Look what Square did!

Remember when we discussed the financial opportunities of using Square as a tool for getting quick payments? Well according to INC.com the company Square has cut the 15 cent processing fee to their transactions. I think this will be great, since much of our class has a business model that would be streamlined by processing credit card payments. This solution is shaping up to be a great tool for small business owners and entrepreneurs in general.

Getting the Money (Photo Credit-http://smallbiztrends.com/2010/02/how-to-get-paid-like-michael-dell.html)

One of the greatest nightmares faced by small business owners like myself has been the dreaded fight to get paid for work done. There are many industries that face this challenge, construction contracting is perhaps one of the biggest realms where getting paid quickly is a nothing but a pipe dream. With technology like Square and their competitors, there is a cheap payment processor can cut the dreams and become a larger part of the business. The news that Square cut the fee got me thinking how to make the capitol flow: What a great way to get and process small investments.

After our class with Pavan Muzumdar, the idea of using revenue for funding began to percolate in my mind. Since we have been polishing and refining our idea pitches at a fevered rate, I found myself lacking the targeted goal for refining my pitch. Then Square! Here is the goal, create the pitch with the express purpose of getting the casual friend, or the family member to buy an “option” investment. Granted its farfetched, but do you think you can transfer the passion of your idea into a micro investment opportunity? I’m not talking about hundreds of dollars, just small stuff. If they really want to invest more they can. The premise seems crazy, but what if your cause or idea is worth it? Maybe it’s the big litmus test for the soundness of your concept? Remember the rumor about a guy who funded his education by asking for one penny at a time, crazy but it worked.

I am so excited that square is refining their model closer to their objectives mentioned in the article. I’m excited because the light at the end of the tunnel is getting brighter, it might be a ‘square’ light but as an entrepreneur looking for bootstrap funding it has the potential to make the next step a reality.

Working for Free

As an entrepreneur, you will receive many, many opportunities to work for free. You may feel compelled to take all the unpaid work you can get when you’re first starting out — after all, it can be used “for your portfolio,” right? What’s the harm?

Potentially: your business will not get off the ground as quickly as you’d like. The more you work for free, the harder it will become to charge people any rate at all, let alone a fair rate. This is particularly true for entrepreneurs who are doing labor-intensive work like graphic design.

There is a great flowchart called, appropriately, “Should I Work for Free?” at (also appropriately) shouldiworkforfree.com. It boils down to this: if you can get (real) karma points, or if it’s your mom’s garage sale flyer, go ahead and consider it. In all other instances: say “no,” or at least think it through really carefully.

There have been entrepreneurs burned by starting out at a too-low price and having to face making an increase. Inc magazine recently featured a case study on Chargify, a company that helps businesses handle online billing. Chargify promised its initial customers free service, charging a fee only once a business exceeded 50 customers using the service. Chargify assumed its clients would grow along with the company, but after one year saw only 1% paying anything. The rest of their customers were hobby entrepreneurs and others who simply didn’t bill more than 50 customers per month. When Chargify changed its pay model to require all users to pay, an uproar ensued.

That’s not to say you can’t be creative about how you do charge for your work. NPR today featured a musician who, among other things, has earned $300 in one week composing custom theme songs at $20 a pop.

Studentpreneurs: Have you encountered a work-for-free request? How did you handle it and how did it work out? Established entrepreneurs: what is your sage advice about working for free? Are there other (perhaps innovative) ways to get the word out without giving a handout?

-Dr Evans

Is the Blue Ocean Turning Red?

 

I just finished reading an article on INC.com called “Small Circus Big Dreams”:

http://www.inc.com/articles/201102/entrepreneurship-in-the-small-circus.html

I was intrigued to see that there is a slew of competitors coming into the market place (Just check the sidebar in the article for ‘circus’) in the great ocean of Cirque de Soleil. I began to ask a two questions about the world of Blue Ocean Strategy.

First, do they (Cirque) still float in a blue ocean or has it begun to change color; how long of a timeline does an ideas blue ocean last? They obviously have defined the market place and are the industry leaders, however there are markets that they left untouched. Was this a wise thing to do? Or since they have become so big ($$$$$$) have they have lost some of their edge?

My own answer is that they have succeeded in defining their world of entertainment so well that their competitor will always work in the shadow of the mighty cirque. They still float in a blue ocean because they have implemented their strategy canvas to the highest degree.

Second, after reviewing the site of Aerial Angles, they got their investors to see the potential of their idea by saying we are different from Cirque because we will tell our audiences the secrets as well as the story. Did they create their own blue ocean by just changing a few things like venue and size? Or since they use the individual artist to make their show unique have they reinvigorated the idea of stars? Is this unique or a copy?

My own answer is that it’s both. They are unique because they have resurrected the very thing that was killing Barnum and Bailey & Ringling Bros. by bringing a troupe of unique individuals. Which means that they are not competing on the same plane as Cirque and although they are in the shadow, they have distinguished themselves by working in smaller markets.  In my mind they still are also copying because they are following the market path that was forged by Cirque and not changing the market. Is this last point debatable yes.

Please give me your thoughts.