Tag Archives: advice

Terp Toolkit: Getting Started

Terp Toolkit highlights resources for starting your business.

Do you have an exciting business idea or startup that is gaining traction, but not quite sure how to get started with managing your growing venture? In this installment of Terp Toolkit, we’ll cover the basics — such as web hosting, development, phone, and email — which are essential to scaling your startup.

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Thinking about applying to a business competition? Five tips from Elana Fine

For b-schools, incubators and other organizations that support startups, business competitions are very hot right now. For entrepreneurs, they can be great opportunities to flex your entrepreneurial muscles and gain traction for your startup or business idea.

CC-04Apr14-635_hr However, with a seemingly endless list of competitions to choose from and limited time, how do you decide which competitions to enter?

Here are five things to consider from Dingman Center Managing Director, Elana Fine:

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Worth Reading 7/26/13

This week at the Dingman Center, board member and successful entrepreneur Andrea Keating was in the office mentoring students with business ideas. We also released a must-read post by Elana Fine, managing director, about the importance of being a global entrepreneur. Now, let’s end our week with what’s worth reading.

Entrepreneur Matt Garrison and his startup Energy.me are contracted to make $180 million in revenue over the next 18 months by buying and selling wholesale electricity. Find out the secret to the company’s technology in Lightning In A Bottle: Starting Up In A $190 Billion Market.

Investors in other cities may have more money to spend, but they don’t have the experience you’ll get from a DC investor. Tech Cocktail shows us why Angel Funding Opportunities Are Soaring in Washington, DC.

VCs don’t want to hear entrepreneurs pitch ten different ideas hoping one will sound good enough to invest in. Instead, they look for entrepreneurs that are passionate and convicted. Here’s why Successful Entrepreneurship Is Not About Winning A Popularity Contest With Venture Capitalists.

Is your startup having trouble pushing people to your website? Take a look at How PolicyMic, A Startup With A Handful Of Employees, Gets 6 Million People To Read It Every Month.

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Fine Observations: All Entrepreneurship is Global Entrepreneurship

Over the past few weeks the Smith School of Business and Dingman Center for Entrepreneurship have welcomed MBA students from Peking University, our partner school in China. Their enthusiasm for everything American – our universities, our financial markets, our TV shows, our music (apparently John Denver in particular) and especially our MALLS – further highlighted the disproportionate interest foreign individuals and firms have in the U.S. compared to our interest in them. This fervor is not unique to Chinese visitors as we host delegations from around the world that are anxious to learn anything they can about how we teach entrepreneurship and incubate startups. Yes, it is flattering that other countries want to learn from us– but are we doing enough of the same? Beyond outsourcing developers and finding low cost manufacturing, are our entrepreneurs doing enough to become global entrepreneurs?

I’m going to venture an educated guess and say “no, not really”. After speaking with hundreds of entrepreneurs in the past few years, there are only a handful that are tackling a problem also experienced in Brazil, leveraging technology developed in Israel or are targeting customers in China. One of those handful, Dingman portfolio company CirrusWorks, immediately peaked the interest of our investors by first targeting Asian markets. Although their unconventional approach to testing their product in a foreign market appeared naive to some, other investors welcomed the contrarian strategy since most startups begin locally and then diversify abroad as they grow. Since the U.S.’s growth rate ranks #127th , I’d argue that more startups need to take a “World is Flat” approach to launching their businesses. Given such feeble rates, startups may never experience the double-digit domestic growth rates that are typically viewed as milestones and therefore may never explore the global appeal of their product.

While exploring this issue with distinguished startup professors at the Smith School, I learned there are some exceptions. They pointed out that recent research has shown an uptick in transnational entrepreneurs, immigrants to the U.S. who leverage knowledge of the U.S. and their home country to start global, high tech startups. It makes sense that those knowledgeable and comfortable with multiple markets would be more likely to embark on a global venture. However, as a whole, U.S. entrepreneurs need to change their mindset to take advantage of international trends and opportunities:

Think global, start local. Startups need to understand and solve global problems. Uber launched in Paris in 2011, before many major U.S. cities, demonstrating the global pain point of inefficient taxi service.

Find comfort in what is uncomfortable. Talk and learn from people from different cultures. Travel to places with language barriers. Get lost on subways and experiment with food. The ability to partner with international companies and comfort travelling to meet a potential customer will give you a competitive advantage.

Understand Every Business is a Global Business. I repeat. Understand every business is global business and every entrepreneur is a global entrepreneur. For those of you who use the business model canvas as a planning tool – think of your canvas and look at which box represents a global opportunity. Is it a customer segment, a manufacturing partner or a distribution channel?

As entrepreneurs, advisors and investors, let’s learn from our zealous global peers. They are certainly learning from us.

Be fearless.

-Elana

ElanaFineElana Fine (@elanafine) was appointed Managing Director of the Dingman Center in July 2012, after joining the team in 2010 as Director of Venture Investments. As Managing Director, Elana’s primary focus is leading the Dingman Center in support of its mission and strategic plan. Key responsibilities include oversight of our student venture incubator, Dingman Center Angels investor network, business competitions, and technology commercialization efforts. Elana also develops and maintains relationships with donors, board members, EIRs, the Smith School community and other campus and regional partners. She is also serving as co-chair of the Dean’s Task Force on Entrepreneurship and Innovation and will be working with our Academic Director to expand the Dingman Center’s research activities and curriculum development.

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Worth Reading 7/3/13

With the 4th of July holiday just one day away, we’re sending you Worth Reading a little early this week. Enjoy your vacation with some good reads.

The goal of many entrepreneurs is to have a successful exit and sell their startup for hundreds of millions of dollars. But, is this the smartest approach? Business Insider tells us Why It’s Better To Sell A Startup For $20 Million Instead Of $200 Million.

There is much to be learned about entrepreneurship from the legendary Superman! Although he never started a business, he embodies many of the principles of entrepreneurship. Here are 7 Entrepreneurship Lessons From ‘Man Of Steel’

Millions in funding doesn’t always equal long-lasting success. Better Place founder, Shai Agassi, knows this all too well. Check out these Lessons From a Startup That Scored $836 Million in VC — and Failed.

Venture Beat recently released an article on the startup tech scene in Las Vegas, including a harsh critique of the DC technology sector. Take a look at InTheCapital’s reaction to the article in Venture Beat Tales Unfounded Jab at the DC Tech Startup Scene.

Finally, we’re including an article on a topic that we’re all tackling—growing and strengthening our Twitter accounts. We talk about it a lot at Dingman. How can we get retweets? How can we get more followers? How is all this affecting our brand? Check out PR Daily’s recent infographic on how to get more re-tweets.

Stay connected with the Dingman Center FB-f-Logo__blue_1024 twitter-bird-white-on-blue

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Business Rx Live Chat with Elana Fine and Rami Essaid

In the Washington Post’s latest Business Rx Chat, Elana Fine was joined by special guest Rami Essaid, chief executive and co-founder of Distil Networks, a company that makes products to block Internet “bots” that sow spam or steal data. Together, they gave real-time advice on all things entrepreneurship.  Here are excerpts from that chat:

First Customers

Q.: Rami, How did get your first paying customer?

Rami Essaid: Our first paying customers were also our first unpaid beta customers. One of the most important things we did early on was talk to potential customers, pitch them on the idea and get buy-in on our concept. As we developed the product, we continued to engage with those potential customers to make sure we are building something they would buy. What that led to is a natural progression from market research to adviser to unpaid trial to paying customer.

Competing with the BIG guys

Q.: Why is it that the big companies do not develop a service like yours? They have resources and an installed base of customers.

Rami Essaid: Some big companies might eventually work on what we are doing too, but big companies move slowly. Often having a lot of resources and customers can be just as much of a hindrance as it can be a benefit. The big guys can’t take the risks a start-up can and often cannot change direction as quickly. This gives us a unique advantage to build and iterate faster than they can and establish ourselves as the market leaders in the space.

Elana Fine: Security is also an area where larger players have historically acquired technology rather than develop on their own, for many of the reasons Rami mentioned above. Some of the biggest players such as Symantec have grown by acquiring a lot of companies (good news for Distil!). Shareholders might be happier to see acquisitions than high R&D costs.

Accelerators

Q.: What are your opinions of [start-up] accelerators? Do they help, hurt or do little to nothing?

Elana Fine: I’m interested to hear Rami’s thoughts on this. I’m going to say they can actually do all three — and it really depends on the accelerator and more importantly the entrepreneur. Accelerators do take equity in companies early on, which can hurt companies later as they raise more money, leaving founders getting squeezed early. For first-time entrepreneurs, they provide extremely valuable advice and extensive networks. Enterpreneurs just need to be clear what they want out of an accelerator and spend their time wisely.

Rami Essaid: I can’t speak highly enough of our experience being a part of the Techstars accelerator program. The mentorship they provided helped us compress a year’s worth of business and product development down to a few months. The program was an amazing jump-start to our company. To this day, we still leverage the Techstars network for introductions, connections and advice.

That said, I cannot blindly endorse all accelerators unanimously. A friend, Aziz Gilani, along with the Kauffman Fellows, did a study on 200 accelerator programs and they found that only a few actually add value to the companies they were supporting. Beyond the nationally recognized few, you really have to take each accelerator on a case-by-case basis.

Protecting your Idea

Q.: How do you connect with potential customers or prove a concept without either starting the biz or giving away your ideas (presuming it’s a service, not a product)? What constitutes “proof”?

Elana Fine: That is always tricky and a lot of entrepreneurs do worry about others stealing ideas, although it doesn’t happen as much as you think. Typically people have ideas in markets where they have some experience and existing connections. If you can’t immediately come up with a list of 10 potential customers that you could eventually sell to, then you are going to have a hard time when you actually have a product ready. For a service, proof is actually delivering on what you offer. If you have a new methodology for dog walking, offer to walk someone’s dog for free to test it out and get feedback on what worked and what didn’t.

Rami Essaid: First of all, the concept of “giving your idea away” needs to go away. If your idea can easily be implemented or copied, then chances are this idea is more of a feature and less of a stand-alone solution. Since you mention this as a service, have you identified who would buy this service? What types of companies are those? Who in those companies would buy it? Answer those questions and then go find local companies and people that fit those descriptions. Connect on Linked­In or call them and simply ask for their advice. You’ll be amazed how many people are willing to talk to someone that is asking for help if they aren’t trying to sell them something.

ElanaFineElana Fine (@elanafine) was appointed Managing Director of the Dingman Center in July 2012, after joining the team in 2010 as Director of Venture Investments. As Managing Director, Elana’s primary focus is leading the Dingman Center in support of its mission of fostering a community of entrepreneurs. Key responsibilities include oversight of our student venture incubator, Dingman Center Angels investor network, business competitions, and technology commercialization efforts as well developing key partnerships on campus and throughout the DC region. Elana earned an MBA in Finance and Accounting from the University of Chicago’s Booth School of Business in 2002, and earned a BS in Finance, from the University of Maryland, College Park, in 1997.

rami essaidRami Essaid (@ramiessaid) is Co-Founder & CEO of Distil Networks. He began his career as the founder and CEO of Chit Chat Communications. After a successful exit, he consulted in mobile development. With over 11 years in communications, network security, and infrastructure management, Rami advised enterprise companies to help improve scalability and reliability while maintaining a high level of security. Rami attended North Carolina State University where he majored in computer engineering.

 

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Business Rx Entrepreneur Q&A with Elana Fine – Part 8

Elana Fine, Managing Director of the Dingman Center recently participated in a live chat on Tuesday April 23 with the Washington Post’s Capital Business magazine for their Business Rx column answering questions from regional entrepreneurs on improving or starting a business. This post features some of the questions from the live chat. Follow the Dingman Center’s Facebook Page and Twitter Page for information on the next live chat and other Dingman Center news and events.

Q. What kind of return do investors like to see within 1 year – 18 months of Series A funding? For example, if a start-up raises $3 million in Series A, at the end of 18 months, what’s the minimum profit margin the company should aim to achieve?

Elana Fine: Investors (meaning VC/angel in this case) actually don’t expect a return at all in 12-18 months. They are investing for the longer term – and understand that you will likely need additional investment before you exit (usually via acquisition or IPO). They invest in companies in big markets that might generate a 3x-10x return.  The investments are illiquid compared to the stock market and therefore riskier.  In exchange for this risk and longer holding period — the cost of venture capital is high.  Most venture investors don’t expect there to be profit margins right away because they understand the money it takes to scale a company.

Q. I have my own consulting business focused on data analysis, research, writing, and project management. I had started consulting when I lost my job a few months ago and found great success right away leading to a full-time offer that was too good to refuse. I want to continue consulting through my own business and have the time to pursue them, but I am wondering about the ethics of doing so.

Elana Fine: We work with a lot of companies who “moonstrap” their startups – working on them after normal work hours. I think the big question is whether you are competing with your employer — that would certainly cross the ethical lines.  I’d always go with the tenet of “honesty is the best policy.” If you are concerned, have an honest conversation with your employer. If you are running the business on your own time and it doesn’t conflict, shouldn’t be a problem.  They might be excited and impressed by your entrepreneurship!

Q. I have been following the Boston marathon bombings and think I have some good ideas for facial recognition software. I have a few friends that are coders and could help. Would a VC invest in this kind of business?

Elana Fine: I think VCs would (and have) invested in facial recognition and other security/identification/verification software.  However, they won’t invest until you have something up and running and have some initial customer traction.  I’d start by doing a competitive analysis. There were a lot of companies started in this space after 9/11. Would be interesting to see where they are now and how far the technology has come.

Q. I have been a nonprofit management generalist for 5-6 years and I recently started a consulting firm working for myself. I have been lucky and have gotten several contracts in the first few months. So far I’ve been marketing pretty broadly and while that has been successful, would it be wise to hone in on a certain expertise, or is it better to remain a generalist? Also, at what point is it recommended to work with sub-contractors? Is it ethical not to tell clients when I choose to work with a sub-contractor? Thank you!

Elana Fine: Hmmm… two questions on ethics in a row. Happy to be a moral compass 🙂  I’m actually not sure on the ethics relating to sub-contractors. I will take part one though. As a consultant I think you do benefit by becoming a specialist, as long as it is in a large enough market where you can build a strong business. You need to start with a market-sizing analysis around your expertise and broaden or narrow based on your skill set and potential demand.  This area has A LOT of consultants, so you’ll really need to focus on refining your marketing message. I think your expertise also drives the price you can charge.  Think of a handyman as an example — most often a generalist that can do a lot of different things in your house will have a lower price point.  However, when you really want to redo your bathroom, you call in specialists who will be more expensive but will know how to do the job.

Q. What trends are you seeing in angel financing? Do you think we’ll see more funding this year?

Elana Fine: Honestly, I think angels are having an identity crisis.  Angel activity across the country increased significantly in the past two years. Now they are facing a Series A crunch – not enough early stage VC capital to fund all the companies that have raised money.  This wave of investments also differs greatly from 5-10 years ago because the companies looking for Series A are at later stages now that software development costs have come down. Angels acted like Series A investors — so are they now looking for Series B investments? And if that is the case, what does that mean for valuation and their equity positions? Will their holding period be shorter? I’m hopeful, but I don’t think we’ll see as much funding this year until we start seeing the companies that were funded in last 24 months receive follow-on capital.

Q. I’m a student startup and am in the finals of a business competition. Obviously, I’m in it to win it. When I do, what are the first steps I should take in evaluating where to allocate the prize package?

Elana Fine: Great attitude – you have to always compete to win!  Be very thoughtful about where to allocate your winnings and don’t necessarily assume you need to spend the money all at once.  Make sure to include your use of funds in your application/presentation — usually judges focus not just on the company, but the ability of the team to use the prize package to take business to next level.  If you think you’ll need additional investment, use the money to get customer or user traction that will prove demand for your product and validate your business model.  If this is a business plan competition and you haven’t already built something — use the funding to get a minimally viable product out to market to start getting feedback.  As a student you need to be careful – winning a large prize package can also create a lot of temptation.  Be smart, responsible and resourceful.

Q. As a successful woman in the finance and entrepreneurial worlds, what advice do you have for other women looking to start businesses or work in investment banking? Have you read “Lean In?” Is Sheryl Sandberg the Gloria Steinem of our time?

Elana Fine: My advice — DO IT!! I haven’t read “Lean In” yet, but it is next on my list. I’ll report back next month.  Women have so many of the necessary skills to start and grow businesses (drive, persistence, charisma, multi-tasking, delegation, etc.), but we just don’t see enough women entrepreneurs. I think the one ingredient we might be missing is appetite for risk and potentially over analysis.  We have great intuition and we need to apply it to starting more companies.  I don’t have the solutions, but it is really an issue I’d like to personally spend more time on.

cupidscup-033012-185_hr1Elana Fine was appointed Managing Director of the Dingman Center in July 2012, after joining the team in 2010 as Director of Venture Investments. As Managing Director, Elana’s primary focus is leading the Dingman Center in support of its mission and strategic plan. Key responsibilities include oversight of our student venture incubator, Dingman Center Angels investor network, business competitions, and technology commercialization efforts.

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Business Rx Entrepreneur Q&A with Elana Fine – Part 7

Elana Fine, Managing Director of the Dingman Center recently participated in a live chat on Wednesday February 19 with the Washington Post’s Capital Business magazine for their Business Rx column. Elana answered questions from regional entrepreneurs on improving or starting a business. This post features an excerpt from the live chat that was posted on washingtonpost.com. Follow the Dingman Center’s Facebook Page and Twitter Page for information on the next live chat and other Dingman Center news and events.

Q. What are your thoughts on getting involved in an existing franchise vs. starting my own company?

EF: It depends on your risk tolerance and the current opportunity. Franchising can be a rewarding route to start a business with a model that has been well tested. Like any start-up, it has it challenges, but it gives an entrepreneur an opportunity to operate an established brand. That being said, this is quite different than pursuing your own idea, dream and passion and seeing something grow (or fail). The latter may have higher risks because the idea and market is unproven, but more potential for upside.

Q. Have you owned a business? How did you become an expert on start-ups?

EF: I was an early employee at a start-up, technology-focused investment banking boutique. Our team was growing our own business while also advising early stage companies on raising private capital and buy side/sell side acquisitions. We worked with a variety of technology companies and often helped refine their growth strategy and business model to prepare them for venture financings or for exit. In my current role, I work closely with many student start-ups, as well as regional entrepreneurs.

Q. I know that it takes time to build a business. What is a reasonable amount of time to give a business before knowing if it has been successful? I guess the real question is: How many months of expenses should a person have when getting started until the income becomes regular?

EF: Ooh, that is always a hard question because it really depends on the type of business. If you are starting a restaurant, you may start generating cash flow sooner than if you are developing cancer drugs. I’d say two things:

  1. Depending on your idea, you want to put a plan in place to score card yourself to know if this is an idea worth pursuing or whether you should pivot or lick your wounds and admit “failure.”
  2. Always assume it will take twice as long and cost twice as much.

Q. I’m thinking of starting a tech company. Should I build it here in D.C. or move somewhere like Silicon Valley or N.Y.?

EF: STAY HERE! There is a thriving ecosystem of technology entrepreneurs and mentors — regardless of what you might otherwise hear. The community is supportive and collaborative with a deep bench of seasoned executives. The imminent decline in government spending should also free up tech talent who, after some soul searching, might find working at start-ups more rewarding than consulting firms. There is a funding issue, no question, but there is also a lot of expertise in grant funding and other non-dilutive financing.

Q. Is one age better than another for starting a business? I know that experience and age go together. I have known several people who reached their mid-50s or early 60s who decided to become consultants and cut back from their full-time jobs. I know college graduates who are used to living on a shoestring budget and could take the chance. But, I am somewhere in the middle. I am used to my current income level, but not my current job situation. I know that I could offer my services and have a better quality of life, but I am not sure if my finances would agree.

EF: Entrepreneurs are like marathon runners (in many ways) — they come in every age, shape and size. Young entrepreneurs are fresh with fewer financial burdens — and have the energy it takes to get ideas up and running. But they are inexperienced in hiring and managing teams, developing customer and channel partnerships, and often impatient with the ups and downs and highs and lows of starting companies. Identify your skill set as an entrepreneur and look for co-founders that might have complementary skills. There is no question your bank account will take a hit, but sounds like being your own boss might be worth the tradeoff.

Q. What is the Cupid’s Cup competition I saw a mentioned on the Dingman Web site?

EF: Cupid’s Cup is a national business competition, sponsored by Kevin Plank, founder and chief executive of Under Armour, for students who are currently running businesses. Finalists will compete for $50,000, and access to Kevin Plank’s network, on April 5th here at the University of Maryland.

Q. As you know, Europe is in the midst of economic crisis. What is the best business that could survive this economic turbulence? Even big companies have already collapsed.

EF: The businesses that are most agile and proactive are more likely to survive. There is no magic formula — but if you are starting a business and expanding internationally, you need to think carefully about which markets to approach first. Those that are more unstable might be lower priority. Other emerging economies with vibrant start-up cultures, such as Brazil, might be a viable option.

cupidscup-033012-185_hr1Elana Fine was appointed Managing Director of the Dingman Center in July 2012, after joining the team in 2010 as Director of Venture Investments. As Managing Director, Elana’s primary focus is leading the Dingman Center in support of its mission and strategic plan. Key responsibilities include oversight of our student venture incubator, Dingman Center Angels investor network, business competitions, and technology commercialization efforts.

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Business Rx Entrepreneur Q&A with Elana Fine – Part 6

Elana Fine, Managing Director of the Dingman Center recently participated in a live chat on Wednesday January 23, 2013 with the Washington Post’s Capital Business magazine for their Business Rx column. This post features the answers to some of the questions posed by regional entrepreneurs on improving or starting a business. Follow the Dingman Center’s Facebook Page and Twitter Page for information on the next live chat and other Dingman Center news and events.

Q. I’ve seen a trend for healthy eating, but there doesn’t seem to be any major chain known for its fast food being completely good for you. Do you think a chain of drive-through healthy fast food restaurants would prosper in today’s market?

Elana Fine : This has proven to be a very tough market to crack.  It turns out there is actually only a small part of our population that demands healthy fast food options.  In fact, we are actually seeing the opposite happen with burger chains and cupcake shops exploding.  Subway might be a good model to try to imitate. They took something standard like a sub and pitched it as a healthy choice.  Look for a product that requires limited behavior change, but is significantly healthier than a burger.

Q. I have a great idea for a small business that would allow me to do something fun while filling a void in local services. That being said, I’m a federal employee who is slowly paying down my law school debt while saving for a house and starting a family. How would you advise someone like me to deal with the insecurity of giving up a steady paycheck and benefits?

Elana Fine : This is often the hardest obstacle in getting started.  A lot of times entrepreneurs are the only ones who think their idea has legs, so it becomes hard to build support and justification for leaving a job.  You need to back your idea with data on market needs, look closely at those examples, and understand the startup costs and runway needed to fund the business.  You will probably need to max out your credit cards and sacrifice some savings, so if you don’t completely believe in the idea or your ability to execute, then hold off. Finally, you will need to sell the idea to the people who will be supporting you! Start by pitching to them the same way you would pitch your business to a customer.

Q. I think that one of the reasons that I continue to work for someone else is that I know I don’t have all of the skills needed to run a business by myself. I need a partner who could take the lead on sales while I take the lead on other aspects of the business. How can I find a like-minded partner for a new business?

Elana Fine : You are smart to understand your own skill set and where you might need help.  I’d suggest starting your search with a couple avenues.  First, find industry networking opportunities where you might find others with similar interests, yet complementary skills sets.  Second, look for resources, such as CoFoundersLab, a local startup that works with entrepreneurs to find their co-founders.  Third, you can always recruit in the way a larger corporation or late stage startup would, look for successful companies in the sector and try to hire their executives. You might find that there are a lot of people itching to do something new.

Q. I recently read that VCs base their investment decisions more on the entrepreneur than on the business. I am used to focusing on selling my business idea when I pitch. Do you have any tips on how I can better pitch myself and my team as entrepreneurs to VCs?

Elana Fine : I’d say it isn’t just the entrepreneur, but the entrepreneur’s ability to execute.  While the idea and the business are important, the real differentiator is the entrepreneur’s plan for growing the business.  VCs are looking for unique business models and monetization strategies rather than repeats of past successes.  An entrepreneur can’t walk in and say they are going to start a mobile app company that will generate revenue through downloads and ads — that has been done before and VCs want to hear something different.  It is the entrepreneur’s job to sell them on how they see and do things differently.

Q. I’d like to start a business to help people with personal finance like investing for retirement, saving for college, debt management, etc., but most businesses like this are located in office parks where people aren’t likely to see it by passing by. How do I market such a business?

Elana Fine : These kind of service businesses typically don’t require a high priced storefront location because someone looking for a personal finance company is probably not looking for one while they are taking a stroll like they would a coffee shop.  Storefronts have high fixed costs, making it hard for a services business that may have more variable revenue streams.  You would be smart to consult a marketing professional, but from a startup perspective, you should look at other companies on the market like HelloWallet, Mint.com and others that are building Web-based, scalable offerings in this market.

Q. I have a full-time job as a Web developer and often think that I could jump ship and become a freelance developer. However, I also know that when someone sends me an unsolicited email offering a service, I almost always ignore it. How can someone start offering a freelance service without having their offers ignored?

Elana Fine : There is a huge void in the local market for development talent, though I wouldn’t suggest sending unsolicited emails. Instead, you could make a name for yourself quickly by taking on some small projects for local startups (even if for equity at first).  The startup community is close-knit and likely to make referrals for you if you do a good job.  Announce yourself at a D.C. Tech Meetup, local FB community or other events and you might be on your way!

Q. I recently read that one of the biggest mistakes a startup can make is asking for too much money. How can entrepreneurs zero in on the right amount of funding to ask for? Should you ask for the amount that you need or the average amount a particular firm usually invests?

Elana Fine : It is a delicate balance to find the right amount, but it does lend to your credibility as an entrepreneur.  Different companies will have different funding requirements, so I wouldn’t go for an average.  You need to target the firms based on whether they write checks in the range you need.  If you need $10M, don’t go to a VC that focuses on $3-$5M. I’d make two recommendations. First, you need a solid financial model that credibly factors in R&D, sales and marketing and other expenses (low on salaries!). Once you figure out the best case, figure out the worst case and plan for that scenario. Think about how you can raise money in tranches, receiving the 2nd tranche after you have hit some performance milestones.  Second, make sure you are approaching VCs that invest in your sector, stage and dollar amounts. Don’t waste your time if there is not a good fit.

Q. What is your opinion on using crowdfunding platforms such as Smallknot and Kickstarter as a way to fund small businesses? Is there anything small business owners should be mindful of?

Elana Fine : I think Kickstarter and other crowdfunding platforms are a viable alternative for bringing new products to market, but I’d suggest learning the ropes before engaging.  Each platform has its own limitations and learning curve.  You could spend a lot of time on a Kickstarter campaign and never get close to reaching your goal. I’d be sure to pursue other funding alternatives in addition to crowdfunding.  You need to be thinking about your next move after you fund the initial project – what will you do next to build a business? How will you fund your next steps?

cupidscup-033012-185_hr1Elana Fine was appointed Managing Director of the Dingman Center in July 2012, after joining the team in 2010 as Director of Venture Investments. As Managing Director, Elana’s primary focus is leading the Dingman Center in support of its mission and strategic plan. Key responsibilities include oversight of our student venture incubator, Dingman Center Angels investor network, business competitions, and technology commercialization efforts.

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Business Rx Entrepreneur Q&A with Elana Fine – Part 5

Elana Fine, Managing Director of the Dingman Center recently participated in a live chat with the Capital Business section of the Washington Post for their Business Rx column. Elana answered questions from regional entrepreneurs on improving and starting a business. This post features some of the questions from the live chat. Follow the Dingman Center’s Facebook Page and Twitter Page for information on the next live chat and other Dingman Center news and events:

Q. How do you think small businesses should use advertising to help sales? What are new and efficient opportunities?

Elana Fine: Depending on your business, online advertising can be an inexpensive and somewhat effective tool to build brand awareness to a target group of customers. Advertising platforms are sophisticated in their ability to use customer behavior for ad placement. However, you get what you pay for — you are still focused on customers that might not be looking for the product you are selling. Small businesses might be better served by lead generation platforms that might better connect you with potential customers, even though you may have to give them a higher percentage of your revenue. If you are brick and mortar — focus on promotions that will drive foot traffic.

Q. I am looking to open a small restaurant, and I am looking to consider my revenue before I can decide what costs I can incur. How should I calculate anticipated revenue for my restaurant?

Elana Fine: This is a tough one to answer in just a few sentences as it really depends on a number of factors. Start building your model based on expected traffic, expected revenue per customer based on price points (is this fast food or sit-down, low-end or high-end?), throughput of customers per meal (are you open for breakfast, lunch or dinner? etc.) You also need to forecast how long it will take for traffic to ramp up and how much it will cost to drive traffic. Also, think through the mix of new customers and repeat ones. Is this something people will eat once a week or once a month? You also need to think through the ongoing expenses — once you build out the space, you’ll still have food expense, which can be costly. Since you can’t store most food inventory for very long, you have to figure out a sophisticated approach to forecasting demand. So … you have a lot of questions to ask yourself.

Q. I want to start a business but not sure in what industry — my passion is sweets (candy/cupcakes/chocolate), but not sure if this can be profitable enough to sustain. Any suggestions?

Elana Fine: There are certainly a lot of options out there for sweet tooth’s — so clearly there is a business model to be found. The issue will be finding a niche for yourself among the many cupcake companies. The takeaway from the proliferation of cupcake and hamburger chains has been that people are willing to pay for high-end treats. If we are going to eat “unhealthy,” we want to do it right. This is also part of an experience — so creating a unique experience for buying candy, cupcakes, chocolate or all three is part of the model just as much as the products themselves. Look at what has been successful among brands like Georgetown Cupcake, Pinkberry and Elevation Burger. Think about what they have done well and where there might be additional opportunities that their current product lines don’t address.

Q. It would seem to me that the answer is almost right in front of this writer: If you want to have a sweets shop, you really need to get into some bakery that specializes in this to get the inside experience of how this business runs (i.e., store size, ingredients order, recipe development, etc.).

Elana Fine: Yes, get smart and educate yourself. Learning from others’ successes and mistakes is better, faster and cheaper than learning from your own.

Q. How much of my savings should I put up for starting a solo PR agency serving medical, dental and other health care professionals? I can’t borrow because of an ongoing foreclosure. I have savings, but I’m not sure how much to tap.

Elana Fine: Before investing your entire nest egg, think about how you can test the market for your services. Talk to health care professionals first and understand their current demand, how much they will be willing to pay for a retainer and what kind of pilot arrangement they’d be willing to commit to. Understand your competition — are they using other providers (which would require switching costs) or are they not engaging any providers (which might mean a longer sales cycle because they don’t have a budget)? Try to forecast when you might line up some initial paying clients and when you will have enough for the business to be sustainable. If you don’t have enough runway in your savings, you may need to think about initially consulting as part of a group or on the side before you fully commit.

Q. For tech start-ups, what are your thoughts on raising seed funding via crowdfunding (i.e., Kickstarter)? Will this scare away formal forms of financing down the road (e.g., venture capital)? If so, how should entrepreneurs address that?

Elana Fine: VC firms will need to be open minded about crowdsourced funding because of its increasing popularity on sites such as Angel List. These sites also give VCs insight into deal flow and help build future pipeline of early stage deals. Entrepreneurs do need to be aware of their capitalization and careful about having too many small investors that might cause problems in later rounds. I think crowdfunding can be a helpful substitute to a friends and family round—to help fund development so you can test the market. Beyond that, I think it is important to really know your investors and what they can bring to the table in exchange for equity. Angel investing is very risky even for the most sophisticated investors, so the diligence really needs to go both ways.

cupidscup-033012-185_hr1Elana Fine was appointed Managing Director of the Dingman Center in July 2012, after joining the team in 2010 as Director of Venture Investments. As Managing Director, Elana’s primary focus is leading the Dingman Center in support of its mission and strategic plan. Key responsibilities include oversight of our student venture incubator, Dingman Center Angels investor network, business competitions, and technology

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