HotOffice recently opened a free service that
includes all the tools in the subscription-based version. The
differences? The free HotOffice puts ads at the top of each
page (as does Intranets.com) and your space allowance is just
40MB per company, not the more generous 20MB per user of the
paid edition.
But HotOffice
packs in the necessary intranet tools, including server space
to stick for-sharing files, group calendar, group contacts,
bulletin boards and chat rooms, and free e-mail for all users.
The upside: encrypted document upload (keeping your secret
stuff secret as it's transmitted to HotOffice's servers over the
open Internet), the ability to organize the this intranet's
content, communications, and users into projects and departments
such as sales or human resources; an import feature to draw on
existing address books from Outlook and Palm handhelds; and an
e-mail center where you can collect not only your HotOffice mail,
but also mail from your accounts.
The downside: HotOffice doesn't show the group calendar on its
start page; and as a whole, the interface is obtuse and a bit hard
for beginners to manage.
These tools are great in and of themselves. But aside from
slick features and lots of storage space, what the heck do you do
with these intranet packages?
Click to the next page, and I'll tell you 5 ways
that these intranets can make your business better.
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Underpricing Fiasco
(inc.com)
You want customers to think they're getting a good deal, but
there's no point in selling yourself short. If you underprice
yourself, customers might think you're worthless, and you could
choke your company's profits. One way to determine the best price
point: conduct a direct-mail campaign that tests different offers.
When Approach Software, in Redwood City, Calif., launched its
first product, it wanted to offer a low introductory price to
persuade users to try its database software program. Jaleh
Bisharat, Approach's marketing director, interviewed prospects and
got confirmation that the $149 price point she was considering was
reasonable. Then, to be sure, she sent out 50,000 direct-mail
offers with price points of $99, $129, and $149. The mailing
provided the "statistical proof" Bisharat needed when almost equal
sales came in at $149 and $129. The company then tested a $199
price, but that "crossed a threshold of what people would spend to
try a new product through the mail," said CEO Kevin Harvey.
The low initial price did its job. One month after the product
began shipping, Approach landed on industry bestseller lists.
Three months later, the company raised the suggested retail price
to $399 ($279 street price)--and the product remained a top
seller.
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(inc.com)
What a Good Name Can Do
Even if you don't have an established brand, you can license a
well-known brand name and put it on your product to get into
retail stores.
Licensed merchandise has exploded in the marketplace in recent
years, and the trend isn't limited to lunch boxes. Of course, it's
an investment. You can expect to pay from 5% to 12% of wholesale
revenues to the licenser over the life of the agreement, in
addition to up-front costs.
Opus, a bird-feeder maker in Bellingham, Mass., negotiated a
license with Disney because John Stone, president of the
second-generation family business, wanted to tap the burgeoning
kids' market. Stone invested $50,000 in product design,
merchandising, and promotion. He worked with Disney through the
year-long design and development process. The payoff? The Disney
name helped to place Opus products in about 3,000 stores.
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(inc.com)
Mailroom Savings
To stretch your marketing budget this year, head first for the
mailroom. "Postage is one of those things that's often
overlooked," says Dan Francis, CEO of St. Louis Pre-Sort, a
Missouri business that sorts and puts bar codes on mail for 500
corporate clients. He offers these suggestions for saving on
postage:
Plan ahead. Mailings that aren't time sensitive can be shipped
standard, instead of first class, saving several cents a piece.
Consider size. If possible, use a standard business envelope
instead of a 9-by-12-inch envelope. You'll save several cents per
piece, as well, plus the cost of the more expensive envelopes.
Mail that has been presorted but doesn't meet post-office size
guidelines is slapped with a hefty service charge.
Clean up your list. Postal Business Centers around the country
will perform a onetime free service: they will take your mailing
list (up to 50,000 names) and insert the correct standardized
addresses. You can also incorporate the bar codes using programs
such as Mail Manager 2000, by BCC Software (800-453-3130), or My
Professional Mail Manager from My Software Co. (415-473-3600).
Either way, you'll probably qualify for the post office's
automation discount.
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Diary Of A Start-up
By John R. Hendricks
(Entrepreneur)It's 8:30 a.m. on Friday, the day
I'm quitting my well-paying job. My wife, Greer, and I make our
way to the subway through a torrential downpour. Because my hands
are full, when we get to the turnstile, I shut our collapsible
umbrella with my chin. The next thing I know, the umbrella flies
back at me, almost knocking out a tooth.
My finger was still on the "open" button. Great. I've been
planning this morning for weeks--in certain respects, for
years--and it isn't supposed to happen this way. Up until the
bloody lip, I'm running at 90 percent confidence and 10 percent
fear. Afterwards, it's 90 percent fear.
As the subway door shuts, I reflect on the events that have led
me, at 30, to this moment.
Friday, March 8, 1996: A new acquaintance, Tom, 27, invited
people for drinks. His apartment was full of oddly shaped sponges
and pot scrubbers--a sponge turtle with its shell scrubber; a
fried egg sponge with its yolk scrubber. I asked if he had a
cleaning fetish. He laughed, then explained they were part of a
project he'd conceived in design school and planned to market . .
. eventually.
My business background and prior attempts at entrepreneurship
led me to ask him more questions about the sponges. To everyone
else, the only thing odder than an apartment full of sponges was
the two of us seriously discussing them.
Monday, March 24, 1996: I've been bumping into Tom frequently
on the way to work. We always talk about the sponges. I ask about
the economics and logistics.
Sunday, May 5, 1996: Tom and I rode in Bike New York, a 42-mile
city tour, with friends. We talked sponges. He's calling them
Soakies, which I think is a great name.
After the ride he asked if I wanted to be a 50 percent partner.
His offer appealed to me for two reasons. First, by taking a
commodity product and changing its shape and color, he's created a
new product. Second, manufacturing involves only sponge cutting
and package printing, so capital requirements are small.
Tom has a good disposition and a solid work ethic. Our
backgrounds--Tom's in product design, mine is in finance and
marketing--are complementary.
With modest aspirations, I see this business as a
resume-building experience; with aggressive ones, I see it as a
multimillion-dollar company. Either way, this is something I want
to do. I've passed up two start-up opportunities since college,
and don't want this to be the third.
Friday, May 10, 1996: We decided to build a company around our
product as opposed to selling a single product line, primarily
because of the difficulties of selling a single product to big
chains.
I spent the week educating myself about sponges. I never knew
they're manufactured in huge blocks the size of a Volkswagen, then
cut down. Tom and I created a timetable: If we want the product in
stores in nine months, we have to ship everything in eight months,
create packaging in seven months, determine pricing and product
image in six months, and so on.
Saturday, June 30, 1996: After many late nights over coffee and
buffalo wings, we've begun to see structure. We'll contract out
manufacturing, warehousing and shipping while we focus on product
development, marketing and distribution. We'll distribute through
specialty stores such as Crate & Barrel and Williams-Sonoma,
and superstores such as HomePlace and Linens 'N Things.
Our revenue projections rest on selling one sponge a day--in
450 stores--at a wholesale price of $2, for base annual revenues
of $328,500. But since we'll be ramping up sales from a small
customer base, our first year's annual sales projections are
$150,000. Next year, when accounts are in place, our running rate
will be $328,500. If we add new products and customers,
second-year sales should hit $500,000. We estimate we need to
borrow $20,000, but should be able to grow the company off of its
own cash flow.
Friday, July 6, 1996: The first step in implementing our
business plan--nailing down pricing--is difficult. Sponge
cellulose is made by only three companies in the world. Getting
huge companies like 3M to take two "kids" seriously is tough.
Thursday, July 11, 1998: Called the die-cutter 3M recommended,
and learned there were huge production quantity requirements. We
used the Thomas Register of American Manufacturers--essentially a
list of manufacturers organized by state--and began cold-calling.
Friday, July 19, 1996: We found two local factories and took a
personal day from work to visit them. We weren't impressed with
the first; it was archaic and dirty. The second was huge, clean
and professional. We believe they'll do the job well.
Sunday, October 20, 1996: Returning from an 18-mile run with
Greer, my marathon-training partner, I found two messages on my
machine--one from Crate & Barrel, one from Williams-Sonoma! I
thought I was dreaming, because even though we'd spent hours
putting together a sales kit, we'd FedEx'd it to these retailers
just last night. Both wanted more information. Not a
sale--yet--but we're on the right track.
Monday, January 6, 1997: Williams-Sonoma decided our products
are "too fun" for their stores, and the buyer who liked Soakies
has left Crate & Barrel. We're pursuing HomePlace,
bloomingdale's, Macy's and Linens 'N Things, but haven't heard
back. Egos bruised, we decided to target independent stores by
exhibiting at the Boston Gift Show.
Saturday, January 18, 1997: The upcoming trade show is forcing
us to finally manufacture our products. We need to finance $15,000
in production costs, plus $5,000 in show costs.
We asked friends and family to invest in increments of $2,500
with either a personally guaranteed 15 percent loan for one year,
or phantom equity participation, whereby they receive 0.5 percent
of every dollar that we sell. If, after two years, we haven't paid
back their $2,500 plus an additional $2,500, they are invested for
the third and final year. So far, we've raised $15,000 and need
$5,000.
Monday, February 6, 1997: Today a conflict between our "real"
jobs and our company surfaced: asking for week off to exhibit at
the show. I couldn't risk my boss saying "no," so I spun a story
about a close friend's wedding.
Every evening we drive an hour to my parents' house, where
we're building the booth. My mom is waiting with dinner; my dad is
brewing coffee. After five late nights, staying awake at work is a
job in itself.
Saturday, March 15, 1997: A bad day. The last two investors
backed out. We are $5,000 short and need to pay the bill or the
factory won't ship us the sponges.
But there's some good news: One of Tom's best friends, Mike,
told his brother what we're doing, and he wants to invest in our
business.
Saturday, March 22, 1997: At the trade show, we made our first
sale, along with many others! I can't describe the euphoria;
everything we've been working on has been validated. Everyone
loved Soakies; we wrote orders all day long.
Sunday, April 13, 1997: The show paid for itself and generated
solid sales leads. Bath & Body Works has since placed a
$20,000 order. Also, I've begun dating Greer--my running partner.
Everything seems manageable.
Monday, November 10, 1997: I asked Greer to marry me. The
business has been moving forward, but Tom and I have been spending
less time on it. Despite that, we've been able to fill the big
orders garnered from the trade show.
Wednesday, January 14, 1998: Something has to change. Our
business isn't going to hit critical mass until at least one of us
is running it full time.
Thursday, July 16, 1998: Today I started thinking about the
company. Although we've taken sizable orders, customers and sales
reps are frustrated that we're rarely available when they call
during business hours. I turned to Greer (now my wife) what she
thought about me quitting my job. She was extremely supportive.
Friday, August 14, 1998: To jump-start our company, Tom and I
decided to bid for a small producer of kitchen gadgets that's for
sale. We can re-brand its products under our name and launch our
own kitchen products--while using the cash flow to support
ourselves and the company.
Saturday, August 22, 1998: The seller liked our proposal, but
has already accepted another offer. Tom and I realized if our
offer had been accepted, we would have quit our jobs to run this
new business, so why not quit our jobs to run our business?
Sunday, November 22, 1998: Tom is in San Francisco for a job
interview. The position would be a step forward for his career,
but the end of our partnership.
< Monday, November 30, 1998: Tom's interview went well, but
he told me, "if I take the job, I'm going to wonder for the rest
of my life about what this company could have become." We decided
then and there to make the full-time commitment to our business.
Soaking wet with my bloody lip and heart pounding, I call Tom
to make sure he hasn't changed his mind. I hang up the phone and
walk to my boss's office.
I know it was the right thing to do-our latest products,
Grippies hanging sponges, are now stocked in 75 HomePlace stores.
Linens 'N Things, Bed Bath & Beyond, and Lechters are all
rolling out Grippies. Two magazines have even published articles
on our products. But despite all this success, my partner and I
recently decided to sell the business to a competitor.
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Persuasive Projections
By
Paul A. Broni, Inc. Magazine (inc.com)
Predicting
the future is never easy. But by following these dos and don'ts
for financial projections, you can avoid some common mistakes
It doesn't matter whether you're applying for your first bank
loan or your fifth, or whether you're seeking venture capital or
debt financing. Sooner or later, you'll have to prepare a set of
financial projections. Lenders will look for a strong likelihood
of repayment; investors will calculate what they think is the
value of your company.
In my past 10 years both as a banker and as a financial
consultant, I've seen many entrepreneurs -- despite the best
intentions -- make mistakes on their projections. The good news is
that the most common mistakes are easily preventable if you know
what to look for. Here are my top dos and don'ts:
-
Don't provide only an income statement; include a balance
sheet and a cash-flow statement, too. It's understandable
that you're focused on sales and net income, but your banker or
investors will also want to know how much money you intend to
leave in the business as retained earnings and how much
additional debt or equity financing you'll need -- if any -- to
grow your company.
-
Do provide monthly data for the upcoming year and annual
data for succeeding years. Many entrepreneurs prepare
projections using only monthly data or only annual data for the
entire three- or five-year period. Don't. Use monthly data for
the first year. After that, use annual data. The financial
results of your first year will probably end up being different
from your projections, so there's no point in thinking that you
can accurately forecast monthly results for the years after
that. This is an instance where less is more.
-
Don't provide more than three years' worth of projections
unless your lender or investor has asked for them. This is
an extension of the less-is-more concept. Let's face it: it's a
stretch to accurately forecast your company's sales or net
income for even three years out. Only in cases in which you're
looking for long-term financing for equipment or real estate is
it likely that your banker will want longer-term projections.
-
Don't provide more than two scenarios in your
projections. Loan officers and investors are already
drowning in paperwork, so do what you can to make their lives
simpler. We've all seen projections with the following three
scenarios: base (or likely) case, worst case, and best case.
I've also seen super case and break-even case. My advice is to
prepare just the base case and the break-even case. The base
case should show what you realistically expect the business to
do; the break-even case should show how low sales could go
before the business begins to lose money.
-
Do ensure that the numbers reconcile. Everybody knows
that assets must equal liabilities plus equity. But all too
often entrepreneurs will simply plug a figure into the equity
slot to make things settle up. That's wrong. If your bank is
doing its homework, your banker will check the math. If the
equity numbers don't add up from one period to the next, you'll
be asked to explain. Even though everyone makes mistakes, that's
one you want to avoid because it makes you look sloppy. Also, if
after the mistake is corrected your company has a smaller net
worth than you originally presented, your banker or investor may
think you were being intentionally misleading. Not good.
-
Don't be too optimistic about sales growth or gross and
operating profit margins. All bankers and investors want to
do business with ambitious entrepreneurs, but there's a big
difference between a realistic business plan and fantasy. While
it's true that companies that have low revenues can grow their
sales quickly in percentage terms, it may not be realistic to
assume, for example, that your business can double in size every
year. That rate of growth would turn a $500,000 company into a
nearly $16-million business in only five years. And although
that can happen, it is definitely not the norm. Also,
entrepreneurs often try to convince lenders that as their
company grows it will achieve economies of scale, and gross and
operating profit margins will improve. In fact, as the business
grows and increases its fixed costs, its operating profit
margins are likely to suffer in the short run. If you insist
that the economies can be achieved quickly, you will need to
explain your position.
-
Do account for reasonable interest expense on the income
statement if you have debt on your balance sheet. That
sounds simpleminded, but you'd be surprised to learn how many
people forget to do it. If you expect to have an average loan
balance outstanding of, say, $500,000 over the year, and your
forecasted average interest rate is 9%, you need to budget
$45,000 for annual interest expense. Don't budget less than a
realistic amount; this is one line item where you're always
better off coming in under budget.
-
Don't include every individual line item for each
expense, asset, and liability figure. Although your banker
or investor will probably be interested in knowing details about
sales from major product or service lines, as well as the direct
cost of sales associated with them, keep to the basics in other
categories. With operating expenses, those would be salaries and
payroll taxes, lease and rental expenses, depreciation,
amortization, and any other kind of expense that consumes more
than 10% of revenues. Also, don't forget to distinguish the
owners' compensation from that of nonowners, particularly if you
and your co-owners are drawing above-market salaries as a means
of reducing business income taxes.
With assets, focus on cash and investments, accounts
receivable, inventory, the major categories of fixed assets
(including capital-lease assets), and any amounts due from
shareholders or affiliated companies. Also, be sure to include
any other assets that you consider material, such as patents or
licenses.
Identifying liabilities is straightforward. You should have one line item for all accrued expenses and a line item
for each of the following: accounts payable, a revolving line of
credit, term loans, capital leases, amounts due to related
parties, dividends payable, and income taxes payable. Finally,
if your business has deferred revenue (meaning that you collect
cash from your customers before having actually earned it), add
a line for it in liabilities as well.
-
Do include with your projections the assumptions that you
used, and be able to explain and defend them. In addition to
the income statement, balance sheet, and cash-flow statement,
you should provide a one-page summary that explains your
assumptions about revenue growth; cost of goods sold; operating
expenses; interest expenses; turnover of accounts receivable,
inventory, and accounts payable; capital expenditures; dividend
policy; and income-tax rates. Also include any ancillary
information that has an impact on the financial success of your
business. Examples of that might be your projected employee head
count and office or warehouse space requirements.
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See and Be Seen
By Kim T. Gordon
(Entrepreneur) Is your present advertising
campaign buried in an avalanche of competing messages? Instead of
waiting for customers or prospects to find your ads, would you
like a way to place them right under their noses?
New forms of out-of-home advertising are springing up
everywhere, and they help advertisers do just that. They're called
place-based media, since the locations themselves draw the
audience to the advertising. Traditional forms of out-of-home
advertising, including billboards and transit advertising, are now
being joined by innovative, new place-based media that work
because they let you fish where the fish are. From advertising on
movie screens, at theme parks and resorts, to advertising on taxi
tops, truck-mounted billboards, video monitors in airports and
malls, and even posters on restroom walls in bars and restaurants,
now there's a media opportunity to fit every type of business and
budget.
Place-based advertising will allow you to:
Advertise free of competing messages. If you live in a major
city, you've seen the specially designed, truck-mounted billboards
that carry a single advertiser's message to viewers along
predetermined routes. Taxi-top and bus-shelter ads also allow
urban advertisers to communicate their messages unencumbered by
competition. If your prospects can't be found on city streets,
your message can take to the air. Let's say you own a small
restaurant in a beach community. You could have an aerial
advertising company fly a banner with your message up and down
local beaches. This form of aerial advertising would really stand
out, compared to a campaign relying on the local entertainment
guide, where prospects would see your ad among dozens of others.
Use environmental stimulation. Imagine you're riding a ski lift
up a mountainside preparing for your second run-and you see an ad
for soup. Chances are having a hot bowl of soup would sound like a
great idea. Now suppose you're sitting in your family room after
dinner, watching television, and a soup commercial comes on. Are
you going to be as receptive to the message?
Place-based advertising that relies on environmental
stimulation is effective because it guarantees that ads will be
seen by those who are in the best frame of mind for your message.
The key is to choose the right medium for your company. For
example, you can now run ads in slide form on movie screens across
the country. This type of advertising works best for marketing
entertainment venues or consumer products and services to adults
ages 18 to 49, the primary movie-going demographic. So movie-
theater ads would probably not be effective for a management
consulting company, because the tone of the message would appear
out of place.
Reach prospects where it matters most. If you have a pet, you
know that veterinary waiting rooms are chock-full of pamphlets and
posters with helpful information paid for by manufacturers of
products you can purchase while you're there. Depending on the
type of products or services you market, look for opportunities to
communicate information in environments that lend credibility to
your message when prospects are closest to the point of sale.
Find lower-cost advertising alternatives. The cost to run a
one-third-page, black-and-white ad in a major daily newspaper on a
single day costs more than $5,000. On the other hand, for less
than $500, you could run your ad three times before every movie on
all eight screens at a local cineplex-for a full week. For many
entrepreneurs, place-based media offers an opportunity to
affordably launch or expand their campaigns. To find the right
type of opportunities for your company, consult the Standard Rate
and Data Service (SRDS) directory called Out-of-Home
Advertising Source or visit http://www.srds.com
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