CafeMom Mops Up $5 Million In Funding

“Moms are much more than a niche,” explained a press release.  “There are 40 million American moms with kids at home, they control 80% of household spending, and they are the primary customer for leading consumer brands across categories.  With more than 65 million pageviews and 1.7 million unique visits in July (up from 23 million PV and 750,000 UV at the end of Q1), CafeMom is already a leading destination on the web for mothers.”

And there you have it: those statistics answer the objections I usually raise to these types of stories.  Toss in a few high-profile advertisers – Playskool, Disney, and General Mills, for example – and we’re all set.

Dan Nova, a managing general partner at Highland Capital Partners, stated, “We are delighted to invest in CafeMom to rapidly grow the Company’s traffic and revenues,” and you can’t blame the guy.  Highland Capital participated in Metacafe’s recent $30 million financing round, by the way, so CafeMom would appear to have its foot stuck in the door of a very wealthy firm.

Also, VentureBeat’s Matt Marshall notes, “Women-oriented sites are experiencing robust growth . . . suggesting this is a good a time as any for the company to get a second wind.”

I am not, of course, implying that anything illegal occurred here – Local.com put out a press release on the matter that explains all the relevant details.  Furthermore, I have no desire to jump to conclusions after the mistakes that were made concerning the Hearst sell-off.  This move does seem odd, though, to a “financially inexperienced” person like me.

In any event, the release explains, “The gross proceeds . . . are expected to be used for acquisitions, to expand direct sales channel development, to protect the company’s growing intellectual property portfolio, and for general working capital.”

Then there’s a statement saying, “In connection with the sale of common stock the company also issued to the investors warrants to purchase up to 471,386 additional shares of the company’s common stock at a price of $7.89, exercisable beginning February 1, 2008 and for a period of five years thereafter; and up to 471,386 additional shares of the company’s common stock at a price of $9.26, exercisable beginning February 1, 2008 and for a period of six years thereafter.”

Again – odd.  But Search Engine Journal’s Loren Baker doesn’t bat an eye, and instead goes on to note other recent Local.com activity; just a couple of weeks ago, the company acquired PremierGuide.

Not too long ago, Redfin was fined $50,000 by the Northwest Multiple Listing Service; many onlookers saw this as a way of silencing Redfin’s honest (and therefore sometimes less-than-complimentary) property reviews, and felt rather bad for the company.  That’s no longer necessary.

“We expect this to be our last round of venture financing,” announced Glenn Kelman, Redfin’s CEO, in a press release.  The release went on to provide some corporate background information (though it did steer clear of the whole NWMLS mess).

“Since Redfin’s last round of financing in May 2006, the company has completed more than $350 million in real estate transactions, saved its home-buying customers nearly $6 million in commissions, increased revenues by more than 2,000 percent, expanded into four new markets, and been featured on ‘60 Minutes.’”  That’s pretty impressive.

And now a few more people will be able to experience that “impressiveness,” as Redfin just launched its service in the D.C. area; that means its area of coverage now includes Massachusetts, Maryland, Washington, California, Virginia, and our nation’s capital.  Everyone else will have to wait, but with a fresh $12 million in Redin’s pockets, the delay might not last long.

Hat tip to the Seattle Post-Intelligencer’s John Cook.

Dude, Dell’s Getting Sued

Cuomo dropped by Albany County Supreme Court to file a lawsuit against Dell, one of the biggest computer manufacturers in the world. The suit blasted Dell for using a variety of deceptive business practices on an ongoing basis.

]]> http://www.webpronews.com/dude-dells-getting-sued-2007-05/feed 7 http://www.webpronews.com/interview-with-phil-hollows-founder-of-feedblitz-2006-07 http://www.webpronews.com/interview-with-phil-hollows-founder-of-feedblitz-2006-07#comments Thu, 20 Jul 2006 17:09:47 +0000 Lee Odden http://www.webpronews.com/?p=30460 Online Marketing Blog deals with the marketing of blogs, I thought adding some interviews with people involved with blog marketing would be of interest to our fast growing audience of readers. ]]> And now for something completely different. Since so much of what’s covered here on Online Marketing Blog deals with the marketing of blogs, I thought adding some interviews with people involved with blog marketing would be of interest to our fast growing audience of readers.

Today’s interview is with Phil Hollows, Founder and CEO of the popular RSS to email service, FeedBlitz. With an active circulation of 682,330 and 53,955 active feeds, FeedBlitz is likely the most popular RSS to email service available. I had a chance to preview some features of FeedBlitz a while back and have been using it personally and with our PR and blog consulting clients ever since. Recently Phil took FeedBlitz on as a full time gig, has secured investor financing and is hiring. What better time than now to check in with Phil for a peek behind the FeedBlitz curtain.

Tell us about your background. How did you get involved with blogs, RSS and starting FeedBlitz?

I first started blogging when I was VP marketing for an enterprise security software company, OpenService, about a couple of years ago. I was looking for a way to reach our prospects and customers more informally and more frequently than the traditional monthly newsletter or press release permitted. Setting up a blog was the obvious answer, and it worked well. The blog let us build a closer and more trusted relationship with our market, helped establish thought leadership, and brought good SEO benefits – carefully written, good relevant blog posts can often appear on SERPs relevant to the business.

So the blog was great, but I wanted too get email updates going to push the content out to our readers. RSS was part of the blog, of course, but I wanted to reach as wide an audience as possible. RSS is tech heavy, unfamiliar to many and potentially user hostile, and I wanted a more familiar, comfortable way to reach our readers. In other words, email. Plus we had a five figure house list already receiving monthly email newsletters from us, so it made sense to get the blog to them using email since they were already used to hearing from us that way.

I signed up with Bloglet, which was the market leader at the time. It worked fine, But then I signed up with FeedBurner, and Bloglet didn’t like FeedBurner’s feeds. Say what? Support messages bounced and all of a sudden my pet project was at risk from an unsupported service that wasn’t playing nicely with my other systems.

I wasn’t about to let that happen. After extensive Googling and asking around I found a few alternatives, but none of them had what I really liked about Bloglet – it’s publisher features. I needed a service that let me manage my subscribers, and there was nothing else around that could match these criteria.

This was the perfect opportunity for me. I saw the complaints about Bloglet online, and the market gap that nobody was filling. And, as luck would have it, from some experimental work I’d done at home in the late nineties, I happened to have an embryonic email marketing system partially written. I figured that all I had to do was dust it off, get it fed from an RSS feed and I’d be done, and maybe others would be interested in using it too.

Well, the work was of course much more complex than I’d originally thought, that’s for sure. But that was the beginning of the project that became FeedBlitz. Many, many late nights later, once it was more or less ready, there still weren’t any products filling the gap. So I mailed a few people who had been public about their dissatisfaction with Bloglet, invited them to check it out, and it grew rapidly from there.

I should let you know, the first SEO service I started in 1998 was called Net-Blitz. So naturally I like the name you’ve picked. How did you arrive at the name FeedBlitz?

Really? It’s a small world I’d owned the domain blitrzware.com for a while (but I let it go before FeedBlitz – drat!). As I was searching for a domain name all of the obvious ones had gone, and then I remembered Blitzware. FeedBlitz was available, I liked the “lightning” connotation of brightness, intensity, speed, and it hearkened back to the Blitzware name I’d used before. Perfect!

So now you have moved on from OpenService, gained some financial backing and are taking FeedBlitz full time. What are your plans for FeedBlitz? Feature enhancments? Where do you see FeedBlitz in the next year or two?

1) FeedBlitz will remain the Internet’s preeminent RSS to email service. We’ll continue to add more value and more capabilities, more easily delivered for publishers.

2) We will set the bar higher and higher in terms of the benefits we deliver for both our standard and premium services.

3) We will innovate and automate enterprise-class messaging and communications using RSS and “Web 2″ for all.

As I look at the RSS to mail market today, one of the core strategic decisions I have to take is deciding what we’re not going to do, because the realm of possibilities is so large. It boils down to this. Our mission is messaging using RSS and related technologies to underpin what we deliver. And our philosophy is to make your messaging work with whatever services you want to use. So you will see us enabling greater and simpler integration with third party services, instead of adding features or services that are already successful and prevalent in the broader market. We will stay focused, in other words. We’ll also make it easy for third parties to integrate FeedBlitz into their sites and services.

The next three months is going to see significant innovation from us on all these fronts. There will also be enhancements that make more use of content in a typical RSS feed. The FeedBlitz blog is the place to track new features and announcements. We’re also using some of our investment on a professionally redesigned web site that will be radically easier to use, as well as being easier on the eye.

FeedBlitz has become a very popular RSS to email service. How did you market it? What marketing plans do you have in the future?

Thanks! There were really two strategies at work. One was to make the most of the market opportunity created by Bloglet, so we made it utterly painless to migrate subscribers out of Bloglet and into FeedBlitz. (We’re an open system too, so publishers can grab their readers at any time).

Secondly, we worked directly with a few key bloggers who seemed to want the services we offered. We paid attention to them, used their ideas to improve the service, and so they’d blog about us and recommend us to others.

As a result, our initial success and work integrating FeedBlitz metrics with FeedBurner enabled FeedBlitz to be set up as FeedBurner’s email engine of choice last Fall. FeedBurner effectively became a channel for us, and that’s still the case for publishers wanting more sophisticated capabilities and customization.

Together, these three approaches delivered a phenomenal word of mouth / viral effect that just keeps on growing, with time and customer care being our #1 investments.

Going forward, we’ll be making the most of our partnerships and innovation to keep momentum up.

When we check our RSS stats, about 1/3 are from FeedBlitz, a 1/3 are from Bloglines and the rest from MyYahoo and other feed readers. Is that common for your subscribers?

It really varies. The FeedBlitz News blog’s readership is over 95% by mail. The more RSS-aware your readers are, the smaller the number of email subscribers you should expect to get. So, for example, a tech heavy blog talking to a tech savvy audience might see incremental circulation of order 10%. On the other hand, a blog talking to consumers about a hobby or family matters might get over 50% of their readership from FeedBlitz. But regardless of your content, everyone will see incremental readership because now you’re giving your readers choices about how to read your content.

Enabling readers to subscribe to your content using email takes advantage of a familiar medium. From a publisher perspective, it also makes it personal – you know the addresses of most of your subscribers. Those are all potential leads. RSS aggregators can’t tell you who is reading your content, so from a marketing and sales process, aggregator circulation is a lot less valuable than an equivalent email circulation count.

For the most part, FeedBlitz is used to convert blog posts that are published in a RSS feed to Email. What other applications and uses are you seeing?

The beauty of RSS and related technologies such as OPML reading lists is that FeedBlitz just works. As “Web 2.0″ grows, FeedBlitz will be able to deliver these innovative applications directly to users inboxes.

Indeed, many sites and systems are publishing RSS feeds, beyond blog posts. We’re seeing email updates of eBay auctions. People are using FeedBlitz to deliver their local weather forecast to their inbox every morning. Using FeedBlitz to track tags in, say, Technorati is a great way to automatically gather market intelligence about what people are saying about you (and your competition). We’re seeing users replace listservers and simple discussion groups with blogs and FeedBlitz – the content is richer, and less prone to spamming. And it sends blog updates too, of course.

We’re also seeing more traditional corporate marketers realizing that a blog coupled with FeedBlitz is a simple yet powerful combination that can do the job of much more expensive systems – but for much less time invested and at a better price point. It’s for these users that we are the only RSS to mail service that offers a blog-based autoresponder capability, for example, as well as the recently introduced “newsflash” broadcast option which sends updates to your readership that are NOT in an RSS feed.

As we move forward and enable even simper integration of FeedBlitz with other services, I expect our publishers will produce a swath of innovative applications that will incorporate FeedBlitz, and I expect that you will see much more FeedBlitz in places other than your inbox.

Please explain what’s behind FeedAdvisor and what has been the response to it? Any plans on making it into an open blog/RSS feed search tool?

FeedAdvisor is a new spin on searching and ranking blogs. It’s like Amazon.com’s feature that recommends books to you based on “People who bought this book also bought.” So FeedAdvisor looks at subscription patterns and says “People who subscribe to your feeds also subscribe to .”

FeedAdvisor works because of the subscription patterns it detects. It’s time is yet to come, I believe, but Tom Evslin (our investor) and I have had some very interesting conversations about how it will grow. It can’t become just another search engine because (a) there are a lot of these about anyway, (b) generic search doesn’t have the subscription information that FeedAdvisor uses to analyze the data, so in fact it won’t work. Amazon’s feature is the same; they work from their sales patterns, and don’t incorporate (say) Barnes & Nobles’. As FeedBlitz grows and more users join, it will become increasingly comprehensive, and we will be able to build out the information in it to augment our other services.

Starting FeedBlitz and working with thousands of subscribers must have exposed you to some interesting and innovative blog and RSS marketing trends. What insights can you provide regarding marketing via RSS? What aspects of RSS marketing should companies be aware of most?

I think the thing to think about is not “RSS Marketing” but “RSS-powered marketing.” If you position programs based solely on content delivered to or in RSS then your return will be low and you may be disappointed unless you’re dealing with a very technical audience for whom RSS is old hat. For example, many are disappointed by ads placed purely in RSS feeds as they perform relatively poorly compared to other media. Targeting RSS as a niche medium isn’t the path to success.

On the other hand, if you build, augment or replace your marketing programs and technologies with services and products that use RSS as the underlying data mechanism, and simply treat your pure RSS feed as an integrated part of (as opposed to distinct from) your web marketing, you’ll do very well. Why? Not necessarily because it’s RSS per se, but because technologies that have RSS at their core are much more flexible, easier to use and just as capable – if not more so – then their older online or desktop cousins. For example, you can ditch your expensive content management system for a blogging platform. It’s faster, cheaper and probably better for most of us. Add FeedBlitz and your newsletter production is painless, more frequent, and automatically linked back to your site. Plus it’s a boon or search engines because now your content is changing rapidly and, thanks to trackbacks and comments, relevant blogs get a lot of high value link love, with other people – your readers – doing all the work for you.

The power of these technologies is illustrated by the fact that corporations are now building large, complex and content rich web sites solely on blogging platforms – the efficiency gains alone make this approach worthwhile for a lot of non-data driven content. That’s a clear trend that will only accelerate.

In the end, I believe RSS will disappear into the woodwork, just as HTTP and SSL and SMTP have now. It will become the glue that enables dynamic web sites and content to link together seamlessly. It’s the applications that use RSS that are key, not RSS itself. And the same is true for marketers. Ask yourself how you can take advantage of RSS to reach a more technically savvy audience or to automate otherwise tedious and repetitive tasks (e.g. newsletter production). RSS-powered automation and services enables us to spend more time doing marketing, and less time (and money) doing production.

What are some of your favorite business blogs and blogs about blogging?

I believe in actionable, relevant and practical solutions to practical problems. So of the well known blogs, I follow Fred Wilson, my investor Tom Evslin, Chris Pirillo, TechCrunch, Steve Rubel’s Micropersuasion, Guy Kawaski and Seth Goldstein (all by FeedBlitz of course). At the enterprise level I think Charlie Wood is on to something with his work in salesforce.com and RSS. I use Technorati and Google blog search for market and competitive intelligence.

Ssshhh, don’t tell anyone I said this, but I find most blogs about blogging to be very cliquey and practically irrelevant; I don’t read them. I don’t care about this video blogger or that format war or whoever such and such an A-lister has annoyed this week. It’s all too incestuous and irrelevant for me.

What 3 tips can you provide to bloggers that are considering or using a RSS to email service?

1) Why not? You’ll get 10-50% circulation boost, push content delivery, better SERP placement, gain lead information, develop metrics, all automatically.

2) Customize your emails to match your branding and messaging, and enable subscriber tracking metrics to measure your activity and effectiveness.

3) Don’t wait. It’s fundamentally free, takes only a minute or so to set up, just do it.

Some excellent insight and advice. Thanks Phil!

Lee Odden is President and Founder of
TopRank Online Marketing, specializing in organic SEO, blog
marketing and online public relations. He’s been cited as a search
marketing expert by publications including U.S. News & World Report and
The Economist and has implemented successful search marketing programs
with top BtoB companies of all sizes. Odden shares his marketing
expertise at Online Marketing Blog offering
daily news, interviews and best practices.

If the business being sold is very profitable, the selling price will likely reflect a significant amount of goodwill which can be very difficult to finance.

If the business being sold is not making money, lenders can be difficult to find even if the underlying assets being acquired are worth substantially more than the purchase price.

Business acquisition loans, or change of control financing situations, can be extremely varied from case to case.

That being said, here are the major challenges you’ll typically have to overcome to secure a small business acquisition loan.

Financing Goodwill

The definition of goodwill is the sale price minus the resale or liquidation value of business assets after any debts owing on the assets are paid off. It represents the future profit the business is expected to generate beyond the current value of the assets.

Most lenders have no interest in financing goodwill.

This effectively increases the amount of the down payment required to complete the sale and/or the acquisition of some financing from the vendor in the form of a vendor loan.

Vendor support and Vendor loans are a very common elements in the sale of a small business.

If they are not initially present in the conditions of sale, you may want to ask the vendor if they would consider providing support and financing.

There are some excellent reasons why asking the question could be well worth your time.

In order to receive the maximum possible sale price, which likely involves some amount of goodwill, the vendor will agree to finance part of the sale by allowing the buyer to pay a portion of the sale price over a defined period of time within a structured payment schedule.

The vendor may also offer transition assistance for a period of time to make sure the transition period is seamless.

The combination of support and financing by the vendor creates a positive vested interest whereby it is in the vendor’s best interest to help the buyer successfully transition all aspects of ownership and operations.

Failure to do so could result in the vendor not getting all the proceeds of sale in the future in the event the business were to suffer or fail under new ownership.

This is usually a very appealing aspect to potential lenders as the risk of loss due to transition is greatly reduced.

This speaks directly to the next financing challenge.

Business Transition Risk

Will the new owner be able to run the business as well as the previous owner? Will the customers still do business with the new owner? Did the previous owner possess a specific skill set that will be difficult to replicate or replace? Will the key employees remain with the company after the sale?

A lender must be confident that the business can successfully continue at no worse than the current level of performance. There usually needs to be a buffer built into the financial projections for changeover lags that can occur.

At the same time, many buyers will purchase a business because they believe there is substantial growth available which they think they can take advantage of.

The key is convincing the lender of the growth potential and your ability to achieve superior results.

Asset Sale Versus Share Sale

For tax purposes, many sellers want to sell the shares of their business.

However, by doing so, any outstanding and potential future liability related to the going concern business will fall at the feet of the buyer unless othewise indicated in the purchase and sale agreement.

Because potential business liability is a difficult thing to evaluate, there can be a higher perceived risk when considering a small business acquisition loan application related to a share purchase.

Market Risk

Is the business in a growing, mature, or declining market segment? How does the business fit into the competitive dynamics of the market and will a change in control strengthen or weaken its competitive position?

A lender needs to be confident that the business can be successful for at least the period the business acquisition loan will be outstanding.

This is important for two reasons. First, a sustained cash flow will obviously allow a smoother process of repayment. Second, a strong going concern business has a higher probability of resale.

If an unforeseen event causes the owner to no longer be able to carry on the business, the lender will have confidence that the business can still generate enough profit from resale to retire the outstanding debt.

Localized markets are much easier for a lender or investor to assess than a business selling to a broader geographic reach. Area based lenders may also have some working knowledge of the particular business and how prominent it is in the local market.

Personal Net Worth

Most business acquisition loans require the buyer to be able to invest at least a third of the total purchase price in cash with a remaining tangible net worth at least equal to the remaining value of the loan.

Statistics show that over leveraged companies are more prone to suffer financial duress and default on their business acquisition loan commitments.

The larger the amount of the business acquisition loan required, the more likely the probability of default.

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And while most people would universally agree that lower cost debt is better than higher cost debt, both end up having their place and purpose.

Low cost debt financing is reserved for low risk applications.

As the risk goes up, so does the cost of borrowing.

Pretty basic, right?

There is a twist however.

Most of the lower cost capital available for small business financing is based on personal net worth, personal credit, and income sources outside of the business.

So even though a business application of financing could be considered high risk, the business owner or manager may still be able to secure low interest rates based on their personal assets and income.

This creates the illusion that low interest rates are available for all small business applications, regardless of their size and relative risk.

Here’s where the trap comes in.

As the business grows, it will use up all the low cost financing leveraged from personal assets and will need to factor in higher cost small business financing sources to fund the capital requirements of the business.

At this point, the risk of the underlying business now starts to get reflected in the interest rates.

The problem is that hardly anyone ever plans for this to happen and the business leap frogs from low interest rate personal loans disguised as business loans into high interest rate personal credit cards.

If the business achieves short term profitability, there can still be low and medium range interest rate products available to fund growth.

But if the business startup period drags on, which is not at all uncommon, higher cost personal financing can quickly become the only capital available to cover short term losses and/or larger than expected start up costs.

To avoid falling into the low interest rate trap, consider the following steps when constructing your small business financing strategy.

Be Ultra Conservative When Estimating Your Capital Requirements.

When you’re trying to start up a business, its all about being optimistic and getting things going so that you can make all kinds of money. Right?

In the excitement of planning a new venture its easy to delude yourself as to what the business start up is realistically going to cost to get going and become profitable.

A better approach is to be conservative with your small business financing requirements, factoring in all probable costs in more detail to increase accuracy.

Even if you think you’re being ultra conservative with your capital estimates, add another 20% to whatever number you come up with as a contingency fund.

Things can and will go wrong.

The perfect startup scenario is about the same odds as winning a lottery ticket, so you might as well go play your lucky numbers instead of banking on an overly aggressive small business financing plan.

Understand The Limits and Criteria For Low Interest Rate Financing.

For startups, low interest rate financing comes from personal credit and government sponsored programs.

In either case, there are limits as to how much capital you can acquire.

The limits for government programs are normally well defined. Just don’t automatically assume that you qualify for the maximum amount.

Personal limits are going to be based on a combination of your credit score, your liquidat-ible personal assets, and the cash flow available to service the debt.

Short term profitability in the business will provide you with greater access to small business financing, but at a slightly higher interest rate compared to low cost personal financing.

The interest cost of incremental capital will continue to rise if the additional debt is not matched by corresponding amount of personal or business equity.

Factor In The True Cost Of Borrowing

When creating your small business financing projections, make sure that you accurately estimate your cost of borrowed capital.

If your low cost money sources are not sufficient to cover off your capital requirements, then factor in higher cost sources available to you and see if the cash flow projections still work.

There is no value in creating an unrealistic cash flow projection.

It can only lead to poor business decisions which will not keep you in business very long.

If the cash flow numbers don’t add up, avoid the temptation to reduce your capital requirements or lower the average cost of capital just to make the numbers work.

The reality of good numbers may tell you not to proceed with your plans, which could very well be the best business decision you ever make.

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Where do you find money for stock? What can you do to improve cashflow? These are just some of the questions you’ll face. Read on for a few ideas that helped me in my first year.

Insist on Deposits (To Cover your Expenses)

Deposits are a great way to finance your company without ever approaching a bank or a venture capitalist.

Especially in the service industry, it’s very useful to ask for a percentage of a job as a deposit. I always make sure that this amount covers ALL of my hard costs and that it’s paid before any work is done.

Hard costs are costs that you definitely have to pay for the project. For example, your time isn’t a hard cost but materials and contractors needed for the job are.

In some cases, this isn’t practical because it forms a large part of the entire purchase amount, but a small deposit in these instances could still prove very useful.

Offer Monthly Payment Terms to Improve your Cashflow

Customers always appreciate flexible payment terms, so offering different monthly payment options can help you get more accepted quotes as well as improve your cashflow.

It’s important if you decide to offer payment terms to set an effective debt-collection strategy in place. Mine is to simply get my bookkeeper to handle it. They’re often asked to do this sort of thing and tend to be quite good at sending nasty, effective letters of demand.

To cover the expenses of debt collection, it may prove useful for you to add 10% to the quote if a client requests payment terms. This is a very commonly accepted practice and shouldn’t hurt your sales at all.

Re-Sell Other People’s Services

Find companies that offer complimentary services to your own and work out some sort of reseller deal with them. Normally you can arrange this so that your clients never even know that it’s not you providing the service at the end of the day.

The beauty of doing this is that you can offer a great service without investing large amounts of money in having your own equipment, stock & staff. The downside is that you seldom have any control over the final product.

Pay Employees on a Per-Contract Basis

Paying employees for the work they’ve done is a great way to ensure that you don’t end up liquidating your business around the quiet season. It also helps your employees (or contractors) feel motivated to do what is required of them and to do it well.

I recommend checking with your local authorities as to how to structure this. The easiest way is often to have a standard contract drawn up which you change on a per-project basis. This allows you to end the relationship with your contractor as soon as they stop performing. It also allows contractors to move on once they feel they’ve out-grown your company.

I usually include my contractors’ fees in the deposit so I know that if the deal falls through, at least they’ve been paid.

Use Credit Cards as Bridging Capital

Credit cards are a great way to finance a small company, but you need to be careful that you don’t use them for personal or unnecessary purchases.

As long as you keep them paid-up and in-check, you can expect the following benefits from your credit cards:

- Get up to 60 days interest-free!

- The more cards you have, the easier it is to get more.

- Get rewarded for using them.

The biggest problem with credit cards is their high-interest but, as long as you pay the full amount within the interest-free period, they’re MUCH cheaper than any other form of finance!

Running a business with little or no capital is difficult but not impossible. Start using these ideas in your business today and watch it grow!

Norio De Sousa runs a web site, www.small-business-hub.co.za, where you can find more information on starting a small business, drawing up a business plan, marketing your company & more.

As your start-up matures, obtaining second- or even third-round funding may allow your business to expand and grow into new opportunities identified after your business was established. If your product or service has proven itself in the marketplace, you may be a candidate for an additional round of funding.

Some possible uses of post start-up funding include:

Penetration of new markets, either by industry or geographic location

Development of new products or services that compliment your key lines of business

Acquisition of competitors, staff and/or facility expansion, or new equipment

Damage Control

If your company is struggling to make ends meet, post start-up financing is not an effective way to address red ink.

Consider other methods of debt management such as refinancing, streamlining systems of production, and bootstrapping before looking for additional funding. Investors will not be interested in extending additional funds to companies that have not yet established themselves firmly in the marketplace.

Identifying Post Start-Up Funding Sources

The best source for post start-up funding may be your original investment partner. However, sometimes asking your investor-partner for additional funds can be a lot like asking your parents for a raise in your allowance. You’re going to have to really prove a need for it, and even then, your original funding source may have woke up on the wrong side of the financial plan.

Should this prove to be the case, there are additional sources to consider, including:

Lending institutions (banks)

Venture capital firms

New private investors

Other professional service providers within your core management team

If you developed a list of potential investment partners prior to start-up, renew your contact with these individuals. By telephone or letter, convey the success your product or service has experienced, as well as your purpose for the post start-up funding. With a solid track record in hand, you may be surprised to find how many potential second-round investment partners you have.

In addition, you’ll be in a stronger position during the negotiation process, meaning you won’t have to give up as much control to achieve your desired result.

Tips For Maximizing Post Start-Up Funding

Don’t commingle funds. Avoid falling into the trap of using new funds to level the books. If you obtained additional funding for expansion, do not deviate from the plan. Address any cash flow problems or existing debt service independently from your company’s expansion needs.

Learn from past mistakes. Undoubtedly, your company’s start-up phase was a learning experience unlike any other. Recall the lessons learned from handling your initial start-up capital. Now that you’ve established a strong working relationship, call in your management team to gather additional opinions on the best way to disburse funds on each project.

Look for new opportunities along the way. As you implement your expansion plan, be on the lookout for ways to streamline and maximize the results of your efforts. Don’t be afraid to upgrade your plan; remember that your business plan should be a “living” document, able to flex as the status of your market and the general economy change.

Jim D. Ray is a seasoned entrepreneur and president of Web Presence, a national web design firm exclusively serving the small business market sector. To learn more, or for a free quote for your own web site, visit the Web Presence web site at: http://www.web-presence.net.

One problem women entrepreneurs often encounter is where to find funding for their business venture. Check out the following list for a few ideas.

Job Revenue: That’s right. Don’t quit that day job just yet. Many women start their home business part time while still working at a full time outside job.

Personal Savings: Many women home business owners look to finance their venture with personal bank account. Or other personal resources such as savings bonds, stock, etc.

Credit Cards: More women than you might think fund their startup with their credit cards. This is risky, but a quick way to fund your business.

Friends and Family: Many women entrepreneurs look to friends and family when starting a new business. Often, money is loaned interest free, which is to the business owners best advantage.

Banks, Credit Unions: Prepare a good business proposal. The bank or credit union might consider you a good loan prospect and fund your business. This might be a long shot because many of these institutions will not consider the business owner unless they have a proven track record or an established business.

Garage Sales: Start spring cleaning. Clear out those attics, basements, closets, of all unwanted items. Garage sale profits might easily fund your complete startup cost.

Ebay Profits: Register with Ebay, the online auction site. Your trash could easily be someone’s treasure. Heh, you might even consider starting a business selling items on Ebay!

More Resources For Funding Your Home Business!
Free Money and Help for Women Entrepreneurs
Over 5,000 Government Sources Of Grants, Loans,
Venture Capital, Management, Technical Assistance
and Marketing Help.

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BB Lee is editor/publisher of SmallBizBits Newsletter
http://www.smallbizbitsnews.com/
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