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The 4 Percent That Counts; Getting VCs' Attention
 

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Yelp conspiracy theories. Slate's Paul Smalera asked business owners to write-in if any of them felt pressured to pay to get--or keep--good reviews with the crowd-sourced online review site. Plenty of conspiracy theorists responded. But, Smalera writes, "none, to my mind, offered clear evidence of any sort of plot by Yelp to coerce business owners into paying Yelp to game its own system." Yelp may use high-pressure sales tactics, he says, but that's true of many B2B sites. When a business doesn't advertise, do positive ratings disappear? Smalera dismisses that charge for lack of evidence. Yelp deletes accurate reviews? True, but with its emphasis on "real people, real reviews" the site can't divulge its moderation standards, which sometimes delete perfectly fair reviews, or spammers and shills would know how to cheat the system, says Slate. Check out Kasey Wehrum's piece in our June issue about three business owners who decided when, and how, to respond to negative views on Yelp.

This means war. As the capital markets tighten and plastic increases in popularity, banks are ratcheting up credit card fees for small businesses, taking a toll on their bottom line. The New York Times reports that merchants are launching a new offensive on those fees, encouraged by a new consumer-protection law designed to protect buyers from excessive fees. According to the Times, retailers large and small--from Wal-Mart to mom-and-pop coffee shops--are compiling petitions and supporting legislation currently moving through Congress to oppose credit-card companies and banks in what the Times expects to be "a furious battle on Capitol Hill." One industry consultant says, "The target is painted bright red on the forehead of every credit card issuer. It is a brutal, brutal year."

Honing in on the 4 percent that counts. Advertising Age asks how it is possible to grow a business when "the only thing getting bigger is our federal deficit." (Apparently they haven't seen the Inc. 5000.) It's hard to avoid all the dismal data surrounding business right now--but according to AdAge, that's the last thing you should do. In order to expand, you'll have to access as much data as possible, says columnist Scott Morgan. By starting with existing customer data and prioritizing target groups, you might find that a core 4 percent of your customers are who really drive your business; that small margin is who you'll want to hone in on.

Six ways to get investors' attention. With growing distrust in stocks and real estate, more and more investors are turning to venture capital as a safer options to "break out of the malaise," reports the Wall Street Journal. But that doesn't mean entrepreneurs are benefiting from their new role as the safe bet or a surer happy exit. No surprise, but CEOs looking for funding need to be prepared to offer stronger business models and field tough questions. The Journal offers six tips to turn investors' heads, including doing some maturing until you have a finished--and meaningful--product or service and making sure your market is sizable. Speaking of VCs, peHUB calls this site the "Best. VC. Homepage. Ever." We say kudos to the Foundry Group for not letting careers in finance get in the way of their rock star dreams.

12 year old's start-up already acquiring. PlaySpan, the online micro-payment start-up by 12-year-old Arjun Mehta, is soon to launch two new marketplace storefronts, reports TechCrunch. Facebook and MySpace will be the locations, allowing users to purchase various virtual goods through their social networks. Mehta's entrepreneurial endeavour - actually run by co-founding father, Karl - recently acquired micro-transaction app developer Spare Change. That company had already powered micro-payments on the two most popular networks, as well as Bebo, processing close to $30 million in transactions this year. More than enough for Mehta's lunch money.

Time running out for giant small business lender. CIT Group, the faltering small- and midsize-business lender, said on Wednesday that "there is no appreciable likelihood" that the government will provide it with emergency funds, The Wall Street Journal reports this morning. Besides helping fund thousands of small businesses, CIT is also "a big player providing cash advances to clothing manufacturers and suppliers, and credit to retailers to pay off invoices." The Chicago Tribune notes that the two main trade groups for retailers and clothing manufacturers pressed government officials on Wednesday to step in. Seemingly to no avail. MarketWatch columnist David Weidner warns that without CIT, "small businesses in the U.S....would be suddenly caught in a financing crunch at a time when the nation needs small businesses to hire workers, fuel production and lead the economy out of recession."

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Last updated: Jul 16, 2009




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