BUSINESS - pageturnpro.com...small business should take in pitch-ing potential investors for startup funding are the things they should avoid. Our panel of experts offered these top

SMALLBUSINESS SOLUTIONS

A supplement to

2012

2 | 2012 SMALL BUSINESS SOLUTIONS

ContentsCreate a strong business plan and get the funding you need

Page 3

The top five mistakes startups makePage 4

Questions entrepreneurs should consider before seeking capital

Page 6

Startup successes storiesPage 7

Area attorneys cater to small business needs

Page 9

Boot camp considerationsPage 11

Going public a risky propositionPage 12

Small business resourcesPage 14

The Daily Record StaffSuzanne E. Fischer-Huettner

Publisher

Tom LinthicumExecutive Editor, Vice President

Maria KellyComptroller

Tracy BumbaAudience Development Director

Tara E. BuckSpecial Publications Editor

Jennifer KimGraphic Designer

Maximilian FranzSenior Photographer

Danny JacobsWeb Editor

Dave KuhnWeb Content Producer

Justin CarsonTeam Leader/Account Manager

To order additional copies of this publication, please contact Tracy Bumba at 443-524-8120 or [email protected].

888.TCB.BANK | thecolumbiabank.com/SmallBiz

Equal Opportunity Lender. Member FDIC. Member of the Fulton Financial Family. Loans are subject to credit approval.EQUAL HOUSINGLENDER

For small business support, bank on us.Valuable resources. Innovative products. All designed

to help your small business grow and succeed.

THE DAILY RECORD | 3

BY MARTY NILAND

Special to The Daily Record

ark Walsh likes what he sees inMaryland’s investment climatefor small startups.

The longtime technologyentrepreneur and founding

partner of Startup Maryland says a lot ofinvestors are ready to move after stayingon the sidelines during the recent eco-nomic downturn.

“I’ve done 25 angel deals in the pasteight years,” said Walsh, whose success-ful investments have included

NutriSystems, LifeShield.com andMobilePosse.com. “From my perspec-tive, there are a lot of those types ofdeals ready to happen.”

Walsh began Startup Maryland, partof the Startup America Partnership, toconnect innovative new companies withthe capital, corporate connections andother resources they need to succeed. Inthe six months leading up to its March 30launch, he has seen a number of smallcompanies prepare and pitch their busi-ness plans to potential investors. He andseveral other regional experts on startupbusiness funding believe entrepreneurs

need to take several key steps to ensuresuccess in their bid for capital funding,angel investment, or even a bank loan.

Deborah Tillett, president and CEOof Emerging Technology Centers, a tech-nology incubator in Baltimore operatingunder the umbrella of the BaltimoreDevelopment Corp., said a good busi-ness plan should start with the basics.

“I’m very simple and common senseabout it,” she said. “If you can answerfive questions, then you’ll get my atten-tion.”

Make your funding pitch a home run Area venture experts weigh in on important dos and don’ts

Julie Lenzer Kirk, director of the Maryland Center for Entrepreneurship, advises would-be entrepreneurs to think about their pitches in terms ofsound bites. ‘Make it short so people can understand.’

MAXIMILIAN FRANZ

See Business Plan page 4

M


Five questionsFirst, define your product, Tillett said:

What are you selling? Next, define your mar-ket: Who wants it? Then, define your pric-ing: How much does it cost? Fourth,describe your delivery process: How dothey get it? Finally, define your go-to-marketstrategy: What need are you addressing?“If you are that simple and that direct

and answer those questions, you’ve got areal good start,” Tillett said.For Walsh, the most important ele-

ment of the plan is a definition of the mar-ket and the competition. “How muchmoney is at stake in the market eachyear? What is the upside that we’re goingto get a percentage of? Who are the peo-ple currently making money? Those arethe questions I want answered,” he said.Another key factor to be addressed is

the scalability of the business: “Can theyhandle it at the right speed to handle suc-cess?” Walsh asked. While many startupscan operate efficiently on a small scale,others find they can’t ramp up once theorders start rolling in he asked. “Some people can find that success is

the source of failure,” he said.

Ready for success?Walsh and Tillett agreed that the next

key step is to present your managementteam, to assure investors that the mem-bers have the necessary background andexperience. “Have you hired, or are youready to hire the kind of people who willprovide success?” Walsh asks.For growth-stage investment, venture

capitalists usually also want to see someevidence of success. For Gary Golding,managing partner of McLean, Va.-basedEdison Ventures, that means demonstrat-ing sales momentum and market need. “We’re looking for customer accumu-

lation over the past six to eight quarters,”Golding said, “also, customers buying andpaying. They want it badly enough to notstring you along. If the fish are jumping

“If you’re not excited, how can you get someone else excitedabout it?

Julie Lenzer KirkMaryland Center for Entrepreneurship


Business Plan continued from page 3

BY MARTY NILAND


Just as important as the steps asmall business should take in pitch-ing potential investors for startupfunding are the things they shouldavoid. Our panel of experts offeredthese top five pitfalls that often sinkfirms in their presentations to ven-ture capitalists:• Avoid PowerPoint and presenta-

tion mistakes such as too many wordson a slide, excessive jargon, or readingyour presentation. Deborah Tillett,president and CEO of EmergingTechnology Centers in Baltimore, saidshe learned a valuable lesson in herdays with a startup firm that was inpartnership with Walt Disney Co. Herquarterly presentations were requiredto be white slides with black print —nothing else. “It’s about substance; not about

how pretty it is,” she said. “Anybodycan create pretty slides. I want to see

the message.”• Avoid an in-depth description of

your technology. “Technology people often want to

talk about their idea, rather than theopportunity,” said Julie Lenzer Kirk,director of the Maryland Center forEntrepreneurship. She says investorswant to know what the opportunity isfor them, not how the product works.“The objective is not to show howsmart you are, but to show what anincredible opportunity this is.”• Don’t present unbelievable num-

bers, the pet peeve of Mark Walsh,founding partner of Startup Maryland. “I hear so many people say, ‘I’m

going to grow from $1 billion to $3 tril-lion in a year and a half.’ It’s very diffi-cult to have a company grow a lot ofrevenue really, really rapidly,” he said.“Automatically, you forget about firmsthat make those types of claims.Greedy valuation won’t get you any-where.”• When pitching to venture capital

firms, don’t calculate their return. “We have people who get paid to

figure out our returns on every singleproposal,” said Gary Golding, generalpartner of McLean, Va.-based EdisonVentures. “Don’t come to me and say,‘If you invest $4 million, by year six,you’re going to make this much.’ That’sour business.” It’s fine to estimate your business

growth, profit margins and futurerevenues, Golding said, but never tellan investor what his own profit willbe.• Don’t pitch a product or technol-

ogy that doesn’t work. Walsh said it’simportant to be honest about testingand development. “Don’t come to me saying you have

a beta product if you have trials withonly five users or 10 users,” he said. “Ifyou’re not honest with potentialinvestors with what you know anddon’t know about a rational growthcurve and rational valuation, you losethe room pretty rapidly.”

Learn from the five mistakes startups make


in, you know it’s a good sign.”When actually choosing a potential

investor, the experts said it’s important toknow and understand the specialties ofdifferent venture capital firms. JulieLenzer Kirk, director of the MarylandCenter for Entrepreneurship, said askingfirms to invest in areas outside their com-fort zones is a tough sell.

“The more you can learn about youraudience, the better,” she said. “You mustknow about what types of investmentsthey’ve made and what their interests are.If they’re the type that’s invested in com-panies like yours, you have a goodchance, but if they haven’t done that,you’re looking for referrals.”

First the windup, then the pitchWhen a startup business team finally

makes it to the point of making the formalpitch, the experts offered several impor-tant pointers for success. Tillett pointedto a page on the ETC website with a blue-

print for a pitch taken from the book,“The Art of the Start,” by Guy Kawasaki,an angel investor and former chief evan-gelist for Apple. “He’s been very success-

ful at this, so he knows from whence hespeaks,” Tillett said.

ETC urges business leaders to devel-

Deborah Tillet, president and CEO of Emerging Technology Centers, asks five questions of every busi-ness plan. ‘If you are that simple and direct and answer those questions, you’ve got a real good start.’

MAXIMILIAN FRANZ



S A F E T Y S AV E S W I T Hiwif.com

An accident on the job can spoil everything. That’s why it’s

important to stress safety to your employees and provide

proper equipment and procedures to prevent mishaps.

A safety-focused workplace helps decrease lost work days

and minimizes workers’ compensation costs. To learn more

about workplace safety, visit iwif.com, the home of Safety

University. To learn more about workers’ compensation

insurance from IWIF, contact your agent, call 800.264.IWIF

or visit our web site.

WORKPLACE SAFETY SHOULD BE

A PRIORITY FOR EVERY BUSINESS.

A SAFE WORKPLACE.AN ESSENTIAL INGREDIENTFOR BUSINESS SUCCESS.


op a 10-slide, 12-minute PowerPoint pres-entation, focusing on the big picture. Useshort bullet points, not long paragraphs,in a 30-point font. The idea is to be com-pelling enough to get to the next level,and get the audience to remember justwhat it is you do.

The presentation should be brief, andinspired, Kirk said.

“Having high energy, excitement and apassion about what you’re presenting helpsyou really connect with the audience,” shesaid. “If you’re not excited, how can you getsomeone else excited about it?”

The experts all agreed simplicity iskey. “One thing I’ve found is important isbeing succinct,” said Kirk. “Put it intosound bites, and make it short so peoplecan understand.”

The experts also agreed that the overrid-ing principle in developing and presentinga business plan is honesty, both with your-self and your potential investors.

“I wish I had a nickel for every time I’d

asked a person about their market, andthey said ‘I know that market and thatcompetitor,’ but they don’t have the firstclue,” said Walsh. “If you’re not honestwith yourself or honest with me, I’m notgoing to waste my money.”

Kirk, who also is a partner in StartupMaryland, said the Maryland Center forEntrepreneurship is planning a work-shop on preparing and pitching busi-ness plans later this year, possibly inthe fall. Details will be released later inthe year.

Get more help • Emerging Technology Centers:www.etcbaltimore.com• Maryland Center for Entrepreneurship:www.hceda.org/thecenter/brc.aspx• Startup Maryland: http://md.s.co/

“If you’re not honestwith yourself or honestwith me, I’m not goingto waste my money.

Mark WalshStartup Maryland


BY PEDRAM TABIBI

Special to Long Island Business News

Ira Halperin, who heads the corpo-rate group at Mineola, N.Y.’s Meltzer,Lippe, Goldstein & Breitstone, recentlyoffered some key questions a startupbusiness or entrepreneur should con-sider before deciding to seek venturecapital or investors:

• Is your product or service pro-tected? Are your products protectedby a patent or trademark registration?Are you the first to market with yourproduct?

• Is there margin? Are you current-ly making money on your product, andis your product financially viable in thelong-term?

• Is there a big enough market forthe product? The market for yourproduct should be large enough toattract investors. Specialized, nicheproducts may fall short here.

• Is the owner fully invested? Is theproduct’s owner putting in part-time orfull-time work on this venture and

does he or she have significant moneyinvested in it?

• Is the product being effectivelymarketed? What are the product’ssales distribution channels and is therea sales force effectively distributingthe product?

• How much? How much capitaldoes the product need, when do youneed it by and what you will do withthe money? These are all questions toconsider in advance of any pitch.

• What is my share? If you receiveequity money for the product, howmuch of an ownership stake in theproduct are you willing to part with?

• Do you have an effective busi-ness plan that puts all of the abovetogether?

Luis Cuneo of IBM also touts theimportance of an effective businessplan. “Managing scalability during theearly stages of a startup will have long-term impact on the company’s finan-cial outlook,” he said. “By developing a12-month investment roadmap, anexecutive team can prioritize invest-

ment based on the business needs andgrowth opportunities.”

Rob Basso of the entrepreneurialhelp group Basso on Business —www.bassoonbusiness.com — saidthat before an entrepreneur pitches toinvestors, he or she should ask: Do Ibelieve in myself and do I believe inthe product or service?

“It all starts with a strong convic-tion that you and your product can besuccessful,” he said.

Basso said the traits of successfulentrepreneurs include having theambition, confidence and convictionto make their dreams a reality.

Asked what mistakes a start-upcompany or entrepreneur shouldavoid, he answered: “The major pitfallfor a startup is to be undercapitalized.Many new businesses fail becausethey are consistently underfundedand never gain the success theydeserve.”

Getting the capital needed to take abusiness to the next level is critical,Basso said.

A few more questions


BY BETH ARSENAULT


The Baltimore region is emerging as atechnological hub for startups withan energetic, creative entrepreneur-ial spirit. By using local resourcesand focusing on customers’ needs,

three local companies are showing remark-able success in their fields.

The lean startupIn 2009, Nathan Gilmore and John

Correlli were working together to buildcustom software for Rosedale Roofing,Correlli’s grandfather’s roofing company.They wanted to find a web-based Ganttchart, a tool that allows project managersto visually map out schedules and assigntasks.When they couldn’t find anything, they

decided to build one themselves, anddeveloped the project on nights and week-ends. They primarily used Google SEO

keywords to advertise the project and,after going through beta testing in early2010, TeamGantt was launched Nov. 20,2010, with about 1,400 subscribers.Over time, more features were added,

and the product spread by word of mouth.TeamGantt now boasts a subscriber base ofmore than 18,000 users whose clientsinclude Twitter, Time Warner, Expedia,Sony and Food Lion. Correlli works ondeveloping the product, while Gilmorefocuses on design and making it easy to use.Since their subscriber base has grown

so consistently — by about 20 percent permonth since November 2010, Gilmoresaid — they have not taken on any outsideinvestments. The pair also have quit theirjobs at Rosedale Roofing, somethingCorrelli said his family completely under-stands. They now work from home inPerry Hall.Along the way, Gilmore and Correlli

consulted with their peers and startupgroups. They participated in Lean Startup

D.C., which emphasized customer devel-opment and ensuring that the team talkedto users along the way. To get customers’opinions, the team used beta websitessuch as usertesting.com to gauge reactionsto the product.“It’s important to be willing to adapt …

and to let the customers help you developthe product as well,” Correlli said.They also suggest being open to criti-

cism, finding a business partner with acomplementary skill set, and learning asmuch as possible from other successfulstartups.

The MBEIdentifying a niche market allowed

Danielle Burnett to seize opportunities forgrowth and provide specialized services toher clients. In 2001, Burnett saw theopportunity to provide IT services, net-work engineering and hardware and soft-ware management for departments of edu-cation in Maryland and founded AppliedTechnology Services. Since 2006, ATS hasprovided IT solutions and staffing forclients including Baltimore City and CecilCounty Public Schools, the Motor VehicleAdministration and other government andlocal organizations.About 90 percent of ATS’s business is

at the state level, Burnett said, but thecompany has expanded to provide servic-es to private clients as its reputation hasspread and it has received more repeatbusiness.According to Burnett, revenue for ATS

doubled every year from 2006 to 2011; in2012, revenue increased but did not dou-ble. Since 2006, the Parkville company hasgrown from one employee to 16.From 2001 to 2006, Burnett said she

focused on establishing a primary cus-tomer base, getting contracts and obtain-ing Minority Business Enterprise certifi-cation. As an MBE firm, ATS is eligible forexclusive work opportunities on stateand local government projects, and the

Read these startup success storiesThree pathbreakers offer lessons to less experienced entrepreneurs

Jayfus T. Doswell, Ph.D., (right) president and CEO of Juxtopia, speaks with a student at theEmerging Technology Center at Johns Hopkins Eastern. Doswell says discipline and perseveranceare essential to entrepreneurial success.

MAXIMILIAN FRANZ

See Success page 8


company is listed in a database of MBEfirms that is used widely by state agen-cies, local governments, contractors andthe public sector.

Burnett said she sees strong partner-ships as an integral part of the company’sgrowth. ATS has developed partnershipswith prime contractors and has becomethe go-to minority business partner formany, she said.

In 2010, ATS won a Top 100 MinorityBusiness Enterprise Award, and Burnettwill accept the award again for 2012.Burnett recently was also awarded theSmartCEO Women’s Achievement Award,which she will accept in June.

All of the recognition gives Burnett achance to network with other achievers inher field and get the company’s name outto the public.

Burnett recommends having a clearbusiness development and marketing plan.Like TeamGantt, she advised entrepre-neurs to know precisely what niche theyare going to fill, and to always keep thecustomer in mind.

“We can’t always win out on price, butwe can always win out on customer serv-ice … by [responding] to customers’ needsquickly and efficiently,” she said.

The inventorJuxtopia was founded by Jayfus T.

Doswell Ph.D. in 2002. The biomedical and

IT company develops products to improvehuman performance in areas such as cog-nitive ability, fitness and injury preven-tion, according to its website. The compa-ny also supplies bioinformatics, healthinformatics and biomedical device devel-opment for government and commercialorganizations.

While working for Lockheed Martin in2002, Doswell saw an opportunity to doresearch and development on a wearablefield monitor for pregnant women.

Although the device never went to market,the experience inspired him to developinnovative ideas for other products.

In 2005, Doswell secured a grant fromthe National Science Foundation to sup-port the research and development ofwearable augmented reality goggles andsoftware, Juxtopia’s flagship product.With more than $2 million in research-based grants, Doswell said he has neverhad to secure a loan for his businesswhich helps him to focus on the compa-ny’s social mission: to improve humanperformance and develop products withhigh intellectual merits.

Doswell said he looks in part to hisupbringing and family history for inspira-tion. Both of his parents were entrepre-neurs, and he said that spirit is embodiedin his own habits.

He was even inspired to start his ownbusiness as a child, selling peaches in hisneighborhood. That taught him how tomarket his own product, sell it and man-age the revenue.

Early exposure to the business worldalso showed him how to fight the feelingsof trepidation and fear that sometimes arisewhen starting a new business venture.

And learning to take a systematicapproach and employ a scientific mindsethelped him to understand discipline andperseverance, he said, crucial qualities forentrepreneurs.

John Correlli (left) and Nathan Gilmore, founders of TeamGantt, say adaptability and listeningto their customers helped their product’s success.

MAXIMILIAN FRANZ

Danielle Burnett, president of Applied Technology Services, says customer service sets success-ful small businesses apart. ‘We can’t always win out on price, but we can always win out on customer service.’

MAXIMILIAN FRANZ

Success continued from page 7


BY AMY BURROUGHS


Mary Cate Claudias is a profes-sional organizer, so one wouldexpect her to have had her busi-ness’s legal affairs in order. Buteven she was surprised to learn

how much she would rely on her attorneywhen her business grew faster thanexpected.

“I needed to make sure immediatelythat I was taking care of myself and pro-tecting my entity before it got out of con-trol,” she said. “Thank goodness I did thatwhen I did, because now it’s really crazy.The phone won’t stop ringing.”

According to attorneys, a host of legalissues can trip up unprepared entrepre-

neurs and small business owners.Between creating a business and plan-ning an exit strategy, owners face legalliabilities in contracts, employment, own-ership of work products and protectionof intellectual property.

Some attorneys are catering to a surgeof small business ownership, driven inpart by people creating their own oppor-tunities in a tough job market. Attorneysalso are seeing more emphasis on soft-ware and other industries based on intel-lectual property, which need legal protec-tion in the form of trademarks, copyrightsand patents.

Easy documents not always bestClaudias’ attorney, Nick Proy of the

Proy Law Firm in Finksburg, said about

half of his clients hire an attorney toensure they do everything correctly,while the other half hire him to fix mis-takes after they’ve attempted to handlethings on their own.

“I see clients draft their own contractsbecause they don’t want to pay me todraft a contract for them,” Proy said. “Butat the end of the day, I’ll spend more timesifting through and editing their contractthan it would take me just to write thething myself.”

Claudias started Charm CityOrganizers LLC in 2010 to help individu-als and businesses declutter and createorganizational systems. She filed her ownarticles of incorporation and trademark

Don’t neglect your legal needsSome area attorneys cater to small business owners’ special circumstances

Attorney Matt Stout advises his small business clients to increase the value on their balance sheets by properly managing intellectual property,licensing and long-term leases on real estate. ‘The phrase ‘The devil is in the details’ is absolutely true,’ he says.

MAXIMILIAN FRANZ

See Law page 10


documents. But when her business grewbeyond what she could handle by herself,she engaged Proy to advise her on hiringhelp.

“There’s a lot of legality that comeswith that and I had no idea how to makesure I was protected,” she said. “I gotgreat advice from him and my businesscoach in terms of subcontractor versusemployee and the implications thatmeans for me for the IRS.”

Her investment paid off: “If I werelooking at my calendar and billing out thetime it takes me to research and do allthat stuff, I’d be losing a lot of money. It’sreally important for me to essentially out-source some of this stuff and be confidentwith the fact it is being done right.”

According to Proy, a frequent mistakeis improperly establishing a business, par-ticularly if owners rely on one-size-fits-alldocuments. “Anybody can download aform, fill in the blanks, sign it and you’vestarted an LLC,” he said. The problem isthat boilerplate forms rarely cover thescope of concerns an attorney wouldaddress, so owners end up with less con-trol or miss out on tax advantages.

Partnerships are trickyKarl Means, who heads Shulman

Rogers’ intellectual property practice inPotomac, said a growing number of busi-nesses are driven by IP assets, whichraise special legal concerns. He pointedto a U.S. Department of Commerce reportreleased in March — the first to measurethe span of IP-intensive industries —which states that those industriesaccount directly for 27.1 million jobs andindirectly for another 12.9 million, or 27.7percent of all U.S. jobs.

Means identified three areas inwhich owners should protect them-selves, but often don’t. The first is docu-menting any partnership, whether it’s anactual joint business or an agreementwith investors.

“Whatever your relationship is, get itdown on paper, because a businessdivorce, just like a domestic divorce, canbe a very messy proposition, particularlyif there’s a successful business involved,”Means said.

Conflict is one cause of rifts, but manyfactors can threaten a partnership, he

said: “Someone could die, someone couldbecome very ill and be unable to partici-pate, some partners just get tired of doingit, some partners run into financial trou-ble and have to get out, so there are a lotof reasons why you have to plan for thosecontingencies.”

Always protect IPMeans also urges clients to protect

intellectual property before releasingassets to the public.

“If it’s successful, you can be absolute-ly certain that someone is going to copy itor knock it off or try to compete with youin the business,” he said.

He described one entrepreneur whowas excited to find an overseas manufac-turer for a device he invented. Accordingto Means, it would be easy for that manu-facturer to produce an extra few thou-sand copies and sell them.

“Make sure you know who you’re deal-ing with, particularly when you start tohave some of these things done abroad,”he said. “You lose control very quickly.”

Review work-made-for-hireThe third area that’s often overlooked

concerns work-made-for-hire agreements,which spell out ownership rights of materi-al produced for the business owner. Peopleoften don’t realize that if they hire a compa-

ny to create a website, for instance, thatcompany owns the material — not thebusiness owner who hired them.

“There’s sort of a stunned look ontheir face when you tell them, ‘You paidthis guy $15,000 for your website, but yourealize you don’t own a bit of it,’” Meanssaid.

Matt Stout, a Baltimore-based attor-ney, caters to entrepreneurs who runtheir businesses from the 30,000-footview rather than the day-to-day trenches.

“I’m consciously marketing towardthat level of entrepreneur who’s ready tobuy a business, or take the next two orthree years to position a business for sale,and then work with a team of advisors toincrease the value of the business,” Stoutsaid. “Legal contracts, licensing, intellec-tual property, negotiating favorable long-term leases on real estate — all thesethings increase value on the balancesheet of a company.”

Yet even savvy entrepreneurs may failto account for personality conflicts, Stoutsaid, and that’s one area where an attor-ney can help them plan ahead.

“That’s where you get into a totallyavoidable situation, where now all of a sud-den, the business itself is at risk becausetwo partners can’t get along, often for per-sonal reasons,” he said. “The phrase ‘Thedevil is in the details’ is absolutely true.”

Professional organizer Mary Cate Claudias (right) works in the home of client Joanna Lignelli.Claudias hired an attorney when her business took off and she could no longer handle every-thing on her own. ‘I had no idea how to make sure I was protected.’

MAXIMILIAN FRANZ

Law continued from page 9


BY KAREN NITKIN


University of Maryland student BillKe knew he wanted to start abusiness, but he didn’t have a spe-cific idea for one in August 2010when he enrolled in the Jumpstart

program at the Dingman Center forEntrepreneurship of the Robert H. SmithSchool of Businesses.“I saw this program being offered

through the school and I decided tocheck it out,” said Ke, from Gaithersburg,who is now 25 and a senior.The program, one of many so-called

boot camps for budding entrepreneurs inthe Baltimore region, was two weekslong. By the end, Ke had forged connec-tions with other enrollees, and togetherthey came up with a business idea,learned how to write a business plan andperfected their “elevator pitch” to

prospective investors.“We had a company,” he said. “We did-

n’t have customers yet, per se, but we haddone research and we had done develop-ment. We knew it was possible. We had adomain name. We were working on thewebsite, we had the business name regis-tered with the state of Maryland.”Armed with that knowledge, Ke and

fellow students Sascha Maraj and JonGrunewald won $3,000 in start-up fundsfrom the Dingman School to start Inkup,a company that refills ink cartridges oncampus. Today, that business has about400 customers, and the founders arenegotiating to sell it to the school’s SmithStore, Ke said.Jumpstart, founded in 2009, welcomes

about 30 attendees a year, including asmany as 15 students from China, saidElana Fine, associate director of theDingman Center. Some participants havefairly well developed plans, while others

are looking for ideas or potential part-ners.“Jumpstart’s goals are simple yet

ambitious: to equip participants withknowledge and skills required to launchand manage successful startup ventures,”a brochure states.Sessions take participants from idea

development to business plan develop-ment to plans for piloting and growingtheir businesses. Established entrepre-neurs and investors give workshops andare available for networking, but in mostcases the businesses at the end of the pro-gram are not developed enough for seri-ous investment, Fine said.

No guaranteesIn the Baltimore region, the past few

years have seen the introduction of sever-al programs aimed at giving potentialentrepreneurs tools and contacts.While these programs can provide

important guidance and networkingopportunities, they do not guarantee con-nections with investors, or success with afuture business.“Participants should mostly expect to

become part of a culture,” said DavidTroy, a Baltimore-based businessmanwho writes about tools for local entrepre-neurs on his blog, Dave Troy: Fueled byRandomness. “Having a common experi-ence with others creates long-term bondsand can be helpful later on in the entre-preneurial cycle.”Potential participants should do their

research before signing up with a localboot camp, he said, adding: “People look-ing to make money from entrepreneurs ormake unrealistic promises about fundingare bad news.”The reputable programs promise

assistance and introductions, but makeno guarantees.One of the region’s newer programs is

the 90-day Accelerate Baltimore programfunded by the Abell Foundation and runby the Emerging Technology Centers inBaltimore. The program began inNovember 2011, when potential partici-pants were invited to submit their pitch-es, said Deb Tillett, ETC’s new executivedirector and president. Twelve finalistswere interviewed, and four winners were

Boot camp or bust?Some considerations for would-be entrepreneurs

University of Maryland student Bill Ke and two fellow students started Inkup, an on-campus inkcartridge refilling business, after completing the Jumpstart program at the Dingman Center forEntrepreneurship of the Robert H. Smith School of Business.

MAXIMILIAN FRANZ

See Boot Camp page 13


BY MARTY NILAND


For startup business owners lookingto raise money and grow their com-panies, the lure of a public stockoffering can be enticing. Recent IPO successes such as

the debut of analytics data managerSplunk, which saw its shares jump 113percent on the first day of trading, mightmake the prospect seem appealing, andso might recent moves to ease federalregulations on going public.

Several local experts warn, however,that even with looser regs and recent suc-cesses in Silicon Valley, an IPO remainsrisky for smaller companies, especially inMaryland. While some types of productsand companies are better suited for pub-lic offerings than others, the experts wetalked to believe that most businesses arebetter off sticking with private financingthan facing the loss of control and finan-cial risks that come with public stockofferings.

“Not all businesses have the capacityto get to that point to be a really good fitfor a public offering,” said JoanneSaltzberg, former chief operating officerof Women Entrepreneurs of Baltimore.“Businesses in this country are mostlyvery small, and have fewer than 10employees. That’s the sum and substanceof the small business community in thiscountry and throughout the world. Butthey are the job creating-engine of theeconomy.”

Risking a business — and the jobs thatgo with it — on an IPO is a decision thatneeds to be carefully considered, saidSaltzberg, who recently launchedEntrepreneurialrx, a training and consult-ing program for small business owners.“Going public is not for everyone.”

This year’s federal Jumpstart OurBusiness Startups (JOBS) Act offeredsome incentive for newer companies toconsider IPOs, but not enough to make itfeasible for most in this region, said

Robert Rosenbaum, president and execu-tive director of the Maryland TechnologyDevelopment Corp. The act was designedto help new businesses raise startup cashthrough crowd funding or peer-to-peerlending, and to ease regulations that sup-porters believed kept small businessesfrom going public. But Rosenbaum isn’tconvinced.

“The IPO market for small companiesis generally non-existent,” he said.“Unlike the dot-com days and the boomdays, IPOs are for established compa-nies.”

The JOBS Act gives companies up tofive years to comply with the accountingand oversight requirement of theSarbanes-Oxley Act of 2002, which setsstrict corporate governance and report-ing standards for publicly traded busi-nesses. But once those requirements arephased in, they can be quite costly — inthe millions at least, Rosenbaum said.

“It’s not for the types of companiesyou find in the Baltimore area,” he said.

“It’s not feasible strategy — not even inthe realm of possibility.”

Even if companies can afford the costof compliance, the burdens of quarterlyreporting are among the other disadvan-tages of going public, said ThanasisDelistathis, founder and managing partnerof New Atlantic Ventures, a Reston, Va.-based early-stage venture capital fund.

“You have to show your competitorsyour numbers. You have pressure frominvestors to reach certain quarterly num-bers,” said Delistathis.

Such pressures from stockholdersoften discourage business owners frommaking investments that look unafford-able, he said, while sticking with privateinvestment allows them to take thoserisks.

For Saltzberg, it’s a matter of inde-pendence.

“What you’re really looking at is givingup partial control of the company to

Public or no? Experts warn of risks

Joanne Saltzberg, founder Enrepreneurialrx, says risking a business — and the jobs that go withit — on an IPO is a decision that must be considered carefully. Business owners must be sure,for one, that they have the right type of product and business model to make an IPO worthwhile.

MAXIMILIAN FRANZ

Going public good for some, but most likely not you

See Public page 13


shareholders,” she said. “Entrepreneurs,by the virtue of their points of view, areindependent people.”

Business owners who are willing tomake those trade-offs, Saltzberg said,need to be sure they have the right type ofproduct and business model to make anIPO worthwhile.

“Any business that requires a largeamount of capital to take it to the nextlevel” is better suited to go public, shesaid. “Technology businesses, in general,need a lot of money and need infrastruc-ture to take it to a level they could nototherwise do without an enormous cashinfusion.”

Delistathis also believes technologyfirms are best suited for going publicbecause of their growth potential. “It hasto be in an industry where the investorswant to see 20-25 (percent) plus annualgrowth potential,” he said. “People investin the technology area, new areas of soft-ware, new areas of the Internet, newemerging markets, rather than traditionalindustry.”

Saltzberg said the first benchmark forconsidering an IPO is knowing your ownneeds. “It really starts with the quality of

business planning,” she said. “What arethe capitalization needs of a company totake it to some specific growth goals? Youcan extrapolate up or down, with a goalof $50,000 or $50 million.”

Delistathis said companies shouldlook for scale, high-growth and high-prof-it potential, but specific financial bench-

marks are hard to define.“Nothing is set in stone,” he said.

“There could be a $100 million (annualrevenue) minimum threshold for a newindustry with high interest and an excit-

ing space. For other industries, it mightbe $200 million. The reason is that it takesa couple of million dollars a year to havea public company, and you have to be ona certain scale to have that.”

Even for the right company with theright metrics, the market may still not beright to go public, Delistathis warned.“Many times you have to have the conceptof the ideal window,” he said. “Is the mar-ket open? The market is in such doldrumsthat investors may not have the appetitefor IPOs. In that case, the IPO window isclosed, and you can’t go public.”

He cited the post-9-11 era, when techcompanies had a difficult time going pub-lic because of external factors, as anotherexample.

But for most companies consideringgoing public, Rosenbaum recommendsremembering what happened a few yearsearlier, in the dot-com bubble of the late-1990s and early-2000s, when hundreds oftech firms saw their stock go through theroof, then went bankrupt.

“They weren’t mature enough, andthey didn’t have a product,” he said. “Ithink business owners should look at his-tory, and learn from history, before jump-ing into this.”

“Unlike the dot-com days and the boomdays, IPOs are forestablished companies.

Robert RosenbaumMaryland Technology Development Corp.

welcomed into the program, free ofcharge.

In some cases, Tillett said, finalistswho looked better on paper lost out in theinterview process because “we sawsomething in the individuals” who werechosen. Program participants are JasonSchuster of Flying Pig Digital, DevinPartlow of Hooopla, Katie Palencsar ofUnbound Concepts, and McKeeverConwell of Nobadgift.com.

“Our criteria [were] that with a littlebit of time and with a little bit of capital,they could go from having an idea to hav-ing at least a working prototype,” Tillettsaid.

The group, which will finish in July,participates in frequent seminars andnetworking sessions. Is members workon their pitches to venture capitalists,learn about finances and businessplans, get legal advice, and have access

to ETC staffers and resources, saidTillett, who hopes to offer the programtwice a year.

Another program is ACTiVATE, start-ed by Julie Lenzer Kirk at the Universityof Maryland Baltimore County in 2005.The school has since licensed the pro-gram to the nonprofit Path Forward forInnovation and Entrepreneurship, run byKirk and co-founder Renee Lewis.

For $3,000, participants get 10 to 12months of “very hands-on” assistance,Kirk explained. The program is currentlyfor women only, and has a technologyfocus. ACTiVATE already has beenexpanded to Michigan and Virginia, andplans are under way for national andinternational expansion, Kirk said. Amixed-gender version also is being con-sidered. The program includes bothonline and in-person components.

“We kind of give you the theory onlineand then we put together panels of peo-ple to say, ‘This is how it really works,’”

she said. The first half of the program isto “find and refine the idea,” and the sec-ond half is “what we call the road to rev-enue.”

Participants “stand up and give theirelevator pitch every week,” she said.Alumni events are held, giving all 150graduates a chance to network.

Kirk is realistic about expectations,however. “We’re not going to hold yourhand,” she said.

A 2010 study by the Sage PolicyGroup found ACTiVATE graduates cre-ated 32 companies between 2005 and2010, creating 124 jobs at a cost of$15,600 per job.

Investors are invited to hear pitches,but more as a learning experience for thepitchers than an actual path to invest-ment for the pitches. Participants shouldexpect “that you will get out of it whatyou put into it. They can expect to bereally supported and challenged at thesame time,” Kirk said.

Boot Camp continued from page 11

Public continued from page 12


Chesapeake Innovation Centerwww.cic-tech.org

The Chesapeake Innovation Center, inthe “informatics corridor” of Anne ArundelCounty, is a business accelerator that aimsto bridge major users of security technolo-gy and small companies at the forefront ofinnovation. The CIC, its partners andmember companies work to advanceinformatics and physical and cybersecuri-ty technologies.

CyberMarylandwww.cybermaryland.org/about

CyberMaryland is a public/private part-nership providing resources and servicesfor new and expanding information tech-nology companies in cybersecurity. Led bya community of entrepreneurs, academia,government, investors, technologists andseasoned industry leaders, CyberMarylandconnects businesses with R&D, education,workforce and contracting opportunities.

Dingman Center for Entrepreneurshipat the University of Maryland RobertH. Smith School of Businesswww.rhsmith.umd.edu/dingman

The Dingman Center focuses on practi-cal entrepreneurship, global innovationand international classroom experiencesto promote opportunities that providemaximum resources to startups in termsof ideation, execution and financing. Itsstated mission is to take entrepreneurs“from the back of a napkin to the first $1million in financing.”

Emerging Technology CentersBaltimorewww.etcbaltimore.com

The ETC’s mission is to help early-stage companies grow and prosper. Aspart of the Baltimore Development Corp.,

the ETC also promotes economic develop-ment, providing startups with business,technical and networking connectionsthat will help them to become profitable.ETC is a nonprofit business incubator pro-gram with two separate incubator facili-ties, focused on growing early-stage tech-nology and biotechnology companies inBaltimore.

Fort Detrick Business Development Officewww.fdbdo.com

The Fort Detrick BusinessDevelopment Office works to promote andencourage collaboration between FortDetrick in Frederick, Md., its mission part-ners and the business community. TheFDBDO supports the needs of small, largeand emerging companies. All services areprovided free of charge. Those interested inmarketing their relevant products, servicesand business solutions should register withthe FDBDO.

Frederick Innovative Technology Center Inc.www.fitci.org

FITCI works to foster entrepreneur-ship in Frederick County while activelycontributing to the county’s job growth.FITCI encourages technological innova-tion and accelerates the development ofcommercially viable companies throughresources and services particular to start-up technology-based businesses.

Inventors Network of the Capital Areawww.dcinventors.org

The Inventors Network of the CapitalArea is a nonprofit educational organiza-tion founded in 1993 whose members areinterested in patents, the innovationprocess, product design, marketing, licens-

ing, prototyping and other product devel-opment issues. INCA’s mission is to helpnew and veteran inventors network andshare information in all aspects of invent-ing — the creative process, prototyping,patenting, and marketing. The website’s“Useful Information” page offers a wealthof advice and practical how-to’s for search-ing patents, software reviews and more.

IRS Small Business and Self-EmployedTax Centerwww.irs.gov/businesses/small/index.html

This special Internal Revenue Servicepage includes highlights of tax lawchanges important to small businessowners or self-employed filers, includingthe new 1099-K, tips and more. SB/SEserves taxpayers who file Form 1040,Schedules C, E, F or Form 2106, as wellas small businesses with assets under $10million.

Maryland Agricultural and Resource-Based Industries Development Corp.www.marbidco.org

MARBIDCO is a quasi-public corpora-tion broadly authorized to develop agri-cultural industries and markets; supportappropriate commercialization of agricul-tural processes and technologies; assistwith rural land preservation efforts, andalleviate the shortage of nontraditionalcapital and credit available at affordableinterest rates for investment in agricultur-al and resource-based businesses.MARBIDCO’s overall mission is to helpMaryland’s farm, forest and seafood busi-nesses achieve sustainable viability andprofitability. The resources page onMARBIDCO’s website is an excellent por-tal for new ag-centered businesses aswell as more experienced ag innovators,providing access to farm credit informa-tion, useful templates and links to addi-tional support by region or by product orcommodity.

Maryland Biotechnology Centerwww.marylandbiocenter.org

The Maryland Biotechnology Center

Small business resourcesHere’s where you will find just about everything you need to know to move your business forward

The sites listed on these two pages are rich with information for startups andsmall businesses of every stripe. Most include templates for confidentialityagreements, directories of their members or partner agencies, calendars fornetworking opportunities and more. If an entrepreneur can’t find what he orshe is looking for on these sites, a quick email or phone call to any one of the

organizations listed here should suffice.


was created in 2009 by Gov. MartinO’Malley as one of the first initiatives ofBioMaryland 2020, the State StrategicPlan for Life Sciences delivered by theMaryland Life Sciences Advisory Board.In collaboration with some state partnerprograms, the center integrates entrepre-neurial strategies to stimulate the trans-formation of scientific discoveries andintellectual assets into capital formationand business development. Program alsoare aimed at encouraging workforcetraining and development, as well as con-necting Maryland’s federal and academiclife sciences research centers to thebiotech industry. Through its grant pro-grams, the center provides investmentsin talent, infrastructure and future com-mercialization opportunities.

Maryland Department of Business andEconomic Development — Start aBusiness Resourceswww.choosemaryland.org/startbusi-ness/Pages/default.aspx

The Start a Business portal at DBED’sChoose Maryland website is a one-stopshop for Maryland entrepreneurs, withinformation about starting a business,counseling and access to capital, as well asthe state’s registration and permittingrequirements.

Maryland Rural EnterpriseDevelopment Centermredc.umd.edu

The Maryland Rural EnterpriseDevelopment Center, a University ofMaryland Extension CommunityResource and Economic DevelopmentOnline Initiative, is a one-stop shop foragricultural and natural resources entre-preneurs, providing rural business inno-vation strategies for farm business plans,marketing, production and managementtechniques. Here you’ll find distance-learning tools and niche course modulesdelivered on MREDC in audio, video orother interactive formats; information onhow to sell and process food in Maryland,including rules for specific foods andimportant regulatory information andlocation-specific contacts; the MarylandAlternative Enterprise Hotlist, a click-through section with resources for 13alternative enterprises in Maryland,including urban agriculture, agritourism,horse boarding, mushroom, specialty veg-etable enterprises and more. Resources

for traditional farms also are provided forcrops, dairy and livestock.

Maryland Small BusinessDevelopment Centerwww.mdsbdc.umd.edu

Since 1988, the Maryland SmallBusiness Development Center Networkhas provided sound advice, counselingand support to entrepreneurs and small tomidsize businesses across the state. Apartnership between the U.S. SmallBusiness Administration and theUniversity of Maryland College Park, thenetwork links private enterprise, govern-ment, higher education and local econom-ic development organizations to providemanagement, training and technical assis-tance to small businesses.

Maryland Technology DevelopmentCorp.www.marylandtedco.orgTEDCO brings innovations from universi-ties and federal labs into the state’s econ-omy by facilitating the transfer of tech-nology to the private sector and by pro-viding emerging technology companiesand university researchers with vital seedfunding and specialized technical assis-tance.

Mid-Atlantic Venture Association www.mava.org

The Mid-Atlantic Venture Associationrepresents the full spectrum of privateequity and venture capital firms withinvestment interests in the mid-Atlanticand beyond, entrepreneurs, and theirstrategic partners. MAVA provides pro-grams, information and forums designedto stimulate revenue and company growth,facilitate quality deal flow, encourage col-laboration and foster relationships amongentrepreneurs, investors, strategic part-ners and customers.

National Federation of IndependentBusinesswww.nfib.com

The National Federation ofIndependent Business has representedsmall and independent businesses as anonprofit, nonpartisan organization since1943. NFIB’s mission is to promote andprotect the right of its members to own,operate and grow their businesses. NFIBalso pools its members’ purchasing powerof its members to access many business

products and services at discounted costs.NFIB’s lengthy online resources page pro-vides timely information for establishedsmall business owners.

Startup Marylandmd.s.co

Startup Maryland, a regional initiativelaunched out of the Startup AmericaPartnership, rallies entrepreneurs, sup-porters and other innovation stakeholdersaround four main initiatives: access to cap-ital, celebration and awareness, resourcemapping, and revenue opportunities andcorporate connections.

UMBC Alex. Brown Center forEntrepreneurshipwww.umbc.edu/entrepreneurship

“The Alex. Brown Center forEntrepreneurship provides and coordi-nates entrepreneurial assets in a singleplace, which helps to stimulate innovativethinking and accelerate implementation,”says director Vivian Armor. The site repre-sents the online version of this dynamiceducational setting.

U.S. Association for Small Businessand Entrepreneurship https://usasbe.org/

The largest independent, profession-al, academic organization in the worlddedicated to advancing the discipline ofentrepreneurship. At its KnowledgeResources page, USASBE includes aSyllabus Exchange, designed to beshared by faculty but also invaluable forthe true entrepreneur who wishes toforgo a traditional M.B.A. but still needsthe knowledge: https://usasbe.org/knowl-edge/syllabus.

U.S. Patent and Trademark Officewww.uspto.gov

This website has it all: IP law and pol-icy, trademark and patent informationand databases, services and helpfuladvice for inventors and entrepreneurs,up-to-date changes to policies and proce-dures, etc.

U.S. Small Business Administrationwww.sba.gov

The U.S. Small Business Administrationprovides support to small businesses andsmall-business owners nationwide throughits 3 C’s of service: capital, contracts andcounseling.

Sign up for Daily News Alerts and be sure to read our new small business blog, the Small Biz Buzz. Subscribe today for only $24 a month! Call 800-451-9998 orvisit subscribe.thedailyrecord.com and mention SMALLBIZ.

TheDailyRecord.com

Daily.InPrint.Online.

When business happens in Maryland, it’s...

When it happens in

Business,it’s...

Maria Zilberman Small Business Beat ReporterMaria Zilberman covers small business,shining a spotlight on one of the key drivers of Maryland’s economy.

Maria-Business-TDR-MagFP_Layout 1 5/17/2012 1:42 PM Page 1

Documents

BUSINESS - pageturnpro.com...small business should take in pitch-ing potential investors for startup funding are the things they should avoid. Our panel of experts offered these top