Monthly Archive for August, 2014

RESULTS: What should we do with the thousands of children who’ve crossed the U.S. border illegally from Central America?

The Question:

What should we do with the thousands of children who’ve crossed the U.S. border illegally from Central America?

6% — Take them in and let them stay here permanently
67% — Take care of them only until we send them home
27% — Send them back across the border to Mexico immediately

Jim’s Comments:
Regardless of how quickly, 94% of you think the thousands of illegal immigrant children from Central America who’ve been in the news lately should not stay here. Over the next few weeks I’m going to ask about your position on a few other illegal immigrant issues, and then I’ll report back to you about what our community thinks.

Thanks to all who responded to last week’s poll. Be sure and participate in this week’s poll below.

How to spot entrepreneurs in their natural habitat

If you venture into the marketplace jungle, you may be able to observe that rare wild creature, the entrepreneur, in his or her natural environment (darting is not necessary, entrepreneurs are very gentle - just rub their stomachs). As you study them, you will find levels of vision, curiosity, courage, tenacity, and faith. Here’s what to look for in order to identify this elusive critter:

Vision: Entrepreneurs see things and consider the possibilities before they exist, even as the world is telling them, “It won’t work.” When entrepreneurs are deep into their vision they go into what their families call a “zone,” which is when it’s easiest to slip up on them.

Curiosity: Entrepreneurs ask questions other humans don’t. They can’t help it. If someone asks you a question and you have no idea what they are talking about, you are probably having a close encounter with an entrepreneur. Don’t be irreverent; you might be at ground-zero of the 21st century equivalent of Velcro or the micro chip.

Courage: Entrepreneurs attempt things that other human species won’t. As you peer through the triple canopy at your subject, look for death-defying acts in the face of conventional wisdom. Entrepreneurs eat conventional wisdom for breakfast.

Tenacity: Entrepreneurs keep trying when other humans give up. They have a high pain threshold, which when combined with a visceral desire that can only be compared to the maternal instinct, delivers a primal display of tenacity which often is frightening to other humans. If the entrepreneur you are observing is crouching, lie down quickly. You probably aren’t in danger, but fainting is a possibility.

Faith: Entrepreneurs believe in themselves and their vision. The great writer and even greater curmudgeon, H.L. Mencken, once said, “Faith may be defined briefly as an illogical belief in the occurrence of the illogical.” That’s our entrepreneur! If you see someone demonstrating an inordinate commitment to an “illogical belief,” congratulations. You’ve found your entrepreneur.

Catch and release, please.

Is a crowdfunding business loan right for you?

In my last column I introduced the concept of crowdfunding — the new word and online methods of fundraising and capitalization. The two crowdfunding examples I described were contributions and business transactions doubling as fundraising.

Let’s continue with the third type, which is, crowdfunding structured for loans.

Crowdfunding debt, AKA peer-to-peer and social lending, is like traditional borrowing: a request for funds comes with the promise of repayment with interest over a specific term. But the former is done online, and the latter is not. Individuals use crowdfunding for personal loans, but our focus here is for business borrowing, which typically involve four crowds:

1. Business borrowers

2. An online crowdfunding platform aggregating loan requests

3. A funding and underwriting source, likely a hedge fund

4. Individuals who invest with #3, knowing it’s for loans to small businesses

Remember the innumerable and anonymous crowdfunding factors from the previous column? These two are also in play with crowdfunding debt, because a large crowd is required to provide a pool of loan funds and dilute the risk, and investors are only known to the funding source aggregator.

Regardless of the funding source, crowdfunding or traditional, small business loans are expensive for the borrower because this sector is considered high risk for two primary reasons:

1. Most small businesses are undercapitalized and operate on a thin survival margin

2. Too many small business owners don’t track financial performance well enough to know how they’re really doing.

And since crowdfunding loans are unsecured, taking the risk to an even higher level, crowdfunding business loans are doubly expensive.

So is a crowdfunding business loan right for you? Here’s some context: If you can borrow from your bank, this year you’ll probably pay an average of about 6% annual interest rate. A crowdfunding loan APR will likely be 15% or more. Any questions?

Crowdfunding business lending has achieved some level of critical mass and is growing.  As I’ve said before, the future of small business capitalization will look a lot different than it does today largely due to this emerging alternative.

Next time we’ll wrap up this series with a tour of the good, bad, and improbable of investor equity crowdfunding. And more tough love.

Write this on a rock If you can borrow money from a bank, don’t borrow from a crowd

Jim Blasingame is the author of the award-winning book, “The Age of the Customer: Prepare for the Moment of Relevance.”


RESULTS: How much do you depend on your smartphone?

The Question:

How much do you depend on your smartphone for tasks other than calling, texting, and email?
24% — Heavy dependence, like social media, newspapers, navigation, travel, etc.
53% — Just a few other tasks right now, but increasingly using it more.
9% — Nothing other than the three in the question.
14% — I don’t own a smartphone.

Jim’s Comments:

There are several reasons why more people - 77% of respondents in our latest poll - are increasingly using smartphones for tasks in their lives.  For example, it now costs no more to manufacture a smartphone than a dumb one, mobile apps increasingly appeal to the

non-technical user, mobile networks encourage them in a number of ways, and perhaps the most important - the cool factor.

I’m pleased to see that small business owners are increasingly owning and using smartphones. When we polled our audience about this not long ago, barely half owned a smartphone. For several years I’ve told you in my articles and on my radio program that if you don’t have and use a smartphone, you can’t keep up with the ever-evolving expectations of your customers.

In my new book, The Age of the Customer, I devote an entire chapter to mobile computing. From Chapter 13, one of the most important points I want you to remember is, “Global computing was not any part of your small business’s past, but it will dominate your future.”

My friend and Brain Trust member, Chuck Martin, has written books about mobile computing and, indeed, has devoted his entire career to the topic.  I encourage you to increase your understanding of the impact of mobile computing with my thoughts and then graduate to Chuck.  Here’s his website where you can find all of Chuck’s information:MobileFutureInstitute.com.  And here’s a link to interviews on mobile computing I’ve had with Chuck on my show.

As a small business owner, using your smartphone for more things delivers two benefits: It will help you become more efficient and productive personally, while providing key insights into what your customers expect from the companies they do business with.

Smartphones and customer expectations

There are several reasons why more people - 77% of respondents in our latest poll - are increasingly using smartphones for tasks in their lives.  For example, it now costs no more to manufacture a smartphone than a dumb one, mobile apps increasingly appeal to the non-technical user, mobile networks encourage them in a number of ways, and perhaps the most important - the cool factor.

I’m pleased to see that small business owners are increasingly owning and using smartphones. When we polled our audience about this not long ago, barely half owned a smartphone. For several years I’ve told you in my articles and on my radio program that if you don’t have and use a smartphone, you can’t keep up with the ever-evolving expectations of your customers.

In my new book, The Age of the Customer, I devote an entire chapter to mobile computing. From Chapter 13, one of the most important points I want you to remember is, “Global computing was not any part of your small business’s past, but it will dominate your future.”

My friend and Brain Trust member, Chuck Martin, has written books about mobile computing and, indeed, has devoted his entire career to the topic.  I encourage you to increase your understanding of the impact of mobile computing with my thoughts and then graduate to Chuck.  Here’s his website where you can find all of Chuck’s information:MobileFutureInstitute.com.  And here’s a link to interviews on mobile computing I’ve had with Chuck on my show.

As a small business owner, using your smartphone for more things delivers two benefits: It will help you become more efficient and productive personally, while providing key insights into what your customers expect from the companies they do business with.

Crowd funding is not new, but crowdfunding is

Crowd funding is not new, but crowdfunding is. Completely intuitive, both terms mean funds conveyed by a crowd to a solicitor.

Crowd funding is actually traditional banking, insurance, stock markets, charities and the like, where the crowds are relatively small and absolutely defined. Now a new word, crowdfunding is very similar except that it’s conducted on the Internet where the crowds are innumerable and possibly anonymous.

It’s largely due to those two words, innumerable and anonymous, that crowdfunding has caught on to the point where several online platforms now aggregate funds seekers with funding crowds. Now with crowdfunding, the Internet simultaneously facilitates and disrupts our experiences with what I call the Four Cs of Modern Society: Connect, Communicate, Communities and Commerce.

So far, crowdfunding fits primarily into two categories:

Contributions/Fundraising

This is where an emotional connection motivates members of a crowd to give to a cause, project, idea, ideal, etc.  Besides the emotional motivation, merchandise like a T-shirt or first album, for example, are likely to be involved as a token of thanks. This crowdfunding form is nothing more than donations.

Business funding

This money goes to a commercial venture, often a startup, with the expectation of receiving a first-of-its-kind product or future discount. The crowd knows the funds partially pay for the merchandise and partly capitalize the venture to which this crowd also has an emotional connection. This is business funding in the form of a commercial transaction, not investment.

Recently, crowdfunding has nudged closer to debt and equity capitalization. Peer-to-peer lending is an emerging form of crowdfunding, while the investment model still has legal and practical hurdles.

It’s clear that the future of small business capitalization will look a lot different than it does today. But for most small businesses the jury is still out on how the crowdfunding options will be part of their capitalization future.

In my next column I’ll use a practical approach and some tough love to reveal the challenges facing both the debt and equity sides of crowdfunding.  Ironically, those two advantages of crowdfunding mentioned earlier, innumerable and anonymous, will manifest as potential barriers as we discuss the more sophisticated forms of crowdfunding.

Write this on a rock…

Crowdfunding is just new tools to accomplish traditional fundraising and capitalization.




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