Small Business Startups—Beware!
If you have a small business, and are looking for an Angel Investor, beware of a scam that several unscrupulous investors and money brokers are offering unsuspecting new entrepreneurs.
It seems that this scam is simply to charge an entrepreneur for the “privilege” of meeting with a prospective investor, or group of investors. The fees charged for this “meeting” can run as high as $25,000, plus a substantial portion of the amount of money raised.
For an in-depth presentation of this situation, I highly recommend this lengthy blog post by Jason Calacanis. Jason may be controversial, but when he sees what he believes is an injustice to small business entrepreneurs, he tackles the issue with a vengeance.
There are hundreds of fair and ethical investors around—both Angels and Venture Capitalists—so there is no need to pay any investor, or money broker, a fee to make your pitch. JUST DON’T DO IT!
If you are thinking about approaching angel investors, please read Calacanis’s blog post first…then pick your potential investors wisely.
New FTC Guidelines
The FTC released new guidelines for bloggers and Internet marketers a short time ago, which are causing a bit of a furor. For in-depth information on the potential effect of these guidelines on book or product reviewers, read this post by Edward Champion outlining his interview with Richard Cleland of the Bureau of Consumer Protection. Quite enlightening!
Also, if you use, or are considering using, testimonials, you should first read this post by Frank Kern, who summarizes his attorney’s advice regarding the use of testimonials when advertising anything you sell, or may sell, online.
It appears that the FTC thinks some of the claims we all see on many web sites and blogs are a bit over the top. Unfortunately, when the government gets involved they typically exhibit a poor understanding of the problem, and they approach the solution much like hunting mice with a cannon. Collateral damage usually outweighs any benefits that might occur.
American Capitalism?
It seems the U.S. has, for quite some time, prided itself in being the true Capitalist nation of the world. With relatively low taxes, fewer government controls, and that indomitable American spirit of freedom, entrepreneurs have a free rein to start whatever business they want in the U.S. This is the land of opportunity, and that is why we lead the world in entrepreneurship—right?
Sadly, the above comments appear to be part of a giant myth. John Schmitt and Nathan Lane, of the Center for Economic & Policy Research published a paper in August declaring that the U.S. ranked second to last out of 22 countries in the ratio of self-employed workers to the total civilian workforce. Not surprisingly, the U.S. also appeared near the bottom for workers employed in small-business manufacturing. Much more surprising, was that the U.S. was also near the bottom for computer related services.
Here are a few comparisons of self-employment as a percent of total civilian employment, as published by the Organization for Economic Cooperation & Development:
- Greece – 35.9%
- Spain – 17.7%
- Britain – 13.8%
- Germany – 12.0%
- France – 9.0%
- U.S. – 7.2%
Of course, when throwing big corporations into the mix, the U.S. fairs much better, but what does this say about small business being the future of the American economy? What does this study say about the role of American small business in any part of our future?
So, what has happened to the entrepreneurial spirit in the U.S.? Why are our European and Asian neighbors beating us at our own game? Have we become so used to living the easy life, with cheap and abundant credit, that we no longer want to work the demanding regimen of the small-business entrepreneur?
It takes guts, passion, persistence, and very hard work to become a successful small-business person today—and it now appears that America has a dearth of people with these attributes.
What has happened in America…and can we retake our former position as a world leader in small business Capitalism?
Back Online!
It’s been a real headache, but I am finally back online. It seems the house we moved to had a bad underground cable, and a construction crew had to pull a new cable across the street and through our yard. Many visits by the cable company finally got the service working, so I’m now up and running (and looking at many, many unopened emails).
Hoping to have a couple of interesting things ready to post early next week.
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