FINALLY! Someone Talks About Intrapreneurship

The name of my blog is The Strengths Focused Intrapreneur, and yet, for the past four semesters, the classes in my program at WCU have focused on entrepreneurial pursuits. Don’t get me wrong, the info is helpful, especially for managing the business side of my husband’s writing career. But what I do in my “day job” is live the life of an intrapreneur. I have lots of autonomy in what I do to manage the departments and functions that report to me, and I basically have little micro-businesses within a larger corporate structure.

So, imagine my delight when in our assigned text for the semester I found a whole chapter in Rogers’ Entrepreneurial Finance on Intrapreneurship!

Joseph Alois Schumpeter, himself, asserted that entrepreneurship did not have to be confined to start-ups. He said, “Innovation within the shell of existing corporations offers much more convenient access to the entrepreneurial functions than existed in the world of owner managed firms. Many a would- be entrepreneur of today does not found a firm, not because he could not do so, but simply because he prefers the other method.” (Rogers 269).

I feel the essence of Schumpeter’s conclusion every day. I am an intrapreneur, and I make the conscious choice to hustle within the corporate structure because I grew up in a family business. I want to know that my paycheck will be on-time, that the collections department is doing their job, that billing statement need not be stuffed around the kitchen table at the beginning of every month, and that my 403b/401k has a handsome match provided by my employer. I loved our life growing up, and also, being the family-owned business is HARD. That’s not to say my life as part of a larger company is easy, but it’s certainly not an 80+ hour a week job, either.

Rogers asserts there are two types of Intrapreneur. He even offers a nifty model (Rogers 270):

Intrapreneur Spectrum

Caretaker– the anti-intrapreneur; happy with the status quo. Not interested in anything outside moderate growth or development of a product.

Developer– looks at the status quo and finds growth opportunity in existing business lines; might find new markets or customers to facilitate growth.

Innovator– creates new products, services or business models outside of regular R&D.

Some days I wonder what it would be like to start my own company or leave my large company to head-up human resources for a growing entrepreneurial endeavor. And then I read articles like these that remind me why I harness the power of my entrepreneurial spirit for intrapreneurial good.

Here are a few articles that might help ground or propel the budding entrepreneur:

I hope you find these articles helpful for choosing your own path as an entrepreneur, intrapreneur, or neither. As for me, my day job will mostly fulfill me in my intrapreneurial pursuits, and I’ll continue being an entrepreneur at home in helping manage my husband’s business and in the multiple side hustles I find myself involved in.

Additional Resources:

Rogers, S. (2014). Entrepreneurial Finance: Third Edition, Finance and Business Strategies for the Serious Entrepreneur. 269-278.

3 Entrepreneurial Funding Sources to Revisit: Loans, Lines of Credit, & SBA Guarantees

Ideas often come easily to the entrepreneur. Even with great ideas, securing funding for a new venture can be the toughest part of the entrepreneurial process. Depending on the type of venture, funding can be even more complicated. While many folks lean towards “bootstrapping” a.k.a. self-funding, some ideas take a bit more capital than an entrepreneur might have in their own bank account. Others pursue the help of angel investors or launch crowdfunding campaigns. These methods might be trendy options, but it’s not time, just yet, to dismiss some of the more traditional types of funding like good old fashion bank loans and lines of credit. These options are often referred to as debt options. Even these seemingly traditional debt options have experienced some revamps over the past decade. Let’s explore the highlights of each:

Loans:

While banks are the obvious place to start, you can get loans from multiple other sources like:

  • Angel Investors- locally, specific to a business industry, and/or national groups.
  • Family and Friend loans- just ask the people who believe in you the most, but PAY THEM BACK.
  • Person-to-person (P2P) on sites like Lending Club (it’s like a combination between crowdfunding and a bank loan).
  • Non-Financial Institution lenders for cash flow lending like Northwestern Mutual and Prudential
  • Personal Guarantees with the Entrepreneurs personal property as collateral.
  • Community Development Financial Institutions (CDFIs)- groups with specific affinity business groups in mind (examples: Farmers, Women-owned businesses, etc.) that might not be backed by traditional banks.
  • Community Banks– smaller independent banks that understand community need and investment more than maybe a large national bank would.

 

Lines of Credit:

  • Work much like opening a credit card, but through a lender. There is a maximum amount the entrepreneur can charge.
  • Or, open a business credit card– it is a credit line.
  • Unlike a lump sum loan, businesses use the money only as it is needed and only make payments on money spent.
  • Lines of credit are particularly helpful if you have some cash flow slow downs because of a seasonal business or because you are just establishing the right payment schedule between you, your customers, and your suppliers.
  • Some suppliers work out lines of credit with the businesses that buy from them, this is industry specific, but it’s worth asking for a line of credit from a supplier.

 

SBA Guarantees:

  • Founded in 1953, the Small Business Administration has loaned funds to over 20 million businesses (Rogers 2014).
  • Perks of their loans include longer pay back periods, most around 10 years and some up to 25 years.
  • The SBA does not loan directly to businesses, rather they use approved banks and financial institutions.
  • Only 1/3 of these loans go to new businesses each year in favor of established businesses.
  • Non-profits, financial institutions, gambling, life insurance, and non-US citizen owned companies are all ineligible for SBA funds.
  • The SBA offers a wide variety of loan products like Express loans, Micro Loans, and Real Estate & Equipment loans. Contact an SBA certified lender for a full list of options.
  • In addition to funding, the SBA offers programs and classes through their development and learning center.
  • SBA lenders can be found through sba.gov or 1-800-827-5722

 

Crowdfunding might be trendy, but remember, entrepreneurs can’t afford to just try one way. I hope this article has convinced you that loans, lines, of credit, and SBA funding has evolved and all three might be a viable option for your business depending on the needs of your entrepreneurial pursuit.

 

 

Resources:

Hecht, J. (2016) 5 Best and Fast Small-Business Loans (Some of Which You’ve Never Heard of). Retrieved from https://www.entrepreneur.com/slideshow/314882

Hecht, J. (2017) Lines of Credit: Online Lenders vs. Traditional Banks. Retrieved from https://www.entrepreneur.com/article/271273

Rogers, S. (2014). Entrepreneurial Finance: Third Edition, Finance and Business Strategies for the Serious Entrepreneur. 161-195.

Slotnick, D. (2018) The 8 best small business credit cards to open in 2018. Retrieved from https://www.businessinsider.com/best-small-business-credit-card

Loans Definition – Entrepreneur Small Business Encyclopedia https://www.entrepreneur.com/encyclopedia/loans

Additional links to businesses and financial institutions can be found throughout the article.

Interview- Jeff Kaplan- Director, Venture Asheville

Interview with: Jeffrey Kaplan, Venture Director. Tech junkie. Media maven. Academic entrepreneur. Dog lover.

Interviewed by: Nancy Critcher-White, Leadership HR Professional and Graduate Student at WCU, studying Entrepreneurship

Website: http://ventureasheville.com/

LinkedIn: https://www.linkedin.com/in/jeffdude/

Nancy (N): Thank you for joining me today, Jeff. While I know many entrepreneurs, when it comes to the topic of , you have a different perspective that I’m interested in learning about. Thank you so much for agreeing to be interviewed.

N: What is your business background?

Jeffrey (J): Education, Academia, and start-ups. I was a teacher; worked for non-profits, went to grad school, did some sales and marketing. Product Owner and Consultant Anthroware. Product development and consulting for product developers. For Hatch, I did program events and new venture creation. Bullet points are ok, right?

N: Yes, of course. Bullet points are great. What personal strengths have contributed to your success?

J: I build rapport very quickly. We just met, but we’ve already been bonding and chatting, right?! That trust building was especially important with my consulting and sales positions. And even now with the companies that come to Venture Asheville, I build trust so I can help people in those business cohorts. Other things: I read quickly, usually articles and finance books. I know how to leverage resources and help others leverage resources. Public Speaking is fun. And I have an ability to convey a creative vision.

N: What was your very first entrepreneurial endeavor?

J: In 8th grade, I bought a CD burner. At school, people would give me a list of songs they wanted on the CD and I would download the songs from Napster and burn their CD and deliver to them the next day. Blank CDs were cheap, and I had a good business going. Another guy entered the CD burning business and started a price war with me, plus his parents had faster internet.

N: How would you describe your current business and what you would tell someone who doesn’t know what Venture Asheville does?

J: Two things- Build Entrepreneurs and get companies funded. That’s my pitch. As the director, I direct. I meet a lot of people. Help businesses make connections. I’m usually either meeting with businesses or entities (sometimes other businesses) that can support the businesses in our cohort.

N: I know some folks might come to you with half-baked ideas, what do you look for in the businesses that are accepted into your programs?

J: We won’t take half-baked ideas. If people come to us at that stage in the process, we send them to Hatch or some other business development help. That part of the process is fun, and I still help with Hatch, but it’s not what we do at Venture Asheville. We are looking for businesses that need help scaling. We want a committed founder. I realize a lot of people have side hustles, but we are looking for founders to be all-in. As an aside, I would like to start some workshops on helping people turn their side projects into their full-time work. Other things we look for: Is there a product/market fit? Does it speak to an underserved market? I love unconventional business ideas and novel value creation. Sometimes that might look like an idea or software platform used for one purpose that a business owner wants to use for an unrelated and underserved group.

N: What types of attributes or success are your Angel investors looking for in the businesses they back?

J: Initially, they want businesses that are already making money. They are looking for 10-35% equity. They fund $100,000 to $800,000. They want companies that can grow and scale successfully. They want businesses to sell in 3-5 years of their investment and a 10X return or 7.5X return across all deals. No real estate deals.

N: This interview will be posted for other entrepreneurs and intrapreneurs to view and learn from. As a serial entrepreneur or serial investor, I’m sure you have financed ventures in multiple ways. Do you mind sharing some of your tactics for funding a start-up?

J: Personally, most of what I’ve done is bootstrapping, pinching pennies, and personal savings. It is really helpful to have a working spouse. I’m familiar with all sort of financing tactics because of my work though. Customer financing through pre-sales is a good option for some businesses. Strategic partnerships are something I did a lot of with my Dogphredly guide, which was acquired. I’m thinking of doing some crowdfunding for a current project, oh and equity crowdfunding is a really interesting concept. Seems a little scary but I think we’ll start seeing a lot more of equity crowdfunding.

N: What are your thoughts on financing tactics like angel investors or using crowdfunding as a way to start a business vs. getting a traditional loan or line of credit?

J: When you are in the earlier phases of a business, it’s hard to get traditional financing. I send people to Mountain Bizworks a lot. Lines of credit are great options early on. If you still need money after angel investors have invested, it’s possible their investments will get squashed, so that’s something to be aware of.

N: What general advice do you have for someone who is starting a business?

J: I see too many founders go for the path of least resistance and they don’t stay true to their vision. It’s going to be hard but don’t compromise your vision. Be tenacious and resilient. Be prepared for a lot of shit to go wrong. It’s harder, longer, and more expensive than you think.

N: Do you have any financial advice you would be willing to share?

J: Don’t spend what you don’t have. Take care of your people. Leaders eat last.

N: Is there anything I didn’t ask you that you would love for those listening to know?

J: As a founder, you can get pretty far before you need to hire a chief financial officer (CFO). That said, you need to know your basic financial documents, and you need access to your books. You need to know your balance sheets, your PNL, cash flow, income, payroll, and run rate. You’ve got to know what you are looking at.

N: I appreciative of your time today. Thanks so much for your words of wisdom for those reading. One last thing before we end…I’m working on a funding proposal for my husband, A.D. White, independent author/publisher. When I complete the draft would you mind giving your opinion on it?

J: Yes, I’d be happy to take a quick look at the funding proposal. In the meantime, have your husband come to the pitch parties at Hatch for open mic night.

N: You said you read a lot of business and finance books, what are you reading right now?

J: [pulls a book from his bag] This one is “Never Split the Difference: Negotiating As If Your Life Depended On It” by Chris Voss. It’s non-intuitive advice on negotiating.

The Intersection of Crowdfunding and Traditional Debt Financing

“Anyone who lives within their means suffers from a lack of imagination.” – Oscar Wilde via Wisebread.com

Last week I wrote about crowdfunding and the many different platforms available for funding. I decided to explore the site Lending Club. I’ve since learned, this type of funding is called person-to-person or P2P lending. Think of it as crowdfunding meets an angel investing pool. I spent some time researching their model and writing some brief instructions on the steps to become approved with Lending Club. Here’s my screencast evaluation of their financing option:

And some more in-depth info on the steps for applying with Lending Club:

Now, let’s follow the (hypothetic) steps to apply from the borrower’s perspective:

Determine your eligibilitylending club eligibility

Click on this link for a dashboard of steps to follow (with access to the electronic platform):lending club small business dashboard

https://help.lendingclub.com/hc/en-us/categories/202523217-Small-Business

  1. Start by exploring the “How to Apply” button
  2. Check your rate
  3. Choose your offer, if given
  4. Watch as people invest in your loan
  5. Funding is sent directly to your bank account
  6. Set-up monthly auto-draft payments
  7. Pay off your loan early, if wanted, with no early pay-off penalty

 

Success and Key Questions (6/30/18 Stats):

https://www.lendingclub.com/info/statistics.action

  • How much does the Crowdfunding source take as a fee? Varies depending on the terms of the loan
  • How long will the process take until the money arrives and can be used? About 7 days for approval and a few more days for funds to be deposited (depending on bank rules). Need to use their check-list to avoid delays.
  • Restrictions? Varies depending on the terms of the loan
  • Reporting requirements? Lending Club wants to see your IRS tax return and requires a 4506-T form to do so. Borrowers would report funds as part of their tax return.

 

Crowdfunding: Potato Salad and Beyond

There’s an urban legend about a guy who posted a crowdfunding cause to “help him make the best damn potato salad,” and the legend is, he made a couple of thousand dollars doing it.

I did some digging on the world wide web and was able to verify that this did occur in 2014 on the crowdfunding site Kickstarter. The guy made Zack Danger Brown didn’t just make a couple thousand, he made $55,000 just posting a prank. With the money, he threw a huge party called Potato Stock.

Imagine what you can do as an entrepreneur or philanthropist who has a real cause or really great idea for a product or business. If you aren’t sure what type of crowdfunding site is right for you, I found two great articles that might help you weigh your options.

In doing this research, I came across a lending site that I had never heard of called Lending Club. In short, they link individuals and small business owners to investors through their platform. I’m going to be researching this one more in-depth as part of my ENT 650 coursework.

Additional Resources:

Rogers, S. (2014). Entrepreneurial Finance: Third Edition, Finance and Business Strategies for the Serious Entrepreneur. 279-294.

Raising Capital Might take More Than a Lucky Cat

“A bank is a place that will lend you money if you can prove that you don’t need it.” – Bob Hope via goodfinancetips.com

This week we are choosing topics to research that pertain to raising funds for entrepreneurial pursuits. We’ll be publishing an article in a few weeks about the topic we research, and I chose a pretty traditional form of funding to explore. My topic is “Loans & Lines of Credit (to include SBA guarantees)”.

So far, I’ve learned the Bob Hope comment about banks loaning money only to people who prove they don’t need it is entirely true. Most banks are pretty risk-averse. This explains the popularity of other non-traditional forms of funding for modern entrepreneurs; options like:

  • Angel Investors
  • Crowdfunding
  • & Business Incubators

For entrepreneurs who have collateral to offer and/or extremely great credit, traditional loans and lines of credit can still be a good option but are usually not the only option to pursue. As I conduct more research, I’ll post the whole article on my blog to share.

In the meantime, I’d like to share a couple of thought-provoking pieces about funding.

The first is a quick bit of advice posted on Entrepreneur.com from Amy Williams, CEO at Citizens of Humanity on choosing investors wisely: https://www.entrepreneur.com/video/310046

The second is an interesting article about the story you tell when pitching a start-up to investors. It’s an HBR piece called Startups That Seek to “Disrupt” Get More Funding Than Those That Seek to “Build” by Dana Kanze and Sheena S. Iyengar.

I hope this gives you some food for thought until my next post.

Cash Flow- Sinking Ship? Let’s Hope Not.

“Beware of little expenses. A small leak will sink a great ship.”

– Benjamin Franklin via brainyquote.com

This week we are researching and writing about cash flow management. Each person in my entrepreneurial finance class has taken a cash flow topic and writing about it for the benefit of our other classmates. I chose the topic of “how to collect cash owed to your company”. Collecting cash owed to your company can be a hard task to manage. The easy solution might be to say, “why not require payment in full before products or services are delivered?” Unfortunately for many industries and businesses, cash payment up-front is simply not how business is conducted. It might be an issue of convenience, corporate billing structure, or needing to deliver upon a service before being paid in full. For many entrepreneurs, collecting cash owed has to be an integral part of daily, and at least monthly, operations.

The first step to ensuring proper and timely collection of payment is an accurate and proactive accounts receivable system. If an entrepreneur anticipates needing to bill customers for products or services rather than or in addition to point of sale transactions. Entrepreneurs should invest in a record keeping or point of sale system with built-in billing/monthly statement generation capabilities.

While I used several resources for the full report, I wanted to share a great article that I found about collecting money owed to your business. As usual, Entrepreneur magazine (and electronic content) published this great piece from John Rampton in 2017 called 6 Strategies for Dealing With Unpaid Invoices That Get You Paid Sooner.

Here are the 6 tactics:

  1. Make sure you followed procedure and then follow-up politely.
  2. Give discounts and charge a penalty.
  3. Abandon the stiff business approach.
  4. Collections, arbitration, mediation, court.
  5. Contact a Business Reporting Bureau.
  6. Factor them.

Make sure you click on the article for the details and some other great links to resources and definitions of some of the terms. I had never heard of “factoring” debt until I read this article.

 

Work Cited:

Rampton, J. (2017). 6 Strategies for Dealing With Unpaid Invoices That Get You Paid Sooner. Retrieved from https://www.entrepreneur.com/article/302037