Radio Free Enterprise

Many entrepreneurs dream of raising millions of dollars in venture capital.

What most don’t realize is that achieving that dream may actually mean creating their own nightmare. You see, closing a VC deal for millions of dollars is not a destination at the end of a long hard journey. It’s the beginning of an even tougher road that most business owners have never traveled before.

If you are an entrepreneur dreaming of raising your first round of venture capital, let me give you five reasons you don’t want to see your dreams come true.

1. You don’t know what you’re doing: Raising venture capital is a difficult, complex, time-consuming process best left to those with years of experience. You need to find investors who specialize in your industry and your stage of development. They are going to want to see tightly-written business plan with credible, detailed financial projections that tell a tale of 10x ROI along with a believable exit strategy. They want you and your management team to have a great depth and breadth of experience in your industry and be willing to hang in there through thick and thin until the company either folds or achieves a liquidity event.

2. Things will never be the same: As soon as the deal is struck - but before the money hits your bank account - you have just switched into overdrive. Expectations will skyrocket and failure will not be an option. What may have been a very profitable lifestyle business is now a fast-track growth business at its earliest stage of development with no guarantee of success.

3. You just lost control of your business: You will now report to a board of directors which will probably be dominated by your new partners, the VCs. Your vision and direction may well be altered along the way or thrown out altogether when and if the board feels a change needs to be made. How you react will be up to you.

4. Everything you do will be scrutinized and second-guessed: While your investors won’t be there working shoulder-to-shoulder with you, making critical decisions and ensuring that the trains run on time, they will be reviewing every action, expenditure and hire, asking questions that you may feel have no real bearing on the success factors underlying your business model.

5. They want the money back: Landing millions of dollars in venture capital means you have a big problem on your hands: how are you going to pay it back? While a huge infusion of capital does present a wonderful opportunity, it also represents an enormous responsibility. The VCs and their investors want the money back - in spades. They are looking for ten times their investment in just a few years. So along with a $10 million asset, you’ve just created a $100 million liability.

Obviously, many companies have done very well by working with venture capitalists, creating billions of dollars of wealth for everyone around the table. Unfortunately, many more have seen their dreams crash and burn by getting in bed with outside investors.

Here’s the bottom line: don’t even consider raising outside capital - from VCs or anyone else - until you have thoroughly thought the process through to all of its possible ends. And understand that by bringing in ambitious, high-maintenance investors, you may lose - or at least lose control of - a great business that took you years to build.

Are you a Mom with a great idea for a product?

Oprah wants to make you a star! A RICH star!

Oprah and QVC (the TV shopping channel) are teaming up to find the most interesting and marketable products that nobody ever heard of so they can bring them to the American consuming public, pleasing the public and enriching the moms (or dads?) who invented them.

As a past participant in a QVC product search cattle call, I can tell you that the competition will be stiff and the success criteria strict. Still and all, it’s worth a shot. The promotional combination of QVC and Oprah is sufficient to make anyone’s wildest dreams of business success come true.

Check out this web page to learn more and enter for your chance to win.

Have you ever seen the movie “Glengarry, Glen Ross?” Fantastic.

The 1992 film featured an all-star cast including Jack Lemmon, Al Pacino, Ed Harris, Kevin Spacey - and an unbelievable cameo from Alec Baldwin. Also a very successful stage play, it’s one of my favorite dramatizations of the sales game.

The central focus of the plot is “the Glengarry leads,” a stack of 3×5 cards that holds the names and contact information of the people most likely to buy the Florida swampland our heroes are trying to sell from their dingy bullpen in a second-floor walkup office building in New York.

The characters are literally willing to do anything - including lie, cheat, steal and kill - to get their hands on those prime leads.

Why? Because few things in business are more valuable than a list of highly-qualified prospects for what you’re selling. But you don’t have to commit mortal sins to get them. All you have to do is visit InfoUSA.com.

With over 14 million business listings and over 210 million residential listings, InfoUSA has all the leads you need. Just list the attributes you are looking for and run a search. InfoUSA will tell you how many listings meet your criteria, how much it will cost to buy them and even plot them on a map to show you where they’re concentrated. They can even analyze your current customer list to tell you who your prime prospects are and where to find them.

I’ve been using this service for years and highly recommend them. Take a look at their site and then come back and tell me what YOU think.

One of the biggest problems facing every business owner is capitalization.

Where can I find start-up capital? How can I be sure to always have enough working capital?

Bank loans are much more difficult to secure than most new business owners realize. Without a decent track record of growth and profitability, no bank is going to give you a loan without requiring you to post collateral such as your house.

Securing venture capital is also very difficult. In fact it’s pretty much impossible if you have no experience in the process and/or your business model doesn’t fit with what VCs look for in terms of growth and the probability of a significant future liquidity event.

So, what’s Johnny Entrepreneur to do when he needs to get his hands on some cash to grow his business? For many people, the answer may be Prosper.com.

Prosper.com bills itself as “The online marketplace for people-to-people lending.” In effect, it’s kind of like an eBay for personal loans. If you need money, you anonymously post your story, how much money you need and the maximum percentage interest rate you’re willing to pay. The site checks your credit score and assigns you a Credit Grade and a Debt To Income percentage. Lenders then post bids of fractions of the total you’re looking to borrow at varying percentage rates not to exceed the maximum threshold you’ve set.

There are too many details and case histories to cover in a blog posting so I recommend you visit the Prosper.com yourself. While you’re at it, you should also visit one of the many piggyback sites which have popped up like EricsCC.com, which chronicles the lending and borrowing statistics of Prosper.com members. Truly fascinating stuff.

People often ask me what The Customer Factory is. This video provides the answer.

Over the past 33 years I’ve had the opportunity to meet, work with and present before thousands of entrepreneurs across the country. And all that time, I’ve been fascinated with what differentiates the fraction who succeed from the thousands who struggle.

In my opinion, the answer comes down to a single word: Marketing.

For most business owners, Marketing is a Mystery and Sales is a Dirty Word. I created The Customer Factory Marketing Model to help entrepreneurs make friends with Sales and understand and implement proven Marketing strategies.

The Customer Factory uses the simple illustration of an assembly line factory to put the entire Marketing process into four steps that any business owner can understand and implement.

Take a look at this video and tell me what you think.

Today’s technology makes it easier than ever before to start and run a profitable business with very little capital.

Entrepreneurs can drop-ship products to customers without getting their fingers dirty with details like production, quality control, employee management, packaging or shipping. Outsourcing means that almost anyone can create their own software package.

Online marketing can be configured so that you never pay a dime until somebody buys something. Audio and video production, graphic design, print production - almost anything you can think of - is available right at your fingertips. As long as you know which button to push - when.

It’s self-apparent: a tool can’t bring you benefit if you don’t know how to use it. And the faster new technology comes on the scene, the harder it is to catch up.

That’s where a new online learning resource from Dell may be able to help. Studio Dell offers a series of informative videos for entrepreneurs on technical topics ranging from “The Benefits of WiFi” to “How to Drive Web Site Traffic” and much more.

The videos are short (about 2 minutes long) so they aren’t very in-depth. But they offer links to more detailed information for those who want to spend more time learning about a particular topic.

If you’re a technophobic entrepreneur, Studio Dell might just be a great place for you.

Don’t you just love it when someone else tells you what you’re feeling and thinking? I know I do.

So I was especially pleased to learn that Wells Fargo Bank and the Gallup Organization have just released their latest Small Business Index, a survey of 600 business owners nationwide conducted between November 9 and November 29, 2006.

Based upon that survey, here’s what we’re all thinking:

1) We are optimistic about 2007. The Small Business Owner Optimism Index is up to 69 points, equaling its highest level since the survey began in late 2003.

2) Our Top Five Concerns are: the cost of insurance (64%), taxes (62%), energy prices (54%), government regulations (45%) and finding qualified employees (42%).

3) Our Five Biggest Priorites for 2007 are: generating stronger revenues (90%), cutting operating expenses (63%), reaching more customers (57%), more advertising (42%) and investing in technology (37%).

I could swear they’re reading my mind! Maybe those people who say the government has bugged their brains aren’t crazy after all.

Seriously, I’m sure this information is useful for guaging how you’re doing and what you’re feeling relative to your peers, but it’s probably more beneficial to those who market to business owners than it is to the business owners themselves.

What do you think? Post a comment or leave me a voice mail message on the toll-free listener line at 866-690-4747. Great voice mails are always candidates for inclusion in future podcasts.

I’ve just found a great site for business owners. I love everything about this site - except its name: Work.com.

I’m sure that registering that domain name required prodigious amounts of either luck or money but, either way, I have no idea why the owners applied the moniker Work.com to a web site which is sub-titled “How-to Guides for Your Business.”

But, let’s put that whole issue aside for a moment and talk about why I’m recommending you visit nonetheless.

At this site you will find over 1,300 (1,361 at last count) guides to various topics on starting and operating a successful small business. Categories range from “Internet and Ecommerce” to “Government” and “Legal.” Topics range from “Online Maps for Small Business” to “Successful On-Hold Messages.” You can also see guides categorized by business type or geographical region.

One of the coolest features of the site is that visitors get to vote on usefulness of each guide on a 1-10 scale where 1=Useless, 2=Almost Useless, 5=Somewhat Useful and 10=Supremely Useful.

Work.com (there’s that name again!) also gives subject matter experts the opportunity to submit their own guides. Another excellent example of the power of education-based marketing.

Check out the site and let me know what you think.

Intuit (the folks who bring you Quicken and QuickBooks) have joined with The Institute For The Future (wow!) to bring you The Intuit Future of Small Business Report.

A blog posting is not the right medium for an in-depth explanation of a document this weighty. So let me just touch on a couple of highlights and let you decide for yourself whether you want to download and read the 20-page first installment of this report.

1. The Social Transformation of the 1960s and 70s have combined with the Technological Transformation of the 1980s and 90s to foment an Economic Transformation which is already underway and will continue into the foreseeable future.

2. Small Businesses play a key role in the Economic Transformation because of their ability to leverage the societal and technological changes quickly, nimbly and creatively.

3. The Face of Small Business is changing rapidly to include people at either end of the age spectrum as well as an increasing number of women and formerly dispossessed members of society from around the world.

4. Many more “solopreneurships” (one business owner with no employees) are arisinig, fueling an upswing in the use of contract and virtual employees.

5. Entrepreneurial Education is being adopted by - and in some cases outpacing - more traditional formal education resources like universities and technical schools.

This is fascinating stuff. I can hardly wait to read the second installment!

I know you’re busy, but if you are serious about growing your business into the future, this is one document you should not only read, but study. I thank and congratulate the folks at Intuit for putting their resources behind its creation.

Post a comment after you read the report and tell us all what YOU think about The Future of Small Business.

Regular readers will remember me gushing about Steve Job’s recent unveiling of the Apple iPhone - which will be available for sale beginning in June.

Could it be that I - and so many other wannabe pundits - were bewitched by Steve’s “Reality Distortion Field?”

Watch this video and decide for yourself.