Entrepreneur Magazine August 2010

ENTREPRENEUR

50 REALLY COOL CITIES TO START YOUR BUSINESS

AUGUST 2010 | ENTREPRENEUR.COM

TRUST YOUR CRAZY IDEA

MEET DREW BREES, AUGUST 2010

NEW ORLEANS QUARTERBACK, SMALL BUSINESS OWNER AND CHAMPION OF ENTREPRENEURS.

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Uconnect速 Web not intended for use by the driver while the vehicle is in motion. Subscription required, sold separately.

Uconnect is a registered trademark of Chrysler Group LLC.

table+of contents +Features 30 The turnaround artist Jim Pohlad inherited a failing team—the Minnesota Twins—on the verge of disappearing from baseball. What saved it?

Thinking like a small business.

By Bruce Schoenfeld

58 Innovation nation

Entrepreneur identifies 50 U.S. cities and 10 lifestyles energizing businesses of all shapes and sizes.

By Jason Ankeny

72 Green fallout The era when green marketing meant sunny logos and big environmental claims is over. Just ask BP.

By Jason Daley

84 But where is the money?

While small business gets talked up in the economic recovery plan, lending to small business is still down—by $40 billion—from what it was two years ago.

Karen G. Mills, head of the SBA, is taking questions.

By David Port

90 Losing the dream, but saving the store The recession is driving more mom-and-pop businesses to transform into franchises.

By Tracy Stapp

98 Ring it up

24 The champion

er Super Bowl title.

Orleans Saints to its first-ev Drew Brees led the New ’s economic revival. repreneurship and the city Now he’s backing local ent

By Jason Daley

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Photo© David Johnson

Shoppers are venturing out again, so it’s time to browse Entrepreneur’s top retail franchises of 2010.

By Tracy Stapp

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I’m Mark. I love wine, so I made it a full-time job. One of the things that helps me be the boss of my small business is this new feature in Excel® 2010 called Slicer. It lets me filter data so I know exactly what’s selling. Note to self: order more Pinot.

> See how you can make it great with new Office 2010 at office.com/2010.

table+of contents +Departments 17 Going Forward

41 Tech

51 Web

Watch out, bikers and bladers. The elliptical trainer has zipped out of the gym and onto the streets.

HiVi’s speakers turn your computer or mobile device into a portable studio, complete with quality audio.

GetGlue recommends movies, music and books based on your interests.

18 Ask a Pro

42 Can’t live with it,

Business Unusual

How do I deal with a PR nightmare?

20 You Should Know Andrew Zimbalist, sports economist.

22 Jargon 22 10 Essential Tweets

38 Almost Famous Your fledgling business doesn’t necessarily need a complex strategy document, just some basics.

Shiny Object of the Month

Website to Watch

52 Build a Website

To iPad or not to iPad?

Sidestep sticker shock by creating a detailed budget for designing, building and launching your site.

44 Six must-have iPad business apps

54 Home remodeling gets retooled

Our votes for some of the latest and greatest.

A web-based platform lets contractors manage customers, vendors and subcontractors, schedule work orders, create and track invoices and order materials from wherever their work may lead them.

can’t live without it

48 Mobile entrepreneur David Heinemeier Hansson of 37signals gives his take on cutting the cord in America; and an app whose optical recognition technology lets you scan bar codes and run your business from your iPhone.

65 Money

Who’s Getting VC Now? An upstart maker of glass baby bottles gets the attention of green-friendly VCs.

66 Do you believe in super angels?

An early-stage investor by any name can be just as useful to funding your business.

78 Start It Up College Startups

How to turn a class project into a multimillion-dollar business. (No degree required.)

80 Finance for Startups The Credit Card Act is good for consumers, but no so much for businesses.

82 Strokes of Genius

124 Back Page

76 Wacky Idea

age-frosted cupcake.

The boozy, manly, camoufl

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Photo© Natalie Brasington

For pro athletes, entrepreneurial endeavors are a natural play.

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My name is Aaress, and if my job was a person I’d marry it. I run one of the most popular women’s tennis websites. My partners and I are constantly updating the site, and use new OneNote® 2010 to share ideas, photos, articles – everything. It’s a digital notebook we can all access over the web.

Even with our smartphones, which have been a total game changer. No pun intended.

> See how you can make it great with new Office 2010 at office.com/2010.

table+of contents +Columns 12 Editor’s Note If you have a crazy idea, pursue it. It might be the best idea you’ve ever had.

By Amy C. Cosper

14 Feedback Our Twitter followers and Facebook fans respond: What’s the difference between a small-business owner and an entrepreneur?

56 Doing Good A Colorado painter provides free makeovers for crisis-stricken homeowners.

By Gwen Moranoran

70 Personal Finance Beware of hidden (or, at least, sneaky) charges on your phone, cable and utility bills.

By Rosalind Resnick

110 Franchise Ink

116 Opportunities Jason Fry won the lottery and invested in Batteries Plus.

By Jason Daley 6 Entrepreneur

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Owner Jim Pohlad, mastermind behind the Twins’ turnaround.

Photo© David Johnson

At Margaritas restaurants, every painting, tile, chair and artwork is direct from Mexico.

By Jason Daley

In Michigan, Green is the New Gold.

If you invested in an alternative energy company five years ago, you would have been considered odd.

Today, people would call you a smart entrepreneur. There’s no doubt that alternative energy is the future. It is, indeed, where the money is. Alternative energy companies are certainly pushing the Green needle towards great success; and it’s happening right now in the land of the automobile. Yes, Michigan is fast becoming the hub for the powers of wind, solar, battery and alternative fuels. Companies like United Solar, the world’s largest manufacturer of thin-film solar panels and Cobasys, whose battery systems enable hybrid electric vehicles around the world, are typical of the businesses that now call Michigan home.

If you’re looking to build or expand your alternative energy company, it’s a good time to talk to Michigan.

To get information on our far-reaching Venture Michigan Fund, contact the Michigan Economic Development Corporation. Click on MichiganAdvantage.org.

SM

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table+of contents +online now

Winning strategies Learn how to expand your network, train skilled employees and use top marketing techniques at the free Winning Strategies for Business conference. Plus, pitch your business to the editors of Entrepreneur for a chance to appear in the magazine. The conference takes place Oct. 5 in Long Beach, Calif. Register at entrepreneur.com/winningstrategies

Our small-business advisors can answer your burning question

Question of the month, submitted by rrthompson: How do I secure a line of credit for my business if my personal credit is poor?

I'm currently funding my 3-year-old business with personal funds. I need some working capital for upcoming projects and marketing.

We asked Ryan Himmel—CPA, registered securities analyst and founder and CEO of BIDaWIZ.com, an online reverse auction marketplace—for his expert opinion. Among his tips: • Make sure the accounting and banking of your personal funds are kept separate from your business.

• Seek a strategic partner with a strong balance sheet and a complementary business model.

• Go to alternative sources of financing, including regional and community banks and the Small Business Administration.

For Himmel’s full answer, visit entrepreneur.com/ask/answer19350.html Have a pressing small-business tax question? Sign on to entrepreneur.com/ask, where Roni Deutch (aka “The Tax Lady”) is waiting to help you. Look for feedback in next month’s issue.

Top 5 retweets

From twitter.com/entmagazine

Check out Entrepreneur's annual list of 100 brilliant ideas What was your most brilliant idea?

4

“The only place where success comes before work is in the dictionary.”

—Vidal Sassoon

Look for an Entrepreneur mag iPad app set to drop this summer.

5

Stop procrastinating! Five strategies to help you beat one of the most common time killers

1 2 3

Productivity tip of the day: Measure your marketing results

Cast your vote The UPS Store and Entrepreneur are proud to announce the 15 finalists for Entrepreneur® magazine’s Entrepreneur of 2010 awards. Now we’re asking you to help us select the winners: an established business owner, an emerging business (less than four years in business) and a college entrepreneur. Go online to entrepreneur.com/e2010 and entrepreneur.com/e2010college from July 26 to Sept. 10 to read their stories, get inspired and vote for your favorite entrepreneurs. The winners will be featured in Entrepreneur and honored at a luncheon in Atlanta in January 2011.

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Green contest winners In the online feature “How to Take Your Business Green,” find out who received a $10,000 green office makeover in Staples and Entrepreneur’s “Green Your Small Business Challenge.” entrepreneur.com/greenoffice/winners

Mompreneur Center Read about balancing business with family, women-led businesses and more at Entrepreneur.com’s Mompreneur Center. entrepreneur.com/mompreneur

Weigh in on EConnect Check out the recent poll results from our small-business social network, Entrepreneur Connect—the place to talk about what matters most to entrepreneurs. Also, create a profile at econnect.entrepreneur.com and join the 67,000-plus members.

How do you stay productive throughout the day?

- Schedule set work times and break times: 19% - Create a daily to-do list: 65% - Exercise: 12% - Other: 4% How will the new healthcare reform law affect your small business?

- Positively: 30% - Negatively: 36% - I’m not sure, it’s all a little confusing: 30% - Other: 4%

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editorial

Amy C. Cosper executive editor Michalene Busico editor-at-large Jason Meyers associate editor Brenda Wong staff writer Jennifer Wang special projects editor Tracy Stapp editorial interns Michelle Juergen, Arshi Khan vice president/editor-in-chief

contributing writers

Jason Ankeny, Mikal E. Belicove, Jonathan Blum, Ericka Chickowski, Jason Daley, Joel Holland, Ivy Hughes, Kate Lister, Gwen Moran, Dan O’Shea, David Port, Rosalind Resnick, Bruce Schoenfeld art & design

Megan Roy Richard R. Olson assistant art director Corey Hollister contributing designer Nancy Roy creative director

design director

entrepreneur.com

David Pomije Eve Gumpel sr. channel editor, tech and e-business Justin Petruccelli editor, startup/finance/management Kimberlee Morrison community editor Kara Ohngren channel editor, sales/marketing/grow Tanya Payne it director Patrick Freeman systems and networks administrator Hristina Moneva ad operations director Michael Frazier traffic coordinator Jose Paolo Dy online marketing manager Landin Gee online ad traffic coordinator Madison Bui online syndication editor Petya Yordanova director, site operations Jake Hudson senior web designer Veronica Skaggs web design specialist Brian Wilkins production associates Kevin Murray, Nicholas Jennes senior application developer Joseph Norris web application developer Mahendran Arullendran l.a.m.p. developer Cindy Sheek junior l.a.m.p. developer Tuan Nguyen vice president, site development

editor, womenentrepreneur.com

channel

marketing

Lisa Murray Lucy Gekchyan associate marketing manager Laura Brown senior graphic designer Jane Maramba graphic designer Andrew Chang vice president, marketing

marketing communications manager

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Vol. 38, No. 8. Entrepreneur (ISSN 0163-3341) is published monthly by Entrepreneur Media Inc., 2445 McCabe Way, Ste. 400, Irvine, CA 92614. Periodical postage paid at Irvine, CA, and at additional mailing offices. POSTMASTER: Send address changes to En­tre­pre­neur, P.O. Box 8542, Red Oak, IA, 51591-1542. One year subscription rates in U.S.: $19.97; in Canada: $39.97; all other countries: $39.97; payable in U.S. funds only. Please mail all subscription orders and changes to Entrepreneur, Subscription Department, P.O. Box 8542, Red Oak, IA, 51591-1542, or call (800) 274-6229 or (515) 362-7461, or log on to entrepreneur.com. For change of address, please give both old and new addresses and include most recent mailing label.

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Your business is the backbone of America.

And we’ve got your back.

When your employees need care, you want to make sure it’s the best. With UnitedHealthcare, your employees can choose the right doctor for them from the nation’s largest single proprietary network of physicians. And with our extensive database, we can direct them to doctors who meet the national medical standards and practices guidelines for quality of care and cost efficiency.

See what makes us the #1 carrier for small business at uhctogether.com/ent, call 1.877.232.8831, or contact your broker.

© 2010 United HealthCare Services, Inc. #1 For Small Business claim based on UnitedHealthcare membership systems (May 2009) for groups with 2 – 99 employees. Insurance coverage provided by or through UnitedHealthcare Insurance Company or its affiliates. Administrative services provided by UnitedHealthcare Insurance Company, United HealthCare Services, Inc. or their affiliates. Health Plan coverage provided by or through a UnitedHealthcare Company.

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editor’s+note[

Speaking of crazy ideas ...

W

hen the notion of a sports edition made its way to the Entrepreneur newsroom (which consists of four editors and a Wii), it was, not surprisingly, met with a certain amount of hesitation. “It’s insane. How can a business magazine dedicated to entrepreneurs pull off a sports issue?” Needless to say, we like it best when we’re told something can’t be done. We trusted our crazy idea on this one, and so we present the very unlikely, first-ever sports edition of Entrepreneur magazine.

Digging into sports team transformations proved to be powerful and thoughtprovoking. Ten years ago, the Minnesota Twins had bragging rights as baseball’s worst team. They were the real-life Bad News Bears. Fans turned their backs on the struggling organization, the stands were all but empty, and the franchise was on the brink of dissolution. But Jim Pohlad, who owns the Twins along with

his brothers, had a different take on the situation. The thinking? Turn the team around by approaching every move as a business. They created a business plan replete with growth and expansion strategies. Pretty bold for a team one small step away from a dirt nap.

The transformation plan played to the strengths of the franchise. Pohlad acknowledged that they could never compete dollar for dollar with big guns like the New York Yankees. But what they could do was become the most efficiently run business in baseball. Bruce Schoenfeld’s story on Page 30 dives into the Twins’ journey from peril to prosperity. If you are a small business looking to compete, his sage advice is required reading.

Equally inspiring but no less sporting is Jason Daley’s conversation with Drew Brees, New Orleans Saints quarterback and patron saint of the city of New Orleans (Page 24). Brees is known for his cunning on the field, but off the field he

is equally skillful: He is a business owner, a franchise proponent and a supporter of entrepreneurship in a city still recovering from the effects of Hurricane Katrina.

There is no greater tale of rebirth than the one taking place in New Orleans, led by the entrepreneurial efforts of people like Brees, who is spearheading a Trust Your Crazy Ideas program in partnership with the city’s Idea Village organization.

His superstar status is palpable in a city that has become iconic not because of tragedy but in spite of it.

Brees and Pohlad are proving that trusting your crazy idea works—and that the entrepreneurial spirit in sports is thriving.

Amy C. Cosper Editor in chief Follow me on Twitter, @EntMagazineAmy

Drew Brees 12 Entrepreneur

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Photo© Jef f Clark

Photos© David Johnson

Jim Pohlad

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+feedback [ Declare yourself

What’s the difference between a small-business owner and an entrepreneur?

• Robert Bitto An entrepreneur is a creator and an innovator. A small-business owner may or may not be.

• Imumba Nyaywa A small-business owner pulls up his shutters at 9 a.m. and calls it a day at 6 p.m.

An entrepreneur is always open for business!

• Brian Schwartz Small-business owner eats crab legs. Entrepreneur eats ramen noodles.

• Barbara Brandt I am a small-business owner, not an entrepreneur. I want to be my own boss, do something I enjoy, make a good living and enjoy my life. I do not want to take big risks in the hopes of making the millions or the headlines.

• Leslie Fishlock A small-business owner has already determined his potential: small. An entrepreneur has already determined the world is his oyster.

• Rhea Lana Riner As an entrepreneur, I feel that we bite off huge tasks—and then figure out how to chew it.

’Trep of the month

AFTER READING the June profile of Patagonia founder Yvon Chouinard, Candace Ruiz of Denver sent us this shot of her wearing her old, favorite Patagonia jacket.

And we mean old: She bought it in 1984. “And it’s the same as the day I got it,” she says. “No wear and tear, no holes and it protects me from the Colorado wind…. My partner and I recently launched our own company, Business Service Corps, and Chouinard’s story was the inspiration we need to build in the emerging market of corporate social responsibility.” Candace, we’re impressed (and we don’t mean by the jacket). Congratulations, and enjoy a one-year subscription to the magazine.

Now the competition is on for August. In honor of this month’s sports theme, post a photo of you with Entrepreneur magazine at a sporting event—baseball to pingpong—at our Facebook fan page: Facebook.com/EntMagazine.

The next 12 issues could be on us.

FIND US ONLINE There’s a whole world of Entrepreneur online, and our Facebook fans, Twitter followers and discussion groups are buzzing 24/7 about what matters to entrepreneurs most. Come join the conversation with our editors and readers: • Become our fan on Facebook: facebook.com/EntMagazine • Follow us on Twitter: @EntMagazine • Join our online community: econnect.entrepreneur.com

Totally ripped MY STAFF and I get so many great ideas from your publication. I tear out pages of special interest as I read, and in June, I practically tore out every article and ad.

Thank you, Entrepreneur.

Alisa Armstrong Big Bear Cool Cabins Big Bear Lake, Calif.

Call for you, Dan SPRINT’S CEO Dan Hesse should focus less on telling everyone where he thinks things are going (“The new power of mobility,” June) and focus more on his company’s customer service. Hey, Dan, your customer service blows.

Al Stratton Orlando, Fla. CORRECTIONS An article in June’s Technology department (“A More Polished Voice”) gave an incorrect rate for RingCentral Office’s hosted phone service. For service with four lines, VoIP soft-phones, fax service and real-time routing to cell phones, the monthly rate is $24.99 per user, not $99.

The June feature “Entrepreneur’s 100 Brilliant Ideas” incorrectly stated the location of Relay Rides.

It is Boston, not Baltimore. The feature was also unclear about Terracyle’s policy of paying for

SHARE YOUR COMMENTS. Write to Letters, Entrepreneur, 2445 McCabe Way, Ste. 400, Irvine, CA 92614; fax (949) 261-0234; or contact us at entmag@entrepreneur.com. Letters may be edited for brevity and clarity.

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trash. It pays 2 cents for each chip bag or drink pouch to the charity or school of the collector’s choice.

Photo© i Stockp hoto. com/ Zoran Zivancevic

EVERY DAY we put a question to our Twitter followers and Facebook fans, and your smart, lively responses never disappoint. But we’ve never seen a discussion take off like the one that did when we asked: What’s the difference between a small-business owner and an entrepreneur?

More than 200 of you responded with strong opinions about the two camps—some of you might say the two species—and everyone was certain about which one they belonged to. Self-employed vs. risk-taker.

9-to-5 versus 24/7. Crab legs vs. ramen noodles.

Choose your tribe, then join this month’s discussions on Twitter, Facebook and EConnect (and with some luck, pick up a weekly gadget or magazine subscription giveaway exclusive to our members).

IT’S LIKE JOINING EVERY HOTEL LOYALTY PROGRAM. Except it’s only one.

TAKE THE

challenge.

GET FIVE NIGHTS FREE .

For a limited time, sign up for the welcomerewards challenge. In addition to the free night you earn for every 10 nights you accumulate, now get a free bonus night at your 15th and 30th nights. Learn more at WelcomeRewardsChallenge.com/Ent. ®

800-2-hotels

*Based on (a) comparison of largest hotel loyalty programs’ regular published rules as of 5/1/10 and (b) assumption that free nights are at similar hotel class, room type, and location as paid nights.

Restrictions may apply to the rate of the 10 nights and the free night. See sites for details. TM, ® and © 2010 Hotels.com, L.P. All rights reserved. CST 2083949-50.

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Trends, issues and data to keep you on top of your game

going+forward Trailblazers: ElliptiGo inventors Brent Teal, left, and Bryan Pate.

BUSINESS UNUSUAL

On your left!

Watch out, bikers and bladers. The elliptical trainer has zipped out of the gym and onto the streets.

Photos© Jeff Clark

AS FITNESS EQUIPMENT GOES, the world’s first elliptical bicycle is pretty darned impressive. It’s got the sleek curves of a high-end road bike, the clean lines of a Razor scooter, a pair of shiny carbon-fiber elliptical pedals, a smooth hub-and-crank stride mechanism and a steering column that collapses for easy storage. Plus, it’s not awkward using it (think Smith machine): Just hop on and start stepping.

“We knew we were onto something when we showed a prototype and people were telling us to make that exact model,” says Bryan Pate, one of the ElliptiGo inventors. It was Pate’s bad knees that started the whole thing rolling: In 2005, he had to stop running and found that neither elliptical trainers nor cycling were satisfying alternatives. “I wanted something that would emulate the feel of running outdoors without beating up my knees,” Pate says. It didn’t exist, so he figured he’d have to create it himself.

He called his friend Brent Teal, a fellow Ironman athlete and mechanical engineer, who set up shop in the garage and cobbled together the first prototype out of chromoly steel, modified roller blade wheels, wooden boards and old triathlon bike parts.

Fast-forward to this past January— four prototypes, millions in investor funding later, Pate and Teal opened headquarters in Solana Beach, Calif., and so far have sold 250 bikes at $2,199 each, including two to a Napa Valley-area police department. They’ve had glowing testimonials from Ultramarathon Man Dean Karnazas (who rode the ElliptiGo from San Francisco to Los Angeles as a warm-up for the L.A. Marathon), Nike Project Oregon runner Adam Goucher and three-time Olympic pentathlete Michael Gostigian.

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ElliptiGo’s buzz is growing, thanks to regular test ride events and its “Epic Ride” campaign, where Pate and Teal enter the ElliptiGo in challenging biking events such as the California Sierras’ 129-mile “Death Ride.” This month, it’s the 10,000-foot “Cycle to the Sun” climb in Maui.

They’re hoping to deliver 2,000 bikes after the summer marketing push, which would make them a small profit by year’s end. And in 2011, the goal is to move 11,000 and possibly introduce lower-

and higher-end models. But their main objective is to kick off a new industry.

“That’s our business model,” Teal says.

“It’s not about making a cool bike. It’s about introducing a whole new way of getting around and, at the same time, getting a good workout.”

He’s not exaggerating that last bit: The eight-speed reaches speeds upward of 25 miles per hour. Perfect for when you want to blow past all the gawkers.

—Jennifer Wang Entrepreneur

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going+forward ASK A PRO

Slammed Q: A:

There are times when you can get away with burying your head in the sand, but a business crisis isn’t one of them. You need to drop everything and fix it. Now. “Small-business owners think they can put their heads down and outwork everything,” says Ronn Torossian, founder of 5W Public Relations, based in New York. “But you can’t outwork crisis. For the people it impacts, it will feel like the end of the world.”

Torossian has seen major corporations, small businesses and celebrities through a fair number of troubling times (Lil’ Kim’s perjury case and financial scandals of a Fortune 100 company). By now, he’s got a few standard rules for managing crises of any scale.

First, he says, come up with a message that addresses what went wrong and how you’ll handle it. Don’t wait to apologize.

Then communicate that message to everyone who’s been affected—in person, if possible. A newsletter won’t cut it, and letting the media provide updates will make matters worse. And don’t pass things on through lawyers or spokespeople. Delegating raises the probability of more disaster. Warns Torossian: “It won’t keep your employees from all walking out or vendors from suddenly saying, ‘We want immediate payment because we don’t know if you’re going to be here next month.’ ” Work on your delivery, too, because how you say things in public can be more important than what you actually say. (Wrong: Tiger Woods’ 13-minute ramble of an apology. Right: Bill Clinton’s direct, sincere four-minute apology.)

“Americans are very forgiving, but they need to believe you actually care,” Torossian says. So leave the script at home and be prepared for scrutiny, because if you’re uncomfortable, it will show. Do everything you can to make yourself and your audience more comfortable—grab water, enunciate, avoid jargon and fancy words and be ready for discussion. “Speak compassionately and honestly, and don’t pretend to be on a higher level than your audience,” he advises.

“It’s the best way to put people at ease.”

In the end, be resigned to some fallout. Not all will be forgiven, but you can minimize the damage. Fortunately, Torossian says, small-business owners can move faster than big companies, and they should take advantage of that. —J.W.

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Ronn Torossian: Don’t wait to apologize.

Photo© David Lang

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You should

KNOW

Talk about expansion THE NATIONAL FOOTBALL LEAGUE officially kicks off its 2010 schedule Sept. 9, when the Minnesota Vikings take on defending Super Bowl champs the New Orleans Saints. But the season unofficially launches Labor Day weekend, when the growing ranks of the fantasy football faithful converge on bars, basements and barbecues across the nation for their annual league drafts. The latest Fantasy Sports Trade Association data pegs the number of fantasy gamers in the U.S. and Canada at 30 million, and the industry continues to expand, embracing “sports” from mixed martial arts to reality

TV shows. There’s even a sitcom devoted to the hobby, FX’s raunchy The League.

So far, fantasy gaming remains as recession-proof as the professional sports it mirrors: 8 percent of gamers plan to devote more time and energy to their fantasy team this year than in previous years, an FSTA survey found, and 71 percent say they will be just as committed as in 2009.

What’s the appeal? It’s fun. It’s social.

It’s an outlet for smack talk. Hell, if you know what you’re doing—and catch a few lucky breaks—you might even win a few bucks. —Jason Ankeny

Why people play fantasy sports It’s something fun to try

To win money, prizes or trophies

65.8%

34.5%

To play with my friends

To socialize with others

61.9%

32.6%

To compete

To network with co-workers or clients

52.3%

11.2%

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Title: Sports economist Why you should care: If there was a title for best sports economist, Zimbalist would probably clinch it. He’s written 19 books—about half of those on the business of sports—and is the go-to guy for quotes and commentary whenever a new stadium goes up or a franchise starts to falter.

His next book of essays, Circling the Bases, is due in November, and it packs in analyses on how the sports industry is prevailing during the economic downturn, along with ruminations on salary caps, steroids and gender equality. But despite plenty of changes in the last couple of years, one thing’s for sure: Zimbalist and his cohorts are still very much in demand. Not bad, considering they’ve already got the sweetest gigs of everyone studying the dismal science.

Quote: Statistically, “between 70 percent and 85 percent of a team’s on-field success is explained by factors other than payroll.” —J.W.

Photo© Veer Inc/Image Source Photography

ANDREW ZIMBALIST

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Um, that’s how much?

NumberQuotes.com is worth a click for quick comparisons

The juice box grows up THE GENIUS IS in the packaging: a shiny 12.7-ounce pouch with a straw. Think Capri Sun juice pouch—but filled with an icy, ready-to-drink margarita.

That’s the concept for the Cordina Mar-GO-rita, a portable (and very drinkable) cocktail from Big Easy Blends, a New Orleans company started in 2009 by Sal LaMartina and partners Antonio LaMartina and Craig Cordes. With distribution in only 13 states, the cocktail’s monthly sales have already

exceeded $100,000, and Sal projects annual revenue of $60 million in less than five years.

“We’ve got plans for GO-jitos, piñaGO-ladas and strawberry daiq-GO-ris,” he says. “We’re going to change the way people enjoy frozen cocktails.”

That’s right. Straight out of the freezer or pulled out of the cooler like a beer. And you’ll avoid getting scolded at for having a glass poolside or on the beach, which is how LaMartina & Co. hit on the idea in the first place. —J.W.

Cloffice

Definition: Literally a closet converted into an office. But any work space that provokes claustrophobia or thoughts of David Blaine is a cloffice, too.

Usage: “I get loads of work done in my cloffice. Two words: Verilux and Adderall.” —J.W.

The Singapore cloffice: The nerve center of reader Suelynn Yap’s music events company in Holland Village, Singapore.

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10 essential tweets CATERINA FAKE, CO-FOUNDER OF FLICKR As you might expect, the woman who helped create the way we instantly share photos is way into the whole Twitter phenom. @Caterina has 17,000-plus followers, and Fake follows 426 feeds herself. Her top 10? A mix of money, tech, art and inspiration that no doubt is influencing Hunch.com, the collective decisionmaking engine she is working on now. @anildash The voice of reason on tech and media issues. Also: “Funny and into soul music.” @etsy For shopping and content links. @fredwilson “You’re missing out if you're not following one of the first investors in Twitter.” @jenbee Links to art and news from Jen Bekman, the founder of 20x200. @kickstarter “A repository of brilliant ideas.” @om Om Malik, founder of the tech blog @gigaom, to learn where things are heading. @pkedrosky Paul Kedrosky is “profound and fascinating” on finance, the economy and tech. @the99percent Inspirational quotes and ways to increase your creativity. @zachklein Thoughts from Boxee’s CPO and “all-around polymath.”

—J.W.

Photo© iStockphoto.com/Pesky Monkey

STEVE DUNCAN WAS giving a speech, and the news wasn’t good. His industry was down $12 billion in 2009, and he needed to drive the point home. “I thought there would be a website out there with good quotes,” says Duncan, director of market intelligence for the Association of Equipment Manufacturers, in Milwaukee. “But there wasn’t.”

So he built one, launching NumberQuotes.com in February. Type $12 billion—or any other number—in its search box and get a list of equivalencies. For instance, $12 billion is roughly the GDP of Jamaica. Or enough to buy everyone in Huntington Beach, Calif., a Cadillac Escalade. Or every single person on the planet a cup of Starbucks coffee.

In just the first month, NumberQuotes got more than 21,400 unique visitors. Not bad, when you consider that’s greater than the number of college history teachers employed in the United States. —J.W.

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innovators+

DREW BREES BRE LED THE NEW ORLEANS SAINTS TO ITS FIRST-EVER SUPER BOWL TITLE. NOW HE’S BACKING LOCAL ENTREPRENEURSHIP AND THE CITY’S ECONOMIC REVIVAL.

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C

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son

John

Newstin, f o t a toaisve of Au2006. t son D e h t

By Ja en he nat ints in ck kep e b s ha since t the Sa arterba urri- e s e e r s H r u rewleBans evee to heolmBowl qwake ofwould lo Or xas, camtime Prk in thethe city played Te e four- n trac feared ss teamTo top ign Th team o many homele other. campa a his , when d the fter an ltiyear ing andep rinachise an game aon a mur Bowl rldn’t ke t a K e fran l road aints Supe s cou canN a S si FL its e perpetsuled thien a 201w0orst crtiCity. >>> on t, Bree inated en the rescen tha t culm that ev f the C tha inder spirit o remwn the do hy

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innovators+ But Brees wants to be more than just a symbol of the city—he’s hoping his support of entrepreneurship can help New Orleans achieve an economic renaissance.

For one thing, he’s jumping in as an entrepreneur himself: Brees recently inked a deal to develop the Jimmy John’s sandwich franchise in the Big Easy, and his ByU Gear clothing is sold throughout the Gulf, with a portion of the proceeds going to charity. And in the last seven years, he’s helped the Brees Dream Foundation raise more than $5.5 million to fund charitable causes in his football hometowns of West Lafayette, Ind., (where he played for Purdue University), San Diego (where he started his NFL career with the Chargers) and, of course, New Orleans.

Most recently, Brees teamed with The Idea Village, a New Orleans nonprofit that fosters entrepreneurship in the city, to bring a Trust Your Crazy Ideas business plan competition to New Orleans high schools.

“Our inspiration with Drew started in the fifth week of the 2008-2009 season,” says Tim Williamson, co-founder and CEO of Idea Village. “The Saints were down with one second to go, at the 1-yard line. The coach wanted a field goal, but Drew talked to him and said we should go for it. In our mind, it epitomized an entrepreneur—the years of preparation and trust and passion, and the moment the coach looked at Drew and said, ‘I trust you.’ ” The entrepreneurial community is trusting Brees, too, relying on his support and example to help jump-start a new class of Louisiana businesses. We caught up with Brees in May while he was scouting for Jimmy John’s locations.

What stimulated your interest in entrepreneurship?

I’ve always felt that I’m pretty businessminded, and, certainly, I think my time in the NFL has exposed me to pretty interesting ideas. It’s spurred that creative entrepreneurial mind-set on even more.

I’m preparing for life after football and thinking about what I like to do and what I want to be involved in.

Has living in New Orleans influenced your entrepreneurial interests?

New Orleans after Katrina was a land of opportunity. The rebuilding efforts in New Orleans really started with creating the [economic] foundation again; there are 26 Entrepreneur

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so many opportunities to help the city grow again and reestablish itself. We’ve watched industry grow in areas where it hadn’t been prevalent, and that creates jobs and opportunities for people. All those are great things and great opportunities for young entrepreneurial minds.

Do you feel as if you’re contributing to the city?

As much as we’ve been able to do here with the Brees Dream Foundation—like rebuilding schools, parks and playgrounds—it’s also great to establish businesses in town that are going to create jobs and provide opportunities for others and allow people to fulfill their dreams. We just retained the franchise

rights for Jimmy John’s here in New Orleans, and we’ll be opening up our first store here very soon, and, hopefully, there will be many more of those to come. We’re constantly finding ways to do things like that to build up the infrastructure and the industry and the job market and the other things in New Orleans that are so important to sustaining a really high quality of life here.

How did you get involved with Jimmy John’s?

It all starts with just really loving the product. I was exposed to Jimmy John’s during my freshman year at Purdue. I ate there all the time and had it delivered to my dorm room all the time. I just loved

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innovators+ the sandwiches. But then the entrepreneurial juices started flowing, and I started thinking about the type of organizations I’d like to be involved with, the direction I wanted to go and what I’d like to create. Honestly, I missed Jimmy John’s so much from my time in the Midwest, and I thought that it was a great fit for what we were doing in New Orleans. The culinary arts is a big thing down here; there are the great restaurants and the great chefs; and so much of the culture is surrounded by food and dining. It’s kind of neat to be part of that somewhat by owning my Jimmy John’s franchises.

What’s ByU Gear?

It started three years ago when we were looking for creative ways to raise money for the Brees foundation.

We had to be creative because most people in New Orleans were trying to rebuild their own homes and lives and didn’t have a lot of extra money. At first, my wife and marketing manager and I would come up with ideas for T-shirts to sell, but now we’re looking for designers from Idea Village to be involved. The clothes are in stores in the Greater New Orleans area. And now we offer the ByU Gear service to other businesses. If they need 1,000 shirts, they can contract with us. We structure the proceeds so a portion is going to the Brees Dream Foundation. We came out with a line of shirts designed by the team during the playoffs, and we made $275,000 in three weeks. That’s an example of what we can do.

Is there an entrepreneurial culture among NFL players?

Yeah, absolutely. The one thing you’re blessed with if you’re lucky to play long enough in the NFL is that you should have made some pretty good money, and, hopefully, you’ve taken care of that the right way. Obviously most guys in the NFL are Type A personalities—that’s how we got here in the first place. You need to have the drive and work ethic to get to this level, and a lot of that carries over to what we do off the field. You see lots of guys get involved in businesses. I think we’re all used to being successful—we’re used to being able to go out and accomplish a goal or task or whatever it might be. But you need to make sure you’re 28 Entrepreneur

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“Entrepreneurship is just creativity. Nothing is too crazy of an idea if you have the vision and desire and work ethic to put it together.”

getting involved in something that you’re truly interested in, that you truly care about, that you’re going to be able to put the time and effort into to see it through and watch it succeed. That’s what I feel we do with the Brees foundation here in New Orleans and nationwide, because that’s going to be one of my passions when I’m done playing.

How did you get involved with Trust Your Crazy Ideas?

We’ve been in talks with The Idea Village now for over a year, and we feel like they’re an organization doing great things for New Orleans—attracting young entrepreneurs, giving them the resources they need to help their crazy ideas come to fruition and become solid business plans and models that not only help themselves but help New Orleans grow. Our thought was, how can we reach out to the younger generation and not just the kid getting out of college—to the high schoolers? So many of them are highly intelligent and have great ideas, and when you can give them an opportunity and the resources to really put something together and gain confidence and learn about the entrepreneurial mind-set, it’s a positive thing. We’re starting off with four schools. We go into each and create this brainstorm room for them where they can meet and create a business model for an entrepreneurial “crazy idea,” as we call it, to raise money for a cause or project within their school. In December, we’re going to have an event where all the schools and teams present their business models to us and then we’re going to award the winner. The Brees Dream Foundation will match funds raised by the winning team.

How does learning about entrepreneurship help disadvantaged kids?

In a lot of ways, entrepreneurship is just creativity. Nothing is too crazy of an idea if you have the vision and desire and work ethic to put it together. You need the perseverance to get told it’s crazy and get knocked down and continue to believe in what you’re trying to put together. If you ask the most highly successful entrepreneurs, there are plenty of times people told them their ideas wouldn’t come to fruition, and look at them now. I think everybody starts at that point. That entrepreneurial mind-set teaches so many great lessons.

Anything you’ve learned on the field that applies to the business world?

When you start a season, every year is a new year regardless if you have veteran players. Circumstances change, things change. It’s a new year every year. You know your competition is getting better and better and tougher and tougher, and you have to evolve and get better as well.

At the beginning of each year, you work to put that team together, you work to figure out the dynamics, you work out how you’re going to piece it together and put everybody in the best position to succeed, just like you do with a business. Everybody has a specific role in order to make the business go. You know there are going to be bumps along the way. There’s going to be adversity, but you know it’s going to make you stronger, going to make you better. You have to fight through it, move forward, get knocked down, get back up.

There are so many lessons that you learn in football that you can carry over to the business world.

JASON DALEY IS A FREELANCE WRITER BASED IN MADISON, WISC.

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The

artist

turnaround

BY BRUCE SCHOENFELD PHOTOGRAPHY BY ScanDAVID & PDF:JOHNSON worldmags & avaxhome

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JIM POHLAD INHERITED A FAILING TEAM—THE

MINNESOTA TWINS—

ON THE VERGE OF DISAPPEARING FROM BASEBALL. WHAT SAVED IT?

THINKING LIKE A SMALL BUSINESS.

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T

here’s a buzz in the air in downtown Minneapolis on an overcast April afternoon.

Baseball’s Minnesota Twins are poised to play the Red Sox at Target Field in only the second regular-season game at the new ballpark.

As fans file in, nearly all for the first time, their sense of anticipation is palpable.

What they encounter is a strikingly original facility that features limestonetopped dugouts, a four-story, glass office tower with a roof deck where fans can watch the game from bar stools, even a shimmering wind-activated sculpture by artist Ned Kahn. “This is the best of the new ballparks in all of baseball,” someone says, and he doesn’t get an argument.

Look around, and it’s hard to believe that just 10 years ago, the Twins were a financial failure, all but deserted by their fans and on the brink of disappearing from baseball. How they have become one of baseball’s strongest franchises ranks among the more remarkable turnaround stories in recent business history. And it only happened because the owners were determined to run their big league sports team like a smart small business.

A small business worth hundreds of millions of dollars? Well, yes. In the world of Major League Baseball, the Twins are small, indeed. At their nadir, in 2000, their player payroll was just a tenth of the New York Yankees’, and the small-fry Twins were one of baseball’s weakest franchises. They played in a corner of a football stadium, the antiseptic Metrodome. Their attendance had dwindled from a league-leading 3 million in the ’80s to just over a million, or barely more than 10,000 a game. Fans were alienated, the team was anchored at the bottom of its division, and its few desirable players were counting the years until their contracts expired and they could leave.

That winter, baseball commissioner Bud Selig proposed contracting the sport from 30 teams to 28 as part of labor negotiations. The Twins’ owner at the time, the late Carl Pohlad, tentatively agreed to a $150 million buyout to dissolve his team. Pohlad immediately became a villain: a billionaire ready to sacrifice four decades of local history for a cash payment. Around the country, fans started wearing Twins caps in solidarity with the beleaguered

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team’s struggle against the Lords of Baseball—including its own owner.

Contraction didn’t happen. And today, Pohlad’s earnest and unpretentious son Jim, who owns the franchise with his two brothers, is being feted as a hero. His Twins are in first place, the defending American League Central champions.

They have reached the postseason playoffs five of the past eight years. Their payroll is a respectable 11th in the league, with revenues to match.

Earlier this year, Pohlad signed catcher Joe Mauer, the American

League’s top hitter and Most Valuable Player and a St. Paul native who was coveted by major-market teams from New York to Los Angeles, to an eight-year contract extension. And Target Field finally became a reality, after years of civic debate and dithering, cementing the team’s presence in Minneapolis.

The Twins’ transformation began when the Pohlads—who also own banks, radio stations and car dealerships—embraced the same kinds of strategies that enable scrappy small businesses of all sorts to take on the big boys. “Can we

team didn’t have a winning season from 1993 through 2000.

What followed was a hard look in the mirror. The Twins were never going to compete dollar for dollar against the biggest teams, that was clear. But Jim Pohlad realized that they could be as efficient as anyone at recognizing and nurturing young talent. That meant skipping the big free-agent contracts and spending that money on scouting and additional minor league staff and instructors. And it meant instituting a philosophy of promoting players from their own farm system. “If you do it right,” Pohlad says, “the impact can be even greater than signing free agents.” Not just one star, but a steady flow.

Developing a young baseball team— as in developing anything with strong potential in a business—doesn’t pay immediate dividends. And a team filled with players nobody had heard of wasn’t likely to solve attendance problems. Still, the Pohlads didn’t waver. “If it’s the right way,” Pohlad told then-GM Terry Ryan, who’d advocated the youth movement, “we’ll have patience.”

The 2000 team had 17 rookies. It lost 93 of 162 games. “We had a payroll of $15 million,” says Laura Day, the team’s senior vice president for business development. “We were scuffling, trying to get fans to the Metrodome. But ownership was committed to a plan.” By 2001, many of those rookies had developed into strong major-leaguers. And in 2002, the franchise emerged from the ashes to win 94 games and the division. The Twins were a baseball version of the Little Engine That Could, and Minnesota started to fall in love all over again.

2. offer a unique exPerience

compete with the Yankees and Dodgers in terms of revenue?” Jim Pohlad says.

“No, we can’t. But we can compete in every other way.”

These days, they do. Their journey from peril to prosperity offers significant lessons for any small-business owner.

1. identify your StrengthS

Large-market teams can lure established stars with huge contracts, then sign new ones if those don’t work out. “They can spend their way out of their mistakes,” says Bill Smith, the Twins’ general man-

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ager, who has been with the organization for 23 years. For much of that time, the Twins tried to build their team by signing established players as free agents.

But because they couldn’t afford the stars, they ended up overpaying for mediocre talent. Unlike the big-city clubs, which consider paying players they’ve benched (or even released) a cost of doing business, the Twins were stuck with these bad acquisitions in the same way a small company might be stuck with an ill-conceived expansion strategy or a misguided line extension. As a result, the

It’s a sports truism that winning draws fans. But small crowds were only part of the Twins’ problems. Sharing the Metrodome with the NFL’s Vikings and University of Minnesota’s Gophers, they had few opportunities to generate income.

They couldn’t sell premium seating or make money from suites. They received a share of concessions but didn’t have full control of the product.

“We were probably the worst team in baseball in terms of revenue sources available,” Pohlad says.

At the same time, the game-day experience in the Metrodome was not what the Twins wanted. They couldn’t choose Entrepreneur

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the brand of hot dog or ice cream, couldn’t hawk souvenirs from a team store, couldn’t tie the current Twins to the past with displays and signage, couldn’t provide sun-hungry Minnesotans with a day of outdoor baseball. One by one, new ballparks were opening … in Houston, Seattle, Cincinnati, Milwaukee, Pittsburgh, St. Louis … 13 in the new millennium alone. The Twins, arguably, needed one more than any other team.

“The day the [state] Legislature finally passed the approval for a new ballpark in 2006 was one of the most important in the history of our franchise,” says Jerry Bell, the team president at the time.

A stroll around Target Field reveals why. Concession stands sell local county fair favorites, from turkey legs to walleye-on-a-stick, and iconic Schweigert hot dogs, the original brand sold at Bloomington’s Metropolitan Stadium in the 1960s during the dawn of the Twins’ franchise. A C-1622:Layout 1 6/8/10 3:10 PMfrom Page 1 ring of luxury suites extends right field around home plate to left field. Instead of portable kiosks sell-

“Nothing is so successful that it can’t be mismanaged. If you lose sight of what you’re doing, it could be here today and gone tomorrow.” ing Twins merchandise, six permanent shops are spread among every level.

Rentable conference space enables the franchise to make money during the off-season and when the team is on the road.

Most important, the open-air setting offers casual fans a reason to go to the ballpark during the summer,

when the last thing Minnesotans want to do is sit indoors. When rain started to fall during that Boston game, fans gave the weather—and the fact that they were sitting outside in it—a rousing ovation.

3. connect with your cuStomerS

For years, the team had run a “winter caravan,” a road show spread over a few days in the dead of January that brought players, coaches and executives to smalltown high school gyms, meeting halls and hotel ballrooms in the five-state area that defines Twins Territory. Rather than cut back when attendance dwindled, the owners expanded the caravan to 90 stops and to two weeks. In groups of 100 to 1,000, Twins fans in Minnesota, northern Iowa, North Dakota, South Dakota and part of Wisconsin were able to make personal contact with players. That dovetailed with the catchy ad campaigns—“Get to Know ’Em,” then “Get to Know ’Em Better”—that introduced fans to these new faces.

Since they didn’t have summer sunshine or their latest free-agent acquisi-

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tions to sell, the Twins made their players as accessible as possible. Emerging stars were asked to continue to participate in the caravan and other promotions. And the team did its best to keep the roster stable, letting fans develop favorites.

“When players come and go every year, it just becomes kind of a revolving door,” Pohlad says. “We didn’t want that.”

The Twins also needed to keep tickets affordable, coupled with special discount nights, Kids’ Days and other promotions that lured fans back to the Metrodome.

That has continued at Target Field, where family season-ticket plans start at $10 a game, as cheap as any in baseball.

The ownership transition from father to son also helped revamp the team’s image. As it happens, Jim Pohlad is as regular a guy as it’s possible for a scion of a billionaire family to be. His forthrightness not only helped to persuade the state Legislature to fund $350 million of Target Field’s construction after years of dickering, it also offset the fans’ perception of Carl Pohlad as penurious and uncaring.

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Despite the turnaround, Jim Pohlad cautions against assuming that the Twins’ struggles are over. It’s a humility that small companies in every field might profitably emulate. “Don’t assume omnipotence,” he says. “Don’t take anything for granted. Nothing is so successful that it can’t be mismanaged. If you lose sight of what you’re doing, it could be here today and gone tomorrow.”

4. remain loyal to your emPloyeeS

Baseball is a transient business, but the number of Twins employees who have 20-plus years with the club is startling. In the years since winning the World Series in 1987, the team has had just two presidents, three general managers and two field managers. “The relationships that the Pohlads have with the people they’d hired, and their willingness to let the people do their jobs, was as important as anything else in what the Twins have been able to accomplish,” says team president Dave St. Peter, who has worked nowhere else since graduating from college in 1989.

Such loyalty served them well. Before

the 2002 season, with the threat of contraction lingering, Toronto asked Ryan to interview for its GM position. Though he faced the possibility of imminent unemployment, Ryan declined. “That sent everyone a message,” Smith, the general manager, says. “That whole off-season, when we didn’t know if there would even be a team the next year, we lost one person, a woman in sales.” That fall, Ryan was named baseball’s Executive of the Year by Sporting News.

Off-the-field stability also helps the Twins maintain good relations with past stars including Harmon Killebrew, Tony Oliva, Rod Carew and Kent Hrbek. “When they walk into our office,” says Kevin Smith, the team’s executive director of public affairs, “they still stop at every desk because it’s the same faces they always knew.”

When the Twins need those stars for a promotion or as part of a marketing campaign, the connection is still there.

5. know when it’S time to act like a Big BuSineSS

Sports franchises typically break even an-

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35

Hall high school. As a pro, he is a repeat batting champion, the best fielding catcher in baseball and the reigning American League MVP. He’s the kind of player a franchise gets once every generation or two. And he wanted to stay in Minnesota.

If Mauer was allowed to leave for a bigger market, “it would have been a big black eye,” Bell says. “It wasn’t just important for the Twins, it was important for baseball to show that a middle-market team can keep a player like that.”

The eight-year, $184 million deal that Mauer signed in March might seem exorbitant for a team determined to act like a smart small business, but the timing was right: The Twins were moving into Target Field and expected to double their revenues in the process. The signing resonated around baseball, giving hope to smaller franchises from Pittsburgh to San Diego.

“Joe Mauer represents a unique opportunity that every team would love to have,” says Jeff Moorad, the vice chairman and CEO of the San Diego Padres.

MVP: twins catcher Joe Mauer signed an eight-year renewal deal for $184 million, a sum that may seem exorbitant for a team that runs like a small business.

But the timing was right.

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“The team has a state-of-the-art facility, the support of a community that has rallied behind them, and the one player that other major leaguers overwhelmingly choose as the one they’d build a team around. It’s a great time to be a fan of the Minnesota Twins.”

That rainy April afternoon at Target Field ended in a loss to Boston, but the fan excitement was in the air as they filed out of the stadium. Up in the owners’ box, Pohlad admits that he’s finally able to take a breath.

“We’ve built a good brand,” he says.

“We got a stadium. We have a foundation of talent in place.”

Below him, the concourse is a sea of blue Twins caps bobbing toward the exits.

They’re not being worn in sympathy anymore but in proud identification with a small business that’s competing with the heavyweights from coast to coast—and more than holding its own.

Bruce Schoenfeld haS Been writing aBout the BuSineSS of BaSeBall Since 1982.

Photo© Sp orts Illust rated/Gett y Im ag es/ T om Dahlin

nually but grow prodigiously in value. An owner who can hang on eventually will reap an immense profit. (One example: The group fronted by George W. Bush that bought the Texas Rangers for $86 million in 1989 sold the team for $250 million nine years later.) But because the Pohlads don’t plan on selling, they’re looking for the team to pay its way. “Just enough of a return to keep us going,” Pohlad says.

Following the 2007 season, that need to stay in the black meant that the Twins couldn’t afford to retain their best player, outfielder Torii Hunter. It also meant they wouldn’t be able to re-sign their best pitcher, Johan Santana, the following winter. So Hunter left for the Los Angeles Angels of Anaheim, and Santana was traded to the New York Mets. “Decisions we chose to make,” Pohlad says.

But knowing that Mauer’s contract was up for renewal after this season, Pohlad made a different decision.

Mauer is a true local icon—a threesport star at St. Paul’s Cretin-Derham

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almost+famous A simple plan Your fledgling business doesn’t necessarily need a complex strategy document, just some basics

T

he first and foremost rule for crafting a strategic plan for your business is to not be so afraid of the process that it stalls your progress.

“You’re always planning—the business planning document you fear is just output,” says Tim Berry, president of Palo Alto Software and author of The Plan-As-YouGo Business Plan. “The plan just outlines what you want to happen.”

Here are some guidelines for developing a straightforward and effective plan. —Ivy Hughes SCALE IT DOWN Unless you have an idea for knocking out Google, you probably don’t need a 100page plan. Most early-stage companies need a strategic outline of about 10 to 15 pages. “Start by making your plan just big enough to manage your business,” Berry says. “The heart of a plan is strategy, not a long, complicated text.”

TAP ONLINE RESOURCES The Small Business Administration site (sba.gov) has guidelines and templates for creating a plan. Berry’s site (bplans .com) features more than 500 industryspecific plans so you can find your sector and start writing. SCORE (score .org) is a good resource for growing companies that need to expand their plans. Right-Brain Business Plan (rightbrainbusinessplan.com) helps creative companies brainstorm the left side of their business.

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HAVE A FALLBACK POSITION “If everything goes according to your plan, that’s great,” says Thom Ruhe, director of entrepreneurship at the Kauffman Foundation. “But 99 percent of entrepreneurs need a contingency plan. Put in a line that says, ‘If we don’t have X dollars in sales by this date and we haven’t obtained profitability, we will…’ Do what? Double down? Change market tactics?”

ASK FOR HELP Before putting your plan to potential investors, seek the counsel of trusted friends, business owners and other entrepreneurs. Have them review your busi-

ness plan, and listen to their suggestions.

You typically get one shot with an investor, and vetting your plan is a good way to fill in holes and anticipate questions.

KEEP IT FRESH Schedule a few hours every month to review your plan. This will ensure you use the plan as a living document rather than a stagnant framework. Use the review process as a way to gauge what’s working and what needs to be altered about your business. “The very process of going through a business plan is useful,” Ruhe says. “It forces entrepreneurs to review their thoughts and work through whether their business is viable.”

Photo© iStockphoto.com/enot-poloskun

COVER THE BASICS Bigger isn’t better—it’s confusing. You can always add components to your plan as your business grows. Review your capitalization requirements and capital resources. Clearly identify your market and provide a basic market analysis. List your assumptions and establish benchmarks.

Outline basic financials, including sales forecasts and an expense budget.

TECH TALK

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tech+department The sound of sleekness

SHINY OBJECT OF THE MONTH

HiVi’s speakers turn your computer or mobile device into a portable studio, complete with quality audio LOOKING FOR A high-end business audio vibe without the high-end cost? Try turning your PC, iPhone or iPod into a professionalgrade sound system with self-powered speakers that have their own amps and can plug directly into your computer or portable device. The HiVi Swan T200Bs come with not one but two separate amps (one for each speaker), making them essentially idiot-proof to install. And the speakers’ distinct angular look adds value to even the most persnickety office design.

HiVi also gets points for its nifty remote control that manages both speakers independently. For $629—less than the price of a decent notebook computer—you can add first-rate audio to your next presentation or stream music into your retail location.

Sounds like a pretty good deal. —Jonathan Blum

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Can’t Live Without It

Chuck McHugh, president of Industrial Design Innovations, a Dearborn, Mich., automotive shipping and logistics business

BJ Farmer, CEO of CITOC, an IT consulting and business services firm in Houston

THE IPAD IS the furthest thing from Chuck McHugh’s mind—which is remarkable, considering he has just spent $34,000 installing 10 design-focused computer imaging systems.

“Not just the iPad,” McHugh says. “Apple was not even part of the conversation.”

Industrial Design Innovations is a 26-person firm that creates shipping containers for specialty car parts for clients such as Ford, Toyota and Harley Davidson.

The company’s aging design tool, called CATIA, was recently upgraded from a legacy UNIX Sun SPARC server. Ford, one of the firm’s biggest clients, dictated that Windows would be the platform.

McHugh saw no need to use computers that could handle both Apple and Windows software. Instead, he saved about 70 percent on the cost of Macs by using traditional Dell notebooks and desktops. “We saw significant improvement in speed and overall performance with this system,” he says.

McHugh recently launched a second company within his firm called RF-IDI, which specializes in remotely tracking car parts. The system lets workers locate misplaced machine parts on factory floors using radio frequency identification tags matched to handheld computers. McHugh said the company considered many hardware and software options and landed on Panasonic Toughbooks, developing its own app out of standard languages like C++.

“There would be nothing unique for the iPad to do here,” McHugh says.

BJ FARMER IS not ashamed of his lust for all things iPad. “I have staked my whole company on it,” he says. “I told my development guys that I do not want to have a single application that does not work on an iPad.” Farmer’s 18-person firm, which he started in 1995 after a career in accounting, specializes in web-based business process automation. He firmly believes that the iPad is the next bridge for even the smallest and most techno-phobic firms to step out onto the Internet business cloud.

Farmer points out that an iPad is stable, rugged and can run all day without a recharge. Entrepreneurs may not be able to create a PowerPoint or Excel file on it, he says, but the unit is the best solution for updating company files. Factor in its wow appeal that closes deals and access to work force automation apps, and the iPad becomes Farmer’s small-business web access tool of choice.

He admits the iPad is far from perfect: There is no camera, which limits the use of optical character recognition, and there is no projector output, which cuts into the tablet’s effectiveness as a demonstration tool. But those limitations don’t dampen Farmer’s enthusiasm. His firm is considering giving away iPads to customers to drive sales of its cloud-based products.

“I figure once I hand these to a client and they can see what they can do, it will open doors to a whole new level of tools,” he says.

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tech+ The hard truth about software licensing YOU THINK SOFTWARE is expensive?

Wait until you start using it for free. The fees add up when businesses are caught using pirated or improperly licensed software. And groups such as the Business Software Alliance and the Software & Information Industry Association are on the hunt for offenders.

But many companies guilty of pirating software are not blatant pirates—they’re just disorganized.

If you track your software, you can keep not only authorities at bay, but also keep from buying unneeded software and better prepare hardware for upcoming software requirements. Some ways to get in line: • Find the right tools. A number of affordable tools automatically looks for licensed and unlicensed software on your computers and forecasts licensing needs. Check out BSA-recommended Attest Gasp (gasp.com), Express Metrix Express Software Manager (express metrix.com) and FrontRange Solutions Centennial Discovery (frontrange.com).

• Save your receipts. Proof of purchase is necessary for more than just preparing for the risk of an audit by the alliance. “If you ever want to sell your business, these records are going to be required, plus there’s all kinds of potential tax issues involved,” says Rob Scott, a lawyer who specializes in BSA defense as a partner of Dallas-based Scott and Scott.

• Ask your reseller for help. If you truly don’t have the budget, you can turn to your software reseller for assistance. “Choose the ones that can manage this for you as much as possible and consolidate it so that you can go to one online portal and look at all of your entitlements,” Scott says.

If all this isn’t enough to get you to take the straight and narrow, remember this: Fees from an audit can rack up into the hundreds of thousands of dollars.

Says Scott: “It’s a lot cheaper to do it as an internal project with the guidance of a consultant or a law firm than it is to respond to an adversarial process like a [BSA] audit.” —Ericka Chickowski 44 Entrepreneur

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Six must-have iPad business apps THE ASCENT OF Apple’s iPad has introduced a bevy of opportunities for road warriors hungry for productivity-enhancing apps. Here are our votes for some of the latest and greatest. —Ericka Chickowski

Application

Features

What it's good for

Price

More info

WebEx for iPad

Webcast and teleconferencing brought to an iPad near you

Conferencing on the go

Free

webex.com/apple

LogMeIn Ignition

Gain remote control of your office desktop directly from your iPad

Remote logins to other systems

$29.99

logmein.com

Salesforce Mobile

Taps you into your Salesforce database when you need it most—while on site with customers

Customer management for road warriors

Free for Salesforce .com customers

salesforce.com

Instapaper Pro

Records web articles and sites for easy offline reading

Catching up on web reading on planes and trains

$4.99

instapaper.com

Bento

Database app lets you track mileage, expenses and billable hours

Keep track of details in the field without Post-its or paper

$4.99

filemaker.com /bento

OmniGraphSketcher

Plot data and draw graphs for presentations or informal meetings

Replacing drink napkins to sketch out business graphs

$14.99

omnigroup.com

17

Average number of applications downloaded per iPad sold, said Apple CEO Steve Jobs during his June keynote address at Apple’s Worldwide Developers Conference in San Francisco.

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tech+ Drives to help you survive It’s time to stop backing away from backing up your business data

My Passport SE for Mac (Western Digital, $199) Apple’s Time Machine system gets all the love, but don’t overlook other slick backup tools for Macs. The 1 terabyte My Passport solid-state drive from Western Digital is mind-boggling. We will spare you the geek drivel here. This compact box can store everything you will ever create in your business, and you can carry it in your pocket. Mac users, need we say more?

ioSafe Solo SSD, 64GB (K.L. Security Enterprises, $495) The toughest backup drive we know that can withstand any disaster is the ioSafe from K.L. Security Enterprises.

It protects your business data from a 5,000-pound crush force and a blaze of up to 1,550 degrees Fahrenheit.

Plus, it can survive being under 30 feet of water for 30 days. It’s expensive, but when it absolutely has to be secure, it has to be ioSafe.

Dropbox (2GB of service is free, 100GB storage is $19.99 a month) The online storage world is jammed with quality providers but, for our money, none of them holds a candle to MIT spinout Dropbox. This online storage utility creates a single folder on your desktop that syncs all your stuff across your PC, notebook and mobile device. Dropbox can be expensive when storing a lot of material, but for virtual solutions, it’s tough to beat.

LaCie Network Space MAX, 2TB (LaCie, $279) At last, a hard drive cool enough to go not under, but on your desk. LaCie gets points for making a storage tool that looks fabulous and has the capacity to store and share media and heavy graphics. The unit supports so-called Gigabit Ethernet, which runs at the fastest possible speeds for a copper networking cable, and it also works via USB drive. For both form and function (and heavy data loads), go to the MAX.

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Photo© iStockphoto.com/blackred Photo© iStockphoto.com/duncan1890

EVEN HIGH-TECH firms can become overwhelmed by the options for external storage. The sprawling data backup world features dozens of options, all of which offer sophisticated protection. Backup shoppers must suss out web-based storage tools against those that connect directly to computers. To keep the market straight, here are our picks for some of the best ways to back up your business. —J.B.

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tech+[mobile entrepreneur>>>

David Heinemier Hansson’s take on cutting the cord in a less-savvy mobile land

Protect your privacy on the go.

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See website for full offer details. © 3M 2010 48 Entrepreneur

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DAVID HEINEMEIER HANSSON comes from a place where calls never drop and mobile phone customers only pay for the minutes they use. That place isn’t Shangri-La—it’s Copenhagen, Denmark.

There are more places like it, but judging from the rate at which U.S. mobile users complain about their service, none of them is in the U.S. Hansson is a partner in 37signals, a Chicago software and Internet applications firm focused on small businesses. He moved from Copenhagen to Chicago four years ago, and he still isn’t accustomed to the differences in quality and cost.

“In Denmark, I never had dropped calls, and here it happens all the time,” he says. “And everyone in Denmark is on

APP OF THE MONTH

Inventory for less than $1 THE REDLASER application from Occipital, of Boulder, Colo., makes a pretty solid argument for how to run your business from your mobile phone.

The app’s optical recognition technology lets you scan bar codes through the camera on your iPhone. Want to do a quick check of your dusty inventory? Grab your phone, wander around the shop,

scan your codes and, poof, an accurate list. Want to compare how your stuff is priced against the competition’s? RedLaser pulls that up and compares it with Google and TheFind data (Amazon.com does not allow its prices into RedLaser, so data is far from perfect).

RedLaser can also organize items without bar codes: Just surf over to a free barcode creator like barcodesinc.com /generator and create a code matched to whatever text you like. Print it up, slap it on every file, box or piece of equipment in your office. Then scan and, again, poof, instant inventory. Not bad for 99 cents. —J.B.

Photo© David Johnson

We’re definitely not in Denmark

minute plans that amount to about $15 to $20 a month. Here, you pay $50 a month minimum. It’s ludicrously insane.”

Hansson is an iPhone customer on AT&T’s network, and his complaints about U.S. mobile traditions have not diminished his love of anything with Apple’s name on it.

“I’m Apple all the way—iPhone, iPad, iPro. If Apple makes it, I’ll buy it,” he says.

The latest addition to his collection is the iPad. “Where it really helps are those situations where I’m asking myself if I really want to lug a laptop around,” he says. “The iPad is easy to carry around and work on wherever you need to.”

Hansson’s device family also sets him up for an unwired lifestyle and professional life. “I’ve been exclusively mobile for the last four years,” he says. “One number for everything makes everything really simple.”

Because 37signals is in the business of creating business applications, the mobile apps Hansson uses daily for business tend to be his company’s creations.

Most often, he’s using Backpack, an organizational app that helps him keep track of flight plans, photos, to-do lists and multiple calendars. To communicate with co-workers, he uses 37signals’ Campfire, which improves on instant messaging by enabling group chat rooms.

Hansson also does a lot of text messaging on the go, and he monitors Twitter from his mobile phone because it’s a major marketing feed for 37signals. For fun, he plays Firemint’s Flight Control and Sid Meier’s Civilization.

These are just some of the apps that keep Hansson a devoted Apple user, but it’s clear he doesn’t feel as married to his mobile service provider. “The second that the iPhone is available for any other carrier, I’m switching [from AT&T].” —Dan O’Shea

Last year, the average data security breach cost $6.75 Million.

And you just know that Cynthia from finance can’t wait to blow the curve.

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Peace of mind in high traffic areas has taken an unexpected form. Precision-fitted 3M Privacy Filters offer a crisp, clear view of your laptop screen when observed from straight on—while blocking wandering eyes from treading on your confidential information. So you can focus squarely on your work. Who knew preventing data breaches could be so elementary?

3M is your solution for privacy on every screen. For more information on 3M Privacy Computer Filters and 3M Mobile Privacy Film, visit www.3MPrivacyFilter.com/Business or call 800-553-9215.

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Passionate, ambitious and downright genius. Meet the finalists and vote for who you think deserves to win the most prestigious award for small businesses.

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These entrepreneurs are zigging while everyone else is zagging.

Help decide who will be the next big thing with your vote!

Not 101ers! These biz ideas rock.

Just sayin’. Vote for your fave and help launch the next revolutionary startup.

It’s your community. You decide.

Voting ends September 10

All other marks used by permission of the owner.

entrepreneur.com/e2010 entrepreneur.com/e2010college

] web+department Earn

The likes of you GetGlue recommends movies, music and books based on what already floats your boat Play favorites GetGlue is a free social recommendation engine spanning pop culture pillars such as movies, TV shows, books and music. After signing up, consumers click on their interests, building a profile that GetGlue matches with personalized faves and raves from more than 500,000 registered users. Suggestions also integrate contextual content from resources including Amazon, IMDb and Wikipedia, and extend across Facebook and Twitter. “We started with the notion that the old web is about websites and pages, and the new web is about connecting people and the things they care about,” says Alex Iskold, CEO of GetGlue parent firm AdaptiveBlue in New York. “Once you tell the site what you like, it connects you with other stuff you might be interested in and people who like the same stuff.”

Photo© Jeff Clark

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r

WEBSITE TO WATCH

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BUILD A WEBSITE

The cost of quality

Sidestep sticker shock by creating a detailed budget for designing, building and launching your website OFF-THE-SHELF CONTENT MANAGEMENT systems and design templates have made building and managing a website easy and affordable for small-business owners with modest needs. Not counting your sweat equity, you can build and maintain a small website for less than $250. But, honestly, do you really want to bank your company’s online presence and messaging on a lowcost website? Working with a full-service graphic design and web programming firm is a more savvy business decision.

Using a professional team, you can expect to pay from $1,000 for a very basic site to more than $50,000 for a larger site with custom graphics, programming and other options.

The cost of your website will be based on the size and complexity of the site required to meet your business-related needs. A five- to 10-page site introducing your business and the services you offer will cost considerably less to build than one that processes purchase orders, for example.

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When budgeting for web programming and design, draw up an itemized list, including the following: • Domain registration: Cost: $10 to $35 per year per domain.

• Hosting: Fees vary considerably based on the complexity of your website, estimated traffic and security requirements. Cost: Shared host, $8 to $50 per month; merchant plan, $25 to $250 per month; dedicated server, $125 to $1,000+ per month.

• Graphics: Unless you have existing graphics, including a company logo, you need to use stock art or pay a graphic artist. Cost: Royalty-free stock

art, starting at about $10 per image; graphic artist, $50 to $150 per hour.

• Content development: Content development usually starts with you, but professional copywriting services can help. Cost: $50 to $85 per hour.

• Content management system configuration and implementation: CMS makes your site easier to populate, maintain and update. Cost: $50 to $85 per hour.

• Programming and/or third-party application fees: Programming includes online forms, e-commerce and CRM tools, as well as custom components necessary for your site to deliver what your business model calls for. Cost: $85 to $125 per hour and/or flat fees or rates for use of third-party applications. If you insist on building your site in Flash, expect to pay 25 percent to 50 percent more.

• Usability testing: Cost: $35 to $50 per hour (plan for at least half-hour per page).

• Analytics: Google Analytics is free, and it’s quick and easy to install. More robust analytics tools vary in price. Cost: $50 to $85 per hour to set up and configure Google Analytics or other programs; $50 to $5,000+ monthly fees for more robust systems.

• Blog: Adding a blog to your website or separately is an additional cost to consider. Cost: $500 to $2,500 firsttime setup including graphic design, programming and configuration.

Because most web programming services are ultimately billed at an hourly rate, the total cost of your website hinges on the site’s size and complexity. —Mikal E. Belicove

Mikal E. Belicove is an author and market positioning and social media consultant. His latest book, The Complete Idiot’s Guide to Facebook, was published in July. When he is not working or ghosting blog entries for clients, Belicove can be found musing about the world on belicove.com and can be reached at mikal@belicove.com.

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Another place to hang your shingle

Home remodeling gets retooled

How one online venture is working to update an old industry A TRADITIONALLY OFFLINE SECTOR such as home remodeling may not seem the likeliest candidate for a next-generation technological overhaul, but Brian Javeline would beg to differ: His MyOnlineToolbox promises to reinvent how contractors do business.

MyOnlineToolbox gives builders a web-based platform to manage customers, vendors and subcontractors, schedule work orders, create and track invoices and order materials from wherever their work may lead them.

“Contractors are evolving—many people stereotype them as sloppy and criticize them for not answering their phones,” says Javeline, president and CEO of Pompano Beach, Fla.-based ServusXchange, the virtual solutions provider behind MyOnlineToolbox. “Their business is mobile—they’re all over the place, and always in the car. They’re forced to play catch-up on their business on their nights and weekends.”

Nationwide investment in home improvement fell just shy of $153 billion in the first quarter of 2010, according to the Bureau of Economic Analysis.

Javeline says it’s virtually impossible to 54 Entrepreneur

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draw an accurate bead on the number of contractors in the U.S. because so many in the industry never declare themselves as such on their government forms, instead tackling remodeling jobs during offhours from other professions and getting paid in cash or check.

These off-the-radar contractors are ideal candidates for MyOnlineToolbox, Javeline says. The platform’s viral collaboration elements create an expanding network of skilled, reliable peers across different specialties such as plumbing, electrical repair and carpentry. Members can advertise for bids and refer others for jobs.

Contractors can sign up to MyOnlineToolbox for free. Premium subscriptions that offer additional features and resources are $89 per month. As of June, more than 1,100 contractors have signed up.

Javeline’s challenge has been recruiting older contractors, some of whom are slow to move their business processes online.

“The younger generation already accepts technology in their lives,” he says.

“They get it.” —J.A.

WITH ONE OF EVERY FIVE Google searches now related to locationspecific queries—translating to more than 20 billion searches per month worldwide—it’s no surprise the digital services kingpin continues to channel more of its energies into solutions optimized for local businesses. Chief among them: Place Pages, a Yelp rival that provides information on local retailers, restaurants, landmarks, transit stations and related points of interest.

In April, Google changed the name of its Local Business Center to Google Places to underscore its tighter integration with Place Pages. According to Google, more than 4 million businesses have claimed their Place Pages, posting contact information, hours, photos, video clips and coupons. Business owners can use Place Pages to get customer feedback and communicate with patrons, and a personalized dashboard compiles data including how many times people have found your firm on Google and what keywords they used to sniff it out.

Other new Google Places features: Real-time updates: Businesses can keep customers apprised of sales and new merchandise and post coupons (including discounts formatted for mobile phones).

Tags: For $25 a month, businesses in select cities can add Tags (yellow markers promoting aspects of their businesses) to their Google.com and Google Maps listings to stand out.

Photo shoots: Companies in select cities can request free photo sessions to spotlight the business interiors.

Customized QR codes: QR codes are matrix codes designed for highspeed conversion via camera-enabled mobile phones. Businesses can download unique codes to include on marketing materials.

Favorite Places: Businesses that generate a lot of Google searches are recognized as Favorite Places. Recipients get a window decal. —J.A.

Photo© V eer/Franck Boston

Google Places gives you a virtual storefront where you can track traffic

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doing+good [

Entrepreneurs who give back

Free paint to good home

Fresh look: Emily and Matt Shoup of M&E Painting.

A Colorado painter provides free makeovers for crisisstricken homeowners

L

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Paint by the numbers Contribution to 2009 jobs: 20 gallons of primer, 45 gallons of paint Total employees participating: 13 Hours donated: 120 Total cost of jobs, if billed: $8,000 Investment in promotion: $500 Publicity: Two TV stories, more than 350 YouTube views, lots of word-of-mouth

Photo© Jamie Kripke

ike most community-minded business owners, Matt Shoup had sponsored Little League teams and supported local charities. But in 2007, Shoup—the owner of M&E Painting, a $2 million residential and commercial painting company in Loveland, Colo.— received disturbing news that sparked an idea of how else M&E could contribute.

When a client canceled a pending job because her husband had just died of a heart attack, Shoup told her he would return her deposit, with his condolences.

But a few days later, Shoup and his wife, Emily, decided their business would paint the woman’s house for free.

“We just wanted to do good for somebody—that was really what prompted us,” Shoup says. That job led to a plan to publicize the effort and search for people who needed help with home renovation.

The company used social media to get the word out, posting a video on YouTube and contacting local television stations and newspapers. Shoup added the free paint makeover offer to his business cards so that he could drop them off at homes that looked to be in need of significant painting.

M&E received seven responses last year, two of which stood out: One family had a child with cancer, and another family’s main breadwinner had broken his back.

Shoup couldn’t decide between them and chose to absorb the cost of both paint jobs.

But the cost was less than he anticipated because Shoup’s crews volunteered their time. “They could have been out there making money, but this way, they were able to really make a difference for a family,” he says.

M&E’s 48 employees were enthusiastic about the results. Shoup kept the program going and plans to give away six paint jobs by the end of 2010.

“As we grow, we’ll give away more—if we grow 30 percent this year, we’ll do 30 percent more jobs,” Shoup says. “We’d really like to continue to make this a bigger thing and help more people.” —Gwen Moran

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Innovation

NATION

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Whatever your entrepreneurial aspirations, there’s a city to match your needs, accelerate your company’s growth and improve your quality of life. Which is the one for you? Entrepreneur identifies 50 cities and 10 lifestyles energizing businesses of all shapes and sizes.

E

ven in harsh economic times, America is still the land of opportunity, especially for entrepreneurs with the vision, ambition and flexibility to follow that opportunity wherever it may lead. In an increasingly connected world, no longer are businesses or their owners tethered to one spot on the map: Whether you’re sizing up a regional opportunity, looking for a change of scenery or simply desiring a certain lifestyle, there’s a location and culture that’s perfect for you.

The challenge is identifying which spot is the best fit.

Entrepreneur selected 10 contemporary American lifestyles and 50 related cities to complement all kinds of business types. Whether you’re looking for tropical breezes, crisp mountain air, crowded city streets or wide, open spaces, they’re all here.

Our methodology is as far-ranging as the list itself, incorporating statistical data, lifestyle studies and empirical research.

Some choices may seem to be no-brainers, others may surprise you, and still others may have you reconsidering segments of the U.S. in a whole new light. That’s the essence of American business: The only constant is change. —Jason Ankeny

1The great

N

outdoors Five cities where peaks and valleys are more than just points on a graph

$57

million Boulder, Colo.

Boulder’s image as a hippie haven belies the city’s emergence as a hotbed for innovation. Silicon Valley veterans and aspiring entrepreneurs alike are descending on Boulder for its unique marriage of capitalist ambition and counterculture spirit.

Homegrown successes Storage Technology: acquired by Sun Microsystems Socialthing: purchased by AOL Kerpoof: bought by The Walt Disney Co.

VC raised by 11 Colorado startups in the first three months of 2010

Urban vitals Population: 599,657 Median resident age: 34.6 years Mean housing price: $585,964

Elevation: 5,344 feet Population: 103,650 Median resident age: 29 years Mean housing price: $585,323 RELATED DESTINATIONS Logan, Utah The city is reinventing itself as a tech hotspot with its Innovation Utah program and Cache Business Resource Center, which offers free assistance to fledgling entrepreneurs.

Bismarck, N.D. The hunting and fishing destination is home to strong and consistent wind patterns that power a flourishing wind-turbine industry.

Billings, Mont.

Famed for fly-fishing, horseback riding trails, whitewater rafting—and opportunities in energy, transportation, healthcare and education.

Jackson, Wyo. The tourist gateway to Grand Teton and Yellowstone National Parks boasts opportunities in arts, entertainment, recreation and accommodation industries.

City life Higher costs, higher stakes but even higher visibility

Washington, D.C.

Its pre-eminence as an enclave of political power tends to obscure the city’s thriving entrepreneurial culture. Federal employees make up 15 percent of the local work force, and professional and business service jobs are on the rise, buoyed by growth in the education, finance, public policy and scientific research sectors.

Embedded customer base: With a $57,936 median household income, D.C. has one of the nation’s most affluent and educated populations.

Office space: D.C.’s downtown offers more investment opportunities in commercial real estate than any other U.S. city besides New York.

Capital city, indeed: D.C. is headquarters for an expanding number of venture funds, including Core Capital Partners, Paladin Capital Group and The Carlyle Group.

RELATED DESTINATIONS New York In May, the ultimate urban destination launched its Entrepreneurial Fund to bolster promising technology startups.

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Chicago The diverse, culturally intriguing and affordable Windy City is home to a growing number of Web 2.0 companies.

Boston With its critical mass of universities, Boston remains on the cutting edge of American innovation, offering big city life in the quintessential college town.

Raleigh, N.C. Raleigh has affordable housing and a natural beauty uncommon for a major U.S. city. It rivals Silicon Valley as a tech epicenter.

2

3Recovery

and rebirth Cities on the mend, where even the smallest business can make a big difference

Pittsburgh

Suburbanization and economic turmoil slashed the city’s population to just 330,000 by 2000. Steel has given way to robotics, healthcare and artificial intelligence, but Pittsburgh retains the vestiges of its industrial past. Generations of family-owned businesses continue to evolve in response to Pittsburgh’s metamorphosis. Officials are redeveloping abandoned industrial sites into housing, retail and office space, typified by the Waterfront and SouthSide Works projects.

0 Number of operational steel mills

4 Living in paradise

New digs: The forthcoming Starpointe Business Park, an 1,100-acre brownfield redevelopment, promises incoming firms a five-year tax abatement and lowinterest loans.

Notable fan quote: “Pittsburgh stands as a bold example of how to create new jobs and industries while transitioning to a 21st century economy.”

Why wait until retirement to enjoy a life of sun, surf and sand?

Miami

The Gateway to the Americas, Miami is home to a flourishing global business and finance community. Largely because of its proximity to Latin America, the city houses offices for more than 1,400 multinational corporations and has the largest concentration of international banks in the U.S. Entrepreneurs here sidestep both local and state personal income taxes, and officials also offer a number of incentives and financial programs for companies looking to relocate.

—President Barack Obama, on naming Pittsburgh as host city of the 2009 G-20 Summit

Tourist target: 12 million visitors per year add $17.1 billion to the local economy.

Population: 310,037 Median resident age: 35.5 years Mean housing price: $135,564

75.9°F: Average daily mean temperature

RELATED DESTINATIONS Oklahoma City In 2009, the city passed the Metropolitan Area Projects Plan 3, a $777 million public works and redevelopment project.

Population: 390,191 Median resident age: 37.7 years Mean housing price: $395,124

Recorded instances of snowfall: One, on Jan. 19, 1977

Oakland, Calif.

Oakland is ranked third for cities with businesses owned by women. It’s also eco-friendly, generating about 20 percent of its energy use from renewable resources.

New Orleans The Crescent City continues its post-Katrina rebound, creating opportunities for entrepreneurs via tax incentives and work force development initiatives.

Jackson, Miss.

Few cities make it easier or more inexpensive to launch a business: Expect to pay anywhere between $20 and $150 in licensing fees.

RELATED DESTINATIONS San Diego Renowned for the most hospitable weather in the nation, the city also plays host to an evolving software and new media sector.

Honolulu Cost of living is high and local time is six hours behind the East Coast, but the natural beauty makes up for the challenges.

Myrtle Beach, S.C. Nearly 15 million vacationers visit each year, perfect for businesses looking to capitalize on the tourist trade.

Albuquerque, N.M. Albuquerque gets more than 300 days of sunshine per year and lies at the heart of the New Mexico Technology Corridor, a cluster of high-tech firms along the Rio Grande.

Purchasing power: A 2009 UBS study ranked Miami as the richest city in the U.S. and the fifth-richest worldwide.

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5Creative

OR THINK ABOUT ...

centers

Five cities where creativity and capitalism make sweet music together

Austin, Texas

Austin’s funky, anything-goes lifestyle exists in stark relief with the traditionally conservative Lone Star State. But Austin is one of the nation’s most progressive and proactive entrepreneurial centers. Locals wear their “Keep Austin Weird” T-shirts with pride but, in reality, the city’s combination of art and commerce couldn’t be better adjusted.

Brooklyn, N.Y. The 300-acre Brooklyn Navy Yard houses 240 tenants, including furniture makers, architectural designers, electronics distributors and jewelers.

Nashville, Tenn.

America’s second-biggest music production center (after New York), Nashville’s recording industry accounts for about 19,000 local jobs.

Seattle The destination of choice for creative types. Tech startups are led by a generation of entrepreneurs who cut their teeth at companies such as Microsoft and Amazon.

Providence, R.I. The city’s efforts to become a center for artistic and tech innovation include Operation Opportunity, a $10 million small-business loan program.

$3.5 million: Amount the nonprofit Central Texas Angel Network invested in regional startups in 2009—10 of them in Austin Tech savvy: Austin earned the nickname “Silicon Hills” for its emerging tech culture.

Don’t mess with taxes: Like the rest of Texas, Austin has no state personal income tax and no corporate income tax.

Population: 1,705,075 Median resident age: 29.6 years Mean housing price: $274,373

Familyfriendly Five places where company and family can both grow up right

Urban vitals Population: 1,023,083 Median resident age: 32.6 years Mean housing price: $683,754

San Jose

San Jose’s reputation as a technological mecca remains unimpeachable. The largest city in Silicon Valley, it’s home to a bevy of tech behemoths, and local startups receive a wealth of venture capital. Despite San Jose’s imposing cost of living, area households have the highest disposable income of any U.S. city with more than 500,000 residents. That, its location and its variety of all-ages attractions make San Jose a flock-to destination for families.

35 percent: Nationwide venture capital claimed by San Jose startups

RELATED DESTINATIONS Kansas City, Mo. As one of the world’s premier bioscience centers (accounting for nearly a third of the $19 billion global animal health market), KC is a cow town for the new millennium.

6

Fayetteville, Ark. Credit Wal-Mart for growth here.

More than 1,300 of the chain’s vendor partners have opened local offices, and small business is increasing at 6.7 percent annually.

Milton, Mass.

Local business is tied to the city’s rich history, best exemplified by the G.H. Bent Co., a baked-goods manufacturer operating since 1801.

$100,027: Annual median income per family 286: Number of high-tech workers per 1,000 people, the largest concentration of any metropolitan area in the nation

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Anchorage, Alaska With a thriving energy industry and unparalleled natural beauty, Anchorage is also one of America’s most tax-friendly destinations: It doesn’t charge sales tax.

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7Off the grid

Five cities where entrepreneurs have the latitude to forge their own paths

Detroit

Detroit sits poised on the brink of economic collapse—and on the cusp of a post-industrial renaissance. Artists and iconoclasts are moving to this city in droves, purchasing foreclosed properties and relying on solar energy and other alternative solutions to pursue lives and careers outside the margins of mainstream society. Officials are looking to reinvent blighted segments of the city as urban farms. Detroit is dead—long live Detroit.

160: Number of startups in the nonprofit TechTown incubator in central Motown

RELATED DESTINATIONS Portland, Ore. Although life in Portland conforms solely to nonconformity, it’s also the site of more than 1,200 tech companies.

Urban vitals Population: 155,000 Median resident age: 33.0 years Mean housing price: $282,146

Burlington, Vt. This counterculture enclave boasts a resilient economy based on manufacturing, education, health services, trade, transportation and utilities.

Boise, Idaho A uniquely urbane locale with a robust creative community, the onetime supply center for Rocky Mountain mining camps is now the site of a burgeoning high-tech industry.

Berkeley, Calif.

Berkeley still thrives as a nexus of liberal activism and progressive beliefs—along with opportunities in educational, scientific and technical services.

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Portion of the 139-squaremile city proposed as agricultural green zones

8Green

Emerging technologies: Biotechnology, nanotechnology, information technology, cognotechnology and hydrogen fuel cell development

Population: 912,062 Median resident age: 30.9 years Mean housing price: $103,647

25%

scenes Where capitalism meets eco-consciousness

Eugene, Ore.

Eugene is famed for its adherence to natural living—Organically Grown Co., the northwest’s largest distributor of fruits and vegetables, launched here in 1982 and paved the way for like-minded startups. Eugene’s Sustainable Business Initiative champions the creation of eco-friendly startups and jobs, and the city is now a model for green technologies in action.

85 percent: Amount of energy the city draws from hydroelectric and wind-generated solutions 150: Miles of smog-free transportation in the metropolitan area Entrepreneurial track record: Blue Ribbon Sports, formed in 1964 by Phil Knight and his collegiate track coach, Bill Bowerman. It later became Nike. Nike’s 2009 green: $19.2 billion RELATED DESTINATIONS Abilene, Texas Just east of the world’s largest wind farm, Abilene green business booms, with a focus on wind turbine blade manufacturing.

Missoula, Mont.

Missoula offers attractive tax breaks for local eco-development projects, and the Montana Community Development Corp. lends $3 million a year to startups.

Ames, Iowa Home to multiple USDA research facilities, the city is a magnet for green R&D initiatives, agriculture-related biotechnology and renewable energy businesses.

Madison, Wisc.

The first city in the U.S. to offer residents curbside recycling also has the Wisconsin Entrepreneurs’ Network, which counseled 3,000 businesses in 2009.

9

5%

College towns

Unemployment rate in the Cornhusker State as of April

Start a business, and learn a thing or two

Lincoln, Neb.

The University of Nebraska-Lincoln’s Nebraska Center for Entrepreneurship encourages students to consider ownership as a career and connects new ventures with financial resources. The university also plans to develop the Nebraska Innovation Campus on a 251-acre site adjacent to its campus, providing space for public-private partnerships and allowing professionals to access faculty research. $20 million: Size of the Paul F. and Virginia J. Engler Foundation’s gift to the University of Nebraska-Lincoln in March to support agribusiness entrepreneurship $260 million: Projected annual revenue from the Lincoln Haymarket Arena approved by voters in May Population: 251,624 Median resident age: 31.3 years Mean housing price: $170,979

41 Engineers per 1,000 people, more than any other American community

Small towns, big 10 opportunities Small ponds where your business can be a big fish

Huntsville, Ala.

Headquarters of NASA’s Marshall Space Flight Center and adjacent to the U.S. Army Aviation and Missile Command, Huntsville is known as a thriving aerospace and military technology center. The nonprofit Huntsville Association of Small Businesses in Advanced Technology pledges to expand the horizons of local startups, by promoting contracts with local federal agencies and facilitating the exchange of information between member firms.

Tech launching pad: Cummings Research Park is the second-largest research park in the U.S., housing 285 firms across 175 buildings.

RELATED DESTINATIONS Provo, Utah Home to Brigham Young University and the second-largest concentration of software companies in the U.S. Minneapolis/St. Paul Thanks to the University of Minnesota and other schools, the Twin Cities boast a concentration of 1,300 high-tech firms.

Dubuque, Iowa Home to five institutions of higher learning, Dubuque serves as the commercial, educational and cultural nexus for Iowa, Illinois and Wisconsin.

Hattiesburg, Miss.

The University of Southern Mississippi partnered with the local Area Development Partnership to create the Business Launchpoint incubator to foster small-business development.

Population: 176,645 Median resident age: 36.7 years Median housing price: $145,800 RELATED DESTINATIONS Sioux Falls, S.D. The self-appointed Best Little City in America is the preeminent metropolis in a state with the country’s lowest sales tax rate (just 4 percent) and no corporate income tax.

Fargo, N.D. Fargo’s Renaissance Zone effort promises tax breaks and other incentives to commercial tenants who lease space in the city’s historic downtown.

Bowling Green, Ky. The Kentucky Transpark is tailored for high-tech firms, featuring educational and research centers along with trails for biking and hiking.

Charlottesville, Va. The Batten Institute at the University of Virginia’s Darden business school offers incubator space and assistance to grad students starting businesses.

9.4 percent: The boost in Huntsville small-business growth between 2004 and 2007—nearly twice the 5 percent national average for midsized metro areas.

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You can get answers by consulting with over 20 Ask Experts, including a small business technology expert from Cisco to help with your everyday networking and communications challenges.

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Baby proof An upstart maker of glass baby bottles gets the attention of green-friendly VCs

Photo© Eva Kolenko

PAM MARCUS USED to feed tiny babies— really tiny babies. The former feeding specialist and pediatric physical therapist spent 16 years working in neonatal intensive care units, and the plastic bottles the hospitals used bothered her.

“I started reading some articles about the dangers of plastics and felt there was too much disposable plastic in the hospitals,” she says.

So in 2005, Marcus contacted architect and designer Daren Joy, who had remodeled her home near Berkeley, Calif., a few years earlier. The two agreed it was possible to improve on plastic baby bottles with a well-designed, environmentally friendly option. Joy designed a glass bottle in a silicone sleeve, free of toxins such as Bisphenol A (BPA), phthalates, polyvinyl chloride (PVC) and polycarbonates. In 2007, the two launched Lifefactory in Sausalito, Calif., with $750,000 from family, friends and a “small investment” by Greenhouse Capital Partners of Sausalito to manufacture and market the bottles, as well as to develop new products.

The partners had met Greenhouse founder and managing partner Peter Henig through a mutual contact and he had taken a shine to the fledgling company.

Even during a recession, the company doubled its revenue in less than two years, a growth fueled by both the strength of its product design and media coverage of BPA and other baby-bottle toxins as the bogeymen of the baby-feeding world.

“We saw a company that was growing despite a horrible retail outlook,” Henig says. “Even though we weren’t looking for a company in the baby space—it’s too narrow a niche for us—it was interesting.” The investors also liked that Lifefactory was capital-efficient and pursuing a market segment that was largely being ignored, he says.

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Lifefactory: Partners Pam Marcus and Daren Joy.

During the next three years, Henig was satisfied enough with the company's performance that Greenhouse joined with Big Sky Partners in Los Angeles to lead a $1.65 million Series A funding round that closed in April. Managing director Katie Schwab of Big Sky joined Henig on Lifefactory’s board of directors.

Marcus says the money will be used to further promote Lifefactory’s new adult water bottle, launched in February. It has landed on the shelves of retail giants

such as Whole Foods and Pharmaca.

The company also plans to beef up sales and marketing staff and efforts to continue growth. For that, VC insight will be invaluable, Marcus says.

“It’s so convenient for us, as a small, inexperienced startup to work with Greenhouse and Big Sky and use their resources, get their guidance and recommendations,” she says. “We were lucky to find a fund that got our story and was interested in investing in us at such an early stage.” —Gwen Moran Entrepreneur

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money+ Angels stay safe from the law

Do you believe in super angels?

An early-stage investor by any name can be just as useful to funding your business ANGEL INVESTORS—affluent individuals who invest in early-stage companies—have long been a staple in the world of business investment. But a new breed of so-called “super angel” investors is emerging.

This segment of investors, which includes individuals and early-stage funds, often forms groups to invest in a broader range of companies to mitigate risk. And their numbers are growing—up 40 percent from last year, according to a recent National Association of Seed and Venture Funds study.

They can be an important bridge over the “valley of death” in investment dollars: that gap between about $100,000, which often can be raised through friends and family investors, and several million, which is how much most VCs need to invest to generate returns large enough to sustain the businesses, says Jim Jaffe, president and CEO of the seed and venture funds association. Fifty-one percent of its survey respondents plan to invest more money in new companies than they did last year.

“Last year, the average VC investment was between $8 million and $9 million,” Jaffe says. “The average for our constituents was $500,000 to $1 million.”

Jeff Clavier, managing partner of Soft66 Entrepreneur

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Tech Venture Capital in Palo Alto, Calif., prefers the term micro-cap VC, because these firms typically focus on early-stage investment at lower levels than more traditional VC firms. But regardless of what you call them, your business should be on a fast track to return three to five times on investment—usually through acquisition—within five years.

Clavier, who focuses on Web 2.0 startups, looks for a strong management team committed to being capital-efficient and a business that can scale to accommodate tens of millions of dollars in revenue within a few years. He also wants to see that the team has some skin in the game.

“It's hard to invest in something that is just an idea,” he says. “Asking for funding for an idea so you can quit your job and develop it isn't entrepreneurship— it’s moving from one job to another.”

Not every company is destined for the explosive growth these investors seek, but those that are can count on early-stage funders like Clavier to provide experienced counsel and connections, just as traditional VC firms do. Early-stage investors are also typically willing to take on more risk, both because the investment points are lower and the very nature of startups is riskier. —G.M.

ups can celebrate an averted disaster: The Restoring American Financial Stability Act of 2010, passed by the Senate in May, didn’t include provisions that could have dramatically altered the way angel investors operate.

As it made its way through the legislative grind, the reform bill was going to require a 120day regulatory review of angel deals, double the current net worth standard for angel accreditation, set an increased $450,000 income standard, up from $200,000, for accreditation and potentially require more red tape and regulatory review at the state level—all of which would have put a damper on early-stage investments. But the passage of an amendment written by Sen. Kit Bond, R-Mo., eliminated those provisions.

“In terms of regulations that entrepreneurs need to watch for, it got rid of all of the things people were concerned about,” says Marianne Hudson, executive director of Angel Capital Association in Kansas City, Mo. “We were left with essentially the same set of regulations we have now—with one very good addition, which is a better way to look for bad actors with a past record of deceit or fraud.”

The amendment did retain a clause that disallows investors’ homes to be calculated into the $1 million net worth minimum. It also says the SEC may reevaluate these standards four years after the bill's passage.

“There have always been pressures to increase the standards for accredited investors and there will continue to be,” Hudson says. “We need to stay vigilant about that.” —Ericka Chickowski

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SMALL BUSINESSES and start-

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Designed For The Chief Everything Officer Visit today to get things done for your business.

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money+ How to get paid ANY TIME YOU’RE not collecting your money on the spot when goods or services are rendered, you’re extending credit—and risking that your money will never land in your bank account.

Collection expert Melissa Nash Andrews, author of How to Get Paid On-Time, Every Time, offers these tips for getting what you’re owed. —G.M.

THERE’S AN APP FOR US. To celebrate our launch, the May - Sept 2010 issues are FREE! Download the app now and get these issues on the same day they hit the newsstand. entrepreneur.com/mobile

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6/24/10 3:47 PM

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Methods for streamlining your company’s collection practices

DON’T

Set a credit limit and a time limit.

Allow clients to exceed those limits. If they’ve run up a balance or are behind on payments, don’t extend more credit.

State your policies about credit and payment upfront.

Have a system for issuing and following up on invoices to ensure that your billing goes out promptly.

Make a receipt-of-invoice call a week or two after the invoice is sent to ensure that it has been received and that it’s in the system for payment according to your terms.

Keep emotion out of it. It can be infuriating when a client doesn’t pay, but anger won’t get the bill paid faster.

Consult your attorney or a reputable collection agency if you can’t collect your money AmericanPublicUniv_12H_0610.indd 4/27/10 on your own.

Waver. “Everyone assumes the owner will make an exception.” Andrews owns her firm, ARI, but she uses the title vice president so that people don’t expect her to change policy.

Send invoices at random times. It’s easier for mistakes and oversights to happen. If you don’t have time to do it yourself, hire someone.

Wait to call. If an invoice has been misplaced or ignored, you’ll have wasted two months before you get it back on track.

Threaten your client with anything that is not within the letter of the law. “It’s easy to cross the line into PAGE harassment, 11:13 AM 1 which can cause legal trouble,” Andrews says.

6.24 National average of days beyond terms, or the number of days past the due date, the average business is paying its bills. The figure represents a 4% increase over the previous six-month average.

Source: Experian's Business Benchmark Report, May

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personal+finance

By Rosalind Resnick Avoid teaser rates. Cable companies may offer a rock-bottom price for a bundled package in return for a two- or three-year commitment. “Sometimes that rate is good for only the first six to 12 months,” Kahn says. “Then the rate goes through the roof.”

Beware of cancellation penalties. Depending on the contract you sign, you may have to pay a hefty fee to move on with your life. That “free” cell phone may end up costing you more in the long run than if you had paid the sticker price and kept your options open.

Customize your plan. “Family plans” and “rollover minutes” may sound attractive, but they make sense only if you use them. “You can save more money by selecting a plan with the appropriate number of minutes,” Kahn says.

Do you really want those services—and fees?

Beware of free trials. New cable, phone and Internet accounts often come with “free trial” subscriptions that automatically start adding up. Call customer service if you see a charge on your bill you don’t recognize.

W

Pull the plug. The best way to save money on utility bills, Kahn says, is to unplug your coffee maker, cell phone charger, air-conditioning units or any other appliance you don’t use every day. “As long as these appliances are plugged into an outlet, they are running up your electric bill,” she says.

It’s worth spending a few extra minutes a month to save hundreds of dollars a year in needless charges.

ith five family members on my AT&T mobile phone plan, my monthly bill generally runs into the triple digits. But several months ago I noticed it was unusually high. I finally discovered the reason: One of us had inadvertently managed to sign up for half a dozen games, ringtones and other subscription services, adding more than $60 a month to our bill. After an hour on the phone with AT&T, we got the subscriptions canceled and the money refunded.

How could I have allowed this to happen? The truth, though I hate to admit it, is that I don’t scrutinize my personal bills nearly as closely as my business expenses.

I was too busy to notice that I was being charged for services I didn’t want or need.

And that’s exactly what those mobile subscription services were counting on.

The next time your phone, cable or utility bills arrive, take a closer look. You may be spending hundreds or even thousands of dollars a year for games, movies and interactive services you never asked to receive. These services often are bundled as part of premium packages or start as free trials that turn into paid subscriptions if you don’t cancel them.

“Be careful of freebies,” warns Arleen Kahn, president of AMK Associates, a New York consulting firm that helps small businesses analyze their costs. “Bundling phone, data and voice may be cost effective for your business, but it won’t necessarily save you money at home. You really need to do your homework to find the best deal for your home and family.”

Here are five tips for cutting your family’s phone, cable and utility bills down to size:

Rosalind Resnick is founder and CEO of Axxess Business Consulting, a New York consulting firm that advises startups and small businesses, and author of Getting Rich Without Going Broke: How to Use Luck, Logic and Leverage to Build Your Own Successful Business. She can be reached at rosalind@abcbizhelp.com or through her website, abcbizhelp.com

Shop around

The web offers a multitude of resources for comparing service pricing and packages, as well as slashing your utility costs. Here’s a sampling:

myrateplan.com: The site’s CellCalc and TruBill features let you search mobile service plans available in your region and do side-by-side comparisons of features, minute allocations and costs.

saveology.com: Enter your address into this site to get an up-to-date list of options for phone, Internet and TV services for your home—and to see whether bundling is the best way to go.

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utilitybillbusters.com: This online trove of energy-saving advice offers articles on everything from the right kind of insulation to how to keep your microwave from burning money.

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Entrepreneur

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>

hen sweet, red crude began sticking to the marsh grass in coastal Louisiana in May, it was the end of an era for many people, including shrimpers, fishermen and a huge swath of the Gulf Coast tourism industry. But it was also, at least symbolically, the end of an era for the marketing world.

For more than a decade, BP had flooded the media with advertisements showing solar panels, windmills and waving fields of grass without a drop of oil in sight. It changed its name, KFC-style, from British Petroleum to BP to deemphasize its claim to fame: hydrocarbons. The company adopted a stylized green sun as its logo and rolled out the slogan “Beyond Petroleum.”

But when the company’s Deepwater Horizon offshore well began blowing tens of thousands of barrels of crude into the Gulf of Mexico each day, no outlay of advertising dollars could change the cold, hard facts: The company that had cultivated the greenest image in the oil industry still derived more than 99 percent of its revenues from gas and petroleum. For consumers who had been fed the image of the company out tending windmills, the revelation was almost as shocking as the images of oilsoaked pelicans.

The BP blowout was the swan song of an old style of green marketing, one in which companies could make green claims and hope that no one would look over their shoulders. In the last five years, a new type of green marketing has taken hold, and it has high standards.

It’s no longer enough to say you’re green in your advertising. It’s not even enough to have one or two flagship green products in your line or to screw in a few compact fluorescents and send out a press release. In a time when consumers and watchdogs measure the environmental impact of raw materials and industrial processes, packaging and transportation,

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a company marketing itself as green needs to have sustainability built into its DNA, or at least painstakingly retrofitted into its culture. But even more important, green products have to be good products.

Research has shown that consumers don’t respond simply because something is environmentally friendly. “Being green in and of itself isn’t a differentiator except with a small group of consumers,” says Joel Makower, executive editor of GreenBiz.com and author of Strategies for the Green Economy. “Green succeeds only to the extent that it means better—it’s cheaper to buy, it operates better, it lasts longer, it’s cooler for my image. People do want to do the right thing, but they don’t want to go out of their way to do that. They love ‘change’ when it’s a noun; they hate it when it’s a verb.”

Back in 2006, Matt Kolb, a real estate agent in Boulder, Colo., had his “change” moment when a client decided to ride around town on a rented bike to look at houses. Kolb lost the client when he went with a private seller he’d met on his bike ride, but the encounter led Kolb to form Pedal to Properties, a real estate firm that offers agent-led bike tours to houses for sale. Last year, after the company became a major player in the Boulder area, Australian entrepreneur Tim Majors approached Kolb and bought half of the company to help franchise the concept around the country. Their green twist of using bicycles is what helps Pedal to Properties stand out in the homogenous, blazer-clad real estate sector, but Majors says it’s more the company’s overall quality.

“When I bought into the company, I realized we had to be more mainstream to be successful,” he says. Majors helped recruit some of the highest-earning agents in the Boulder area and persuaded Terabitz, a market leader in real estate software, to help Pedal to Properties develop a next-generation real estate platform that uses social media. That has helped Pedal to Properties become not only a greener alternative, but also a company with strong fundamentals. It has launched locations in Northampton, Mass., and Sonoma, Calif., with more on the way.

And the bike tours, which are optional, aren’t just a green gimmick. Majors says they offer buyers a real advantage. “Biking slows down the buying process and gives clients a feeling for the community. They get to see what it’s like to bike to local schools or churches. It’s a great differen-

tiation from other real estate firms.”

But the company is cautious about calling itself “green,” even though it’s made strides in becoming paperless by handling massive real estate documents electronically and have pushed the idea to others in the industry.

“I would never say we’re absolutely 100 percent green,” Majors says. “But we understand the responsibility of a green company, and we’re very environmentally conscious.”

;

hat’s another distinction between old-school green marketing and today’s generation of green salespeople—a willingness to reveal exactly what the practices are and a willingness to admit strengths and weaknesses to customers. That’s the basis of “radical transparency,” a practice in which a company allows consumers to examine its manufacturing processes, warts and all. The outdoor gear and clothing company Patagonia, for example, created a mini site called The Footprint Chronicles in which consumers can track individual products and their carbon footprints from their raw materials to their delivery to store shelves.

“Making a change like that is like turning a gigantic ship—it doesn’t happen fast,” Makower says. “No company is or likely will be perfect. There’s no such thing as a sustainable company yet in the truest sense of the word. We have to accept our green status as imperfect or be paralyzed by imperfection.”

In many respects, green transparency is being forced on the corporate world.

Sustainability stats are likely to become as common as food nutrition labels when Wal-Mart implements its sustainability index during the next few years. The index will assess the environmental effect of all of the 100,000 products Wal-Mart sells, from Coca-Cola to Black & Decker. That’s the type of large, mainstream change that can drive other companies to improve their green bona fides.

Government is getting involved, too.

After almost 15 years without a revision, the Federal Trade Commission is updating its guidelines for green claims, creating verifiable definitions for buzzwords such as “sustainable” and “biodegradeable.” It’s begun calling out greenwashers, too. Last year, the

FTC fined four companies for selling bamboo-derived rayon clothing as 100 percent pure bamboo and hit Kmart for improperly marketing paper plates as biodegradable.

More states are implementing strict laws to cut down on greenwashing, meaning that green marketing needs to focus on honesty and transparency.

Easy access to information, understandable definitions and a crackdown on greenwashing are essential if green marketing is to overcome its weak link: consumers.

0

n an Eco Pulse survey conducted this spring by The Shelton Group, a Tennessee-based marketing firm that tries to mainstream green products, 64 percent of participants said they were interested in buying green, especially low-cost, low-risk items such as cleaning products and recycled paper products. But, in practice, green products haven’t caught fire; according to the survey, only about 20 percent of respondents said they are “consistently green in their behaviors or purchases.” Part of that is because consumers are confused about which companies are truly green. In a 2009 BBMG Conscious Consumer Report, survey participants rated Wal-Mart both the greenest and least green company. All of those green “seals of approval,” green bottles and eco-sounding product names make it

difficult for consumers to determine which products are the real deal. So, they often simply cut green out of their decision making.

“Twenty-five percent of our respondents said they had no idea how to decide if a product is green,” says Lee Ann Head, Shelton’s vice president of research. “The vast majority of people still make their decision based on reading labels—but at the same time they don’t trust the labels. There’s still a sense of buyer beware with green products.”

And because consumers don’t understand exactly what green means, they often conclude that the green product won’t perform as well.

In the service industry, selling yourself as green can be an expensive endeavor, especially if there is no guaranteed payoff. That’s why Joey Terrell went it alone when he decided to refresh his Joliet, Ill., Denny’s by building a LEED-certified restaurant in 2009. (LEED stands for Leadership in Energy and Environmental Design, an independent certification program run by the U.S. Green Building Council.)

Denny’s gave him permission to build the green restaurant as long as it cost about the same as a regular store, he says.

The project turned into a marketing boon itself as Terrell’s Denny’s raced a nearby McDonald’s to become the first greencertified restaurant in the country.

When it was all said and done, Terrell says, he came in $40,000 under budget and is saving about $20,000 a year in energy and water conservation. Plus, he’s

You, only greener THE NEW MAXIMS OF GREEN MARKETING Be credible. Companies are petrified of being marked as greenwashers, with good reason. Boycotts, media campaigns and a bad public image can tar a company for years. Being honest about your struggle to go green and the progress you’ve made is more convincing than giving yourself a fake seal of approval.

Stay mainstream. Less than 20 percent of consumers make purchasing decisions based solely on environmental factors. To appeal to a wider market, think about green-plus … green plus cheaper, green plus faster, green plus better.

Be a teacher. Consumers are confused by years of greenwashing and environmental jargon. Communicate your company’s green qualities simply and in a way that consumers can relate to and understand. —J.D.

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benefiting from a marketing boost. “We’re seeing double-digit sales increases over last year. It’s a surprise for us, we weren’t anticipating that. People generally come into the restaurant and tell us it’s because it’s green,” says Terrell, who is planning to turn his Mokena, Ill., Denny’s green, too.

“People tell us they love eating in the restaurant but can’t pinpoint why,” he says.

“Maybe it’s because the air is fresh with reduced contaminants, and the skylights make it feel like you’re eating in a meadow.”

0

n many ways, green marketing has transcended marketing. To market itself as green, a company has to do the often difficult work of actually being green, not simply flashing pictures of windmills.

But unlike the first generation of green marketing, which imploded when the expensive products failed to live up to customer expectations, today the momentum is so strong, and the benefits often so compelling, that companies aren’t likely to abandon their green efforts. In fact, much of the most successful environmental advances have happened under the radar as companies have squeezed waste and inefficiency from their manufacturing processes and reduced packaging. For instance, the aluminum can is a third lighter than it was 20 years ago, a remarkable green achievement that doesn’t show up in Budweiser advertisements.

Green marketing eventually will fade away, and if innovation continues at the current pace, that will be sooner rather than later. Not because green marketing is ineffective but because green is becoming the status quo. When all cleaning products are nontoxic, when every appliance is an energy sipper, when all toaster ovens are 100 percent recyclable, green will cease to be a factor. Until then, marketers need to plug their green achievements without making that their only notable selling point.

“Green is no longer a trend, it’s inextricably linked to how companies do business, design, use and dispose of products,” Makower says. “In 10 years, you won’t be able to sell a car without electric assist. Green will be part of the fabric. It’s those other differentiators, like cost and performance, that will still be important.”

JASON DALEY IS A FREELANCE WRITER BASED IN MADISON, WISC.

Entrepreneur

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start+it up

Time to launch a business and get out from under The Man

ACKYBIADKEEARY: *HW E BUTCH T

The boozy, manly, camouflage-frosted cupcake ENTREPRENEUR: David Arrick, laid-off commercial real estate attorney and former celebrity trainer, now founder of Butch Bakery, an online Manhattan cupcakery

IDEA: Cupcakes for men. “We stay away from pastels and sprinkles,” Arrick says. Hence the “Driller,” a maple cupcake smothered with crumbled bacon and chocolate ganache; the “B-52,” a Kahlua-soaked cupcake sporting a camouflage topping and the “Beer Run,” a chocolate-beer cupcake with beer-infused buttercream and crushed pretzel sprinkles. Can’t decide? The “Butch Box” holds all 12 flavors for $48, plus $8 delivery.

“AHA” MOMENT: Walking past the long line of people waiting for frilly cupcakes at Magnolia Bakery in Manhattan, the cupcake craze’s ground zero. Two thoughts ran through Arrick’s head: “I gotta get on that bandwagon” and “Where’s the boy bakery?”

STARTUP: Arrick cashed out his 401(k) and ran up credit cards to the tune of $25,000. He worked with bakers and consultants to create recipes and focused on building a strong online presence (butchbakery .com). “It’s the biggest risk I’ve ever taken, but I’ve reached an age where the worst that could happen doesn’t sound that scary.”

PAYOFF: Original sales projection: $5,000 a month. By year’s end, the bakery should net more than $10,000 a month. “I think it’s OK to say that we’re on the other side of the ‘Why didn’t I think of that?’ fence.”

CUSTOMERS: 90 percent women. “I’ve tapped into the ‘What do you get for a guy?’ market.”

WORK PHILOSOPHY: “It’s just cupcakes. Relax.”

MEDIA LOVE: A cupcake cookbook deal with John Wiley & Sons, slated for release next year, with 50 “guy friendly” (read: easy) recipes for manly occasions (football season, barbecues, spring training…). On deck: A reality show pilot with MY-Tupelo Entertainment. The concept: “Guy reinvents himself through a bakery.”

2011 AND BEYOND: Develop a masculine baking brand, start shipping nationwide, open Butch Bakeries in Chicago, Boston, L.A., San Francisco and Miami; ultimately, “I’ll be a cross between Rachael Ray and Guy Fieri.” —Jennifer Wang

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Photo© Natalie Brasington

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start+it up COLLEGE STARTUPS

Cast your vote

Box.net: Co-founders Dylan Smith, left, and Aaron Levie.

I’m an entrepreneur, get me out of here!

Today’s episode: How to turn a class project into a multimillion-dollar business. (No degree required.)

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cold-called a couple of billionaires, Mark Cuban, owner of the Dallas Mavericks, and Paul Allen, Microsoft co-founder and owner of the Seattle Seahawks.

“We were going through our list of billionaires, and Paul Allen was geographically the closest,” says Smith, now 24.

“So we actually delivered our prospectus through his doorman. It’s not clear that it ever arrived to him directly.”

Their luck was better with Cuban. Not only did he respond to their unsolicited e-mail, he ultimately also gave them $350,000 in startup capital. How did

they pull that off?

“It’s as important to sell yourselves as much as the service,” Smith says. “The business model’s going to change 50 times, and the market’s going to change, but you need to convince that investor that you are smart enough and excited enough about the opportunity that you’ll figure it out.”

Within months, they had officially launched their business, Box.net, a cloud content management system that helps businesses share information and collaborate on projects online. The basic platform is free and is monetized by upselling advanced features, increased storage and additional security.

In just a few short years, Box.net has grown tremendously. The Palo Alto, Calif., company now has more than 4 million users, has raised $29.5 million in funding and employs 90 people.

Oh, and the marketing class that started it all? Levie earned an A-minus.

—Joel Holland

Extra credit

Aaron Levie’s advice for making the most of an assignment: 1) Don’t pick a generic research project. Choose a specific market or opportunity that could really turn into a business.

2) If you don’t have a business idea, start with a market that interests you and set out to address a problem.

3) Learn the industry inside out. This gives investors confidence in you.

4) Analyze competitors to get an idea of what you’ll be up against and what you’ll potentially earn.

5) Take the project seriously.

Photo© Eva Kolenko

AARON LEVIE AND DYLAN SMITH didn’t know exactly what they wanted to do—it was 2005 and they were, after all, just sophomores in college. But they knew this much: They were ready to be out of the classroom and into their own business.

So Levie, a student at University of Southern California, and Smith, an old friend attending Duke University, began bouncing entrepreneurial ideas off each other. For a long time, nothing stuck.

Then Levie was assigned a marketing project: Choose a market and conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).

“I chose digital storage because it was something that was interesting to me,” says Levie, now 25. “And through the process, I realized that there were very few meaningful services out there providing this technology.”

With money saved from Smith’s online poker winnings and a few previous small ventures, they hired engineers to develop the technology and marketers to begin spreading the word to bloggers. And when they needed more money? They

The UPS Store and Entrepreneur are proud to announce the 15 finalists for Entrepreneur® magazine’s Entrepreneur of 2010 awards.

Now we’re asking you to help us select the winners: an established business owner, an emerging business (less than four years in business) and a college entrepreneur. Go online to entrepreneur.com/e2010 and entrepreneur.com/e2010college from July 26 to Sept. 10 to read their stories, get inspired and vote for your favorite entrepreneurs. The winners will be featured in Entrepreneur and honored at a luncheon in Atlanta in January 2011.

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start+it up FINANCE FOR STARTUPS

Is that a business credit card in your wallet?

HOW IMPORTANT ARE CREDIT CARDS to small-business owners?

According to the SBA’s annual report to the president, they represent about 70 percent of small-business lending by the nation’s largest banks.

More than 85 percent of small businesses use at least one credit card for business, according to a 2009 National Federation of Independent Business report.

And a National Small Business Association poll showed credit cards as the top source of small-business capital.

So, passage of the Credit Card Act last year—a bill designed to stop the unfair and deceptive practices by many of the largest card issuers—should spell relief for small businesses, right?

Wrong. If that’s a business credit card in your wallet, you’re still fair game to credit card companies on the hunt for income opportunities. The new regulations stipulated that card companies report recommendations on protecting small businesses to Congress by April, but according to the small-business group, that deadline came and went without any action.

In the meantime, the pillaging continues. A whopping 75 percent of small-business respondents have been socked with higher interest rates, lower credit limits, or higher fees in the last six months, the association reports. More than a quarter of them are paying more than 20 percent interest—more than six 80 Entrepreneur

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times the prime rate. Nearly 60 percent reported receiving bills after they’re due.

And almost half say their due date randomly changes. Polls by the independent business federation showed that almost 15 percent of those who’d been hit with a change in card terms suffered the worst change of all: outright cancellation.

This is exactly what happened in the consumer market. “Between its passage and when the law went into effect in February of this year, banks seized the window of opportunity to engage in a shameful frenzy of gouging,” says Lauren Bowne, staff attorney for Consumers Union.org. “Even customers with perfect bill-paying records were targeted. Being a day late or a dollar short on a single payment could trigger $35 to $40 in late fees and a 20-point rate hike—overnight a cardholder could go from paying 10 percent interest to over 30 percent.”

So where does all this leave the smallbusiness owner? In a word, vulnerable.

Sure, you could use personal credit cards, but your accountant would advise against it: It could lower your personal credit score and complicate an audit.

Your lawyer would be against it, too: Commingling personal and business funds can threaten corporate protection.

Even if Congress does step in on behalf of small business, history suggests that credit issuers won’t lay down their guns until the eleventh hour. Schwark

Photo© V eer/Francesco Carucci

If it is, forget the Credit Card Act—you’re as vulnerable as ever to sky-high rates, erratic billing and unexpected fees

Satyavolu, CEO of BillShrink.com, offers one glimmer of hope, noting that some business card issuers, such as Capital One, are voluntarily doing the right thing and adopting some Card Act provisions.

If you’re wondering how your business plastic stacks up, dig out your old fart glasses and read the fine print in your card agreement. Based on the Fed’s reading of the biggest abuses, here’s what you want to see: Reasonable notice of rate or fee increases. Consumer issuers are required to provide 45-day notice of important changes in terms and give the cardholder the option to cancel the card.

Increased rates apply to new charges only. Before the reform, unannounced rate increases—often as high as 25 percent in a month—applied to carried balances, not just new charges.

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Restrictions on over-the-limit fees.

Consumer issuers must notify borrowers if a transaction will exceed their limit.

Limits on when rates can go up on new cards. Rates and fees, except those in teaser deals, cannot change for 12 months from the date of issuance unless a consumer is more than 60 days in arrears.

Rules about billing dates. Consumers must receive their bills on the same day of each month and 21 days before due.

Stipulations about how payments are applied. Before reform, many issuers chose to apply payments first to the portion of the bill with the lowest interest rate. Now they have to do just the opposite.

Rules about what balances are subject to interest charges. The new law prohibits a “two-cycle average daily balance method” of calculating finance charges—expensive if you carry a card balance only occasionally. —Kate Lister Kate Lister is a former banker, small-business investor and veteran entrepreneur. Her books and websites include Finding

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A REWARDING CAREER IN CRUISING

w w w. C rui se On e Fr a nc h ise . c om or c al l 8 0 0 8 2 2 6 5 0 6

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start+it up Strokes of genius Not so much [3floz.com] The limit on in-flight liquids in carry-ons has spawned its own cottage industry, and one of the smarter entries is 3floz.com, a website that sells high-end grooming products in trial sizes—that is, Transportation Security Administration-approved 3 fluid ounces or less. Look for Avalon Organics, Phyto, The Art of Shaving, Archipelago Botanicals and more, or order a pre-made kit. It’s a win-win: No checked bag, and no settling for whatever’s on the hotel sink.

FIKI Sports [fikisports.com] Sports has infiltrated office culture. Foosball and pingpong tables decorate lounges at all the cool companies, and Wii competitions and fantasy sports leagues are pursued with the intensity of a death match. Now there’s another office playing field, straight from seventh-grade homeroom: tabletop sports games from FIKI (“flick it and kick it”) Sports. Choose from hockey, baseball, golf, basketball, soccer and, of course, the classic: football. Most are about $9 or $10. Just consider your time at the keyboard a warm-up.

ENT-Franzone1-2h:FP_Master

4/27/10

3:34 PM

Open Office Space [openofficespace.com] For startups on the hunt for work space, here’s a site that’s as useful as Craigslist, but without the sketch factor. Owners of unused and underused office space post ads—for a single desk or an executive suite—and the detailed, interactive listings prevent unpleasant surprises. Maybe leasing a shared cubicle is weird.

But, admit it, it’s not as weird as that time you answered a Missed Connections ad.

Page 1

—Jennifer Wang

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PhotoŠ Veer/Alloy Photographyw

But

where

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is the

While small business gets talked up in the economic recovery plan, lending to small business

is still down—by $40 billion—from what it

was two years ago. Entrepreneurs are grumbling.

And Karen G. Mills, head of the SBA,

is taking questions.

By David Port

F

or glass-half-full types, President Barack Obama’s proclamation this spring that his administration “is committed to helping small businesses drive our economy toward recovery and long-term growth” was another indication that small business has a true ally in the White House.

For others, however, those words provided another stinging reminder of how policymakers in Washington have failed to back their statements with action.

Despite repeated assurances from the administration, accompanied by a flurry of new pro-entrepreneur initiatives, small-business supporters such as Todd McCracken, president of the National Small Business Association, in Washington, D.C., are concerned that policymakers remain largely beholden to big business, just as they were when George W. Bush ran the White House.

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J

ust consider Uncle Sam’s recent spending habits: $358 billion spent by the feds on small-business initiatives, compared with $2.8 trillion for non-small-business initiatives such as the Wall Street bailout. Even with a vocal supporter in the White House, McCracken contends, Washington’s small-business track record of late is full of “bills that just didn’t go far enough, proposals that took a wrong turn altogether and initiatives that left us scratching our heads wondering ‘What were they thinking?’ ” On the other hand—the glass-half-full side—is Lesa Mitchell, vice president of Advancing Innovation of the Kauffman Foundation, an organization devoted to the development of entrepreneurship. “This is by far the greatest level of interest we have seen from any administration,” Mitchell says. “And that is a bipartisan comment.”

Meantime, Ben S. Bernanke, Federal Reserve chairman under both Obama and Bush, is urging banks to lend more to small businesses, calling it crucial to the economic recovery. Bernanke pointed out that as of June, outstanding loans to small businesses declined to $660 billion in the first quarter, down $40 billion from two years earlier.

At the center of it all is Karen G. Mills, the president’s choice to lead the U.S. Small Business Administration.

Mills, a New Englander with a strong venture capital and private equity background, has the formidable task of making the role scripted for small business a reality in the economic recovery. As you’d suspect, the small-business community is also divided on her qualifications to fulfill that role, given her résumé heavy on big business.

We caught up with Mills, speaking from Washington, D.C., about her plans for leading the SBA to prominence, tackling troublesome issues such as access to capital and government contracting practices, and how she plans to help revive U.S. small business—and the economy.

What is the SBA doing to help entrepreneurs?

There are two kinds of small businesses.

There are Main Street small businesses and there are high-growth entrepreneurs. For net new job creation, a smaller number of high-growth entrepreneurs create lots of those jobs. So we have focused on them, and they need different kinds of capital and different kinds of counseling, and we are working very hard to make sure the programs we have stimulate those entrepreneurs.

For instance, we run the Small Business Innovation Research program. There is extraordinary R&D happening in this country, but we want to make sure small businesses are taking those innovative ideas and pushing them to the next level, then eventually commercializing them.

And we’ve just announced the fasttrack program for SBICs [the SBA’s small business investment companies] and we are processing more applications, because there’s a lot of demand now from companies whose funding sources in the marketplace have disappeared, and we now have investors who have turned to the SBA to help get their funding out in the hands of good, high-growth entrepreneurs.

What are the odds of actually securing an SBA loan?

I travel around the country and I talk to small-business owners all the time—it’s actually one of my favorite things. What I tell them is they should get into our counseling network first. We have 1,100 Small Business Development Centers. We have 110 Women’s Business Centers. We have a 86 Entrepreneur

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whole network of SCORE counselors you can even access online. As you work with them to develop your business plan and your loan package, you can make yourself much more clear in your presentation and, therefore, much more likely to be bankable.

sis. But, in addition, we have bone structure—a network all across this country that’s extremely powerful.

In most communities, we are extremely relevant to both Main Street small businesses and to young entrepreneurs. The president has really made small business a priority, so that the SBA under President Obama has enormous support. He really understands that small business is part of the way to middleclass prosperity.

Which funding sources are most accessible for small businesses?

How has the climate in Washington changed for small business and entrepreneurs?

We have microloans. We have 170 intermediaries making microloans. We have about 5,000 banks who have SBA loans, and there are a variety of SBA loans, depending on the purpose of the loan, whether it’s to buy a building or whether it’s to finance inventory. So the most important thing is coming into the situation with a clear idea of what it is you want to do to grow your business. Then the SBA will partner with you to try to get you the tools you need.

Despite all of that, the SBA has its critics—people who wonder if the agency has lost sight of its mission and its relevance for small businesses in America.

This is a fantastic agency and it is highly relevant to small businesses and to the economy. The first indication is that we were able to put $25 billion into the hands of small businesses over this recession and really fill part of this credit gap that existed because of the financial cri-

This president has been moving strongly to help small business from the start.

When the president and Congress passed the Recovery Act, this was critical to allowing the SBA to increase our loan guarantees to 90 percent and reduce or eliminate the fees.

Now the president has asked Congress to do even more because there are still gaps in the recovery and not every small business has access to all the credit they need and all the other tools they need to grow. We have a proposal before Congress that has strong bipartisan support to have a small-business jobs bill. And that should be coming forward soon.

What would that bill do?

We have asked Congress to continue the successful Recovery Act 90 percent [loan] guarantees and fee elimination through the end of the year. We have also asked Congress to raise our loan limits to $5 million. Right now, they are at $2 million.

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Where h to tap in There are a lot off companies—manufacturers, franchises—that need the larger loan size and the players in the market that used to provide that type of funding, some of them are still absent, so we need to fill that gap. Understanding that banks are going to need credit support, we’ve also asked for the ability to use our 504 program [which provides businesses financing to acquire fixed assets for expansion or modernization] to refinance owner-occupied real estate.

So the dentist that owns the dentist office or the manufacturer that owns the warehouse will be able to, using this proposed 504 product, get that mortgage renewed.

How can the SBA have the strongest effect on small business in America?

At the SBA we’re responsible for making sure that 23 percent of all [federal] government contracts go to small business and that’s about $100 billion a year.

So this has a very important effect on all small businesses, and we have special programs for veteran-owned small businesses, and socially and economically disadvantaged small businesses and women-owned small businesses, so we can give them what we call the oxygen—the revenue—they need to grow.

Is that 23 percent target being met?

Last year we really focused on the Recovery Act and making sure small businesses had their share of those Recovery Act contracts, and I’m happy to say we are actually well ahead of our goal on Recovery Act contracts. We’re at 29 percent.

A number b of websites bsit i can ca an help l entrepreneurs t keep a finger keep finger o on n tthe he pulse l o off Washington Washington: ashington: ashing hi : • SBA, the expansive website for the U.S. Small Business Administration: sba.gov •T The he Offi Office ffi off IInnovation i & Ent Entrepreneurship Com Commerce Eco Economic Adminisstrat tration: a • Ent Entrepreneurship, laun launched Kauff-man ma a Com Commerce pro promote activity ty globally: glob glo b •S Small m Commpan panies, mat match sources source o rces with wit h sba.govv /aboutsba/sbaprograms/inv /ab b ams/inv ams/in i /index.html /in i •S SBA BA Developl me ment network workk of about abo b offices ces that h offer offe ff infor-mat mation, sba.gov/aboutsba sba ba /sbaprograms/sbdc/ /sb b / •S SBA BA Business ess Centers ters, network orkk of offices offic ffi entrepre-neurs neu e sup support /se /services/counseling/wbc/ • SCO SCORE, CO than n 360 60 veteran veter eteran er small small-businesspeople mall busine b sinesspeop people e offer free, confidential advice and mentoring: score.org —D.P.

This is a program for small business.

It’s not a program for big business masquerading as small businesses, and we have gone very far to try to ensure the integrity of the program and make sure those who are eligible are those getting the contracts.

Are there new standards or new screening procedures?

Yes. In fact, we redid the regulations for our flagship [business development] program, 8(a), and strengthened them 88 Entrepreneur

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Photo© Veer/Corbis Phot ography

The SBA under previous administrations has been criticized for awarding contracts to larger entities that were masked as small businesses.

considerably. And those are helping us make sure it’s small businesses that get the access to these contracts.

What is the most pressing issue facing small businesses in 2010?

Small businesses are coming off a difficult time, with the recession and the credit crunch. So the first thing we have been concerned about is making sure we get the Recovery Act dollars in the hands of small businesses and give them the credit they need to grow and move forward.

In addition to access to credit, small businesses care about a number of other things. We find that our counseling operations are equally important as our credit operations because small businesses really need help and advice, and when they get it, they tend to have more sales and more profits and more longevity, and they hire more people. So we have looked forward and said, “How do we get all the tools small businesses need into their hands?” Maybe they want to export. Maybe they want to know how to use broadband. Maybe they are veterans who are coming back and want to start a business or grow their business. Our job is to make sure all that information and opportunity is accessible for small businesses so they can do what they do, which is keep our economy strong.

What is your agenda for moving forward?

My goal is, internally, to invest in our agency and our bone structure. To make sure our people have the training and we have the information technology to make sure the SBA delivers a helping hand to small businesses in the ways they need to get capital, to get counseling, to get government contracts and, heaven forbid, in the event of a disaster, we are also helping small businesses right now in places like Nashville and the Gulf Coast survive difficult situations. We will be there for small businesses because we know they are the critical force that is going to create jobs in our economy, and we know they are the critical force that is going to innovate and keep us competitive all across the globe.

DAvID PORT IS A DEnvER-BASED WRITER WhOSE BOOKS InClUDE The Caveman’s PregnanCy ComPanion AnD Caveman’s guide To BaBy’s FirsT year.

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The recession is driving more mom-and-pop businesses to transform into franchises

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Satisfied: John Andikian converted his market into a 7-Eleven.

L

, m a e r e d r e o h t t s g e n h i t os aving s t bu

alif., C , n i t us e in Trs earlier,out r o t s a er, ab niencreted 30 yew e v ork ay before n o c a y t r a s e k c d d r a e o a l ff C pen s that h felong gr r passed aw hen I , o y by Je n h p a a i r W og | Phot Andikams. Dream er, a rl.i “My fatheembered: dikian says h n t Stapp h a y o f c J a e r s m n

By T hen ad big dr d with hi togethe lways re ether,” A he hn he talke ng a storeup, but I a and I tog whe eday owni ity came to be he im.”>> som opportun, it’s going it after h that hat store to name get t I’m going “and

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He got the chance in the summer of 2004. And true to his promise, he named the place Andy’s Market and stocked it with just about everything customers might want—snacks and drinks, maps and lottery tickets, even his own version of a Slurpee, the Andy Freeze. The only problem was, customers were in short supply.

“I had visions when I first opened Andy’s Market of competing with WalMart,” Andikian says with a laugh. “That dream ended after a couple weeks. Nobody knew what Andy’s Market was.”

After 18 months, his sales were too low to cover the rent and he was in danger of having to close. So when he learned of an opportunity to transform his little market into a brand-name convenience store, he jumped at the chance. For a $20,000 franchise fee and $100,000 in inventory and construction costs, 7-Eleven transformed Andy’s into an instantly recognizable green, orange and red-striped Slurpee outpost.

The transformation took just 48 hours—with crews working around the clock. And Andikian says it paid off almost immediately.

“As soon as they put the 7-Eleven sign outside, my sales doubled,” he says.

“I was doing about $70,000 a month in sales; now I’m doing about $160,000.”

There are more and more stories like Andikian’s in the franchise world. Although conversion franchising has long been the practice in real estate, travel agencies and hotels, its popularity has increased in recent years in other industries, including auto shops, restaurants and business centers. Part of the reason, experts say, is the down economy.

“Independents who might have been satisfied at a certain level of performance find themselves no longer able to meet that level,” says Mark Siebert, CEO of iFranchise Group, a franchise consulting firm in Homewood, Ill. In fragmented or contracting markets especially, he says, converting an independent store to a franchise can mean the difference between surviving— even thriving—and closing your doors for good. A number of franchisors that previously grew solely through startups has picked up on the trend and started offering programs to help independent owners join their systems.

7-Eleven started its Business Conversion Program in 2005 to offer owners of independent convenience 92 Entrepreneur

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stores—as well as liquor stores, delis and small grocery stores—the chance to become franchisees. The selling point, says Jeff Schenck, 7-Eleven’s senior vice president of national franchise, is becoming “an iconic brand” with proprietary products, or what he calls “destination products.” Think Slurpee, Big

Gulp and Big Bite. That kind of brand power is appealing to independent operators, so it’s no surprise that in the five years since the program started, 196 stores have been converted—and interest continues to grow.

The approach benefits franchisors, too. “It’s a very efficient way to grow,”

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Schenck says, “and a great way to add to your store count without adding stores to the market.”

Re-branding an existing store costs far less than building one from the ground up—which means franchise fees and royalties are often less. And time-consuming zoning and licensing issues are usually already taken care of.

So it’s no wonder that 7-Eleven plans to continue to aggressively expand the Business Conversion Program. In fact, Schenck says, the company hopes conversions will make up about 60 percent of its total franchise growth in 2010.

The maTchmaker

Conversion franchising has become so successful that many franchisors are finding ways to make it work even for those who don’t already own a business. Case in point: Allegra Network.

The print shop franchise and its sign shop affiliate Signs Now have pioneered what they call the Matchmaker Program, which helps pair aspiring franchisees with existing print or sign shop owners

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looking to sell their business.

Steve White, Allegra’s chief development officer, says the Matchmaker Program started when former corporate executives began approaching Allegra about opening a franchise but didn’t want to start from scratch. The benefits of purchasing and converting an existing shop quickly became obvious.

“You already have this established business, a business that’s known in its market area,” White says. “There’s an established set of relationships there, and we’re able to jump in and run this thing right away.”

That doesn’t mean it’s a walk in the park, though. This acquisition-andconversion strategy comes with its own challenges. Although new franchisees taking over the business won’t struggle with losing their independence like original owners would, they also don’t have the operational experience of the original owners.

“You have a person that’s both learning your business and operating it at the same time,” White says. “So the normal support structures aren’t enough.”

“i loved being an independenT, buT The boTTom line is The boTTom line.”

For that reason, Allegra has support specialists dedicated to Matchmaker franchisees in their first year in business.

And unlike 7-Eleven, Allegra Network and Signs Now are business-tobusiness companies, which means that re-branding can prove to be detrimental rather advantageous.

“These are established businesses that already have customers,” White says.

“Those relationships are really important, and we can’t afford to disrupt them by converting the brand.”

Then there’s the same obstacle that is hounding so many aspiring entrepreneurs in today’s economy: limited access to capital. Getting financing for the purchase of an existing business is a little easier than getting it for a startup, White says—but not by much.

George Riesenfeld joined the Matchmaker Program in 2008, but his first deal fell through because he couldn’t get financing. He didn’t give up on the conversion program, though. “In today’s economic climate,” Riesenfeld says, “the risks are much too high to start from scratch.”

His patience paid off. In January, he took over a Fort Worth, Texas, print shop that had $3.2 million in sales last year—making it the largest deal ever made through the Matchmaker Program. It’s too soon to know how business will compare as a franchise. Still,

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wanTed: independenTs Riesenfeld is so sold on the benefits of conversions, he’s already looking for more shops to acquire.

The Tradeoff

Andikian’s store may not be the market that he and his father envisioned all those years ago, but Andikian is no less involved in running it. If anything, he’s even more hands-on now that it’s a 7-Eleven, because the benefits of converting to a franchise didn’t end at gaining a well-known brand name.

7-Eleven provided state-of-the-art equipment he could never have afforded as an independent, including a sophisticated inventory control system that even shows which brands of cigarettes aren’t selling.

Although Andikian is still leasing the store, the company covers all maintenance and repairs. This means he can spend more time interacting with customers—and less in the back room worrying about how to make ends meet.

“You have free rein when you’re an independent, but you are also responsible for all the bills, accounting, payroll—and that stuff just adds up,” Andikian says. “Now my time is devoted towards more important things.”

Independents who join franchise systems can also benefit from the franchisor’s marketing, national accounts, strategic alliances and referral relationships, purchasing power and, of course, backroom services and support.

“There’s a quantifiable value to what the franchisor brings,” iFranchise Group’s Siebert says. “So you measure that value against the cost.” Of course, the decision to convert is never just that simple. “It’s a very emotional decision to make,” Siebert says. “Somebody is taking the name they’ve built over the years, or even that their parents built over the years, and changing it.”

Andikian understands that all too well. “I loved being an independent,” he says, “but the bottom line is the bottom line. In the first 12 months since converting, my gross sales increased $850,000.” He was able to pay off the $120,000 cost of converting his store by mid-2009, about two and half years later.

And in the end, he did find a small way to keep a part of his and his father’s dream: The owner of his 7-Eleven?

Andy’s Redhill Market Inc. 96 Entrepreneur

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August 2010

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Industries such as real estate, travel agencies and hotels have long focused on conversion franchising, and companies in other areas are beginning to see the benefits of this growth strategy. A few franchisors that have started conversion programs in recent years:

AllegrA Network/SigNS Now

Allegra’s Matchmaker Program pairs new franchisees with independent print shop and sign shop owners looking to sell their businesses. It also helps them calculate the value of the business and negotiate the sale, and once the sale is made, assists with upgrades and the conversion strategy.

7-eleveN

When independent store owners join 7-Eleven’s Business Conversion Program, they continue to own or lease the site, but 7-Eleven installs proprietary equipment and assists with re-branding. 7-Eleven receives 25 percent of the store’s gross profit after the first three months, leaving 75 percent for the owner. (It’s a 50/50 split for startup locations that 7-Eleven builds from the ground up and owns.)

SteAmAtic

Conversion franchising has proven so popular with independent disaster recovery businesses that the majority of the franchises added to Steamatic’s system in the last 10 years have been conversions. The franchisor sweetens the deal with reduced fees and royalties.

checkerS Drive-iN reStAurANtS

Forty percent of this burger brand’s growth in 2009 consisted of conversions of existing real estate—and not just restaurants. One new Checkers started out as a run-down car wash.

golD’S gym

Since Gold’s Gym started its conversion program in 2008, five independent fitness centers have joined the system. Converting franchisees agree to a 10-year term but have the option to terminate the franchise agreement on its third or fifth anniversary if they decide the brand isn’t right for them.

DriveN BrANDS (mAAco AND meiNeke)

The car-care company’s Advantage programs offer both a conversion program and a program to help new franchisees acquire and convert existing independent centers.

Participants receive at least half off their licensing and training fees.

The company has also created the Jump Start program, which focuses on car dealerships that have been shut down. Licensing fees are half off, and there’s no training fee. More than 20 dealerships have joined in the last 10 months, converting their service bays into either a Maaco or Meineke service center.

hoNeSt-1 Auto cAre

This auto repair franchise began offering a conversion program in 2009, with incentives including a reduced franchise fee ($15,000 instead of $25,000) and reduced royalty fees ranging from 2 percent to 4 percent for the first two years.

PoStNet NeighBorhooD BuSiNeSS ceNterS

Since 2009, PostNet has targeted postal and business centers interested in converting. It waives the franchise fee and cuts royalty fees to 3 percent and 4 percent for the first two years. It offers financing for remodeling and free one-year advertising. —T.S.

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Shoppers are venturing out again, so it’s time to browse Entrepreneur’s top retail franchises of 2010

IT’S BEEN A TOUGH few years for the retail industry, but store owners in every sector—from apparel to business centers to children’s products—are finally starting to see the light at the end of the tunnel.

And the numbers back it up: Earlier this year, the Commerce Department reported that the second quarter kicked off slightly better than expected, with retail sales hitting $366.4 billion in April, a .4 percent uptick over the month before and an 8.8 percent improvement over the same time last year. Not exactly a national spending spree but still reason to be hopeful that the recovery is moving in the right direction.

If you’re feeling optimistic about the retail world too, check out our list of the top retail franchises from Entrepreneur’s annual Franchise 500®. The companies are arranged alphabetically by category, and you’ll likely find whatever type of business you’re interested in on our wide-ranging list.

This listing is not an endorsement of any particular franchise. Look at it rather as a first step in your research, which should also include reading Franchise Disclosure Documents, consulting a lawyer and an accountant, and talking to existing franchisees. —Tracy Stapp

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!!

Entrepreneur

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+franchise Apparel Apricot Lane 2010 Franchise 500 ranking: 345 Women’s clothing, accessories & gifts Total cost: $111.4K-246.5K apricotlaneusa.com Plato’s Closet 2010 Franchise 500 ranking: 153 New/used clothing for teens & young adults Total cost: $176.6K-328.9K platoscloset.com

Rocky Mountain Chocolate Factory 2010 Franchise 500 ranking: 136 Chocolates & confections Total cost: $158.5K-592.3K sweetfranchise.com

Cartridge Sales Cartridge World 2010 Franchise 500 ranking: 145 Printer/fax cartridge replacements & sales Total cost: $120.1K-194.6K cartridgeworldusa.com

Batteries

Learning Express 2010 Franchise 500 ranking: 238 Specialty toy store Total cost: $192.5K-375.5K learningexpress.com Once Upon A Child 2010 Franchise 500 ranking: 166 New & used children's clothing, equipment, furniture, toys Total cost: $170K-264K ouac.com

Convenience Stores

Batteries Plus 2010 Franchise 500 ranking: 117 Batteries & related products Total cost: $153.8K-302.1K batteriesplus.com Interstate All Battery Center 2010 Franchise 500 ranking: 252 Batteries Total cost: $129.5K-275K allbatteryfranchise.com

Rapid Refill 2010 Franchise 500 ranking: 273 Inkjet & toner cartridge replacements Total cost: $59K-161.1K rapidrefill.com

Children’s Products Educational Outfitters 2010 Franchise 500 ranking: 336 School, business & team uniforms Total cost: $93.2K-201.95K educationaloutfitters.com

Candy Kilwin’s Chocolates Franchise 2010 Franchise 500 ranking: 275 Chocolate, fudge, ice cream Total cost: $419.3K-609.4K kilwins.com

Kid to Kid 2010 Franchise 500 ranking: 352 New & used kids’/maternity clothing & products Total cost: $141.8K-216.4K kidtokid.com

ampm Mini Market 2010 Franchise 500 ranking: 10 Convenience store & gas station Total cost: $1.8M-7.6M bpfranchising.com Circle K 2010 Franchise 500 ranking: 25 Convenience store Total cost: $161K-1.4M circlek.com 7-Eleven Inc. 2010 Franchise 500 ranking: 3 Convenience store Total cost: $40.5K-775.3K 7-eleven.com

Frame Stores Deck The Walls 2010 Franchise 500 ranking: 497 Custom picture framing & wall decor Total cost: $112.5K-201.1K dtwfraninfo.com

The Great Frame Up 2010 Franchise 500 ranking: 413 Custom framing & wall decor Total cost: $112.5K-201.1K tgfufraninfo.com

100 Entrepreneur

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Photo© iStockphoto.com/foto-z

Fastframe USA Inc. 2010 Franchise 500 ranking: 364 Custom picture framing & art sales Total cost: $105.7K-150.2K fastframe.com

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By Jay Conrad Levinson, Frank Adkins, and Chris Forbes For nonGuerrillas fundraising is s a mystery that is about as unpredictable as the weather. One minute they are flooded with donations, the next they are in the midst of a serious drought. However, Guerrillas are not taken by surprise with the winds of financial change; they know they can become a fundraising force of nature because they understand the Golden Rules of fundraising success.

Rule 1: Know Your Donors

Individual donations are the backbone of nonprofit support. Ninety percent of most nonprofit funding comes from individuals.

That is why a donor list with much more information than names, addresses and phone numbers is important. If you’re thinking like a Guerrilla your list will have details about your donors lifestyles such as where they eat, vacation, play, hobbies, achievements, favorite sports teams, and other small but important details. Once you have your donor list you are ready to impress them with your knowledge and love of people.

This interest in people will be evident in your marketing, and in the way you treat your donors.

Rule 3: Help Donors Find Personal Fulfillment

People want to make a difference.

They are seeking personal fulfillment through supporting your cause. When your organization can find a way to help people solve their problem of finding fulfillment though charity work, they will be more willing to jump on board to help your cause. They support you because they can feel good about themselves while making the world a better place.

The easy part for them is; they only have to write a check. The hard part for you is coming up with a creative way to show the need for donations in a way that is also compelling to the perceived needs of the donor.

Rule 5: Respect Your Donors

Guerrillas know that there’s a world of difference between donor care and donor attention. Your marketing can say all the right words and tell donors how important they are to you, but unless you take the concrete steps beyond those words they won’t believe you. Do this by making sure that everyone in your organization who deals with donors pays very close

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attention to them. Each donor or volunteer for that matter should feel unique and special after they’ve contacted you or been contacted by you.

Rule 6: Focus on Current Supporters

Why do you think that it costs five times as much to raise a donation from a new donor than from an existing one? The answer is easy…because the price is high to find a new donor while the price is free to find an existing one. That is why it is so important to keep in touch with your current donors. This has the effect over time of constantly increasing donations while reducing your marketing investment. You already have a list of your donors. Go back to it often to update information on them, keep communicating with them so when it’s time to give, it will be easy for you to ask.

One other way to focus on current supporters is to have them focus on themselves. You do this with a focus group of your most involved donors, but you could certainly try it with those who give the minimum as well.

Jay Conrad Levinson is the author of the best-selling marketing series in history, Guerrilla Marketing.

Today, Guerrilla Marketing is the most powerful brand in the history of marketing, listed among the 100 best business books ever written. Frank Adkins is the Vice President of Special Projects for Guerrilla Marketing International. Chris Forbes is a certified Guerrilla Marketing coach specializing in nonprofit marketing.

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Hair Care City Looks 2010 Franchise 500 ranking: 489 Full-service hair salon & basic spa services Total cost: $116.1K-317.7K citylookssalons.com Cost Cutters Family Hair Care 2010 Franchise 500 ranking: 198 Family hair salon Total cost: $94.5K-210.3K regisfranchise.com Fantastic Sams Hair Salons 2010 Franchise 500 ranking: 39 Full-service hair salon Total cost: $118K-230.9K fantasticsamsfranchises.com First Choice Haircutters 2010 Franchise 500 ranking: 164 Family hair care Total cost: $105.5K-161.5K regisfranchise.ca Great Clips 2010 Franchise 500 ranking: 100 Hair salon Total cost: $109.4K-202.5K greatclipsfranchise.com

Sport Clips 2010 Franchise 500 ranking: 69 Men’s sports-themed hair salon Total cost: $153.2K-276.9K sportclips.com

Pearle Vision 2010 Franchise 500 ranking: 103 Eye-care center Total cost: $84.3K-584.6K pearlevision.com

Supercuts 2010 Franchise 500 ranking: 5 Hair salon Total cost: $111K-239.7K regisfranchise.com

Relax The Back Corp.

2010 Franchise 500 ranking: 269 Products for relief/prevention of back & neck pain Total cost: $247.5K-401.5K relaxthebackfranchise.com

Health Products

Z-Coil Pain Relief Footwear 2010 Franchise 500 ranking: 411 Pain-relief footwear Total cost: $88.2K-160.8K zcoil.com

Magicuts 2010 Franchise 500 ranking: 305 Salon services Total cost: $111.3K-169.3K regisfranchise.ca

American Ramp Systems 2010 Franchise 500 ranking: 329 Wheelchair ramp rentals & sales Total cost: $121.8K-204.5K amramp.com

Pigtails & Crewcuts 2010 Franchise 500 ranking: 384 Children’s hair salon Total cost: $93.8K-168.3K pigtailsandcrewcuts.com

Foot Solutions Inc. 2010 Franchise 500 ranking: 417 Comfort shoes & inserts for clients age 40+ Total cost: $213.4K-250K footsolutions.com

Pro-Cuts 2010 Franchise 500 ranking: 216 Hair salon Total cost: $94.1K-195.8K regisfranchise.com

Good Feet Worldwide LLC 2010 Franchise 500 ranking: 403 Arch supports & related products Total cost: $85.4K-213.5K goodfeet.com

Snip-Its 2010 Franchise 500 ranking: 471 Children's hair care & party services Total cost: $127.8K-273.7K snipits.com

Miracle-Ear Inc. 2010 Franchise 500 ranking: 14 Hearing instruments Total cost: $122.5K-570K miracle-ear.com

Home Decor

Photo© iStockphoto.com/carlosalvarez

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Budget Blinds Inc. 2010 Franchise 500 ranking: 77 Window coverings Total cost: $89.2K-173.1K budget-blinds-franchise.com Decor & You Inc. 2010 Franchise 500 ranking: 405 Decorating services & products Total cost: $60.7K-98.1K decorandyou.com Decorating Den Interiors 2010 Franchise 500 ranking: 251 Interior decorating services & products Total cost: $45.3K-53.7K decoratingden.com Entrepreneur

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+franchise Organization Systems Closets By Design Franchising 2010 Franchise 500 ranking: 321 Custom closet & home/office organization systems Total cost: $124.9K-278.4K closets-by-design.com GarageTek Inc. 2010 Franchise 500 ranking: 473 Garage organization systems Total cost: $75K-255K garagetek.com

Pet Products Pet Supplies Plus 2010 Franchise 500 ranking: 308 Pet supplies & services Total cost: $518.6K-1M petsuppliesplus.com Petland 2010 Franchise 500 ranking: 250 Full-service pet store Total cost: $444.5K-983K petland.com

Postal Annex+ 2010 Franchise 500 ranking: 286 Packaging, shipping, postal & business services Total cost: $138.8K-200.1K postalannexfranchise.com

Wild Birds Unlimited 2010 Franchise 500 ranking: 306 Bird-feeding supplies & nature gift items Total cost: $87.4K-136.4K wbu.com

PostNet Neighborhood Business Centers 2010 Franchise 500 ranking: 165 Packing & shipping, printing, copying Total cost: $172K-198.3K postnetfranchise.com

Signs By Tomorrow 2010 Franchise 500 ranking: 220 Digital imaging & signage Total cost: $149.9K-260.9K signsbytomorrow.com Signs Now 2010 Franchise 500 ranking: 372 Signs & graphics services Total cost: $155.6K-298.7K signsnow.com

Sports Equipment & Apparel

AIM Mail Centers 2010 Franchise 500 ranking: 366 Postal & business services Total cost: $134.1K-215.4K aimmailcenters.com

Sign Stores Goin’ Postal 2010 Franchise 500 ranking: 155 Retail shipping & business services Total cost: $48.8K-135.5K goinpostal.com Pak Mail 2010 Franchise 500 ranking: 206 Packaging, shipping, mailboxes, business support Total cost: $134.5K-166.2K pakmail.com 104 Entrepreneur

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FastSigns Int’l. Inc. 2010 Franchise 500 ranking: 85 Signs & graphics solutions Total cost: $170.7K-316.7K franchise.fastsigns.com Sign-A-Rama Inc. 2010 Franchise 500 ranking: 66 Signs Total cost: $64.9K-225.7K signarama.com

The Athlete’s Foot 2010 Franchise 500 ranking: 137 Athletic footwear & related sports accessories Total cost: $244.1K-522.9K theathletesfoot.com Play It Again Sports 2010 Franchise 500 ranking: 201 New & used sporting goods/equipment Total cost: $229.1K-425.2K playitagainsports.com

Tools Distribution Matco Tools 2010 Franchise 500 ranking: 19 Tools Total cost: $79.9K-187.6K gomatco.com

Photo© iStockphoto.com/hohojirozame

Postal & Business Centers

The UPS Store/Mail Boxes Etc. 2010 Franchise 500 ranking: 20 Postal, business & communications services Total cost: $154.95K-293.5K theupsstore.com

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Build your brand and grow your business A positioning strategy behind the world’s most successful entrepreneurs, including Donald Trump, Robert Kiyosaki, and Suze Orman, branding yourself as both author and entrepreneur seems like a marketing must for anyone seeking to share their expertise, grow their personal brand and their business.

Sure, you’ve thought about it—having the credit “best-selling author” accompany your name. The prestige, immediate credibility, and competitive advantage that come with authoring a book are undeniable.

Chances are you’ve already considered taking your message to the page, but have been stumped by what to do next.

-Glenn Croston, author of 75 Green Businesses You Can Start to Make Money and Make a Difference and Starting Green

Is your goal to build your reputation, increase your recognition and grow your business? If so, a self-published book hiding in the back of a room isn’t going to do the trick. Knowing this, Entrepreneur Press, a leading publisher in the small to midsize business category, developed a new publishing option: Entrepreneur House Authors.

Entrepreneur House Authors is a fullservice, publishing and marketing solution perfect for entrepreneurs seeking to grow their brand and their business by leveraging their book. Under this innovative publishing program, Entrepreneur Press and its parent company Entrepreneur Media Inc. present visionaries, like you, with the means to publish your book, gain Scan & PDF: worldmags & avaxhome

exposure by the millions, and ultimately, become the recognized expert in your field.

“We help entrepreneurs share their expertise through publishing a book, and then we work with them to use that book to further define their identity, establish their credibility, build their reputation, and grow their business,” explains Leanne Harvey, director of marketing, Entrepreneur Press. “We do this using the reach, media exposure, business partners, and publishing expertise of Entrepreneur—something that no other publishing option can compete with.”

Combining Entrepreneur magazine’s readership of three million, and Entrepreneur.com’s six million unique visitors per month, with a multitude of esteemed online business partners including AOL.com, MSNBC.com, FoxBusiness.com, and WashingtonPost.com, Entrepreneur offers “author-preneurs” invaluable face time with millions of potential clients worldwide.

“Working with Entrepreneur Press has given me the opportunity to broaden my online platform and in turn, grow my business and my company,” says Susan Gunelius, author of Kick-Ass Copywriting in 10 Easy Steps. “Little did I know that partnering with Entrepreneur Press would lead to my becoming a featured columnist on Entrepreneur.com reaching millions of readers per month. My relationship with Entrepreneur Press has opened a multitude of doors for me to network with people around the world, share my passion and expertise about marketing, branding and copywriting, and grow my business significantly.”

Partnered with Entrepreneur Press, entrepreneurs seeking publishing success get the editorial benefit of working with a traditional publisher and the backing of Entrepreneur Media, Inc. a respected voice in the media community and trusted brand for more than 30 years.

“The team at Entrepreneur Press has literally helped me create an entirely new brand and career. No other publisher I have worked with so fully supports their authors with publicity, marketing expertise, and the type of creative brainstorming that comes with only the best of the best,” says Dr. Dani Babb, author of Finding Foreclosures and The Online Professor’s Practical Guide to Starting an Internet Business. “Without their expertise, incredible exposure, early assistance and believing in my work with a real strong partnership, I would have had a much tougher road to get to this place today. Thanks to Entrepreneur kicking off things, I have a two hour weekend show on Entrepreneurship on Fox Business and am the go-to person for numerous national media outlets. They are THE BEST!” If you’re writing a book and are seeking a publisher who will help you elevate your brand and grow your business, visit:

entrepreneurhouseauthors.com.

+franchise Snap-on Tools 2010 Franchise 500 ranking: 33 Professional tools & equipment Total cost: $17.6K-281.96K snapon.com

Edible Arrangements Int’l. Inc. 2010 Franchise 500 ranking: 48 Floral-like designs from sculpted fresh fruit Total cost: $154.9K-298K ediblearrangements.com

Vitamins

EmbroidMe 2010 Franchise 500 ranking: 108 Embroidery, screen printing, ad specialties Total cost: $86.3K-187.3K embroidme.com

GNC Franchising 2010 Franchise 500 ranking: 68 Vitamin & nutrition store Total cost: $125.8K-228.6K gncfranchising.com Max Muscle Sports Nutrition 2010 Franchise 500 ranking: 393 Sports nutrition products, weight-loss consulting, athletic apparel Total cost: $154K-285K maxmusclefranchise.com

Friendly Computers 2010 Franchise 500 ranking: 314 Computer repairs, services & sales Total cost: $62.3K-177.5K friendlycomputers.com

Miscellaneous

Gateway Cigar Store/Newstands 2010 Franchise 500 ranking: 111 Newsstand & sundry store Total cost: $55.9K-501.8K gatewaynewstands.com

Aaron’s Sales & Lease Ownership 2010 Franchise 500 ranking: 42 Furniture, electronics, computer & appliance leasing & sales Total cost: $233.9K-607.6K aaronsfranchise.com

Music Go Round 2010 Franchise 500 ranking: 474 New/used musical instruments & sound equipment Total cost: $252.3K-324K musicgoround.com

Ace Hardware Corp.

2010 Franchise 500 ranking: 34 Hardware & home improvement store Total cost: $238.5K-1.6M myace.com

Oreck Clean Home Center 2010 Franchise 500 ranking: 260 Vacuum cleaners, air purifiers & related home-care products Total cost: $148.8K-221K ownanoreckstore.com

Color Me Mine Enterprises Inc. 2010 Franchise 500 ranking: 259 Paint-your-own-ceramics studio Total cost: $136.7K-177.9K colormemine.com

Slumberland Franchising Inc. 2010 Franchise 500 ranking: 293 Home furnishings Total cost: $449K-2.1M slumberland.com WineStyles Inc. 2010 Franchise 500 ranking: 446 Wine store Total cost: $229K-380.5K winefranchise.net Wireless Zone 2010 Franchise 500 ranking: 144 Wireless communications store Total cost: $65.3K-199.5K wirelesszone.com

The Original Basket Boutique 2010 Franchise 500 ranking: 369 Gifts, gift baskets, corporate gifts Total cost: $47.5K-59K obbgifts.com

Photo© iStockphoto.com/Floortje

ColorTyme 2010 Franchise 500 ranking: 323 Rent-to-own electronics/ furniture/appliances Total cost: $402.1K-627K colortyme.com

Planet Beach Franchising Corp.

2010 Franchise 500 ranking: 383 Spa & UV-treatment services Total cost: $201.9K-394.6K planetbeach.com

Crown Trophy Inc. 2010 Franchise 500 ranking: 232 Award & recognition items Total cost: $168.5K-199.5K crownfranchise.com

Play N Trade Franchise Inc. 2010 Franchise 500 ranking: 431 New & used video games Total cost: $216.6K-329K playntrade.com

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RNR Custom Wheels & Tires 2010 Franchise 500 ranking: 255 Custom wheels & tires Total cost: $332.1K-$421.4K rnrwheels.com

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A success story Keeping it real: John Pelletier of Tío Juan’s Margaritas.

The cantina, reconstructed At Margaritas restaurants, every painting, tile, chair and artwork is direct from Mexico

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Why franchise now?

We’ve been ready for a long time, but the market and economy have been a factor.

Now we have a great franchise development team that’s been successful before.

And everyone else, from the heart of the kitchen to the executive level, is excited and rowing in the same direction.

Why not just order your décor online?

We don’t buy old, traditional stuff. We respect tradition, but we’re buying contemporary crafts. Over the years, we’ve tuned into the Mexican art scene. If something new is going on in Tonala, I know about it and it’s on our next truck.

And the staff field trips?

Each year we take six to 20 staff and call it cultural education. We eat and drink and visit the artisans. If managers have been with us for more than a year, we usually bring them to Mexico. We’ve also taken key cooks, bartenders and support people. We visit our tile factory, our

papier-mâché maker, eat street food, take a trip to Tequila. Along the way, they pick up the feeling of what Mexican hospitality is like. Mexico is very customer-centric. Light revolves around the customer. We want to bring that cultural magic back.

How authentic is your food?

We’re not here to be called the most authentic restaurant—some of our restaurants seat 480 to 500 people. That’s a tough sell as authentic, especially compared with a little place owned by a Mexican family. Pork carnitas, for example—in an authentic taquería, they boil the pork in lard. My customers will not tolerate pork cooked in lard. We think of our food as a remix of traditional and modern Mexican.

What’s your favorite margarita?

The one we make with Herradura Anejo is rugged. It makes you feel like you’re in Tequila. Give it a little floater on top, and now you’re talking.

Photo© Natalie Brasington

W

hen John Pelletier opened his first Tío Juan’s Margaritas restaurant in Concord, N.H., 25 years ago, he wanted to fill the place with real Mexican artwork, handmade furniture and décor. “Not mainstream pieces,” he says.

So he and his brother rented a U-Haul trailer and drove from New England to Tonala, a Mexican port city in Jalisco known as an arts hub. They hit the mother lode, coming home with handmade sculptures, paintings, pots and more. The authentic décor became Margaritas’ signature as the chain expanded, and none of the 21 restaurants is exactly alike.

Now, every time a new restaurant opens, Pelletier sends a 50-foot trailer to bring back everything from curtains and chairs to tables and hand-painted tiles.

And every year he takes members of his staff to Jalisco to soak in the atmosphere.

On the verge of opening his first franchises this year, Pelletier talks about how he’ll reproduce his “direct from Mexico” philosophy. —Jason Daley

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A focus on franchisees

Two years after his big win, with two Batteries Plus franchises up and running and plans to open stores in Coral and Bonita Springs over the next year, Fry is well on his way to becoming the Battery King of South Florida—and a scratch golfer.

—Jason Daley

A battery franchise? Really?

I lost a lot of money when the stock market crashed and through other bad investments. I figured this is kind of a recession-proof business. People always need batteries. I feel better investing in a battery store than the stock market, that’s for sure.

Your stores are doing well. Do you have a secret?

Our Fort Myers store, which has been open for 14 years, has been the highestgrossing store in retail in the whole chain since I took over March of 2009. I attribute our success to customer service. In this day and age, that’s what people are looking for, and we stand behind everything we sell. But my secret weapon is my friend Shawn Kennedy. He’s just a genius when it comes to building custom battery packs, and he knows how to sell them.

Meet Jason Fry, lottery millionaire and Battery King of South Florida

F

or Jason Fry, 2008 was a bad Hank Williams song. The Florida native was working three jobs—bartending, pouring concrete and digging wells— and still faced bankruptcy. The housing bubble put a sure-thing investment property underwater; he was expecting his second child; and his marriage was on the skids. Christmas was just three days away.

“I don’t know why, but I bought a lottery ticket,” Fry says. “It’s something I’ve only done a handful of times in my life.”

That whim turned out to be a $47 million payday. For the next year, Fry did

116 Entrepreneur

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what you’d expect a millionaire in his 30s to do—he bought a boat, an Escalade, a Shelby Mustang, a motorcycle and a house in Fort Myers. He played golf every chance he got and invested in a driving range with a golf pro.

But the life of leisure made Fry antsy, so when an old college roommate showed him around his Batteries Plus operation in Orlando, the seed was planted. Fry went back to the golf course, but when he found out the franchise had the Cape Coral area available, he bought the territory and persuaded the owner of the Fort Myers location to sell.

Are you OK with getting orders from the franchisor?

We used to not be open on Sundays, and then corporate said all stores had to be open on Sunday. Lots of people who own stores were not happy about that. But looking at how much money we make on Sundays, it just doesn’t make sense to close. It does bother you, but I’m a brand-new owner. They’re not always right—but the majority of time they are.

Photo© Navid/Maverickphoto.com

Juiced

What’s the hardest part?

People think this is just a car battery place.

We do a lot of aggressive advertising, but customers still walk in every day asking for oil changes [which aren’t offered]. They’re amazed at what we have. We can build almost anything. In construction, a replacement battery for a drill can cost almost as much as buying a new drill. We can build a new one for half the cost. It costs an arm and a leg to replace those dog collars for electric fences. We can open those up and change the battery, no problem.

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Beyond the sporting life For pro athletes, entrepreneurial endeavors are a natural play

J

MARK SCHLERETH • NFL offensive lineman (19892000); won three Super Bowl rings (one with the Washington Redskins, two with the Denver Broncos).

• Played recurring role of Detective Roc Hoover on the CBS soap opera Guiding Light.

• Co-founded Mark Schlereth’s Stinkin’ Good Green Chile sauce, available in hot (Red Zone Blitz), medium (Opening Kickoff) and mild (Kickers Only).

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CHARLES OAKLEY • NBA power forward (19852004) for the Chicago Bulls, New York Knicks, Toronto Raptors, Washington Wizards and Houston Rockets.

• Hosts online cooking show Café Oakley.

• Co-owns Oakley’s Car Wash, with locations in Brooklyn and Yonkers, N.Y. Oakley’s guarantees that if your car gets dirty within 48 hours, it’ll give it another wash.

BARON DAVIS • NBA guard (1999-present, now with Los Angeles Clippers).

• Third overall pick in 1999 NBA draft.

• Co-founded production company Verso Entertainment with high school friend Cash Warren, husband of actress Jessica Alba.

VENUS WILLIAMS • Holds 19 Grand Slam titles in professional tennis (tied for 12th on all-time list and second among active players, behind younger sister Serena).

• Career prize money as of May: $26,761,235— second all-time high among female athletes.

• Founded V Starr, a commercial and residential interior design firm based in Jupiter, Fla., in 2002.

JORDAN PALMER • NFL quarterback (2007-present, now with Cincinnati Bengals).

• Career statistics as of 2009 NFL season: 0 touchdowns, 2 interceptions, 41 passing yards.

• Co-founder of mobile applications firm Rock Software, developer of RunPee (an app alerting moviegoers when they can safely go to the restroom without missing a key plot development).

Photos© Get ty Imag es/Bri an Bahr, Joe K ohen, Val erie Macon, And reas Solaro, Rob Tri ngall/Sportschrome

ust as New Orleans Saints quarterback Drew Brees is entering the business realm and helping shore up the Crescent City’s post-Katrina recovery, former Detroit Pistons guard and NBA Hall of Famer Dave Bing is helping drive Motown’s rebirth—and his approach is even more hands-on: Last November, Bing (who launched his own automotive product supply firm after retiring from pro basketball) was elected as mayor of Detroit, vowing to rejuvenate the crumbling local economy by simplifying licensing and permits for new businesses.

Few athletes are able to achieve the levels of influence as Brees or Bing, but a growing number of pros is following an entrepreneurial path—and not always after their playing days end, either. —Jason Ankeny

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