Monthly Archives: August 2016

How to Apply Accelerator Programs

Startup growth isn’t always easy to achieve. Even with a great idea and a proven need for your product or service, it can still be difficult to boost sales and make a profit when you’re first starting out. Growth can and does plateau, too, leaving more established businesses wondering how to break that next barrier.

For some companies, the answer to overcoming these challenges is to seek the help of an accelerator — a highly selective, intensive program that offers the funding, mentorship, education and networking necessary to jump-start growth, typically in exchange for equity in the company. If you’re thinking about applying to an accelerator program, here’s what you need to know and some options to consider if you decide it’s the right path for you.

Accelerators versus incubators

You may have heard the terms “accelerator” and “incubator” used interchangeably, and it’s true that they are similar. Both are interested in helping startups and small companies achieve growth, and may even offer some of the same perks, like office space and a powerful network of mentors and advisers. However, businesses interested in these two options should be aware of some important differences between them.

Accelerators usually invest money in their selected participants in exchange for a share of equity. They work to speed up the business development process during a restricted period of time, typically three to four months. Incubators, on the other hand, are less structured, and are generally focused more on building viable ideas and business models. In a TechRepublic article on the subject, author Conner Forrest wrote, “If an accelerator is a greenhouse for young plants to get the optimal conditions to grow, an incubator matches quality seeds with the best soil for sprouting and growth.”

Who should apply to an accelerator program?

The startups best suited for accelerators are the ones that want to grow by learning and sharing experiences with others, said Mark Lawrence, co-founder and CEO of on-demand parking app SpotHero and a graduate of the Techstars Chicago accelerator program.

“You have to be willing to talk not only about your successes but your struggles,” Lawrence said. “You also need to have a solid idea for a product or service and understand where you want to take your company and what goals you want to achieve.”

The typical applicant is in the early stages of business development and has either just launched or is getting ready to do so. Many companies have a finished product or concept, and may have even raised capital; others may only have an idea and no funding whatsoever. These startups can benefit greatly from the resources and assistance an accelerator can provide, and the program mentors work with them to get their product ready for customers and investors.

But don’t think that you can’t participate in an accelerator if you’re beyond the “startup” phase. In fact, there are numerous programs designed specifically for companies that have overcome the initial hurdles of starting up and want to take their business to the next level. One such program is Interise, a nonprofit organization that accelerates small business and economic growth.

“Small businesses achieve first-stage growth by focusing on quality and direction,” said Jean Horstman, CEO of Interise. “Second-stage growth [is about] management and leadership. As a second-stage growth accelerator, we work with businesses that have hit a wall, and what worked before isn’t working now. In a peer learning group, [Interise participants] acquire the know-how and management techniques to achieve second-stage growth.”

What are the requirements for applying?

Each accelerator has its own set of requirements, and some are more selective than others — the most competitive ones have an acceptance rate of less than 5 percent. The application process usually includes a lengthy series of questions about your business idea, your market and competitors, the work you’ve done so far and potential challenges. Specific qualifications — such as a certain development stage, whether you’ve raised funding before and intellectual property agreements — vary greatly by program.

If an accelerator is interested in your company, you’ll be asked to come in for an interview. Chris Tsai, founder and CEO of preordering platform Celery, said that when his team was applying to the popular Y Combinator accelerator, conducting mock interviews with program alumni was immensely helpful.

“[Y Combinator holds] rapid-fire, short, intense interviews,” Tsai said. “We practiced, [and then] interviewed with four partners in a short period of time — about 10 to 15 minutes. We found out that day that we were accepted.”

Business Bank Account Tips

Opening a business bank account is a critical task for a new business owner. Even if you are a sole proprietor, having a business account is the best way for you to keep track of your finances and your business records. Putting this simple barrier between your personal and professional finances helps to make day-to-day transactions easy to follow and document.

“It is just good accounting practice to keep your business [finances] separate from your personal, and setting up a business checking account is the first step to making this possible,” said Kevin Ravenscroft, president of Timberwood Bank in Tomah, Wisconsin. “You can track your income and expenses for IRS filing purposes, more easily identify potential business deductions from the IRS, maintain clear records for potential audits, and you may be able to limit your personal liability.”

Choosing a bank and account services

Business banking is different from consumer banking, so the bank where you have your personal checking account may not necessarily be the right one for your business. When deciding where to open your business account, consider the financial institutions in your area. Talk with each of them to discover their specialty and see if it is a fit for your company. Some banks are small business specialists, whereas others focus on property or equipment loans.

Today’s business banking customers can also find lines of credit and cash management services in addition to checking accounts. Starting a relationship with bank personnel familiar with your field or industry gives you another resource for inquiries and the ability to tap into their experience and expertise when it is needed. They may have suggestions or be aware of programs that you did not know about to make your business bigger and better. However, be aware that some bankers might try to encourage you to use their products and services — even if you don’t necessarily need them — just to make more money. Be sure to do your research and ask questions so that you understand what you’re signing up for.

Business banking costs

Many banks offer business checking accounts for free, with a minimum balance requirement and a limited number of transactions. At JPMorgan Chase & Co., for example, business owners with revenues of up to $10 million can open an account with just $25. At First National Bank of Omaha, business owners can take advantage of a Business First Free Checking account that requires a $100 minimum opening balance but has no minimum balance requirement.

As your business grows, you may need to change the type of checking account your business uses. While enhanced accounts might also charge a fee, the benefits of being able to handle an increased number of transactions efficiently and having access to more bank services offsets the cost. However, David Ely, professor of finance at San Diego State University, cautioned business owners to keep the total cost of balance requirements and fees in mind.

Know more about trading stocks

Stock trading, once the sole domain of Wall Street, has become easily and affordably available to all in the last 20 years, thanks to online brokerages. Prior to online trading, people relied on the services of a stock broker, who would make buy and sell orders on the customer’s behalf. Today, individuals are able to execute buy and sell orders themselves in a fraction of a second using computerized trading services.

While buying and selling stocks — which are shares of ownership in a company — can make you a fortune, it’s just as easy to lose that money. To become a successful trader, it is crucial that you become familiar with the tools of trading, the theory behind it and the daily reports that drive market shifts.

Stock market basics

Like all businesses, the stock market operates on a system of supply and demand. When you purchase stock, your hope is that other traders become more eager to own a share of that company over time. When the stock’s popularity increases, traders will compete to own it and bid up the sale price. In theory, a rising share price is the result of improvements in the firm’s value and potential, also known as its fundamentals. In reality, stock prices change for any number of reasons, only some of which investors are able to predict.

Researching and choosing stock

There are two main schools of thought regarding how to choose stocks. The first, called fundamental analysis, relies on the use of a company’s financial reports and public statements to analyze the health of the business. Balance sheets, income statements, yearly and quarterly earnings, and news releases from the company are all important tools for a fundamental analysis. Fortunately, those reports are easily searchable online, as are tutorials on how to read them, such as those offered by the SEC. Market and industry trends, media publications and historical analysis also play a role.

The second school of investing is called technical analysis. Technical analysts believe that swings in stock prices follow patterns that traders can learn to detect and profit from. Technical analysis is not as widely accepted or practiced as fundamental analysis. However, many traders use a combination of the two techniques to choose stocks. Choosing a company with sound fundamentals and then occasionally trading on a technical indicator is a safer strategy that relying only on technical indicators.

Before deciding to buy or sell any stock, you should thoroughly research the company, its leadership and its competition. Sites such as Yahoo! Finance offer excellent compilations of news stories, financial statements and stock price histories (called charts) that provide insight into the company. Stock sites also display professional analysts’ ratings of a given stock, indicating whether that analyst advises a trader to buy, hold or sell a stock. Examining the records of those analysts may help you assign value to their opinions.

Personal stock-trading services

Before you can begin buying and selling stocks, you need to decide which online trading service you want to use. Rob Beauregard, director of public relations for Fidelity Investments, says choosing your brokerage partner carefully can directly affect your bottom line.

“The best piece of advice for an online trader is to choose your brokerage partner with open eyes,” Beauregard told Business News Daily. “Know their pricing, service, investment choices, education and research resources, and securitypractices. No one should just rely on their gut instincts or the tip from their friend or neighbor anymore. The resources easily accessible to them to generate and validate investing decisions are too valuable not to utilize.”

When you’re looking for an online broker, consider the costs of each service the brokerage provides and the level of support you will need from qualified brokers. Business News Daily’s sister site Top Ten Reviews offers an overview of a number of trading services, with ratings for their fees, research tools, mobile access and investments offered.

Merchant Account For Right Manage

Credit cards don’t process themselves. This is where merchant accounts come in. A merchant account is essentially the middleman that lets businesses accept credit and debit cards in person and online.

Usually provided by banks and other financial institutions, a merchant account processes electronic payments by transferring funds between customers’ and merchants’ banks. During a sale, the merchant account works behind the scenes to withdraw funds from the customer’s bank and deposit them directly into the merchant’s checking account. The process works the opposite way during a refund.

Here is a simple explanation of how a merchant account works, what to look for in a merchant account and how small businesses can get one. For a more in-depth look at merchant accounts, check out our Credit Card Processing Buyer’s Guide, which will also help you figure out whether your business needs a merchant account and how to find the right one for your business.

How a merchant account works

When a credit card transaction is processed, information must be sent to a payment gateway to see if the cardholder has sufficient funds. For traditional transactions, this is generally part of the point of sale (POS) machine, which reads the cardholder’s data and checks with the credit card company to ensure the transaction can go through. This is known as a “swiped” or “card present” type of merchant account, which can include retail, restaurant or lodging merchants.

But in a “keyed” or “not present” transaction, this is done online by a payment gateway, which connects to the credit card company. These kinds of merchants can include mail order companies, telephone order companies or e-commerce/Internet merchants. When merchant accounts are set up, the same company, called the payment processor, can often set up the payment gateway in the same process.