Small Business Marketing

When we started our company in 2002, venture capital was scarce, so we sought alternative ways to finance the business. The Small Business Innovative Research (SBIR) program, specifically the one offered through the National Science Foundation (NSF), is high quality source of funding. I have personally worked on proposals that have won awards from the Department of Defense (DoD) and the NSF totaling over $2.1 million. I am also a business reviewer for Phase II proposals for the NSF. I have both been through the proposal process and the selection process.

The SBIR Program

The SBIR program was created in 1982 as part of the Small Business Innovation Development Act. Eleven Federal departments and agencies are required under this act to reserve a portion of their R&D funds to be awarded to small businesses each year.

To receive an award under this program, a company must be American-owned and independently operated, for-profit, and under 500 employees. Additionally, the principal researcher must be employed at least 51% of the time by the business. There is still some debate as to whether venture-backed companies qualify if the VCs own more than 50%. Speak with the program manager to determine your eligibility if you fall in this category. Each agency determines its own topics and amounts for the awards (within parameters). The websites for all the SBIR programs are listed on the DoD SBIR webpage.

The Latest NSF Solicitation

The NSF has a fairly comprehensive website that covers the submission guidelines. Your life will be easier if you review this site long before the submission deadline. The deadline for the spring 2008 round has passed, but start thinking now about your possible submissions for the fall. The solicitation for the spring has been posted and the proposal is due on June 10th at 5:00 pm. This is a hard deadline and they will give you no leeway if you miss it. Each company may submit up to four proposals in one round.

The topics for this round include Biotech and Chemical Technologies, Software and Services, and Electronics, Components, and Engineering Systems.

The Phase I will be for no more than $100,000. You are usually notified four to six months after the proposal has been submitted. If you should win this grant, you will begin the grant period in late 2008 or early 2009. You get 2/3 of the money up front and 1/3 at the end. After six months of research, should you find success, you may apply for a Phase II grant up to $500,000. Again, you may apply in either January or July following the completion and, if successful, you will receive your funds in another six months: 25% up front, 15% at the end, and 20% three times during the course of the project. A Phase II is usually 24 months. Please note, that for the first year, you are spreading a small amount of money over a pretty long period. This is useful for funding some of your development with non-dilutive funds, but not particularly useful at providing working capital.

Winning Your Phase I

Understand the solicitation topic: they are very serious about sticking to the topics. The topics for this round are fairly broad, but if you have an advanced material that decreases the wind resistance on airplane, it doesn’t matter how fabulous it is, you will have to wait until the Advanced Materials solicitation. Call the program officer and find out if they are interested before you do all the work on the proposal. Have an innovative technology. They are not interesting in funding improvements. Additionally, the proposal is reviewed by someone who really understands the technology. Don’t skimp on technical details because you assume the reader can’t understand it. If the program manager doesn’t understand what you are doing, they will find someone who does. You will not be successful if they don’t have the information necessary to understand what you are attempting to do. Have a good commercialization plan. In Phase I, they are not expecting an extensive business plan, with a full marketing campaign defined. They are, however, going to expect you to have a good understanding of who might buy this product, why they would want to buy it, and what they might be willing to spend for it. They will also expect that the market be at least large enough to support your company as a commercial venture. And never, never say “there isn’t a market yet for my product because it’s so innovative” or “there are no competitors for my product.” When the car was invented, the market was everyone who owned a horse and wagon. Competitors were everything that could move a person from one spot to another. Provide letters of support. It is actually a requirement for this solicitation, but even when it is not a requirement, it’s a really good idea. Good letters of support come from representatives of companies that will be interested in buying your product. In the best case, they will say that they will buy it, if you are successful. Often the easiest thing to do is write the letter yourself and ask the representative to copy it onto his or her company letterhead and sign it. If you include multiple letters, don’t provide the same copy to every supporter – it makes you look like an idiot. Call the program officer well before the due date. Okay, I said this before, but it bears repeating in case you missed it. The program managers whom I have met are intelligent, dedicated people. They are very excited about these technologies and knowledgeable in their areas of expertise. They can be very helpful in developing your proposal. That being said, don’t pester them on little details, they are also very overworked. It’s probably a good idea to call sooner rather than later. Let someone else read your proposal before you submit it. That someone should have a very strong command of the English language and should be able to let you know if the proposal reads well, presents the ideas clearly, and has perfect spelling and grammar. Also, don’t be clever in your presentation of the document. Times New Roman, 12 point, is the font of choice for newspapers, books and magazines for a reason – it’s easy on the eyes. Don’t make your reviewer’s job harder than it needs to be.

Some Technical Notes

You are required to submit your proposal through FastLane. Sign up with FastLane and start using it right away. It’s pretty easy once you get used to it, but occasionally there are technical glitches and they will happen to you if you wait until the last minute. Get a DUNS number right away if you don’t have one. Call Dun and Bradstreet at (800) 333-0505 or find them online at http://www.dnb.com/us/. You will need a DUNS number to sign up with FastLane.

Winning Your Phase II

There is no official solicitation for a Phase II. If you have completed your Phase I NSF SBIR, you are eligible to apply for a Phase II grant. You may apply either the two following cycles, meaning if you completed your Phase I in December, you may apply either by January 31st or July 31st. The website has general Phase II proposal instructions.

Should You Apply?

When we are going through the proposals, they may be rejected for many reasons. Mostly proposals are rejected because they do not meet the technical or commercial hurdles required for a Phase II grant. That being said, we periodically hit a proposal that is rejected for other reasons that could have saved the company and the grant committee a lot of time.

If you did not get any positive results from Phase I, don’t bother to submit a Phase II proposal. We occasionally see companies who say basically, “my idea for Phase I didn’t pan out, but I have another idea on how to make this work, so I am submitting for support of that idea.” That is another Phase I proposal. It gets immediately labeled as such and put in the rejection pile. Don’t bother to submit that as a Phase II proposal.

If you are not confident of your results, check with your program manager. They should be willing to suggest areas that need shoring up and also should let you know if they don’t believe a Phase II proposal will get funded.

Writing Your Phase II Proposal

The number one reason why proposals get rejected is technical. The technical review team is made up of scientists and engineers in the field of study of the solicitation. The program managers have selected a panel that has deep knowledge in your area of research. They expect the technical portion of the proposal to look like any other grant, meaning they expect all the technical information needed to make a decision on the technology, backed up by references. I have heard many times on the panel, “Well, this looks interesting, but I don’t have enough information to determine whether it is feasible.”

If you have never been a university scientist, it behooves you to find one in your area of expertise and ask them to review your technical proposal before you submit it. The technical reviewers are extremely brutal and are unwilling to compromise their review standards.

The second reason, and much lower on the weighting scale, is the commercial section. I have seen a technology where the technical reviewers rave about in its innovativeness and brilliance, but the commercial reviewers can’t see a market at all, and the project gets funded. I have never seen a great business plan, with a mediocre technology, get funded.

The business plan is important though. Should your proposal be placed next to another with a similar quality of technology, the commercialization section can carry the day.

Your plan should clearly define the steps that your company will take to get from R&D to revenues. If you need to build a beta tool after the prototype has been completed, you should have a clear definition as to how you will fund it. Just so you know, everyone says, “we will raise venture capital.” Raising venture capital is easier said than done. If you are going to say that, make sure that you have some venture capitalists review your technology and write letters of support. Also, have alternative plans in case the VCs don’t drop money in your lap.

Also, a lot of proposals say things like, “We will partner with Honeywell to manufacture our first project. Five years later, we will have $50 million in revenue.” It seems that people put a lot of thought into getting the first product completed and are good at imagining what will happen in five years, but they seem to skip the whole process in between – which by the way, is the hard part.

Another commercialization issue is the lack of any business experience in the management team. If you can’t afford to hire some one, find some business advisers (and listen to them). You can start with your local S.C.O.R.E. office.

Finally, have someone read over your proposal. It should be written clearly, with no grammar or spelling mistakes. If you can’t find business advisers or someone to read your proposal, why would someone want to give (yes, give) you $600,000.

Click here to visit the NSF SBIR website. Good luck.

By: C. Worrall

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When it comes to gaining funding for your business there are a number of different places and avenues that you can approach but the one that you actually choose to use will be based on your business needs. Some examples of the places that you can turn to in the hope of gaining the business finance that you need are bank loans, family/friends, credit cards, overdrafts and investors. These are only a handful of the finance options that are open to both start-up businesses and established businesses; however in some cases many businesses often choose to use a combination of many different sources of finance in order to cover all of the expenses.

It can easily be said that many new businesses will exhaust the internal financial resources which are needed and used to get your business off the ground during the initial start-up phase. It is because of this that new businesses will then seek additional capital in order for them to continue to grow. The statement it takes money to make money is also never more relevant than it is when it comes to small businesses. This is due to the fact that every small business needs money to get started, operate and expand as well as to grow.

If you are a start-up business and you are at the point where you require outside finance you must clearly identify the purpose of your business finance. The start-up finance that you gain for your business is generally acquired so that you can gain assets for your business. These assets are used to help your business achieve its profit making objectives.

When you start to look for ways of raising business finance you should have calculated roughly how much money you are going to need in order to cover all of your business start-up expenses. By doing this you have a better chance of getting the business finance that you want and that you require. Once you have gained a rough estimate of how much money you are going to need for your business start-up in order to get your business off the ground you can start to think about the various avenues that you are able to approach as a way of securing your business finance.

However when it comes to business finance there are only really two words that you need to consider, these are debt or equity. Debt finance, for example, comes in the form of bank loans and credit cards. Debt finance is money that is lent to your business. It will cover all of your business costs but you are required to pay it back. You will have to repay debt finance on a monthly basis with added interest. Before you agree to take out debt finance it is important that you are able to keep up with the monthly repayments. To find this out you should investigate your expenditure and ensure that you will be able to keep up with the payments sufficiently.

The second word that you need to know is equity. Equity finance is money that is invested into your business for a share of your business. You don’t have to pay this money back at any point within your business but it does mean that you lose an aspect of control over your business.

Within every business there are five main components that are needed in order to ensure that your business operates successfully. These components are Personnel, Equipment, Housing, Products & Services and probably most importantly Capital. Without capital all of the other components wouldn’t exist within your business.

By: Helen Cox

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Expenses like income are treated differently depending on your method of accounting (cash or accrual). Cash accounting says a cost is “expensed” when you write the check to pay for it. Accrual accounting expenses the cost when the transaction occurs whether or not money is exchanged, e.g. a supplier may give you 30 days to pay your bill or you may pay your payroll/sales taxes monthly. Accrual accounting attempts to keep expenses matched up with the sale that generated it. Bills that are paid in a lump sum for the year can be accrued (spread out) each month; e.g. unemployment insurance is paid in lump sums which throws off your P&L because of the large payment.

A solution is to record the payment to the Pre-paid Expenses account within Current Assets on the Balance Sheet. You can then divide the amount by the number of months paid and then each month reduce the Pre-Paid Expenses by the smaller monthly payment and record it in the Unemployment Insurance account on your P&L.

Most of your expenses come from your checkbook register but there is a couple you will want to watch out for.

The principle portion of your loans and credit cards that you pay on your bill are not expenses. The principle portion paid should go to the liability account on the balance sheet for the loan. The interest portion of the bill is an expense. You need to look at the bill and split out the two portions.

Items that are purchased in the $500+ range (start ups and businesses with sales less than $300,000) are considered investments in the business and should be depreciated over an IRS predetermined time span. This is where tax law and Generally Accepted Accounting Principles are applied. Larger businesses are able to expense bigger ticket items. A small business puts these $500+ purchases on their balance sheet under long term assets.

Don’t worry about recording depreciation monthly unless your accountant has given you a schedule. Depreciation becomes a non-cash expense and accounts for the items you put on the balance sheet above $500 earlier.

Something to watch out for with depreciation is that the new tax laws have accelerated the ability to depreciated your assets, a good thing for lowering taxes but it often leaves a small business looking like it is not re-investing in itself. Ask your accountant to run the depreciation schedule two ways, one for taxes using the acceptable accelerated depreciation and the second way using the straight line depreciation based upon the lifespan of the asset for your business books. Why is this important? Banks run ratios that use assets to determine bank ability. As for you, it will give you a better idea of when to re-invest in furniture, fixtures, and equipment.

The most difficult thing about using P&Ls is consistent coding of expenses into their appropriate accounts. If you are unsure about which accounts to use, start with the ones on the tax return you will be using; e.g. schedule C for sole proprietors.

By: Bruce D Hunter

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Investment property mortgage rate is one of the most decisive factors when choosing a mortgage. Typically, the lower the interest rate, the better the mortgage. But the assessment of viability of a mortgage really depends on the type of mortgage and other loan terms. It is crucial that you shop around a bit to find a mortgage and mortgage rate that suits your requirements. A mortgage can be obtained from reputable banks, financial institutions, credit unions, and even private mortgage brokers, who would find the best rate possible for you.

Investment property mortgage rate can be classified into three major types: fixed-rate, adjustable-rate and balloon or reset.

Fixed-rate mortgage is a mortgage in which your interest rate and monthly payments are fixed throughout the life of the mortgage. There are two major types of fixed-rate mortgages based on the duration of the mortgage – 30-year & 15-year. The major advantage of a fixed-rate mortgage is that the interest rate and the monthly payments don’t increase with an increase in market rates. However, this can sometimes work against you, simply because the mortgage interest rate remains fixed even if the market rates are down.

Adjustable-rate mortgage (ARM) is a mortgage that has a variable investment property mortgage rate. ARMs usually start with a lower interest rate and lower monthly payments – this contributes to their wide popularity. However, it is imperative that you be aware of the specifics of an adjustable-rate mortgage, including the adjustment periods; indexes and margins; caps, ceilings and floors; and the number system.

Balloon or reset mortgage is based on a 30-year amortization schedule, with a 5-year or 7-year term. At the end of the term, you have an option to either pay off the remaining principal, or reset the mortgage at the current market rates. Therefore, you have the benefit of lower monthly payments, but you are required to repay the complete mortgage by the end of the specified term.

With several types available, you might be perplexed as to what type of investment property mortgage rate should you choose. The following few points will elucidate this aspect.

A fixed-rate mortgage is perhaps the best option if you plan to own the investment property for more than 5 years. But if you wish to sell the property earlier, or you want to start with a lower monthly payment, an adjustable-rate mortgage seems like an apt choice. And if you believe that your income will increase over time, and you can pay off the whole mortgage within 5 or 7 years, then you can go for a balloon or reset mortgage.

Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author’s information with live links only.)

By: Joel Teo

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Investment

The first thing you would ask yourself when contemplating on a consolidate debt loan is, what is consolidate debt loans? Consolidating some or all your debts is a process of combining all your debts in to a single or one loan, with one monthly payment and in most cases low interest rate.

The lending company, who consolidate all your debts into one, will pay off all your current debts and loans and issue a new loan to you. Now that all your current debts are in one loan, you will only need to make one single monthly payment.

This could be your first query when thinking of consolidation, but either way it is entirely up to you. Benefits. Some of the benefits of a consolidation are that the payment processes get simplified. No more multiple monthly payments that may stresses you out.

You can lock in a low interest rate which will mean more savings for you. You can also extend the payoff time to several years depending on your eligibility (though this will increase your total interest to be paid on the life of the loan). You will only deal with one lender and can also lower your monthly payment.

You may also ask, am I eligible for a consolidated debt loan? Almost anybody can ask and get to consolidate debt loan. You can also consolidate anytime you would like to do it. Eligibility for consolidation varies from company to company or from lender to lender, as their basis for approving varies. But this can easily be check by logging online to verify or inquire about their qualifying requirements.

For student loans, it is a little bit different.

Some consolidators will require a minimum of 10,000.00 dollars in total debts for them to consolidate your loans. For school consolidation loans, the best place for you is through the federal government loans program. Here you can get the lowest interest rate for your college and/or school loans.

How about my monthly payments?How much will they cost me? A monthly repayment again varies depending on the amount of the loan and the length of the loan term.

The shorter the loan term, the more the amount is, whereas the longer the term is,the less amount money you have to pay monthly.

For students who do consolidate debt loans, they usually have flexibility payment options, depending on their budget and income. Just a reminder, the faster you pay it off, the less interest you have to pay.

How much is the interest on a consolidate debt loan? Most lenders have a competitive rate of interest, but if you shop around, you will find the best rate. Do some due diligence and research among the lenders who has the lowest interest rate.

For student consolidation, it is usually the weighted average of the interest rates on the loans being consolidated. Some have a variable rate and some have a locked interest rate (based on the current federal rate). Please be reminded that even tenths of percentage point can mean hundreds of dollars to you so always consider the lowest possible interest rate.

Start of repayment and about deferring of loans.

The start of repayment for students usually get a nine month grace period on repaying loans once you are out of school and some are 6 months. But the best thing to do is start sooner and you will be better off. On deferring your loan, yes you can, but that is if you are eligible. If for some reason you are not employed, or you are encountering some financial and economic difficulties, the U.S. department of education will pay the interest that accrues during the deferment period (this apply to school consolidation loans).

When you defer loans you do not have to pay it back, and interest will not accrue.

To maintain a good credit rating do not default on your school consolidation loans to avoid penalties and more payments later on. When you know your options, you may have the option to consolidate debt loans.

By: Shellaine Enfesta

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It’s time for a new marketing plan and some of us would rather have our fingernails pulled out than sit down and work out a new strategy. So we put it off or wait for the new year to start this project, because the new year is a time to start over, to put the past year behind us and to make resolutions for the coming year. But, there is nothing that says we can only make resolutions at the beginning of the year.

One definition for resolution is, “A course of action determined or decided on.” A marketing plan could be considered a course of action determined or decided on for the operation of a business. A marketing plan encompasses every aspect of a business. It is more than selling, more than advertising and, it can be done any time of the year. Furthermore, it can and should be reviewed several times a year.

Often, we start a new marketing plan by taking up where the old plan left off. We review that plan, maybe update a few items. We start out by asking “What went wrong? What went right?” This approach assumes all the data is in and all that is needed is to eliminate the things that did not work out and beef up the things that did work.

While that is a legitimate and very workable way to approach building marketing strategies, the focus is a bit narrow. It does not help shine a light on new opportunities, changes in the marketplace or industry, or new methodologies that might improve efficiency. Furthermore, the best marketing results come from tightly focused marketing that clearly communicates to a targeted audience.

In a workaday world that gives us little time for reflective consideration, we often tend to rush this process and assume that the company is doing what it should be doing, selling what it should be selling, marketing to the right audience, and is organized and staffed the way it should be. This year, let’s take a moment and ask ourselves more questions about the market, our audience, our resources and our competition. Your marketing plan can take a whole new direction when you get the answers to questions such as: “Is this still the right thing to sell? Is this still viable? Is this what people want? Does it still fit with our corporate identity and mission? Who wants this product or service, and what are the benefits they believe they get? How do our company, our products and our services compare to similar companies, products and services in the marketplace today? Has our competition changed their product or business model?”

Once you get a good feel for the marketplace and any new opportunities or challenges coming from outside the business, it’s time to take a look inside with questions like: “Have we added capabilities, skills or knowledge that suggest we serve new markets? Are there capabilities, skills, knowledge or equipment that we need to develop or acquire? Or should we be narrowing our focus to take advantage of specialized skills and services? Have we tried to become everything to everyone? Could we be number one in a niche market?”

If you honestly evaluate both the external and internal influences on your business or product, it becomes easy to develop a marketing mix for success. You will learn what you need to be telling clients and prospects and you will know who that target audience is. You will likely get information that indicates where your marketing and advertising budget should be allocated.

Whatever questions you ask, just be sure to ask them. One tip: If, like most of us, you don’t have time for a long client and prospect survey, study what your competition is doing and evaluate what they do that is truly successful (not just everything they do), and look through your own customer records for trends, problems and successes.

By: Cynthia Pinsonnault

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It seems that you are making episodic payments as interest against your debts endlessly. The debts that are piled stands erect before your eyes without the least change of improvement. If this is so, then you need to get debt management program at the earliest. Be it a single or multiple debts, the policies are rational to settle and consolidate them with a single stroke.

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Debts usually fall under the category as bad credit. So, it is feasible that you can also cater poclies to disperse other bad credit disputes. So, at a single price you can borrow one or more services. Furthermore, appraisals from financial experts states that services also pave ways to avail loans in such crucial financial stage at low and cheap interest rates.

The best and easiest way to procure the services of debt management program is online application method. It facilitates users to approach lenders from home within seconds without being travel the miles to lender’s office. Debtors can just collect and subscribe the services to surmount and tackle debts.

Summary: Debt management program is an ideal program to consolidate the single or multiple debts. Along with dispersing the debts you can also avail financial aid if necessary at reasonable and attractive rates. To get the prop within seconds consider the online application method.

By: Alex Jonnes

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