Hemp = Opportunity
December 18th, 2018

Cannabis Sativa.  Yep.  Same plant that produces marijuana which is pretty much all that people are hearing about these days.  But, all hemp is not equal and therein lies what might be some very interesting opportunities for new businesses.  There are different strains of Cannabis Sativa.  One has a high concentration of THC – the psychoactive component that gives marijuana its kick.  Industrial hemp has a far lower concentration of THC, and has wide variety of uses.

Hemp is probably one of the earliest plants to be cultivated.  Evidence of its cultivation has been found on an island off Japan dating to approximately 8000 BC.  There are many more advantages to industrial hemp than can be listed here, but here are just a few.  One acre of hemp will produce as much fiber as two to three acres of cotton, is stronger and softer than cotton and will not mildew.  On an annual basis one acre of hemp will produce as much paper as two to four acres of trees.  Most types of paper products can be produced from hemp, and while hemp is generally ready for harvesting in about 120 days, trees take a little longer to harvest.  And one more, hemp can be used to create environmentally-friendly substitutes for plastic-based products.

So for someone looking for a new business opportunity industrial hemp might be worth a look.  If you look at everything that industrial hemp can be used for now, with all of today’s new technologies and manufacturing processes, the opportunity is out there.  But one of the absolutely biggest factors that will affect the future of industrial hemp is its inclusion in the new Farm Bill about to be signed into law which makes it legal to grow hemp, which makes it eligible for crop insurance.  That is more than huge.

So if a woman in Brooklyn can make lamps out of mushrooms, what could you do with hemp?

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You started your business with a value proposition – your product or service.  You had something to sell that people bought to either to get a job done more efficiently or cheaply, or to solve a problem, or something that they wanted (but not necessarily needed).  Often at SCORE we see people come in with a product or service already in existence.  But when we start asking questions about who their customers will be, whether they will pay what you are asking in order for you to make a profit, who their competition is and why their customers will switch and buy from you, things sometimes begin to unravel.

It seems almost unnecessary to ask if you really know your customer.  But do you?  How well do you know them?  Are they the same today as they were yesterday when you started?  Is there a new competitor who has entered your market space that you may not have paid attention to yet?  Might they be better, cheaper, or closer in location to your normal customers?  In the world we live in today things can often happen so fast that if you aren’t constantly monitoring your customers and your competition, the business model that you have been using suddenly may not be as valid any more.

The light at the end of the tunnel could be a train.  Don’t let yourself get run over.

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A Startup Idea
December 4th, 2018

How about a can opener?  Someone’s first reaction might be “Can openers are so yesterday!”  But there

The article centered around problems that companies like StarKist, Bumble Bee Foods and Chicken of the Sea are having with declining sales of canned tuna.  One reason, among many, is the ever-increasing American focus on convenience.  A can of tuna has to be opened, drained (cats can smell it from the opposite end of the house and can suddenly materialize in the kitchen before the can is half drained), and then utensils and dishes to eat or mix the tuna have to be gathered.  Waaaayyyyyyy too many steps in today’s convenience-oriented world.  The companies are now starting to take various steps to make eating tuna more convenient.

The lesson here is to pay attention to the world around you.  Things are always changing in the economy, sometimes almost imperceptibly, that can create new opportunities for entrepreneurs.  Even in something like your social media feeds you may begin to sense something being mentioned more frequently – positively or negatively.  Maybe there is an opportunity there for a new business.  Maybe you can invent the next can opener. was a recent headline in the Wall Street Journal that said “The Trouble With Tuna: A Lot of Millennials Don’t Even Own a Can Opener.”  My first reaction was a chuckle.  But as I read on in that article a lesson began to dawn on me.  This is not a criticism of Millennials.  It is about change and opportunity, and the Millennial generation is moving into place to lead it. 

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Loan Applications and Risks
November 27th, 2018

Small business lending for banks is high-risk even in good times.  So if you are planning to make an application for a loan, think about this.  Small businesses tend to have a higher failure rate than larger ones, often simply because they have not had enough time to build up a cushion against bad times.  So rather than try to put only a positive spin on the benefits of your application, how significant your sales growth has been etc., consider adding something on risk factors and how you plan to deal with them.  You know it’s a risk.  The bank knows it’s a risk.  All public offerings of any kind of securities have a section on risk factors because of the laws of full disclosure to protect investors, and the bigger the offering the more the risk factors listed – sometimes going on for pages. 

So if you have something addressing risk factors in your loan application, or even in a preliminary conversation, it says to the lender “I know that there are risks in this loan, but here are the ones I see and how I plan to deal with them (in order to get your loan paid back).  I’m reasonably sure that most small business lenders have hardly seen anything like this, and it might just make a difference to you getting the loan.  You have nothing to lose.  Full disclosure might make you a winner.


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Lenders and Social Media
November 20th, 2018

Are you are looking ahead to expand or buy new equipment and thinking about getting a loan for your company at some point in the future?  Do you spend much time on social media?  Use social media to grow your brand?  Use social media to take a picture of what you had for breakfast?  You may never think that your social media activity could one day have an effect on your ability to get a loan, but it might.  Lenders and credit bureaus are looking more and more at potential borrowers’ social media activity as part of their credit decisions.

I’m talking here about business credit, not personal.  There are still questions about the legality of using personal social media posts in making credit decisions, but one major credit reporting agency has already dipped its toe into the water.  If at some point in the future looking at peoples’ personal social media posts become legal for companies such as banks, it is going to open a dramatic new look into your personality online, and may be opening a very large can of worms depending on what you do when you’re online.

Getting back to your business, your business presence online could be a problem, or it could an asset. Think how many people turn to social media and other sources for things like reviews – for example, what you liked about what you had for breakfast; but they also look for companies to do business with that they can trust.  Your behavior online can be a tremendous benefit to your company and your brand.  The more positive attention you attract to your company and your products or services on social media the stronger your chances could be of a favorable opinion of your company by a lender at some point in the future.  Like it or not, your social media profile is going to become a more widespread data point in your business activities.  It is already being widely used in things like hiring decisions where, as far as I know, the legality of it has not been seriously challenged.  But it’s coming.  Where do you fit in?

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Clicks to Bricks
November 13th, 2018

The patient is still breathing.  Barely, but breathing and taking nourishment.  An interesting thing is happening in retail.  Online shopping, led of course by Amazon, has been like a slow-moving Pac-Man gobbling up retailers who operated from bricks.  Many of the bricks have crumbled; think Toys ‘R Us.  But, bubbling just below the service some bricks are making a comeback, and one of the most stunning is Amazon itself, with Amazon Books.  Untuckit has been an aggressive online and print advertiser, selling largely online.  But then as an experiment it opened a popup shop in Manhattan and suddenly profit margins started to improve and customers started buying more.  Others like Warby Parker and Bonobos are opening physical locations.

Why? Instant gratification for one.  Amazon started its rise to owning the world selling books online.  But there is something about holding a book in your hands – reading the flyleaf, the back cover (even though you can do that on Amazon), and thumbing through the pages.  There is something for a woman in many cases about trying on a pair of shoes and looking at them on her feet; in a mirror; seeing how it makes her feel; seeing what it feels like to walk around in them.  Holding up a blouse, or a shirt, or putting on a winter jacket; hard to do that online.  Tactile; human touch; sights and smells, and on and on.  You’re in a store and something else catches your eye that you would like better.  You probably wouldn’t have seen it on the website. 

But my guess is that one of the most powerful advantages of the bricks is customer service.  You can ask questions.  Do you have this in another size?  Another color?  You can return something to the store instead of boxing it up, shipping it back and waiting for the charge to be credited back to your credit card. 

There is a certain magic to good customer service.


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A Cup of Coffee
November 9th, 2018

How does the humble (before adding multiple embellishments) cup of coffee relate to your supply chain?  Start with growing and shipping the beans to a roaster.  It then must be transported to a purchaser, marketed and sold to a retailer who then prepares it and sells it to you.  There are multiple cost centers from the time the bean is harvested from the bush (cost of the land, the seed and the labor) to the time it becomes salvation for you.

There are at least three transportation nodes there – the grower to the exporter to the roaster to the buyer to the retailer.  Gas prices are going up.  The economy is booming.  Wages are going up, albeit slowly, at every stage, and the strong economy is putting upward pressure on wages.  You might not have as long a supply chain.  But in my experience one of the many things that small business owners often do not pay enough attention to is their costs.  If there are a couple of different particularly important nodes in your supply chain it might be worth keeping an eye on what is happening in that particular industry because things could be happening that could lead to increases in the costs in that particular node before it gets to you, giving you a chance to prepare if necessary.

Understanding your supply chain could make you second and third cups more enjoyable.

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Your Credit Score
October 30th, 2018

Do you know what your credit score is?  If you don’t you should and moreover, you should keep up with it regularly. If you ever go looking for a loan from a bank your credit score is going to be one of the first things they look at.  Generally, realizing that every deal is a snowflake, if your score is in the 650 range most banks start to get uncomfortable, and it doesn’t take a score much below that to lead to a no on your loan request.  There may be certain mitigating factors which could overcome a lower than normally acceptable credit score, but not very often.

Also, some of the many online non-bank lenders that have come into the marketplace because of banks’ reluctance to make small business loans look at a borrower’s credit score.  Those that do may be more flexible, but a bad credit score is still usually a killer.  Many times in SCORE when either startups or existing small businesses are looking for help finding a loan and they are asked what their credit score is, they don’t know.  That is simply bad management. 

Somewhere out there someone probably has your Social Security number one digit off.   And also in this age of hackers stealing data from credit unions, something might appear on your credit report that had nothing to do with you and you never knew it.  You are entitled to three free credit reports, but they are not in great detail.  Order yourself a full credit report from one of the major reporting agencies.  They cost very little, and given what it could save you, it’s money well-spent.  It could mean the difference between a yes and a no.

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Econ 101
October 26th, 2018

A few of you may have had to take Economics 101 in college.  A few of you might have been able to stay awake for the whole class.  When the good times are rolling it doesn’t seem to be a real big deal to catch a couple of winks.  The good times are still going to be rolling when you wake up.  Supply and demand –  Economics 101 at its most basic.  There is lots of demand because we have money in our pockets, and lots of supply to fill that demand.  Business is good.

The stock market just keeps going up, setting new records.  Until it hits a slight “correction.” Jobs are plentiful, so much in some cases that there aren’t enough people to fill them putting a damper on opportunities to continue to grow.  In terms of unfulfilled demand, just look at the long-haul trucking industry.  I have seen figures as high as 50,000 jobs going begging in that industry alone.  Wages are continuing to be forced up to attract new drivers.  But the shortages still exist.  House prices, the major source of most people’s personal wealth are high.  Consumer sentiment is high.  The Small Business Optimism Index continues to set new records.

“ We have six exits from our aircraft….  In case of a sudden decrease in cabin pressure oxygen masks will drop down from the overhead bin.  Place the mask….”  It may be time to at least pull out the seat card in front of you to familiarize yourself with how to get out of this plane that just keeps flying higher and higher.

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4 + 4 = 2
October 23rd, 2018

Higher math courtesy of the Federal Reserve.  By the end of 2018 it is expected that the Federal Reserve will have raised rates by a full point, and another four rate hikes are expected for 2019.  Recently Boston Federal Reserve President Eric Rosengren hinted that because the economy is still very strong that interest rates might need to become a “little more restrictive.”  Fed speak for don’t assume anything.

What might that mean for your business?  Does it mean anything?  How much do you use your credit card for your business?  By the end of next year the rate on your card is likely to be at least 2% higher than a year ago.  If nothing else, rising interest rates may increase your cost of doing business, putting upward pressure on your prices.  Higher prices, lower sales maybe.  Other things that you buy may become more expensive for any number of reasons.  If you can’t match increasing costs with your prices it could lead to lower profits.

It may have no effect at all, but by any chance are any of your customers or suppliers likely to be affected by the now-you-see-them-now-you-don’t tariffs?  Probably not, and because you know who your target customers are and why they buy from you, you figure that you have got any tariff-related issues under control.  But, something that a supplier might have to buy to make one of the products you buy may be affected by tariffs which could possibly raise your costs.  And because that landscape keeps changing, stay vigilant.  And the tariff noises are just a big macro issue that can affect a lot of things.  But there are a lot of little things happening here and there that indicate some hesitancy in the continued growth of the economy.

And one more thing.  And again, interest rates are going up.  Bank lending is going to tighten.  The economy is booming, but behind the curtain costs are inexorably rising thanks to the Fed.

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