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SMALL BUSINESS | SMALL TALK / KAREN E. KLEIN

Scams and Other Pitfalls on the Road to Launching a Business

May 20, 1997|KAREN E. KLEIN

Q: I am selling my convenience store business and am interested in finding a small business to operate with my wife. I am 60, financially sound and really don't need to work. However, I am concerned about staying active. Any suggestions?

--Tom Dixon, Victorville

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A: You are in an enviable position, venturing into a new enterprise with no immediate cash flow concerns and with your spouse by your side.

First, a caution: Though you may be anxious to figure out your next step, allow yourself plenty of time for due diligence and research. With money in your pocket, it's tempting to leap into something new just to reestablish your identity and channel your creative energy. In your position, you could be an easy target for entrepreneurs who will pressure you to make a decision quickly, "before the opportunity vanishes." Beware of get-rich-quick schemes that are, indeed, too good to be true. Many business opportunities are purchased in haste, for the wrong reasons, during this interim period.

Also, working with your wife will bring some new challenges. You'll need to clarify expectations, especially about who is going to do what and when, in the household and in the business.

You should choose something that is equally appealing to both of you. Create a checklist of what you both enjoy. Articulate your personal goals as well as your vision as a team.

Arrive at an agreement about how much of your retirement savings you want to risk in the new business. Consider when, if ever, you want to retire, and, above all, choose something you will have fun doing!

--Azriela Jaffe

Author of "Honey, I Want to Start my Own Business:

A Planning Guide for Couples" (HarperBusiness).

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Q: I, along with three partners, started a small sports apparel company about a year ago in East Los Angeles. We are under our own label and have received extensive support from people who have seen or heard of our merchandise. Our main concern now is taking the clothing line to the next level (funds not being our No. 1 asset). How do you suggest we raise more money, get more market recognition and find new production resources?

--Gerry Mendoza, Cudahy

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A: It is not uncommon, after a year in business, to lack enough equity in a company to attract another investor without relinquishing control. You may want to reach certain value milestones before you go after some kinds of capital.

On a positive note, capital--both debt and equity--is more abundant than I have ever seen. The growth of financial institutions willing to lend people money is more attractive for entrepreneurs than ever--once they've achieved a certain level of success.

Talk with an expert who can evaluate whether you are ready to seek additional capital. In fact, I recommend that you surround yourselves with advisors with experience in your industry who can help you raise capital, expand and make connections. They will not only explain the options to you, but they can become mentors.

To lay the foundation for the next stage of your business, you and your partners should have an honest discussion. Explore your vision for the company and decide if all the partners share that vision.

Write out a clear set of goals. Do you want to establish a brand name? Become national or international? Expand your line? Clarity about what you want to achieve will become more important as your company grows.

--Peter Cowen, StratePlan, Westwood

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Q: I am working with a manufacturer of photoluminescent safety signs, trying to market the products to high-rise office buildings, university dormitories, etc. How can I get maximum exposure of these products with a minimum of cost? Is there an inexpensive way of exposing them over the Internet?

--Tammy, Los Angeles

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A: This is a question everyone asks about the Internet. Unfortunately, a lot of people try to advertise their products or services by sending out unsolicited e-mail, i.e., junk mail. It's called "spamming the Net," and it is frowned on as not being proper "Netiquette." If you try a spam, you could face a backlash; in the worse-case scenario, you could be mail-bombed or get a denial-of-service attack. If someone mail-bombs you, you could find 100,000 e-mails sitting in your box. Or, if someone gets really upset with you, they can do a relatively simple technical procedure that keeps your server busy so no one can get into your site.

To promote your product on the Internet, you need to establish a Web site for your marketing and promotions. The least expensive way to do that is to look for an Internet service provider that will allow you to set up a home page and have a small bit of storage as part of your regular account. Several service providers sell such package deals.

Once you've established a Web page, you need to drive people to your site. You can register with a search engine, such as Yahoo, to get the word out. Realize, however, that search engines typically have a lot of requests, and it will take some time before your site is listed.

Remember that the Internet is really a supplemental way to do advertisement and promotion. Most people use their Web pages as an adjunct to their marketing, making sure their Internet site is listed in a prominent place on their letterhead and other advertising so people can access it any time.

--Mark Liphardt

AT&T senior technical executive and

president, Internet Developers Assn.

If you have a question about how to start or operate a small business, mail it to Karen E. Klein in care of the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to business@latimes.com. Include your name, address and telephone number. The column is designed to answer questions of general interest. It should not be construed as legal advice.

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