5 Reasons Now Is The Best Time to Start a New Business

start-business1The combination of inexpensive technology, accessible virtual markets, and easy funding through crowdsourcing is changing the face of entrepreneurship. Today’s new business starters are socially sophisticated, willing to bear more risk than previous generations, and more likely to work out of a home or small office and rely on others for business processes. Some are small guerrilla outfits surfing from one hot concept to the next, and some are venture capital-funded geniuses with disruptor ideas.
It is a great time to start a new business – the best time in history.
 

The Keys to Success

America has always been the land of opportunity, the Mecca for entrepreneurship. While great fortunes have been made by immigrants and first-generation Americans such as Andrew Carnegie in steel, John D. Rockefeller in oil, and William A. Clark in copper, thousands of others formed successful small companies that provided financial security and employment for hundreds of thousands of their fellow citizens.
 
The possibility of being responsible for one’s own fate has never been greater in the history of the country. Latent opportunities for new ideas and businesses have exploded exponentially, each new concept and novel interpretation of old methods pregnant with possibility, just waiting to be birthed. There are several key reasons why this is so.

1. Cultural Accommodation

For much of history, capitalism was restricted to the beneficiaries of high birth, ancestral wealth, and exclusive education. The wide-open spaces and untapped resources of the new continent in the 19th century shattered cultural norms that had existed for hundreds of years. Entrepreneurs flooded the country, exploiting new resources, new markets, and new technology to create the greatest industrial nation in the history of the world.
 
Despite the success, access to these new possibilities was unfortunately generally limited to white males. Minorities (except in their limited communities) and women were excluded, restricted by racial prejudice, cultural stereotypes, and inefficient educations.
America in the 21st century is a more open society and access continues to broaden regardless of sex or ethnicity – anyone smart enough and brave enough to create a new business can try. According to a 2013 American Express report, there are 8.6 million women-owned businesses in the country, generating more than $1.3 trillion in revenues and providing jobs for 7.8 million employees. The rate of growth between 1997 and 2013 in new women-owned businesses has been one and a half times the national average. In a U.S. Census News release in 2011, Tom Mesenbourg, deputy director of the U.S. Census Bureau, proclaimed, “The growth in the number of minority-owned firms – both employers and non-employers – has far outpaced that of businesses overall.”
 
Led by federal and state governments, programs to assist potential new business owners are readily accessible and generally free. An entrepreneur can access classes ranging from basic accounting, to sophisticated product and service contracting. Face-to-face onsite mentoring is available from organizations such as S.C.O.R.E., while municipalities, colleges and universities, and private businesses offer incubator facilities with administrative and accounting assistance at low cost. Federal laws require that a percentage of federal contracts be subcontracted to small businesses and provide detailed contracting assistance for those individuals and companies who seek such work.
 
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Importance of Community Banks and How They’re Threatened by Dodd-Frank

local bank buildingMalcolm Holland, president of $650 million Veritex Community Bank in Dallas, Texas, worries about the future of community banks as a result of increasing federal regulations and growing compliance costs. His concern is based upon the increasing expansion of federal rules that limit the flexibility of community bankers to meet the needs of their customers: “Community banks need to be creative because small business is creative. If we can’t meet the needs of small business – the core of our business – the economy as we’ve known it will cease to exist.”

In Mr. Holland’s opinion, legislators and regulators have failed to distinguish traditional community banks from the large multinational finance corporations commonly called “banks,” but for whom the standard functions of banking – taking deposits and making loans – are a minuscule part of their activities. It was the activities of the too-big-to-fail entities that caused the recent worldwide financial crisis, not the community banks. Unfortunately, in response to the mortgage securities debacle and in their efforts to prevent similar abuses in the future, the heavy hands of the regulators and uninformed legislators have unnecessarily and unfairly burdened community banks.

History of Community Banks

Banking is among the oldest industries in the world, tracing its roots back to ancient times where lenders, representing temples of worship or ancient rulers, provided loans to farmers to raise crops or traders to finance purchases in a distant region. As government-issued currencies became more acceptable and common, commerce expanded across continents and oceans, and a greater proportion of the population began to rise above subsistence, the beginning of our modern banking system appeared.

The first regulated savings bank in America (and the world) was the Provident Institution for Savings of Boston, Massachusetts in 1816. Just as the ballot box provided the opportunity for a man to assert himself in the politics of the nation, the savings banks allowed him to share in its prosperity, according to John Townsend, writing in his 1896 “The History of Savings-Banks in The United States.” It is from these roots that community-based financing developed.

Definition of Community-Based Financing

Simply stated, community-based financing is the utilization of locally based and supported financial institutions and organizations to fund local businesses and individuals within the same community or geographic area. The concept implies a continuous cycle where residents of the community, employed by and trading with local businesses, deposit their savings in locally owned institutions, which subsequently (and repeatedly) lend to or invest in local businesses and individuals.

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For Inventors: Sources of Capital

This article initially appeared on the IPWatchdog.com website November 2, 2013

inventorSome inventors turn to 3rd-parties for help, seeking to avoid the ego-mashing, time, and effort that seem to accompany every capital-seeking attempt. More often than not, however, they find the relationship expensive and unsuccessful. Successful efforts invariably require the inventor’s involvement as well as access to individuals who can “pull the trigger” on investment – who you know can be just as important as the product’s viability. Professional advisors may ease the process and improve your chance of success if they possess the following:

  • personal contacts among the sources whom you seek to solicit
  • an understanding of the intricacies of negotiation
  • prior successful experience raising capital or licensing inventions
  • your best interests

Whether paid by fee up-front or contingent, or as a percentage of your final arrangement, any advisor should represent you, not the potential investor.

As the girl in the fairy tale ruefully remarked, “You have to kiss a lot of toads to find a prince!” Raising capital is not much different and is often a difficult, tedious, and frustrating process.

Common sources of capital worth pursuing include the following:

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For Inventors: How to Monetize Inventions (Financial Arrangements)

This article first appeared on IPWatchdog.com on November 9, 2013.

inventorAs any viewer of “Shark Tank” can attest, the variety of financial arrangements which are negotiated between inventor entrepreneurs and investors is broad. A final agreement is always the result of negotiation between the two parties. Unfortunately, many inventors go into the gunfight with a knife, so to speak, over-matched and under-prepared.

Unless you are a veteran of previous negotiation and thoroughly understand the potential value of your invention, you would be wise to engage the services of an attorney and/or a firm who has previously negotiated financial transactions for similar inventions. You don’t want to leave money on the table, nor do you want to have an unrealistic view of your work. Expert assistance can help you avoid either outcome.

The following descriptions are by no means exhaustive, but represent a sample of the strategies you might employ in order to monetize your work:

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