Diving Into The Media

How valuable is press coverage, anyway? Plus, when investors say no.

 

Five years after founding my software company, I'm ready to take it to the next level. I have a solid partner list with companies like IBM and recently joined my local chamber of commerce. I would also like to get exposure in business magazines. Is this a smart move?
Lorenzo D. Phillips Jr.
RenWare, Centennial, Colo.

Well, this is certainly one way to get your name in print. Whether it happens again depends on what "taking your business to the next level" means. If you're going public, retaining an investment banker, or pursuing a venture capitalist, then press clippings of the non-perp-walk variety can lend you cachet. Similarly, portraits of a stimulating or humane workplace attract new employees, while plaudits for excellence motivate current ones.

Ink may also pique the interest of consumers, says Seth Goldman, whose organic iced-tea maker Honest Tea has been splashed across the pages of everything from Time to O, The Oprah Magazine. Corporate accounts are a tougher sell: The CIO of a major corporation isn't likely to turn up on your doorstep waving a few pages ripped from a trade journal and crying, "Gimme." Goldman recommends businesses selling to businesses spend less time wooing the weeklies and more time developing personal networks, attending Chamber shindigs, and such. "If you're just trying to get customers, it's unclear how the media will help," Goldman says. A final caveat: If a reporter does agree to write about your company, you can't control what she says. And in this era of corporate ignominy, there's no such thing as "no such thing as bad publicity."

I recently started a company that is forecast to generate $50 million in revenue and $25 million in profits in three years. I have had a fairly successful career in Fortune 100 companies, but seem to be getting nowhere with funding. What could I be doing wrong?
Jeffrey Fry
Videodisgo, Austin

Unfortunately, all that lovely revenue is in the bush: Investors like to see something in the hand before they shell out. Angels, as the name suggests, are more comfortable with faith. Start with angel networks in your area and concentrate on folks who have invested or worked in your industry. Matchmaking services, such as Santa Fe-based Gathering of Angels, will weigh in on your business plan and introduce you to likely backers. And remember that while everyone won't have a check, they will have opinions. Their insights are valuable, so solicit feedback about what prompted the naysayers to say nay.

You might also try putting your own money on the line. That worked for Vui Le, who founded a Houston-based cell phone software company called Vuico two months before September 11. "I couldn't raise a dime," he says. Finally, an angel said that if Le raised $100,000, he would match it and get friends to contribute as well. After doing the hat-in-hand thing with family and friends, he returned with the cash. Within three months, the angel and his partners had kicked in $500,000.

If after a couple dozen pitches the angels still aren't singing, the problem may be your business plan. Perhaps they're worried that your forecasts are too ambitious: You might consider tuning down those numbers. Partnering with a seasoned entrepreneur can also help inspire confidence in your valuation. Investors are more comfortable with green eyeshades than rose-colored glasses.

My nine-year-old safety-products business has met most of its original goals, and I'm struggling with where to go from here. Should I form a board?
Ken Barnhill
Safety Max, Albany, Ga.

Entrepreneurship is a powerful expression of individualism, but that doesn't mean you can't ask for help. What you want is a board of advisers: people with no money invested in your company or legal stake in running it, experienced businessfolk who can offer direction when you are lost and a sounding board when you are uncertain.

Advisory boards generally meet once a quarter and include top executives from major customers or allied industries, says Ralph Ward, publisher of the online newsletter Boardroom Insider. Contacting such eminences may be intimidating. On the other hand, "you've got nothing to lose," says Susanna Macaraeg, who created a board of advisers six months after founding consulting firm Smooth Engine in 2000. A few phone calls to top-flight executives she knew or admired yielded a five-member panel--made up of experts in finance, marketing, and law--that has introduced her to valuable contacts and helped craft sales pitches. "People are far more generous in sharing their experience than you think," she says.

It doesn't have to cost much, either. Ward suggests a stipend of $500 to $1,000 per meeting. All Macaraeg pays is the cost of an occasional working lunch. Then again, her company is in New York City, so $500 may not be far off the mark.

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