tv Your Business MSNBC July 17, 2011 4:30am-5:00am PDT
it's your break, honey. same coverage, more savings. now, that's progressive. call or click today. these moms turned down professional money and got fellow parents to invest in their small business instead. we look at both getting funding close to home and from overseas. and meet the super entrepreneurs of comic-con. that and more coming up next on "your business." small businesses are revitalizing the economy, and american express open is here to help. that's why we are proud to present "your business" on msnbc.
hi there, everyone. i'm j.j. ramberg. welcome to "your business," where we give you tips and advice to help your business grow. can you imagine turning down millions of dollars for your start-up? not once, not twice, but three times. that's exactly what the founders of the mother company did. today we start the show with a where's the money that shows us sometimes smart money is better than more money. ♪ mamma mia, now i really know ♪ mimi i could never let you go ♪ >> ken wong, four kids, 4 and 2. >> rachel jacobs, two kids. mia will be 6 on saturday. jacob's 3. >> todd specter. i have two kids, 5 and 2. >> while at first glance, this may sound like a parenting support group, it's not.
this is a meeting of investors who all have at least $10,000 on the line in a new venture called the mother company. >> thank you guys for coming. what i'm going to do is i'm going to take you through a brief investor presentation. >> the mother company is run by abby schiller and samantha kurtzman counter. >> we're developing a line of products based on social and emotional learning for kids. the backbone of that line is our ruby studio series. >> hi, everyone. welcome to my studio. i'm ruby. >> and then from that we're making plush dolls, based on characters from the show. >> abby game up with the idea in 2008. she had the vision. she had the drive. what she didn't have was the money to make it all happen. >> i remember selling things on craigslist to pay for people. >> so like any ambitious entrepreneur, she set out to find funding. despite doing this in the worst economy this country has seen in decades, she got a fantastic response. >> i reached out to three
different professional investors, and all three of them offered me more than double what i was asking for. >> money in the bank, right? not in this case. abbie turned them all down. >> i had to trust my gut and realize, if this wasn't a good partnership, it wasn't ever going to be a good partnership. i had to walk away three times from offers of millions of dollars. >> her gut was telling her that these offers were from people who just didn't get her concept. they may have had had money, but in exchange for the cash, they wanted a lot of control. so with sam on board, they changed gears and started reaching out to people who did get the concept. >> we spoke to them at school, at play dates, on playgrounds. we would open our laptop on the floor of my daughter's ballet class. we pitched them at birthday parties. >> the mother company started talking to, well, mothers. >> to me, it seemed like a no brainer. it was a product that i would use. >> julie met sam through a social group they both belonged
to. she became one of their first investors. kim hammer knew abbie through an online moms group. when she knew abbie was looking for money, her reaction? >> how much? because i loved what she was doing, you know. it's a piece that seemed to be missing in everything. that surrounds children. >> todd specter learned of the investment opportunity through his wife. >> she opened her e-mails by 6:00 in the morning in december. it was dark. she said, this is unbelievable. you've got to see this. it's an unbelievable 90 second blush. >> the traek to getting these people on board. >> it's not the business, the it's the person. there can be a thousand different businesses out there. if you don't believe in the person running the business, it may or may not work. >> second, they knew what they were talking about. >> abbie and sam's presentation
was terrific, and it real ly -- they really were able to convey what they were trying to accomplish and what these lofty goals that they had were. >> third, they were creating community. >> it was great because it kind of felt like we were all friends and family and we were getting in on something special, you know, at the ground floor. it was a chance for us all to kind of connect. >> we reached out to people who we thought would work well together. it was like putting together a dinner party. not everybody is right for that particular dinner party. >> in chunks of at least $10,000, abbie and sam ended up raising nearly $500,000. and as important as the money, they recruited an advisory board, most of whom are available when typical advisers aren't -- on play dates. >> the experience of seeing it through stories or seeing it through the animated segments that you have. >> and at the park. >> his biggest issue is sitting still. >> and who serve as a constant
focus group. >> our investor advisory board meetings are really productive because they are parents who are going through exactly the things that we want to address on our shows. >> all of the investors have been clear. they've come on board because, as parents, they truly believe in doing something positive for the next generation. but sam and abbie say, while they appreciate the moral support, they know that in the end this was also an investment decision, and they are aware every single day that there are a lot of people the mother company hopes to pay back. >> failure is not an option. we will be writing them a big check, and i will say woo hoo! mother company! we did it! >> so while everyone might not be in a group of people where they all have an extra $10,000 to spare, there's definitely something to be learned from this piece about going to people who understand your business. let's turn to this week's board of directors.
nell is the founder, president, and ceo of count me in for women's economic independence. and larry chang is a managing partner at volition capital. great to see both of you guys. >> great to be here. >> it's such an interesting piece because both of you deal a lot with funding small companies. what i loved is that this woman turned down millions of dollars. she was selling stuff on craigslist and turning down money at the same time, but it turned out to be a great idea. >> yeah. >> loved the fact that she followed her entrepreneurial instincts and said, you know what, these professional investors are not for me. i'm going to find real advocates for my product and company and went to parents. i think that's a great idea. >> a lot of people do this maybe not in as organized a way as she has, but it really is just angel fou funding. it's friends and family. she was more business-like about it. what do you think somebody needs -- do you have to be to that level, prepare this presentation? they had coffees and had friends of friends invite people to the
coffees. does it have to be like that, that formal? >> i think it's a good idea to explain to potential investors exactly what you're trying to do so everyone is on the same playing field. make a professional presentation on your company. >> are you afraid they're going to get too involved? >> i think, if you organize it properly and make the roles very clear, that you can avoid that. i think you have to make the roles clear and what you expect from them and what you're going to do and what they're going to do. you can't be walking around in the mommy company talking about you have too much to do and those kinds of things and inviting them into situations you may not want them in. you have to be very clear about what you're going to do and what they do. >> what about the idea of valuing the company? you've got a bunch of people coming in, giving you money. what's your opinion on how you value the company?
what percentage do you give them? >> what you generally do is look at comps. if there are other companies with similar spaces that raise capital, they can always serve as a benchmark. comps are what the market declares. you talk to investors and what type of ownership they're looking for and what you're willing to give up, and find common ground and see what happens. >> it seems you're in a lucky position. not everyone is going to be in a position where they can turn people down. do you? do you say i'm crossing my finger. this person doesn't seem to fit in. they're kind of going to be a pain later on. >> taking money from an outside investor is like a marriage. if you don't feel good about it, don't get involved, whether it's institutional or individual. i love the fact she turned them down when her instinct said it's not right. this is a long term relationship. so i think it's a good call. >> conferences can be intimidating, but they're also a great way to make important contacts for your company.
here now are five ways you can maximize your conference networking. plan your day. attend the events that relate to your business. if you're interested in the topic or speakers, there's a good chance there are people with common interests there too. practice your introduction. come prepared with an intro about all the facts about yourself, your company, and your interests. show up early and stay late. arriving before a session gives you an opportunity to start conversations with people at the session as well as the speaker. prearrange meetings. if there are people you'd like to meet, send e-mails to those people before hand to make sure you'll get a chance to see them at the conference. and finally, follow up immediately after the event. add them to your linked in or send a follow-up e-mail while you're still fresh in people's minds. if you are out looking for funding, you don't have to confine yourself to the united states. there are plenty of international investors looking to put capital into growing
businesses. jennifer hill is an attorney who focuses on international start-ups and investors and is here to tell us how to do it. great to see you, jen. >> great to be here. thank you. >> so the united states obviously one area, but then you're doing some work in chile, i think, is it right now? >> all over latin america, argentina, and brazil, and there is a lot of money going oun there as well as u.s. businesses as well. >> how do you even reach them? it's hard enough to get a meeting with a venture capitalist here in the united states, how do you get one in south america? >> develop a relationship with a start-up community. with social networking, that is so much easier to dothan ever before. i wouldn't randomly target places, but if you know your business is going to grow in a particular area or you want to develop suppliers somewhere else, start focusing on that area. put it in your linked in profile. look for meet-ups both here and locally. >> so that's interesting. it's not necessarily that your business has to be based over
there, but if you're going to be working, like suppliers over there, then somebody might be interested in investing in you. are these companies also interested in investing into start-ups or businesses that are purely u.s.-based, you know, have nothing to do with overseas? >> they are. one really interesting program that's actually going on right now is stalled start-up chile, and it's sponsored by the chilean government. they've said, look, we want entrepreneurs to come and start here. we'll give you the money to do it even if you go back to your home country. they have funded entrepreneurs, given them thousands of dollars a piece as a stipend and come down and look for online resources to develop businesses. the hope is they'll stay, or even if they do go back to their home country, they'll employ people locally, and it will be a wonderful investment in the future. >> seek investors who fund individual businesses. >> look for investors who funded that particular industry and
look for expansion abroad. a lot of copy cat businesses. if you have a business model or have seen a business model that's worked really well in the u.s. and the idea is to start it locally or maybe add a different language to it or what not, look for investors that are attracted to that kind of business, and you might be able to reach out to them all over the world and see if they're interested in funding you. you don't always have to be there, but they're interested in buzz models that are proven. >> what about a business model proven in that country that you want to bring to the united states? >> absolutely. i think that's great to do. >> and government stipends, we talked about that in chile. how do you research these things? >> a lot of stuff is online. the best place to look for is look for an economic development agency. a lot of countries have that. the uk has a trade and investment arm that operates all around the u.s. and are looking for businesses that want some foothold in the uk. they'll help you find investors and employees and services. ireland has enterprise, the canadian government does. there's lots of economic development agencies around the world that are right here in the
u.s. that are looking to help you grow your business. >> i guess, if you're looking to start -- you're sort of at the start-up point now, and you can get money from an investor overseas, it might be cheaper for you to start there too. >> absolutely, it can be. there are wonderful cost savings. we've seen that with outsourcing, but the future is smart sourcing. call centers in columbia are becoming much, much bigger. obviously, spanish skills, great english skills as well. and you have favorable time zones because they're within the u.s. time zones. there's a lot of great software developers in chile and argentina. there are broader resources, even online like e-desk. look with them on projects that cost effective in overtime, and they become critical parts of your business. >> and they're resources like you and your company. so when it comes time to making a deal or getting introductions, there are places out there that can help you. thanks so much. >> you're welcome. thank you. >> when we come back, we'll have
more on getting funding for your business. we'll talk about how to get people who back your competitors to invest in you. and thousands of small businesses find customers and fans as they head to comic-con. this is my band from the 80's, looker. hair and mascara, a lethal combo. i'm jon haber of alto music. my business is all about getting music into people's hands. and the plum card from american express open helps me do that. you name it, i can buy it. and the savings that we get from the early pay discount has given us money to reinvest back into our business and help quadruple our floor space. how can the plum card's trade terms get your business booming? booming is putting more music in more people's hands.
the nation's biggest gathering of geekdom, comic-con, is under way this week. thousands of sci-fi, comic, and graphic novel fans are flocking to the event, where they can check out the products of artists and small business owners who create fantasy worlds. we visited comic-con last year and spoke with a few entrepreneurs who learned that carving out a niche can bring on super hero sized profits. if you think you're looking at a giant halloween party, you'd be wrong. >> oh, sorry. >> but it's an easy mus take to make because this is comic-con.
amh. >> who's known for his dramatic d.c. comic cover illustrations, is one of nearly 1,000 entrepreneur artist vendors who attend this once a year comic book convention held in san diego, california. >> you get the most traffic, most exposure. i'd have to do ten other large shows to equal what i do in san diego. >> to the outsider, the con, as it's called, may look like nothing more than a big dress-up party, but for those entrepreneurs who understand it, it's a booming niche market which can form the core of a successful business. stuart ng is a los angeles-based entrepreneur who's niche is comic books by hard to find illustrators, people like adam hughes, books like other comic and animation pros are eager to find and buy. >> the animation industry and comic industry, he is a really valuable resource. everybody i know buys their books from stuart.
because he has the best stuff. >> i've gotten rid of all the chaff, and here's the good stuff. >> ng focuses on books not available through chains like amazon or barnes and noble. >> i've developed a philosophy of not competing with them. so if it's available on amazon, i'm very unlikely to carry it. >> he's one of the guys you go to when you're looking for obscure tracts on art and painting and just wonderful graphic sensibilities that you can't find at regular bookstores. >> stuart ng and his online component has developed a steady customer base. customers not only buy his books but also send their friends to buy books too. in turn, many of them offer ng
exclusive rights to distribute their own self-published sketch books. this relationship has paid off. despite the crippled economy, ng's business has grown 25% over the last six months, and here at comic-con, sales from this four-day orgy of consumption has netted him close to 20% of his annual revenue. >> i like the style a lot. i think that the characters have a lot of charms. >> ng's focus at this convention doesn't stop at the cash register. he says running a niche business means also acting as something of a talent scout. he keeps his eyes out for hot new talent to showcase in his store, the kind of creative inspiration that keeps his customers coming back for more. >> i was wondering about the art catalog. are you going to be wholesaling that? will you be able to send us some? >> for you, yeah. >> okay, great. >> we always see a bump after comic-con. so we have the revenues from the convention itself. plus if we buy well, then we come out of comic-con, and
through august and september, we're selling books like crazy through the mail order. >> it's time now to answer some of of your business questions. the first one is about managing your company's expansion. >> i just bought a jewelry store in new york. we'll be going into 30 to 50 stores. walgreen supplying. we're now going national. how do i handle this growth? >> right. be careful what you ask for. first of all, congratulations to her because that's fantastic news. if she's worried about it now she better get on it. >> it's great she's worrying about it because it's a double edged sword. you can be widely successful doing this and can also wreck your business. you need to know your numbers right now today, understand what
you got. and partner with someone, not partner find someone who will mentor with you who had a relationship with this company and also talk to the company. talk to the company about you really want to make this an excellent relationship so what guidance and is there someone there i can work with to make sure. and i think the other thing is can she get a handle on how many stores these going to go into? she start to have some role in what the roll out is so that it isn't all over the country right away unless she's ready for that and often people aren't ready for that but if you can roll it you want more slowly you can one, i think, what kind of money you need to invest and where the pitfalls are. >> i love this idea of talking to the company because a lot of time people want to pretend they know everything. >> think about it. you got people that you're dealing with who are dealing
with 100 companies, who have had some of these questions. >> number one thing a small consumer retail before they go into high volume know your economics. which means when you sale product how much money do you really make after you factor in how much it takes. factor in your cost, transportation, material, return, package, labor. if you net $4 on a $10 product and you have to cover all your costs it better not cost you $5 to make that product. otherwise a high volume can kill your business. >> moving on the next one this is about locating potential investors. >> how can i get in contact with those same investors as some other boutique owners are, clothing company would have on the east coast or the west coast. which avenue can i take or which site can i go to in order to contact these individuals? >> it's smart of her to try to target those investors who are
interested in space. how do you find them. >> there's a great private company site called ka torch ra. angel list is a great place. list your business and have angel investors inquire about investing in it. there's no perfect place on the web to understand private company ownership across the board. it's pretty tough. >> any other avenue that's not as organized as this? >> she needs to -- people invest in people. so she needs to start meeting people, and i'm concerned that she's looking for investors who invest in companies like this because often if they are in another company are they is going to take on the same kind of company. so i would say she needs to really appreciate that it's her that they are going to invest in and therefore she needs to meet people. i wouldn't discount friends or family or attorneys or accountants to start that conversation because the personal relationships here, i think, are very important, and,
yes, you can get an idea on the website but they need to know you and you need to know them. >> i have one of the most networked guys he said he goes for two coffees a week with somebody he doesn't know. that accounts for 25% of his business. that's where you can find investors. let's move on the last question, this is about a lack of funding. >> i've been in business for 32 years, and my big question is why can't small businesses get any capitalization. banks aren't lending. i've never seen it like this in my entire business career. >> mary is not the only one saying she's having a hard time getting a loan from the bank. maybe it's a point where you don't go to a bank. where else can people go? we talked about friend and family a lot on this show. >> we need to think about sales. how does she increase sales. increasing your sales are the
best way. and if you're charging enough for your product, over the years -- i want to ask them how much are they charging for their product because they are not making enough profit to keep the business going or keep it going in a way she wants. so i would look at sales. obviously aller to things we've talked about but really look at how you can up your sales. >> do you fine with your company, trying to get loans right now having hard times? >> banks are a great source. they are so risk diverse. there are options. you can list a loan request and instead of banks fund it you can have other individuals or institutions. crowd funding. there are great events in boston which brings together investors around small businesses. these are other good openings. it's been 32 years chasing a bank not the best option. >> thank you for this advice. this was helpful and we appreciate it. and if any you out there have a
question for our disperse go to our website. the address is openforum.com/yourbusiness or e-mail us your questions and comments. address is email@example.com. now, there was some helpful advice on how to improve your business. now let's get some great ideas from small business owners just like you. >> my great idea for a business entrepreneurs is take your business seriously, but not so seriously to where you get caught up. you don't want to make the small mistake by taking your business so seriously that you wipe everything out. it's just like anything else, take it, provide it, prepare it, partner with someone early. if it doesn't work scrap it and do something else.
>> my great idea for entrepreneurs, especially those within the first five years of their business is to make sure that they do have a team of interns. because what you want to do is you want to have a succession plan. even if you can't afford to hire someone right now, you want to get a good sea of interns you can grow into employees. >> if you know what your passion is when you're 19 you should start when you're 19. it doesn't make sense to wait until 30. do you want to market your small business on facebook but don't know how to start? check out our website of the week. pagemodo.com help you customize your webpage. you can choose from 18 customized page. one custom page is free, pretty
much number accounts that include more pages start around $6 a month. to learn more about today's show click on our website. it's openfor dum.coum.com/yourb. and become a fan of the show on facebook. and follow us on twitter, it's @yourbusiness@msnbc. >> sometimes it takes somebody from outside of the industry to reinvent the industry. >> how thinking outside of the box resulted in a bathroom in a box. remember we make your business our business.