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Cryptocurrency and the Law: What Small Businesses Should Know

Posted: 27 Jun 2019 09:00 AM PDT

Cryptocurrency first gained widespread recognition when Bitcoin skyrocketed to a value of $20,000 per coin at the end of 2017. Even as the digital currency came back down to Earth, eventually sinking as low as $3,000 before returning to its current value of about $8,000, interest in crypto remains significant.

The rise of Bitcoin and other digital currencies developed in its wake has also raised legal questions for regulators, investors and entrepreneurs alike. Small businesses could possibly benefit from the adoption of cryptocurrencies, especially as a support infrastructure is developed around them; however, understanding the legal implications and how the shifting regulatory landscape could ultimately impact digital payments is critical.

What is cryptocurrency?

Cryptocurrency is generally defined as a decentralized digital asset that relies on encryption techniques to verify transfers and exchanges. Cryptocurrencies are referred to as decentralized because transfers do not require a middleman, such as a bank or payment processor. Instead, digital assets can be transferred directly from buyer to seller.

"Today, [cryptocurrency] is treated widely as a 'store of value' rather than an everyday currency that can be used to pay for basic goods and services," said Michael Yuan, a technologist and chief scientist at The CyberMiles Foundation. "Why? Like gold or diamonds, the value of cryptocurrency is not its underlying utility but how much people believe in it."

Typically, the underlying technology behind cryptocurrency is blockchain, by which many users or "nodes" all hold a complete record of all transactions that have ever occurred on the platform. Because the full ledger of historic transactions exists across all computers on the blockchain, it is very difficult to forge fraudulent transactions; every user has access to a complete, verified record and could see any discrepancies that arise from foul play. This is referred to as a "distributed ledger."

"Such verification is made possible with blockchain technology, the digital ledger in which transactions made in a cryptocurrency are recorded chronologically and publicly," said Yuan.

To verify and add a new "block" of pending transactions to the "chain" of previously verified blocks, computers on the network must come to a consensus that the new block is legitimate. They do so by solving for a mathematical equation in a process that is known as "mining."

That might seem like a lot to take in, but the bottom line is this: Cryptocurrencies are designed to be securely transferred at will between multiple parties without the need for a central authority, like a bank, to control the process.

"It holds the promise of simplifying … [business to business] payment networks, from faster payments to lower transaction fees," Yuan said.

Cryptocurrency and the law

As a relatively new phenomenon, cryptocurrency has drawn the attention of governments around the world. However, exactly how it will be regulated remains unclear. In the U.S., the Securities and Exchange Commission (SEC) regulates most cryptocurrencies as securities. Their status as a securitized asset has made it difficult for small businesses to use cryptocurrencies as typical legal tender.

That could soon change, said Nash Foster, CEO of Pyrofex. Legislation is working its way through Congress to address the ambiguity around accepting digital assets as payment. While the creation of new cryptocurrencies and their distribution would remain a matter for the SEC, new laws could remove barriers to using digital currencies as payment.

"It appears that Congress is going to pass several bills simplifying legal issues for merchants and small businesses," he said.

For example, Foster pointed to an effort led by Reps. Warren Davidson and Tulsi Gabbard, known as the Token Taxonomy Act, which would eliminate the tax liability imposed on merchants for transferring cryptocurrencies, currently considered a securities trade under the current definition of digital currency.

"This … was really the biggest problem for small businesses that just want to take payments in cryptocurrency, because the tax accounting could just be ruinously complicated," said Foster. "That should be worked out by later this summer, and then there will likely be very little for small businesses to worry about."

Taxation of cryptocurrency

Tax policy remains as muddy as the regulatory landscape. Taxation varies from place to place, so it can be difficult for businesses to know exactly what their obligations are when they start accepting digital currency. Generally, businesses accepting cryptocurrency should account for it based on its cash equivalent.

"For example, if you send out an invoice for $1,000 for landscaping services and you agree to be paid in cryptocurrency, the $1,000 must be booked as revenue, and income taxes must be paid on the same, even though you did not receive the physical cash," said Shira Kalfa, founder and partner of Kalfa Law.

But what happens when that cryptocurrency fluctuates in value? If you collect a cryptocurrency payment and the token increases in value, that could be considered capital gains and be subject to the relevant taxes.

"Using the example above, your business … must pay income tax on the $1,000 it received… let's say [the] crypto's value increases to $2,500 in equivalent cash value," Kalfa said. "This accrual also captures tax … and this tax would be a capital gains tax being the difference between the adjusted cost base of $1,000 and the disposed fair market value (FMV) of $2,500."

Needless to say, accepting cryptocurrency could quickly lead to a significant increase in record-keeping. Be prepared to track all cryptocurrency transactions and changes in value if you choose to accept crypto payments. What are the consequences of failing to do so? The U.S. Internal Revenue Service (IRS) recently signaled it's about to crack down on crypto tax avoidance. 

According to IRS tax investigator Gary Alford, the agency is poised to begin criminally charging Bitcoin holders who don't pay their taxes. Alford told crypto publication CCN, "We are aware that there were cases to be made, we just didn't know if we were at the point where we can bring it for criminal prosecution. We believe we are at that point now."

Cryptocurrency for small businesses

The concept of cryptocurrency offers a few immediate promises for small business transactions. Cryptocurrency payments are direct from buyer to seller, significantly reducing or eliminating fees charged by payment processors and banks. Payments in crypto are also irreversible once the transaction is verified, meaning businesses do not run the risk of chargebacks on disputed transactions.

"While Visa charges between 3% and 15% in fees per transaction, cryptocurrency networks typically charge less than 1%. And there is no risk of chargebacks, because cryptocurrency transactions aren't reversible the way that credit card transactions are," Foster said. "Crypto operates more like cash, where the end user has to deal with security risk, instead of the merchants accepting all the risk."

However, accepting cryptocurrency comes with risks. Chief among these is the price volatility, which could result in some cryptocurrencies drastically changing value moments after the transfer. If a cryptocurrency crashes before a business can convert it to dollars, it could result in a loss. In addition, Foster said, the support infrastructure for cryptocurrency simply isn't in place yet.

"Cryptocurrency allows merchants and end users to do more of what centralized payment processors and banks used to do, but that means you have to learn something about what you're doing," Foster said. "Even if you are taking payments in Bitcoin, that doesn't mean your landlord will accept Bitcoin for the rent."

Business owners that accept crypto payments then must learn about converting tokens into cash, the security of exchanges or crypto wallets, when any fees would be triggered and more. That learning curve has contributed to another challenge: Adoption simply isn't widespread among consumers. While customers are more familiar with digital wallets than ever, widespread adoption of cryptocurrency has not yet occurred, meaning implementing a system for accepting cryptocurrency might be a solution in search of a problem.

Still, Foster believes it is an optimal time for small businesses to get ahead of the curve and prepare for what could be the next evolution in payment method. Mass adoption, he said, could come sooner than expected.

"I'm a firm believer that now is a great time for [small businesses] to begin adopting cryptocurrency for their regular flow of payments," he said. "Customers are already comfortable setting up digital wallets on their smartphones … getting customers to adopt the technology won't be particularly difficult."

Facebook for Business: 25 Tips and Tricks to Supercharge Your Business

Posted: 27 Jun 2019 08:00 AM PDT

With such broad reach, any entrepreneur or small business owner looking to grow their online presence should not overlook Facebook.

Creating a business page is a great first step, but this action alone is not enough to stand out. You should be up to date on all the latest strategies to captivate your audience, turn them into leads and convert them into customers.

Here are 25 effective, yet easy-to-follow Facebook marketing tips and tricks that will help you generate sales for your business. And best of all, these are tips you can implement for free today. All you need is to put in some time and dedication. 

How to get started

1. Create a business page, not a personal profile.

This is something a lot of entrepreneurs starting out on Facebook often get confused about. If you create a regular (personal) Facebook page with your business name and details, it is not  a business page as per Facebook's rules and regulations. Facebook recognizes personal and business pages as different.  You should have a dedicated business page.

To create your business page on Facebook, you can simply click on the Pages section on Facebook.com, followed by the Create Page button. The advantages of business page differ from those of a personal page. With a business page:

  • You can enjoy unique tools and features that Facebook designed to help manage your business needs.
  • Your fans can subscribe to automatically receive your updates to your page.
  • A business page will add to the brand profile of your business, thus establishing trust with your customers.

2. Create a username or custom short URL.

When you create a Facebook business page, Facebook assigns a random URL to your page. Instead, you can obtain a username or vanity URL (as it is often called). This makes it easier for users to search for and recognize your business page. A vanity URL also helps with:

  • Increasing brand awareness and trust among customers
  • Enhancing SEO search results for your business
  • Integrating with link retargeting and UTM tools

As a bonus tip, you can optimize your vanity URL to include targeted keywords in order to further boost your SEO. 

Perfect your profile

3. Capture attention with a cover photo.

A picture speaks a thousand words. Convey the essence of your business with a well-thought-out cover photo. In general, it is recommended to use an 851x315-pixel photo as the cover of your Facebook business page.

Keep the following points in mind while uploading a cover photo for your Facebook business page:

  • Focus on the mobile-first appearance of your cover image.
  • Preferably, use right alignment for your cover photo.
  • Pin a related post below your cover photo .

4. Optimize your profile picture.

Use your company logo or title to create a well-designed profile picture. If you are a proud solopreneur, consider putting your own photo as the profile picture. Here are some tips to keep in mind when selecting your profile picture:

  • Preferably, select a profile picture that is 180x180 pixels or larger.
  • Ensure that your profile picture shows your passion for your business or product.
  • Check that your picture resonates with your core customer audience.
  • Make sure that your profile picture helps you stand out from your competitors. 

5. Craft the About section so it speaks for your business.

The About section is a great way to let your customers know about your business and what you offer. For business pages on Facebook, the About tab is located on the left-hand side of your business page. 

Here, visitors can learn more about your product offering, website URLs, Instagram pages, and other relevant information about how they can reach you. Be smart; make good use of these sections.

Maintain your brand

6. Respond quickly to messages. 

While the intention behind a Facebook business page is to better connect with customers, why not prove it? The more responsive you are to customers' requests and private messages, the more responsive "stamp" you are likely to get on your page. 

You might have seen badges for businesses indicating how quickly they respond to messages, such as "very responsive," "typically replies within a day," etc. Though responding is not mandatory as per Facebook rules, it serves as social proof that you care about your customers by answering their questions or concerns.

7. Share your achievements.

Your business has come a long way to reach where you are at today. You have had several achievements along the way. Share such milestones with your followers and let them join in too. For example, share a post when you reach your first 1,000 likes, first 100 customers or second anniversary. When creating a page post, simply select a Milestone to add and share your achievement. 

8. Create call-to-action buttons with a purpose.

Business pages on Facebook have a unique advantage. As a business owner, you can add a call-to-action button to your business page.

For example, you can add a Sign Up, Contact Us, or Book Now button, along with the corresponding details.  These buttons can link to your Registration page, Contact Us page, or Order page accordingly. Thus, when a user clicks on a button, the corresponding actions happen instantly, making it easier for customers to complete their desired objective. 

9. Customize your tabs.

If you have many sections, such as Contact Us, Careers, Products, About Us, on your website, you can showcase them as tabs on your business page. Visitors will find it convenient to select what they want and be redirected to the corresponding pages of your website. 

You can do this by signing in to your Facebook business page, selecting the More tab and then Manage Tabs from the dropdown list. 

10. Focus on creating quality posts.

Gone are the days when bloggers posted average content on their websites and social media accounts just so they continued showing up in the newsfeed. Social media algorithms have changed. Quality matters now.

Produce high-quality posts rather than quickly publishing posts that have less-valuable content. Learn how to write better posts by following and learning from top accounts in your niche. Add compelling videos, images, infographics and other facts to make your content lively and informational. 

11. Learn when to post.

Though there are no hard-and-fast rules for posting on your page, statistics reveal some interesting facts about the best day and time to post on Facebook to garner the most engagement.

Every Wednesday at 3 p.m. (in your local or primary target audience's time zone) is a good starting point. You can also try posting on weekends and between 1 p.m. and 4 p.m. on Thursdays and Fridays. Fridays are generally the highest engagement days. If you want to share good news or a milestone, do it on a Friday.

Avoid posting on weekends before 8 a.m. and after 8 p.m. People are busy on the weekend and tend to be less attentive during these times. 

12. Be innovative and interesting.

Resist the temptation to share basic updates. Readers should enjoy viewing your posts and content. Whenever you post, try to make it interesting, important and informative. You can improve engagement by adding captivating images, videos, polls and other interactive content. 

13. Offer value and freebies.

Promoting only your products will quickly turn off your followers. Consider sharing some  interesting facts or news that is in line with your product. For example, if you sell handmade beauty products through your Facebook page, talk about the benefits of organic ingredients, or homemade DIY recipes. Readers are more likely to be interested in your posts and may consider buying your products along the way. 

14. Make sure your meta descriptions are complete.

Understand that when you share a link from your website to your business page, Facebook pulls the description text based on metadata. As a result, it's important to make sure that your website page has a detailed meta description. The same applies to images on your pages.

15. Do not include long URLs.

When sharing a post, the corresponding URL innately gets attached with the post. When your page followers click on the post, they are automatically redirected to that URL.  You do not need to add a link again. If you wanted to add a separate link, try Bitly to improve the appearance of your URL. 

16. Include eye-catching images with your posts.

Studies found that posts with compelling images are more attractive to readers and will draw followers in versus posts that do not have images. Boost your user engagement by adding images to your content, and get more readership and views to your website. 

17. Touch up your images.

Before posting on your Facebook page, make sure that your images are visible and appealing. If not, you can edit your images using formatting tools. However, don't over edit so that your image looks too artificial or inauthentic. It's best to adhere to Facebook's recommended dimensions image posting guidelines and dimensions. 

18. Boost engagement by including videos.

Posting videos on Facebook pages garners increased engagement. Post videos and, preferably, live videos to boost audience views for your page. 

Measure your performance

19. Improve your posts with Facebook Insights.

Using Facebook Page Insights, the analytics tool from Facebook, you can understand how your posts are doing. This tool provides reports like the number of visitors, views, likes and other details for your page. Facebook Page Insights is helpful in analyzing the effectiveness of your posts and measuring how your website is benefiting from a Facebook business page. Insights can be found in the top navigation bar of your business page. 

20. Plan ahead.

Plan out all important calendar events that may be relevant to your audience and potentially on a global scale too. Holidays such as Mother's Day or Thanksgiving are great opportunities to share relevant related content. For this, you may want to plan ahead and schedule your posts accordingly. 

21. Keep learning.

To stay in touch with new trends, as well as new tips and tricks to attract customers, it is important that you always keep learning. For this, where better to get new information than Facebook itself? You can subscribe to Facebook's official blog and read their posts periodically. This valuable resource lets you do more with your business page. 

22. Install Facebook's social media button on your website.

Once your page is set up, do not forget to add Facebook's widget and social share buttons to your website. This way, visitors can like and follow your business page directly from your website. Another advantage is the social proof this provides as your visitors can see how many followers you have and that you are active on social media.

23. Test your posts.

Suppose you share a video or image post and analyze the metrics of that post. For your next post, try changing the content a bit, shortening the video length or using a different meta description to see if there are any notable differences in views, likes and shares. This optimization method serves well in improving your posts and seeing what resonates with your followers.

24. Gain from advertising tools of Facebook.

You have done your part in promoting your website through your Facebook page. Congrats! Why not reap more benefits by making use of Facebook's advertising tools? You can try boosting your posts or running purchase conversion ads using Facebook Ads Manager. With some experimentation, you can improve your results and expand your audience.

25. Better understand your audience.

Facebook Audience Insights is a tool that lets you better understand insights about your audience. This can help in building better personas and determining what messaging resonates the best. This is one of Facebook's most underutilized free tools, and it will definitely make a difference for your business. 

With these 25 tips, you are ready to master social media on Facebook and reap the rewards for your business. As a bonus, consider applying these Facebook marketing strategies. All the best! 

Facebook's Ad Metrics Changes: What SMBs Need to Know

Posted: 27 Jun 2019 07:00 AM PDT

  • Facebook has eliminated the single Ad Relevance Score and replaced it with more detailed metrics.
  • The social network giant adjusted its algorithm to give priority to content users engage the most with.
  • As a small business, valuable content is key to driving engagement.

 Facebook has been hard at work updating many of its ad features over the last few months, namely, doing away with the single Ad Relevance Score, updating how the potential reach is calculated and adding three more actionable updates.

According to Facebook, "We're constantly evolving our ad platform, which means our metrics must evolve too. We think this [new] level of granularity will offer reporting that's more actionable for businesses." [Read related article: How to Use Facebook for Business]

Facebook has added three ad relevance diagnostic dimensions:

  • Quality ranking, which is how your ad's perceived quality compares with ads competing for the same audience. Facebook measures ad quality based on feedback that indicates users have hid an ad or flagged it as clickbait.

  • Engagement rate ranking, which is how your ad's expected engagement rate compares with ads competing for the same audience, i.e., the likelihood of a user interacting with an ad either by clicking, reacting, commenting or sharing.

  • Conversion rate ranking, which is how your ad's expected conversion rate compares with ads that have the same optimization goal and compete for the same audience. This determines the likelihood of a user completing your optimization goal.

Facebook says that when used together, these diagnostics will help advertisers understand whether changes to creative assets, audience targeting or the post-click experience could improve performance. They will not factor into your ad's performance in the auction.

There were also changes made to potential reach, which provides businesses with an idea of how many people will see the ad campaign. Potential reach was previously calculated based on the number of total monthly active Facebook users; now, though, it will only include users that were shown an ad on Facebook in the last 30 days. This estimate, according to Facebook, will more closely align with results advertisers will see in their campaign performance.

Facebook created a chart to help users discern the meaning of a variety of ad relevance diagnostics, and it provides helpful recommendations to help you meet your advertising goals.

Metric-based comparison

These changes will allow advertisers to see exactly how their advertisements are performing against their competition, something that many feel is a long time coming in the age of digital transparency.

These new metrics are scored based on how well your advertisements compare against those of your competitors shown to the same audience, instead of the old method of Facebook assigning your ad a score between one and 10 based on early impressions of positive and negative interactions (such as likes, video views or hiding an ad). Many advertisers complained the old metric was too vague to be of any value and didn't delve into why an ad was performing well or failing.

The new quality ranking is still primarily based on users' interactions with the ad, but each ad's performance is no longer isolated within its own performance. As a result, engagement has become more important than ever – if your ads get more engagement than your competitors, you get a better score.

"Focus on creating relationships instead of just selling," said Brandon Fargo, owner and CEO of Brahvia Consulting. "Content and video are king right now."

You want your advertisements to echo your business, grab attention and inspire customers to follow the call to action, whether it's to buy a product or sign up for a newsletter. Video is one of the highest-engaged-with forms of advertising on the platform – 70% of videos are watched all the way through – and can have enormous benefits for your business if executed correctly.

To create a video ad, you'll follow the same protocol for creating a static ad. Select Get video views under Campaign Objective, then define your audience, budget and ad schedule. Then follow Facebook's instructions for creating a video or upload your own file.

Effect on small businesses

Because these changes are largely for advertisers' benefit, don't expect to see any noticeable changes with your Facebook ads. You should, however, expect to see more detailed information regarding your ads and how they are performing, which can help you refine your marketing strategy.

"[You] should only change the ads that need revision based on [Facebook's] insights," said Emma Franks, senior paid social account manager at Hanapin Marketing. "If there are ads with low engagement rates, those are the ones that should be updated first."

Franks added that ads with a low-quality ranking could improve if shown to a different audience while ads with poor conversion rates could benefit from driving traffic to a new landing page. Take the time to understand the new metrics and what they mean for your advertisements, and have a plan in place if you see that changes need to be made.

Facebook also introduced two changes to its algorithm around the same time as the metric changes, the first being prioritizing friends the user is most likely to want to hear from based on past engagement, and the second being increasing visibility to links the user will find most valuable.

As a small business, you can benefit from these changes by making sure your content is relevant and valuable to your customers, despite Facebook's declining organic reach to Pages. As long as users are actively engaging with your content, you should stay relevant in their news feeds and continue to have your ads viewed.

How to Make Remote Employees Feel More Connected

Posted: 27 Jun 2019 06:00 AM PDT

With so many positives, it's no wonder why remote work is becoming more and more popular. Research from Owl Labs, 16 percent of global companies are fully remote and 40 percent partially remote. Those numbers are only going to keep rising as more people realize the benefits of remote work.

But, with all the benefits of remote working, there come struggles as well. When your team members are working from their homes in different locations, they're missing out on connecting with each other and the company as a whole. A Harvard Business Review study of 1,100 employees, found that remote employees are more likely to feel that colleagues mistreat them and leave them out. If your remote workers are experiencing these feelings, it could decrease their productivity and negatively affect company morale.

Building strong connections is a key part of building a strong business. Here's how to make your remote work team feel more connected.

Use communication tools.

Your remote workers need to be able to easily communicate with each other. Sending off an email and waiting to receive the response just won't cut it in today's work environment. In order to make your remote workers really feel connected, you need to make sure you're using remote working tools for communication. One of the most popular remote working tools is Slack. Slack is a type of instant messaging tool where conversations are organized into channels. These channels allow you to organize communications based on teams, projects, or even office locations. Implementing a communication tool, such as Slack, will allow your remote workers to feel like they can get a hold of someone quickly if they need to.

Aside from creating Slack channels based on teams and projects, you should also create some general or family channels that allow your remote workers to chat with each other about topics unrelated to work. Many remote workers miss the opportunity to chat with their co-workers like they would in a traditional office setting. So, by providing them a space to talk about whatever's on their mind, they'll feel like a true member of your work family.

Hold weekly video meetings.

Another effective way to make your remote work team feel more connected is with some face-to-face interaction. There are a lot of studies out there that claim technology has killed face-to-face interactions. While that may be true, in the case of remote work, technology actually makes face-to-face interaction possible. Since your remote workers can't come into the office, you can hold weekly video meetings with a video communications tool like Zoom or Skype. Holding regular video meetings will allow remote workers to get that face time they're missing out on. Ultimately, this will help them form better bonds with their co-workers.  

To build even stronger connections during your weekly video meetings, don't talk only about work.  Add a personal touch. For our company's weekly video meetings, before we start talking about projects, a new website launch, or KPIs, we allow our team members to share any good news they have. This could be work-related good news or just something fun they did on the weekend.

Establish fun company traditions.

It's easy to establish fun company traditions in an in-person work environment. For instance, on the birthday of each of your employees, you can have a pizza and cake party in the office. And on the last Friday of every month, you can have a board game day. But, if you want to make your remote team feel more connected, it's important to continue these types of fun company traditions online. The question is how do you do that exactly?

Well, to celebrate birthdays you can post "Happy Birthday" messages on  Slack, this way other employees can chime in with their own birthday messages and GIFs. Maybe you could even deliver a pizza to your remote employee's location. We do this on occasion at our remote company. You could also create online scavenger hunts or get everyone together to play an online game. Including remote workers in fun company traditions will create stronger bonds and help you keep your company culture intact.

Celebrate your team.

Recognizing the accomplishments and improvements your employees and co-workers are making is a great way to make them smile, make them feel proud, and make them feel like an important part of the team. So, if you want your remote workers to feel more connected, take the time to celebrate them. Not only will praise make your team feel more connected, but it can actually increase productivity as well, according to a study published in Forbes.

You can do this by sending a quick message of praise when a remote worker does a great job or adding an employee of the month program. But, as the owner of the company, you can't be everywhere all the time, so you won't be able to see all the awesome things your employees are doing. So, let your team members celebrate each other by implementing a system that allows team members to submit praise. That way, everyone will be able to get some shine a little easier.

Plan a yearly company retreat.

Getting together with your remote team in person is another great way to form stronger connections. Try to plan a yearly retreat for all of your employees. Depending on the location of where your employees are, yearly company retreat might not be feasible for all companies. However, if you can, a yearly retreat is one of the most effective ways to spend real quality time together and build deep connections.

A team retreat will allow all of your remote workers to get together and share ideas, work on projects together and plan company goals. But a yearly retreat shouldn't only be focused on work. Make sure your team has free time during the retreat to hang out and get to know each other. You should also plan fun activities and outings; allowing your employees to let loose a little allows them to open up and get to know each other. A retreat will make your remote team feel more connected and give them something awesome to look forward to all year.

When you're managing a remote team, you're often worried about the logistics. How will the team collaborate together, how will they communicate and handle customer service, how will they submit completed work, and so on. But, making sure your remote workers feel connected is key to running a successful remote company.

Having your team members feel connected to one another will improve their collaboration skills and ultimately improve the quality of work they produce. A connected remote team is also a happy one. When your remote employees feel a connection to coworkers and the company, they'll stick around for the long haul.

Is My Business Idea Good Enough?

Posted: 27 Jun 2019 06:00 AM PDT

Maybe it's a passion project or something that can fill a void in the market. Whatever it is, before you start pursuing your new great idea, it's important to make sure it's strong enough to withstand the trials and tribulations that come with starting a new business. [Related article: How to Take the First Step Starting a New Business]

Entrepreneurship can be incredibly personal and all-consuming in that you are pouring significant amounts of time, money and energy into one idea. Naturally, you want to do all that you can to ensure that idea is worth your while before you start a business.

Business.com spoke to business experts and experienced entrepreneurs to see what you can do to make sure your business idea is worth executing, and how to know when it's time to let it go.

Validate your idea

The first, and most important, step – once you have a business idea – is to go through the validation process. The exact process differs depending on what your business idea is, but, generally, you'll want to start by asking yourself the following questions:

  • Is there a real need? Does my idea solve a real problem?
  • Will people buy it?
  • Will I be profitable?
  • How many people will want my product/service?

You need to make sure that you have a product or service that people want and are willing to pay a reasonable amount for. If neither of these is true, it will be disastrous for your business.

This step is where you conduct the bulk of your market research, comparing your product or service to existing ones in the market and sending surveys to your target audience to see where they feel the market is lacking.

You should also investigate the competition and make sure that your product or service fills a gap or provides an added value, whether in price or features, but be sure that the gap doesn't exist for a reason.

"If the big players in your space aren't offering what you are, see if they've done it before and stopped," said Robert Livingstone, president and founder of Ideal Cost. There is often a good reason why a particular idea has never worked out.

Next, ensure your business idea is legally allowed and is able to comply with applicable laws and regulation. Finally, if possible, conduct a test within your target market with a prototype, beta version or sample of your product or service. Offer your test product for free and take careful notes of reactions, comments, suggestions, and questions.

Use your network

As you're crunching numbers, reach out to your professional network and trusted friends to see what they think about your idea.

"Networking is a great way to carry out low-cost or free market research," said Hannah Attewell, success and business coach at Force of Nature Coach. "Look at how the people you meet receive your idea and how they talk about it. Seeing how people react to your idea will give you a great barometer."

It is important that you are willing to accept criticism and unexpected results or responses at this stage in the process. Negative feedback can be a good thing by bringing attention to places where your idea may be lacking, helping you revise your pitch to be more effective or identifying key business questions.

You should also take every opportunity to reach out to existing entrepreneurs in the same industry or area of interest to see if they would be willing to review your idea and give feedback. 

"You might think they [fellow entrepreneurs] won't be willing to lend you advice since you're technically competition, but there's enough work for everyone," said Carrie Anton, creative architect at Wonder: An Idea Studio. "Many small businesses tend to live by the saying 'A rising tide lifts all boats.'" 

Give yourself a SWOT analysis

A SWOT analysis (strengths, weaknesses, opportunities, threats) of both yourself as an entrepreneur and your idea can give you a strong sense of where you stand, what you do well, what you need to work on and issues to keep an eye out for.

"By making a detailed list of all [your] personal strengths and weaknesses, [you] can determine what role you can take in your business and what roles you need to delegate or resource," said Sarkis Hakopdjanian, director of strategy and principal for The Business Clinic.

Do your homework

Doing thorough, diligent research as a way to flesh out your business idea can also help you determine how sound it is and potentially provide new insights and elements to your original idea.

"Do your homework," said Leeron Cohen, CEO and founder of Clips Garage. "Even when you think you know certain things, you will never be at 100% knowledge gained on any idea you have. Always be learning." 

As a potential business owner, it is vital that you are a near expert on your product, your market and your target audience. And as business is a constantly evolving field, it pays to keep up with the latest developments, products and services in your specific industry.

"The best advice I received in starting my business is to always keep learning," said Hakopdjanian. "The only thing constant in life and business is change, and businesses that adapt to a fast-changing environment can grow and thrive, while businesses that are slow to adapt and learn are left behind."

When to let it go

Sometimes, despite all the best efforts, an idea just doesn't pan out. This can be difficult to come to terms with, especially with a business idea that you've poured a lot of work into. But with business ideas, letting an idea go is often less about abandoning it as it is taking it in a new direction.

"Many times, you don't need to scrap a business idea entirely; rather, you should figure out if a pivot in a new direction may be something that the market demands," said Cohen.

Gauging the reactions of a focus group, your network, or family and friends is usually a good way to see how the general public would receive your idea, plus it helps you determine whether or not you need to redirect. Pay attention to how excited your audience gets about your product or service and how hard you have to work to get a reaction.

"If you have to sell really hard and no one seems convinced, it's time to reinvent," said Bethany Babcock, CEO and founder of Foresite Real Estate. "You need cheerleaders for your business, and if the product or service isn't creating those, and quickly, it's time to re-evaluate."

If pivoting doesn't help, and you feel stuck in a draining cycle, that may be a sign that it's time to let the business idea go entirely.

"Running a business is hard, especially in the beginning," said Rivky Itzkowitz, founder and designer at Impact Fashion. "If what you're doing is no longer rewarding and is, instead, a drain on your day, you need to make some changes."

You should also make a point to pay attention to and be realistic about your numbers.

"I'd recommend scrapping a business idea if you aren't seeing measurable incremental growth each month for the first 12 months of sales," said Livingstone.  

For more discussion on business ideas, visit this business.com community thread.

How to Build a Business Without Investors

Posted: 27 Jun 2019 06:00 AM PDT

  • Starting a company without the weight of investors can yield many benefits that outweigh the cons, like controlling your own destiny, not having to compromise with shareholders and quickly changing business direction when needed.
  • If you do not have investors, you must be prepared to spend more of one thing in particular: time.
  • Build a successful startup by investing your free time, learning how to take on every job responsibility and making the necessary sacrifices for growth.
  • Always keep an eye on your finances, and only hire employees when necessary.

Building a business from the ground up is often very difficult. Building a business without the initial cash flow from investors can be even harder. However, choosing to start a company without the weight of investors can yield many benefits that outweigh the cons. 

Lauren Grech, the CEO and co-founder of LLG Events, an international event management firm specializing in luxury destination weddings, discovered those benefits when she partnered up with her husband, Paul, to build what would later become a successful business without investors. 

Grech was working as a research and development scientist at the medical examiner's office in New York City when the idea to start her own luxury event business piqued her interest. Shortly after planning her own wedding, Grech learned her passion for event planning and decided to pursue it professionally. She knew it would take hard work and dedication, but with her husband by her side, she believed they could turn their dream into a reality without investor funding.

"I decided it would be best to undertake LLG Events using my own time instead of other people's money," Grech told Business News Daily. "For me, the benefit was the ability to drive the business in whatever direction required to get us to where we are today."

Benefits of starting a business without investors

Many decisions go into starting a business, including whether or not to have financial investors. It is important to weigh the pros and cons of taking outside money, and to take note of what options are realistic for your business. Grech said that starting something on your own and investing your own time and capital is demanding, but it can be highly rewarding.

She said there are a number of benefits to starting a business without investors:

  1. You have complete control of your own destiny. It allows you to understand your capabilities and shortcomings, which you can see the direct result of through success or failure. The rewards are yours, but so are the losses.
  2. You can push yourself and live up to your potential. One of the most intimidating things about starting a new business is the risk that it is going to fail. However, if you are solely responsible for your business, you may be more inclined to work harder to achieve your dreams.
  3. You don't have to compromise with shareholders or a board of directors. When investors' motivations are different from your own, it can cause difficulties and tension with decision-making. Investors can also add more pressure financially, mentally and emotionally.
  4. You have the freedom to quickly change direction as needed. Going without investors gives you the freedom to pivot or shift the direction of your business without convincing others that it is a good idea. This enables you to quickly adapt to the constantly changing market.

"It is important to be as agile as possible, especially in the early days as you continue to search for product-market fit," Grech said.

How to start a business without investors

Starting a business with investors and without are very similar paths. However, if you do not have outside financial backing, you must be prepared to spend more of one thing in particular: time. 

"When starting a company without investors, you must put in the investment of time," said Grech. "There is a trade-off between the financial commitment investors can provide with the time it takes to start your business."

1. Invest your free time into your side hustle.

Since starting a business without investors can leave you strapped for financing, it may be wise to keep your day job while you develop your new business. Grech and her husband did this by volunteering at events on the weekends to gain industry knowledge, insight and network connections. Grech went to work early so she could leave early to meet with vendors and clients, as well as to work on her website, marketing and planning materials.

"I worked for free, with any free time that I had," said Grech. "The more time I was able to focus on LLG, the more time I was able to dedicate to the business."

2. Learn how to take on every job title and responsibility.

Growing a business without investors comes with additional responsibility and pressure, since you are likely your only employee. In the beginning, you may not have the capital to hire employees, causing you to take on every job title and responsibility by yourself.

"You learn to become your own lawyer, accountant, secretary, etc., and you run every department until you acquire enough money from your sales to hire talented and specialized personnel," Grech said.

3. Make the necessary sacrifices to grow your business.

Your business, like a baby, is going to demand a lot of time and attention. You must be willing to make sacrifices to free up your time. Grech said the more time you can free up, the more you can work on your startup and expedite the next phase of your business. However, keep in mind that spending time on your venture will take time away from other activities or people. It's a give-and-take that you must figure out how to balance.

"In the early part of my career, I had to make a lot of sacrifices," said Grech. "Every penny went into the company, and Paul and I did not travel unless it was for business. We skipped family gatherings, birthdays and nights out with friends, all to work and focus on the company's growth."

4. Hire the right individuals (when you can afford it).

When you are finally in a position to scale your business, you should invest in the right individuals. The people you hire should be specialists who believe in your vision. Grech said that finding the right employee is like finding the right investor.

"You need to find those who share in your vision and your growth, who believe in what you're doing and the message you are spreading," Grech said. "For me, company culture was everything, and if we were going to expand, it needed to be with the right people."

Grech advises bringing on team members slowly, only hiring when necessary. She said it is important to focus on building a business savings.

5. Don't forget about finances.

Through the entire startup process, keep your revenue and finances in mind. Since you won't have investors to support you in times of need, ensure your company is always in the green. Grech said that she worried about financial responsibilities and commitments every step of the way.

"Paul and I were sure to never overextend ourselves financially," she said. "Instead, we'd rather take on the work and increase our capacity in order to achieve what was necessary for the business to grow."

Tips for managing expectations

One of the hardest lessons Grech had to learn was to have patience. As an up-and-coming entrepreneur, you may want immediate success, but this is not a realistic expectation. Patience can allow you to see the difference between short- and long-term gains, as well as to manage your expectations. 

Another important quality to attain is self-control. Grech said a high level of self-control allows you to make fewer impulsive and emotionally driven decisions. It can empower you to make decisions without fear, keeping you calm in situations of high stress, because you have the knowledge and faith that everything will work itself out in due time.

"My advice to future entrepreneurs is to just stay the course," said Grech. "Investors help, but ultimately you are in debt to them. You can do this on your own if you believe in yourself and invest the most precious thing: time."
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