Alternative Funding for Entrepreneurs
Big job gains in April. Just a day after the Greek financial crisis sent stock markets into a 16-minute frenzy, the Labor Department announced that the economy added more jobs in April than any month since March 2006. The figure, 290,000, was much higher than economists expected and, according to The Wall Street Journal, signals that companies may be gaining confidence in the economic recovery. It's not all good news for the economy, though; the unemployment rate actually went up in April, as people who had given up looking for work got back into the job market.
A new source of funding for entrepreneurs: the corporation. At peHUB, Allegis Capital founder Bob Ackerman makes the case that start-ups scouring the capital markets might want to seek out corporate collaborators instead, particularly as investors within those companies are once again turning their focus toward start-ups. The benefits are clear: Start-ups can leverage a corporation's brand identity, distribution channels, and relationships with buyers. And corporations can benefit from a scrappy start-up's culture of innovation. But Ackerman, who has brokered deals between 50 corporations and his portfolio start-ups over the years, warns entrepreneurs to keep their eyes open. Where VCs fixate on return on equity, corporations zero in on self-interested strategic benefits, in most cases to fill a product or technology void or to nail down a call option on innovation that might prove useful later. But the consequence of a sinking resources into a partnership are much worse for the start-up. In terms of giving up an equity stake, beware of requests for rights of "first refusal" or "last offer," which Ackerman says "can make it difficult to bring another interested acquirer to the party at the appropriate time."
10 days worth of clothes in a carry-on? It seems like checked bags won't fly for free on most airlines these days, so if you're a business owner who travels frequently, it makes sense to try to fit everything you need into a carry-on bag. The New York Times interviewed a few airline industry professionals to figure how to pack efficiently, with a slideshow revealing how one flight attendant fits everything she'll need for a 10-day trip into a standard carry-on suitcase in six steps. One key packing technique is tightly rolling up your clothes, which takes up less room than simply folding them.
Three ways to woo your local bank. So just how tight is the small-business lending market? Yesterday, in a speech in Chicago, Fed Chairman Ben Bernanke summed up the current state of the credit market by saying, "Right now small business conditions are much tighter than anytime in recent memory." While the big banks are making efforts to improve their small-business lending, many businesses are finding community banks more receptive to their needs. Community banks, however, rely very much on relationships. So before you make your pitch to your local banker, the Wall Street Journal has some tips on smart ways to develop a working relationship with your community lender. Communication is key, so businesses need to be forthcoming with financial data and should plan on giving their bank biweekly status reports. For some more tips, check out our article on how to get chummy with your banker.
Netflix co-founder joins board of textbook renter. The textbook rental market is heating up, with newcomers such as our "Coolest College Start-up" nominee MyBookBorrow.com sprouting up all over. Now, VC-backed BookRenter has upped the ante, adding Netflix co-founder Marc Randolph to its board, TechCrunch reports. BookRenter, founded in 2008, has already raised $6 million in venture capital.
Build a business, not a client list. There's an appealing logic to aspiring solopreneurs trying to build their list of clients at the cost of everything else. More clients means more money and more positive testimonials, so ideally more growth. But ultimately, you may become chained to your clients and their needs and the flexibility you had craved from working for yourself could fly out the window. The 99 Percent has a post on how to stop thinking like a freelancer and start thinking like an entrepreneur. Some suggested ways to build assets include creating online properties that will grow in value, turn your knowledge or skills into salable physical or digital items, or build a personal brand. For more on that last approach, consult our resident solopreneur Marla Tabaka.
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