914INC.’s Starting Your Business Right—Roundtable Discussion
In this issue’s web exclusive, the conversation continues with the seven experts assembled for our roundtable on “How to Start Your Business Right.” Learn what to do to get yourself from great idea to opening day.
In case you missed the roundtable in the print magazine, you can read it first here.
We put lots of expert advice into our roundtable on starting your business right, but we know you’re looking for as many tidbits as you can get. Here, we keep the conversation going. Wondering whether starting a business is different since the recession or how to talk like a businessperson? We’ve got your answers, plus extras on what kind of website you need, where and how to get your business accelerated once you’re up and running, and much more.
Talk the Talk
Louis Scamardella: In terms of being taken seriously, I always tell entrepreneurs to speak authoritatively. For instance, [if you’re speaking to] a real estate broker, say, ‘I am going to open a store. I need fifteen hundred square feet on Mamaroneck Avenue.’ You don’t say, ‘I am thinking about opening a store’ or ‘I am looking into opening a store.’ People do not respond to that. I think it puts them into a ‘decision-making’ mood, which they have to start right away.
When It All Becomes Too Much
Michael Rao: At times, you are going to run into a jam and you’re just not going to know how to figure it out. When I have an issue, I pick up the phone, for instance, and call one of my mentors [at a New York City realty group]. ‘What do I need to do? How do I do it? How did you do it?’ At the end of the day, it is going to save you time, money, and, most important, effort. These people have been through it. They know the right answers.
To Blog or Not to Blog?
Carolyn Mandelker: If you feel that your product or service is such that there is a huge amount to say, then think in terms of blog architecture. What that means is it has infinite capacity. It can have thousands upon thousands of pages. It can change daily.
You Get What You Pay For
Susan Corcoran: But startups have to be very, very careful. When they do have employees, there is kind of this expectation that everyone will work hard and everyone is paid a salary to work hard and ‘we will all reap the dividends when we see profits.’ But one of the things we need to be careful about is our wage-hour laws, which classify people as those who are eligible for overtime and those who aren’t. And some of the people who are working very, very hard—maybe working over forty hours and not being paid overtime—really should be eligible for it. So that is one thing that our entrepreneurs should be careful about. And they may think that they don’t have to pay interns, but they really should be. There are only limited instances where you can have somebody on board and not pay them.
Robert Schork: Has any of this advice changed in the last few years? If we were having a conversation about starting a business before the recession, would we all be saying the same?
Jeanne Goulet: Well, I think we are having this discussion more often [now]. Since the recession, more and more people are starting their own businesses. There’s been an explosion of entrepreneurism.
Susan Corcoran: We are in a much more litigious economy now, with respect to companies trying to protect trade secrets and other types of protectable interests. So when entrepreneurs try to figure out what their niche is, they have to take a step back and figure out what their legal risks are, too.
Robert Wyker: One of the things we also teach is that a patent is a license to litigate. So one of the questions we would ask the widget maker here is, ‘How unique is your widget?’ Because if you have got a good product, somebody else is going to knock it off. And all of a sudden, you’re no longer alone in your niche. [Your product] is for sale in Walmart at a price that you can’t begin to touch. It is a lot easier to get a patent than it is to defend one, and not too many people want to get into that. In SCORE, I would say maybe ninety percent of people who come in to start new businesses are in service, rather than manufacturing. Very few people want to own or open a manufacturing business, which is a much, much bigger deal where you run into the kinds of problems that I am talking about.
Why Construction on I-287 Matters
Michael Rao: It is all about demographics: What is your target ‘audience’? If you want to open a store in Tarrytown [but expect] customers to be coming from Greenwich and Rye and Purchase, [you have to ask if] they are going to commute across the I-287 and travel twenty to twenty-five minutes. Or should you open over on Purchase Street in Rye?
Jeanne Goulet: One of the fundamental things that is required when you start a business is to decide what kind of legal entity you are going to have—whether it will be a transparent entity like an LLC or a corporation. And a lot of that depends upon how you want to exit the business. If you want to sell your assets, you may be better off with an LLC structure, or, if you need funding with venture capital, many times they require a C corporation.
How to Spot Half-Hearted Applicants
Robert Wyker: Loyalty in business today seems to be a forgotten term, and, now, if you can get two years out of people who used to work for twenty for one company, you are doing pretty well. So you actually want the best people, but you also want people whom you will have some reason to believe are there for the long haul.
Carolyn Mandelker: That is tough because you cannot read into the future, but there are certain signs. If we see on a resumé that someone has moved frequently and every year is changing jobs, we will not even consider them. If they tend to be in a job for three, four, or five years, it shows stability. It shows they are probably well thought of, or at least tolerated, by their company. But in terms of loyalty, I think an employer, in a way, has a responsibility. I mean, we are all in business to provide whatever service or product, and we also want to make a profit. But I think you also create a culture within your company, and if people really like working there, you have less of a loyalty problem than you would if they feel that they are just a number.
Beware the Baker’s Dozen
Michael Rao: I find that a lot of entrepreneurs who fail get ahead of themselves: A guy who owns one or two restaurants and is striving and is doing incredibly all of a sudden thinks he wants to have ten and eleven and twelve restaurants. He doesn’t have control of what he originally started with. They spread themselves too thin.
From Startup to Growth
Carolyn Mandelker: There is also now the Blueprint Accelerator Network. It’s not for startups as in, ‘You opened your business three weeks ago,’ but if you are early-stage and you look like you are moving in the right direction, you would be a candidate for the Accelerator, which does offer access to debt financing and free office space for the first year.