Networking Is Essential for Professionals, Too

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This article by Kathleen McGinn Spring was prepared for the

September 12, 2001 edition of U.S. 1 Newspaper. All rights

reserved.

Launching the Start-Up Without a Rich Uncle

What is the best way to fund a start-up? "For most

people, a rich relative is still the best form of financing,"

says James Scott, founder of The CFO.com. Luckily for

entrepreneurs

without a wealthy uncle in the family tree, he says this is not the

only way to find the cash to get a new business up and running.

Scott sits on a panel discussing "Financing Alternatives: Creative

Ways of Raising Money," on Wednesday, September 12, at 5 p.m.

at a meeting of the New Jersey Technology Council at the Fleet Bank

Training Center in Jamesburg. Other panelists include Jim Gunton

of the NJTC Venture Fund and Bruce Haislip of Elity Systems.

Cost: $50. Call 856-787-9700.

Scott, who says he was "educated entirely by the state,"

received

his undergraduate degree in economics from Rutgers in 1976 and his

Rutgers MBA in finance in 1981. He thought he would make a career

in commodity trading futures, but instead gravitated toward getting

new companies — or new divisions within companies — up and

running. On his first job, for Greater Media in East Brunswick, he

started a cable division that went from "zero to $5 million in

two years." Other start-up opportunities followed, including a

10-year stint at Telecom Analysis Systems in Eatontown, a company

he joined early on and helped take to $20 million in sales.

"I like to bring order to chaos," Scott says of a reason he

is drawn toward start-ups. He likes the energy level at these new

companies, and the unique opportunity they offer to "solidify

a dream by getting the resources to make it a reality."

In his last job, Scott was CFO for KnowledgeWindow.com (formerly

VLearn),

a Princeton company that enables corporate learning over the Internet.

Two factors led to his resignation from that start-up. "I had

a bad back," says Scott, a resident of Ocean Township. "The

51-mile trip was just too much." The second reason was that Scott

had been mulling over an idea. Young, growing companies do not need

— and often can’t afford — a full-time CFO, but they badly

need the expertise a CFO brings. Two years ago, Scott founded his

own company to answer that need.

Setting up an office in Spring Lake, and hiring his wife, Carolyn,

also a Rutgers MBA, to handle marketing, Scott offered himself as

a virtual CFO to tech start-ups. He says he acts in this capacity

for about five companies at a time. His clients include Dovetail

Sciences

in Allentown, Pennsylvania, EnCamera Sciences Corp. in Arizona, and,

closer to home, ExpertPlan, a Cranbury company that provides Web-based

retirement plan administration.

The CFO.com was founded in 1999, some months shy of the Internet

meltdown

that caused a number of companies to drop the dot-coms from their

names in much the same way that Irish immigrants with names like

O’Reilly

and O’Meara were said to have "dropped the Os in the ocean"

as they approached Ellis Island. But Scott has no desire to distance

himself from the Internet. His company’s name offers great branding,

he says, and besides, he has not lost his faith in the power of the

Internet. "The idea of information on the Internet has changed

the way people think," he says.

Still, in Scott’s opinion, the business model espoused by many

Internet

companies left a lot to be desired. "The whole funding thing was

overblown," he says of the often-successful attempts of untried

entrepreneurs to raise tens of millions of dollars. "The whole

ramping up quickly thing was overblown." And, of course, putting

revenue generation a distant third to recruiting top talent and

grabbing

market share proved disastrous.

With the dot-coms on their backs, and those who invested in them

smarting,

the venture capital outlook for tech start-ups in general has

deteriorated

badly. "If the atmosphere for tech start-ups was 10 on a scale

of one to 10, it’s down to a two or three," says Scott. "It’s

still possible to get funding, but much harder, and at much lower

valuations."

Here are some ways entrepreneurs can pull in the cash to get their

start-ups to the next level.

Turn those pockets inside out. "I won’t work with

someone who hasn’t put in his own time and his own money," says

Scott. Investors have the same criteria, so the owner of a new

business

has to be prepared to dig into his own savings, and perhaps even

mortgage

his house or sell some assets to get the business going before he

asks outsiders to provide funding.

Review all of the company’s assets. Scott has consulted

to Bluejeanmedia.com, an Internet publisher that put up stories

readers

sent in. The company is now in bankruptcy, he says, but its owner

retains the rights to the content readers sent in, and has put it

together into a book. She is using the book, says Scott, to

"finance

a comeback." The lesson here is that companies, and especially

tech companies, often have assets they never consider valuable, and

that these assets can be used as capital.

Some of these assets can be used as collateral, too. That is the case

with ExpertPlan, one of Scott’s clients. "They have about 100

plans," he says of the 401 (k) plans the company administers.

"They’re adding about 10 or 20 a month." These plans have

value to anyone who might consider purchasing ExpertPlan, Scott

explains,

in the same way that each cable subscriber adds value to a cable

company,

and each water customer adds value to a water company. In the case

of ExpertPlan, Scott figures each 401 (k) plan adds $10,000 to the

company’s value. That is money ExpertPlan can use as collateral, says

Scott, who is in the process of helping the company raise $2.5

million.

Choose landlords, vendors, and alliance partners

carefully.

"There are landlords in New Jersey no one should work with,"

says Scott. These are the landlords that require personal guarantees

on office leases, and show no inclination to bend with the winds of

economic change. Others will work with tenants, perhaps helping them

through a cash crunch. "You want to do business with good

people,"

says Scott. Establish a network of vendors, customers, business

partners,

and landlords, and do your part by helping them out — perhaps

by sending business their way.

Network like crazy. The advice Scott offers to

entrepreneurs

looking for capital is the same advice so often given to job seekers

— network, network, network. Let absolutely everyone know you

are working at funding your company. "Tell vendors, customers,

your accountant, everyone in the family. No source should be

overlooked."

Know where to find angels. Many entrepreneurs spend their

days going to meetings and funding fairs to meet angel investors.

This isn’t the best approach, says Scott. A better tactic is to

research

your company’s industry so well that you are aware of all of the

players.

Among them are recently retired executives, some of whom may want

to stay in the game. These are valuable contacts, and, with luck,

one might decide to fund your company.

But even if an angel can’t be induced to bite, all is not lost.

"A lot of people think money is going to solve all their

problems,"

says Scott, "but that is not the case. Almost any business can

be built slowly." A big infusion of cash is nice, but a solid

business plan is better.

Top Of Page
Networking Is Essential for Professionals, Too

With her frequent court appearances and complicated

love life, Ally McBeal doesn’t appear to spend a lot of time

networking.

TV attorneys — even those trying to make sense of dimpled chads

— seem to be living a glamorous life. To mesmerized TV audiences,

the practice of law looks like all drama, all the time. But, according

to Julie Battista, a real life attorney who is an associate

with Pepper Hamilton, networking, an activity not known for inspiring

exciting fiction, is something no successful attorney can overlook.

Battista joins a panel speaking on "Networking for Success"

at a meeting of the Central Jersey Women’s Network on Thursday,

September

13, at 6 p.m. at the Wyndam Mt. Laurel. Other panelists include Ed

Kelleher of Kelleher Associates, a company specializing in career

transition counseling, and Robin Hurd-Graham, a corporate

trainer.

Cost: $35. Call 908-281-9234.

Battista, a graduate of West Virginia University (Class of 1990) who

holds a J.D. from Temple, says "people don’t think of lawyers

when they think of networking." Lawyers themselves give little

thought to the process of building contacts to build business, she

says, at least they don’t early on in their careers. "It’s not

taught in law school," she says.

Law firms don’t spend a lot of time talking with their new associates

about networking, either. Yet a solid roster of clients is one of

the main things a law firm looks at when it decides which of its

associates

will make partner. Becoming a partner in a firm is the goal of most

lawyers in group practice. The partners, each receiving a share of

the firm’s profits, make far more than associates do. And, what’s

more, in most cases, an attorney is not allowed to remain on as an

associate past the time — perhaps his sixth or 10th year out of

law school — that the firm grants partnerships.

Even after partnership is attained, income varies among a firm’s

partners,

and an important determinant in any one partner’s share is the amount

of business he brings in. Networking is an important tool in bringing

in business, and Battista says that is the case not only in law.

"It’s

true in accounting, insurance, consulting, and in other service

professionals,"

she points out.

These are some of Battista’s networking suggestions:

Start Early. This is a tough one, she admits. The first

years in practice are an intense time for attorneys, who are expected

to quickly come up to speed on legal procedures and, typically, to

bill lots of hours. Still, Battista says, if attorneys get involved

in networking early on, they will have time to develop and deepen

relationships with young professionals in other fields. As these

contacts

move up in their organizations, they will be in a position to hand

work to friends. Those who jump into networking years later, perhaps

when they are being considered for partner, will not have the same

opportunity to develop real friendships.

Keep in touch. Even young attorneys, busy as they are,

should make time to keep up with friends from college and law school,

and with family and other friends too. "Now, with E-mail, it’s

easy," says Battista. Just write a quick note, or forward an

interesting

article. Anything to keep the friendships going. And remember, she

says, to keep the relationship reciprocal, offering help, leads, and

work referrals, and not just expecting to be on the receiving end.

Try networking events. "I found one of my biggest

clients at a presentation/networking event," Battista says. She

knows many attorneys are not comfortable at networking gatherings,

but says the effort can pay off. Anyone who just can’t stand the

thought

of wading into a room of strangers, though, can still make valuable

contacts. Battista suggests volunteer work or joining a sports group,

"something where you’re comfortable."

Speak up. Battista describes herself as outgoing. She

enjoys networking, and is even happy to speak in front of a crowd.

Making presentations, she says, is an excellent way to meet

prospective

clients. So valuable is this tool that she suggests those who are

timid about speaking might try joining a group like Toastmasters,

which offers coaching and support to those who want to get up in front

of an audience.

Be persistent. The big client Battista met at a networking

event had a lawyer on staff when she met him, and was happy with his

work. She stayed in touch with her new contact for more than a year,

and when his attorney stepped down, she was ready to step into his

place, bringing "substantial" business into her firm.

Actually, even though Ally McBeal is never shown attending

Chamber

of Commerce events or speaking at Rotary meetings, she often is

portrayed

as doing one of the things Battista says is most important in

networking.

In winning cases, and often going to great lengths to make clients

happy — even going so far as attending a prom with a client in

one episode — she sets herself up to reap referrals from existing

clients. Battista calls this"internal networking," and says it is

one of the best ways to win new business.


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