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You can listen to all podcast episodes here. Learn about some of the most important topics raised by today's aspiring entrepreneurs and small business owners.
BONUS: How Your Business Can Have an Impact
Build a business with an impact.
Ready to make a difference with your business but don’t know where to start? Just ask Thomas Ling, founder of Kin+Kind, who combined his passion for the environment and love of animals to create eco-friendly pet products. Thomas breaks down what makes a business sustainable, the importance of transparency and authenticity, and how you can start a business that does good in the world.
“It's important that we are running the kind of company that we want to see out in the world.” Thomas says.
Learn what it takes to be a clean business, and the benefits that come with it.In this episode you’ll hear:
(01:09) Kin+Kind’s story.
(02:56) How Kin + Kind brings transparency and authenticity into their products.
(04:11) What are clean ingredients?
(06:34) Being a clean company is about more than using good ingredients, it’s also about how you treat your employees.
(07:25) What is greenwashing?
(09:15) How to start a sustainable business.
(10:50) The benefits of having a clean business.
Key takeaways:
1 - Starting a business that has a positive impact means being transparent and authentic. And there’s a few ways you could do that. Thomas makes sure to use the common and scientific name of the ingredients they use, get’s third-party certifications so their customers know what’s in their products, and uses responsibly sourced ingredients.
2 - Building a clean business isn’t just about ingredients; it’s also about how you treat your workers.
3 - Using high-quality ingredients can be pricey. Thomas advises new businesses to be prepared to roll your products out at a loss and focus on a small group of customers that share your values. It's going to take a lot of experimentation. So, start small and do a proof of concept, then once you see that there’s a market out there that wants what you’re selling – that’s when you might be profitable.
4 - Even though it costs a lot to start a clean business, it's worth it. Thomas says when your business is based on good values, your customers stick with you, even when times are tough. Kin+Kind kept going during the pandemic because their customers knew they cared about their pets and the environment just as much as they did.
00:00:01
Thomas Ling: So we're not just making a product because I came from a very, very unrelated space, and the switch was to do something I was passionate about and something I cared about and trying to do something that had an impact. And it's weird. How do pet products have an impact? But in the way that we interact with our products and our employees and our community is how I feel I'm having an impact and doing and putting into the world something that represents the value systems that I have.
00:00:27
Andrea Marquez: To celebrate Asian-Pacific American Heritage Month, we're highlighting an Asian and Pacific Islander-owned small business that's taking care of your furry friends while doing some good in the world.
Hi, I'm Andrea Marquez, and this is Small Business, the podcast brought to you by Amazon. Today we'll be digging into clean ingredients and sustainability with Thomas Ling, the owner of Kin+ Kind, a manufacturer and retailer of pet grooming and wellness that's on a mission to clean up pet care. Starting Kin+ Kind wasn't always part of Thomas's plan.
00:01:05
Thomas Ling: I went to Harvard Law School and I practiced for about a decade and I enjoyed being a lawyer. I liked doing law, but I didn't feel passionate about the type of clients that I was servicing. It wasn't moving me towards having an impact on the world.
00:01:18
Andrea Marquez: Tom has spent a lot of time doing pro bono work, and he still continues to do that on the side, but pets and the environment have always had a special place in his heart.
00:01:28
Thomas Ling: I grew up working in pet stores. There's a cute pet store down the corner that I would hang out, and finally they said, “Do you want to get paid?” I was like, “Yeah, that'd be great.” And I just had a ton of pets in my home. So I had rabbits, I had birds, I had fish, I had dogs. Just always surrounded by animals, but dogs and cats, I've always really ... Think they're part of your family.
00:01:47
Andrea Marquez: His sister Janine, who helped co-found Kin+ Kind shared his obsession with pets, and she ended up opening a pet store.
00:01:55
Thomas Ling: We actually worked at pet stores together, and so it was kind of a space that I was familiar with. She's passionate about all these things and seemed interesting and exciting. It allowed me to bring the idea of being passionate about environmental issues and trying to make a product that brought those environmental issues into the pet space. Just seemed kind of a good fit.
00:02:15
Andrea Marquez: But Janine eventually ended up leaving Kin+ Kind to start her own company.
00:02:19
Thomas Ling: And so she's like, “Thomas, your sustainability is nothing. Hold my beer.” So she went and made a company that doesn't use plastic.
00:02:29
Andrea Marquez: So this passion to help the environment and have a bigger impact clearly runs in the family. And one of the main ways that Kin+ Kind tries to do this is by bringing transparency and authenticity to their products.
00:02:41
Thomas Ling: That means using natural ingredients that are certified by the United States Department of Agricultural Inspectors under the USDA Organic Program or the USDA Bio-based program. Plus that means we make everything ourselves here in the United States.
We're using the highest regulatory standards so that we're able to be good to our team while we're being good to the world. And the last thing that we used as kind of our pillar of transparency and authenticity is that we have made everything specifically for pets. So we had our own veterinarian and our own plant scientists pull these things together themselves to make sure that we have ingredients that are dealing with pets in a holistic, natural way that's effective and safe and good for the environment.
00:03:27
Andrea Marquez: There's a lot of responsibility behind your brand. Am I hearing a dog collar?
00:03:33
Thomas Ling: That is.
00:03:33
Andrea Marquez: That is.
00:03:35
Thomas Ling: Yes.
00:03:35
Andrea Marquez: I love that. That's so cute and super fitting for this conversation. So, Thomas, can you explain to me what clean ingredients are?
00:03:45
Thomas Ling: So that's about using things that are both responsible and transparent to the consumer, and that's really missing in the pet space. So in the pet space, there's a lot of greenwashing, there's a lot of omission because it's not that tightly regulated from a labeling perspective. So they're not required to put everything that's in their bottle into their labels. So step one is, Hey, what's in that bottle? Because pet parents are rightly concerned because they want what's best for their pets and feel very passionately about certain ingredients that are natural, that are responsibly sourced, and you need that level of clarity.
00:04:21
Andrea Marquez: This is a good time to mention that Amazon through our Climate Pledge-Friendly program is helping customers discover products with third party sustainability certifications like USDA Organic to help sellers like Kin+ kind offset some of the economic hardships of starting a sustainable business. So, Kin+ Kind does a few things to ensure that they're transparent about what's in their products. First, Thomas says that they use the common name and the scientific name for every ingredient they use.
00:04:52
Thomas Ling: So we don't use fantasy names, we don't use made up names.
00:04:55
Andrea Marquez: They also have third party certifications on their products.
00:04:58
Thomas Ling: Because inspectors come in, they audit our books, we do lab testing for our products so that there's 100% certainty that you know hat's going in or on your pet.
00:05:08
Andrea Marquez: And they use responsibly sourced ingredients.
00:05:11
Thomas Ling: We are a certified USDA organic brand because we feel very passionately that things should be grown with minimal negative impact on the earth. So if you're certified USDA organic, that means all of your ingredients are USDA organic. That means they're grown without pesticides, they're grown without GMOs, they're grown without other harmful farming practices because the United States Department of Agriculture defines what that means.
And so people throw away that term organic. They don't really know what it means, but if it's got that organic seal on it, you are compliant with the program that the United States Department of Agriculture has put out there that makes us feel good that we're protecting the earth.
And that makes you feel good that you're protecting your pet because you know what's in that cosmetic or in that supplement that you're putting it. And the newest category is a Pee+ Stain so you can feel good about what you putting in your home so that you know that you're not inhaling these ingredients that are just bad for you, your family, your pet.
00:06:06
Andrea Marquez: Kin+ Kind wants to be a responsible company and provide clean and transparent products to their customers. But being a clean company goes beyond this. It also includes caring for your employees.
00:06:18
Thomas Ling: So we have our own team working in our own facility. So being local obviously is good for our community, but it's also good because it's good for the employees. So our employees have healthcare benefits, they have dental benefits, they have retirement programs because this is important. It's important that we are running the kind of company that we want to see out in the world, and we're doing here is how we want to be treated, and we want other people to be treated.
00:06:44
Andrea Marquez: Thomas mentioned greenwashing when he was talking about the pet space, and if you don't know what that is ...
00:06:50
Thomas Ling: So greenwashing specifically just saying, I'm natural, and then there's nothing in your package that's natural or there's nothing in your package that's good for the environment. There's nothing other than the name of your product potentially. So there are a lot of products, particularly in the pet space that says, I'm natural or I'm clean.
Then you look in their bottle and you're like, “There's not a single natural ingredient in here.” So it's kind of this practice. People know that there's a consumer demand for natural, and a lot of it's a lot of confusion because these terms, organic, what does that mean?
Natural doesn't have a legal definition and they pretend that this is good for the environment or that this is good for pets, but that they have no right to that claim. Some of it can be quite difficult. That's something we should be concerned about. It's not fair to you as the consumer. It's not fair to the environment because they're putting out products that aren't good for the environment.
00:07:40
Andrea Marquez: But using high-quality ingredients that are natural or organic isn't cheap. So if you're planning on starting a business that centers around sustainability or a specific value you have, Thomas says that you have to be prepared to potentially roll your products out at a loss when you're first starting out.
00:07:58
Thomas Ling: I have a lot of experience at that. Yeah, so in terms of, hey, if I was in a kind of different space and I wanted to put my values into my business, I think it's focusing on a small segment of people who share your values and can you have a value added service in that small segment instead of trying to do something at scale, because if you try anything at scale, it takes a long time to ramp up. It takes a lot of experimentation, it takes a lot of cost before you can do that. And so kind of do a proof of concept in a small idea.
So if it's like, Hey, I want to make brownies, you're never going to make money doing it, but go ahead, make brownies, see if there's a market for it, then scale up. But you're not going to make any money in the first infinity period of time until you know okay, this is a good product, I see a path forward to profitability for it because I've done the math. So, okay, I need this equipment and I need this price tier, and I need X, Y, Z to profitability. So you have that mapped out, but you find that that there's a proof of concept that there's a market out there that wants it and responds well to it.
00:08:59
Andrea Marquez: But for Thomas, the benefits he gets from having a clean company outweigh the cons.
00:09:04
Thomas Ling: I'd rather have a smaller business that succeeds based on its values and that has customers that relate to it than a large business that just turns out things to a larger public. My products are not for everybody. I sit on pet shelves next to value brands, and that's fine. They're just a consumer might want that value because that money might mean a lot to them, or they just don't really care about my values, and that's okay. It is what it is.
But being able to have a company that I want to go to work for every day is in of itself a value that's dissonant with kind of the idea of capitalism, that I should only produce the thing that the market wants because if I produce only the thing that the market wants, I'll only produce the highest-margin product, which isn't good for me or the other important stakeholders, the people who work with me at my company or the people I'm serving.
So there are other values other than that pure consumer choice. And then two is, yes, you can run a successful business if you find a cohort of people that you want to work with and consumers that you want to serve because they have demands and they want those demands to be met. And those demands are value-based. I'd love for that community to grow, and it is growing. We see that the natural space and the clean space are areas that have very consistently been growing more rapidly than other areas and areas that there was a shocking low level of sacrifice during harder economic periods.
So during COVID, I thought, “Oh gosh, I'm going to go out of business.” I am like, “I'm doomed. I'm doomed.” There's no way that I'll be able to stay in business when people don't know if they were going to have money in a month. And it was so scary, and it was interesting that no, actually, we grew huge leaps and bounds because people continue to think of their pets as family and the values that they were putting into the product that they're getting for their pets were important to them. So they stuck with us and we grew. And so that's great having someone that's loyal to us as a value-based business as opposed to just a commodity that's on the shelf because the next person who makes it cheaper, you buy it from them, but they didn't. They stuck through it.
00:11:12
Andrea Marquez: So aligning your business with your values, even if it makes the product a little more expensive than usual, might get you a bunch of loyal customers. I learned so much about creating a sustainable business and what it means to be a clean business. If you missed anything, don't worry. We've taken notes for you. You can find them at www. smallbusiness. amazon. com.
If you liked what you heard. Don't forget to subscribe and tell your friends about us by sending them a link to this episode, and I'd love to know what you think. So please leave us a review on Apple Podcasts. It's easier to do it through your phone or send us an email at thisissmallbusiness@ amazon. com with your thoughts.
That's it for this episode of This Is Small Business, brought to You by Amazon. Until next time, I'm your host, Andrea Marquez. Hasta Luego, and thanks for listening.
This is Small Business is brought to you by Amazon with technical and story production by JAR Audio.
Ep. 55: How to Build Your Marketing Strategy
Build a strong marketing strategy.
The more people see your products, the more sales you’ll probably get – and a marketing strategy can help you do that.
Just ask Elena Fahrländer, the Chief Commercial Officer of Danish Endurance, a company that sells their products worldwide. She’ll be sharing what they do to find their target audience and how their approach to marketing changed as they grew. You’ll also hear from Elizabeth (Liz) Downing, director of partnerships at The Ecom Cooperative. She’ll give more actionable advice on how to build your marketing strategy using realistic goal setting and data analysis.
“It's really important to look inward, really examine who you are as a business, and then set your goals and your expectations based on what you think you can achieve,” says Liz, “and it all comes down to the data.”
In this episode you’ll hear:
(02:18) Danish Endurance’s story
(04:02) How to find your target audience
(07:02) The importance of clear and realistic goals and budgeting when building your marketing strategy
(11:02) Starting out with a structured marketing strategy
(11:50) How and why Danish Endurance constantly updates their marketing strategy
Key Takeaways:
1 - Before you start working on your marketing strategy, you need to figure out who your ideal audience is and how to reach them. Liz says there’s a few questions you need to ask yourself: what do you have? Do people want it? And which people want it and what is the best way to reach them. Elena also adds that Danish Endurance relies on data to understand their customer journey and figure out the best way to reach them.
2 - Customer reviews are important for multiple reasons. It tells you what your customer thinks about your product. Most customers use reviews to figure out if your product is worth buying, and it's important to the algorithm -- so it helps people find your product.
3 - Realistic expectations and goals are important – and data will help you figure out what that might look like. But even if you don’t have data yet, Liz suggests that you look at data from other businesses that are similar to what you want to do.
4 - Build a marketing budget and monitor it. Monitoring how much money you spend on marketing and how successful your campaigns are will help you figure out what works and adjust your spending accordingly.
5 - Stay dynamic. Once you create a marketing strategy, be prepared to update it. Elena says Danish endurance review their strategy on a monthly basis to maintain competitiveness.
00:00:01
Andrea Marquez: Marketing is an essential part of your business. And I know, I know, I feel like I say that about everything we talk about on This is Small Business, but marketing is how you get people to know you exist. And even if you have the best product on the market, it'll just collect dust if you're not putting any effort into getting the word out.
I'm Andrea Marquez, and This is Small Business, a podcast brought to you by Amazon. Today we'll be talking about how to get started on your marketing strategy, because marketing yourself isn't always easy.
00:00:37
Elizabeth Downing: Whether you're in person business, whether you're an online business, it's just really hard with the saturation of people entering the marketplace, with the saturation of all the noise out there and all the different types of new media we have, and the changing behaviors of buyers based on their age and their demographics. It's just fascinating to me. And it's always such a hero story to me when somebody manages to get the word out about their product, and a small business becomes a bigger business because of their marketing efforts.
00:01:04
Andrea Marquez: That's Elizabeth, Liz Downing, Director of Partnerships at the ECom Cooperative, a platform that provides free resources to eCommerce businesses.
00:01:13
Elizabeth Downing: I got interested in marketing early in my career, I did promotional marketing for a while. And then I did so much freelance writing, and that was obviously to support people's marketing efforts. And when I started working at ECom Engine, we started working with all different types of sellers, people who had been on the marketplace since it opened, people who were just entering the marketplace. And I just found it fascinating.
00:01:36
Andrea Marquez: Liz says that she was always interested in marketing, mainly because of the psychology behind it.
00:01:42
Elizabeth Downing: I was always more entertained by commercials than other kids were, because I thought it was really interesting the way different products positioned themselves, different companies positioned themselves. And I just think that the marriage of small business and marketing strategy is my favorite thing to think about and my favorite thing to talk about.
00:02:01
Andrea Marquez: Liz has a lot of marketing advice that she'll share with us throughout the episode, but first, let's hear from a company that succeeded in getting its products in front of as many eyes as possible.
00:02:12
Elena Fahrländer: So DANISH ENDURANCE was founded in 2015 in Denmark by two Brothers. So it's a family business, and the brand is rooted in the belief that physical and mental balance forces personal endurance. So therefore, DANISH ENDURANCE, our brand, aims to inspire greater happiness through quality sports and casual wear. So it's really products for everyone, I would say.
00:02:37
Andrea Marquez: That's Elena, the chief commercial officer of DANISH ENDURANCE.
00:02:41
Elena Fahrländer: I oversee the sales operations across various third party platforms and marketplaces at DANISH ENDURANCE, and over the past six years I've witnessed the company's evolution from really a startup to a more established brand. It's been an exciting journey, contributing to the growth of our brand from just about four products when I started to now plus 100.
00:03:09
Andrea Marquez: DANISH ENDURANCE started because Nicolaj, the CEO, couldn't find high quality and affordable compression socks when he was training for a marathon.
00:03:17
Elena Fahrländer: So he thought, if you want something done right, you need to do it yourself. So he did. And then we entered into many other clothing categories, such as underwear for men and women, headwear base layers, and everything is with a very clean, Danish design and a sustainable twist.
00:03:37
Andrea Marquez: And they're selling these products all over the world, so clearly they know a bit about how to get their products seen by their customers. But before you start thinking of how to reach your customers, Liz says that first you need to know who your target audience is, which is a lot easier said than done.
00:03:56
Elizabeth Downing: As you get started with a small business in general, obviously you're going to want to take the temperature of the world out there and find out what the demand is for whatever it is that you're selling. So step one is what do you have? Step two is do people want it? And then step three is which people want it, and how is the best way to reach them? But there are things that you need to think about as you ramp up and you get started with that before you can even actually start marketing.
So it is a real chicken and egg situation, in that you have to have a pretty good idea of who's going to want what you're selling out there. But in terms of how you reach them, there are lots of steps to take, including what your competitors are doing, identifying what channels are successful for your competitors. That's probably the easiest hack, is look at who you're going to compete with and how they're doing it, and then figure out how you can do it better.
00:04:52
Andrea Marquez: Elena says that DANISH ENDURANCE is constantly using data to understand who their target audience is and how to best reach them.
00:04:59
Elena Fahrländer: We regularly request customer segmentation data, then we can use that to customize our imagery and our campaign content, such as headlines of the campaigns and so on. So it really tracks the very first touch point of the customer and lets us see where exactly the customer converts then in the end, how many touch points the customers had until the purchase happens so that we can see that all the different campaign types that they all play into, basically in the end, convincing the customer to buy our products.
00:05:31
Andrea Marquez: Understanding the user journey to your products is helpful, and looking at your reviews is another way to know more about what your customer wants.
00:05:39
Elizabeth Downing: Customer reviews are important, because it is the social proof behind the success of your product and how good your product is, but it plays into the search algorithm and it plays into how often you win with your advertising. It's a metric that's really important and really to get, because what we used to say is, “Happy customers don't leave reviews.” And for every bad review you get, you need to get a lot of good reviews to make up for it because that average star rating is really important.
00:06:10
Andrea Marquez: So reviews are important for multiple reasons. First, it tells you what your customer thinks about your product. It's how most customers decide on whether they'll be buying your product or not. And it's important to the algorithm, so it helps people find your product. Now, let's dig into how to set up your marketing strategy. One of the most important things you need to do is make sure you set clear goals and have realistic expectations.
00:06:38
Elizabeth Downing: So if you're launching, then you have an expectation for your launch and an expectation of the marketing you do around your launch. And then once you get into growth, then you're going to have a growth expectation. But you have to be realistic, so it's really important to look inward, really examine who you are as a business, and then set your goals and your expectations based on what you think you can achieve. And it all comes down to the data. So even if you don't have any data because you haven't done anything yet, you can look at the data from other people who have done what you're trying to do and you can get an idea of what your category is going to do.
00:07:16
Andrea Marquez: And of course, another important part of your marketing strategy is your budget.
00:07:21
Elizabeth Downing: So you'll have a marketing budget that you can allocate according to your goals. You can figure out which channels are going to be higher impact for you based on what your competitors are doing, based on what complimentary services are doing. You have to really geek out on it. You have to really get your data, set your expectations, set your goals, and then start small and execute from there. And if you do that, it's easier to avoid mistakes. But if you go in with unrealistic expectations, you're putting yourself at a huge disadvantage.
00:07:58
Andrea Marquez: When you're starting a business, money is always top of mind. And even though marketing isn't always cheap, there are ways to market your business and build brand awareness without breaking the bank.
00:08:09
Elizabeth Downing: So I think that what a lot of businesses do, and I think it's a good idea, is to get your product to some people and get some feedback on that. Because you don't want to put your product someplace and then all of a sudden have to change something about your product.
So first, get it out there, get some feedback on it, and then you can develop your launch strategy and you can figure out which marketing channels are going to work best for you. And then conservatively using the social space, using whatever virality you can achieve is a good way to get your brand name out there without spending a whole ton of money right at first.
00:08:49
Andrea Marquez: We have a whole episode that's dedicated to social media and virality. It's episode 45 of This is Small Business, and it's filled with tips on how to go viral, what to do if you go viral, and how to create content for your brand on social media.
Let's say you've already set aside a budget for your marketing strategy and are now spending that money. Now, you'll need to make sure to monitor the data that's coming from your marketing efforts so you know what's actually bringing in customers. And keeping an eye on the data will also help you know what to stop spending money on.
00:09:19
Elena Fahrländer: I think at the very beginning when we started up our brand, we invested a lot. And we didn't have a lot of data transparency in the first few years, I would say. And now our company has adopted a very data-centric approach, it's one of our core values at DANISH ENDURANCE. And we really monitor different marketing KPIs so we know exactly how much we're spending on marketing every day. We have a few always-on campaigns that are very targeted towards different audiences and also our best-selling products mostly, but then we also make sure that we budget a bit of money to test some new initiatives. For these, we really oversee them very closely to make sure that we are not overspending on that.
00:10:04
Andrea Marquez: But before you experiment with different strategies.
00:10:07
Elena Fahrländer: I would really recommend everyone to start with a very structured marketing campaign account from the very beginning and roll that out then to the other locales that are opening up, or also new products that you're launching. And get full transparency into your product profitability from day one, because that's just so important that you know how much marketing money you can spend and what your margins allow you to spend. And then you can take very conscious choices about maybe selling at an unprofitable level for some time to gain market share. But I think the most important is that the choice is conscious on that.
00:10:42
Andrea Marquez: And once you create a marketing strategy, be prepared to constantly be updating it.
00:10:48
Elena Fahrländer: We create an annual budget for each market and for the company as a whole, and that's when we establish our overarching strategy. So our marketing strategy is very much aligned with our annual budget. But then we need to stay dynamic, so we conduct regular monthly reviews as well. We have some market trends, competitor activities that we need to monitor and that we need to adjust to. So it doesn't make sense to just create one annual strategy in January and never adjust. So I would say we go over that on a monthly basis, that ensures that we stay competitive in our marketing activities. And on top of that, there's always some new campaign types that are launching and that we need to test, and then roll out if the test proves successful.
00:11:37
Andrea Marquez: So to sum it all up.
00:11:39
Elizabeth Downing: You're going to want to set your goals and expectations. You're going to want to allocate a marketing budget. You're going to want to explore your most cost-effective channels that will have the highest impact. You don't have to do this alone, small business owner. You've got resources out there and people who really, really want you to succeed. Take advantage of that, because that's something that not every industry has that the e-commerce industry does have, is a ton of support and a whole lot of love.
00:12:06
Andrea Marquez: I totally agree. I definitely see that support and love in all the people I've talked to on This is Small Business. I learned a lot of important information about marketing from Elena and Liz. One thing that stuck out to me is that data is key to figuring out your marketing strategy. And if you're just starting out and don't have any data yet, you can always look at data from similar businesses. If you missed anything, don't worry, we've taken notes for you. You can find them at www. smallbusiness. amazon/ podcasts.
If you enjoyed this episode or found any of the tips helpful, make sure to subscribe and tell your friends about us by sending them a link to this episode. And please, please, please consider leaving a review on Apple Podcasts. It helps other people find the show.
Plus, I love hearing your thoughts on the episode and how you'll be using this information in your business. If you're an aspiring entrepreneur, or maybe you already have your small business up and running and you're ready for the next step, a super valuable resource that can help you is the Amazon Small Business Academy. Take the free self-assessment on the Amazon Small Business Academy site at www.smallbusiness.amazon.
That's it for this episode of This Is Small Business, brought to you by Amazon. Until next time, I'm your host, Andrea Marquez. Hasta luego , and thanks for listening. This is Small Business is brought to you by Amazon with technical and story production by Jar Audio.
Ep. 54: Small Business Fun Facts: What to Know Before Starting a Small Business
Listen to a small business overview crash course.
Your small business (or idea if you haven’t started yet) is a lot more important than you think. Just ask Karen Kerrigan, the president and CEO of the Small Business & Entrepreneurship Council. She’ll be sharing a ton of fun facts about how small businesses drive innovation, help the economy, and create jobs. You’ll also hear from Kylie Jiwon Hwang, an Assistant Professor at the Northwestern University Kellogg School of Management. She’ll give us more insights on how entrepreneurship can help marginalized individuals and how starting your own business can benefit your community.Get a quick refresher on why the work you’re doing (or planning to do!) is important and learn all the benefits and challenges you might encounter on your entrepreneurial journey.
In this episode you’ll hear:
(01:42) Why Small Businesses are important.
(04:27) Why Marginalized individuals are gravitating towards entrepreneurship and the benefits that come with it.
(07:33) Challenges that you might face when starting a business.
(10:48) How technology has been helping small business owners overcome some of the challenges they face.
(14:41) The importance of being prepared before starting a business.
Key Takeaways:
1 - Small businesses create jobs. According to the SBA, small businesses in the US generated 1.5 million jobs and 64% of new jobs.
2 - Small businesses drive innovation which makes the economy more vibrant. Karen says that 80 to 90 percent of patents are filed by small businesses so entrepreneurs are at the forefront of innovation.
3 - Entrepreneurship provides opportunities for marginalized individuals to find jobs and achieve financial independence and success.
4 - It’s important to be aware of the challenges that you might face before getting into entrepreneurship so you’re better prepared to handle them. Some of these challenges may be inflation, and limited access to capital, funding, and the social networks you might need to help you succeed.
5 - Getting training is important. We’ve talked about how you’ll learn as you go in other episodes of This is Small Business, but it is important to know what you’re getting into to increase your chances of success. Karen mentioned that a lack of training or preparation is the reason why some businesses fail.
6 - Utilize technology. Karen says that technology has helped lower the cost of entry to entrepreneurship. You can use technology to find customers, advertise affordably, and even launch your business online on your own.
00:00:00
Andrea Marquez: We are constantly hearing that small businesses are important. They contribute so much to the economy and they give people jobs. It's why I love working on this podcast. I get to elevate their stories and give you tips and key lessons on how to start, build and grow your business. We've covered a lot on how to get into entrepreneurship, but we barely scratched the surface on why you should do it, and since sometimes it can feel like you don't have access to the same resources as other people, is it really a good idea to start a business?
Hi, I am Andrea Marquez, and This is Small Business, a podcast brought to you by Amazon. Today we'll be digging into the importance of small business, some of the challenges to expect and how to navigate them. So whether you're already starting a business and need a quick refresher on why the work you're doing is important, or if you're considering starting one but feel like the odds are stacked against you, then this episode is for you. But first, let's start with the basics. What is entrepreneurship?
00:01:14
Kylie Hwang: I define it as a labor market status, which is distinct from paid employment. So working for an employer, which essentially means that it's individuals who start their own businesses, and I think it will include small businesses, even businesses that aren't incorporated or don't have employees. So it's a pretty broad definition that I think about.
00:01:32
Andrea Marquez: That's Kylie Hwang, an Assistant Professor at the Northwestern University, Kellogg School of Management. Kylie says that entrepreneurship is important in many different ways. The first is job creation.
00:01:45
Kylie Hwang: So according to the Small Business Administration, small businesses actually generated 1. 5 million jobs and account for around 64% of new jobs in the US.
00:01:54
Andrea Marquez: And they don't just stop at providing jobs. Karen Kerrigan, the President and CEO of the Small Business and Entrepreneurship Council says that most small business owners also like to focus on providing quality work life to their employees.
00:02:10
Karen Kerrigan: They want to pay them well, they want to provide them with healthcare. They want to provide them with the best benefits that they can to retain their workers. Sometimes it's just very, very difficult, costly and expensive. That's why we're working on solutions to bring down the cost of healthcare and other benefits and making it much easier for these employers to provide the benefits that their employees deserve.
00:02:34
Andrea Marquez: When thinking about entrepreneurship, the word innovation also comes up. Karen says that 80% to 90% of patents are actually filed by small businesses.
00:02:44
Karen Kerrigan: When you look at the innovation and the competition and all the vibrancy, it is coming from individual entrepreneurs who have these great dreams and they're taking them to the marketplace.
00:02:55
Andrea Marquez: This is something that Kylie also points out.
00:02:58
Kylie Hwang: Entrepreneurial firms, and you're probably thinking about your typical Silicon Valley type of tech startups, have been really at the forefront of innovation and technological developments. They're the ones doing creative destruction. So that's also been a reason why entrepreneurship has been seen as so important to the economy and the society in general.
00:03:17
Andrea Marquez: And that leads us to another point, economic growth.
00:03:21
Karen Kerrigan: When you look at every sector of our economy, whether it's technology, agriculture, manufacturing, biopharmaceutical, energy, retail, it's all dominated by small businesses and the entrepreneurs behind those firms that are really helping to make our economy more vibrant and more competitive and viable.
00:03:41
Andrea Marquez: Kylie says that there's one more reason why entrepreneurship is important.
00:03:45
Kylie Hwang: Entrepreneurship in small businesses really provides opportunities for marginalized group members to actually find jobs and gain employment that would otherwise not have been possible for them and actually work and achieve financial success and independence.
00:04:03
Andrea Marquez: I'm really excited to dig into that. We've talked about this on previous episodes of This is Small Business, but when you see people who look like you succeed in something you want to achieve, like starting a business, it makes it seem more achievable. And Kylie says that marginalized individuals are increasingly becoming entrepreneurs because of two reasons. The first is because the barrier to entry is low.
00:04:27
Kylie Hwang: There are a lot of platforms that provide ways to become an entrepreneur more easily, a lot of online things that you could do, for example. So that's making marginalized individuals more likely to become entrepreneurs because it just lowers the barrier to go into entrepreneurship, compared to the old ages where you actually had to have more financial capital, social capital, et cetera.
00:04:48
Andrea Marquez: And the second reason is because becoming an entrepreneur is sometimes easier than finding a job.
00:04:54
Kylie Hwang: I think this can be generalized to a lot of populations. So research has found that immigrants or racial minorities or even mothers who face the motherhood penalty are more likely to become entrepreneurs because they find that traditional employment is hard to get or because the jobs that they get aren't satisfactory in a certain way.
00:05:14
Andrea Marquez: Kylie has done a lot of research on this. She mainly looks at how and why formerly incarcerated individuals become entrepreneurs.
00:05:22
Kylie Hwang: And the main reason behind this, there could be other reasons that are going on as well, but the main reason is really that it's difficult for them to find work. So they're going into entrepreneurship as an alternative way to overcome this discrimination that they face in the labor market.
00:05:36
Andrea Marquez: But it's not just formerly incarcerated individuals who turn to entrepreneurship to overcome discrimination.
00:05:42
Kylie Hwang: Other cases, which I mentioned like the motherhood penalty, recent research, which I haven't done myself, so I can't really speak to that research, but they've found that mothers who are more likely to face penalties, for example, in countries that have more biases towards women, they're more likely to engage in entrepreneurship as almost a plan B to employment. So I think, and this generalizes to immigrants and other marginalized populations. So it does seem to be that entrepreneurship is many times the route that people tap on when it's very difficult for them to find traditional work.
00:06:16
Andrea Marquez: And these entrepreneurs could end up benefiting their communities as well.
00:06:20
Kylie Hwang: So some of them were specifically working on products or services that were serving their communities or their local communities, and they also had some initiative going on within the company that was something about having more social impact. So I think that beyond job creation or beyond helping the focal individual who's the entrepreneur, there seems to be this spillover effect from having these marginalized group entrepreneurs who may be more likely to be open to hiring others and also being more socially impactful in their businesses as well.
00:06:56
Andrea Marquez: Okay, so clearly there's a lot of benefits to entrepreneurship. You get to create job opportunities for yourself and for your community, and you help the economy grow. And it doesn't hurt that it's becoming a lot easier to start a business because of all the resources out there. But if you want to get into entrepreneurship, it's also important to be aware of the challenges you might face so you're prepared to face them. Karen says that an ongoing challenge that a lot of small business owners face is inflation.
00:07:23
Karen Kerrigan: Many have not kept pace with inflation. So inflation was a very big concern of business owners over the last year or more. And hand in hand to that is just economic uncertainty. What is going to be happening in the economy? Is there going to be a recession? Is there going to be an economic slowdown or not? That uncertainty really affects confidence and their willingness to invest in their businesses.
00:07:48
Andrea Marquez: Karen also says that recently, a lot of small business owners have been struggling to find the labor they need to operate smoothly.
00:07:54
Karen Kerrigan: I think in our last survey, our small business checkup survey that we did, and business owners say the lack of skilled labor or labor was affecting their operating capacity.
00:08:05
Andrea Marquez: Another challenge is getting access to capital or finding funding.
00:08:08
Karen Kerrigan: And that is one of the other issues that has really been an increasing pain point for small business owners, particularly during the last year as interest rates were rising. So with higher interest rates, the cost of capital goes higher and makes it much more difficult for business owners to access the credit and the capital that they need to invest in their businesses, to scale their businesses, to operate their businesses.
00:08:35
Andrea Marquez: Another challenge that Kylie says could affect entrepreneurs is access to social networks.
00:08:40
Kylie Hwang: They lack the social networks to gain financial capital, gain ideas, et cetera, that are really important to be successful as an entrepreneur. So I think for this, and also connectedly, they also lack the human capital to actually found and succeed in a business, which can be really little things like general business knowledge, like bookkeeping, how to incorporate your company. But these things are things that they also lack in human capital, which also hinder them from being successful in founding or even after founding, that they are more likely to exit out because they were unsuccessful. So I think for social capital or human capital, I think things that could be done is that increases in perhaps training or incubators.
00:09:24
Andrea Marquez: Getting proper training is important for anyone who's trying to start a business. Karen says that a lack of preparation and training before jumping into entrepreneurship is the reason why some businesses fail.
00:09:35
Karen Kerrigan: Going into that endeavor with as much information as possible in order to succeed. So really, lack of preparation, lack of education, and I don't mean education in terms of college degree or a master's. I'm just saying educating yourself, right? Accessing the type of training and the skills that you need, financial management particularly, to grow that business.
00:09:59
Andrea Marquez: But Karen also says that small business owners have also been turning to technology to find solutions.
00:10:04
Karen Kerrigan: So we've seen small businesses really embracing technology. In fact, artificial intelligence, AI. It's really the fastest that I've ever seen small businesses embrace any type of technology. AI has just been extraordinary in what it has meant for many small businesses in terms of resolving some of these challenges that we just talked about.
There's been technology and tools that have come along to support entrepreneurs in their dreams, and the risk has become far less because of that technology and the barriers to entry and the costs have been greatly lowered because of technology, being able to find customers quicker, being able to advertise them more affordably, being able to launch the business without having to have a storefront or a brick and mortar, being able to do it on your own or with independent contractors.
So again, technology really has been an enabler of entrepreneurship, which given the reasons why people start businesses, has pushed them and encouraged them and allowed them to pursue these dreams.
00:11:12
Andrea Marquez: The digitization was really accelerated because of the pandemic. The pandemic also had other effects on small businesses.
00:11:21
Karen Kerrigan: In 2020, there was a massive boost in individuals that filed business applications. A lot happened during the pandemic that is driving this interest in starting businesses. Obviously digitization, people wanting more flexibility. There's more opportunity in the economy. There's been disruption in business models. Obviously the different types of technology that are coming online now, AI, AR, VR, they're all driving new business models and driving new entrepreneurship. So there's been a massive increase in people that are interested in starting businesses, and the business models has shifted as well. It's really an exciting time to be a business owner.
00:12:05
Andrea Marquez: So one of the things that I end up talking to a lot of entrepreneurs on the show is the drive behind wanting to do this because it's risky, but there's also a reward, right? So in your words, why do you think people should do it?
00:12:20
Karen Kerrigan: We've asked startup entrepreneurs this question over time, and for many, it's they want to be their own boss. The number one reason why most people start businesses is they want to be their own boss. They want control over their time. They do like the flexibility, particularly for many women entrepreneurs, they like that flexibility. That doesn't mean that they're working less. They might be working at 2:00 in the morning as opposed to three o'clock in the afternoon, but having that flexibility is very important. And then for many, they believe there's an opportunity in the marketplace and they can fill a need. They have a solution. They found a niche, and they're very passionate about that and wanting to make it happen.
00:13:09
Andrea Marquez: So if you've been considering starting a business...
00:13:11
Karen Kerrigan: I would say do it, but go into it with preparation, with the right information, with a sounding board. It could be friends, it could be family, it could be people who've started businesses themselves to check your ideas, help you check those ideas against market realities, really do your homework. And there's people that are out there that are willing to help you. The local business owner, local entrepreneurs, people online, organizations that have mentoring programs. You don't have to do this alone, and you shouldn't do it alone. Do it prepared and knowledgeable and knowing that it's going to be a grind, but also knowing that when you succeed, it's going to be well worth the risk and well worth the time and worth everything that you put into it.
00:13:58
Andrea Marquez: So being prepared and aware of the risks before you start a business is key.
00:14:02
Kylie Hwang: So I think for our marginalized group members who are seeking entrepreneurship, I do think that they have to spend some time to think really about what the business that they can actually be successful is, not just follow the crowd of who's going into entrepreneurship. And also seek out. I think there actually is a lot of non-profits and also policy help for marginalized group members these days. So I think they have to extend their networks to think more about how to get help specifically from non-profits that target marginalized entrepreneurs and try to go in with a bit more knowledge.
00:14:38
Andrea Marquez: I think that's an important piece of advice to end on regardless of your background, because a lot of the time, I think we romanticize entrepreneurship. And even though you do learn as you go, it's important to know what you're getting yourself into.
We covered a lot in this episode. If you missed anything, don't worry. We've taken notes for you. You can find them at smallbusiness. amazon/ podcasts.
That's it for today's episode of This is Small Business, brought to you by Amazon. Reach out to us at thisismallbusiness.amazon.com to tell us what you're up to, or let me know what you think of this episode by leaving a review on Apple Podcasts. It's easier if you do it through your phone. And if you liked what you heard, I hope you'll share us with anyone else who needs to hear this. If you're an aspiring entrepreneur or maybe you already have your small business up and running and you're ready for the next step, a super valuable resource that can help you is the Amazon Small Business Academy. Take the free Self-assessment on the Amazon Small Business Academy site at www. smallbusiness. amazon.
Until next time, I'm your host, Andrea Marquez. Hasta Luego, and thanks for listening. This is Small Business is brought to you by Amazon with technical and story production by JAR Audio.
Ep. 53: How a Small Business Owner Can Do More for Their Employees
Learn about what you can do for your employees.
Aside from a regular paycheck, what more can you do for your employees? And can going the extra mile for them really help your business' bottom line? Listen in to hear from brothers and founders of Mr. Tortilla, Ron and Anthony Alcazar. Their approach to business was formed at an early age, while watching their parents work hard with no buy-in. And then we’ll speak with Ludmila Praslova, PhD. Professor of Industrial Organizational Psychology, and author of The Canary Code: A Guide to Neurodiversity, Dignity, and Intersectional Belonging at Work. "Imagine having to walk in shoes that are extremely big or way too small, way too wide, way too narrow," said Ludmila. "That's painful, that's not comfortable, …flexibility just makes sense."
In this episode you’ll hear:
(00:43) Why Mr. Tortilla wanted to take care of their employees
(03:26) How it’s good for business to prioritize a healthy workplace
(04:58) The bare minimum an employer could do for its employee
(06:40) The importance of flexibility and how to implement it into your company
(12:18) How to start a conversation with your employee about their needs
Key Takeaways
1 - There’s a business case for treating your employees well. Feeling safe, accepted, and valued is a part of our core psychological well-being. When employees don’t feel this way they can’t do their best work because they’ll waste their mental resources on negative feelings. Plus, good morale leads to less turnover.
2 - An employer owes their employees a bare minimum of fair treatment, and financial safety.
3 - A flexible work environment allows employees to work when they’re at their most predictive in a way that works for them. This doesn’t have to come at any cost to the employer and can lead to a healthier life for the worker.
4 - Talk to your employees about what constrains their productivity. Putting up barriers, simply because that’s how things are done unnecessarily makes life hard for some employees who don’t fit the mold.
5 - Normalize an intake form that asks questions about preferences and needs. This builds trust, which makes for better workplaces.
00:00:03
Andrea Marquez: I've heard so often on This is Small Business that connecting with people is a massive part of running a small business. There are customers, suppliers, lenders, the list goes on, but an absolutely integral item on that list is employees. What can you and what should you do for them beyond some of the basic expectations? How do you keep your workplace flexible enough to ensure you're attracting the best people, then enabling them to do their best work.
I'm Andrea Marquez and This is Small Business, a podcast brought to you by Amazon. Today we'll be talking about how small business owners can create a healthy work culture for their employees. My first guest learned about that at an early age.
00:00:51
Anthony Alcazar: We saw how hard my parents worked their whole lives and they really didn't have much to show for it. They'd dedicated their lives to companies that they helped grow, and at the end of the day, it was just a job and dead edge and that's it.
00:01:03
Andrea Marquez: That's Anthony Alcazar. He and his brother Ron are the founders of Mr. Tortilla, a low-carb tortilla they created in a quest to make Mexican food healthier.
00:01:14
Anthony Alcazar: When me and Ron decided to talk about this business he said, “Listen, let's start a business where we make sure we take care of our employees that can grow with us and are with us and the company grows, they're taken care of.”
00:01:24
Andrea Marquez: So 10% of Mr. Tortilla's net profits go toward employee profit sharing, on top of sharing the wealth. They also wanted their approximately 40 employees to like going to work.
00:01:36
Anthony Alcazar: We said, “When we have our own factory, we want to make sure that the culture is right, that people love to come to work, that people get along, that no bullying happens, and there's just this work environment that people love.” That was super important for us.
00:01:48
Andrea Marquez: It was important to the brothers to differentiate themselves by having a higher quality product. They knew one of the best ways to do that was by having a higher quality workplace. Creating a culture of caring is integral to Mr. Tortilla's brand. It's a simple concept of being nice to their employees, but according to Ludmila Praslova, it goes a lot deeper than that.
00:02:10
Ludmila Praslova: I usually come to it from a human centric perspective where there is an absolute value in affirming the dignity of every human. But I realize that for many people it's also important to understand the business case perspective. From that perspective, when people are felt valued, when we experience the sense of belonging, we are well. It's a core of our psychological wellbeing to feel like we are with people where we can feel safe, accepted and valued. Otherwise, our mental resources are going to be consumed by anxiety, insecurity, looking behind our back, expecting the knife, and we're not going to be our best selves. We're not going to be performing at our best.
00:03:02
Andrea Marquez: Ludmila is a professor of industrial organizational psychology whose work really zeroes in on diversity and inclusion. She's written a book called The Canary Code, A Guide to Neurodiversity, Dignity and Intersectional Belonging at Work. Ludmila, can you tell me a little bit more about the financial benefits of prioritizing a healthy work culture?
00:03:25
Ludmila Praslova: If you have good morale in your organization, if you have employee loyalty, if employees stay, there's a tremendous cost just on notating turnover heading to rehire, retrain, which is extremely expansive. When people work on their best, they are significantly more productive. People who feel like they had input in developing what they do, they are heard, they're valued, also performed significantly better than people who feel like they're cogs in the machine, who have no control and no input into what is going on. When you add this together, it's a multiplication effect of treating people right on human productivity and human involvement. That's even before we get into things like organizational reputation and the word of mouth.
00:04:30
Andrea Marquez: It's true. Customers are more and more concerned about where their products come from, how they're made, and under what conditions the employees are working. That's also the case for prospective employees. It's common to do a bit of digging about the culture, not just around the job you'll be doing. Beyond making people feel valued and heard, what is the minimum responsibility you think that an employer has to an employee?
00:04:52
Ludmila Praslova: There is a bare minimum of social safety where you are treated properly, psychological safety, where you feel like you can participate, and financial safety. As a bare minimum, I think people need to get out of their jobs a life that doesn't hurt. That, unfortunately, doesn't always happen, but life that doesn't hurt means satisfaction of basic needs, appropriate levels of food and housing that doesn't cause suffering. Now, inspiring life is beyond that. When you want people to really be on their best, not just not suffering, but thriving, you really want to be able to give people ability to travel, have vacations, have sabbaticals, time for their creativity, time, and a little bit of financial cushion where they are building their future, where they're feeling confident about their future.
00:05:56
Andrea Marquez: As a creative myself, one of the things I value the most in wherever I'm working is a flexibility to be able to do my job and do it very well, but also have the time to have a life and pursue my career interests. I think even outside of work, those feed the work that I'm doing anyways. It's all interconnected and it allows my mind to be a little more at peace and I'm a little more happy. That's what flexibility and creativity does for me. Why it's important to me. Why do you think it's important to organizations on a larger scale?
00:06:29
Ludmila Praslova: Well, absolutely. Imagine having to walk in shoes that are extremely big or way too small, way too wide, way too narrow. That's painful, that's not comfortable, right? Why would we force someone to work in ways that hurt them and doesn't allow them to perform their best? Flexibility just makes sense.
00:06:57
Andrea Marquez: What does that look like?
00:06:59
Ludmila Praslova: Some people work best in 25 minutes, little break, 25 minutes, another little break, the Pomodoro way, for example. Other people need three to four hours of uninterrupted time to concentrate and be on their best. Why would you force someone into someone else's working reason? It's just like forcing someone to wear shoes that are completely nowhere close and expect them to perform well and run a marathon and win. They're not going to win if they're not supported in working in a way that supports them in their best. Doing work that is aligned with who we are, being able to maybe creatively tailor our responsibilities for job crafting and having flexibility in our schedule and where we work, not because it's a win, but because it actually makes us work better.
00:08:04
Andrea Marquez: If we're talking to a small business owner who's like, “Great, I'm on board. I want to do this.” How do they implement this into their small business?
00:08:13
Ludmila Praslova: It is going to depend on what your business goals are, what kind of skills you want. A more general answer is think about what you are trying to define your own business goals and then be open to more than one way that people can help you achieve that goal. Because sometimes we're stuck in this assumption that this is how I work and this is the only way to work. Just openness to the fact that there are many ways to get from point A to point B, and different people work best in different ways. That's a very good starting point. Then brainstorm with your people. You hired someone, maybe you just have one part-time employee, talk to that person. How can you bring out the best and what will help them to achieve? How can we just remove artificial constraints on their productivity? When you have your second and third employees talk to them what will help them to be on their best.
00:09:26
Andrea Marquez: Artificial constraints, that's such a great way of putting it. It's so important to reassess how we do things and wh. y Anthony Alcazar talks here about how they reassessed their hiring practices.
00:09:38
Anthony Alcazar: I knew what equal opportunity employment was, but I never really felt it. When I started going into retailers, different stores, I saw what equal opportunity employment meant, everybody. I saw adults with special needs be employed and how happy they were to work. I got the chance to get to know them and I told Ron, “This is what we have to do. We want to do this.” They're part of our team, a core part of our team. They do exceptionally well. They just needed an opportunity and they've excelled.
00:10:05
Andrea Marquez: That's a win-win situation and Ludmila expands on it.
00:10:09
Ludmila Praslova: Why would you leave out a huge percent of the population and a huge talent pool? Not hiring people who have some kind of difference doesn't make sense because most organizations accommodate the needs of parents without any kind of issues. Working students have needs and most organizations say, “Okay, we'll accommodate your schedule.” Just think about it as how do we enable their best performance. Then you stop thinking about, let's say, accommodations is something special that you do for people, but you are simply enabling humans to do their best work. Just like you allow parents to pick up their kids or students to take their tests.
I think we need a little bit of mindset adjustment. If you need to have quiet place to work because you need to concentrate, it just makes sense because you're going to do your best work. If someone needs instructions in writing and that is going to help them perform their best, why not? It's just a performance enabler. That's what those people understand and that's what allows them to create winning and high performing organizations.
00:11:28
Andrea Marquez: How do you go about having that conversation around what an employee needs? Do you start with the new hires or is it during the application process? What's the best way to do it?
00:11:37
Ludmila Praslova: If you have flexibility in onboarding and do you also get to know your people and to say, “How do you work best? Do you need a long period of time to concentrate or do you work in short spurts of time?” Really make a default across all people who work for you without singling anyone out. That is something that normalizes human differences and allows everyone to work on their best. You can build trust by allowing everyone to say, “Okay, this is what I need to perform on my best,” without even requiring them to disclose. Then if you build that trust, people might be much more comfortable also bringing those specific needs and differences to the manager's attention.
00:12:28
Andrea Marquez: Trust is always so integral, and Ron and Anthony showed us how to put all of that into action because if there's one thing I learned today, it's that healthy workplaces can often happen through minor adjustments.
00:12:40
Anthony Alcazar: One important thing is that we always have raffles every other week, and so we have prizes we give to our employees. We have a weekly meal where we vote, “You guys want pupusas? Do you guys want mole,” and we'll bring in for the employees.
00:12:52
Andrea Marquez: I love that. Who doesn't want some mole or pupusas? That was a lot of great information, so much to take in at one time, but don't worry, we've taken notes for you. You can find them at smallbusiness. amazon/ podcasts.
I hate to blow on our own horn, but we've had some great reviews come in lately and I wanted to share this one with you, Josh949 of somewhere in the great US of A wrote, “I love the podcast format. It tells small business stories while focusing on a main business topic. Andrea also does a great job summarizing the key takeaways at the end.” Thank you so much, Josh949. I really do appreciate it. I'd love to hear what you think. Please make sure to leave a review on Apple Podcasts. It's easier to do it through your phone or send us an email at thisissmallbusiness@ amazon. com.
That's it for this episode of This Is Small Business, brought to You by Amazon. Make sure to subscribe and tell your friends about us by sending them a link to this episode. Until next time, I'm your host, Andrea Marquez, Hasta luego and thanks for listening. This is Small Business is brought to you by Amazon with technical and story production by JAR Audio.
Ep. 52: What You Need to Know About Audits
Learn about business audits.
Dealing with audits doesn’t have to be scary as long as you’re prepared for it. Just ask Erick O. Bell, an accounting professor at the Haas School of Business at UC Berkeley, who used to work at KPMG LLP in the Audit Risk Advisory Services. Erick simplifies everything you need to know about audits – even the IRS audit – so it doesn’t feel as daunting. “Most audits that are happening. They're not audits that are at odds with each other,” Erick says. “A typical audit generally is just, you've made an assertion. Can we verify that that assertion is accurate?”
Learn about typical audits, how to navigate them, and when you might need them.In this episode you’ll hear:
(01:00) When should you get an audit.
(03:45) About IRS audits.
(07:36) How to navigate a typical audit.
Takeaways:
1 - If you’re just starting out, you won’t need an audit anytime soon. You only need an audit when you’re asking for a huge loan or trying to get investors. And if you’re trying to get a smaller loan and your bank asks you for an audit, Erick says that you can let them know that you don’t want to take on the cost of an Audit. Instead, ask if you can provide them with the financial documents they need – they’ll usually agree to that.
2 - An IRS Audit is a little scarier than a typical audit, here’s how to navigate it: Make sure to be responsive and hire a tax attorney to help you out. Usually an IRS audit will be a series of questions about some of your finances and you need to respond with receipts.
3 - Here’s what you can do so your typical audit goes smoothly: first, make sure to be organized. You can hire an accountant or bookkeeper to help you with that. Second, be honest. Auditors aren’t out to get you. They’re just there to help you understand the accounting rules. Third, know some key audit terms, so you’re more familiar with what’s going on. And fourth, be nice to your auditors.
00:00:01
Erick O. Bell: Really what an audit is is someone testing the work that someone else has done. So for example, take financial statements. Management is proclaiming that these financial statements are accurate and so the auditor's job is just to go in and make sure that that assertion that management has made is correct. At its simple form, that's what an audit is.
00:00:21
Andrea Marquez: Audits can sometimes be associated with fear and it's a scary process to go through for some businesses. And if you're starting your own business, you might be wondering if you should even get an audit and what that process looks like. I'm Andrea Marquez and This Is Small Business, a podcast brought to you by Amazon. Today, we'll be digging into some things you need to know about audits with Erick O. Bell, an accounting professor at the Haas School of Business at UC Berkeley and an active certified public accountant. And yes, we'll touch on the scary IRS audits too.
00:00:54
Erick O. Bell: Most small businesses should not need an audit. And so a lot of times, small businesses will come to me and they'd say, “We're interested in getting a loan and the bank says that we need to have an audit done. Can you do an audit of our financial statements?” And my response is, “No, I won't. I don't think that's what the bank really means when they say they need an audit done.”
00:01:17
Andrea Marquez: Before getting into academia full-time, Erick worked at multiple auditing companies. And now, in addition to teaching, he also runs an accounting firm where he does accounting and bookkeeping services for small businesses.
00:01:30
Erick O. Bell: And I just think as a business owner, you push back on that and say, “We don't want to incur the cost of having two years of audited financial statements. What information on our financial statements are you most interested in and can we have an independent accountant come in and give an opinion on our assertion of either how much revenue we've earned over the last two years, our statement of cashflow over the last two years?” And so it would be much less in scope than an audit.
00:02:01
Andrea Marquez: Erick's referring to an audit that's done in accordance with the American Institute of Certified Public Accountant standards or AICPA standards. These audits can be pretty expensive, so it's great to hear that banks can be open to other ways to approve your loan. If you're a small business, you might not need an audit anytime soon if you're just starting out. But if you're planning on growing your business, then you might want to be prepared just in case.
00:02:26
Erick O. Bell: Once I'd say you've crossed maybe 5 million in revenues and now you're looking to get outside investors, you're looking to get multimillion dollar loans, it's at that point when you should be looking at hiring a auditor. And an auditor is an independent accountant and so these types of businesses will have their own accountants who's doing the work on a monthly, weekly basis. And then once a year or several times throughout the year, they will have a second set of accountants. The independent accountants come in and say, “Let's give an opinion on the work that's been done. Has it been done accurately?”
00:03:04
Andrea Marquez: So if you're trying to get an investor to grow your business or you're applying for a multimillion dollar loan, we'll dig into what the process looks like and how to do it. But first, let's talk about another type of audit, the IRS audit.
00:03:15
Erick O. Bell: An IRS audit is very scary and it happens very rarely. And so when the IRS is auditing companies, they're auditing their tax return. And the whole purpose of that audit is making sure that they've reported all the income that they've earned, so that they can apply the appropriate tax rate to receive the tax dollars that are due. So the IRS audit is separate. I think a lot of people have fear around it. As I was thinking about this yesterday, I was reminded of a time when I was at a barber shop.
This was probably 15 years ago and the barber said, “So Erick, what do you do? What's your job?” And I said, “Oh, I'm an auditor.” And the entire barber shop got quiet. Everyone was like, “Oh, man. We can't say anything around this guy.” And I said, “I'm not that type of auditor.” Most audits that are happening, they're not audits that are at odds with each other. An IRS audit, they are saying, “We believe you've under-reported your income and we're going to prove the opposite.” Whereas a typical audit generally is just you've made an assertion. Can we verify that that assertion is accurate?
00:04:27
Andrea Marquez: So when we're talking about the typical audit, it's not like they're here against you. They're just trying to be like, “These are the facts. We're just laying them out.” Versus the IRS audit is much more like, “Oh, you really have to have your stuff together.”
00:04:42
Erick O. Bell: Usually what happens in an audit is it was a mistake that was made and so there'll be additional taxes, there'll be interest that you have to pay for the unpaid tax and then if you've significantly underpaid, there'd be penalties associated with it. But in a normal audit, you get to pick who your auditors are. The company selects their auditors.
00:05:03
Andrea Marquez: And just to ease your mind a bit, in case you do end up getting an IRS audit, here's what the process might look like.
00:05:10
Erick O. Bell: I think that first, you get the letter from the IRS, is be responsive. And then at some point, you may consider hiring a tax attorney, someone who has experience with negotiating with the IRS.
And again, when we use this term, IRS audit, it's really more like an IRS agreed upon procedures. They're looking at a very specific aspect of your tax return. We see that you had $300,000 in revenue and you spent $100,000 in travel. Can you give us the receipts for those travel expenses? And so it sounds scary, but the reality is you just go to your credit card statements and pull up the receipts and say, “Here are my receipts for the $100,000 of training.”
Now, if $50,000 of that was trips back and forth to Vegas, they're going to ask some follow-up questions. And so to the extent that you did your best, it really isn't a overwhelming or scary process. It's just a back and forth asking for questions and you're providing responses.
00:06:13
Andrea Marquez: So now let's get back to talking about the typical audits. If you're planning on getting an audit, there's a few things you need to do. The first one is be organized.
00:06:23
Erick O. Bell: Hire an accountant or a bookkeeper, someone that can help you navigate the audit process. Small business owners are really good at doing what they do and you don't want to be distracted from your business's purpose by focusing on an audit.
00:06:39
Andrea Marquez: The second is be honest.
00:06:42
Erick O. Bell: Most auditors are not out looking for gotcha moments. That's not the goal. The goal is to be collaborative and to help you understand the accounting rules and this is when and how you should or could recognize revenue.
00:06:58
Andrea Marquez: And the third is know some key audit terms.
00:07:02
Erick O. Bell: So for example, one term is materiality. Auditors are testing for whether or not the financial statements are correct in all material respects, which means if you had a million dollars in revenue, it doesn't matter if there's the extra $1, 000 that did or did not make it on there. A million dollars in revenue is a million dollars in revenue. Different from $1. 2 million. Now that 0. 2 becomes a material number. And by materiality, it's what information in the financial statements would be significant enough to influence the decision making of a potential investor or creditor.
And then another key term, for example, would be audit adjustments. And this is just very standard and so this goes back to being honest and just understanding an auditor is going to come in and look at your financials and say, “You should have recorded this expense or you should not have recorded this expense, so what we're going to do is present you with adjustments that you can make to your financial statements that they will be correct.”
And so a lot of times, people get nervous, because they say, “We want zero audit adjustments.” And I always say, “That's not how it works. You're going to have audit adjustments. That's why you have a second set of eyes coming in and looking at it and not to get all worked up and not even make that a goal.”
00:08:22
Andrea Marquez: And the fourth and in my opinion, the most important thing to keep in mind when you're getting an audit is...
00:08:27
Erick O. Bell: Be nice to your auditors. Here's what I would explain to my clients. Say, “I need you to understand something. I just came from a place where they did not want me there and now I'm here and I know you don't want me here. And when I leave here, I'm going to go to another place where someone doesn't want me to be there, so let's just work together, make this as painless as possible. I'm going to send you a list of documents that I want to see and then I'm going to add to it based off of what I've seen. We'll just try and get through this as easy as possible.” That usually gets a chuckle out of them, but understand that we're just here to do our jobs and ultimately, it's to make your financial statements be reliable.
The whole purpose of an audit of financial statements is you can put those out to potential investors and creditors and say, “This information is reliable, because we did it and then we had someone else come in and they gave an opinion that says, ‘Yes, they did it right.’ ”
00:09:21
Andrea Marquez: That was Erick O. Bell, an accounting professor at the Haas School of Business at UC Berkeley. This was such an informative conversation on audits. I love that Erick managed to make getting an audit less daunting. We covered a lot in this episode.
If you missed anything, don't worry. We've taken notes for you. You can find them at smallbusiness. amazon/ podcasts. That's it for this episode of This Is Small Business, brought to you by Amazon. Make sure to subscribe and tell your friends about us by sending them a link to this episode. And please leave a review on Apple Podcasts. It's easier if you do it through your phone, or send us an email at thisissmallbusiness@ amazon. com.
Until next time, this is Small Business. I'm your host, Andrea Marquez. Hasta luego and thanks for listening. This Is Small Business is brought to you by Amazon with technical and story production by JAR Audio.
Ep. 51: How a Patent Can Protect Your Idea
Protect your business idea.
Getting a Patent can be a complicated and expensive process, but it can protect your idea as you work on bringing it to market. Just ask Becca Davison, the CEO of UnbuckleMe, who got a patent early on in her small business journey. Becca explains how she came up with UnbuckleMe, why she decided to patent her idea early on, and what that process looked like for someone who was new to entrepreneurship. You’ll also hear from Colleen Chien, a professor at Berkeley Law School and the founder of the Paper Prisons and Diversity Pilots Initiatives. Colleen digs deeper into how a patent can protect your idea and breaks down everything you need to know before and during your patent application. Learn whether you should even get a patent, how you can protect your idea from copycats, and what the patenting process looks like.
In this episode you’ll hear:
(00:38) What is a patent?
(02:29) How Becca came up with UnbuckleMe
(05:28) The different types of Patents
(06:45) The process of filing a patent
(11:46) Why copycats can still show up even after you get a patent
(13:28) How to protect your idea from copycats
(14:41) The difference between copycats and competitors
Takeaways:
1 - Just because you can get a patent doesn’t mean you should. Colleen says that you should think about how it’ll benefit your business because a patent is expensive and the process could take a few years.
2 - If you’ve decided that a patent is the way to go, then you need to do a lot of research. First you need to find out if your product is novel and non-obvious by looking through existing patents and applications. You can look through online databases like the USPTO and Google Patents or you can hire someone to do it for you. Then you’ll have to decide whether you should get a design patent or a utility patent by figuring out what’s unique about your idea.
3 - If your budget is limited, the first step to the patent application could be filing a non-provisional patent. Colleen says that this patent acts as a placeholder for your idea and gives you 12 months to decide if you want to turn it into a full patent. A non-provisional patent or a pending patent application can also allow you to collaborate with manufacturers or do market research without being worried that someone might try to steal your idea.
4 - Unfortunately, having a patent doesn’t stop the copycats. But there are many ways you can protect your idea or product. Colleen suggests leveraging trademarks and copyright, and you can also try to broaden your patent claims like Becca did.
5 - Be open to healthy competition. It’s important to protect your idea from people who try to steal it, but there will be similar products on the market that will compete with yours. Instead of trying to take down every product that resembles yours, focus on making your product the best one on the market.
00:00:03
Andrea Marquez: There's a lot of benefits that come with getting a patent. It gives your product legal protection, it makes you look more marketable, and it lets potential investors, partners, and customers know that your product is unique and valuable. But a lot goes into applying for a patent. So where do you even start? When should you file a patent? And does a patent really protect your product from people who try to copy it?
Hi, I'm Andrea Marquez, and This is Small Business, a podcast brought to you by Amazon. Today, we'll be breaking down everything you need to know about patents, whether you even need one, and the process of filing it.
00:00:46
Colleen Chien: A patent is a legal document granted by the government, in this case, the Patent and Trademark Office, that gives the owner the exclusive right to make, use, sell, import, and distribute their invention for a certain period of time. So what it is is it's not the right to practice your invention, but the right to exclude others from using or profiting from it without your permission. It's sort of like a fence. It keeps people away from your property, but you still need to commercialize your invention if you want to make money on it.
00:01:12
Andrea Marquez: That's Colleen Chien, a professor at Berkeley Law School.
00:01:16
Colleen Chien: Before I started teaching, I worked in patent law for several years, both as a patent prosecutor, writing patents, but also providing advice to businesses on their patent strategies. I've also worked in public service. I worked in the White House on patent issues. So today, I'm speaking in my own capacity, but I just wanted to let you know I've been around the block a bit when it comes to patents.
00:01:33
Andrea Marquez: Colleen is the person to go to for anything patent related. She'll be explaining the process and giving us insights throughout the episode. It's important for me to mention that none of the things mentioned on this episode should be taken as legal advice. We are here to provide with general information. So before you do anything, please see qualified professional counsel on your specific matter. The hiring of an attorney is super important, so don't make the decision lightly or based solely on anything we cover today on this episode or any other, for that matter.
So now, before we talk to Colleen, let's hear from Becca Davison, the CEO and founder of Unbuckleme, a small tool that helps unlock a child's car seat. Right now, Becca has six patents, so her idea is pretty original and unique. Before we get into why Becca has six patents, let's dig into how she came up with the idea. As most businesses do, Becca got into entrepreneurship, because there was a gap in the market that she could fill.
00:02:33
Rebecca Davison: I had my first daughter in 2015, and my mom graciously offered to help me out with childcare.
00:02:38
Andrea Marquez: But when she was showing her mom how to unbuckle her daughter's car seat, she realized that her mom lacked the strength to do it.
00:02:45
Rebecca Davison: And we kind of looked at each other and thought, “Well, if you can't unbuckle the car seat, you can't take my daughter safely out of the house. How are we going to solve this problem?”
00:02:51
Andrea Marquez: Her mom settled on spending time with her granddaughter at home. But as Becca's daughter got older, her mom started to realize that she was missing on key memories that she could be making with her granddaughter, so she relies on her experience as an occupational therapist to come up with a solution.
00:03:07
Rebecca Davison: She designed an adaptive tool that is just a C shape tool. It's very simple, and it uses leverage. So if you think of like an old fashioned nutcracker, it just wraps around the button, that's flat on the five point harness, and it applies leverage to make it 50% easier to unbuckle. And so, it was the difference for her of being unable to do it herself with her thumb pressure and some arthritis at the base of her thumb and then, applying some leverage with this tool. And she was very easily able to unbuckle it.
00:03:35
Andrea Marquez: And when Becca saw her mom's solution...
00:03:37
Rebecca Davison: I thought, “She can't be the only person on the planet that's having the same struggle, so let's sort of explore it and see if maybe we can start a business at this point.” So I think her first response was like, “Oh, I can make a few more for your friends.” But we quickly started thinking, “Well, maybe this product should exist in the marketplace for other people to be able to use.”
00:03:57
Andrea Marquez: The first thing that they decided to do was refine the prototype that her mom created.
00:04:02
Rebecca Davison: She spent her career making splints for patients with disabilities and making adaptive tools, using leverage and rubber bands and things like that. That's what her whole career was. So to use some leftover splint material, it's very pliable. It heats up, and you can bend and stretch it. And then, it hardens when it cools. And so, it's a perfect prototyping material actually, because you can just test different features.
00:04:21
Andrea Marquez: And they tested everything.
00:04:23
Rebecca Davison: I think we probably had, no joke, over 75 prototypes of just, “What if the lever arm was longer? What if it was taller? What if it was open wider?” At one point, I think my mom got screws or hinges. We were trying so many different things, thinking, “Well, if we're going to actually invest the money into bringing this to market, we'd better make it perfect.”
00:04:40
Andrea Marquez: And once they finally settled on a prototype that was up to their standards, they decided to get market feedback and research.
00:04:46
Rebecca Davison: I think that's a super important step for early entrepreneurs is to really validate your concept and your idea. So we went to a trade show. We talked to a lot of industry experts. We actually gave out a lot of samples to people and got feedback and said, “What would you change about it? And also, what would you pay for it?” And so, that feedback was super important, and having all those prototypes really helped us get a lot of feedback in the early days. We wanted a product that customers loved, and that was just the driving goal and it continues to be our driving goal. We want customers to be so happy with this product.
00:05:14
Andrea Marquez: Becca knew that she had to protect her idea before she went to market, so they filed for a provisional patent a few months after they came up with her idea. And if you don't know what that is, Colleen says that it's the first step to filing a patent.
00:05:28
Colleen Chien: A provisional patent is kind of a temporary application filed with the US PTO. It's inexpensive in the sense that you don't have it go through the entire process, and it's great, because it allows you to claim patent pending status on your invention for up to a year. When you go from provisional to non-provisional, you're basically entering the formal application process and starting the examination. And that's generally for a utility patent. And a utility patent protects these functional aspects of your invention. It's what most people think about when they talk about patents.
00:05:56
Andrea Marquez: And there's also other types of patents, like the design patent.
00:06:00
Colleen Chien: Which cover our new original and ornamental designs for articles of manufacturer.
00:06:04
Andrea Marquez: And even a plant patent.
00:06:06
Colleen Chien: For new and distinct plant varieties.
00:06:10
Andrea Marquez: So we've already mentioned that Becca's product was unique and original, which is a requirement for your idea to be patentable. But in order to find out if your idea is novel and non-obvious, you have to do a lot of research.
00:06:25
Colleen Chien: It's about looking through existing patents, published applications, and also just looking around in the field and trying to understand, “Has this idea been discussed before? Has it been put into a product or sold?” If it has, then you're not going to be able to patent that idea in that form anymore. You'll probably try to look for some of the more unique elements of what you're doing. So you can start with online databases, like the USPTO or Google Patents or you can hire a professional to conduct the search for you.
00:06:49
Andrea Marquez: But Colleen says that just because you can apply for a patent doesn't mean you should.
00:06:53
Colleen Chien: I think you always want to start with a business need and what the business purpose of the patent is. Patents are expensive to apply for, and then, going through the process can take several years. So if you are looking for some kind of thing that you can hold in your hand, negotiate with immediately, a patent is not typically going to serve that purpose.
00:07:12
Andrea Marquez: But if you decide that you do want to get a patent, there's a few things you need to do before you start the filing process. First, you need to figure out which patent to get.
00:07:21
Colleen Chien: Is it the design that's really unique and unusual about your product? Or is it really some idea or new way of doing things that you're bringing to bear?
00:07:30
Andrea Marquez: Then you have to think about which patent will fit within your budget.
00:07:34
Colleen Chien: You can still start by filing a non-provisional patent, which is kind of like a placeholder. It's a patent application, but it's a way to say, “This is my idea. I'm going to stake out this territory, and then, I'll decide whether I want to turn it into a full blown patent at the end of the year.”
00:07:49
Andrea Marquez: That's what Becca did when she first applied for her patent. She says that they were still refining their prototypes and trying to figure out what they wanted their product to look like. So they filed for a provisional patent.
00:08:01
Rebecca Davison: Which, in the US, gives you 12 months to continue to sort of iterate around the margin of your design before you submit a non-provisional patent that gets actually examined by the US patent office.
00:08:12
Andrea Marquez: And Becca says that they needed all the time they could get, especially since they were new to entrepreneurship.
00:08:18
Rebecca Davison: So it's going to take us four times longer than it could take anyone else to pop on the market tomorrow with this product. So we needed to sort of buy ourselves some time in a sense and make sure that we had protected our idea to give us time to go do the legwork and make sure, again, that we had the most perfect product and that we had designed it and marketed it in the right way that we wanted to.
00:08:34
Andrea Marquez: Colleen also says that filing for a provisional patent is a great way to protect your idea, if you're not going to be working on it alone.
00:08:41
Colleen Chien: Having that patent or even that patent filing in your pocket gives you the confidence to have those conversations and say, “Hey, let's work together on this, but I want to make sure my rights are respected.” And that can allow there to be a tradable asset for that patent-holder or that patent applicant, that then they can use to negotiate with the other parties to, again, bring this to market. And it just provides that trust and that sense of confidence that that patent applicant or patent-holder can bring into the process, that there is something outside of the negotiation that's protectable by the patent-holder.
00:09:13
Andrea Marquez: So just filing a patent application can give you some peace of mind. Having an early filing date can work towards your advantage, if someone tries to copy your idea, but a patent application doesn't give you immediate legal protection. You could only enforce a patent after the patent is granted.
00:09:28
Colleen Chien: That's why I always recommend that using non-disclosure agreements and other ways of withholding information if you need to are going to be smart ways to also protect your idea when sharing it with potential partners or manufacturers. But I think it's important to realize that patents, as much as they can be used to exclude others from copying your idea, they can also be used to include others in your process and collaborate with them in bringing your idea to market.
00:09:54
Andrea Marquez: Okay, so after you've done your research and verified that your idea is original, you can finally start filing your patent. We've already said that the first step could be to file a non-provisional patent. It'll protect your idea as you work on it. Then if you realize that your idea is gaining traction in the market, Colleen says it's time to convert that provisional patent to a non-provisional patent.
00:10:18
Colleen Chien: Once you're in that range of filing an actual application, you'll go back and forth with the patent office over several rounds, in most cases. Your application will be reviewed by an examiner, and then, there'll be a back and forth, some suggestions with ways you can amend or make your patent claim stronger. And then, hopefully, eventually, in about three quarters of the cases, you'll get your patent. Once you get your patent, you'll have that exclusive right to your invention for a set period of time. You can continue to pay maintenance fees and have your patent live out its full life to 20 years from the date of filing.
00:10:50
Andrea Marquez: And once you have your patent, the first thing you should do is celebrate.
00:10:55
Rebecca Davison: I think we have a video of my mom and I popping champagne, and we were like, “We have the patent. It's so exciting. It's great. Everything's going to be good now.”
00:11:02
Andrea Marquez: Until someone tries to copy your product.
00:11:06
Rebecca Davison: I think what really surprised us was seeing some of the competitive products that popped up that looked identical to ours, but perhaps had just changed the smallest of details, things that were so nuanced and specific, that doesn't change the function of the product at all, but it was just copying our idea with a small tweak, but then, they could sort of use that language to say, “Well, they said that the top arm was longer than the bottom.” So you sort of get into this song and dance of what words you've included in your claims. And that was shocking to me, because I thought, “Well, what do you mean? This is the identical product. They've just taken the smallest interpretation of words.” And I do believe you can take someone to court, and you can say, “This is basically the same thing,” and you can make all those arguments. But we didn't have the resources to do that.
00:11:47
Andrea Marquez: Copycats can still exist, even if you have a patent. Colleen says that it's important to remember that a patent protects the idea, not the expression of the idea in terms of product.
00:11:58
Colleen Chien: So you can have a patent over a particular aspect of a product, and if the copycat doesn't copy that particular aspect, but copies other parts, then it will still bear a resemblance potentially to the original item that's being sold. So that would be a situation where I would consider it to potentially be uncomfortably close, even though it's not infringing.
00:12:19
Andrea Marquez: There are still ways to protect your product, like leveraging trademark and copyright.
00:12:24
Colleen Chien: Are they trading on your brand or copying some aspect that identifies you to the consumer? That could be a trademark violation. If they use your exact words or a source code, that could be a copyright violation. Notably, with copyright, you don't have to file for it. It automatically exists. So even if you haven't filed for formal protection, you can still register your copyright. You might have a copyright claim. You can go through process to apply for a trademark, even after you've been putting it in use or you intend to use it.
00:12:53
Andrea Marquez: We can't stress enough the importance of getting the right kind of help.
00:12:57
Rebecca Davison: I definitely recommend anybody going down this path to work with an IP attorney, because they are very familiar with this process and how to craft your claims in a way that broadens your coverage as much as possible. And I think patents are so important to small businesses, because we don't have the big resources of big corporate companies. So the patents that we do have have given us a bit of a moat to succeed and have been really critical to our success.
00:13:20
Andrea Marquez: It's also important to remember that there is a difference between copycats and competitors.
00:13:25
Rebecca Davison: I don't mean to come across and say that we don't welcome competition, because I do think, if people come up with new ways of doing things that are different, I think that's fair game. And I would argue that we were probably not the first. There was another tool on the market before us, and we saw it and it didn't work for my mom. And so, we aren't the first either. So I do think that there's a healthy space for innovation.
00:13:45
Andrea Marquez: So it's important to be open-minded about the competitive landscape. There can be healthy competition.
00:13:51
Rebecca Davison: And I think that's hard sometimes for entrepreneurs to recognize is they want to be very territorial about their invention, but you're solving a problem. You're going to find your target market. You're going to find those people that really, really want your product and really resonate with your story, and that's really all you need to focus on is how to succeed and how to make your business succeed. I think some of the legal stuff can be distracting, and if you focus too much on competitors, I think it can take your focus off what really matters, which is your own business and how to grow it.
00:14:21
Andrea Marquez: I'm so glad Becca pointed that out. Protecting your idea is important, but don't get too lost in the legalities of it all. That time is better spent on improving your business, and if you're considering getting a patent, Colleen says that right now is the perfect time to do it.
00:14:36
Colleen Chien: I think there's been a realization that we really need all ideas to be out there and to come to market as much as possible. And good ideas can come from many places, and I think, for small business owners, there may be that desire to ensure that your invention, if you're putting out in the world, it can be something that you can control to some degree. And that's what a patent can help you do.
00:14:55
Andrea Marquez: I think anything law related and business could get a little overwhelming, but Colleen and Becca did a great job in simplifying the process and explaining what a patent is. We covered a lot in this episode. If you missed anything, don't worry, we've taken notes for you. You can find them at smallbusiness. amazon/ podcasts. That's it for this episode of This Is Small Business brought to you by Amazon.
Reach out to us at thisissmallbusiness@ amazon. com to tell us what you're up to, or let me know what you think about this episode by leaving a review on Apple Podcasts. It's easier if you do it through your phone. And if you liked what you heard, I hope you'll share this with anyone else who needs to hear this. If you're an aspiring entrepreneur or maybe you already have your small business up and running and you're ready for the next step, a super valuable resource that can help you is the Amazon Small Business Academy. Take the free self-assessment on the Amazon Small Business Academy site at www. smallbusiness. amazon.
Until next time, I'm your host, Andrea Marquez. Hasta luego and thanks for listening. This is Small Business is brought to you by Amazon with technical and story production by JAR Audio.
Ep. 50: Why Public Relations Matter
Learn about public relations for your business.
Accidents happen, we make missteps, sometimes our brands are tarnished. So how do we prepare for the inevitable and mitigate impact? Indya ‘Icy’ Wright, the Founder and CEO of Artiste House, a PR firm that prioritizes diversity, inclusivity, and representation, has some answers. According to Wright, “all we can do is try to minimize the results of what happened, rectify it, and if things go well, move forward.”
In this episode you’ll hear:
(02:35) How do you figure out what your story is?
(05:22) How do you determine which issues to take a stance on publicly?
(07:52) You never know when a crisis will strike, how do you prepare?
(08:27) After a crisis, how do you deal with the potential loss of business?
Takeaways:
1 - Your story is one of the most important assets you have. Make sure you know what it is. Then create your content around what you have to say. We connect with the people behind the brand, so don’t be shy.
2 - Before you invest in public relations (PR), know what your goals are. If it’s improving invisibility, say yes to as many opportunities as you can. One of the few exceptions is if the offering brand’s values doesn’t align with your own. Another is creating controversy for attention’s sake.
3 - Being true to yourself and your brand will help you decide when and if you want to take a vocal stand on issues. Tap into who you want to serve and what matters most to you.
4 - If you find yourself in the middle of a PR nightmare, bring in crisis management. You’ll need to assess impact, take accountability and most importantly, outline actionable steps toward preventing the same thing from happening again. Another smart step is having a crisis management plan in place before you need it.
5 - PR crises are inevitable. No matter how well loved you are or how careful you are, missteps happen. Plan for it. And remember, the customers who stick with you through the hard times are the ones who are truly invested in you and your brand. Once you know who they are, you can focus your messaging to them.
00:00:01
Andrea Marquez: Whether you're just starting your business or you're well into your entrepreneurial journey, one thing's for sure: your public image matters. But how do you build and maintain that? If you're not sure how to manage your brand's public relations, or PR, then this episode is for you.
I'm Andrea Marquez, and this is Small Business, a podcast brought to you by Amazon. Today, we'll be talking about PR, how to get started and things to keep in mind for you and your business.
00:00:30
Indya Wright: When you think of smaller businesses or even just different nonprofits, they can invest in a public-relations agency nine times out of ten, and then the work that they're doing gets ignored and then they can't raise funds for the important causes that they serve. And so I love being able to provide that service, a quality service, but prioritizing the people that otherwise get ignored.
00:00:51
Andrea Marquez: That's Indya Wright, the founder and CEO of Artiste House, a PR firm that prioritizes diversity, inclusivity and representation. Indya has been working in PR since she was just 14 years old.
00:01:05
Indya Wright: Being a DC native, I was in something called the Summer Youth Employment Program, so I've got to see firsthand creatives doing their projects, advocates doing their projects... I've always been in this field and didn't realize it.
00:01:17
Andrea Marquez: Indya eventually worked in banking and the legal sector, but those early experiences stayed with her.
00:01:24
Indya Wright: And while in my free time I was amplifying the work people were doing, I never considered that something that could be a career for me. But I finally had this random aha moment after quitting my job at the Superior Court. Like, “Okay, what next?” Because I had no backup plan, no money saved at all. My first thought was to tell my story.
00:01:45
Andrea Marquez: And two weeks after quitting her job, she ended up in Chicago, telling her story to Mark Cuban and Steve Harvey on Steve Harvey Show.
00:01:54
Indya Wright: They gave me a seed of a thousand dollars with the caveat that this money has to go towards your dream, and honestly, I did not know what my dream was, what my thing was, and so I just went back to doing what I did best in my free time: amplifying people. But what happened from that public exposure was that people that had the budget to invest found me, hired me to help tell their stories, and so that's honestly how my company was born.
00:02:20
Andrea Marquez: So Indya knows from experience how important PR is, because telling her story is how she managed to start her own business. But before you can get your story out there, first you need to figure out what your story is and incorporate it into your brand.
00:02:36
Indya Wright: Everything you do, consider the story you want to tell, and that's going to reflect in the content you share online, where your product or service is available, the people you serve. That all ties to the story of your brand. When you think about PR, what I find is a lot of small businesses think, “Oh, I'm not there yet. I don't have the sales. I don't have the client base. I don't have this. I don't have that.” All this imposter syndrome kicks in. But the reality is it really, truly is about the story, and more often than not, people are more interested in the people behind the brand than the brand itself. It's less about the product or service, more about the person and the mission, and I feel like that's across the board. Any industry, any brand, any goal. Who are you serving? Why are you serving them? I feel like that's the hook that makes things newsworthy.
00:03:25
Andrea Marquez: Once you've answered these questions, Indya says that the first thing you should focus on when you're trying to amplify your brand story is building community.
00:03:33
Indya Wright: They become your biggest supporters, your audience, your fan base. They continue to help amplify the news that you generate for yourself. So I definitely think any business, any size, big or small, should start with community-building and nurturing their desired audience.
00:03:47
Andrea Marquez: Indya also says that you need to consider what your goals are before you invest in PR. And if your goal, like most small businesses, is to make sure everyone knows who you are, then you need to say yes to as many opportunities as you can.
00:04:02
Indya Wright: I feel like in the beginning, the more visibility, the better. The one exception to that is if that brand's values completely are not aligned with your own. Then it makes sense to not want to introduce yourself to their audience. But if it's just a random preference thing, “I don't think my audience is here,” you never know who may take interest in your brand, in your product. There's different facets to everyone.
00:04:29
Andrea Marquez: And there's one more reason to say no to an opportunity.
00:04:32
Indya Wright: There are some PR agencies that believe in using scandal to get the community talking. Personally, in my career, I would never advise a client to do that. I do not believe all press is good press. I prioritize the mission and the importance of what they do.
00:04:50
Andrea Marquez: I think it's so important that Indya pointed that out, so I'll say it again: not all press is good press. Visibility is important, but you need to make sure that you're reaching the right audience. Indya talked about how storytelling and community- building are important. People connect to the story behind the brand, and we see that when customers get upset if their favorite brand doesn't comment on an issue that they feel is important. So how do you figure out when to enter a conversation? Indya says that it all depends on how your brand is positioned.
00:05:21
Indya Wright: So if it's a situation where you're just being true to yourself, true to your brand, and you've been mission-based at the onset of creating this brand, it's not out of place for you to be vocal. So I think it depends on what means most to you. Is it about being accessible to everyone, or are you not afraid to niche down and really tap into who you want to serve and what matters most to you?
So, for example, let's say it's a major bank, a bank that serves clients nationally, globally. They may want to stay out of the conversation. They may want to stay quiet. It really has nothing to do with the clients they serve, the work that they do. But there may be, let's say, a small minority-owned bank whose community is impacted by something happening in the world. It may be important for them to be vocal about it because the people they serve may be waiting to hear from them.
00:06:10
Andrea Marquez: And if you end up with a PR nightmare on your hands, that's when you turn to crisis management.
00:06:15
Indya Wright: The first step would be assessing the impact, what was said, and then taking accountability for that. And then also the biggest piece to crisis management that puts clients, customers, viewers, at ease: you always have to outline actionable steps that you will take going forward, because an apology is just words. People want to see how you're going to prevent something like this from happening going forward. You have to be vocal. You have to display actionable steps. Otherwise, people will feel like you're not taking the crisis seriously, and it really hurts public trust.
00:06:49
Andrea Marquez: So assess the impact, take accountability, and lay out actionable steps to show your customers that this won't happen again. But that's a lot harder than it sounds, especially if you need to address a crisis as quickly as possible. So Indya says that having a crisis-management plan before a crisis happens is essential, no matter how big or small your business is.
00:07:11
Indya Wright: Who do we contact when crisis strikes? Who's going to be the front-facing spokesperson when crisis strikes? Who's going to approve the messaging to make sure we're all in agreement? And how soon do we respond to this crisis? The best course of action is to stay ready so you don't have to get ready. Have a crisis plan. Even if you're at a place in your career where you can't invest in full-time public relations, or crisis management, you can reach out to a PR firm to say, “Hey, we would like help developing a crisis-management plan just in case so that we have this.” That's another affordable option as well.
00:07:43
Andrea Marquez: Do you think every crisis can be navigated? Because I think about this a lot when I'm on social media. I'm like, “What can they do?”
00:07:52
Indya Wright: All you can do is mitigate impact. Unfortunately, even the best of professionals in the communication space, we cannot completely prevent or protect people from crisis. All we can do is try to minimize the results of what happened, rectify it, and if things go well, move forward. That's the result of good crisis management. It's reflecting, adapting, and potentially moving forward.
00:08:20
Andrea Marquez: I know hearing this is scary, that it's impossible to get it right, but the plus side is that staying true to your values can be good for business.
00:08:28
Indya Wright: There's never going to be a perfect answer, a perfect solution for anything. There never will be. And I think honestly, there's peace in realizing that that's okay, because when you potentially lose part of your audience or potentially lose clients or lose supporters, they weren't aligned with you and your brand. And I think the key to being profitable, the key to building brand awareness, the key to getting out there, is making sure people that are really invested in you and what you're doing find you. And I think by weeding out those that aren't, it makes it easier for you to really hone in on the messaging for your audience.
00:09:06
Andrea Marquez: That was Indya Wright, the founder and CEO of Artiste House. Ending on a positive note, even though I hope none of us have to go through a PR crisis, I feel a little more comfortable knowing what steps I should take in case that happens.
We covered a lot in this episode. If you missed anything, don't worry. We've taken notes for you. You can find them at smallbusiness. amazon/ podcasts. That's it for this episode of This Is Small Business, brought to You by Amazon.
Make sure to subscribe and tell your friends about us by sending them a link to this episode, and please, please, please leave us a review on Apple Podcasts. It's easier if you do it through your phone. Or send us an email at thisissmallbusiness@ amazon. com.
Until next time, I'm your host, Andrea Marquez. Hasta luego, and thanks for listening. This is Small Business is brought to you by Amazon, with technical and story production by Jar Audio.
Ep. 49: Do You Have What It Takes to Own Your Own Business?
Learn what it takes to be an entrepreneur.
If there's one thing we’ve learned over the many episodes of this show, it’s that owning and operating your own business is hard. You have to overcome challenges you didn’t even know existed. Thinking of becoming an entrepreneur or you’re wondering if you should stick it out? We have Dr. Laura Morgan Roberts, scholar, speaker and consultant, who studies the science of maximizing human potential, to guide us through. “I do think for every market need, for every human desire, there is an entrepreneur who is inspired and equipped to meet that need and to help for people to connect with that desire”And Pamela Wirth, of Hello Health, will share what she’s learned on her path to entrepreneurship. Learn from an expert and those who have been there!
In this episode you’ll hear:
(03:49) Why connecting with others is one of the most important traits of an entrepreneur(05:23) What qualities you need to be an entrepreneur
(08:17) If you can't go all in on your business because you need the financial security of a 9 to 5, how else can you start your business journey?
(10:24) How do you start a business if you have too much on your plate?
(12:56) An entrepreneur is also a leader, so what qualities do you need to be a great leader?
(15:38) What are some hurdles that entrepreneurs might have to overcome when they're thinking about starting a business?
(18:45) What are some of the qualities you need to help you get through the tough times?
Takeaways:
1 - As an entrepreneur you need to be able to connect with people, whether that’s customers or employees. Running a successful business requires identifying your market then meeting people’s needs. Look to fill a gap in the market or even better yet, create a new one.
2 - Think long and hard about your ability to manage risk and then how to work within your parameters. You can start small while still working full-time, and grow incrementally while continually assessing the risk. Your business doesn’t need to be all or nothing.
3 - If you are already feeling maxed out with what’s on your plate, think of ways to build a business around what you’re already doing. Your business can be an extension of the knowledge you have and the work being done.
4 - As an entrepreneur, you’ll need to be a leader. A big part of that is understanding what motives some people may not motivate others. Be flexible and agile in your leadership.
5 - Play to your strengths. Figure out what only you can bring to the table. Once you know what you’re good at, continue to develop those skills by asking for feedback then leverage that in the business you are creating.
6 - You don’t have to have all the answers before you start. Be open to listening and learning along the way. While it’s good to learn from the mistakes of others, you are also free to do things differently.
7 - Having passion and commitment will get you through the tough times. Because there will inevitably be some. Pay attention to the good times in order to keep finessing what you’re doing.
00:00:04
Andrea Marquez: Hi, this is Small Business, a podcast brought to you by Amazon. I'm your host, Andrea Marquez. I started this podcast because I wanted to learn more about small businesses and how entrepreneurs do it. Through my many conversations, what stands out is the dedication, the drive, the commitment and unwavering conviction it takes to do this, to be an entrepreneur.
But of course, there's more to it than that. Running your small business requires so many hacks. That's why I truly believe this is one of the most important conversations that needs to be had early on in your journey. Do you have what it takes to start and run a business of your own?
For this episode, we're going to explore this question and look at how to prepare yourself for taking the leap and opening your own business. And if you've already done so, you'll hear tips for hanging in there. To dig into this question, I have organizational psychologist and consultant, Laura Morgan Roberts. But first, let's hear from Pamela Wirth Barnhill, who like many entrepreneurs, has seen her share of struggles.
00:01:15
Pamela Wirth Barnhill: I had to sell a car and spend an incredible amount of money getting to where I'm at.
00:01:19
Andrea Marquez: She's the CEO and founder of Hello Health based in Arizona.
00:01:24
Pamela Wirth Barnhill: Hello Health is supplements for brain, gut and immune health, as well as we are very shortly in early 2024, rolling out cost-effective lab testing for brain, gut and immune disorders. We're going to also be introducing more of a community because a safe place to be able to connect with others is really important, and so that's a big priority of ours.
00:01:46
Andrea Marquez: Long before Hello Health, Pamela knew at her core that she was an entrepreneur, but she didn't know where to direct that energy until her son got sick.
00:01:54
Pamela Wirth Barnhill: Around the age of five and a half, six years old, started baby talking, crawling eyes, constantly dilated, devoid of all emotion, would wash his hands 30, 40 times a day, would enter and exit rooms in a certain manner. He had shoulder shrugs and eye tics and head mannerisms.
00:02:10
Andrea Marquez: After multiple trips to different doctors and diagnoses that didn't quite fit, Pam finally found a treatment plan that made sense to her.
00:02:18
Pamela Wirth Barnhill: And the doctor says, “So we need to fix his gut.”
00:02:21
Andrea Marquez: It wasn't easy, but Pamela stuck to it, and her trouble accessing the tests and knowhow in supplements needed to help heal her son is what started her on her path to opening her own business. You are not the first person who has been given a diagnosis for a loved one. You not only went through this whole journey, you took it a step further and decided to do something about this. When did you feel confident to pursue this particular idea?
00:02:48
Pamela Wirth Barnhill: I totally had imposter syndrome for years. I probably had this idea for three or four years before I actually started acting on it, and it just kept eating at me because I kept talking myself out of it and I was like, “Oh, it's going to be too expensive. It can take too much time. How are we going to do this? Am I really good enough? Well, there's already brands out there. Well, they don't exactly do this, so maybe I should.” There was nothing out there that was really talking to me where I was at, and I figured if there's nothing talking to me, there must be a hole talking to others too.
00:03:21
Andrea Marquez: I think this is a golden ticket for starting a business. Life leads you to a gap in the market, which plants an idea that just won't go away. And it's interesting that Pamela is saying nothing was speaking to her where she was at. It's something our next guest finds incredibly important. Dr. Laura Morgan Roberts is scholar, speaker and consultant working within the social sciences. She says the ability to connect is one of the most essential traits of an entrepreneur.
00:03:49
Dr. Laura Morgan Roberts: For many people, it's the socio emotional skills, to be able to connect with others. We say this phrase all the time, it feels passe at this point, but meet people where they are. I think that practice is paramount for any leader. It's also paramount for any entrepreneur, a small business owner. You have to understand what kinds of needs people have when they're coming as a member of your team, when they're coming as a client or a customer of your business and the unique strengths and skills that you bring that can help to meet whatever need they have in that moment.
00:04:32
Andrea Marquez: Okay, understanding people's needs and then meeting them is foundational in small business ownership. But is there such a thing as the ideal entrepreneur?
00:04:41
Dr. Laura Morgan Roberts: I don't think that there is an ideal entrepreneur across the board. I do think for every market need, for every human desire, there is an entrepreneur who is inspired and equipped to meet that need and to help for people to connect with that desire. So as long as you know what market you're trying to support, that you're trying to engage, that you're trying to ignite and activate, you can become an entrepreneur who will be best equipped to serve them.
00:05:18
Andrea Marquez: So understanding the market you're entering is essential, but what sort of qualities do we need?
00:05:23
Dr. Laura Morgan Roberts: Let's start with your capabilities. What is it that you can do very well that would help you to develop the product or service that would be of interest, that would be of need to other people? I'd start there. If you don't have the capability, it's not a deal breaker. In my area of business, which is consulting, coaching, strategic advising, I can invest in developing my skills and my expertise in that domain so that I can then provide high quality services to others. But it's pretty hard to build a business if you don't have some level of expertise and you've not invested some time and effort into cultivating or refining your skill set.
00:06:06
Andrea Marquez: Right. You need to have the skills to be able to offer top service. What else?
00:06:11
Dr. Laura Morgan Roberts: The secret sauce is finding a way to design or deliver a product or service that is not already available in the marketplace. It's not about replication. It's not about imitation. It's really about embracing what is distinct, authentic and unique about your vision and your approach, and learning how to align that with the market's needs. Even better, creating a new market that doesn't already exist, but aligning that around your ability to differentiate.
00:06:45
Andrea Marquez: Don't be afraid to stand out. Here's what Laura would say to someone that asks, “Do I have what it takes to be an entrepreneur?”
00:06:52
Dr. Laura Morgan Roberts: I would say, what are your priorities and what is your risk profile? It's less about whether you have what it takes and more about what you're willing to give or give up on the path to entrepreneurship.
00:07:12
Andrea Marquez: So earlier, we heard Pamela talk about having to sell her car in order to raise funds. So Dr. Morgan Roberts, how do we determine this? How would I determine if I'm willing to do what it takes to be an entrepreneur and use me as an example?
00:07:29
Dr. Laura Morgan Roberts: I would love to. What would it take for you to become an entrepreneur? Is there anything in your life that you would have to change, modify, alter, sacrifice in order to pursue entrepreneurship?
00:07:47
Andrea Marquez: I feel like for myself, I would probably have to quit my current corporate 9-5 job. And I say this because I know that a lot of people have side hustles. However, I am a primary caretaker for a sick relative, my mother, and I also do a lot of extra things for my family. So since I'm not willing to sacrifice helping my family, I would need to sacrifice my 9-5 job, which would then come with, “Well, then how am I going to get paid?” Right?
00:08:17
Dr. Laura Morgan Roberts: And for most people, that is the trade-off. It's the financial security. It's the need to be able to provide for oneself and to provide for one's family. That feels like a big barrier in pursuing entrepreneurship. The phrase you used was going all in. I would suggest perhaps starting small and letting something grow. That would be the first piece, that it doesn't have to be an all or nothing overnight radical change or shift.
The way that our economy is currently structured, technology provides so many helpful platforms that will allow us to grow and develop in our business ventures in smaller increments. It doesn't have to be the all or nothing venture that it used to be when someone invented something in their garage or their basement and then they were selling it out of the trunk of their car. We have platforms that can help to support in the vendor process. We have technology that can help to manage our communications and PR. We have social media that can help to send out messaging and promotions about the work that we're doing that can provide more efficiency in our entrepreneurship.
So the massive sacrifice of cutting the tether and setting sail is quite large, and it's a privilege for many people to be able to dive all in in that way. Or you have to have a really high risk profile like, “I believe in my idea, this is going to pay off and here goes, it's all or nothing.” That's why we use the phrase, ‘Going for broke.’ That's what it means to go for broke, but I think the vast majority of entrepreneurs and small business owners are growing their businesses and their ventures incrementally and not taking that all or nothing approach.
00:10:18
Andrea Marquez: Right. Start small. But how do you make it work if you already feel maxed out?
00:10:24
Dr. Laura Morgan Roberts: Synergy. This has been huge for me in my work. As I mentioned, I am someone who still has a full-time job and therefore my business ventures have always been part-time by necessity, because as a full-time professor, I have obligations. I have student needs. I'm also an active researcher and writer. So there are lots of things that I do that help me to be much more impactful and responsive in my business, but it's part of my full-time profession.
So how does the work that I do in my day job as a researcher, as a professor help me as an entrepreneur? For me, it's understanding the needs of the market, finding different ways to speak to people and to help to support and address their needs outside of the proverbial ivory tower, outside of higher education. There's so many other people on the planet who are asking these same questions about leadership, who want resources, who are hungry for this information and knowledge. They don't want to read the textbook version of it, right?
But they want somebody who can translate for them the cutting edge latest insights in a way that is rigorous, relevant and relatable. And that's where synergy comes in. So I will come back to you and say, you don't have to answer this now, but some things to ponder would be what is it that I'm already doing that I focus a lot of time and energy on that I'm able to offer, to provide, to engage in the context of my full-time work or conversely, outside of work, the things that I'm doing as a caregiver, the things that I'm doing in my community and with my friends? Are there ways that I can take the activities that I'm already involved with, I'm already invested in, I've been cultivating my skills and my capabilities? And perhaps use that to help to fuel some of my entrepreneurial ventures and then build out from there.
00:12:42
Andrea Marquez: Great pieces of advice. Thank you. And let's say your small business evolves from a side hustle to something bigger with employees, you're a leadership consultant. What are some key characteristics of a great leader?
00:12:56
Dr. Laura Morgan Roberts: I think one struggle and challenge is assuming that what works for you, works for everyone else. What lights you up will light up everyone else. What motivates you, motivates everyone else. You may love happy hours after work as a way of bonding with other folks in your organization. I guarantee you there are one or two people who would rather not engage in happy hours, but go along with it because they want to be supportive of the team. And there may be one or two that feel really uncomfortable with that and would much rather connect over a coffee, a tea, or a community service project.
So assumptions about what motivates us, what helps us to feel more connected and engaged. They're often based on our own limited experience. And as we grow older, as we gain more exposure, as we encounter people from diverse backgrounds with diverse life stories and a unique set of needs, we realize that we can't use a one-size-fits-all strategy for leadership. We have to be more flexible, we have to be more agile.
00:14:14
Andrea Marquez: What else do you think people should be thinking about before starting a business of their own?
00:14:18
Dr. Laura Morgan Roberts: So one of the practices that I encourage on a daily basis involves playing to your strengths. So thinking about how I show up as my best selves in any environment means I'm actively engaging my strengths. I'm doing the things that I do well. I'm trying to learn how I can be even better in those areas and how I can utilize my strengths to connect to other people's needs and to create new marketplace opportunities.
So if one of my strengths is public speaking, then I'm looking for new opportunities to be able to utilize my voice in settings with audiences that would appeal to my message and to the work that I'm bringing. I'm also trying to get more feedback on public speaking, which aspect of the talk, of the speech, of the story, of the message resonates most so that I can continue to grow in that area. All these are different ways to be able to tap into one small strength and leverage that as a signature feature of my own business.
00:15:31
Andrea Marquez: What were some of the hurdles you were up against? What did you not fully realize until you had some experience under your belt?
00:15:39
Dr. Laura Morgan Roberts: When I first started as an entrepreneur, I had two things that were really holding me back. One, I thought I had to have all the answers. I had to be the authority, I had to be the expert, and who was I at 30 years old to be the authority on much? Right? I hadn't had a lot of lived experiences at that time, and I was advising and supporting people who were older than I was, who were more experienced than I. I had to figure out how I could bring value to that engagement in a way that wasn't predicated on me having to prove that I was the smartest person in the room. I thought I had to be perfect. I wasn't always able to just lean back and enjoy the moment and listen to what everyone else had to teach me that ultimately helped me to build a better business.
The second fallacy or mistaken assumption I had was I had to do it like everybody else. I'm in this business of leadership development and consulting, and I'm very fortunate. I have been mentored by, supported by some of the most brilliant, kind-hearted people in the world who do this work, and it was so intimidating to sit back and watch them leading their businesses. So you try to imitate and borrow a little bit of what this person is doing, a little bit of what that person is doing, but ultimately, you miss out on developing your own brand. It's really about finding your own path to unique value creation that gives you joy and fulfillment in life.
00:17:35
Andrea Marquez: I love that. Don't aim for perfection. Do your homework and believe in your abilities, and then do what you do best. Play to your strengths. And let's bring Pamela back for a minute before we go. We've talked a lot about the skills needed to be an entrepreneur. Pamela, was there ever a moment when you thought about giving up?
00:17:56
Pamela Wirth Barnhill: Yeah, there were a couple of times where I had people saying, “Hey, this next critical step is going to get real expensive. Are you sure you're in?” I was like, “Okay, here we go.” I've been working full-time through this too. I have not taken any outside investment as much as I've wanted to. I had someone offer me $ 250,000 for half of the company, and that was super tempting. But then at the end of the day, half the company is a lot. And then if you ever did want to take outside investment, again, there's practically nothing left. I'm on this current path where I am slowly growing with intention so that it doesn't break.
00:18:30
Andrea Marquez: It's nerve-wracking to put so much money, time and effort into something that isn't a sure thing. So here's what Dr. Morgan Roberts thinks, keeps people going when the going gets tough and there's so much uncertainty.
00:18:44
Dr. Laura Morgan Roberts: Some degree of passion, some commitment, something that's just going to give you the elbow grease to take an idea, take a dream, take a product, a service and keep working with it, keep growing in that area, keep finessing it, bounce back from the feedback that you get. Learn from the rejection along the way. Pay attention to the moments when your business is really booming and the times when things are a little more quiet and try to learn from all of that. If you hold fast to the passion, you remain dedicated to your vision for impact, and that's really important to keep you going as well.
00:19:27
Andrea Marquez: That was an invaluable conversation. I hope this inspires a lot of entrepreneurs who may feel blocked from taking the next step. As we heard, sometimes it's about starting small, being unique, playing to your strengths and really connecting with people. Be authentic in who you are and what you have to offer. Look for the gaps in the market and fill them in a way that only you can.
So do you have what it takes to be a small business owner? There's only one way to find out. We covered a lot in this episode. If you missed anything, don't worry. We've taken notes for you. You can find them at smallbusiness. amazon/ podcasts. Reach out to us at thisismallbusiness@ amazon. com to tell us what you're up to, or let me know what you think of this episode by leaving a review on Apple Podcasts. It's easier if you do it through your phone. And if you liked what you heard, I hope you'll share us with anyone else who needs to hear this. If you're an aspiring entrepreneur or maybe you already have your business up and running and you're ready for the next step, a super valuable resource that can help is the Amazon Small Business Academy. Take the free self-assessment on the Amazon Small Business Academy site at www. smallbusiness. amazon.
That's it for today's episode of This Is Small Business, brought to you by Amazon. I'm your host, Andrea Marquez. Hasta Luego , and thanks for listening. This is Small Business is brought to you by Amazon with technical and story production by JAR Audio.
Ep. 48: Business Loans Dos and Don’ts
Learn about business loans.
Money is such an integral part of your business. So when the time comes and you need to secure more, where do you start? Who do you turn to? We’ve got Iman Cotton, loans officer with CDC Small Business Finance to guide us through it. Iman says that a good place to start is by thinking, “something that sounds too good to be true, probably is.”Learn how to best prepare you and your business for a loan.
In this episode you’ll hear:
(01:39) How do you find a good lender?
(03:29) What documents do you need to apply to a small business loan?
(04:31) Mistakes small business owners make when they want to apply for a loan.
(07:34) Now that you have the loan, what happens if you’re struggling to pay it back?
Takeaways:
1 -The first step is looking for a lender, the place to start is at institutions you have a relationship with. And be sure to check out all of your options, traditional banks are a great start but also check in with local SBA district offices. Do your homework and feel confident about which lender and loan is best for you before signing on the dotted line.
2 - Get all your paperwork in order. For startups, have your business plan, financial projections and your completed personal tax return on hand. Existing businesses are going to need personal and business tax returns completed and financial statements.
3 - There are definitely some things to avoid. Don’t spend money before you know you can finance the entire cost of your venture. Hire professionals when it comes to things you might not be qualified to do, like taxes. Be careful not to write off all of your revenue in order to keep your taxable income down. Don’t borrow more than you need.
4 - Be transparent with your lender if your financial plan goes awry. Things don’t always go as planned. If you’re struggling to hold up your end of the bargain, being open and honest is imperative.
00:00:01
Andrea Marquez: Money is always top of mind for an entrepreneur. You need it to be able to start, grow, pay yourself, your employees. The list goes on and on and on. And one way to fund your business is through loans. I don't know if you feel like this, but to me, loans are super scary. I've always been told to never spend money I don't have. What will happen if I miss a payment? How can I make sure I'll be able to pay it on time? Where do I even apply for loans? How do I find out if I qualify? If you've never applied for a loan before, it can feel like a daunting process. So let's break it down together. I'm Andrea Marquez and This Is Small Business, a podcast brought to you by Amazon. Today we'll be talking about business loans.
00:00:47
Iman Cotton: Each financial institution has credit enhancement products such as loans, government-guaranteed loans, state-guaranteed loans. They even also have lines of credits and possibly more products. Then there's non-traditional lending organizations such as a certified development company or a CDC, and they are created to help business owners access capital. There's also community development financial institution who provides access to affordable financial products and services in underserved communities.
00:01:19
Andrea Marquez: That's Iman Cotton. She's a loan officer with CDC Small Business Finance. And before that she worked in banking with loads of traditional institutions. Iman just listed a bunch of different options that are available to small business owners. But before you start applying for a loan, first you need to figure out who's going to be your lender.
00:01:39
Iman Cotton: Start with your deposit relationship or start with your actual bank that you're working with. So I'm huge on relationships and I love relationships because I love the guidance and I want to work with like-minded individuals and people who believe in me and will champion whatever it is that I'm doing. So who's your deposit relationship with? Also, you want to explore and research the SBA District Office in your area, and then there's other resource partners such as the SBDC and SCORE, and they can help with business plans, with different resources, with different lending partners.
00:02:15
Andrea Marquez: And there's a few red flags to keep in mind while you're trying to find a lender.
00:02:19
Iman Cotton: You want to ensure that they're an actual lender. So for an example, there's a Merchant Cash Advance or MCA. This is not a loan, this is an advance on your receivables that you're able to secure in the event you accept debit and credit card payments. But again, an MCA is not a loan. It's an advance on your future receivables where you pay back a percentage of your daily sales as the repayment.
00:02:46
Andrea Marquez: And you've heard this one before, but...
00:02:49
Iman Cotton: Something that sounds too good to be true, it probably is. So those loans that you can get approved in days or it's low doc or no doc or quick documents, you want to be leery of those because you may have an extremely high annual percentage rate or APR. And then also, if they can't disclose the APR or the annual percentage rate, be leery.
00:03:14
Andrea Marquez: Honestly, I apply that to all of my life. If it sounds too good to be true, it probably is. So when you've done your research and figured out what loan and lender works best for you, you may be ready to apply. Let's get into what documents you'll need.
00:03:29
Iman Cotton: If you're a startup business, you want to ensure that you have a business plan and financial projections. We want to see that you have your personal tax return completed for the current year. If you're an existing business, you want to ensure that you have your current personal and business tax returns completed and that their current and accurate. We want to see that you also have interim financial statements such as an interim profit and loss statement and an interim balance sheet. Being aware of your current debt load and cash position is extremely important. That way we can have an intelligent conversation and I can help possibly quarterback the situation to make suggestions or recommendations, how to better prepare yourself in the event that I don't have a solution for you today. If the answer is no today, how can we turn that no into a yes or what's the actual game plan?
00:04:22
Andrea Marquez: Now, let's get into what you should avoid doing when you want to apply for a small business loan. The first is, don't spend money until you know can finance the whole cost.
00:04:32
Iman Cotton: So for instance, if you have construction or tenant improvements that you need for a new location that you're looking to lease or to have your business run out of. If the construction is $200,000 and then it happens to increase to $250,000, if you've already started that project and the project increases, you might run the chance where you can't receive financing because some lenders may not go into a project that's started to finance it.
00:05:04
Andrea Marquez: The second mistake is not getting help when you need it.
00:05:07
Iman Cotton: We have a lot of clients that have to get amendments because of their tax returns just being completely erroneous because they tried to do them themselves.
00:05:18
Andrea Marquez: The third mistake is running too many personal expenses to reduce taxable income. Iman says, this is the biggest mistake small business owners tend to make.
00:05:27
Iman Cotton: For instance, if your revenue is $10 million a year and you want to apply for a loan, but you write all of your expenses off to where now your net profit or net income is negative $2 million, we look at the negative $2 million versus the $10 million in revenue. So we more so care about profit and net income versus the revenue amount. So be cautious to not write all of your revenue off to reduce your taxable income.
00:06:00
Andrea Marquez: The fourth mistake is taking more money than you actually need.
00:06:04
Iman Cotton: It can ultimately put you in a tight cash flow situation. But we do our due diligence to ensure that we are not putting our clients in a worse off situation and that they can actually afford what they're actually requesting. And the use of funds is a legitimate use of funds. So within requesting money, what you say you'll use the money for, you have to use the money for that. We're not financing money for you to personally live off of. Keep that in mind. This is strictly for the business and you want to get exactly what you need
00:06:39
Andrea Marquez: And to make sure you can actually pay back the money you're borrowing, Iman says that you need to have a business plan and 24 months of financial projections.
00:06:48
Iman Cotton: You're sitting down, setting the road map of what you anticipate your sales to be, what you anticipate your cost of goods, the expenses, the payroll, just the overall operating expenses, so you can actually arrive at the net profit that you want to. So it's like backing into the numbers and creating that road map so you can have a plan to go off of to generate the amount of revenue that you need to pay back the loan and to cover all of your expenses.
00:07:17
Andrea Marquez: Let's say you finally got the loan, congrats. Now you need to make sure you keep up with those payments because there are consequences to not being able to pay back your loan. But if things don't go the way you planned, Iman says that you need to be transparent with your lender so that they can help you get through it.
00:07:33
Iman Cotton: The goal is not for our borrowers to default on the loan. So it's just about being transparent and communicating and trying to set in place a workout plan and going from there. Assuming they can't pay back because the business is closing, then the lender would come in to liquidate the assets and work with the borrower to work out any remaining balances. And then they may look at any personal collateral if it was held and things of that nature. But ultimately, one can lose their business and not be eligible for any additional federal lending if they aren't able to pay back the loan.
00:08:08
Andrea Marquez: That was a lot of information on how you can secure a loan. Iman did a great job of simplifying the process, but all this information can get a little bit overwhelming. So if you're still unsure about whether a loan is the best option for you.
00:08:22
Iman Cotton: Don't be fearful to at least have the conversations now about what goals you have for your business. I always say, don't call me after you've quit your job. Call me before you leave that place of employment. Get comfortable with no when applying for anything or when you're just trying to get your business off the ground. The more you hear no, the more you can also hear yes.
00:08:53
Andrea Marquez: That was Iman Cotton, a loan officer. Getting comfortable with hearing no is a great piece of advice to end on. As an entrepreneur, you might be hearing it a lot. I hope this episode helped make loans a little less scary. Let me know how you're getting prepared to find or apply for a loan or if there's any advice that stood out to you. We covered a lot in this episode, so if you missed anything, don't worry, we've taken notes for you. You can find them at smallbusiness. amazon. com/ podcasts.
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Until next time, This Is Small Business. I'm your host, Andrea Marquez. Hasta Luego and thanks for listening. This Is Small Business is brought to you by Amazon with technical and story production by JAR Audio.