Top 7 Small Business Investor Turn-offs

In any region of the country, the competition for funding from wealthy patrons called "angel investors" and venture capital funds is intensive. Not only are entrepreneurs developing impressive business opportunities but they are also boosting their funding potential by packaging their deals in ways that reduce perceived investor risks.

Whenever entrepreneurs can strengthen a company's strategic position, fundraising becomes easier. As such, they are taking extra time to demonstrate the workability of a new technology, identify first customers, or line up high traffic Web sites as partners for new Internet technologies. First-time entrepreneurs are also stacking their startup management teams with individuals who have succeeded in other entrepreneurial settings.

Another factor that influences investor decisions is their own investment track record. You can imagine that the big money losing deals are always a sore point in their memories. Just last week, I spoke with a particularly agitated angel investor who swore "never again." I'm sure this investor will be forever wary of any new deal that sort of looks like, sounds like or acts like another goose egg investment.

Here are some areas that investors say are on their lists of never again investments.

* Product feature emphasis. First-time angel investors all eventually learn the painful lesson that cool products by themselves don't necessarily lead to investment success. Product features can be copied by competitors or become obsolete in fast changing markets. Lasting investment gains are made in companies with smart branding, ongoing customer relationship building, profitable sales, reliable distribution -- not just innovative features.

* Husband and wife teams. Investors need to count on board members and top managers to put the needs of organization before personal loyalties. It's hard enough when stress-filled startup or early stage companies have to replace founding board members or executives or cut back salaries when money is tight. But when spouses are tied up in troubled companies, investors say the troubles and resentments magnify. Equally, no one wins when young, vulnerable companies are tied up in troubled marriages.

* Off-site CEO. Startup organizations require a high level of constant collaboration. While certain functions can be outsourced anywhere on the globe, there is no replacement for onsite leadership.

* Bad recordkeeping. Angel investors are more likely to be exposed to entrepreneurs who don't yet understand the importance of thorough recordkeeping than venture capital funds. There is a long list of troubles that can come out of the woodwork of poorly administered companies including unrecorded shareholders, liabilities or litigation; questionable intellectual property ownership; unpaid payroll taxes; and more.

* Lack of management financial expertise. Should an accomplished technologist run a company? Not if the technologist has no understanding of basic accounting, financial statement elements, pricing decisions and no desire to learn.

* No competition. It's wishful thinking to believe that a new business will face no competition or resistance in the marketplace. Smart investors don't believe the hyperbole; soon-to-be-sorry investors do.

* Investing in common stock. When businesses don't grow according to plan, it's better for investors to own preferred stock than common stock.

"Work around" is an expression software code writers say when they are confronted by a problem or recurring bug. Now that you know what can scare off investors, make sure you don't make it easy for investors to give you the fast no. Be flexible and creative. You can do it.

http://smallbusiness.yahoo.com

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The 30 Second Commute

Posted by: SBOCTeam

Before you begin a home based business, make sure you're aware of the personal and professional challenges you'll be facing

Although late night commercials on television and unsolicited emails may tell you how easy it is to start your own home-based business, the reality is that you're likely to work as hard or harder at home than you did before you took the leap and went out on your own. The appeal of such independence is obvious: no boss, no commute, no office politics, greater freedom, and more time with your family. You may even be able to take a portion of your home expenses as a tax deduction since you are now using your house or a portion of it as an office. However, with all those benefits come dangers one rarely has to deal with when employed by someone else. Strictly speaking, working from home isn't for everyone.
According to Millie Szerman, author of A View From The Tub: An Inspiring and Practical Guide to Working from Home (Stairwell Press), the question of whether to open up your own business depends entirely on the person. "Some people need the structure of an office to be happy and successful," Szerman explains, "while those of us who enjoy working independently will be happier on our own."

Dollars and Sense
Indeed, there are numerous factors to take into account when deciding whether or not to break away and start working out of your home. The first basic question is whether you can really afford to start your own business. Not only will you have to dip into a large portion of your personal savings in order to get your new company off the ground, but you may also have to go without a salary for at least a little while before you start making a profit. And don't expect to get free health and dental coverage anymore, either. Now insurance costs comes out of your own pocket. By the way, if you're looking forward to not counting up your vacation days, remember that when you run your own business there are no paid vacations and no one to run your business when you're away.

There are other matters to ponder. Are you motivated enough to maintain an efficient work style without a higher-up constantly checking up on you? Will you be able to work when your kids and other distractions are around and, on the flip side, can you stop working at night when your desk is only 40 feet away? And do you need the camaraderie of your fellow workers nearby?

Know the Law
Once you've decided that you are, in fact, able to work from home, a huge issue is to make sure you can legally operate out of your residence. Zoning laws may prohibit working out of your house, potentially halting your operation before it even gets going. Some believe that it is better to run your office secretly instead of taking the chance of being denied a permit, but Szerman advises honesty.

"The fines and penalties may be exorbitant if you keep it quiet, and then someone discovers what you're doing," she warns. "You can do your research first, to be sure that there are no zoning restrictions, without letting on exactly what you're doing. Do your homework before you begin, and you'll never have to worry about getting caught."

Consider the Setup
Once this sizable hurdle is crossed, you can finally start setting up your office. Try to find a desk in an area away from distractions, and, if possible, away from the busy places in your house, such as the living room or kitchen. You'll need a place to store records, like a computer and a file cabinet and also ways to communicate with customers and vendors. Internet access is vital these days, along with a phone and a fax machine. Setting a similar structure to being at work is essential to being productive; your family must know that just because you're home doesn't mean you can run errands and play, and you'll have to establish regular business hours and stick to them.

In her book, Szerman describes flexibility, motivation, patience, and determination as the key traits an individual must have in order to flourish in a home office setting. It has certainly worked for Szerman. "As an independent worker/thinker, working from home has enhanced my career, and I can't imagine ever going back into someone else's structure."

Source : smallbusinessonlinecommunity.bankofamerica.com

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