. You manufacture, I distribute. Or I invent, you market. A potential pitfall, says Dorfman, is decision gridlock. A common occurrence, the deleterious effects of two minds pulling in different directions, can be mitigated by prior planning. Write in dispute resolution mechanisms upfront, when everyone’s happy, and there are no disputes on the horizon.
#h#Legal Structure Makes a Difference#/h#
Victor Elgort, a senior partner at law firm Norris McLaughlin & Marcus, specializes in corporate law, and spends a good deal of his time helping entrepreneurs to set up their new ventures. "Everybody is so focused on the need to get up and running that they don’t take the time to think about long term consequences," he laments. And when problems arise, he adds, "it’s often too late to un-ring the bell."
One of the first choices an entrepreneur has to make is that of the legal form his business will take. Is it better to make the new venture a corporation or a limited liability company (LLC), or maybe a sole proprietorship? Or does it even matter?
No matter what the business, there is an urgency to pin that first dollar to the wall — whether literally or figuratively. Slow down just a little, is Elgort’s advice. Setting up the business properly from the beginning can save untold dollars down the road.
While the possible permutations are endless — "No two businesses are ever the same," stresses Elgort — there are some guidelines that apply across the board:
Check with your licensing board. "Professionals are subject to regulations by state or federal agencies," says Elgort. These agencies establish a list of permissible forms of business entity. "There are 22 or more different regulatory agencies governing licensed professionals," he says.
Look past New Jersey. Elgort recently helped a real estate broker form a business that will have offices in northern New Jersey, southern New York, and eastern Pennsylvania. Each state has different regulations governing the establishment of a real estate company, and the entrepreneur has to conform to all of them.
Take the long view. "When a person is thinking of establishing a business," says Elgort, "he is focusing on taxes, liability, and insurance." That is all well and good, but, he asks, "what about asset protection, wealth transfer, bringing children into the business?" In setting up a business, think past the first year or two, and try to consider as many future scenarios as possible.
Give the LLC a good look. The LLC is relatively new. In fact, the first one was formed in New Jersey just about 10 years ago — by Elgort. "It was part of Christie Whitman’s bid to make New Jersey business-friendly," he says of the legislation that brought the LLC into being.
In his view, the LLC, which has most of the advantages of a corporation, but is more flexible, and easier to administer, did, in fact, give New Jersey a business edge. In most respects, for most businesses, it is the way to go.
Don’t worry about an LLC’s acceptance. There was a time when banks hesitated to lend money to an LLC, and other companies may hesitate to do business with them. There was a perception that an LLCs freed owners from liability. But that is not the case. There are a number of reasons for choosing an LLC, but counting on it to act as a shield against all liability is not one of them. The LLC’s owner is on the hook for any obligation for which he gives his personal guarantee. In the real world, that covers just about everything. Letting banks know this, says Elgort, was all it took to make them comfortable with LLCs.
The LLC does offer some liability protection, though. Suppliers, says Elgort, may not have the clout to demand a personal guarantee. So, should a business go under, its owner might not be personally liable for business supplies and the like.
Choose a corporation when an IPO is in the future. One of the times when a corporation can be a better choice is the case where a new company is quite sure that it will be going public.
When in doubt, go with an LLC. It is easy to convert an LLC to a corporation, and the consequences generally are tax neutral. The converse is not true. When a corporation becomes an LLC, "the tax consequences can be dramatic," says Elgort. "Essentially," he says, "you are liquidating the corporation."
There are often ways to mitigate the tax bite, but doing so takes time and expert advice.
LLCs are now the most popular business choice. Leaving corporations in the dust, LLCs are now the top choice with new New Jersey companies. This is so, says Elgort, because they are so much easier to form and to administer, and because they carry substantial flexibility in taxation. A corporation, for instance, has to have a board of directors, officers, an annual meeting, and bylaws. LLCs need none of these things.
But LLCs are free to adopt any or all of these corporate trappings. They can mimic a corporation in almost any way.
A company of any size can be an LLC. It used to be that many one-person businesses would operate as sole proprietorships, but now, even these very small businesses can reap the advantages of an LLC. At the other end of the spectrum, says Elgort, an LLC can be a large company with hundreds of millions of dollars in annual sales.
#h#Plan Your Exit Now#/h#
Michael Mufson, who founded Commerce Capital Markets, the investment banking arm of Commerce Bancorp, has ridden the investment banking roller coaster for more than two decades. He has seen that investors want to put money into a promising venture, and then get it out again — fast. The Initial Public Offering (IPO) allows them to do just that. When the company in which they invest goes public, cash inflow stops, and there is often a handsome reward. "For the last decade, it was commonplace to take a company public," says Mufson. "Today volume is off 75 percent."
But, while the profitable IPO exit door is largely shut, investors still insist on getting their money out of a venture quickly. Three to five years is ideal, and few investors will wait around for more than seven years. With the IPO largely out of the question, the best road to a pay-out often is a merger or acquisition. This new reality affects the way entrepreneurs have to structure their businesses, and how they have to approach venture capitalists. The new reality for entrepreneurs is the following:
Planning for an exit. A new enterprise may be little more than a patent in an entrepreneur’s pocket. No matter. You may have no permanent offices and few employees, but you must have an exit strategy — a way to cash in on the company that does not yet really exist. Investors want to know how they are going to get their money back, and when. As a practical matter in this market climate, that generally means identifying companies — the more the better — whose products could really use technology like that you are developing.
One such potential suitor will not excite investors, says Mufson. Find a dozen, or better yet, two dozen.
Doing without investors for as long as possible. In the old days, circa 1999, the idea was to pull in vast amounts of capital well before an idea became a product. Now, with valuations for new tech ventures down two-thirds, or more, it makes sense to hang on to as much of the company as possible for as long as possible. The pay-off is not going to be what it once was. If you want a decent slice, you need to keep as much equity as you can.
Conserving cash. "Hold on to equity as long as possible," advises Mufson. The add-on venture rounds — $100 million here, $50 million there — which were so common in the late-1990s, are gone. That money has to last. "Don’t rent an expensive suite of offices in Lawrenceville," says Mufson. In short, he urges, "spend money only when you need to."
Getting ready to get out. Not only do investors want their money to get out of a new venture quickly, but they want the entrepreneur and his lieutenants to be ready to clear out as well. "Funds are suspicious of entrepreneurs who want to run the company," Mufson says. In their view, the founder is the person who racks up 75 percent-a-year growth in the first half decade or so. "Once it’s 20 to 25 percent growth, the entrepreneur is not the best manager," says Mufson.
There is still money out there. Mufson says that, ironically, this cash tends to be in the hands of venture funds that raised a lot of money late in the boom cycle, and did not get their management acts together in time to spend all of it on hot dot-coms. Getting a share of that cash now is not easy, but it is possible. To catch an investor’s eye now, says Mufson, forget the flash. Investors are reluctant to spend any cash, and are drawn to promising start ups with a similarly frugal style.
#h#Buy a Business: Don’t Start One#/h#
Business formation is up, but there could be another route for would-be entrepreneurs. A safer route. Or, as corporate attorney Michael Rambert asks: "Why start a business from scratch when you can buy one that is already successful?"
Rambert has looked at business from just about every angle. Now a corporate attorney with Archer & Greiner (www.archerlaw.com), where he specializes in small business matters, he has done everything from export perfume to the Bahamas to head up New Jersey’s office of small business development.
It was while working for a bank, loaning money to small businesses, that he "really learned about business." That, he says, "was my real baptism." He has come to believe that success involves playing on solid ground, the kind of ground provided by buying a going venture. There can be pitfalls, but, he says, would-be entrepreneurs would do well to take a look at established businesses. Here is how to go about it:
Decide on an industry. Rambert says it is a good idea to know something about the industry, but in-depth knowledge is not always necessary. He has seen any number of cases where a new owner brought in a seasoned manager to provide the day-to-day expertise needed to run the business.
Think about level of involvement. It is possible to buy a business, but not run it. But if you do decide that you will be the one in charge, Rambert says you need to realize that you are not just buying a business. "You’re buying a lifestyle," he says. Think about that aspect upfront. Do the owners typically work 16-hour days? Are they on call around the clock?
Don’t waste time reading classified ads. "They’re full of junk," says Rambert. Skip the ads, he says, and talk to people most likely to know of owners who want to move on. "Bankers know," he says. "Lawyers know. Accountants know." These are the people to whom business owners turn in good times and bad. "They’ve seen the books."
There are business brokers, but Rambert is lukewarm on using them. "With accountants and lawyers," he says, "you have a code of ethics." Business brokers could be every bit as ethical, but he says the fact that professionals are sworn to uphold ethical standards gives at least some degree of comfort.
What is the market value of the business assets? Chances are that the owner knows. "But he won’t tell you," says Rambert. Well, he won’t say a word if your offer is high. If it’s low, you will hear about the number he has in mind. The owner may have had an appraiser do a valuation. If so, and if it sounds high, you will need to have your own done. Normally, says Rambert, the numbers will be within 10 percent of one another.
What is the market potential for this company’s products and services? Here is where many Internet venture capital investors got tripped up, says Rambert, who observed some out-of-control deals when he was advisor to the state on the formation of technology companies. "There were companies the state gave a little money to," he says, "and a venture capital company came in and gave them $14 million. And those companies don’t even exist today. It was crazy!" Obviously, market potential had been overestimated.
Are there any lawsuits pending against the company? Make sure to have your lawyer run a thorough check.
Is the business financially viable? Have your accountant look at the books — carefully.
Be prepared to participate financially. Typically, says Rambert, a buyer is expected to put down enough cash to cover 15 to 30 percent of the purchase price. The owner often carries 15 to 30 percent of the purchase price as a note, and a bank finances the rest. "Banks want you to put some skin on the table," he says, "otherwise, you could just walk away."
Ask the owner to stick around. "When you buy a business," says Rambert, "you’re buying employees too." As the closing date approaches, it can be a good idea to have key employees sign employment agreements. It is almost always important to try to sign the owner as well.
"Make him a consultant," advises Rambert. Tie the owner’s compensation to the company’s performance, and it is a good bet that the owner will work hard. What’s more, his introductions to customers, bankers, and vendors can be priceless. "People like continuity," he points out.
Count up the advantages. Starting a business from the ground up can be exciting, but it’s also risky. Acquiring an established company instead buys you a measurable track record of performance, established business accounts and customers, trained employees, relationships with bankers, a company attorney and accountant, and, if you’re lucky, transition help from an owner who knows every nuance of the company’s operations.
#h#The Franchise Route#/h#
Working for a large corporation, a person tends to take some things for granted. Gina Leggiere logged 20 years in corporate America. Now the owner of two franchises, she recently accosted an employee who was blithely heading home with a roll of toilet paper tucked under her arm. The employee was shocked at being questioned. "`At Pepsi everyone takes toilet paper home,’" the indignant worker told Leggiere.
"They never stop to think of where the money comes from," she says. "I have to sit down and explain. They don’t realize that salary and toilet paper come out of the same pocket." That would be her pocket. Cut loose from corporate luxe, Leggiere says she watches every penny, and she advises other entrepreneurs to do the same.
Before deciding to start a business, she learned that "Ninety-five percent of all new businesses fail within three years.". On the other hand, her research indicated that 95 percent of all new franchise businesses are still around after 10 years. Liking those odds, she began researching franchises. She decided to go with Sign-A-Rama, opening a store in Piscataway (732-819-8844), and four years later bought a second franchise, in Post Net, a mailing center. Along the way, she has learned some lessons:
Research, research, research. Leggiere hired a franchise attorney. Among other things, he went over every detail of her contract, ensuring that she could live with each of its terms. "He was expensive," she says, "but I went in with my eyes 110 percent open." She also used an accountant with knowledge of franchise agreements.
Anyone contemplating the purchase of a business needs to realize, she says, that no one possesses all the skills necessary to thoroughly evaluate the opportunity. "I was smart enough to know I didn’t know how to start a business," she says.
Realize that businesses vary wildly. Leggiere owns two franchises. "They couldn’t be more different," she says. "They’re day and night." She cannot think of a single negative thing to say about Sign-A-Rama. "Post Net is a different story," she says. She bought the franchise when it was owned by Sign-A-Rama, and it was later sold to another company. Both are franchises, and each courts similar customers, but management styles in the home offices vary markedly.
Manage your schedule. Entrepreneurs have a tendency to turn into firemen, putting out little blazes as they erupt. "You go to input an order and the phone rings," she says. "You stop to answer it, and then remember an appointment. You spend 15 minutes looking for your keys, and run out the door without inputting the order."
Slow down, is her advice. Prioritize. Make a plan and stick to it.
She visits clients on the way in to work. Upon arriving, she settles in to review orders, and make estimates. There is a routine for the day and a routine for the week. Sticking to it gives her focus.
Make time for sales. Pressed to take care of clients and to complete projects on time, new entrepreneurs have a tendency to let some things slide. The first casualty is sales and marketing. Doing so is a guarantee of trouble. "It’s a vicious cycle," Leggiere says. "You’re trapped."
No matter what else an entrepreneur does, he has to "learn to love sales and marketing," she says, acknowledging that this is hard for many. "We’re used to thinking of sales in terms of going with our parents to buy a used car," she says. "It was considered a less than reputable occupation." This is a perception every business owner needs to rethink.
Hire like your business depends on it. "If you’re Dell, it doesn’t matter if one salesperson is rude," she says. One lost sale is of no great moment. For a small company, though, a single surly employee is enough to crater the whole operation.
Don’t overstaff. Business owners walk a thin line. If they try to be too involved in day-to-day operations, they risk losing sight of big picture tasks like marketing and expansion planning. But if they hire too many people to help them out, they risk going under.
Leggiere is a hiring mentor for other Sign-A-Rama owners. On any number of occasions she has had to tell one of them that his staff is too large. "They say `but you have three employees,’" she reports, "and I say `Of course I have three employees! I’ve been in business for eight years, I need three employees.’"
In the early going, though, it is the boss who will have to tend to sales, customer service, and probably deliveries, computer repair, and janitorial duties as well.
#h#All in the Family?#/h#
When her children were young, Penni Nafus and her husband looked at their finances and decided there was no way they could save enough to send them to college. Both were working, but not making enough. The solution, they decided, was to start a business they could run together.
"Just about that time," Nafus recounts, "he was driving a machine, and the engine blew up." The machine was a Zamboni, the ice rink fixture that smooths out ice between skating sessions. He called the company’s California headquarters looking for parts, got to talking, and was offered a distributorship.
The couple had found its business, which opened its doors in their unheated garage. Moving from parts to service to sales, the company grew and prospered. "Our exit strategy," says Nafus, "was to sell the company when our last child graduated from college." On Jim Nafus Jr.’s graduation day, they signed the papers, although her husband remains as a consultant.
Nafus is now director of the Women’s Business Center of the New Jersey Association of Women Business Owners (NJAWBO). "Entrepreneurs are mavericks," says Nafus. In her opinion, a person who fits in perfectly "over there at Merrill Lynch" could be very unhappy out on her own.
Out on their own, however, is where more and more women are finding themselves. "We’ve seen a change, an evolution," says Nafus. "Two years back a lot of downsized women were coming out with a package and experience. Their attitude was `I’m going to start a business. I’m not going to be downsized any more!’" Now, however, the women she is seeing are embarking on business ownership without benefit of a severance package. Many don’t have deep experience in business, either. "It’s not middle management now," she observes. "We’re getting to the workers. Companies are closing up. Everybody’s going."
The Women’s Business Center is fielding requests for information and for help from "panicky" women. "Their unemployment is running out," says Nafus. While the new female business owners, circa 2001, might have been using cash, contacts, and experience to launch a substantial business, many women Nafus sees are now starting service businesses on a shoestring.
This is one heck of a time to be breaking into a depressed and uncertain economy, but Nafus says the entrepreneurial drive will out. Nafus offers this advice:
Think about timing. There are people who would be fine business owners, but not just now. It is important to realize that being the boss does not come with a time clock. It comes with a full-time commitment. Anyone unable to devote nearly every working hour to a new company may have a hard time growing it.
Count your cash. Nafus says she has seen any number of business owners who, seven or eight months after opening, are making sales, but are going under. "They say `business is good. I’m making money,’" she says. They had signed a lease. They had hired employees. But they’re out of money.
Save until you have enough capital to go the distance, she says, pointing out that payment may only come many months after a sale. "If you’re working with the government, it’s 120 days," she points out. Meanwhile, suppliers demand payment after 30 days.
Shift the load. Nafus says she made every possible mistake in the early days as a business owner. The biggest, she believes, was "trying to do everything myself." She finally realized that it did not make sense for her to do bookkeeping when she could hire someone for $10 or $12 to do it for her. Eventually she hired five employees. But did they do as good a job as she had been doing? "Better!" she exclaims. "I did a 360 degree turnaround. I realized there were a few other smart people out there.
"I didn’t settle for good enough," she says. "I was more demanding of the people who were working for me than I was of myself. I expected them to do the job better than I did." She realized that she was hiring experts, while she had been trying to be expert at a number of tasks.
Supervising employees, meeting a payroll, rounding up clients, getting clients to pay on time; none of it is easy. Yet, says Nafus, there is nothing like cashing those checks when they start to roll in. It’s one of the things that makes so many people take a chance on opening a business. Says Nafus, "it’s like making vice president at Merrill Lynch."
Tuesday, January 13, 9:30 a.m.: NJAWBO Women’s Business Center, "Women’s Network for Entrepreneurial Training." Free. 127 Route 206, Hamilton, 609-581-2220.
Wednesday, January 21, 9:30 a.m. : NJAWBO Business Women’s Center, "Building a Business Website," $25. Suzanne Engels, WebArtNTech. 127 Route 26, Hamilton, 609-581-2220.
Thursday, February 5, 9 a.m.: NJAWBO Women’s Business Center, "Build Your Own Marketing Plan in One Day." $50. HQ Global Workplaces, 51 JFK Parkway, Short Hills, 609-581-2220.
Wednesday, February 4, 9 a.m.: NJAWBO Women’s Business Center, "Internet Marketing", $30. 127 Route 206, Hamilton, 609-581-2220.
Monday, February 9, 9 a.m.: NJAWBO Women’s Business Center, "Are You an Entrepreneur?" Free. 127 Route 206, Hamilton, 609-581-2220.
Wednesday, February 11, 9:30 a.m.: NJAWBO Women’s Business Center, "Marketing Magic." $25. 215 Route 31, Flemington, 609-581-2220.
Thursday, March 11, 6 p.m.: NJAWBO Women’s Business Center, "Celebrating Latino Business Women." Free. Mercer Hispanic Association, 200 State Street, Trenton, 609-581-2220
Monday, April 12, 9 a.m.: NJAWBO Women’s Business Center, "Are You an Entrepreneur?" Free. 127 Route 206, Hamilton, 609-581-2220.
Wednesday, May 12, 9 a.m.: NJAWBO Women’s Business Center, "Are You an Entrepreneur?" Free. 127 Route 206, Hamilton, 609-581-2220.
Thursday, May 20, 9 a.m.: NJAWBO Women’s Business Center, "NJ Taxation
#h#An ETI Business Success Story#/h#
Mary Harrison is the owner of Euphorbia, a growing retail and bridal consulting business in downtown Lawrenceville. In 1995, after owning a catering business, burning out, and then working as an employee in the hospitality business, she knew she wanted to become a business owner again — and wanted to be smart about making the move. Toward that end, she began taking business classes.
Then, three years ago, energized by the birth of her second child, and deciding to move to another level, she signed up for the Entrepreneurial Training Institute (ETI), a program sponsored by the New Jersey Economic Development Authority.
"I had been taking business classes for years," Harrison says, "but I felt I needed one last class. I got tired of hearing myself say `I’m going to finish my business plan.’" From the start, she realized that ETI was different. "Other classes give you an outline and a general idea, but it’s all hypothetical. There is no assumption that you are really going to start a business. ETI does assume that."
Harrison has gone from ETI graduate to ETI promoter, talking to individuals and to groups about what the program can do for a prospective business owner. For her, a huge benefit was help with financials. A creative person who named her business after one of her favorite flowers, Harrison confesses that she came to ETI with little expertise in accounting or cash flow projections.
She wanted to know if her business idea was solid. "It sounded like a good idea," she says, "but is it viable? I wanted to hear a CPA say `You are fully capitalized. The money you have will get you through.’"
ETI came through, leading her through financial projections, and it did not stop there.
"I did not know how to meet a banker," says Harrison. "I never knew they wanted to lend money." Stunned, but pleased, she soon found bankers courting her. "They wanted to make a sale," she says.
She credits ETI with getting her ready to present a business plan that would reel the bankers in. "You have to know your business plan backwards and forwards," she says. "If there were a hole in your plan, it came out before you went before the bankers." Prepped by ETI, Harrison secured a $55,000 business loan to get her enterprise off the ground.
The big picture for Euphorbia is changing — fast. Within months of completing her business plan, it was becoming obsolete, an eventuality for which all entrepreneurs should be prepared, Harrison counsels.
The retail portion of her business was supposed to be just an add-on, a supplement to her wedding planning business, a place where brides could pick up unusual guest books or gifts for their bridesmaids. Instead, the store quickly became a popular gift shop. She has teamed up with local artists, made some gift items herself, and seen retail become about 50 percent of her business. The stationery segment of her business also took off to a degree she did not expect. It accounts for 25 percent of her business.
Soon retail customers starting asking if Euphorbia’s gifts were available through a website or a catalog, and Harrison realized that she had better offer her merchandise through one or the other. So she is working on adding E-commerce to her Internet site (www.euphorbiashop.com).
Between photography, glossy stock, printing costs, and mailing expenses, a catalog is a major undertaking. She reasons that selling via her website will be far less expensive. "I’ll take the picture myself with a digital camera," she says. Not yet concerned with the science of search engine placement, Harrison sees E-commerce primarily as a convenience for customers. Worried about how she would handle order fulfillment on a large scale, she doesn’t want Internet sales to get too big — at least not yet.
Harrison does, however, credit the Internet with bringing newly-engaged women to her door for wedding planning. "The first thing they do after they get engaged is jump on the Internet at work," she says. There, in chat rooms of big bridal sites like The Knot (www.theknot.com), women with weddings on their minds gather and compare notes on wedding planners. A number of her clients have found her on the Internet.
Harrison has made a decision to invest in the business rather than rush it to profitability. Besides, she says, most businesses do not climb into black ink until their third year. For Euphorbia, that would be next year, and she is confident that the business is on track to turn a profit by that time.
Crediting ETI for its role in her success and recommending the entrepreneurial training program to others, Harrison nevertheless adds a note of caution, emphasizing that starting a business is a huge undertaking. "You have to be ready," she says. What’s more, "you have to make sure that your family is onboard," she says.
A start-up is quite a ride. Like many a New Jersey entrepreneur, Harrison is thankful that ETI was around to provide a trail map.
#h#The ETI Course On Franchises#/h#
New for 2004 from the Entrepreneurial Training Institute (ETI)is an 8-week course on franchising. In introducing the course on its website (www.njeda.com/eti), ETI writes "Myth: Buying a Franchise = Guaranteed Business Success." Of course, starting any business is risky, but ETI, which operates under the auspices of the New Jersey Economic Development Authority, works hard at upping the odds in favor of the entrepreneur, whether he is starting a stand-alone business or joining a chain.
In addition to its new franchising course, it offers a number of other eight-week, in-depth courses for aspiring business owners. There is a general course and there are specialized courses for non-profits, high-tech businesses, and Spanish-speaking entrepreneurs.
The general program covers such topics as goal setting, financing, and marketing. Students develop a business plan for their businesses, which is necessary for them to obtain financing, and submit them for review to a panel of banking, accounting, law, marketing, and economic development professionals for review.
The program is offered in 10 locations throughout the state at a cost of $295. Classes are held one evening a week at 6 p.m., and class size is limited to 20 students. The next session starts in March. Locations will be announced in January, but general inquiries are being accepted now through the NJEDA’s website (www.njeda.com) or at 609-292-9279.
To graduate, students must attend six of the eight classes and complete all written work, including a business plan. These plans will be subjected to a "panel review" by lawyers, bankers, and accountants on the last night. Graduates are prime candidates to qualify for monies from a revolving loan fund established by the NJEDA. More than 400 people have graduated from the training program in the past eight years.
Non-profits that want to become self-sufficient and not rely on grant funding for the long term may be eligible to take ETI’s Transition of Not-for-Profits course. Students learn how to create a business plan and learn the basics of operating a business. Prospective students are invited to call Seton Hall University Institute on Work (973-313-6103) to schedule an assessment of their organization’s readiness to enroll in ETI. The charge is $200, and students will be informed either that they are ready for ETI or that they are eligible for counseling to prepare for ETI.
Registration for the program, which is held in Newark and in Trenton, is $295. Institute on Work staff serve as facilitators during the ETI class sessions for the not-for-profit organizations. Graduates are eligible for free mentoring in areas such as marketing, bookkeeping, and completing loan applications.
For high tech businesses, the EDA offers an ETI on Targeted Business Planning. It teaches the basics of operating a business and how to create a business plan, and offers opportunities to present business plans to high-tech experts, angel investors, and venture capitalists. It also provides networking sessions with professionals who work in the high-tech industry. The cost for this course is $295, and enrollment is limited to 20 students, who enjoy a 4:1 student/teacher ratio. Classes start in March, and the location is still to be determined. Call 609-292-9279 for more information or visit www.njeda.com
As for the franchising course, a pilot offering, it is similar to other courses’ length, cost, and graduation requirements. For its inaugural year, the course is being offered only in West Paterson. There will be a free information seminar in February. Date and time have not yet been announced, but reservations are being taken at 609-292-9279 or by E-mail at firstname.lastname@example.org