A Bill of Rights for Borrowers, Help for Startups, Avoiding Investment Scams and more

13 Things Entrepreneurs Need to Know

By Rieva Lesonsky

1. Small Business Borrowers’ Bill of Rights

So glad to see this. With the goal of protecting small businesses from predatory lending, a coalition of nonprofit and industry lenders, credit marketplaces, brokers, think tanks, and small business advocates launched the Small Business Borrowers’ Bill of Rights.

The Small Business Borrowers’ Bill of Rights was designed to foster greater transparency and accountability across the small business lending sector. It outlines six key rights the Responsible Business Lending Coalition believes all small business borrowers deserve:

1. The Right to Transparent Pricing and Terms, including a right to see an annualized interest rate and all fees
2. The Right to Non-Abusive Products, so that borrowers don’t get trapped in a vicious cycle of expensive re-borrowing
3. The Right to Responsible Underwriting, so that borrowers are not placed in loans they are unable to repay
4. The Right to Fair Treatment from Brokers, so that borrowers are not steered into the most expensive loans
5. The Right to Inclusive Credit Access, without discrimination
6. The Right to Fair Collection Practices, to prevent harassment and unfair treatment

At the launch event Karen Mills, formerly the head of the U.S. Small Business Administration, said, “Small business owners are seeing the number of alternative sources for financing their companies grow at an unprecedented rate, and while this is a good thing in terms of increasing access to capital, borrower protections have not caught up.”

John Arensmeyer, the CEO and founder of the Small Business Majority, an advocacy group says,  “Our goal is to ensure that the transformation going on in small business lending truly benefits America’s small businesses, including those that have been underserved. This means making sure the industry, which holds the promise to meet small businesses’ capital needs, is built on transparency and fairness, and puts the interests of small businesses at the center of the lending process.”

The effort to create a Bill of Rights for small business borrowers was spearheaded by Fundera, a leading online lending marketplace, (and a client). Fundera’s cofounder and CEO Jared Hecht says, “The Small Business Borrowers’ Bill of Rights lays out a series of common sense principles that will serve to always put the interests of small business owners first. We believe that in order to ensure the long term viability and growth of online lending the industry should align around a set of pro-consumer responsibilities. This is just step one of a long journey in our quest to bring transparency and accountability to small business lending.”

Any small business lender, broker, or marketplace can stand up for small businesses by attesting that they abide by all aspects of the Small Business Borrowers’ Bill of Rights on a form signed by their CEO.  You can read the entire Bill of Rights, find the form and the names of organizations at Responsible Business Lending.

 

2. The Power of Social Media

According to Acquity Group’s 2015 Next Generation of Commerce Study, 34 percent of consumers have tried a new product or service as a result of a campaign or advertisement on social media.

Key findings include:

• Discounts win shares on social: 57 percent of college-age consumers and 49 percent of Millennialssay they would engage with a post that includes a discount code.
• Pulling the heart-strings on social pays off as well: 67 percent of Millennialswould view a link shared on a family member’s or friend’s wall and 48  percent of younger consumers surveyed would share a funny video with their networks.
• Streaming Content is the way to go: 59 percent of consumers say they’re more likely to watch an online streaming TV series produced by a brand rather than by a traditional media company, just to avoid commercials.
• Advertising isn’t dead:  After seeing a campaign or ad for a new product or service on TV, 57 percent of consumershave tried it; 38 percent of print magazine or newspaper readers have done the same, while 34 percent tried the product or service after seeing it on social media.

Check out the infographic below:

3. 9 Tips On Avoiding Investment Scams 

Guest post by attorney John H. Snyder 

The world is full of ambitious people with big ideas. Unfortunately, often the big idea is to separate you from your money. Don’t get scammed. If you’re considering making a significant investment in a start-up or early stage company, follow these nine tips to avoid becoming a victim:

Understand the business plan. You need to understand the business you are investing in. If you don’t understand it, don’t invest in it. Before you think about writing a check, ask:

• What is the company going to do with your money?
• Does the company have enough money to do what it says it’s going to do?
• What does the company sell?
• Who is going to buy?
• Who is competing in this market?
• How does the company make money?
• When do you get to see some profits?
• If the company succeeds, when do you get to sell your equity?

The business plan should make sense to you. If it doesn’t make sense, don’t assume that you’re not smart enough to “get it.” Here’s a secret—most business plans don’t really make sense when you dig into them. That’s why most new business ventures fail.

Again, if you don’t understand it, don’t invest in it.

Don’t get stampeded into investing before you’re ready. Show me [someone] who insists you’ve got to invest RIGHT NOW, and I’ll show you a scam. Promoters of legitimate ventures will encourage you to take your time, consult your lawyer and ask questions. They should want to have savvy, sophisticated investors as part of their circle. If a business wants your investment today, it will probably want it in two weeks. It’s your money. Invest it when you’re ready and not a moment before.

Talk to other investors. Ask the promoter to put you in touch with other investors. Pick up the phone and have a conversation. Here are a few questions to get you started:

• How do you know the promoter?
• Can you tell me about the business?
• When did you invest?
• Do you have common stock (or membership units)?  Preferred?  If preferred, what are the differences between common and preferred?
• What about this company convinced you to invest?

If the promoter won’t let you talk to other investors, or if the other investors seem sketchy, run away!

Talk with the company’s lawyer. If an emerging company is taking money from investors, it should have a lawyer. Ask for the name of the lawyer and for permission to call him or her. Then, really call. The purpose is to find out some valuable information:

• Does the lawyer really exist?
• Is the lawyer a bona fide experienced attorney with a deep background in business?
• Do you get a good vibe from the attorney?

Nothing can kill a start-up faster than incompetent legal advice. Even if all the other fundamentals are good, a company with poorly drafted corporate documents and agreements is a disaster waiting to happen. If the company does not have capable and reputable legal counsel that is a big red flag.

Ask common-sense questions. When a promoter tells you about the fabulous returns his or her venture is going to earn, ask some common-sense questions:

• Why haven’t 100 other companies rushed into this market?
• Why haven’t the big private equity firms snapped up this deal?
• Why doesn’t the promoter simply borrow the needed funds from a bank, so that he only has to pay interest and can keep the fantastic profits for himself?
• Scammers tell stories that you want to believe. Sometimes the best question is: “Why do I deserve this generosity?”

Don’t get shamed into investing. The scam artist’s best trick is often to make you feel insecure. If you ask an uncomfortable question, the scammer will make you feel naive and foolish for asking such a “silly” question. It is human nature to crave the admiration and approval of others. No one wants to be thought a rube. Scam artists prey upon basic human nature.

Always remember, when someone wants your money, you get to ask any questions you want. If you get the sense that the promoter is trying to make you feel stupid for asking questions, you’re probably about to get scammed.

Resist the Fear of Missing Out. We’ve all heard the stories (many apocryphal) of the guy who passed on an opportunity to be an early investor with Warren Buffett. Or Sam Walton. Or Bill Gates. And yes, sometimes that probably happens.

Scammers prey upon this fear. They’ll convince you that this is a “once in a lifetime” chance to get rich. They want to create a sense of psychological urgency—that sense of: “Oh my God, this will change my life!” Before long, in your fantasy, you’re already spending the profits.

When you start to feel that sensation in the depths of your soul, CHECK YOURSELF! Most scams, in retrospect, are painfully obvious. (That Nigerian prince who just needed $10,000 to unlock $100 million? Yeah, I guess that did seem a little fishy.) Scams work because they cause your brain to shut off for just long enough to write a check.

Resist the fear of missing out and you’ll probably avoid getting scammed.

Meet the promoter in person. Don’t ever invest based on a phone call, or worse, an email. Meet the promoter in person. Have lunch or a drink. Talk to them and find out what their story is. Have them tell you about themself. Does the story make sense? Do they know the kinds of things that people with theirs background ought to know? Do you get a good vibe? Do you trust them?

This is not 100 percent foolproof because scammers are quite persuasive. However, in my experience, if you use a meeting to tease out a lot of biographical information, it will put you in a position to go back, do some more diligence, and see if they check out.

Engage a smart business lawyer to kick the tires. If you’re going to invest a meaningful amount of money, paying for a few hours of a lawyer’s time can save you from a very expensive mistake. You want a lawyer who has seen a lot of deals, who has the capability to investigate the promoter and make inquiries into their background and reputation and who knows how to spot a scam. It’s amazing the number of successful people who invest without legal counsel.

Don’t be one of them. Follow the above steps and chances are good you can avoid getting taken by a charlatan peddling fools gold.

Bio: John H. Snyder is recognized as a forceful trial advocate and creative legal strategist. John was recently named to the American Society of Legal Advocates’ “Top 40 Under 40” list of New York litigators, and has been rated a “Rising Star by SuperLawyers since 2013.

 

4. Improve Your Website’s Design

The design of your website is crucially important to the success of your business. Austin Paley, the Corporate Marketing Communications Manager for Blue Fountain Media share some tips:

Imagery and Usability

Imagery is important across all verticals when it comes to website design, but it is particularly important when it comes to e-commerce sites. High-quality, high-resolution visuals can make a world of difference between a sale, or a visitor leaving your site and not converting. To meet this need for excellent photos, many ecommerce brands take a significant amount of time and effort to make sure that the images of their products are of the utmost quality, and that users are able to interact with them on-site in a way that helps facilitate the sales process, and increase conversion rate.

However, problems with web performance and site speed often occur when too much time is spent worrying about image quality and not enough time focusing on how the photo affects usability. Using the appropriate image dimensions and optimizing the file size of your images (in a way that doesn’t hurt quality) will help increase load time on each page, which is incredibility important in terms of usability. Brands that fail to take these steps to optimize images run the risk of having a slow page speed that will undoubtedly have an adverse impact on the user-experience and SEO rankings.

Another facet of imagery that is often overlooked is image alt text. While this doesn’t directly impact users, you want to make sure you have relevant tags on your images so that images show up in a Google search. By optimizing your image alt text, you can ensure that you’re not losing any users that are searching for relevant images you have, and you can increase the amount of users that visit your website and convert.

Relative to responsive design, serving images that are scaled appropriately for mobile, tablet and desktop is often a trouble point. A lot of times, you’ll see a stunningly designed desktop site, and when you switch over to mobile, not all of that functionality that makes the desktop version great will carry over. As mobile continues to grow and permeate the online user base, tailor your images to users on all devices—not just desktop.

 

5. Positive Outlook for rest of 2015

According to the Business Confidence Survey released today by Insperity small business owners are positive about their economic prospects through the end of the year, although they’re “following a familiar pattern of easing growth plans as the year progresses.”

According to the survey, 71 percent of participants are meeting or exceeding their starting 2015 performance objectives, down from 79 percent in July 2014 and 74 percent in April. The current survey indicates 29 percent expect to do worse in 2015 versus 21 percent this time last year and 26 percent in April. When asked how the current economy is affecting the bottom line of their business, 18 percent say it is increasing earnings, 47 percent replied with no real change, 31 percent state that it is decreasing earnings and 4 percent are unsure.

Hiring the right people and controlling operational costs top the list of short-term concerns at 54 percent and 49 percent, respectively, followed by the economy at 48 percent.

Regarding plans for employee salaries and wages for the remainder of 2015, 27 percent plan to increase compensation, the same as in July 2014, but down from 39 percent in April. The survey indicates 59 percent plan to maintain compensation at current levels, versus 63 percent last year at this time and 48 percent last quarter; 3 percent expect decreases versus 1 percent in July 2014; and 11 percent are unsure, compared to 9 percent last July.

Paul J. Sarvadi, Insperity chairman and CEO reports more than half of survey respondents “still expect sales to increase for the remainder of the year—and that remains a positive indicator for near-term economic activity in the small business sector.”

 

6. Is America Getting a Raise?

Well, it’s not much but the Small Business Index just released from Intuit shows that in comparison to previous months, employment growth was notably slower in July. While employees were paid slightly more, they worked additional hours throughout the month.

According to the Index, employees at small businesses received a slight (very slight) increase in their monthly pay, reaching the equivalent of $2,825, up three measly dollars from June.

 

7. Get Advice from Bill Rancic

Five small business owners will have the opportunity to get answers to their biggest challenges from entrepreneur Bill Rancic.

You can submit question from now through August 23 to Ask Bill Rancic, hosted on Own It: A Small Business Network. Plus, every entry enters the small business owner into a prize drawing, where 10 business owners will win $500 each for participating.

The idea to “connect” with Rancic stems from an Intuit study showing 41 percent of small business owners “feel a sense of loneliness in their work life.”

QuickBooks is also providing a number of activities and opportunities to win $500 in cash prizes on Own It: A Small Business Network through Nov. 3, including a chance to get an update for your website, share what inspires you and create a banner ad with a free banner builder.

Giving Tuesday is an international day of giving back (celebrated on December 1). QuickBooks is challenging small business owners to donate time and resources to benefit their local communities on Giving Tuesday. In a few sentences, share your pledge of support, and post photos of your story after December 1. Your pledge enters you in a prize drawing for $500 for your business and the cause you pledged to help.

To see the official rules, visit the Small Business Big Game website.

 

8. Multichannel Selling Pays Off

Stitch Labs, a leading inventory control and multichannel selling solution, just released a report showing SMB retailers who sell through multiple channels see a significant increase in revenue over single channel sellers, with a particular focus on Amazon as a major contributor to increased order volume.

Some highlights of the study:

• Overall, for retailers who have shopping carts, as the number of marketplaces such as Amazon or eBay increases, the average revenue increases, average order volume increases, but average order value decreases.
• On average, shopping cart customers who also have a single marketplace make 38 percent more revenue than shopping cart customers with no marketplace. Those who have two marketplaces make 120 percent more revenue.
• Retailers who sell on two marketplaces see 190 percent more in revenue than those who only sell on a single marketplac
• Single channel sellers with a shopping cart do 18 percent fewer orders than their marketplace counterparts, however they tend to have 129 percent higher average order volume.
• On average, retailers who sell on two channels have double the revenue of retailers that sell on only a single channel.
• Customers selling on Amazon have more average orders than any other channel—shopping cart or marketplace.
• Retailers who sell only on Amazon have more than 4x as many orders as retailers who sell through either eBay or a shopping cart.

Brandon Levey, CEO of Stitch Labs, says, “Selling across multiple channels will always bring additional fees and work for retailers, regardless of where and how they sell. But it’s a small price to pay in order to double the size of your business.”

 

9. Get Smart

To help more startups become successful Rev1 Ventures developed a program, Concept Academy, that helps entrepreneurs validate a product’s market before they spend the time, money and resources to build a company around it.

Tom Walker, president & CEO of Rev1 Ventures, says, Concept Academy leverages “industry best practices and our team’s extensive expertise of over 100 combined years starting, building and funding high-growth companies.”

Concept Academy was launched a year ago and is an intensive, three-day program aimed at validating the startup’s concept by proving the market first. In its first year, Rev1 held six sessions for 150 startups—and nearly 30 percent  validated their concepts.

Some tips for startups from Rev1 include:

• Know your customer. Nothing else matters if you aren’t building something people will want to buy. Concept validation should be your starting point. Start with your target market and get honest feedback from them. Sit down with them and honestly listen to their input. Survey them.  (CEO Tom Walker)
• Let your customers fund your product.Don’t spend a dime on developing a functioning product until you can prove you are building the right product. Create a prototype that serves their needs (the ones they’ve told you has the right set of features). If they agree, they’ll sign up and write you a check even before you build it because ‘they have to have it’, which is the greatest validation of all. (SVP of Entrepreneur Development Mike Blackwell)
• Be intellectually honest. This is a tough one. Many entrepreneurs are so passionate about their ideas that they will hold onto them—even after they’ve lost barrels full of money. The most successful entrepreneurs are able to take market input and refine their products—even abandon them—to meet a market need.  (EVP of Venture Acceleration Wayne Embree)
• Align your funding needs with key milestones.One of the most important investment considerations at the concept stage is aligning your near-term capital needs and use of funds with achieving commercially relevant milestones such as securing early customers, product development, and identifying talent to build your team.  Demonstrating a track record of successful execution and positive results will increase the value of your venture and improve your chances for successfully raising your next round. (SVP of Investment Funds Ryan Helon)
• Start with your Total Addressable Market. This is the entirety of your market if you could sell to EVERYONE who could potentially buy your offering. Once that is identified, narrow it down to the subset you can realistically reach. Drill down even further to understand the segment you will target in your startup’s first 36 months. This funnel approach should serve as the foundation for your business model and plan. (SVP of Venture Acceleration & Development Dave Bergeron)
• Messaging matters. In the concept stage, it’s all about knowing what your market wants and aligning your product—and your message—with customer pain points. A cool name, a logo and your Twitter feed may be important eventually, but in the beginning it’s all about the customer’s experience. Be sure you can answer this: What job is my customer hiring my product to do? That’s how you position your product and is the basis for your messaging. (CMO Kristy Campbell)

 

10. …and Smarter

Endurance International Group, a leading provider of cloud-based platform solutions to help SMBs succeed online, just announced that Business On Tapp is launching Tapp University (TappU), a series of in-app small business courses available to users of its mobile application. TappU provides “mini” lessons on topics based on FAQs submitted by users of Business On Tapp, such as ‘How to Improve Cash Flow,’ ‘How to Get Started on WordPress,’ ‘How to Go Mobile,’ and ‘How to Master Local SEO.’

The courses consist of four short lessons. Users receive a badge upon completion of each lesson. The badges are displayed on a user’s Business On Tapp business card, highlighting their knowledge of these topics.

TappU is available through the latest version of Business On Tapp from the Google Play or App Store. Business On Tapp is a free mobile application offering daily insights and actionable tips to help small business owners succeed both online and offline.

For more information watch Welcome to Business On Tapp or visit tapp.com. Download Business On Tapp in the Apple App Store or get it on Google Play.

 

11. Solar Power for SMBs

SolarCity recently introduced a new solar energy service it says will make it possible for many SMBs to pay less for solar electricity than they pay for power from their local utilities. Initially, the service will be offered to owner-occupied business locations in California, but it’s expected to expand to the east coast and other territories in early 2016.

SolarCity expects to make it possible for many to pay from 5-25 percent less for solar electricity than they pay for utility power with no upfront cost, depending on their own utility costs and usage. The service will also include fixed, flat solar payments for 20 years, so if the utility rates increase in the future, customers can save even more.

SolarCity says SMBs can now afford solar technology due to reduced installation costs, its proprietary, lightweight solar panel mounting system and special financing offers.

SolarCity has built a new business unit dedicated to the SMB market, and is currently hiring. Interested candidates should visit  SolarCity Careers to learn more.

If you’re interested in learning more go to their website.

 

Cool Tools

12. Getting Prototypes–Quickly

MacroFab, just got a $2 million seed round of funding, which it will use to expand the software and manufacturing capabilities of its platform and be able to turnaround turnkey prototypes in as little as 24 hours.

“The traditional manufacturing process is broken,” says Chris Church, the founder and CEO of MacroFab. “Third parties drive prices up while unnecessary complexities cause confusion for new businesses. We are solving what has previously been a disjointed process.

MacroFab  is making small-batch manufacturing easier and more affordable. For example, hardware startups can upload their designs, get an automatic quote, and order prototypes or production runs through the online cloud-based platform.

 

13. Manage Customer Complaints in the UK

Youstice just announced the launch of its web application for customer complaint management designed to connect retailers and customers, as well as resolve global shopping disputes in a matter of minutes for UK retailers.

The service, available to retailers as a simple, integrated web plug-in for their websites, is the world’s first cross-border online platform, designed to resolve shopper-vendor disputes in three easy steps and a couple of clicks, promoting trust between companies and their customers.

The web application is designed to help brands take care of customer disputes quickly and easily, whenever and wherever they arise. The aim: providing win-win resolutions to any complaint and turning customer satisfaction into a strong selling point for businesses.