April 23, 2012 By
Ann Meyer
Fibrenew franchise owner Ivar Vankemenade has lessened the brunt of the recent spike in gas prices by relying on technology to help him shave pennies here and there.
His Global Positioning System diverts him around traffic jams en route to repa
ir leather upholstery on-site for customers, while an app tells him which station has the lowest prices. Vankemenade will stop before his gas meter falls to empty when a customer call puts him in the vicinity of cheap gas. “I use technology to my advantage,” he said.
This week, Vankemenade found gas for a relative bargain in Villa Park at $4.39 a gallon. That meant a tank cost about $75, up from less than $60 a year ago.
Ivar Vankemenade, owner of Fibrenew Chicago NW franchise, uses an app to get the best price on gas.
But ultimately, he plans to pass on some of the higher energy costs to customers. That’s just business, he said. “It would be impossible for any business to stay afloat if expenses rise in any business area if they’re not passed on to the customer,” he said.
Record prices
Prices at the pump hit a record $4.67 a gallon in Chicago this week, according to the Chicago Sun-Times, leaving few businesses exempt from the sting of higher costs in a weak economy. To weather it, some are moving to more energy-efficient vehicles, while others are tapping employees to be more energy-conscious or using technology to help in the cause.
Randy Moon, franchise owner of AdvantaClean of DuPage County in Naperville, has set a goal of chopping $100 to $200 a week off the company’s budget by reducing energy use by 10 percent to 15 percent. He plans to do it by working smarter and has encouraged employees to come up with ideas. “It’s amazing…when you get a bunch of people thinking about it,” he said. For example, the company took an employee’s suggestion to stock up on supplies online instead of running to the supply house frequently.
Moon also swears by the franchise’s centralized call center, which books jobs using the most direct travel route, so the company’s cleaning technicians aren’t driving back and forth from one job to the next.
Tracking drivers
Increasingly, companies are taking advantage of GPS capabilities to monitor employees behavior on the road. It can make bottom-line sense, though it sometimes feels uncomfortably Big Brother-like.
“It’s all about savings,” said Michael Sanfratello, owner of Alsip-based Advanced Wiring Solutions, which installs and maintains structured cabling for telecommunications and alarm systems. The company, which had revenue of $4.2 million in 2010, employs 32 workers, including 26 field technicians.
One upside: Tracking drivers via GPS screens at headquarters and via smart phones has largely eliminated personal use of company vehicles during non-work hours and the gas consumption that goes with it, Sanfratello said. Vehicle tracking also has reduced speeding, which cuts fuel efficiency, while improving the company’s routing and dispatching of drivers.
Fleet-tracking systems certainly aren’t new but, with gas prices stuck near record levels, their value is becoming more apparent to small-business owners in a variety of fields.
On the
map
Embarque Chicago, a unit of Washington, D.C.-based Carey International Inc., has equipped its fleet of chauffeur-driven Toyota Camry hybrids with GPS tracking, said Lou Tessier, vice president in charge of fleets at Carey International. The company turned to the tracking devices to improve routing and cut down on extra trips to pick up passengers, but a bonus is the ability to monitor drivers’ speeds and whereabouts, Tessier said. “All of those things add up to helping us control gas costs and better serve our customers,” he said.
High gas prices are pumping up demand for GPS tracking systems. New York-based ABI Research forecasts subscription revenue for fleet management systems in the United States will hit $2.47 billion by 2016, up from $1.38 billion in 2010. Subscription fees range from $29 to $55 a month. In addition, some systems require upfront purchase of the tracking devices, while others include the cost of a monthly lease in the subscription fee. U.S. Fleet’s best-selling model sells for $349. In addition, count on $20 to $100 in installation cost.
Commercial Tire Services in Melrose Park has used a GPS tracking system designed by Glenview-based Navman Wireless Holdings to monitor 20 trucks that make service calls to replace and repair customers’ truck tires on the road. By compressing routes, keeping tabs on how fast drivers are traveling, and monitoring whether they’re wasting gas with excessive idling, the company estimates it trimmed its gas bills by about $3,000 a month, or 12 percent to 15 percent during the last gas price spike a year ago. “You have to squeeze what you can,” said service manager John Pavia, who noted that rising oil prices also impact the cost of the tires the company sells.
Tracking services provide tools to monitor vehicle speed, idle time and maintenance needs, said Tzau Jin “T. J.” Chung, president and CEO of Navman. The company, which employs 280 workers worldwide, has devices in some 135,000 vehicles.
No wrong turns
Chung pointed to other benefits of GPS systems: They help drivers avoid wrong turns — another drain on time and fuel – and a Navman accessory also allows for two-way messaging between fleet vehicles and the home office, allowing for better time management. Customers often need to reschedule and jobs can take longer than planned. “All that can mess up the schedule for the day,” Chung noted.
Even so, he acknowledged that some workers chafe at being monitored. “It is almost an invasion of privacy,” he said.
Pavia has run into that problem at Commercial Tire. “It’s, ‘Oh, you don’t think I’m doing a good job,’” he said of staffers’ misgivings. But he said workers get over their initial reluctance when they see data that shows fleet-tracking is improving the company’s profitability, which ultimately puts money in their wallets. “At a time when companies are laying people off, we’re trying to keep people employed,” Pavia said. “We’re trying to maximize our savings, and one of our largest expenses is fuel.”
Editor’s note: Parts of this story previously ran in Crain’s Chicago Business. L3C Chicago, L3C retains the copyright.
January 30, 2012 By
Ann Meyer
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Kevin Willer of the Chicagoland Entrepreneurial Center predicted Chicago's labor, university resources and capital would drive business growth.
Expect to see rapid change in Chicago’s business community in the coming year, as technology disrupts old industries.
“Think about what the Internet has done in the last 10 years,” said Matt McCall, partner at New World Ventures. It has created companies, while putting others out of business. “I also call it the venture capital employment act.”
Most of the entrepreneurs who made predictions and projections at the Chicagoland Entrepreneurial Center’s 2012 Startup Forecast event Wednesday morning were bullish about the coming year and said technology was likely to drive economic growth. “2012 will be the year Chicago gets noticed,” said Matt Spiegel, chief executive at TapMe, who predicted two more Chicago tech startups would issue Initial Public Offerings in the coming year.
With a plentiful labor pool, university resources and a growing network of startup investors, Chicago “holds the pieces” for sustainable business growth, said Kevin Willer, president and chief executive of the Chicagoland Entrepreneurial Center. Unlike in the past when startup capital for new businesses was a rare find, Chicago now hosts angel networks and seed funds from local venture capital firms, Willer said. “You have a lot of people writing checks to help companies get off the ground,” he said.
Still, how many jobs will be created was less clear.
Increasingly, companies are using contingent labor to keep costs low as they figure out ways to turn a profit from businesses that often deliver information or networking at no cost to users. Even when they provide free access, many companies struggle to attract sufficient users as a proliferation of websites, apps, videos and games compete for consumers’ limited time.
Create value
“Free isn’t cheap enough,” said Howard Tullman, a serial entrepreneur who is president and chief executive of Tribeca Flashpoint Media Arts Academy in Chicago. “No one wins the race to the bottom.”
At the same time, free can work if the digital company can provide a compelling reason for people to become regular users, Tullman said.
Even when money isn’t exchanged, consumers make a deal with websites in the amount of personal information they’re willing to share. “I’ll give you more and more of my private information if you save me time, if you save me money,” Tullman said.
Hire problem-solvers
When building a team, entrepreneurs should look for problem-solvers and encourage them to practice devising solutions on and off the job, said Harper Reed, the former chief technology officer at Threadless, who is now working for the Obama campaign. When putting together an optimum team, he said, “Hire problem solvers. Fire non-problem solvers.” And don’t be afraid to prune
your staff to get rid of bad apples.
Cash isn’t the only incentive entrepreneurs can offer job candidates. While software engineers are in demand, many will accept a job at a startup because they relish the opportunity to make their marks. But to keep them, business owners have to trust their engineers and provide them a say in the company, instead of treating them like a resource, Reed said.
Entrepreneurs should give credit where credit is due, and celebrate successes along the way instead of dwelling on failures, Reed advised.
Build sensible businesses
Chicago has an advantage over other markets because of its “sense of sensibility” in building businesses, said Jim O’Connor, managing director of MVC Capital and co-chairman of the Chicagoland Entrepreneurial Center’s board of directors. “This community you see built today is really additive and is going to build,” he said. “You’ll have some failures along the way, but we’ll have some really big successes. This is because this community works together.”
Read more at SmallBizChicago…
January 24, 2012 By
Ann Meyer
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While early projections for IPOs in 2012 aren’t promising, Lee Graul of BDO USA points out that investor confidence can change quickly.
The bull IPO market that many were predicting a year ago might take a bit longer to materialize.
While Groupon made headlines when it raised about $800 million in a November public offering that valued the company at $10 billion, making it the largest initial public offering by a U.S. Internet company in years, the U.S. market for public offerings in 2011 fell short of most experts’ predictions. In Chicago, four companies went public in 2011, even with 2010, and nine have plans for offerings in 2012, Crain’s Chicago Business reported Jan. 2.
Nationwide and globally, however, the number of IPOs fell in 2011 from 2010, Crain’s said. The European debt crisis, coupled with high domestic unemployment and slow economic growth, contributed to ongoing uncertainty, said Lee Graul, partner at BDO USA in Chicago. And the latest BDO IPO Outlook survey, conducted in early December, indicates bankers’ confidence has yet to rebound.
A bearish forecast
About half of investment bankers surveyed were predicting an increase in U.S. IPOs in 2012, compared with 72 percent who predicted an increase a year ago. About 35 percent said the market would be flat in 2012 and 15 percent predicted a decrease in offerings.
Most pegged the average size of initial public offerings at $291 million, up slightly from the average of $268 million projected a year ago, and significantly larger than typical IPOs in other economic periods.
Companies going public on U.S. exchanges in 2012 are likely to be backed by private equity or venture capital, as they were in 2011, Graul said. “We’ve found private equity and venture capital were the main sources of the transactions for the third consecutive year,” he said. More than 40 percent of IPOs are expected to come from private equity portfolios in 2012, followed by 20 percent from venture capital portfolios, the study said.
Waiting out the economy
Many venture capital investors have been waiting out the economy and holding on to portfolio companies longer than usual, resulting in more mature companies going public. “[The investors] haven’t been able to get their money out of their investments since 2008 or 2009,” Graul said. To the extent that venture capital and private equity investors are able to sell portfolio companies through IPOs this year, they will have more capital to invest in new ventures, he said.
Despite the study’s bearish forecast, Graul pointed
out that the stock market picked up during the last two weeks of 2011 and could lift investor confidence in 2012. ”Things change quickly on Wall Street. It’s all psychology,” he said.
What it takes
Companies likely to find success on the public markets will be able to show long-term growth potential, stable cash flow and profitability, the study said.
Technology, energy and health-care businesses are most likely to find success through U.S. IPOs, the study said. But even those sectors experienced a decrease in confidence in the survey, with 73 percent of bankers projecting an increase in technology IPOs in 2012, down from 87 percent who forecast an increase when asked a year ago. Bankers showed increased confidence in only the media/telecom sector, where 39 percent are forecasting an increase in IPOs in 2012 compared with 35 percent who were bullish on the sector a year ago.
Foreign markets beckon
Smaller firms wishing to go public in 2012 might consider exploring foreign exchanges, which can be more accessible to startups, Graul said. “There is an opportunity for people to look offshore for funds these days,” due to the lower cost of capital and less regulation, he said.
Firms that can’t generate interest on U.S. exchanges or that flinch at the compliance requirements in the United States might find foreign exchanges more appealing. Exchanges in Singapore, Hong Kong and Canada “have been more receptive to offerings,” he said.
At the same time, the U.S. exchanges generally command a higher share price. “You might be able to raise more money doing a U.S. offering than in these other markets,” Graul said.
Read more at SmallBizChicago…
November 27, 2011 By
Ann Meyer
A business’s value often lies with its intellectual property, as Google’s planned buy-out of Motorola Mobility suggests.
Google wanted Motorola Mobility’s 17,000 patents and was willing to pay $12.5 billion in the deal that was approved Friday by shareholders of the Libertyville-based mobile technology company, experts said. In general, 80 percent of a company’s market capital is in intangible assets, “and intellectual property is the largest single piece,” said James Malackowski, chief executive of Ocean Tomo, a Chicago firm that serves as an auction house for intellectual property.
With patents hotter than ever, the America Invents Act passed last month aims to put U.S. patent regulations on the same page as international rules, by using a first-to-file criterion for assigning patents instead of the first-to-invent standard used historically in the United States.
With the new law, which takes effect in March 2013, the pressure will be greater than ever to be the first to file a patent, said Robert Gerstein, partner at Marshall, Gerstein & Borun in Chicago. “With first-to-file, there’s a premium placed on getting your application in,” Gerstein said.
Traditionally, the U.S. Patent & Trademark Office’s first-to-invent criterion considered who came up with the idea first instead of who filed for the patent first. But the old system led to complicated, expensive legal proceedings when more than one company claimed to be the original inventor. Often, a small business couldn’t afford the legal fees to defend itself. By going to first-to-file, the government hopes to eliminate some of the contests that have been clogging the system, Gerstein said.
Reduced fees for small businesses
What’s more, a provision in the law reduces the filing fees by 75 percent for small businesses. Entrepreneurs also might be able to save on legal fees by using reduced-fee services through universities, small business centers or online companies, such as Rocket Lawyer, which offers access to on-call attorneys who discount their services by 40 percent.
But it’s important to seek legal advice early, says Chicago entrepreneur Richard O’Brien, chief executive of Payment Pathways Inc., who has filed for four patents. “If you have a good idea, you need to stop talking about it and go file your patents,” he says.
O’Brien understands the advantage the new rules provide to entrepreneurs who act quickly. “First-to-file does give me a lot more defensive capability,” he said. But even under the new law, large corporations will still have the power to file a dispute, he said.
O’Brien filed his first patent in 2004, shortly after the company was founded and years before it went to market with its Greenlist directory, designed to make electronic payments safe. He received that patent in 2010 and another one, which Payment Pathways had filed for in November 2006, was awarded this past May, he said.
Keeping attorneys in business
In what O’Brien calls “a very frothy market in intellectual property,” he expects to see far more patents filed. “It’s a lawyer-get-rich law,” he says, because ultimately it will generate more work for attorneys.
Most agree more patents are likely to be filed because of the new rules. In fact, 80 percent of attorneys survey by Rocket Lawyer said they think there will be more provisional patent applications in the future.
Many of the patented ideas might not
support a new business, but they could draw royalties for inventors willing to license the technology, said Charley Moore, the founder and chairman of Rocket Lawyer.
In the meantime, consumers and business owners acknowledged being confused by the rule change.
Two-thirds of respondents to a Rocket Lawyer survey of non-attorneys said they were not aware of the new law. In addition, just one-third said they understood the difference between first-to-file and first-to-invent.
Read more at SmallBizChicago…
November 7, 2011 By
Ann Meyer
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At Nick's Pizza & Pub, employees are privy to the company's financial results. Photo by Taylor Smith courtesy of Nick's Pizza & Pub.
Like a big family, everyone who works at Nick Sarillo’s restaurant knows everything about the place, including how much Sarillo pays himself in salary, how much the cheese costs, how customers rate the service and even how many napkins on a table is too many.
They’ve also learned the values Sarillo’s Italian restaurateur parents taught him: Treat your customers like guests in your home. Give them the same quality and service you would deliver if they were your own family.
The mix of contemporary open-book management and old-world service has proven to be a winning formula for the $3.7 million Nick’s Pizza & Pub in Crystal Lake. And with the opening last month in Elgin of a second Nick’s Pizza location, Sarillo is out to prove his success is repeatable. Building one thriving restaurant is hard enough for most entrepreneurs, but learning how to take the business to the next level is a task business owners in all industries struggle with, experts say.
Opening the books
“Most people don’t manage proactively. They’re reacting and putting out fires,” said Rudy Miick, president of Miick & Associates, a Boulder, Co.-consulting firm. But open-book management changes that because it encourages planning based on hard data. Using open book, companies share financial results regularly with employees and encourage workers to take an active role in boosting that performance.
“It’s one of the things we really promote,” said Mary Corbitt Clark, then executive director of Winning Workplaces, an Evanston-based non-profit that strives to help small businesses improve their workplaces.
“Being entrusted with the information conveys a kind of respect and sharing that employees take very seriously. It’s precisely what they want,” Clark said. The concept of empowering staff is a growing trend among restaurants, said Hudson Riehle, a senior vice president at the National Restaurant Association in Washington, D.C. It often involves a pay-for-performance component and can be effective at boosting profitability and employee retention.
While Sarillo credits consultant Miick for suggesting the open- book approach, the restaurant’s culture is all Sarillo’s. He grew up in his family’s restaurant business and learned firsthand the value of hard work and customer service.
“By the time I got out of high school, I thought, ‘I’ve had enough of pizza,’” he said. He turned to building custom homes for a while, but when he couldn’t find an appealing family restaurant in Crystal Lake, he decided to start his own. He opened Nick’s Pizza & Pub in 1995, with his family’s pizza recipe and a rustic atmosphere. He built the restaurant with barn beams, then decorated it with antiques, mounted animal heads and put peanut shells on the floor.
Old-fashioned work ethic
In the first seven years, the restaurant grew to more than $2 million in annual sales. But with employee turnover hovering at more than 100 percent annually, Sarillo knew something needed to change before he could expand further. “I was a pretty driven, hard worker coming from that old Italian neighborhood where we couldn’t understand if everybody didn’t come to work and bust their butt for you,” he said.
When he came to realize other people “have a different understanding from their upbringing of what hard work is,” he learned to motivate employees by telling them clearly what his expectations were and promising higher wages when performance improved.
Sarillo’s instincts were better than most, Miick said. “His personal coaching was pretty
darn effective,” he said. Now, with the help of Miick, Sarillo has turned his business principles into a codified system that he can implement at multiple locations. He plans to add three new locations in the next three years, he said.
With the Elgin eatery projected to bring in about $5 million in sales its first year, the company could hit $9 million in sales by the end of the year, Sarillo said. What’s more, the Crystal Lake restaurant has achieved a profit margin of about 18 percent, nearly double its level three years ago and well above the industry average, Miick said. And annual employee turnover has dropped to less than 30 percent.
Read more at SmallBizChicago…
October 18, 2011 By
Ann Meyer
257.jpg” alt=”" width=”300″ height=”257″ />– Chicago photographer Jimmy Fishbein hasn’t forgotten the terrorist attacks that struck New York 10 years ago, where his photography studio was located at the time.
Fishbein lost just about everything, including his portfolio, when his studio next to the World Trade Center got caught in the disaster of Sept. 11.
“I basically had to start over, because I had nothing to show,” said Fishbein, who grew up in Deerfield and moved back to Chicago in 2003 to start fresh.
One small consolation: He had been conscientious enough to back up his financial records on an external hard drive that he kept in a sealed box. It survived the disaster, while his computers, photography equipment, furniture and other belongings did not.
The disaster reinforced a lesson small business owners often overlook: Take the time to safeguard what’s most important to your business. If disaster strikes, you’ll be glad you did.
Businesses also should put in place plans that include a system for business continuation and emergency communication in the event of a disaster.
“Don’t think that it can’t happen,” Fishbein said. Security experts and accountants have been giving that same advice for years. Yet planning for the worst is often the last thing on small business owners’ minds. Most are stretched thin, and record keeping and security issues often fall by the wayside.
Planning for the worst
While many companies added disaster preparedness plans after Sept. 11, some apparently have become lax since then, according to the Society for Human Resource Management‘s HR Magazine. About one-third of organizations recently surveyed by the society said they felt they were well prepared for potential threats and disasters. This minority sentiment emerged despite the fact that three-quarters of organizations said they had formal disaster preparedness plans in place, down from 85 percent in 2005 but up from 54 percent in 2001. SHRM reports that large corporations are more likely to have communication and business continuation plans in place than small businesses are.
In reflecting on the Sept. 11 attacks, Fishbein said the experience taught him to be appreciative of life, but he also became more vigilant in securing his images. Now working in Pilsen, the 38-year-old commercial and portrait photographer backs up everything he shoots on a daily basis using a computer program calledCarbon Copy Cloner. Each week, he swaps his hard drive at the studio with another at his home, so that he has a duplicate copy of everything.
While some companies rely on Internet-based storage using cloud computing, Fishbein likes being able to put his hands on the backups. “I like being in full control of my work and knowing it’s not going to be lost in the cloud,” Fishbein said.
While large corporations’ multiple locations serve as backup support, many small business owners think safeguarding their most important information means keeping a paper copy in the filing cabinet next to their computer, experts said.
If disaster strikes both, the business is out of luck. Record keeping is vital to the success of any company, said Roger Bierman, franchise regional manager at Fiducial. “There are two or three items a business owner wants to know: How much money did I make, where did the money go, and did I comply with all the stateand federal tax laws?” Bierman suggested.
What to keep
You’ll want records updated at least monthly to answer those questions. Bierman, a former small businessman who owned two Dunkin Donuts franchises and a service station, found using an expandable file and duplicate checks was the best way to keep track of important information back then.
Monthly financial reports are pertinent not only when making day-to-day business decisions, but
also when forming a long-term strategy, spotting problem areas or seeking funds from a bank or outside investors.
Comprehensive records also are critical if the Internal Revenue Service requests more information or audits your company. At a minimum, keep a monthly summary of your business transactions, with detailed information kept in an accounting journal or ledger. Your books should indicate gross income, deductions and credits, according to the Internal Revenue Service.
You’ll need to keep tax records for a minimum of three years, and often longer. Keep invoices, purchase orders and cancelled checks at least seven years, experts said. And be sure to jot a note on receipts to identify what the expense was for. Several years from now, you might not remember.
Keep transaction records for real estate and other assets indefinitely, as well as important business documentation such as incorporation papers. Staff records should be maintained for at least four years and employee benefit plan information should be held for a minimum of six.
Staying on top of financial records
Fortunately, the same records that will help you gauge your business progress, set new goals and forecast the future also will come in handy if you’re audited. The IRS usually has three years to audit a return, though that statute of limitations can be extended. For records that would help you through an audit, the IRS recommends keeping your records for seven years. In cases of fraud, however, the IRS can go back indefinitely. Besides the actual numbers, keep evidence that will support a deduction, such as a receipt, canceled check or restaurant bill.
Still, in the event of a national disaster, the IRS has been known to be more flexible. “When I spoke to the IRS about my situation, they were very understanding,” recalled Fishbein, who filed an extension for tax year 2001 because he couldn’t get to his records before the deadline.
The key is stay on top of your finances. Don’t expect your shoebox of receipts to survive a flood, fire or national disaster.
Read more at SmallBizChicago…
October 16, 2011 By
Ann Meyer
a>As a marketing consultant to the destination travel industry for more than a decade, Robin Malpass watched as Midwest tourism bureaus and resorts struggled to attract attention in a tough economy.
She knew the Midwest was often overlooked as a destination for travelers. “People often dismiss it,” Malpass says. “People think you have to get on a plane to see anything fun or interesting, but that’s not true.”
To address both challenges, Malpass launched BestMidwestTravel.com a year ago. The site offers trip ideas, information on special deals and events as well as related blog and social media content. To make it work financially, Malpass pitched the tourism bureaus on the concept of collaborating by becoming sponsors of the site. In return, besides mentions on the website, the company would pool the funds the sponsors provided and buy ad space in media outlets that they couldn’t afford on their own. The sponsors also would get access to the site’s permission-based e-mail list.
Economy’s downshift a double whammy
Malpass saw a need for a collaborative approach partly because the downshift in the economy has meant less hotel and travel taxes are being collected and disbursed to tourism bureaus at the same time that consumers are looking for more affordable destinations closer to home. By helping the agencies spread the word about local attractions, the site also would be helping consumers with their travel planning.
“We’re constantly trying to get the name out there,” says Robert Navarro, executive director of the Heritage Corridor Convention & Visitors Bureau in Romeoville, which is a sponsor of BestMidwestTravel.com. “Any time we can reach the visitor through the back door…that’s making a connection for us.” Few travelers search for the Heritage Corridor bureau by name because they don’t know it exists, Navarro says. By being part of a cooperative effort, the organization can gain awareness at a reasonable cost, he says.
Users to the site often aren’t aware that some of the content is provided by travel bureaus because the site doesn’t disclose the source of its content. Aside from a few ads, such as one promoting VisitGalena.org on the home page, the site doesn’t announce its sponsors, so users don’t know which content has been supplied by a tourism agency and which is written independently. “Most of the content is client-supplied,” Malpass says.
Some say that raises an ethical question. “Any time you have people providing information, it should be declared,” says Jacqui Banaszynski, Knight Chair professor at the Missouri School of Journalism at the University of Missouri in Columbia, Mo. “I’m fine with the tourism bureau providing information. I just want to know where it came from.”
The issue isn’t new. As the number of bloggers attempting to make a living by accepting payment or freebies from companies they wrote about accelerated, the Federal Trade Commission in October 2009, clarified therules on advertising disclosure to include blogs. At that time, the FTC referred to “the long standing principle that `material connections’ (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed.”
Providing full disclosure about the source of online content allows the reader to make their own decision about the information, Banaszynski says. “I applaud these people who are trying to make a living, but I want some transparency about where their information came from,” she says.
While readers of a travel guide published by a single state or regional tourism bureau know as soon as they pick it up that it is promotional in nature, websites or publications put out by independents generally are assumed to be informational. “If a journalism is presenting themselves as a credible site, then I’m counting on them to vet that information or at least tell me where it comes from,” Banaszynski says.
Full disclosure
Malpass says she wasn’t aware of the rules on disclosure. She simply wanted to give the tourism bureaus more bang for their marketing dollar than they could accomplish on their own. “I was really looking for a way to help my clients reach more of the market and with less money,” Malpass says. After a phone call with a reporter to verify that some content on the side was supplied by sponsors without disclosure, Malpass said she intended to publish a notice on the home page disclosing that fact.
Besides funding the site, Malpass says, sponsor revenue goes toward cooperative marketing programs, including social media and advertising in news media in major markets. The Paducah, Ky., Convention & Visitors Bureau, which paid $5,000 to be a sponsor from May 15 to Nov. 15, says BestMidwestTravel has made Paducah a featured destination and offered to publish three travel itineraries on the area as well as its events. It also has re-tweeted the bureau’s Twitter communications for more awareness, says Rosemarie Steele, marketing director at the bureau. “We’re seeing people coming to our website as a result of it,” Steele says.
Levels of sponsorship
BestMidwestTravel.com tried offering two levels of sponsorship at $5,000 and $15,000 for the summer season, but no one bought the more expensive offering this year, Malpass says. At the $5,000 level, sponsors are granted access to the site to post events and travel deals using their own copy and photographs.
Content from or about sponsors also might be mentioned in blog posts and
an eNewsletter sent to users who sign up for it. Malpass also shares e-mail addresses of those users ho have agreed to receive information from the site’s partners. In June, that amounted to a list of 1,100 addresses. At the higher level, sponsors would have received “more real estate in all of our P.R.,” Malpass says, including blog posts, Facebook posts, Tweets, banner ads on the website and mentions in the site’s eNewsletter.
Read more at SmallBizChicago…
September 3, 2011 By
Ann Meyer
Lindsay Saewitz, founder of CitySwarm, has cut costs by taking a do-it-yourself approach. Photo courtesy of CitySwarm
Lindsay Saewitz might not fit the stereotype of a risk-taking entrepreneur, yet she chucked a job hunt in favor of launchingCitySwarm last fall.
Her new events business aims to provide engaging experiences to young professionals in their 20s and 30s, Saewitz said.
She came up with the business idea after organizing events that attracted 100 or more young alumni of the University of Michigan, her alma mater. “People are looking for things to do,” she said.
A do-it-yourself approach
So Saewitz put aside a job search that wasn’t leading to an events position and started CitySwarm with about $3,000 in savings, including $2,000 for business insurance. She cut start-up costs by taking
a do-it-yourself approach.
Building a business through so-called bootstrapping, where entrepreneurs use their own funds and look for ways to save money while building sales, is a tried-and-true approach. Some business owners use it because they can’t get capital from other sources, while others appreciate the freedom it provides them.
A San Francisco startup profiled in The New York Times has launched three commercial products since April 2010 without taking outside capital because the founders wanted the ability to experiment. While the company, called Irrational Design, acknowledges its marketing budget is limited, it is comfortable with a longer timeframe to profitability, co-founder Jared Cosulich told the Times.
Sustained growth through sales
In Skokie, family owned Jelmar, the maker of CLR and Tarn-X cleaning products, took its first loan recently, after growing slowly but steadily for 60 years, said Alison Gutterman, president. The company prided itself on having no debt, but will use the financing to expand into corporate sales, Gutterman said.
Jelmar, which has annual sales of about $50 million, has kept its headcount low, by outsourcing product manufacturing to other companies. The result has been a profitable business that is a leader in its niche, Gutterman said.
At a time when loans and other capital are difficult to secure, many entrepreneurs have no
choice but to grow slowly.
Low-cost solutions
Here’s how Saewitz launched her business for little more than pocket change:
- Saewitz built her website, http://www.cityswarmchicago.com/, using the free service, Weebly.com, though she opted to spend $30 a year to remove the Weebly footer, she said.
- She made her own logo using drawing tools on Microsoft’s PowerPoint software, then saving her work as a JPEG file, she said.
- She obtained low-cost legal advice through a business law clinic run by Loyola University’s School of Law, where a professor and third-year student helped her establish her business as a limited liability company and draft terms of service and a privacy policy for her site.
- She uses a third-party provider, Eventbrite, to process event responses and payments. The provider required no upfront fee, though it takes a percentage of each transaction, Saewitz said.
- She does her own social media outreach, using Facebook, Twitter and a blog to announce events.
- She relies on public relations to get events listed in Metromix and other publications. Saewitz said she has scoured the Internet for other companies’ press releases and media kits and tapped her network of friends and colleagues to help spread the word. According to her own research, 40 percent of those who came to a recent event learned of it through an item in Metromix.
- She uses MailChimp to send out a weekly newsletter to her contacts of 900 or so.
- She networks regularly in person.
To attract customers, Saewitz is keeping prices low. One of her first events was an art class at a Gold Coast art studio generally not open to the public. For $35, guests received two hours of drawing instruction with a live model, supplies and a $10 voucher for an open studio session. Saewitz said 17 people attended.
Spreading the word
Saewitz hopes to offer eight events a month, but currently is offering about four per month until she generates more volume, she said. “My immediate challenge is getting the word out because I don’t have money to spend on advertising,” she said.
Saewitz plans to create additional revenue streams, but is taking it one step at a time. “I’m kind of just going for it,” she said. “I decided there’s no way for me to know how it’s going to turn out unless I do it.”
Over time, she is considering expanding to other demographic groups. In the future, she said, “My biggest challenge is going to be taking it to the next level.”
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