Common culprits for failure include undercapitalization,cash-flow crises, and overexpansion. Then of course there are a host of external factors that nobody can predict—let alone adequately plan for—such as volatile credit markets and unstable economic cycles.

To gain insight into specific practices that enable small companies to keep going and growing even during difficult times, BusinessWeek profiled three entrepreneurs who have reached benchmarks in their companies’ life cycles: three years, five years, and 10 years. Their stories and strategies follow.

Year Three
BYD Ranch & Kennel
Bryan, Tex.
Founded 2007

After 20 years doing business administration for a number of small businesses, Miriam Rieck decided to go out on her own and open a dog and horse boarding kennel in Bryan, Tex. In 2007 Rieck and her husband plunked down $100,000 from their savings to purchase a 45-acre ranch and built BYD Ranch & Kennel’s facilities. Rieck says she differentiates it from her competition by limiting the number of runs so that she can devote more attention to the animals. The practice resonates with customers. “My clients are like an extended family and their animals are like their babies.”

Rieck says working directly under the owners of those earlier companies helped prepare her. For one, Rieck says she recognized the importance of defining boundaries between your private life and business life, a line that can often blur when you own your own business. Moreover, she says, “during the crucial first years I learned you really always need to recycle money back into your business instead of taking money out of it. A new business needs to stay fresh, especially in an industry with animals. The property can look dirty and dingy really fast. People consider their dogs like children and they want them taken care of like they are at home.” Rieck says she reinvests profits to keep her facilities in good shape. And, she says, “It’s important not to cross the line and take money meant for the business and make it your personal income.”

According to Rieck, a new small business that is customer service-based should recognize the importance of creating and deepening ties within the local community. “I always believed you should support the local community,” she says. That includes membership in a number of dog clubs and sponsoring fundraisers for the local animal shelter. “I get out there in the community and I have a good working relationship with the area veterinarians. Most of my business comes from word of mouth. “I do almost no print advertising.”

From the beginning, Rieck says she didn’t set specific benchmarks to meet each year. Instead, she set a goal to increase her client base 10% to 15% annually. In her first year in business, Rieck had 100 clients; she now has more than 300. “My ideas were simplistic; I stuck to my simple goals—nothing really grand.” Her revenue has increased accordingly: In her first year in business the firm made $17,000; during the second it hit $32,000, and Rieck says she is on pace to reach $60,000 this year.

ear Five
Space Architectural Design Firm
St. Louis
Founded 2005

When Tom Niemeier launched his firm, he planned to expand to a 20-architect office, then stop. “I had worked in a number of firms over the past 25 years and I always liked the comfort of a smaller business,” he says. Rather than rely on one type of client for revenue, early on Niemeier decided to make sure he launched a firm with a diversified clientele working on educational, corporate, health care, and hospitality projects—with residential comprising only about 10% or less of the workload. “Part of my growth strategy was to pick people who have expertise in areas that we didn’t. When we brought them in, we also brought in their client base,” he says.

In four years Space grew to 16 people (15 architects and one office manager). “We positioned ourselves so that the people we hired were already proven and had an expertise,” he says. Part of that strategy included circumscribing the firm’s growth ambitions. “We never set a time on when we wanted to get to a certain level, but once we had about 13, 14, or 15 architects we became a firm that could handle almost any size project except a mega $100 million project.”

Niemeier says another key decision was to keep his overhead lean. “Once a firm hits 25 to 30 people, then you have to bring in an accounting person, a full-time receptionist, and an office manager. You are just feeding the machine. We didn’t want to get to that point. We all like to draw and design and be part of the architecture staff; we didn’t want to just go out, play golf, and network new clients. We do that to a certain degree—but when you have 50 people that’s pretty much all you do—you are buried in managing and marketing the firm.”

When construction began to slow down in 2007 and business tapered off with the slumping economy, Niemeier tried to recalibrate and adjust to the new realities. In the past two years he says he laid off three people. He also purchased a construction company that he says “helped us lengthen our revenue on any given project. We design it and we build and manage the construction. It’s a nice source of revenue.” This year Niemeier expects revenue to reach about $1.7 million, down slightly from $1.8 million last year.

“There’s never been a moment yet that I felt I was not going to make it,” he says. “Even if we have had to cut people.”

Year 10
Resource Options
Needham, Mass.
Founded 1999

Before starting staffing provider Resource Options in 1999, Matt Carlin spent seven years as a hockey coach at Cornell and Dartmouth. After getting married, his wife, a former news anchor, and he decided that if they wanted to raise a family, they needed to change their lifestyles. For Carlin that meant trading in his travel schedule to start his own company.

Carlin says he chose the staffing business because it required a similar skill set to being a hockey coach: primarily recruiting talented people. “I would be utilizing the same methodologies and processes,” he says. He borrowed $50,000 from his father and made his first goal paying back the loan as soon as his company became profitable. He wanted to run a business that could sustain itself with two to three people.

“Each time we had success we wanted to have some more,” he says. “Initially I wanted to get to $5 million and I did that by year three. That same year Carlin says the business turned a profit and he was able to repay his father. “Then we went to $10 million, then $25 million.”

During the first year, Carlin says his biggest client that represented 10% to 15% of his receivables filed for Chapter 11 bankruptcy protection. “That was an enormous loss and a big hurdle to get over,” he says. “But what I learned from that is that I really had to do a better job of screening and qualifying our prospective clients. Not everybody is a good client and when they don’t pay their bills in a timely manner I realized we had to fire them.” Carlin says the situation also taught him “not to put all of our eggs in one basket.” Following that first-year debacle that nearly undermined the company, Carlin says he redoubled his efforts in order to bring in new business and made sure to diversify the base so that any one client wouldn’t expose the company too much.

After surviving the first year, Carlin says by the time he reached year five his biggest challenge was to keep up with growth. “We were growing so quickly, we opened branches and satellite offices. We were doubling and tripling revenue every year. We were growing faster than our projections. I did a lot of soul-searching and made some key hires in 2005, and I began to delegate more responsibility.” Carlin also invested in new technology and software to streamline processes and shore up his back office.

During the past two years the company’s lightning growth has stalled. Carlin says “we had to face the reality that we were not going to continue to double our revenue on an annual basis in a less-than-favorable economy. We are now learning to do more with less.” Resource Options has 31 full-time staffers and 850 field contractors—down from 1,200 contract positions in 2007. Carlin expects revenue to reach about $12.5 million to $13 million this year, down from $14 million last year.

Still, reaching the 10-year mark, Carlin says he realizes that owning your own business is as much a huge amount of work as it is joy. “If going into business was easy, everybody would do it.”

But he says his best lesson still comes from his days as a hockey coach. “The only way to run your business effectively is to hire people that are better than you and that’s what I think I am best at. It’s the players that win the game, not the coaches. I say hire people that are better than me and make sure those hires get in the habit of hiring people that are better than them.”

Written by Stacy Perman staff writer for BusinessWeek in New York.

Today, a myriad of firms in the business planning niche exist to capitalize on the high-speed expedition of delivering business plans. Every entrepreneur must know prior to working with a business planning consulting firm that a document of the highest caliber cannot be hurried; it takes time to digest the concept and understand the most effective approach prior to writing the content and developing a sound financial model. It is extremely important for entrepreneurs to carefully read and understand the philosophy behind every business planning consulting firm. Questions one should ask him or herself prior to retaining the company’s services include:

• How will my business plan be created and what approach is used to create it?
• Who will write my business plan and what is their experience in this field?
• What is turnaround time in completing the first draft of my business plan?
• Who will oversee my business plan (i.e. a project manager or business planning consultant)?
• Will I have fill out a questionnaire to begin the process?
• Will the company provide real-world critique and suggestions during the process?
• Does the company employ a large team of writers and financial modelers to write my plan or are a select few involved in the process?

The answers to the aforementioned questions will help the client (the entrepreneur) make an informed decision when it is time to hire. Ethos 360, for example, has founded an ideology that is based on growing and sustaining the entrepreneur. The company was formed to provide small business owners and entrepreneurs with a single point of contact to receive honest, objective answers and next-step coaching. Anyone purchasing a business plan should focus on hiring a firm that values integrity, honesty, and cultivating strong client relationships.

It is unfortunate that a lot of businesses look past the actual concept of a business, and instead focus on the end-result: a “finished” business plan and a profit. Rather than taking the time to really understand the business itself and the creator behind it, business planning companies have utilized a team model approach that is impersonalized and lacks consistency. Companies like Ethos 360, have first handedly seen and experienced the result of imperfect business planning models and their impact on not only the document, but the client. Ethos 360 has chosen to infiltrate this niche industry by ultimately putting the client first; throwing out antiquated strategies that rush the process; and leading clients forward to prepare for anticipated growth in their own business.

A business plan is more than a product or service, but a collaboration of the client and lead consultant that results in a seamless, organically crafted tool that will essentially serve as one of the most valuable documents in the origin, operational, and growth stages of a business.

He and a partner had drawn up plans for a gin, vodka and whiskey distillery in Spokane, Wash., but they struggled with the best funding options.

“Neither of us was rich,” he says. “We didn’t want to have to sell shares in the company to start with. But we both had long corporate careers, and so our 401(k) plans appealed to us.”

Poffenroth and Kent Fleischmann used their 401(k) savings, a working line of capital from a local bank and additional personal savings to fund Dry Fly Distilling in 2007.

Risking their retirement nest eggs has paid off so far: Dry Fly Distilling has garnered national and international awards, and its products are sold in 19 states and several Canadian provinces. Business doubled last year, Poffenroth says. Their 401(k) funds were converted to company stock as part of the start-up, and the stock value has doubled as the $2 million firm has grown.

FOLLOW THE CHALLENGE: 5 groups of entrepreneurs take USA TODAY’s Small Business Challenge; see video
ADVICE: Six weeks to start up your own business by Rhonda Abrams
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Relying on retirement savings to fund a business venture is a significant gamble. Only about half of small businesses survive at least five years, says the U.S. Small Business Administration. And small-business bankruptcy filings increased 44% from the third quarter of 2008 to the same quarter in 2009, according to Equifax. Further, draining or depleting retirement funds can be catastrophic financially if the money cannot be replaced.

“A small business is risky, and when you combine it with your retirement funds to launch the business, you are multiplying your risk,” says Gerri Detweiler, a personal financial adviser at Credit.com. “It’s easy to get caught up in the immediate needs of your business, but the last thing you want is to have your business fail and have nothing for retirement.”

Martin D. Hauptman, an attorney who specializes in retirement income issues, says he has two clients who invested in themselves and failed. They not only lost their businesses, they also lost their retirement savings. “One client has found a job, but the other has not and is on the verge of losing his house,” Hauptman says.

Funding sources sought

Little reliable data exist about how many entrepreneurs use retirement nest eggs to start businesses.

But business advocates and many financial firms have pushed the idea the past two years as the lagging economy and ongoing credit crunch have dried up many funding options. Last year, 39% of small-business owners said they were unable to get adequate financing, more than the 22% who said the same in August 2008, according to a 2009 year-end report by the National Small Business Association, a non-profit organization.

Prior to the housing market collapse, many entrepreneurs took out home-equity loans to provide seed capital. But that option has disappeared for most.

“Clearly, retirement assets are an untapped source of capital for many folks who are trying to start up a plan,” says Mark Davis, senior vice president at SunTrust Investment Services. “There are providers that would happily facilitate them. But I wouldn’t recommend that anybody do it to a large extent with retirement assets.”

Yet many entrepreneurs see the other funding options as risky, too.

Lenders often require loans to be collateralized with a home or other finances, says David Nilssen, co-founder of Guidant Financial Group, which helps provide small-business financing. Loans can also come with high interest rates, and the entrepreneur may have to start payments before the business even earns any money.

When Paul and Annette Cardosi purchased an existing franchise, Units Mobile Storage Franchise in Phoenix in May 2009, they decided to use their 401(k) plan savings. They converted about three-quarters of their plan into 300,000 shares of stock for the business.

“I had worked for a Fortune 500 company for 28 years and left them in 2008, and I never intended to do anything with my 401(k) plan but use it as a retirement fund — that is, until this option came about,” Paul Cardosi says.

The Cardosis had other money saved but wanted to hold onto it to run the business. When they tried to get an SBA loan, they were told they had to be in business for two years before any lender would consider them.

“It’s been a great product to sell, even in a down economy,” he says of the storage unit business. “But can I say that it is risk free? Absolutely not.”

Two ways to go

Entrepreneurs who have left their regular jobs to start a firm essentially have two options for using their 401(k)s as start-up capital. One is less complex than the other, but the more complex option can provide access to more money without fees.

The simple option is not all that different than a regular 401(k) loan.

Let’s say a lawyer or tax accountant plans a very small or single-person firm. He or she leaves a corporate job and takes the 401(k) savings from that company to the new business by establishing a 401(k) plan in that business’ name.

At that point, a traditional 401(k) loan can be taken from the new firm’s 401(k) plan. There are restrictions, though.

The entrepreneur can only borrow the lesser of 50% of savings, or $50,000. And the loan repayment plan typically lasts for five years and requires a fee of the prime interest rate plus 1% or 2%, says Robert Cheney, a financial planner at Westridge Wealth Strategies.

The small-business owner needs to have enough steady income to repay the loan. If payments can’t be made, the loan is considered in default, and taxes and an early-withdrawal penalty will apply if the 401(k) owner is not 591/2 or older.

The second, more complex option is often referred to as a ROBS loan — Rollovers as Business Start-ups, so-named by the IRS.

Entrepreneurs using this option typically need help from a firm specializing in such work.

For a fee, these firms help the new business create its own 401(k) plan and transfer funds from the owner’s existing 401(k). The retirement money is then used to purchase company stock that’s held in the new 401(k) plan. This provides the entrepreneur’s corporation with start-up capital.

Some experts believe that it is harder for a new small business to meet IRS guidelines for ROBS loans.

The wording is not clear-cut in IRS rules, but the agency seems to require an independent appraisal of a business value to ensure tax compliance. But a start-up often has trouble meeting that goal because it may have zero value, Hauptman says.

That may be one reason why ROBS are mostly used by franchisees who are buying into an existing business.

Rhino 7 Franchise Development, a franchise developer, says that about 30% of the franchisees it worked with last year opted for a 401(k) rollover. And most were low-cost franchise purchases of $150,000 or less, says Doug Schadle, CEO of Rhino 7 Franchise.

The IRS interest in ROBS loans stems from concern that individuals might try to skirt taxes and early-withdrawal penalties by establishing a business in name only to access 401(k) funds. The IRS in 2008 issued a memorandum regarding such loans.

Before an entrepreneur decides on either option, it’s a good idea to get legal and tax advice. If an IRS audit disqualifies the plan, all the assets could be subject to a penalty, says Davis at SunTrust.

The business owner also has to consider that if he hires employees, he will be responsible for adding them to the 401(k) plan under the rules for eligibility requirement, Cheney says.

Weighing the options

But even with all the complexities and risks, many entrepreneurs believe tapping a 401(k) is the best option.

“When you first start out, no one else wants to take that risk,” says David Heitner, CEO of Heits Building Services, in Hasbrouck Heights, N.J. “I looked at different banks and institutions. They give you paperwork that is inches thick, and you have to jump through hoops.”

In 2003, he decided to roll over his 401(k) plan to use about $80,000 for his cleaning company, which provides the service for restaurants and universities.

As the business has steadily grown, the value of his 401(k) stock also has increased. He says that if he were to sell the company now, he might receive about $2.5 million.

“When you utilize your own retirement money, on the surface, it may seem high risk,” Heitner says. “But the rewards can also be there.

“I was fortunate to be in an industry that was not affected by recession, and so it has been a good move for me. … I believe that the business will take care of me in the long run.”

By Christine Dugas, USA TODAY

Sharpen your pitch for angel and VC investors. The event provides a safe and relaxed environment for entrepreneurs to practice, refine and test their “elevator pitch” to a group experienced in funding their businesses and others. Receive instruction on how to fine tune your pitch along with a thorough funding analysis. Receive professional feedback from Ethos 360 team members to help you get funded.

Participants seeking small business loans receive guidance regarding debt financing, the loan process, and how to package your business materials for loan submission. Get your questions answered about locating lenders and building small business credit.

The event is free to attend, limited availability. Apply now to secure a spot. Email info@ethos360.com for an application, first come first serve.

The Ethos 360 Free Investor Pitch Clinic and Loan Clinic Event will take place between 1-4 pm on Saturday April 3rd, 2010 at our offices located at 1001 SW 5th Avenue, Suite 1100, Portland, Oregon.

If you miss this one or it’s out of you area don’t worry it’s OK. Ethos 360 will be conducting Free Investor Clinics and Loan Clinics in major markets across the United States and Canada throughout the year.

Ethos 360 is committed to giving back to the small business community and fueling entrepreneurism.

Note: We do not sign NDAs so please do not ask. Investors aren’t going to sign them, the bank isn’t going to sign one and neither are we. Thanks!

I found no shortage of options and companies that provide fantastic campaign tracking and monitoring, but Mad Mimi stood out for its easy interface that didn’t burden me with the retrospective wish that I had taken design courses in my college years. As “one of those people who can’t draw”, the simple layout and design features paired with the traditional marketing tools sold me. Or was it the cute picture of the founders of the company that are still managing operations?

The video below features Gary Levitt, CEO of Mad Mimi, describing his experiences building his business on the Ruby on Rails web framework. Enjoy!

Some of us have the itch to become an entrepreneur but have to “keep our day jobs” while we give this starting a small business idea a go. It may well be, in fact, that starting a small business part-time is the most common entrepreneurial process.

Part of succeeding at starting a small business, if you have to do so part-time, is to know your schedule and your time limitations and choose a business concept that you enjoy, have some training or expertise in and can be accomplished around your work schedule. The other alternative is to change your work schedule either with your current employer or choose an alternative employer. Starting a small business takes effort and focus as well as time.

It may be that your current job is not only time consuming but also the type of work that requires a great deal of energy, a great deal of concentration, a very regimented schedule and perhaps the responsibility that tends to have you taking your work home with you either actually or mentally. This sort of work style doesn’t lend itself well to starting a small business part-time.

Let’s look at an example of a journalist who has a successful writing and editing business from her home office. When she decided she was interested in starting a small business she had been working for many years in newspaper management. Her executive responsibilities required 70 and 80 hour work weeks and even then she took work home.

After many years of this she began to think more and more about her dream of starting a small writing business. The calling became too strong to ignore. But how was she to even think of starting a small business when she had little time, energy or focus left in her busy work week? Besides, she had to work to keep the roof over her head.

What she did to determine if starting a small business was even possible, was to sit down and begin writing her business plan along with examining her budget, deciding where she could eliminate some non-essential expenses in her life, and what she absolutely had to have to live on. She then looked for, and found, a job that not only brought in enough money to live on but freed up a lot of her daytime work week hours as well as her mental focus. She took a customer service job in a call center.

Starting a small business was going to be possible with this job where it had not been with her newspaper career for a number of reasons. It required considerably less mental acumen, it didn’t require that she take her work home with her, it was easy, the hours were flexible (she worked 3 pm to midnight Thursday through Sunday) and the dress code was highly casual. She could work all day starting her small business and then don her jeans and go into the call center in the evening. Now she’s quit that call center job and her dream of starting a small business has been fulfilled. Her business is thriving and she works at it full time.

Launching a start-up requires adaptability and sacrifice but the potential rewards include a powerful sense of accomplishment, financial success and the freedom that comes with being your own boss. Succeeding as an entrepreneur is more than worth the hard work.

Here are just a few ways to completely and utterly dig your startup into the ground, as such read them, and do what you can to avoid them.

1. Have a poorly defined value proposition. Having a poorly defined value proposition will cause you headache after headache when looking at and presenting your business model. You have to know who you are targeting, what you’re offering and why they would want to use your product or service. Who is your customer?

2. Setting unrealistic objectives in your development and deployment pipeline. No matter what you think you will not underpin the world in a year, you will not have income of €20.000.000 in year one, and you will be greatly disappointed.

3. Focusing on the bottom line instead of on the service / product you offer your customers. Your customers are your lifeblood, if they are unhappy your bottom line will suffer, if they are happy, they’ll be repeat buyers, and even help market your product. Simple as that.

4. Involving yourself and your business in ethically questionable practices. Unsavory marketing practices, overly creative accounting are just some of the things that will in the end ruin your business, don’t do them.

5. Developing a product without adequately deploying resources to market it effectively. Sure, you may have a product that could cure cancer, end world hunger, and fly humans to the moon, but if no one knows about it, no one will use it. Market it, and market it effectively.

6. Going on a spending spree. Meaning, poor cash management. You may have €250.000 that you received in the form of F3 (Friends Family Fools) Capital and you think it’s great so you pay a premium for services that could otherwise be outsourced, delivered in a more cost effective way, and get everyone a brand new Mac Pro to write e-mails on. Not a good idea.

7. Launching too early or too late. Timing is everything, think about the market, the economy, the sector you’re in, where is it now, where will it be in 3 months, 6, a year or two. You don’t have to change the world today, and launching today may lead to failure.

8. Flying solo. Think you can do everything yourself? You can’t. Involve others. Even if you’ve decided to start alone, bring in friends, talk to your network, and see if people will help you out. You don’t have to give them an equity stake in the beginning see how you work together. If you work well, ask them if they’d like to come on board.

9. Forgetting about scalability. Good ideas scale well, multi-million ideas scale at their core. How big can your product realistically get? Who is your customer, and how can fast can you grow without compromising service.

10. Secrets are no fun. Talk, and share your idea with people you trust, friends, family, colleagues, these people are inevitable to the success of your business, you don’t know everything, and collaboration can more often than not fix problems before they arise.

11. Doubting your idea early on. Doubt is natural, you will have ups and downs, this is completely natural, but if you doubt your idea within the first month, or three of your start-up career. Chances are you’ll become disheartened quite early on and quit. Save yourself the trouble and thoroughly analyze your concept before taking the plunge.

A friendly message from the people at F3FundIt, and with that. Good Luck!

Original blog post written by Jacek Grebski and found here.

Lower Health Care Costs with a New Small Business Health Tax Credit: Barack Obama and Joe Biden understand that the skyrocketing cost of healthcare poses a serious competitive threat to America’s small businesses. Small businesses are the drivers of job growth in our economy, creating, on average, more than two thirds of net new jobs each year. Yet small business owners face unique challenges in providing health care to their employees, including higher administrative costs, lower bargaining power, greater price volatility and fewer pooling options. Barack Obama and Joe Biden will reduce the burden on small businesses in our economy by offering a new Small Business Health Tax Credit to help small businesses provide quality health care to their employees. The Obama Small Business Health Tax Credit will provide a refundable credit of up to 50 percent on premiums paid by small businesses on behalf of their employees.

Obama’s Small Business Health Tax Credit will work alongside other aspects of his health care plan to lower costs and improve competitiveness for America’s small businesses, including:

• Access to a Low-cost National Health Exchange: The Obama health care plan will provide small businesses with new opportunities to buy low-cost, high quality health plans for their employees through a national exchange similar that will allow small businesses to get the same benefits of spreading risk and administrative costs over a large pool that larger businesses currently enjoy.
• Reduced Volatility and Lower Costs by Reimbursing Catastrophic Costs: The Obama plan will reimburse employer health plans for a portion of the catastrophic costs they incur above a threshold if they guarantee such savings are used to reduce the cost of workers’ premiums. This reimbursement (often called reinsurance) is particularly important for small business plans, which can be overwhelmed by the costs of catastrophic expenditures for even a single employee.
• Investment in Cost Reduction and Quality Improvement Strategies: The Obama plan will aggressively lower health costs by facilitating broad adoption of standards-based electronic health information systems, and other value-increasing innovations improving chronic care management, and increasing insurance market competition.

Provide Zero Capital Gains and Other Tax Relief for Small Businesses and Start-ups: Barack Obama believes that we need to reduce burdens on small business owners, many of whom are struggling to succeed as health care and energy costs continue to skyrocket. Barack Obama and Joe Biden will eliminate all capital gains taxes on small and start-up businesses to encourage innovation and job creation. Obama and Biden will support small business owners by providing a $500 “Making Work Pay” tax credit to almost every worker in America. Self-employed small business owners pay both the employee and the employer side of the payroll tax, and this measure will reduce the burdens of this double taxation.

Expand Loan Programs for Small Businesses: Access to capital is a top concern among small business owners. Barack Obama cosponsored the bipartisan Small Business Lending Reauthorization and Improvements Act. This bill expands the Small Business Administration’s loan and micro-loan programs which provide start-up and long-term financing that small firms cannot receive through normal channels. Obama and Biden will work to help more entrepreneurs get loans, expand the network of lenders, and simplify the loan approval process.

Support Innovation and High-Tech Job Creation: Barack Obama believes we need to double federalfunding for basic research, diversify energy sources, expand the deployment of broadband technology, and make the research and development tax credit permanent so that businesses can invest in innovation and create high-paying, secure jobs.

Create a National Network of Public-Private Business Incubators: Barack Obama and Joe Biden will support entrepreneurship and spur job growth by creating a national network of public-private business incubators. Business incubators facilitate the critical work of entrepreneurs in creating start-up companies. They offer help designing business plans, provide physical space, identify and address problems affecting all small businesses within a given community, and give advice on a wide range of business practices, including reducing overhead costs. Business incubators will engage the expertise and resources of local institutions of higher education and successful private sector businesses to help ensure that small businesses have both a strong plan and the resources for long-term success. Obama and Biden will invest $250 million per year to increase the number and size of incubators in disadvantaged communities throughout the country.

Invest in Women-Owned Small Businesses: Women are majority owners of more than 28 percent of U.S. businesses, but lead less than 4 percent of venture capital-backed firms. Women business owners are more likely than white male business owners to have their loan applications denied. Barack Obama and Joe Biden encourage investment in women-owned businesses, providing more support to women business owners and reducing discrimination in lending. To create greater opportunities for women business owners who would like to do business with the federal government, Obama and Biden will implement the Women Owned Business contracting program that was signed into law by President Bill Clinton, but has yet to be implemented by the Bush Administration.

Increasing Minority Access to Capital: Access to venture capital is critically important to the development of minority-owned businesses. Yet there has been a growing gap between the amounts of venture capital available to minority-owned small businesses compared to other small businesses. Less than 1 percent of the $250 billion in venture capital dollars invested annually nationwide has been directed to the country’s 4.4 million minority business owners. And in recent years, there has been a significant decline in the share of Small Business Investment Company financings that have gone to minority-owned and women-owned businesses. In order to increase their size, capacity, and ability to do business with the federal government, and to compete in the open market, minority firms need greater access to venture capital investment, as well as greater access to business loans. Barack Obama and Joe Biden will strengthen Small Business Administration programs that provide capital to minority-owned businesses, support outreach programs that help minority business owners apply for loans, and work to encourage the growth and capacity of minority firms.

Promote Small Business Ownership in the Communications Industry: Barack Obama joined Senator John Kerry (D-MA) in calling on the Federal Communications Commission (FCC) to immediately address the issues of minority, women and small business media ownership before taking up a second review of wider media ownership rules. Obama has continued that fight by urging the FCC to establish an independent panel on minority and small business media ownership. As president, Obama will support efforts to achieve diverse media ownership, particularly in an era of increased media concentration.

Support Local Businesses Affected by Hurricane Katrina: In the wake of Hurricane Katrina, Barack Obama introduced the Hurricane Katrina Recovery Act to rebuild the Gulf Coast. This bill included language to increase the government-wide goal for procurement contracts awarded to small businesses owned and controlled by socially and economically disadvantaged individuals for recovery and reconstruction activities related to Hurricane Katrina. Obama also established a government-wide goal for procurement contracts awarded to local businesses in Katrina-affected areas of 30 percent of that total value for 2006 and 2007.

Provide Emergency Relief: Barack Obama supported legislation to provide emergency relief to small businesses affected by a significant increase in the price of heating oil, natural gas, propane, or kerosene. This bill authorized the Small Business Administration to make disaster loans to assist small businesses that have suffered or are likely to suffer substantial economic injury as the result of a significant increase in the price of heating fuel.

Support Rural Small Businesses: Barack Obama and Joe Biden will support entrepreneurship and spur job growth by establishing a small business and micro-enterprise initiative for rural America. The program will provide training and technical assistance for rural small business, and provide a 20 percent tax credit on up to $50,000 of investment in small owner-operated businesses. This initiative will put the full support of the nation’s economic policies behind rural entrepreneurship.

Promote Digital Inclusion: The lack of affordable, high-speed Internet access in rural, urban, and minority communities has created a digital divide between those who have access to the Internet and those who do not. This severely limits the growth potential of many urban and rural companies. Approximately only one-third of rural areas and half of urban areas have high-speed Internet at home or work. The areas affected by Hurricane Katrina have particularly suffered due to a lack of IT infrastructure. Barack Obama and Joe Biden believe we can get true broadband to every community in America through a combination of reform of the Universal Service Fund, better use of the nation’s wireless spectrum, promotion of next-generation technologies, and new tax and loan incentives. As a key step to achieving full broadband access, Obama believes the Federal Communications Commission should provide an accurate map of broadband availability using a true definition of broadband instead of the current 200 kbs standard and an assessment of obstacles to fuller broadband penetration.

• Sales and business connections are often developed from the relationships we have with other people, and networking provides the opportunity to meet people and expand your contact list.

• Choosing the right group to join or event to attend is crucial, otherwise you will meet people who have very little or no interest in what you have to say. Focus on the quality of your contacts not on quantity. Getting two quality contacts who will answer your phone calls or read your letters are better than having ten who will not.

• The first impression your contact gets about you could be what cement the relationship or take it apart. A firm handshake, a pleasant facial expression, a demonstration of interest in your contact, and attentiveness to his/her name and line of business will convince your contact that you are not only there to sell some product, and quickly move onto your next victim.

• Your first meeting with a contact should be about understanding his problems, needs and concerns and collecting contact information. Clearly state what you do in 15 seconds and in 30 seconds what you have done to help people with similar problems. Don’t use the initial meeting to promote your credentials. Your contact is not interested in your credentials, not yet, but in how your solution can solve his problem.

• The follow up after a networking event is where many small business owners come short. Send a handwritten card to the people you met the next day, referring to the networking event where you met. Within two weeks send them letters arranging to meet for lunch or coffee to learn more about their businesses and how you can help.

• If a month goes by with no communication between your contacts and you, they may forget about you, and potential customers may be lost. You may talk to your contacts by phone, but you will get better results by using a letter, newsletter or articles in your blog to demonstrate your expertise or the value of your product by sending them useful ideas and suggestions they can use immediately.

• The average person is estimated to know about 250 people. This means each person you meet has the potential to connect you with over 60,000 people. The more people you meet, and the quality of your relationship with them will take your name and products to places where alone you could never have reached.

• This reach will allow you to become a powerful resource for your contacts. The quality and regularity of the ideas and suggestions you send to them will keep your product on their minds, and be the first person they come to when they need help.

• Your contact list will further expand when you follow up on referrals that others give you. Contacts who give you referrals have confidence in your expertise, reliability or the quality of your product. They have found your solution to their problems helpful, and would like to share with their family and friends what they have found. Be sure to follow up on your referrals.

• Social medias like facebook, twitter, myspace and linkedIn are providing networking opportunities for millions of business people on the Internet. But you will agree that eventually you have to meet your contact in person and shake his/her hand before you feel comfortable enough to sign that $100,000 contract.

• If you are not networking, you are losing thousands of potential customers who have money to spend and need your service or product, but do not know that you exist. Go to events where you will meet large number of people. Initiate conversation with people you meet. Ask to be introduced to people you don’t know. Express genuine interest in your conversations. Give out your business cards, and follow up on your contacts.

The primary purpose of networking is the building of business relationships; the buying and selling of goods and services are its byproducts. Only when you have developed those relationships will you get their byproducts in increase sales.

By Ben Aidoo