Friday, August 26, 2011

Five Ways to Build Business Credit
Kelly K. SporsBY Kelly K. Spors | Yesterday|

… [Getting] credit is much easier when you don't need it. …Here are five options to get started.

1. Mind your personal credit rating. The biggest factor in many banks' decision to initially lend businesses money is the owners' personal credit ratings and they typically look for a personal credit score of at least the mid-600s, says Ami Kassar, co-founder and chief executive of MultiFunding LLC, a Broad Axe, Pa.-based company that helps businesses connect with lenders. … Moreover, lenders will also often check the personal credit of any investor or business partner with more than a 20% stake in the business, Kassar says.

Logo for The Home Depot. Category:Brands of th...Image via Wikipedia2. Apply for credit before you need it. To begin building a credit history for your business, apply for at least some sort of credit soon after starting up, Kassar says. A small business will often have to establish itself for two years before a bank feels comfortable offering a sizable credit line. … Some major retailers that supply to small businesses, such as OfficeMax or Home Depot, offer commercial credit accounts that can help build a credit history for your business.

3. Grow your credit and use it. Many businesses with enviable credit histories applied early for business credit cards and credit lines and used them as early as possible, says Wayne Sanford, owner of New Start Financial Corp., a credit consultancy in Allen, Texas. … Also, check to see if you have a profile with Dun & Bradstreet, a business data and credit reporting agency, suggests Gwendolyn Wright, a San Francisco business consultant and former first vice president of the Bank of San Francisco, a community bank. …

4. Forge relationships with more than one lender. Banks can change lending policies on a moment's notice and cut your credit limit overnight, so it can help to not have all your financial eggs in one basket, Sanford adds. …

5. Consider alternatives. Remember that traditional banks are not your only shot at credit, Wright says. … Other resources include asset-based lenders, which focus more on collateral rather than credit worthiness, factoring -- which lets you borrow against your accounts receivables -- and peer-to-peer lending and crowdfunding sites, such as and …
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Wednesday, August 24, 2011

Cautious optimism: Startups will come out ahead

August 23, 2011 | Adeo Ressi

It’s hard to not get a sinking feeling in my stomach when I watch the stock market drop and hear smart people talk about a 25 percent correction. …

However, if you look closely, there is a new reality today. There are reasons to be cautiously optimistic.

The Start-up StageImage via WikipediaFirst, let’s start by looking at the modern angel investor. … [Many] of today’s angels work in startups and have pulled money off the table through a sale, IPO or, more likely, the secondary markets. They are skeptical of public markets after the debacles of 2000 and 2008. Therefore, while a 16 percent decline in the public markets may drop the aggregate amount of angel investments, modern angels will continue to invest in what they know: startups.

Diagram of venture capital fund structure for ...Image via WikipediaSecond, let’s look at the limited partners (investors in venture capital funds). Long before this correction, many of them had already fled the venture capital asset class, and they are not coming back. … Smarter VCs have adjusted by tapping sovereign wealth funds and other alternative capital sources, including the wealth of the partners themselves. …

Third, the VCs themselves have already been doing fewer and fewer deals since the end of 2008. … Entrepreneurs have already adjusted to a world where venture capital is a scarce source of capital (AngelList, for example), so a change in deal volume should not significantly change startup financing.

Finally, the mergers and acquisitions market is better positioned than it has been in the past. Large corporations are sitting on enormous cash reserves, and it is only a matter of time before we see a greater number of acquisitions. The thousands of angel-backed startups being launched each year represent attractive acquisition targets. …

Even if the correction continues and startup financing shrinks, we’re not facing a post-party “sober-up” stage similar what happened to 2000 and 2008. The reality is that creating meaningful and enduring technology companies is not a zero sum game. In a world of nearly seven billion people with 30 percent internet penetration and nearly two thirds of the global population using cell phones, there is room for thousands of new technology companies each year. And, if everything does go to hell again, the true entrepreneurs make their own luck.

I for one maintain a healthy dose of cautious optimism: Startups will come out ahead.
Image representing Founder Institute as depict...
Image via CrunchBase
photo of Adeo Ressi, Founder's Institute
Adeo Ressi is the founder of the Founder Institute, a global network of startups and mentors that launches hundreds of technology companies per year across four continents. Applications are now open in over 10 cities worldwide. Follow the Founder Institute on Twitter at @founding.
Adeo will also be one of the “sages” appearing onstage at DEMO Fall 2011, a conference co-produced by VentureBeat. It’s happening in Silicon Valley Sept. 12-14.Register Today and take advantage of our special VentureBeat Partner rate of $995.00.
[Image via Olena T./Shutterstock]
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Tuesday, August 23, 2011

How to Prevent Self-Inflicted Disasters

strategy+business magazine

All too often, companies unintentionally create their own worst crises. With a little awareness of your organizational DNA, you can avoid that fate — and the headlines that go with it.

by Eric Kronenberg

LabuĆ„ Cygnus atratus II pri hoteli Hubert v Ge...Image via WikipediaDuring the last few years, a number of well-publicized “black swan” events — highly destructive calamities that seemingly come from out of nowhere, and that are diverse enough to include oil rig explosions, automobile recalls, major production delays, financial meltdowns, and at least one phone-tapping scandal — have had immense negative effects on the companies involved. … After the event, the leaders of the company often have to admit: “We did it to ourselves.”…

Self-inflicted black swans have occurred in many industries in widely varying circumstances, but always with one common factor. …Typically, a number of people within the company knew about the situation and saw the potential downside in advance; if this knowledge had been acted upon with diligence and in a timely manner, the problem could have been prevented. Often, these companies had formal procedures in place designed to avoid these precise risks, but the procedures were routinely ignored or bypassed by employees.
How could companies that knew better fall into these traps? Because the perception of risk diminishes over time. It’s not unlike the dangerous habit of texting while driving. … Companies that get into similar habits — overlooking or sidestepping their risk management practices — are similarly primed for a self-inflicted black swan. …
An Introduction to Organizational DNA

…The organizational DNA framework is a vehicle for understanding the formal and informal elements that drive and constrain day-to-day behavior in your company. (See Exhibit.) This framework, introduced by Booz & Company in the early 2000s, … Like molecular DNA, organizational DNA has four “bases”: components of activity that fit together like building blocks. They determine how an organization executes — what changes it can make and what actions its members can take. The four bases are:
  • Decision rights and norms. The rules and practices that govern how actions in an organization are shaped and focused.
  • Motivators and commitment. The values and principles that drive employee behavior and engagement.
  • Information flow and mindsets. The patterns of thinking and communication that inform what people do in an organization.
  • Organizational structure and networks. The links and connections that guide how people work with one another throughout the hierarchy.
When put together, the formal sides of each organizational DNA base make up the official part of the organization’s operating model: …These are the documented, official standards for company operations across all levels.

… The informal sides of each base have an equally strong impact. These include the norms that people keep in mind about what matters and who is important, the commitments that individuals make about why they care, the mindsets that people (and groups) adopt that shape their perceptions of their work, and the networks through which people in a company develop relationships.

Companies with self-inflicted crises nearly always have formal elements in place that are intended to help the organization avoid accidents and problems: reports, explicit procedures, and watchdog and prevention measures that prevent catastrophes when nominally followed. But the informal elements determine the way that policy is implemented. In many cases these unwritten rules, values, standards, and workplace routines treat these formal procedures as bureaucratic overkill. … Like the driver who texts in traffic, the company gets away with noncompliance for a long time, while the effectiveness of its procedures gradually erodes. The crisis doesn’t occur until a long time after the noncompliance began.
The Key to Capability
… Here are four starting points, each based on one of the building blocks of organizational DNA:

1. Clarify who is responsible for which decisions, taking into account the influence that informal leaders already have (decision rights and norms). The decision rights for large, unrealized risks are probably unclear, because by their nature, these risks involve long-term concerns with an uncertain payoff. …

To establish a more appropriate group of decision rights, you may need to set up a cross-organizational team to manage information on significant risks. Make sure that some members of this team have the requisite decision rights to ensure that practices are put in place and that people comply. Other members may be influential people who have no formal role in preventing risk, but who are personally committed to the idea and well connected informally.

Formal decision rights should be backed up by informal discussions to establish general agreements. For example, what if a contractor sees a practice that seems dangerous? Whom should he or she inform? What if that person doesn’t act on it? Who should then step in? Once these informal general agreements have been reached, design the formal decision rights to complement those agreements.

2. Align incentives and other motivators to promote awareness of potential risks and their prevention (motivators and commitment). Because incentives are rarely designed with self-inflicted black swans in mind, they may produce conflicting priorities. The CEO of a financial institution may be charged by the board with looking out for long-term health, but individual traders are compensated on the short-term revenues they generate. Or a manufacturing company may have a safety-conscious culture alongside a high-pressure production schedule; managers who can’t keep up are seen as letting everyone else down.
It’s not easy to resolve these tensions, and people often rely on both formal and informal support. If the company has established rules about the priorities and rewards involved in anticipating risk, and if most people are regularly exposed to informal conversations about the dangers of cutting corners, they are more likely to avoid peril. It also helps when people involved in a complex situation can meet openly to hash out the issues and think together about ways to resolve the tension between being fast and being safe.

You can often find evidence of poorly aligned incentives by talking to managers in the field. Have they “normalized” their view of problems, discounting the idea that catastrophes could happen and letting excessive risk become business as usual? …

To redesign motivators and commitments may require an explicit review of your organization’s gaps and inconsistencies. How closely aligned are the promotion and bonus structures with the behaviors you want to promote? Do employees care about short-term gain only, or do they have long-term growth and the preservation of their jobs in mind? …

3. Create formal and informal communication channels to raise awareness of current conditions on the ground (information flow and mindsets). In preventing self-inflicted black swans, one central challenge is ensuring that senior decision makers can get an accurate, timely, and independent overview of “ground truth”: the realities of project progress and potential problems. … In most companies, executives receive messages selectively filtered and tailored to what people believe they want to hear. …

…These challenges can be overcome, but only by establishing open communication channels — both formal and informal — through which senior leaders can interact with lower-level employees to get their perspective. Regular review meetings will not suffice; it takes regular interaction, ideally in casual face-to-face settings, to give senior management an accurate picture of what is happening.

This kind of conversation also gives lower-level personnel a clear understanding of management goals — and improves their judgment about which types of problems are worth reporting, and how to report them. … The point in all this is to broaden the flow of information to and from senior management, as well as around the organization generally.

4. Set up better reporting relationships and prevention guidelines, using work-arounds as diagnostics (organizational structure and networks). When under pressure to produce, employees often develop work-arounds, shortcuts that allow them to sidestep the formal checks and balances of risk prevention. After a work-around has been in place for a while, it becomes second nature; people almost forget that the old rules exist. …

The presence of a work-around can provide a valuable clue that some process is unclear or cumbersome and needs to be either enforced or changed. … [Talk] to people directly about the reasons that work-arounds have developed, and institute new policies that address the underlying issues.

… If you find yourself continually defensive about queries from the public or from regulators, that’s a clue that you have a deeper internal issue to explore. …
An Ethic of Integrated Action
Very early depiction of Cygnus atratus, given ...Image via WikipediaIn companies primed for a self-inflicted black swan, some or all of these problems may exist side by side. …

An organizational DNA analysis doesn’t prevent any particular crisis; instead, it gives you a better capability for identifying whether your organization is vulnerable to all such crises. This type of analysis is equally useful for other problems that require organizational change: building a high-performance organization, moving into new markets, or adopting a more coherent strategy. You can’t immediately change the way your organization behaves by simple fiat. But with a close look at the core elements of your organizational DNA, you can recognize the design steps that can lead to better behavior very soon.

Author Profile:

  • Eric Kronenberg is a partner with Booz & Company in Florham Park, N.J. He specializes in developing capabilities for program and project management, engineering and design, and manufacturing and construction in multiple industries, including aerospace and defense, energy, and transportation.
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Wednesday, August 17, 2011

22 Things to Do During That Boring Conference Call

By Laura Vanderkam | August 15, 2011

Photo courtesy flickr user, Jayegirl99

A phone made specifically for conference call.Image via WikipediaOn my “Crock Pot” post last week, I suggested ordering groceries online during boring conference calls. A few readers asked for a list of other things you can do during boring conference calls to pass the minutes and hours when you only need to pay a little bit of attention (like if someone says your name).

… I have mixed feelings about writing such a post. Because fundamentally, if you repeatedly experience conference calls that require so little attention that you can multi-task, then why are you on them? The most productive use of your time and energy is to figure out a way to kill such calls, or pare down the invite list to only those folks who need to be there. You can also ask to shorten the time frame. Negotiate down to half an hour from an hour, and watch your life improve.

Image representing Facebook as depicted in Cru...Image via CrunchBase… If you’re not going to be able to change your glut of conference calls without making choices you don’t wish to make, then here are some other ways to pass the time in a mildly productive fashion without checking Facebook (not that there’s anything wrong with that):

1. Read a novel in bite size chunks at

2. Write a love letter to your spouse

3. Look at photos of major art works at

4. Schedule a mole check or other health maintenance appointment you’ve been avoiding at

5. Knit

6. Doodle

Image representing Shutterfly as depicted in C...Image via CrunchBase7. Make a photo book at Shutterfly or another major photo site

8. Cross off a major financial housekeeping task (like setting up automatic transfers from checking to savings)

9. Pace — it burns more calories than sitting there!

10. Do sit-ups or push-ups, or at least contract your abs

11. Challenge your notions of the universe by reading a political blog that represents views that are the polar
opposite of yours

12. Read the website of a daily newspaper in a random small town you’ve never visited

13. Watch a video from the Khan Academy on a math or science topic that’s long confused you (as long as you’ve got your phone call on mute)

U.S. Declaration of Independence ratified by t...Image via Wikipedia14. Brush up on history by reading a document you haven’t looked at since civics class (do you know what’s in the Declaration of Independence?)

15. Read poetry at the Poetry Foundation’s website

16. Send an email to an old friend asking how he’s doing

17. Clean your desk

18. Plan how you can knock an item off your List of 100 Dreams this weekend

19. Send a thank you note to someone who’s done something good for the world. Not necessarily someone famous; an under-appreciated volunteer at your church would be a good start.

20. Explore a subculture that’s completely foreign to you. I spent some time earlier this spring reading posts on chicken-raising forums. Did you know a rooster was called a “roo”?

21. Via, make sure you never run out of toilet paper again

22. Get started on your Christmas shopping, or pick out items and cards for birthdays and schedule deliveries in advance

How do you pass the time during long conference calls? Help me get to at least 25!
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Tuesday, August 9, 2011

How Cities Lure Startups

Economic developers from Irvine, Calif., and San Jose, Calif., describe the strategies they're using to persuade entrepreneurs to set up shop or expand

By Karen E. Klein

Location of San Jose within Santa Clara County...Image via WikipediaHow do cities successfully engineer conditions to attract high-potential small companies that will create new jobs in the future? Two California cities … Irvine … and San Jose … have established successful public-private partnerships and programs aimed at encouraging businesses. Here are some of their strategies that others could apply in their own regions.

Maximize resources. The city of Irvine has a University of California campus within its boundaries. … "We draw on the intellectual horsepower of professors, interns, and students from UCI. It lends us a more educated workforce and higher standards for our local schools," says Christopher Lynch, vice-president for business and economic development at the Irvine Chamber of Commerce. …

Focus on nurturing locals. In San Jose, 39 percent of job growth comes from first-year startups, says Jeff Ruster, deputy director of the city’s Office of Economic Development. … In the past, startup companies that grow exponentially have located satellite facilities out of the state, where costs are lower, Ruster says. "Our value proposition is to keep their headquarters and their highly skilled job here," he says.

Community investment. Both cities make education and infrastructure a high priority, arguing that better living conditions attract ambitious, entrepreneurial residents. … That means long-term investment, much of it coming from local and state tax revenue, some in the form of school and construction bonds. "The entire community must support the quality of life for everyone so that talented entrepreneurs, workers, and their families will want to live and work in the community," [Ruster] says.

Creative partnerships. Ruster works not only in the city’s economic development office; he also serves as executive director of Work2Future, a workforce investment board that serves the larger Santa Clara County. … Although it is unusual to have one person head both agencies, "our vision was that we shouldn’t look at economic development and the workforce as two separate entities. There has been a bottleneck for corporate growth here because of the problem of finding talent. We felt the workforce investment board could and should play a role in [fixing] that." Because they come from the economic development side, job counselors are often better received by the unemployed: "People don’t see us walking up to their doorstep in a charity role."

Startup outreach. Even before they come looking for help, Lynch wants Irvine startups to get connected with local resources, training, and funding. … The Micropreneur Economic Development Program is something like an online training course, featuring seminars, webinars, and interviews with local business owners. Hands-on events are held regularly in conjunction with the TriTech Small Business Development Center, a Small Business Administration office that provides free consulting and workshops to fast-growth tech companies.

Ruster also wants his staff knocking on the doors at new companies and helping them connect. To that end, San Jose has established a separate website,, that lays out services from 40 organizations aimed at startups, from help with government procurement opportunities, to commercial leasing, to a database of prescreened job applicants. …

Entrepreneurial mindset. In order to help entrepreneurs, cities and business groups must adopt an entrepreneurial mindset themselves. "… We help them develop their network, look for co-branding opportunities for them, help find management and employees at every skill level, and offer support from expedited permitting to helping them demonstrate proof of concept. Instead of just helping them with real estate, we take a holistic approach," says Ruster.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.
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Wednesday, August 3, 2011

Business Jargon Makes People Think You're Lying, Study Says

Logo for BNETImage via WikipediaBNET
by Jessica Stillman | July 1, 2011

(Images courtesy of Flickr user Dyanna, CC 2.0)
…From ‘blue sky thinking’ and ‘impactful’ to ‘personal brand’ business writing is notorious for its love of fuzzy and complicating terminology. Business jargon is a major office pet peeve (and topic of several heated BNET posts) and likely to annoy co-workers and customers, but is your use of the latest hot term also making you look like a liar?

Personality and Social Psychology BulletinImage via WikipediaYes, suggests new research in Personality and Social Psychology Bulletin covered on PsyBlog. The study is out of New York University and a Swiss university and shows that when you want to seem believable and trustworthy, concrete language is the way to go. For instance, take these two sentences:
  • Hamburg is the European record holder concerning the number of bridges.
  • In Hamburg, one can count the highest number of bridges in Europe.
These sentences mean entirely the same thing but when asked to rate their truthfulness, people judge the second more highly. Why? The simple, clear image of pointing at arches crossing bodies of water that it conjures up. As PsyBlog summarizes there are several reasons easy-to-picture language equals believable language:

  • Our minds process concrete statements more quickly, and we automatically associate quick and easy with true.
  • We can create mental pictures of concrete statements more easily. When something is easier to picture, it’s easier to recall, so seems more true.
  • Also, when something is more easily pictured it seems more plausible, so it’s more readily believed.
If you want to come across as a straight shooter, the study’s authors suggest, stick as much as possible to simple language that’s easy to visualize — concrete verbs like ‘write’ or ‘walk’ beat ambiguous ones like ‘benefit’ and ‘improve’ — and avoid the passive tense (for those of you with only a hazy recollection of those high school English classes, here’s a quick primer on the difference.)

Still struggling to strip the business jargon from your memos or website copy? Perhaps handy translator Unsuck It can help. It promises to turn corporate speak into non-annoying, standard English and is also not bad for a Friday chuckle.
Jessica Stillman
Jessica Stillman
Jessica is an alumna of the BNET editorial intern program, which taught her everything she knows about blogging. She now lives in London where she works as a freelance writer with interests in green business and tech, management, and marketing.
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