Saturday, January 12, 2019

Corporate to SMB - Transition from Corporate Staff to Owning Your Own Small Business Can Be a Huge Shift

“I sure do miss the support, the accountability, and…oh yeah…the paycheck!”

Those who have worked for or owned a small business for any length of time are used to making it up as they go along and have a very hard time fitting into a corporate culture. Alternatively, those who have been used to thriving in a corporate environment with rules, procedures, and accountability often have a very hard time owning a small business. 

As the president of SoCal MasterMinds we have seen an unexpected trend. A substantial percentage of our membership have spent the majority of their careers in big companies, but due to downsizing, mergers, burn out, and other life-altering changes, have ended up owning a franchise or independent small business. 

In my recently released third edition of  When Friday Isn't Payday: How to Plan, Start, Build, and Manage Your Small Business,  I make the claim that most entrepreneurs are woefully underprepared for their venture. They commonly have low aptitude, training, and or experience in such fundamentals as accounting, managing others, marketing, and especially, sales.

These shortcomings are commonly somewhat balanced by passion, youth, low personal overhead, and few deeply ingrained business habits. The 35-year old who quits her job at the bakery to open her own shop is used to the small business environment and has had a chance to study at least some aspects of what it takes to survive.

The big company type who buys a business, a franchise, or starts their own enterprise from scratch is used to training, readily available resources of all kinds, and the need to wear only one or two hats.

Overnight they are thrust into a foreign culture where their new business depends on their ability to find prospects, sell those scary folks, establish proper books, collect receivables, establish procedures to ensure that products and services are delivered above expectations, price appropriately, and keep overheads in line. And all of this is done with the expectation of replacing that corporate paycheck and all the benefits…and soon.

What we are seeing in our MasterMind groups is extreme frustration, often a kind of paralysis, and life savings being wiped out in short order.

Here’s one story:

“When I worked for the company, I was required to make 100 calls per week. I am competitive by nature, so I would always make more calls than my team members. Those calls would result in five appointments, and I would close three. I was always a top producer.

“Now that I’m on my own, I have no pressure to make the calls, there is no competitive environment, and so I putz around with nonsense rather than get on the phone. I am far less productive now than I was.”

Here’s another:

“I opened my practice after leaving a large firm. I am now faced with finding clients. I have never marketed anything and have no training in sales. Friends tell me that I need to go knock on doors. I’m petrified by that idea. I hate salespeople. Why would I want to be one?”

Or this:

“I’m having a pretty good year, or so it seems. My customers seem to like what we’re offering. But about 70% of my income is from one client, and they are running about 90 days on my invoices. They now owe me $30,000. I don’t want to complain. They might stop doing business with me. Then what?”

The list of examples could go on for another 20 pages. In fact, I’ve decided to write a future book on this subject. But for today, what can these folks do?

  • Become an expert in each of the disciplines that are problematic. Read  When Friday Isn't Payday: How to Plan, Start, Build, and Manage Your Small Business, and other books that teach the basic principles of running a small enterprise. Then find book, online tutorials, YouTube videos, college classes, or other training to help go deeper into each area as needed. 
  • In particular, become an expert salesperson. There are hundreds of resources that can help. You will need to either sell or find someone to sell for you or you have almost no chance of success. In the beginning, it is usually a much better idea for you to do the selling. In this way you learn what is needed to get and keep great clients. 
  • Join a MasterMind group where you can get the expert opinion from peers who have done it before and understand what you’re going through. You also get the missing accountability. 
  • It can’t be done in 40 hours. You will need to work as many hours as necessary during the first few years. You won’t make your old paycheck until you have put in the sweat equity. It could take 3-5 years or more. 
  • If you are a franchise, lean heavily on the franchise management to help you with areas where you are weak. While it may sometimes be hard to believe, the do have a vested interest in your success. The original fee you paid was very nice for them, but it is the ongoing revenue stream they count on to actually keep them in business. 
  • If your finances are getting short, cut back every unnecessary expense until you have positive cash flow. 
  • A business manager or coach may be able to help you in those areas where you are weak. Make sure you see a clear ROI from their services.
It is possible to make the transition from corporate to small business, but you will need to be persistent and aggressive to do so.

Saturday, November 24, 2018

34 Questions Help You Determine Your BQ - Business Quotient. WIll You Be the Next Elon Musk?

In case you haven't heard, starting and managing a small business is VERY HARD, takes an amazing array of skills, temperaments, and ... well, let's not spoil the test.

In the course of writing the 3rd edition of When Friday Isn't Payday: How to Plan, Start, Build, and Manage Your Small Business, it occurred to me that there might be a way to give prospective owners a sort of aptitude test. People like me who can't draw a stick figure should probably not go into graphic arts, even with all the fancy new tools. It turns out the same can be said for business aptitude. Some folks shouldn't go that direction.

Well, the test has another application. Do you know any business owners who are failing, barely getting by, and/or hate their life (or what's left of it after 70-hour weeks)? Me, too. So, the test is for them, as well. I know plenty of lawyers who gave it up because it just wasn't worth it.

Enough blab. Go here to take the test. You can tell us your score or make other comments about the test below. 

The BQ Test


By the way, When Friday Isn't Payday: How to Plan, Start, Build, and Manage Your Small Business, is on sale during December. Paperback, normally $24.95, just $14.95. Kindle edition might be free if you are part of the Unlimited Club. If not free, you can get it for just 99¢. Normally $7.99

Wednesday, August 22, 2018

New! Startling Discovery of #1 Success Factor for New Small Business

Serial entrepreneur and business author rewrites his list of success factors for start up businesses

After an extensive internet search to see what others say about success factors, I found exactly one which included my number one in their top ten. On that particular resource, my number one was their number ten. The other lists were created using various approaches, including interviews with successful entrepreneurs, studies compiled by consultants or writers, and off the top of the head articles based on experience.

My research? As a marketing consultant I have spent the last ten years helping over 170 small businesses in very disparate fields with increasing their sales and profits. Over the past year I have participated in organizing MasterMind groups and Business Networking Referral called E-TEAM. Through this effort I have been introduced to another 100 companies where I was able to go deep into their companies success factors.

Also, I have started and managed 15 successful small businesses and 3 unsuccessful ones.

So here is my top ten list of why businesses succeed:
  1. Desire
  2. Sales
  3. Marketing
  4. Luck
  5. Accounting 
  6. Planning
 I would certainly agree with some of the other lists that adequate capital, location, good bookkeeping, appropriate margins, and things like traffic, leads, and conversion are critical as well. However, desire is that intangible which overcomes inadequacies that are always present in any business, whether start up or mature. 

If you follow my blog or other writings, you know that I want to be remembered for the phrase "nothing happens until something is sold." In my dealings with small business owners over the last half century, I am constantly appalled by the lack of sales skill. That lack of skill is often accompanied by a fear of prospecting, cold calling, and selling. Well, I don't really care how good your location is, how wonderful your product or service is, or whether you are priced right if there is no one to get the word out. And no, you won't get folks lined up at your door or your phone ringing of the hook with great web presence alone. 

If the owner hates to sell, desire to succeed, desire to help others, desire to spread the word about the fantastic offer the company is making can overcome the reluctance to do the hard thing and sell. This proposition can be applied to all the other hard things, like hiring, firing, working 100 hours a week, or digging deeper and deeper into savings when necessary, then calling Uncle Harry when your own money runs out. 

If the owner is lukewarm about the business, the smallest hurdle can undo the entire effort. But if the owner is passionate enough, there is almost nothing that can get in the way of success.  


“I Hate Selling” and Two Other Reasons Why Small Business Owners Fail


How Can You Overcome The Three Primary Issues that Kill Small Businesses?

As my beautiful bride and I walked along Pacific Palisades Park in Santa Monica on a sun-drenched day, she wondered aloud about our upcoming wedding anniversary, “How would you feel about renting a hotel or small cottage for two nights. I’m thinking it needs to be close enough to the ocean where we can hear the waves. I’m really drawn to every part of coastal living right now. Don’t you think that would be a great way to go down memory lane regarding our time together.”

Toni is not a salesperson. The idea of spending even one moment in the business of selling products or services to others would be horrific to her. But the pitch above was masterful, and the close was artful. We all sell all the time. So why do business owners commonly say that they hate to sell?

I would propose that most don’t hate selling. They are perfectly happy to talk to someone about their product or service and see if there’s an opportunity to do business. It isn’t the act of selling that chills the soul. What many dread is the prospecting such as cold calling, selling to strangers who might say no, or following up on initial calls. When you call to ask for the decision the answer might be no or the calls and emails may not ever be returned. In other words, doing the hard things.

Number one on the list of why business owners fail…Nobody is selling. What about number two? It’s related. The owner doesn’t want to do the hard thing, so he or she hires it done. This might be hiring a salesperson, a sales rep agency, a social media lead generation company or any one of a number of ways to avoid the hard aspects of selling. Unfortunately, it is the rare owner who actually becomes expert in managing any of these resources.

You see, it is hard to sales manage others when you don’t know how to sell. It is hard to know which rep group to hire if you haven’t studied how rep groups work. It is hard to evaluate a social media agency if you don’t really get social media. You can spend a huge amount of money in an attempt to generate traffic, leads, or sales with little to show for the effort. Small businesses fail for lack of the necessary capital to overcome the reluctance of the owner to sell and the costs of the learning curve necessary to become proficient with alternative approaches.

If business owners hate to “sell,” they hate accounting even more. Most might not really hate accounting if they had ever taken a course or read a book about business accounting. Regardless of the reasons, most small businesses fail to set up good accounting systems, fail even harder at managing input into the systems they do establish, receive reporting from their accounting systems that is inadequate at best, and have no ability to analyze and make corrections in response to the reporting, because they don’t know how to read the reports.

The comparison here would be that your heart surgeon does surgery with no idea what is happening with your temperature, breathing, blood pressure, pulse, brain function, etc. The second reason that so many small businesses fail is due to the bookkeeping being inadequate. Why? Because the owner doesn’t want to do the hard things.

Hiring, managing, motivating, firing! These are hard things. The government doesn’t help owners love dealing with employees with its endless rules, laws, and meddling with the employer/employee relationship. So just after the owner says he hates selling, and hates accounting, the third verse is: “I hate HR.”

It goes without saying that this is just one more “hard thing” where the owner doesn’t want to take the time to develop expertise. There are countless resources available on how to hire, how to manage, how to motivate, and how to fire an employee. But the reality is that the small business who reaches the size that allows it to hire employees is commonly driven out of business by the bad hiring choices and the ineffectiveness of the employee (s) once hired.

Successful businesses are commonly those where the skills of the owner are so great that they overcome the barriers presented by failings in these three critical areas. For instance, you might have a retailer who is so good at merchandising and choice of location that the customers come and buy even if the sales staff is not that great.

You will see the outstanding lawyer or doctor whose reputation results in referrals and the accounting doesn’t matter, except that the company could be doing so much better if the collection of past due invoices was better.

Or you have the manufacturer who creates a product so compelling that inefficiencies in line and staff positions only reduce profit, they don’t kill the company.

As a consultant and a mastermind facilitator, I have seen hundreds of such companies; those that make it in spite of themselves, and those that fail for these very reasons. What I have seen is that owners who join a mastermind group quickly learn about the places where they are getting in their own way, failing to do the hard things, or on the verge of failure because of issues like the above.

When you surround yourself with peers who have unique business experience, skills, and education, you are going to have individuals within that cadre who will see right through your defenses and into the heart of the matter.

Those peers will care enough to spell it out. As an owner we rarely hear the truth. In fact, we rarely feel safe enough to speak the truth. But in a mastermind group we quickly see that the others in the room get it. They’ve experienced the same fears, roadblocks, regrets, and failings. They’ve been offered opportunities like the ones currently on your radar. They’ve made good and bad choices. They can speak with great authority because they’ve lived it. And they can speak honestly because they have no vested interest in the outcome.

If you live in Southern California and you’d be interested in joining a MasterMind group and enjoying the immense benefits of peer-to-peer learning and accountability, please contact Randy Kirk at 310-910-1848

Tuesday, May 01, 2018

What If Your Business is B2B only and the Networking Chapter Your Checking Out Is Heavily B2C?

Small business marketing today is moving from an advertising driven paradigm to one based on networking, connecting, relationship building, and reviews and referrals. Consumer goods better have great reviews on Amazon, and service businesses better have great reviews on Yelp. Then you have review platforms on Facebook business pages and Linkedin, too.

All of those systems are passive. Sure you can work them, try to optimize them, even spam them, but they all require that the customer find you through search.

Proactivity, on the other hand, relies more than ever on face to face, or at least text/email relationship building. There are plenty of folks trying to sell small business on the idea that this can be done through Linkedin prospecting, Facebook video ads, or Instagram storytelling. In fact, I’ve made a good living and helped my clients use some of those tools t
o excellent results over the last decade or so. You should be using them.

But almost every small business owner or rep I talk to says the same thing. They either need to go door-to-door or else do some form of organized networking. Some of the possibilities include:
  • Mixers
  • Chamber of Commerce Events
  • Service Club membership
  • Trade shows and local pop up booth events
  • Business Referral Networking Groups. 

All of the above hold their own special charms and can work if they are worked hard and with great intentionality. For this post, however, let’s take a deep dive into the world of Business Referral Networking organizations.

Can You Make Money through a Business Referral Organization?

The following are my recommendations for choosing the right group. But first allow me to tell you a few things that will influence my position. I have been a member of three different groups, have attended meetings of the largest group, and have written about this type of marketing in at least two of my business books. So, yes! I believe this is a solid way to generate new business with a very reasonable investment of time, money, and energy.

I am also currently a director for E-TEAM, a brand new division of TEAM, one of the largest referral networking organizations in the US. However, I think you will see that this position is not causing any bias as you review the methods for selecting the right group.

How to Choose the Right Business Referral Networking Chapter

You see, I’m going to focus on the chapter, not the parent organization. So here are the criteria I would use:

1.     No less than 15 active members. No more than 35. Some very large groups are very successful, but you rarely have time to give a presentation of your business. Less than 15 is usually a club in distress that is on the way to folding. The exception would be one that is growing under a solid leader.
2.     Check before you go as to whether your category is taken or compromised. Some chapters will go to great lengths to divide up categories, so they get everyone to join. You benefit if you have more breadth.  
3.     When you attend, pay attention to the protocol. All such groups insist on using good networking approaches during the 15 minutes or so before the formal meeting starts. Are the members standing up and actively networking? Do you get greeted by one or more members?
4.     Check the membership as they give their 1-minute elevator speeches. Are there power partners for you in the room? In other words, are their individual members who share clients with you? E.g. Real Estate Agent, Mortgage Broker, Handyman, Escrow Company.
5.     Now listen carefully to see how much business is being passed. The rule of thumb is four referrals per member per month. So, in a room of 15, you’d expect around 15 referrals to be passed. If less than 5 outside referrals (non-member referrals) , you need to at least ask some questions.
6.     Always check two or three groups before you decide, unless you are there because of a strong recommendation or unless the chapter is obviously super strong and perfect for you.

This has been a serious problem and may still be a problem in your neighborhood. I was a part of such a group. It was a really good group, friendly and doing business. Unfortunately, I wasn’t getting a single usable referral. To be 100% honest, the first week I was given a power partner referral that turned out to be golden. Then nothing. 

A New Kind of Business Referral Group Is Launched - B2B Only

I happened to get into a conversation with the CEO of TEAM Referral Networking, Kelli Holmes. We discussed my problem. She said she had a solution. A new kind of chapter where all the members were B2B. Essentially this meant that every member of the group was a power partner for every other member.

I attended a local chapter and found the difference to be amazing. The payroll guy, the merchant services gal, and the website developer all had exactly the same client profiles. So did the business broker, the commercial printer, and the business banker.

As I looked around the table at the commercial realtor, the business coach, and the commercial photographer, I realized that every single person could basically hand over their customer and prospect data base to the person next to them, and they could just start calling that list. But instead, the merchant services rep had spoken to their bakery customer about the payroll services guy, and the baker was expecting a call.

The result of that meeting was a decision to partner with TEAM and become a director for this new kind of B2B only referral group. We call it E-TEAM and were opening them throughout Southern California at this time, with plans to expand nationally soon.

We are actively building clubs in the Inland Empire, the Eastern portion of LA County (Covina/Pomona/Diamond Bar) and Northern Orange County. Our plans are to begin organizing additional chapters in DTLA, San Gabriel Valley and WLA in the Fall of 2018.

If you would be interested in joining a chapter of an E-TEAM B2B Referral Networking Group, please call Randy Kirk at 310-910-1848 or email at We are also looking for individuals who would like to help build a chapter in their area. For more information please visit

Top categories for E-TEAM

1.         Payroll service
2.         Staffing company
3.         Commercial insurance
4.         Lende
5.         CPA and/or bookkeeper
6.         Commercial photographer
7.         IT managed services
8.         Website/social media
9.         Commercial Printer
10.       Sign makers
11.       Merchant Services
12.       Business Lawyer
13.       Commercial Realtor
14.       Graphic Artist
15.       Promo Products
16.       Charitable organization
17.       Janitorial
18.       Supplemental Insurance
19.       Security alarm installer
20.       Buildout contractor
21.       Commercial HVAC
22.       Guard service
23.       Business Broker
24.       Business Consultant
25.       Business Coach

Sunday, April 29, 2018

Five Reasons Why You Should Join a MasterMind group – Three Reasons Why You Shouldn’t

SoCal MasterMinds meet to help on another improve personally and professionally

It was Harold’s turn to be in the hot seat at his MasterMind group meeting. Harold was no different than most who have come before a group of their peers to expose their innermost business goals, needs, and problems. He was terrified. 

However, he had seen how others before him had weathered the brutal honesty and heartfelt advice from the group, and he had also seen how they had been catapulted to change in ways that drove better sales, profits, and quality of life.

The hot seat will make you better at SoCalMasterMinds.comBut Harold’s time would be a bit different than the others. He had never really faced himself in any real sense, nor had he had anyone in his tribe who was willing to be honest with him. 

What came next was both ugly and necessary. Harold became defensive and angry under the questioning of his motivations, his methods, and his results. His defensiveness became the issue, which only created more walls to go up in Harold’s emotional response. The result was that Harold got very little that would help his business from his hot seat experience.

On the other hand, as the next hours, days, and even weeks played out, Harold met with members one-on-one, and recognized how he had sabotaged his opportunity. His apologized to the group as he realized how his ego got in the way of his ability to hear truth.

#1 Reason to Not Join a MasterMind group & #1 Reason to Join

You should NOT join a MasterMind group to confirm you own understandings about yourself, your business, or your expectations. In fact, the number one reason to join is tohave those very things examined, tested, and challenged. As business professionals who run our own show, we are almost always in a bubble, an ivory tower, an echo chamber. Our only resource for good counsel is ourselves. King Solomon knew the results of such counsel “Where there is no counsel, plans fail.” 

#2 Reason to Not Join - You're Happy Being Meh. Join MasterMind Only if You Want to Soar

You SHOULDN’T join a MasterMind group if you’re happy with your current results. As a consultant for the past decade, I’ve run into dozens of business people who have invested time, sweat, money, training, and taken huge risks just to make $60-$80,000 per year. And when asked, some of those will say, “I’m okay with that.”
You should join a MasterMind group if you’re not “okay with that.” The other members of the group are going to use every ounce of their creativity and business skill to provide you with new ways to improve personally and professionally. If you aren’t interested in improving, they will lose interest in your participation. MasterMind members are driven by the desire to see things flourish, not wither and die.

If You Lack Persistence, Don't Join a MasterMind Group

#3 reason why you shouldn’t join a MasterMind group. Lacking persistence.  Most small business owners and reps are getting mediocre results because they don’t want to do the hard things. MasterMind is a place where that reality is going to be handed to you by a group of your peers. Peer pressure may be just what you need to do those hard things, but don’t come expecting to find a simple, passive, non-threatening way to make the big bucks. 

Join If You're Ready to Break Out of Your Comfort Zone

Prepare to leave your comfort zone at 
You should join a MasterMind group if you are really frustrated with your inability to break out to the next level, whether that is breaking $100,000 a year or $1m per year. Join if you are making lots of money, but you’re not enjoying life. Join if you are making money, but have new directions you’d like to try, and need wise counsel to check your decisions.

Finally, you should join a MasterMind group if you are looking for a permanent board of directors who have no reason to kid you, pasify you, or stroke you, but will enjoy the thrill of helping you become all that you can be. 


MasterMind Groups are being formed in Southern California right now. If you would be interested in learning more about joining a group are starting a group in SoCal, please call Randy Kirk @310-910-1848 or email at


Friday, July 21, 2017

Goal Setting is Step One for Any Business - from Startup to Selling Out


 Carefully Considered and Written Goals May Dramatically Increase Your Overall Success

My mom used to say: “You’re going off half-cocked.” Most of the small businesses that I have worked with could use the same challenge. Any well-run effort should have a plan, and every serious plan starts with the goals. The goals answer the questions:
  • Why am I doing this?
  • What are the ultimate success metrics?
  • Why would consumers or businesses buy from me?
  • Am I passionate enough to do what needs to be done?

There may be a few more questions for that list, but those would be a great place to start. There is an almost unlimited list of ways to make a living or a fortune. Evaluating your specific idea by asking these four questions can help you to make choices between options, and get serious with yourself about diving in.

You are about to risk substantial time, money, energy, and emotion. Setting very specific goals before you start that effort is A. Sensible, and will B. Actually contributes to your success.

You may want to start with your personal life goals. Have you thought them through? Have you written them down? Recent research has shown that those who write down their goals achieve success at a much higher level than those who have not. I believe this advantage derives from the kind of thought that goes into the writing process. You might have some general goals in your mind about what you want in the future, but writing them down will bring clarity, and cement them in your mind and heart.

Whether we are talking about personal goals like family size, where to live, lifestyle choices, and charitable efforts, or business goals like total sales, profits, or type of enterprise, clear goals will provide direction regarding strategies and tactics.

The headline promised that this article was not just for start-ups, and it isn’t. You can and should stop yearly at least to contemplate any changes in goals, and to review your progress towards achieving the goals you’ve been working on.

Another time to think through your goals is when there is a major transition such as a major new product line, an acquisition, a buyout offer, or retirement. Entrepreneurs are commonly distracted from their primary focus by some new, bright shiny object. Even a new line of business for the company may look great in concept, but not really be lined up with the goals you’ve set. Of course, you can change your goals any time, but it is better if that decision is considered in the light of “changing goals,” rather “it seems like a good idea.”

There are many excellent books on goal setting. The first few chapters of my book, “Running a 21st Century Small Business,” take a deep dive into setting life goals.

Friday, June 23, 2017

New Crowdfunding Methods to Raise Cash for Both Startups and Mature Businesses

Kickstarter, StartEngine, GoFundMe, and Others Can Help Your Business Raise Needed Money

Do you have an idea that you believe could sell millions of units, but you just lack the money to bring it to market? I have been faced with that dilemma multiple times in my life. The resources generally available until just this decade are listed below and I have done all of them, some of them multiple times or continuously:

  • Credit Cards
  • Friends and family equity or loans
  • Borrowing against personal assets like your home    
  • Bank borrowing using personal guarantee, personal or business assets 
  • Small Business Administration Loan 
  • Selling stock to qualified investors with SEC filing 
  • Asset lending on accounts receivable, inventory, or purchase orders 
  • Customer advanced payments

All of these are still valid methods and commonly used, but there are limits and companies are commonly not able to use these approaches for all the opportunities or crises they encounter.

Now there are two more methods that are creating massive funding for companies, products, and services that don’t require any assets or much cash. Both involve crowdfunding online. One method uses “rewards” that are paid for in advance based on a HOPE that the company will actually deliver the rewards as promised, someday. Almost generically known as Kickstarter, the most common reward is a new product that the funding is designed to help the entrepreneur bring to market.

The other is raising equity or loans from qualified and non-qualified investors in amounts as little as $100 at a time. The investors are found online as part of a crowd of folks that like to take these kinds of risks.

Let’s take a look at these one at a time

Over the course of the last 40+ years I have brought multiplied hundreds of products to market and either owned or worked with 180 companies that offered products are services. In the course of these years they new company or new product process worked something like this:

  • Idea
  • Business plan for development
  • Cash requirements analysis
  • Personnel and facilities requirement to launch
  • Source of cash analysis
  • Timeline
  • Raise cash, execute on personnel and facilities
  • Spend money on design, tools, packaging, inventory
  • Take idea to buyers and attempt to create pre-orders based on brochures or prototypes
  • Make initial buy of inventory with no idea how fast product will move through distribution and off the shelves.
  • Ship and wait for results – manage results to best extent possible
  • Evaluate and shift as necessary regarding product, packaging, POP displays, distribution channel marketing, price, competitive shifts, etc.
  • Evaluate movement and begin to plan inventory rotation based on sales

Kickstarter and other websites like this are now firmly established with outstanding records for raising amounts as small as a few thousand dollars to multiple millions. The advantages for any company launching a new product using Kickstarter are huge:

  • Almost all of the risk is shifted to those seeking the reward (product.) With other methods the entire risk generally falls on the company and/or owner.
  • You can test market the product prior to spending more than a few dollars on copy, artwork, videos, etc., about the proposed product
  • The product gets displayed on a website where thousands of potential consumers can see your concept and potentially take a risk by placing an order for the “reward.”
  • The marketing content that you create for a successful Kickstarter campaign is now tested and ready to be used to sell in the future in traditional “stores.”

What does it take to create a successful Kickstarter type campaign?

  • A solid and serious new product or service idea that has an element of inspiration around it. There needs to be something seriously new and innovative.
  • Your own large following on social media, preferably including a big email list of folks who would be interested in the product or at least with helping you out.
  • A well thought out and creative pitch that can be translated into Great Copy, videos, spec sheets, etc
  • Rewards – This would include variations of your product, but might also include T shirts, thank you letters, etc.
  • A serious fund raising goal
  • Evidence of trustworthiness

What if there is no “amazing” new product, but you have a great company idea, or an existing company with a track record. If you would like to issue stock, you can go traditional routes similar to what John just outlined with friends, family, associates, venture capitalists, etc. But congress passed a bill which provides a new route.

You can now use online resources, including social media, to “advertise” your stock offering to both qualified and non-qualified investors. The stock can be preferred or common, voting or non-voting, it can even be bundled so that you are only dealing with one entity instead of thousands of individual share holders.

Under these new rules, these stock offerings do not have any of the onerous SEC requirements that earlier offerings require. Sadly, you are limited to only raising $2m per year. LOL

How does this process work?  What do you need to be successful?

While there are those who only try to raise a few thousand dollars using this approach, I would recommend sticking to credit cards and Mom if that’s all you need. Personally, I would suggest a minimum raise of $25,000 or even $50,000 for this type of stock offering.

You will want professional help. Start Engine Is one of the largest, but there are many. Each has their own niche, so it is hard for me to say which would be better for you. The reasons you need help:

  • Unless you think your friends and fans will fork over all you need, these online companies are followed by investors looking for these types of opportunities.
  • They will help you with the legal filings and what you need on your listing
  • For a fee, some will help you with the marketing (Start Engine $4000)
  • There are also issues of timing, how much to ask for, how to value your company preoffering and what that will look like post offering.
  • The actual type of stock, limitations, etc., are other legal issues you may get help with.

To be successful, you either need a killer idea, a great company story, an amazing leadership team or all of the above. Then you need to tell your story within the bounds of legal and ethical constraints. In other words, you are not allowed to puff your deal.

Consider this scenario, which is exactly what I’m doing with a current client. 

  • You have a new product or service idea
  • You have $10,000 available from friends, family, credit cards, cash flow
  • You raise $50,000 through a stock offering (cost $7000)  Net $43,000
  • You put the new product concept up on Kickstarter – cost $5000
  • You raise $100,000 (cost of goods $50,000) net $45,000
  • You now have $98,000 in working capital ($88,000 if you repay the $10,000)
  • You finish the research, make the tooling, buy the goods and ship the orders.
  • You may have spent some of the $98,000 on the make ready and overhead.  Let’s say you have $50,000 left. You can now use the $50,000 to buy inventory, set up the product on Amazon and eBay, and start selling.
If you would like to discuss more about the details of these methods of starting or financing your small business, please call Randy Kirk at 310-910-1848. The first 45 minutes of consult is without charge or obligation.