JumpStart: IdeaExchange Blog

Many entrepreneurs know firsthand what it takes to bootstrap - to work with limited resources (financial and human) and stretch them as far as possible without relying on external resources. But try as you might, it is unlikely that you can do it all alone. Eventually, you will need to bring in people with skills and knowledge that you don’t have.

You have three options:

1. Continue in bootstrapping mode. Find someone with the expertise you are looking for and convince them to provide their sweat equity on the if-come that the business will grow and succeed.
2. Delay growth until you have the ability to hire the A+ players you need.
3. Outsource. Lawyers, accountants, and marketing specialists are just a few of the highly trained service providers that are available on an outsourced basis when a hire isn’t possible. Reach out to service providers to focus on what is most important: generating revenue.

Unsure where to find the most reliable Service Providers? Here are some suggestions:

1. Ask for recommendations. You are not the first entrepreneur in need of a lawyer well-versed in patent protection. Other entrepreneurs will gladly provide referrals. Once you find a service provider you trust, it can also be helpful to ask who they partner with. Attorneys usually have an accountant they can recommend, and vice versa.
2. Poll a general audience using social networking tools. Online communities such as Twitter and LinkedIn are now vital tools for business discussion. With the number of professionals online rising daily, the internet is a great place to engage a wide variety of individuals. Post the criteria you are looking for on Twitter or in a LinkedIn group, and watch as the suggestions come in!
3. Check online directories. IdeaCrossing.org is a free online resource that has a searchable online database where entrepreneurs can find and connect with service providers. Users can search by keyword, zip code, and business category to find a list of providers that meet their criteria. The Better Business Bureau also has a searchable online database where you can find accredited service providers in your area. These businesses meet the necessary standards of trust and transparency.

Don’t try to handle all aspects of your business on your own. Know where your team’s weaknesses lie, and seek experts to fill those gaps. Find the right people for the job, and move forward with a better business. 

Tiffan is the Vice President of IdeaCrossing, a free online community created by JumpStart, which connects entrepreneurs with the national resources necessary to grow their businesses. Tiffan has worked at several venture-backed startup technology companies and strategic marketing agencies in both Boston and Cleveland. Through her work, she has facilitated the necessary growth of early-stage companies.

If you are an entrepreneur that is looking for investment capital to grow your startup, it is easy to get excited when a potential investor asks for your business plan. And why not? This angel investor or venture capitalist may be able to provide just what you need to make your dream a reality.

Before you get too excited, take a breath. Bear in mind that you are intending to enter into a business relationship with an investor and just as you would qualify any potential business partner it is also important to qualify your investor. There are several things to consider before you start handing over the requested documents like your business plan, financial statements, etc.

Were you referred? If they were recommended to you by someone you trust or are a known investor in your region, chances are they are a reputable investor. Even so, take precautions — read on.

Do the research. You need to do your own due diligence to be certain that you are dealing with a reputable investor. What are the steps you can take to do this?

1. Ask the investors to provide their information first. Ask about their business including their full contact information and physical address. Have them tell you about their investment interests, process, and expectations.
2. Verify the legitimacy of the financial organization. Try contacting the Better Business Bureau (www.bbb.org) or the Federal Trade Commission (www.ftc.gov) about their practice.
3. Request references of people they have invested in previously, and then call these references to discuss their experience.
4. Conduct business with a firm in your own country, especially if you have difficulty verifying the legitimacy of foreign investors. In many cases, though not all, investors want to invest in businesses that are located near them because this allows for better oversight of the investment and relationship.
5. Never provide personal information before receiving paperwork or pay upfront for a loan application review.
6. As you begin to form a relationship, engage an attorney that is capable of adequately representing your interests.

Know the odds. Did you know that for approximately every 100 business plans that an angel investor gets, they pursue maybe 10 for a further conversation, conduct their own due diligence on 3-4, and invest in 1-2? The odds are small that that investor is going to invest in your business.

Protect your secret sauce. Most investors will not sign a NDA initially since they typically will pull in subject matter experts to consult during due diligence. If you are going to provide them documentation on your business, you need to be prepared to share the essence of your idea without giving away the secret to what makes it so special. Down the road, when both parties are confident that things will move forward, a NDA can be revisited.

Get it in writing. Any reputable investor will be willing to put what they are offering in writing. Do not accept a verbal offer.

Though there are fraudulent investors, do your best to not get discouraged. There are many legitimate financial sources available for starting your business. Explore your options and take your time. Whatever you do, don’t allow any investor to pressure you into committing to an investment before you are certain of their legitimacy.

These tips are not intended to be comprehensive, but merely serve as a guideline. 

Other websites that can help you:

• The Federal Trade Commission — www.ftc.gov
• The Better Business Bureau — Search for any scam reports made — http://www.bbb.org/us/Find-Business-Reviews/
• RipOff Report — A website made “by consumers, for consumers” — www.ripoffreport.com
• Scam Busters — Helps you protect yourself from clever scams online and offline — www.scambusters.org
• Complaints Board — Online database of complaints for bad and fraudulent business –http://www.complaintsboard.com/
• Consumer Fraud Reporting — Search for companies to see if complaints have been posted by other consumers — http://www.consumerfraudreporting.org/search.php
• Save & Invest — Tips and tricks to avoid scams, lists of common scams, enter the criteria of your situation into a “scam” meter for evaluation — http://www.saveandinvest.org/55Plus/Fraud/index.htm
• ScamXposer — Search for recommended and not recommended business opportunities — http://www.scamxposer.com/bizopp-reviews.html

Tiffan is the Vice President of IdeaCrossing, a free online community created by JumpStart, which connects entrepreneurs with the national resources necessary to grow their businesses. Tiffan has worked at several venture-backed startup technology companies and strategic marketing agencies in both Boston and Cleveland. Through her work, she has facilitated the necessary growth of early-stage companies.

Late last month, WKYC-TV3 spent some time with JumpStart to get a sense for what we are doing for the local economy. What came out of the meeting was a great piece for the station’s What Works in Cleveland segment. On August 28, 2009 the NBC local affiliate aired the piece, which not only tuned viewers in to what JumpStart is doing to help high growth potential companies, but gave them an insider’s view as to what one of those companies, AnalizaDx is up to.

AnalizaDx is developing early cancer detection tests, which the Cleveland Clinic and University Hospitals have found to be highly effective. From its lab, which is a converted elevator factory located on Cleveland’s near east side, AnalizaDx President, Arnon Chait, explained that they’ve been able to bridge the gap between idea and a company with the help of JumpStart.

Beyond AnalizaDx, JumpStart Ventures has invested in 39 other high growth potential companies located in Northeast Ohio because we believe that entrepreneurship growth is critical to our economy’s future.

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