1. Please give us a brief description of your business.
Newsforce Network gives marketers an always-on voice in the online news media, through placement of "storytelling media" or sponsored content on premium news sites. We replace what is ordinarily a banner ad with our unique storyboards and editorial treatment. The result is that customers can enact their own content strategy to change public perceptions, one story at a time, without having to solicit journalists to write about them. It's like a mashup between advertising and PR, and it ultimately gives companies more control of their brand messages in news media online.
2. What inspired you to start your own business?
This is actually my second business. My first was an interactive agency called SiteLab, which was started by a group of partners. We became nationally known for our search marketing expertise and web development. It's still going strong.
My parents were both entrepreneurs, so the idea of *starting* a business has never frightened me much - what I never expected though was how difficult it is to *grow* a business.
In the case of SiteLab, I was pretty lucky in a way. There was already a working business - we bought our division of a larger company when we were threatened with shut-down. A few of us got together and said "We think we can do something with this" and we offered a buyout for the assets and clients. When we started, there were just five of us doing the work that was previously done by about 14 people.
As for Newsforce, it was an idea that had its genesis at SiteLab, and it has been generously incubated by them and two other companies who are shareholders. I've always been blessed with an ability to think of interesting business models and to sense trends in the wind, but ideas are nothing unless you can implement them. So, with a skeleton crew again, and an amazing CEO (Vince Bianco), I've been given the freedom and resources to build a completely new product sector in the internet marketing space.
We have been primarily bootstrapped by founder investment, but we also have raised some angel money and anticipate additional capital raises shortly.
3. In your opinion, what are some of the biggest challenges faced by entrepreneurs and small business owners?
In my opinion, the same issues challenge all sizes of business: capital and talent. If you have great talent, you can get by without capital for a while but you'll have trouble at some point getting beyond the label of "small business" unless you have a solid plan for scaling (and a business model that scales - service businesses are notoriously hard to scale because they rely so heavily on the people who implement the service), and the capital to make the plan happen.
Not to jump on the "whining about whippersnappers" train, but now is especially challenging for businesses who are hiring young people in the Gen Y category, because they notoriously will not stay at a company for more than a year or so. It's ultimately quite damaging for any company to have a constant rotation in its staff, but it's especially painful for small companies which often can't absorb the shock. I've seen it happening over and over to my colleagues, and the frustration can dampen a leader's desire to bond with the troops since there's a constant abandonment of the company and its vision. Ultimately, you end up with disenfranchisement all around. So, you should probably plan to hire a mix of ages, and have a failover system in place from the get-go.
I think for most entrepreneurs, it's a shock to realize that not everyone is as committed and passionate as you are, and that's just a normal thing in any generation. The trick is to assume it upfront, and to build enough process and training from day one, so that you can more easily absorb impacts in staff changes.
One of the other big "ah-ha" things I've learned is to do a significant amount of research upfront to more accurately drive the business plan. Don't sign a lease or lay down a website until you've exhaustively interviewed a significant number of potential customers, researched the growth rate of similar companies, and talked to a few competitors to get the real story. Yes, I said talk to a competitor - you don't have to tell them your business plan, but think about it - if someone approached you and said, "I'm thinking about starting a company that's similar to yours; would you mind if I ask you about some of the challenges you had in building your company?", you'd probably give them at least a conversation. Most mature business leaders aren't afraid of competition - they're more afraid of NO competition, which means that you're probably in a declining sector.
4. What obstacles did you face when you first started your business and how did you overcome them?
The biggest overall obstacle for Newsforce, other than the darned recession, is that it's actually ahead of the market somewhat, because we're building a whole new segment in Internet marketing.
Per my earlier advice, I wish I had done more customer research before we started Newsforce. Like most entrepreneurs, I had the hubris to believe I needed to guard our "secret sauce" so much so that we only used third-party research about the market and buying patterns of the public relations companies out there. Ultimately, we spent time and money chasing a market that wasn't mentally ready to embrace our model, and weren't typically given the kind of budgets we expected. The good news is we were able to change our focus and target market without significantly changing the product itself, but we could have been there a lot quicker if we'd done more qualitative research with the people we thought would buy our product.
We also faced a leadership struggle early on, because we were all trying to be nice and give all the shareholders equal voice and control of the company, which is a ridiculous power model. Companies can't be democracies. When we finally gave in and brought in an outside CEO, it helped us to establish more clear lines of authority and direction which ultimately freed the company to move forward efficiently.
By the way, regarding "secret sauce" - you're probably not the only one to have come up with it, so dismiss that thinking right away. Ideas are free, and a lot of people have them; the real challenge and the real value you can build is *implementation* of that idea.
5. What advice would you give to someone who is contemplating starting his or her own business?
Decide upfront if you're building a legacy business, or if you want to get out in X years and sell the business. You must make that decision today because it ultimately will affect everything about how you design the company.
If you're building a legacy business, one that you want to hand down to your grandkids, then invest primarily in customer service and employee training/process early on, and also spend the cash to brand yourself properly. Remember, once upon a time Nike was a small business - the thing they did differently was build high quality shoes that had a "brand mystique" which differentiated them from other sneakers. In a commodity market (and all successful market sectors eventually become commoditized), your ONLY defense is a great brand, but brand is more than just a logo: it's also a sum total of the experience customers have with your product and company.
If you're looking for an exit strategy from day one, the factors for success are already established: you must hit $10M in revenue and show consistent 20% profit margin in order to get any kind of decent payout from a buyer. If your business plan can't model into this with any credulity, then you've got a mismatch on your vision.
6. How has networking helped you grow your business?
You can't grow any business without people and networking. Business is all about the human connection. Studies have shown that 75% of all word-of-mouth referrals happen in person or in an electronic dialogue (phone, email), and those conversations drive the majority of business out there. If you're not meeting people and sharing yourself with them, you're missing out on potential education, connections, investors, and customers.
It was through networking that we found our CEO. It was through networking that we got our initial angel investors and beta customers. We use social media as well to help spread the word and to solicit product feedback, and to establish our thought leadership in the industry. Virtual networking is a good complement for face-to-face, but the two work best in tandem.
In this downturn, my personal network has been a godsend. Since everyone is strapped for cash, we're all trying out various creative bartering arrangements to keep our businesses thriving. We've done some great partnerships for co-marketing and even job-sharing. It's a blessing to realize that when the chips are down, the natural inclination of my colleagues is to band together and drive our way out of the storm.