The Spanish Language Web

Posted on by Alex M. Hochberger, MBA

South and Central America are home to large and growing populations, close proximity to the United States and Canada, and often generous or free trade pacts with the United States, bringing business interaction as well as increased immigation. With a growing Spanish speaking population in America, you would think that there would be massive growth in the Spanish language web. According to Wikipedia, Spanish Language in the United States,” 35.5 Million Americans over the age of 5 speak Spanish as their primary language, roughly half of whom speak English “very well.”

So a little over 5% of the American population speaks Spanish and very little English, and a little over 5% of the American population speaks Spanish natively.

When Apple was < 5% of the market, people worried about losing 5% market share by not accommodating them. By not offering your website in Spanish, you are losing 5% of the potential market that doesn't speak English well AND 5% of the potential market that speaks Spanish better. As a result of neglect, the keywords are substantially less competitive in both paid and free search, yet they are still neglected.

What are you doing to accommodate this portion of America?

Ban on Internships a Bad Idea

Posted on by Alex M. Hochberger, MBA

Many professionals start their career as interns, learning the business while working for little or no money, and possibly with our without college credit for the experience.  At Feratech, we always maintained an active internship program, taking advantage of our Boston location to always have young students with fresh insights working for our company.  The interns learned the business, developed valuable skills, and provided useful man power to our growing business.

The administrations has decided to crack down on this practice, which will drastically affect the career prospects of current college students.  By eliminating this practice, firms will dramatically decrease the numbers of positions that they offer, which will result in more college graduates leaving school with a pile of student loans and no work experience.  The administration feels that internships are volunteers, and only the government and non-profits can have volunteers.  The affect of this on the media is the subject of this rant by John Stossel, which illustrates part of the problem.

Given the high unemployment rate, teenagers and students are struggling to find summer employment, because they are competing with out of work people that can work year round without restrictions.  This leaves internships as one of the prime sources for job experience for students, a position being targeted by the administration.  We already know that graduating in a recession hurts your income for ten years compared to graduating in good times.  A 22 college graduate without an internship on their resume is not only competing against those that were able to get a paying internship, but against the 23 year old that graduated the previous year, has the internship, and a year of experience.

My resume coming out of college was filled with internships from high school and college, albeit paid because computer internships were normally paid in the dot-com era, without those experiences, I would have had tremendous difficulty my first years out of school, a decision being laid upon today’s college students.  Given that the administration received two-thirds the votes of the 18-30 crowd, I do not understand why they are taking a position that will have a huge negative affect on those young professionals starting their careers.

A Tory Government and Internet Marketing

Posted on by Alex M. Hochberger, MBA

Most American Internet marketers are focused 100% on the United States market. It’s an easy decision, it’s the home market, there are few language issues (Spanish language websites are still rare, even for Sun Belt companies), there are 300 million Americans, and it’s a market they know. Those that branch out include some focus on Canada, and occasionally, the UK and Australia play a role. While the allocation of votes has left the Conservative Party with a near majority, it appears that the Tories are about to place their first Prime Minister since Tony Blair’s victory in 1997 — for fun, I went to the Wayback machine to pull a BBC link from before May 1st, 1997, the last time the Conservative Party held power, note the changes on today’s version of the BBC.  Quirks of the electoral map are interesting to political junkies, since the Conservative victory was much larger than Labour’s in 2005 in raw votes, but Labour’s 3 point margin left them with a large seat advantage.  Whether this minority government or coalition government lasts the five year term or not, it is a major change in government.

What makes this interesting is that Labour’s 13 year run included the entire Internet revolution.  When the Conservative Party last held power, 1997, the Internet was in its infancy, and primarily in America.  Now 70% of UK Households have broadband, an entire new industry has cropped up.  In 1997, Windows 95 was still new at bundling Internet Explorer, Netscape was the dominant platform, and plenty of homes lacked a personal computer.

The Internet world is dominated by issues of privacy, security, and taxation.  How will a center-right government approach issues of International trade for services and virtual products.  A young Internet marketer was in middle school when the Tories last held power, making the UK a fixed entity for most of their life.

The International Media is focused on Foreign Policy and issues regarding EU integration, but nobody is talking about any of the areas that might affect our area of the economy.  With the Conservatives pull back from the EU, resulting in less onerous privacy issues, will tax reform make doing business in the UK more interesting?  When we were expanding Creditcards.com, we hosted a UK site (uk.creditcards.com) in the UK, and dealing with issues of payment and legalities were onerous, and issue that a new Conservative government make seek to change.

Labour’s base was “working class” men and women in the cities, the knowledge economy wasn’t a blip on their radar.  Does a new legal environment open up exciting opportunities, or will this area of the economy be ignored.  A hung parliament with a minority or coalition government usually doesn’t last long in the UK’s system, so minor changes and a “snap poll” within a year is possible, or will the Conservatives try to make major changes fast before their government falls and they return to the polls?

Secret of Amish Business Success

Posted on by Alex M. Hochberger, MBA

Roughly half of new businesses in America fail within 5 years, but 95% of Amish Businesses hit the 5 year point.  Despite stereotypes about the Amish and their businesses, the budding ranks of Amish Entrepreneurs combine their strong, traditional work ethic and craftsmanship with modern business practices.

Despite the avoidance of technology in the personal lives of the Amish, Amish owned business to use technology, albeit in often unusual ways, to run modern businesses.  To avoid connections with “the English,” the Amish have historically used generators for power, but now appear to use solar and wind power to avoid using the power grid while still providing modern amenities.  An Amish business owner isn’t going to be using a Blackberry at home to keep on top of their business, but computerized accounting, air conditioned stores, and other parts of modern business will take place.

A strong work ethic, building a business based upon what you know, modesty and politeness as the cornerstones of a service oriented business are lessons for all of us.

Time to Invest In Startups

Posted on by Alex M. Hochberger, MBA

So with the planned increases in personal tax rates (which hit small businesses that report via K-1, i.e. S-corporation and LLCs election S-Corporation status), combined with the collapse in small business credit, there is a concern about declining business investment.  Since large established businesses tend to lose jobs over time, job growth is dependent on  small business growth.  There is a proposal floating on capital hill to create a capital gains tax-free investment opportunity for small businesses.

The basic idea, to qualify, the company must be structured as a C-corporation (a taxable entity), and not in certain segments of the economy, but for those businesses, a qualified investor would be able to realize their capital gains tax free.  The qualifications: direct investment in the company (not buying via broker), an asset cap on the business, and the tax status of the entity, and the investment will be exempted from capital gains AND AMT taxes… the later is important because qualified angel investors often fall in the AMT window, which eliminates the preferential treatment of capital gains because the AMT tax recaptures it.

This presents an interesting opportunity.  The problem with the capital gains rate and start-ups is that most start-ups fail, so angel groups pool money and invest so they make money on the 1-in-10 successes.  The opportunity for entrepreneurs is developing a business concept that would rapidly deploy capital raised under this exemption, in a way to safely purchase assets that will appreciate and create most of the gains in the form of capital gains rather than profits that would be double taxed because of the corporate structure.

The stated goal is high tech and construction companies that tend to create high wage jobs, but those ventures are inherently risky and the requirement of an original investment would prevent pooling.  The pool of investors able to make 10 angel investments individually is pretty small, and most groups aggregate themselves through a pass-through entity like an LLC organized for taxes as a partnership, which conceivably would be prevented from taking advantage of this new status.

The question is, what “high tech” business, for tax purposes, could be “low tech” enough to be a safe investment, providing a market or greater return that would be tax free.  Highly speculative investments wouldn’t be relevant, and the long term gain needs to be through capital gains, not profits, or the tax advantages would be wiped out and you’d be better off using an LLC using a partnership return.  With capital gains rates scheduled to return to 20%, plus a 3% health care levy, and some in the administration talking about raising them higher, it’s time to focus on tax sheltered investment vehicles.  The low tax environment has discouraged tax shelters allowing people to focus on the underlying investment, but the coming years of tax increases brings back the importance of sheltering income for high net worth opportunities, and creates an opportunity for smart entrepreneurs.

Thoughts?

Launch a business with Social Media and SEO in 5 Steps

Posted on by Alex M. Hochberger, MBA

So I routinely get asked by friends for advice on how to get a web business launched with no money.  As I politely steer them away from the idea that I should do it for them, I thought that I should work on a basic guide for getting started.

Step 1: Pick a Good Domain Name

A domain name is your address, what you will hand out, and what you will advertise.  Your goals are short, easy to spell, nothing to trip people up, and keyword friendly.  If you are dealing with cars in Florida, and your name is Jake, then CarsByJake.com would be friendly, start with your keyword, and be easy to spell.  FloridaCarsByJake.com would also be good, but JakesFloridaCars.com gets tricky because without the appostrophy, it sounds like your name is Jakes.  Avoid double consonants (two words, one that ends in a letter and the next work begins with it), and definitely do no “merge” it being clever, people will get confused.  I find dot-com extensions better than alternatives, but it may depend on your industry.  It’s been over 10 years since dot-net was the premium TLD and dot-com a negative one, but dot-net still has cachet in technology sectors.

Step 2: Register with Twitter, Facebook, and LinkedIn

You don’t get to play if you aren’t there.  Twitter is important for the ability to move information out there.  Facebook has a tremendous number of users and viral power, and LinkedIn is where the professionals hang out.  While you may not use all these mediums terribly effectively on Day 1, the sooner you open an account, the sooner you are ready to use it.  If you aren’t going to optimize for all platforms, also register with Ping.fm or HelloTXT for content syndication, that will let you move your messages to all platforms at once.  I would recommend picking a URL shortener for social media (I use Bit.ly) and creating an account with stats, this way you can keep your collection of short links and start to see what drives traffic.  For Facebook, you should also setup a Page for your business so people that like your business can Fan your Page, even if they don’t know you personally.

Step 3: Setup the Website and add Content

If you aren’t ready for a serious commitment, using a free CMS system like WordPress.com, or other environment that let’s you publish and bring your own domain name is important.  Make certain that you can export content later if you move.  Despite my historically building my own CMS platforms for SEO reasons, I’ve been finding WordPress.com a great platform for self-publishing, and I can always export to a WordPress.org (self hosted) system later and work from there into whatever I want.  Good content is key to success.  Learning to write 5+ blog posts a week plus updating the core of the site (Pages in WordPress speak, the static content part of any CMS) of information, adding images, etc., is time consuming.

Step 4: Get in the Social Media World and Blogosphere

You need to participate to get involved.  For Facebook, setup the appropriate privacy policies and participate in comments, Wall Posts and pictures.  Wish people well on their birthday, tell them when they put up cute pictures of children/grandchildren, be friends with your friends.  For Twitter, grab TweetDeck, start finding the appropriate Hashtags for your discussions and start sharing information.  With your blog, find bloggers posting questions that you can answer, and either leave a comment (if short), or answer with a link to their entry with software that will ping them with the answer.  Like any form of networking, participate.  Retweet good posts, share your expertise, and build up an online reputation.

Step 5: Using Content and Social Media, Promote your Site which Promotes your Business

This final step is how you pull it all together.  Write good content for your site on the blog, promote it through your new Social Media channels.  The better the content, the more likely you are to get Retweeted or linked to from other blogs.  The more links you get to your site, the better you will do in search engines.  The more you get Retweeted in Twitter, the more likely you are to get Followers.  The more you get mentions and links on Facebook on news feed, the more likely you are to reconnect with friends or come to the attention of customers.  SEO = keywords + good content + links… the more advanced part of SEO, you can get to that later, when you get traction.  If you need to hire an SEO expert, you will already have new customers from your web site plus a great starting point for the SEO who can see your keyword success to get started.  As you add content and social connections, your traffic will build and build, and if your site’s core information is good, you will successfully launch your business.

This is my first draft of this 5 Step Process.  I expect to come back and revise over time.  Comments, suggestions, etc. are all appreciated.  Feel free to Follow me on Twitter and Tweet this Post!

Government Matching Inventors with Manufacturers

Posted on by Alex M. Hochberger, MBA

Three cheers for some smart governmental policy.  Markets do well where there is perfect, or near perfect, information, and limited barriers to entry.  Markets do poorly where there are barriers to entry, particularly if they are information based.  Technology, IT in particularly, has helped shrink businesses by eliminating layers of management because you no longer need a 6:1 reporting ratio because of paper limitation.  Further, Just In Time EVERYTHING, manufacturing, wholesaling, inventory, etc., helps keeps companies lean, just buying things as needed in an open marketplace.

One area where the market failed to make connections was in the manufacturing of products.  Contract manufacturing seemed popular with large companies, but there didn’t ever seem to be options for small businesses.  Strangely, every entrepreneur I know who made a product made it in China, not because of the cost differential (shipping and monitoring eats it up on small lines) but just because they could get it done.

Department of Commerce’s Manufacturing Extension Partnership helped launch Planet Eureka!, the innovation marketplace.  Maybe we’ll be able to get one of my wife’s ideas to market this time around.  Thanks to CNN Money for pointing me in this direction, you can read the artile that I read, “What’s your idea worth?”

Retro Small Business Financing – Customer Funding

Posted on by Alex M. Hochberger, MBA

In a world of complicated finance, the idea of building a business without capital, raising money from your customers seemed expensive and retro.  Although mentioned as an example in every business text book, in reality, entrepreneurs have focused on debt financing or outside investors rather than looking to their customers.

With the credit crunch and housing collapse eliminating many small business loans and home equity loans as a source of business capital, many entrepreneurs are returning to the historic source of capital, their customers.  Money magazine shares the anecdotes of several business owners, owners who have sold stock, pre-sold gift certificates, and otherwise took action to raise capital from their current or potential customers, both raising capital cheaply and increasing customer loyalty.

In some ways, however, this capital is cheap, and in other ways it is very expensive.  The capital is cheap in that it lacks personal guarantees, protecting the downside, and may not have the warrants and other “teeth” that angels and VCs may want.  However, selling $1,500 in gift certificates for $1,000 to raise money is a 50% rate of return and will likely be redeemed within 3 months, potentially charging you a 200% rate of interest.  If that customer would have spent $1,500 with you anyway, that’s real cost in opportunity cost.  To the restaurant owner, if they run at 50% margins, that $1,500 costs them $750, so from a cash flow point of view, the money is cheap.  As most small business owners will remind you, cash is king, and cash flow matters a lot more than the traditional finance metrics, because cash means survival.  The Fortune 500 finance guy is worried about NPV (Net Present Value), but the local coffee shop needs to pay the rent and cover payroll.

As a rule, I open my business bank account with the first check from a customer.  If I invest in the business, it comes later, but by always opening the account with a customer check, it serves as a reminder that you aren’t in business until you have a paying customer.

Internet Upscale Success – Net a Porter Hits Successful Women

Posted on by Alex M. Hochberger, MBA

After spending so much time in sub-prime finance where most of the SEO/Internet Marketing Industry lives, and helping eCommerce businesses in a race to the bottom of price and service, it’s nice to know that the premium industry is surviving and even thriving in this space.  Fortune Magazine had a great article on the success of Net a Porter, selling high end clothing to wealthy but time strapped women who was a virtual fashion magazine, think of it as Vogue that delivers the clothing to you.  Much of the online fashion buzz has been for companies with rapid fire sales like Rue La La, which lets designers dump excess inventory to those with free time… young professionals who can sit at their office computer waiting for the 15 minute window where the good stuff all goes when a boutique opens.

Net-a-Porter is offering a mobile and web experience, letting a busy professional woman that is on the go have the latest fashions despite an industry that ignores them.  The successful women that I know have more disposable income than time, and the boutique industry still targets the trophy wives of the idle rich.  A female executive working 80 hour weeks as a dealmaker simply doesn’t have the time that the wife of her male counterpart does to go and be waiting on in a fancy boutique, but there is no reason that she’s can’t be properly dressed.

It’s nice to see that in a race to the bottom, a company focused on service found a profitable niche.