For many, owning their own business is as much a part of
the American Dream as owning a house or vacationing at
Disney World. But most people don’t know where to begin.
And over 50 percent of all new businesses fail in the
first year alone.
Barry Bendes, a partner in the New York City and Short
Hills firm of Edwards, Angel, Palmer & Dodge, has a
specialty in getting small businesses off to a good start.
"The key is that people need to plan for success," he says
(U.S. 1, March 1, 2006). Specifically:
Find a good accountant. Bendes is an attorney, but still,
he says that "the most important thing that I tell people
is to go out and get yourself a good accountant. It is
much more important than getting a good lawyer." Do this
before renting space or incorporating, he says. A thorough
consultation should take place well before any business
cards are printed up.
Plan ahead. What sort of business are you interested in?
What is the current market? What about short-term and
long-term success? "Planning is king and the second most
important thing is to make a good business plan," says
Bendes. "It serves as a tool to help get started and well
as measuring your path to success as you go along."
Maintain a positive attitude. Owning your own business is
time consuming, and a huge amount of work. Despite the
time commitment, rewards are rarely immediate. There will
be times when the new business owner will doubt that what
he is doing is worth it. But Bendes says that successful
businesses are started every day and it’s important to
keep a good outlook. "The more you plan for success," says
Bendes. "The better your chances are of having success."
Think Twice Before Adding Staff
Employees? Who needs them? Terri Adams has managed to
avoid hiring a single one as principal of Adams Consulting
Group, based in her Princeton home
It’s not that Adams advises owners of small businesses to
do it on their own. What she has done herself – and
preaches for others – is the development of strategic
partnerships to provide help when it’s needed. For Adams,
networking at chambers of commerce and similar
organizations doesn’t mean just looking for potential
customers. She also keeps her eyes open for people whose
business strengths and knowledge areas complement her own
(U.S. 1, February 22, 2006).
One of her partnerships is with someone Adams met through
the Princeton Chamber who develops promotional products. A
big part of her business comes from corporations who ask
her to do training for a big product launch or a new
initiative. If these companies are also looking for a
package that includes promotional products to symbolize
the new product line or vision, then Adams turns to this
This way she can deliver what she calls a "more holistic
proposal." And it turns out to be cheaper for the client
than an "a la carte" approach. Because she uses this
partner exclusively when she needs promotional expertise,
he also gives her a special discount that she can pass
along to the customer. In return, says Adams, "each time I
have an opportunity to refer or integrate promotional
products, he will get the business." The cycle continues
when a client contacts him with a new initiative, and he
might ask, "Who is helping you to launch this new product
Based on her own experience, Adams offers this advice
about partnering to other small business owners:
Go for the big contracts. Even though you are small, you
don’t have to limit yourself to small contracts. "With
partnering," she says, "you can deliver a more
well-rounded product rather than try to get a sliver of
the pie." Suppose you write marketing copy and someone
needs a website. You’re good on the words, but you may
need a designer who knows how to position copy in a
user-friendly way, and you may also need an website
optimizer, who will put in key words so that search
engines call up the site. Tapping these partners means
that you may be able to get a big contract that you never
could have gotten on your own.
Find partners before you lose business. Small operators
can lose contracts either because they are perceived as
too small to handle a large contract or because they don’t
have available skills complementary to their own. Asks
Adams: "Moving forward, are there likely partners you
could be scouting out now?"
Don’t expand your company. Expand your network of partners
instead. Remember that business is cyclical. If you hire
when you are in the middle of a crunch, those employees
may have little to do when business slows down.
Befriend big business. Many large companies cannot be
bothered with small projects, and, in part because of
their high overhead, need to charge top-of-the range fees.
Still, they want to hang onto customers. The solution can
be to refer customers with small projects to trusted
owners of small businesses, who are happy to take on the
small projects, and who are able to charge less for doing
As an example, Adams says that a big accounting firm with
high fees may have a continuing alliance with a smaller
firm that is more affordable for certain customers.
Share the cost of doing a trade show. With charges of
$1,500 to $3,000 for a booth, trade shows may be beyond
the means of small businesses. One option for two
businesses that sell different things to the same audience
is to share the cost and the leads generated.
Seek out complementary partners. Ask yourself, "What other
services would round out what I do?" One potential partner
for Adams was a staffing agency, because its clientele was
similar to hers. "Their target is human resource
departments who either manage temporary or part-time
employees or place full-time employees," she says.
"Sometimes in my business, the human resource area is my
main partner in establishing a new initiative like
Determine whether a potential partner is the right
partner. If you meet someone at the Princeton Chamber, for
example, ask yourself not only whether you like them, but
also whether you trust them. Ask who else they know in the
chamber, and then talk to those people. If you get a good
feeling, and have done due diligence, then go ahead.
Start very small and see how it goes. If the person seems
substantial, honest, and ethical, then propose something
low-risk – like sharing a single lead. If it works out on
a small scale, go larger. The next step may be to share
five other contacts or to move to more substantive
sharing. Adams tried out her promotional products partner
with a growing bank, which was instituting a new
management development program. "It was a small project
and went well," says Adams, "and he gave me a good price."
Slowly they have been expanding that partnership with
riskier ventures that require a larger up-front
Make sure each person’s tasks are defined. Set
expectations about what the goals are and what each
partner expects to gain. Partners must also decide how to
measure what each one is doing and how to determine
whether their collaboration has been a success. Make the
goals specific. In this project, the partners’ goal is to
cover costs and get "great testimonials" to use in
marketing their next webinar.
Draw up a contract. Make either a formal or an informal
agreement, depending on the level of partnering. If there
are a lot of dollars at stake, Adams advises involving
legal counsel. For the bank’s promotional products, she
and her partner had a one-page agreement specifying the
discount Adams would get, and the discount he will get if
he refers her or if they land a joint project with one of
"If money is at stake, people are greedy," says Adams, so
agreements must be made in advance. An agreement should
also include liability and insurance.
Too Old To Start? Never, Not Even at 93
`You’re going to invent radium, or I’ll pull your hair,"
Clara Schmitz loudly pronounced to her daughter Doris.
Young Doris tried to explain the difficulty of this task –
basically, Madame Curie had already made that discovery.
But her mother was having none of it. She had high
ambitions for her daughter. And while Doris was unable to
discover radium, she racked up impressive achievements,
including founding a national company based on her own
invention, and shepherded it to success – beginning at age
At the age of 93 when we caught up with her last year,
Doris Drucker, widow of world renowned management
consultant and economist Peter Drucker, is an author,
inventor, scientist, and entrepreneur. Throughout her
career, she has consulted with many startup firms, helping
them bring new inventions to market. Her recently
published autobiographical book, "Invent Radium: Or I’ll
Pull Your Hair," is an account of her youth in Germany
(U.S. 1, March 29, 2006).
Visivox launched. Throughout his career, Peter Drucker,
author of 35 books and prime shaper of American management
theory, was always invited to speak somewhere. "It became
my job to sit in the back of the hall and yell louder!
when his voice started to drop," recalls Doris Drucker,
"and I want to tell you, having heard these talks dozens
of times, I was really getting tired of it."
Surely, she thought, there must be a better voice feedback
method. So, finding nothing available on the market, she
invented one. Her solution, Visivox, was a small device
that attaches to a podium and translates the speakers
voice volume into a series of warning lights. The speaker
can thus project the proper voice volume to match the
Partner up. "Nobody knows every part about starting a
business," says Drucker. "You really need to find and
bring in good partners who can help you." Drucker, quite
naturally, turned to her husband. He had, after all,
guided the world’s major businesses, and revamped the
country’s view of business management. "So I asked for his
help," she recounts, "and he says, `oh, I don’t know
anything about small business.’"
Undeterred by her unhelpful hubby, Drucker partnered with
an electrical engineer and, by l996, at the age of 84, she
was ready to bring her invention to market, and carved out
enough space to get it off the ground. "Every entrepreneur
needs one to two years of food and shelter money to get
started," says Drucker. "You have to have your time free."
Key marketing problem. "Inventing’s easy. It’s the
marketing that’s hard," says Drucker. She had a product
for which there was no known competitor – seemingly a
perfect niche. But Visivox faced a far larger hurdle than
competition. "Speaker ego was my biggest problem," says
Drucker. "Every speaker behind every podium thinks his
voice fills the room. They don’t care about draperies or
different acoustics, they think their voice covers it."
Yet with a lot of intense marketing, Visivox came to be
recognized as a valuable tool. Hotels and universities now
equip their podiums with the device and preachers have
come to accept that the faithful can get the message only
if they can hear it. Speech pathologist George Whitmore of
San Bernadino’s Casa Colina Center for Rehabilitation
Medicine has found Visivox to be an ideal
non-interruptive, self-monitoring tool for his
brain-injured patients, helping them to learn how to speak
Insure Key People
What do Rita Hayworth’s legs and your trusted CFO John
have in common? Both are valuable, irreplaceable business
assets, worthy of insured protection. If John gets hit by
a truck, both you and his widow may weep copiously at the
funeral. But come Monday, it’s back to business, and with
the sudden realization that he has passed on without
passing on any of your company’s financial information, a
very tangible sense of his loss will hit home.
Insuring against lost time, expertise, and sales until a
replacement can be found and trained typically has been a
consideration mostly for major corporate CEOs. Yet more
often it is in the smaller firms that a handful of
individuals hold irreplaceable knowledge or abilities.
Gwen Faulkner, financial service professional with the
Cherry Hill office of the MassMutual Financial Group,
speaks to specific insurance strategies (U.S. 1, June 28,
Insuring key people has traditionally been seen as a
compliment conferred by the directors and received as a
status symbol by the executive. In smaller firms, such a
policy, if employed at all, is generally taken out only on
the owner. "But rank or past performance have nothing to
do with key person insurance," insists Faulkner. "It is a
matter of determining the individuals whose sudden loss
would effect the bottom line." These may not necessarily
be partners or upper management people.
Supposing a firm’s young sales manager provides excellent
motivation and training for his sales force, and sales
figures show that an amazing two-fifths of annual sales
come from one aging senior salesman. Loss of the manager
would entail a relatively short replacement time, with a
small dip in revenue. But losing that senior salesman and
all his clients might nearly sink the ship. Which of these
two should be insured?
He’s worth what? Unlike a movie star’s body parts, a
business person’s worth is fairly easy to calculate and
less personal. The very first step before any insuring is
to get an outside valuation of the company.
"This should be the real value of the firm," says
Faulkner, "not the under-valuing that we so often do for
Once the actual company’s value is determined, any
individual’s percentage of that value becomes more
apparent. In the case of a salesperson, it is easy to
judge his annual revenue stream and figure the cost of,
for example, a half-year’s replacement time. For a design
engineer who is continually turning out new products,
worth must be calculated in terms of the whole company’s
Faulkner continually warns clients that insurance demands
a constant reassessment of corporate value. Benefits for
key person insurance depend not only on company growth,
but also on the relative value of the insured individual.
Insurance as perk. Blending key person insurance in with
the rest of the benefits package transforms a company
safety net into a real hiring lure. For that trusted CFO
to be worth anything to the firm, he must not only be
alive, but also fit, alert, and able to sit at his desk
and perform. This means that an increased health insurance
benefit for that CFO is a wise investment.
Similarly, such additional insurances can be applied to
that person’s pension plan at minimal cost.
"The whole trick to key person insurance is flexibility,"
says Faulkner. "Every insurance company has standard
formats, yet in each case the terms are something the
company can design." Blending in such additional coverages
with the compensation package may tip the scales in your
favor when top managerial talent is looking for a new
Buy-sell hedges. Business auction ledgers are rife with
tales of partnerships reluctantly put on the block so the
remaining partner can come up with the cash to satisfy the
heirs’ inheritance. Whether the business has boomed or
remained steady, partners’ fortunes tend to be fixed to
their company’s growth. Thus, they seldom have enough
capital to buy out the other partners’ shares.
A simple buy-out insurance plan on all the partners
ensures that any surviving partner can pay off the heirs’
share without dissolving the business. Premiums here tend
to be quite affordable. Yet before plunging into such an
agreement, Faulkner suggests each partner get to know the
heirs. Does each partner even have a will? Are the heirs
interested in participating in the business, and is it
worthwhile to bring them aboard now?
"I’ve seen people insure their pets for $100,000," says
Faulkner. "Hopefully, your key people are worth at least
Prepare for Disaster
Forty percent of businesses that experience a disaster
will not recover from it, according to statistics from the
New Jersey Small Business Development Center. What can you
do to make sure that your business doesn’t become a
A large part of disaster preparedness is really just good
business practice. Jeff Perlman, principal of Borden
Perlman Insurance, with offices at 2850 Brunswick Pike,
says that "typical risks in New Jersey are flood, fire,
and wind." But a disaster for a business can range from
major natural disasters to seemingly minor incidents such
as a computer crash. A minor accident can become a major
disaster for an unprepared business. Some precautionss:
Find a back-up location. "The biggest factor in whether a
business recovers from a disaster is how quickly they can
get back in business," says Perlman. Having a secondary
location to move to can be the difference between the
ultimate success and failure of the business. For a
business that needs only a small space, this may be
accomplished quickly and easily. But other businesses, an
auto body shop for example, have larger and more specific
space and equipment issues to deal with.
Large corporations often have back-up facilities, a luxury
that few small businesses can afford. But Perlman says
that there are ways that even the smallest company can put
a contingency plan for back-up space into effect. He
suggests, for example, that a company can develop an
agreement with "a friendly competitor" in a nearby town.
For some businesses, sharing office space for a time may
be possible, for others, the agreement might mean that
customers are sent to the competitor’s shop until the
business is running again.
Have the proper insurance. When people think about
insurance, they think property damage, says Perlman. "They
want to be insured in case the roof blows off the
building." Property insurance will cover the new roof, but
what about the business that is lost while it is being
repaired? A second type of insurance, business
interruption insurance, will cover the loss of income from
a disaster. Business interruption insurance can save the
day after a fire or a tornado, but, Perlman warns, "this
type of insurance is not readily available in the case of
Flood insurance is the third type of insurance a business
should consider. Who needs flood insurance? "After that
last few years, I’m beginning to think everyone in New
Jersey should have it," he says.
Take care of your data. Whether your records are on
computer or are in hard copies, keep all of the back-up
copies you need to run your business in a safe location,
preferably somewhere other than your office.
For a small business, with fewer than 10 computers,
protection from crucial data loss can be as simple as
backing up to a read/write DVD once a week, then storing
that DVD at home, or in some location far away from the
computers themselves. Larger companies, with more
computers, may need to take greater measures, such as a
backing up to a different server that is in another
Document your physical assets. Just as many prudent
homeowners do, it’s a good idea for a business owner to
make a list of all of his business equipment and of any
inventory. Even better than a list is a videotape, which
provides a visual record of hard assets.
Keep insurance records safe. In case of a disaster, you
will want to get in touch with your insurance companies
quickly. Keep copies of contracts and agents’ contact
information at an offsite location.
Pinpoint employees. In a disaster, it is possible that
employees will have to scatter. Make sure to keep a list
of emergency contacts, including the home and cell phone
numbers of all employees and of their back-up contacts.
After you have completed your disaster preparation plans,
call around and make sure that the people you do business
with are also prepared for disaster. If your key vendor
has a disaster, will you be able to get the supplies you
need? If it is something that is vital to your business,
make sure you have another source for it.
Low Cost Marketing For Start-Ups
`We are in probably the most competitive marketplace I’ve ever seen,
especially for smaller businesses," says Nunzio Cernero, who has been
involved with small businesses for over 30 years, both as co-founder
of the Small Business
Development Center at Mercer County Community College, and through his
own Brick-based business, Nunzio E. Cernero LLC, as financial planner
(U.S. 1, January 18, 2006).
Dissatisfied with the culture of larger companies – or downsized from
them – a number of corporate refugees are deciding that going it alone
is a better option. Entrepreneurial success stories are regularly
touted in the press, and classes
in how to form a business are offered nearly every week.
Often what a big business has that a small business lacks is a
significant marketing budget. Cernero says that when he first started
teaching at Mercer County Community College he would give the students
$100 million of "play money" to
develop a marketing program. By contrast, he now pushes what Jay
Conrad Levinson named "guerrilla marketing," or "grassroots
marketing." The goal, as the subtitle of Shel Horowitz’s book
"Grassroots Marketing" says, is "Getting Noticed in
a Noisy World." Cernero suggests some ways to make this happen:
Define your market. Entrepreneurs usually have a sense of who they
might sell to, but this needs to be clarified. "You don’t want to
spend money reaching out to people not in your target market," says
Get out there. Find ways to interact with potential customers or
clients in your target market. What do they read? What kind of
meetings do they go to? Who do you know who is either in your market
or who influences it? For example, if your
target market includes public relations firms, you may know a printer
who is selling to one or more of them.
Speak anywhere and everywhere. Give seminars and talks both to
consumers and business people. "I speak anywhere I can," says Cernero,
"to anyone who will listen." His one caveat is that it’s not worth
your time to talk to a group that does
not include people in your target market.
Develop a database of your target market. Include current customers,
potential clients, and opinion leaders. Track everyone you talk to or
get a business card from, entering as much contact information as you
can. Use the database to
interact with the people you’ve met. Cernero suggests sending regular
mailings to clients – birthday cards, newsletters, and announcements
of promotions – but always give people the opportunity to opt out.
Use the web effectively. Develop a website if you can afford to. Check
out new services on the web being developed by Yahoo, Amazon, and
Google that are like yellow pages and can help you find local service
Build an opinion leader network. Send useful information to opinion
leaders. For example, you might send articles to printers on effective
management of a print shop.
Join groups. Find out where members in your target market meet. If
they are chamber of commerce members, start attending meetings. If
they are passionate golfers, dust off your clubs. If they are church
goers, consider attending bazaars,
fairs, and other non-religious events.
Include some random marketing. Make it a weekly habit to pick out four
prospects, and send them each a letter and then follow up with a phone
Search for creative marketing ideas. Plug the keywords "grassroots
marketing" into Google from time to time, and check out what other
people are doing.
Blogs for Marketing
Here is what small business owners in search of a good, cheap
marketing tool need to know about blogs. They’re effective, they’re
free, and they’re a snap to set up and maintain.
These fast facts come from Janie Hermann, director of technology
training at the Princeton Public Library and an enthusiastic blogger.
In addition, she is a regular contributor to the Library Garden blog
U.S. 1, October 4, 2006).
"A blog is a way to create a web presence," she says. "It’s great for
small businesses that can’t afford a website. You don’t have to know
HTML (the language of website architecture). You don’t have to know
web design. You can be hosted
free. It’s a wonderful way to communicate."
How can you get started? Go straight to Blogger.com. This site is
completely free and easy to use. There are competing blogging
services, including WordPress, and they have advantages, including
advanced tagging features and URLs – or web
addresses – that don’t end in blogspot.com. But, says Hermann, for
ease of use Blogger just can’t be beat.
Blogger provides a choice of templates that allow users to personalize
their blogs. Choosing a template is the first step to blogging, and it
can be accomplished with just a few mouse clicks.
Are there any pitfalls? If you’re an employee blogging about your
company or your industry, be careful, says Hermann. Even bloggers who
post controversial material, but try to stay anonymous, have run into
trouble, typically in the form of
a go-straight-to-the-unemployment-line note. It is generally easy for
anyone with the right tools to pierce the veil behind which a blogger
might try to hide. Bottom line, says Hermann, "Don’t write anything in
a blog that you don’t want
your boss to read."