Raising finance meets brand marketing

Profunder.com, the brainchild of Jessica Jackley, co-founder of kiva.org, it the tip of a silver-lined iceberg. Crowdfunding is a significant way to go for people who want to start a business.

Crowdfunding is using the Internet to pitch your project to a mass audience, or just your friends and family. Raising money for your startup can be a huge and often unsuccessful effort. Crowdfunding, crowd finance or raising crowd capital can be a much more exhilarating activity that

• avoids repetitive pitching;
• gets you in front of many people at the same time;
• enhances your brand;
• offers your fans a rewarding way of backing you;
• can raise funds quickly;
• can provide conviction to your later pitch for loan or equity capital.

The extra benefit of using Profounder is that they take care of the admin for the process, the loans remunerated by a royalty on sales and they get round tedious SEC rules by ensuring that loans are only made by people you know. I can heartily endorse the advantage of this means of paying only when your sales are there. When I started my first business back in the 80s, a daring bank offered loans on that basis.

Revenue Sharing Loans

Wonderful way to borrow

One of the founders of the non-profit kiva.org, the crowdsourcing microlending site, Jessica Jackley has built on the idea and Kiva’s experience to establish a wonderful site for venture founders: profounder.com.

What’s wonderful is that loans are made from your network who are inspired by your pitch to back your new startup business. But rather than having to give away equity or get saddled with regular interest payment on a loan, the investor is repaid once the new company starts to make sales.

Profounder enables the entrepreneur to

• create a fundraising pitch
• invite friends, family, and community to invest online
• pay investors a share of revenues over time
• manage paperwork, legal compliance, and more.

Investors get a percentage of your revenue over the time period you choose. There is unlimited financial upside. Each quarter throughout the duration of your investment term, you will log onto ProFounder to report your quarterly revenues. Based on these, Profounder will pull the percentage you’ve chosen to distribute proportionately to all of your investors.

This way, there is no attention paid to the loan by the SEC and the whole process of acessing money is greatly simplified. If you want to learn a lot more about many other ways to use bootstrap finance, go to the Bootstrap Finance page of Startupowl.

US Small Biz Profits Growth 2010

Vermont Top State

According to Inc. Magazine’s Small Business Blog, the US State where small business profits were growing the fastest in 2010, was the State of Vermont. This is very interesting, given that Vermont is only rated 37th out of 50 in the CNBC Top States for Business rankings for 2010.

Source: Inc. Magazine

Forbes magazine placed Vermont 45th in their Best States for Business rankings in 2010. In the Tax Foundation’s 2011 State Business Tax Climate Index, Vermont comes in the 38th slot. In the Chief Executive magazine’s Best and Worst State Ranks – 2010, Vermont is at #36. The Small Business & Entrepreneurship Council’s latest Small Business Survival Index was less generous, placing Vermont at #47.

So how is it that a State that does badly on most business rankings has small businesses that can can come top with a 71% increase in profits in 2010?

Entrepreneurs Buck Trends

My experience tells me that entrepreneurs can do well in bad economic times as well as good. The size of the ventures means that they don’t fit large scale patterns.

I started my main business in 1982 in a UK economy that was at its lowest ebb since the Great Depression. We were so small that we could buck the trend. If we added one or two accounts in the first few months, that meant doubling our revenues.

In 2010, only Wyoming had fewer inhabitants than Vermont among all the US States. With 625 thousand people, it is dwarfed by California with 37 million people and Texas with 25 million. The petty size of the population also means that Vermont’s a State where the businesses are also small. Being small they can be much niftier than bigger brethren.

Norway is a small country with a population less than 15% the size of California’s, but Norway’s average per capita income is currently about $52,000 (the 4th highest in the world) vs. California’s at $42,000. Interesting, though, that Norway figures at #10 in the World Banks rankings of the best places for startups, behind the USA’s #3 spot.

The Best Conditions for Starting a Business

It’s my contention that the best conditions for starting as business are those that the venture’s founders set for themselves. When I hear a potential entrepreneur saying, “It’s not a good time to start a business,” my reaction is that for the person in question, it never will be.

I hear people in my home State of Vermont saying that it’s a bad place to start a business, I cringe. It sounds like an excuse to me. True, it probably is not a good place to build a steel mill, but the great attribute that successful entrepreneurs have is that they find obstacles to be challenges.

Live into business

As a young manager, I remember lots of talk about work-home life balance. I even had a commission to write a book called The Natural Manager about 40 years ago. It never got written, but I have always believed that there was no reason why work life and home life had to be in opposition.

When I was a student at Besançon in eastern France back in 1958, I visited Le Corbusier’s  Notre Dame du Haut at Ronchamp that had been built four years earlier. This amazing hilltop pilgrimage chapel was designed to speak to worshipers and reinforce their humanity and their spirituality. A building with purpose and soul.

In business, can you integrate the role of the engineer, the economist–and the artist?

If you can, you are able to be a social architect and create  the conditions in which an enterprise can truly thrive. There are more and more examples of entrepreneurs as social architects. Tony Hsieh, founder of Zappos is one such. He says, “Our goal at Zappos is for our employees to think of their work not as a job or career, but as a calling.” He believes that their strategy will provide the platform necessary for Zappos to be a long-term enduring and growing business.

Tony Hsieh has even written a book called, Delivering Happiness: A Path to Profits, Passion, and Purpose that describes his business process as a social architect. Social architecture is the conscious design of an environment that encourages social behaviors that lead towards some goal or set of goals.

As you live into starting a business, you tend to create those conditions naturally. As the business grows, the secret is to maintain that natural management style to flourish. The trouble is that it requires intention.

It requires mindful intention and sets of conscious acts to ensure that behaviors continue to reflect the venture founder’s original purpose. Peter Block, in his book The Answer to How is Yes, says “The task of the social architect is to design and bring into being organizations that serve both the marketplace and the soul of the people who work within them.”

Peak and Path

Keeping your eye on the peak, while watching the path is a nice skill for leaders, followers and entrepreneurs.

If you aim to start a business, there is every need to do just that. Dream of profits, but monitor your cash flow.

Top managers have a hard time balancing command and control systems, while at the same time being social architects to enable the performance they dream about. Good social architects create the means through which the ends can be achieved.

It is all too easy for CEOs–of one person enterprises as well as multinational corporates, to keep attending to the rocks in their shoes as they stumble on. In the corner office or at the kitchen table, isolation tends to drive you towards the matters of the moment rather than the goals of tomorrow.

Just as it is with someone sitting cross-legged on a cushion trying to meditate, without (you would think) distraction, the neurons are firing on all sorts of interruptions and diverting ideas. An experiences meditiator concentrates on an ‘object’, like the breath, staying in the present, aims never to lose sight of the distant peak of enlightenment.

For the meditator and the executive, the brain is wonderfully good at distractions. The pebbles on the path ensure the peak stays elusive. Our strategy should be to focus on both peaks and paths at the same time. Strategies are hopes and their implementation is a struggle–but what’s so different about life?

Edgewalkers Go Out-preneuring

What’s an edgewalker? Judi Neal says they are people “who walk between worlds and have the ability to build bridges between different world views. They have a strong spiritual life and also very grounded and effective in the evryday world. They have five qualities of being:

• self-awareness
• passion
• integrity
• vision
• playfulness.

Why would such people go out-preneuring. What’s out-preneuring? Out-preneurs are those employees who want to create their own business, but have deep respect for their existing company and see mutual opportunities for maintaining a link.

The kind of person prone to do this will tend to be an edgewalker.

Futureworks–an example of In-preneuring

While they are far from alone in the field of sponsoring what I call In-preneuring, Procter & Gamble have gone to some lengths to organize the process through what they call Futureworks. They invite others to bring them innovations in areas that connect with P&G brands for co-development.

Futureworks creates, incubates, and scales tranformational new business models, new categories, and service experiences with consumer-driven, disruptive market innovation. P&G FutureWorks has a diverse, experienced, entrepreneurial team, and is closely connected to P&G’s key leadership and their strategic goals. We work across brands, categories and functions, identifying opportunities and partnering accordingly.

They call it open innovation: the practice of accessing externally developed intellectual property in your own business and allowing your internally developed assets and know-how to be used by others. basically Futureworks is P&G’s entrepreneurial new-business generator and they already have over 1,000 agreements in place. Don’t be afraid of the giant!

Trendwatching for All Startups

Before, during and after you start a business, watching trends of all kinds, not least those in the consumer field is a vital, though not necessarily time consuming activity.

Without watching, you may miss the boat, or caught with your panties down – so it could be embarrassing–or worse!

There are many ways to trendwatch, apart from simply keeping your eyes and ears open. One I use is trendwatching.com: an independent and opinionated trend firm, scanning the globe for the most promising consumer trends, insights and related hands-on business ideas.

Top of their list for 2011 is Random Acts of Kindness. My feeling is that the cultural/spiritual underpinning of RAKs also underpin many aspects of social and cultural change that are happening right now. Generosity replaces greed, ‘what works’ is tempered by ‘what matters’, collaboration is the new competition, seeking shared value is the strategic imperative for sustainability.

Trends for 2011

Trendwatching: their 11 Crucial Consumer Trends for 2011 is a good place to start. You can subscribe for free or pay for the premium service. For this year, they list:

1. Random Acts of Kindness,
2. Urbanomics,
3. Pricing Pandemonium,
4. Made for China (if not BRIC),
5. Online Status Symbols,
6. Wellthy,
7. Social-Lites and Twinsumers,
8. Emerging Generosity,
9. Planned Spontaneity,
10. Eco Superiority,
11. Owner-Less.

Springwise: this is another source of my own trend watching. Their Top 20 Business Ideas for 2011 is very interesting in itself, but also when you see the ideas they have identified, you can map many of them onto the 11 Trends listed above. Springwise is another service you can get for free. Helped by a network of 8,000 spotters, their editors scan the globe for smart new business ideas, delivering instant inspiration to entrepreneurial minds.

If you are contemplating the idea of starting a business, this is an excellent place to go for inspiration. Even if you do not go for a me-too startup, the ideas they spot may lead you to your own unique business idea.

Inc. Small Business Success: you should be reading Inc. magazine anyway, but you can also subscribe to their newsletter–I do. A recent issue identified 11 Big Ideas to Watch in 2011. They are:

1. Rethinking Retail
2. Paranoia, Inc
3. The Return of Hiring
4. Cash, Credit, or iPhone?
5. Resuscitating Electric Cars
6. An IPO Comeback
7. The Battle for Your Living Room
8. Bespoke Everything
9. A Facebook Backlash
10. Adding Bottom Lines
11. More Uncertainty.

150,000+ Sets of Trends for 2011

If you can’t find what you’re looking for heree, just search the Internet for ’11 trends for 2011′ and you’ll get more than 150K of the lists identified, so if you want to start a business, don’t tell me you are short on data on the sector you’ve chosen. There are lists for branding, cocktails, customer loyalty, digital marketing, family, fashion, film-making, food, IT, kids, liberty, mobile apps, non-profit marketing, recipes, restaurants, prisons, public relations, social media, sports medicine, tech, weddings–to name but a few.

What’s great about this is that it costs you nothing to tap into the combined wisdom of experts in different fields of every aspect of of life: economics, society and politics. It has never been so cost so little to do market research for anyone who wants to start a business.

It’s not too late. Now is the moment to create your business model. Maybe the reason for the existence of the business you want to start is no longer valid. There is a better mouse trap–even than your own invention. Or, worse there is after all, no need to kill mice in the first place.

Of course you have your business plan, whether on the back of an envelope or bound into a 50-page document with charts and tables. But will it work? Will they believe it?

Alexander Osterwalder and Yves Pigneur have led the charge, with their book, Business Model Generation and the deceptively simple way of looking at strategy. Their business model canvas is a wonderful way to take a fresh (visual) look at the key elements of your wish to start a business.

Use the canvas on your own or with associates. Be creative. Use sticky notes, scribbles… get the ideas painted in. Then stand back and admire your masterpiece. Be sure that it won’t look quite as pretty as you thought when you were up close. The picture just doesn’t hang together. The perspective’s wrong, or the brushstrokes aren’t realistic. All the best artists repaint their canvases.

Entrepreneurs do it all the time. So should you.

When Michael Porter, strategy guru known for his five forces of competitive advantage comes to the view that creating shared value (CSV) is the key to the survival of business, I pay attention. When you think about it, the concept is not only ethical and about doing the right thing, it is also a very sustainable business strategy. Porter’s article, written with Mark Kramer, appeared in the Jan-Feb 2011 issue of HBR and deserves to be read by any thinking entrepreneur or manager.

Selfish competition can be such a waste of resources. Selfless cooperation is not always inimical to commercial success. Indeed ‘working with’ makes better business sense that ‘working against’. Business is a form of social organization. It is just that it has a particularly economic goal. The achievement of economic goals require working within an environment that helps, rather than hinders.

Social harms that flow from mindless behaviors have a strong tendency to come back and bite business in the bottom, creating unwanted cost as well as aggravation. Contributing to social good, on the other hand, is very likely to be of material benefit too. It is not a matter of being nice, but rather understanding the mutual advantage of contributing to the creation of a just and fair society.

Following a strategy of creating shared value is likely to require the firm to re-examine its business model.Looking at a business model requires an examination of customers, what they are offered and within what infrastructure, in order for the business to be financially viable.

Nestlé is one corporation that has dived into CSV and their image of how it sits in the sustainability continuum is depicted in the pyramid on the left.