What is Spreadable?

If you haven’t heard about Spreadable, it’s a new tell a friend tool from our parent company, Grasshopper Group. But it actually came to be right here on Grasshopper.com.

For those of you who have ever seen or used the Refer an Entrepreneur button on our site, that’s Spreadable!

A few years ago, we wanted a better way for our customers to refer our product. We tried a couple of different tools but nothing really fit our needs, so we built our own. The result?

* A tool that in one year gave us a 20% conversion rate and generated over $100,000 in additional word of mouth revenue! *

And that’s how Spreadable was born. It’s a simple product that integrates with both email and social tools and it’s easy to use. Plus, you can track the results!

It comes with back-end analytics and conversion tracking so you know who’s referring you and what’s happening with those referrals.

I don’t know what you’re currently using for referrals but it’s probably not as awesome as Spreadable. We highly suggest you go check it out!

Over at Grasshopper Group there’s a great post on how to stick to your 2011 resolution of starting a business. We included several tips including “Think big”, “Think small”, “Keep your resolution every day” and finally, “Hold yourself accountable”.

One of the tips under “hold yourself accountable” is to actually do something for your business. Doing something or even buying something tangible can help motivate you and make the process more real.

Below we’ve outlined a few low cost actions that can help you get your business going this year:

1. Register a Business Name

You’ve probably thought about what you would call your business a million times. Now it’s time to take action and actually register it. You want to make sure it’s available and also protect it. Here are a couple of resources to help you:

• Registering Your Business Name
• Steps to Registering a Business
• Register Your Business

2. Create a Logo

A website can be an expensive way to start, so let’s begin with a logo. You may not be a designer but there are a number of freelancers out there who can help and aren’t terribly expensive. Check out 99designs.com, Logoworks, Logo Design Guru or ask around, you may know someone.

3. Purchase a Domain Name

A good domain name is imperative. It will go in your emails, on your business cards and more importantly, its how potential customers will find you. A good domain name should be short, describe your business, be easy to remember and a .com. SEOMoz has a great post, “12 Rules for Choosing the Right Domain Name” you can check out.

As for domain providers, there are a number out there including the most popular GoDaddy, Network Solutions & Yahoo.

4. Get a Phone Number

Starting out you will most likely use your cell phone the majority of the time. But let’s be honest, your current voicemail message probably doesn’t really sound all that professional for a business. Plus, do you really want to put your cell phone number on all of your business materials? No.

A dedicated business phone number is a great way to go and it’s cheap. You can lock down a toll free or local number for $9.95 a month, which includes call forwarding, voicemail boxes, custom greetings and more. You can still get your calls on your cell phone but no one else has to know that.

5. Print Business Cards

You don’t have to print a ton of them but why not get a few? It’ll feel good to see your name and company on a real business card and can act as a motivator. You can get them fairly cheap from a company like VistaPrint or PrintingforLess.

Make it happen

This year, don’t just say you are going to do it, go do it. Starting a business is a big endeavor so focus on doing one thing at a time. Make 2011 the year you stick to your resolution!

Starting a new business can be a turbulent undertaking. For one thing, there are no guarantees of success. Businesses fail every single day, and plenty of entrepreneurs come away with nothing to show for months or years of hard-fought effort. The idea of sacrificing a steady salary for an uncertain, hoped-for payday also tends to provoke anxiety.

While some are undeterred by these obstacles, others opt to play it safe and scrap their business plans altogether. Below are six of the most prevailing reasons why people are afraid to start businesses (and whether they make sense.)

1. The Economy

Some of the most common fears about starting businesses relate to how “the economy” is doing. If the economy is in a lull, many would be entrepreneurs assume that now must necessarily be the wrong time to get started. This belief is reinforced by nay-saying politicians and journalists who exaggerate even the very worst economic news.

Remember, though, that there is no single entity called “the economy.” What is loosely referred to as the economy is really just the vast, interconnected web of buyers and sellers accommodating each other through the market and price system. Moreover, there are two sides to every transaction. While some sectors of the economy may be hurting (such as finance and housing today), those on the other side of the affected transaction (like foreclosure specialists and storage facilities) could be thriving.

2. Uncertainty

Another fear that stops entrepreneurs from getting started is the uncertainty inherent in owning a business. Unlike a salaried job, business ownership provides no immediate or guaranteed pay. Income, if any, is commensurate with the company’s sales or profits. If you have grown accustomed to being paid on a regular schedule regardless of outcome, trading that in for the uncertainty of business ownership can feel like a leap of faith. It is entirely legitimate to wonder if your business will be capable of providing for you or your family.

That said, there is a flip side to the uncertainty. If and when your business does produce an income, no boss or employer can take it away. Never again will you have to plead for a raise or demonstrate why you “deserve” more. In business, your income is entirely determined by what you produce and/or sell.

3. Indecision

Others have reservations because they are undecided about what type of business to start. More often than not, these are people who know they want to be self-employed, but not in what capacity. This, too, can be a legitimate fear to have. If you currently work in a steady career, it is not enough to simply “go into business.” In order to credibly go off on your own, you must be confident about what kind of business you will open. You must also have the skills and expertise to succeed in that business.

Current or previous jobs are a good reference point. If you currently work for an accounting firm, starting your own is perfectly reasonable. Deciding to abruptly change course and buy an Alaskan crab fishing boat might warrant more scrutiny.

4. Debt

Debt can constitute a serious obstacle to entrepreneurship. If you are saddled with student loans or credit card bills, it will be difficult to obtain any start-up financing you might need. In severe instances (such as if your wages are being garnished), any income your business produces will go directly to your creditors anyway.

Needless to say, concern about your pre-existing debt is a completely defensible reason to fear starting a business. Rather than trying to juggle both at once, focus squarely on repaying all of your debts first. Once your financial slate is wiped clean, you can move on to business ownership with a clear mind.

5. Family Obligations

Financial concerns are not the only reason people fear starting businesses. The early years of a new company can be incredibly taxing, and some fear having little time to spend with their families. After all, everyone gets the same 24 hours in a day. There is only so much of yourself to go around, and if you’re putting in ten or twelve hour days at work, there is no way to also spend that time at home. (Unless you have a home office, that is.)

It may truthfully be that family time is a deal-breaker for you. On the other hand, don’t be too quick to relinquish your ambitions. Discuss with your spouse whether arrangements or sacrifices can be made for the early days of your company.

6. No Benefits

Finally, other would-be entrepreneurs worry about what losing benefits, such as employer-provided health insurance or 401(k) contributions, will do to their overall finances. This, too, is a serious concern worth addressing. Perhaps you or a family member has a long-standing health condition. In such a scenario, a sudden lack of coverage could prove devastating.

Not every situation is so dire, however. Retirement accounts (including IRAs, Solo 401(k)s and self-employed pensions) can be opened and funded on your own without the help of any employer. It may also be possible to form a pool with other entrepreneurs and buy health insurance at lower group rates, which is essentially how large employers buy it.

The way to know for sure is to determine what, if anything, such plans do for entrepreneurs. John T. Reed, a Harvard MBA, points out that what actually needs stimulating is business profits, which supply the money for defense, Social Security payments, employee salaries/wages, business taxes and ultimately, the stimulus itself.

What Was Stimulated

The question of whether the stimulus is working, therefore, is really a question of whether it helps entrepreneurs be more profitable. Some aspects of the stimulus do appear to help. Roughly $15 billion in stimulus money was devoted to letting businesses use current losses to offset profits from the previous five years (instead of the previous limit of two years), which made such companies eligible for tax refunds.

Another $11 billion was allocated to help government contractors by no longer withholding 3% of contractor payments to ensure tax compliance. Additionally, $5 billion was spent allowing businesses to speed up depreciation on equipment purchases. Unfortunately, this and other tax relief to businesses totaled just $51 billion out of the entire $787 billion stimulus.

The rest of the bill, as the Wall Street Journal breaks down in chart form, is largely about funding public works projects and government-run social programs. $400 million, for instance, was provided to extend and increase state unemployment payments. Over $5 billion was set aside to modernize and repair federal office buildings. A whopping $29 billion was allocated to highway improvements, while another $26 billion went to extend jobless benefits for up to 33 weeks.

Laid-off workers in the aggregate received a $24 billion, 65% subsidy to continue paying premiums on their old employer’s health insurance plans for nine months. In total, roughly $736 billion of the $787 billion stimulus packages went to social programs, infrastructure improvements and tax relief for low and middle-income workers.

Stimulus or Sedative

Clearly, the bulk of the stimulus bill created incentives for activities other than profit making. Among the specific things rewarded in greater amounts were “core investments” (including over $1 billion to failed government-run enterprise Amtrak), miscellaneous energy projects, education and healthcare.

Regardless of the merits or demerits of these things individually, they are not about entrepreneurs or helping them in any demonstrable way. If it is kept in mind that business profits are the true source of prosperity, it seems that the stimulus has been downright antagonistic to entrepreneurship. Several prominent economists (including Edward C. Prescott, Robert Lucas, Jr. and Vernon L. Smith) said as much before the bill was passed. The Congressional Budget Office likewise concluded that for whatever short-term gains the stimulus produces, there would be a net decrease in GDP by 2019.

A Real Stimulus For Entrepreneurs

A stimulus plan that truly helped entrepreneurs prosper would contain vastly different provisions. Alex Tabarrok of MarginalRevolution.com writes that a real stimulus would be concerned first and foremost with boosting incentives to produce. To that end, Tabarrok proposes that the IRS cut the marginal tax rates of every citizen, not just low and middle-income earners. That would increase the ability of consumers to spend again and would not require any additional government debt.

Another deficit-friendly way to help entrepreneurs would be to reduce or eliminate corporate income taxes. According to the Tax Foundation, the United States taxes corporations at higher rates than any other country, including France and Germany. In an article on what a true stimulus plan would accomplish, John T. Reed proposes (among other things) the following:

• Abolishing the corporate income tax
• Ending all wage and price controls
• Eliminating all tariffs and restrictions on imports
• Limiting the Internal Revenue Code to ten pages in length
• Enacting a “producer-recruiting program” that biases U.S. immigration toward healthy, talented and ambitious foreigners while simultaneously encouraging a “parasite drain” away from the U.S.
• Establishing a Constitutional limit on what percentage of an individual’s income can be taxed

There are also ways for the government to actively help businesses, rather than simply leaving them alone. In The Gridlock Economy, Michael Heller explains that entrepreneurs are routinely thwarted by ownership gridlock, which delays progress on everything from developing blockbuster drugs to ending airport congestion to using more than just 10% of our broadcasting spectrum. Through smart policy, government could encourage the creation of patent pools and other mediums that make it easier for entrepreneurs to innovate.

The Opposite of the Stimulus

Regrettably, while all of these things would be of immense help to businesses, none of them are the focus of this or any foreseeable stimulus bill. As many have pointed out, the various government spending-based activities called for in the stimulus will ultimately come at the expense of entrepreneurs. To the extent the stimulus is funded by current taxes, the nation’s businesses are worse off by that amount. To the extent the stimulus is financed by debt, the same will be true albeit later rather than sooner (as reflected in the predicted net reduction in GDP by 2019.)

Taking all into account, the stimulus package has not only failed to help entrepreneurs, but also arguably made their jobs more difficult. A true stimulus would create lasting incentives to produce and hire rather than just temporary aid to those suffering hardships.

For all the pain and hardships recessions cause, they also create unique opportunities for savvy entrepreneurs in general and certain types of businesses in particular. Today, Grasshopper explores why recessions can be an ideal time to get a business off the ground.

Lower Pressure & Expectations

A common barrier to starting a business is fear of failure. Entrepreneurs are often chastised by friends or family to pursue something more realistic (like a “guaranteed” job or career) than the company they dream of starting. Those who ignore the criticism and start one anyway expose themselves to great scrutiny. And this is why, in one respect, a recession is a perfect time to strike out on your own.

When the economy is booming (think back to the mid-late 1990′s or much of the 1980′s), success is the norm. If you announce intentions of shunning a traditional career for the entrepreneurial lifestyle in such a climate, there will be even more wrath from doubters if you falter. Recessions, on the other hand, are by definition barren of very many “sure thing” career opportunities. It’s tough to fault someone for starting a business when there is no easy job to fall back on.

Furthermore, it is less surprising if you fail because after all, “the economy” is down anyway. Put another way, recessions can actually deflate the intense bubble of pressure and expectations entrepreneurs find themselves in during prosperous times.

“The Economy” is Not Down

Marketing instructor Ken McCarthy once sent an e-mail to his subscribers called “the economy doesn’t exist.” His main point was, as he explains:

“There is no such thing as “the economy.” There’s only your market and your customers, and the whole game of entrepreneurship – the whole game – is adapting successfully to circumstances whatever they may be.”

While it is somewhat oversimplified to say that there is no such thing as the economy, entrepreneurs can learn an extremely valuable lesson from this. The economy is not a a single entity that marches in one direction and drags everyone with it at equal speed. Rather, “the economy” is simply a broad, catch-all term describing the interactions between innumerable people, businesses, industries, markets, products and services. People in different sectors of the economy, consequently, face entirely different circumstances, threats and opportunities. Recessions do not affect all of these people in equal proportion, and in some cases, it barely affects them in any noticeable way at all.

And just like there is no single entity called “the economy”, there is also no single activity called “business.” BusinessPundit.com, for example, refutes the popular statistic of there being a given percentage of “small businesses” that fail. As it turns out, “small business” is another vague phrase which includes “such wholly different and unrelated fields as restaurant operation, self-publishing, plumbing and web design.” Because of the unique market forces and success-determining factors involved in different types of businesses, BusinessPundit concludes, “it means practically nothing to proclaim that “small businesses”, categorically, have a set failure rate that you specifically should be swayed by.”

Counter-Cyclical Industries

Thus far, our discussion has been limited to how businesses can persevere in spite of the recession. But it may surprise you to know that there are entire industries (called counter-cyclical industries) that prosper because of the recession. Which industries these are largely depend on why the recession is happening and what its fallout has produced. The current recession offers several examples. We know that the fallout of the housing bust has been disastrous for over-leveraged home owners, much of the financial sector and certain U.S. automakers.

Remember, though, that there are always two sides to every transaction. While the above parties have struggled, others have feasted, including bank foreclosure departments, foreclosure lawyers, auctioneers, and asset managers of foreclosed properties. Another example of a counter-cyclical industry is personal storage, because layoffs often induce people to move to less expensive areas of the country. In fact, certain segments of the financial sector such as retirement planning often see a leap in business during recessions when people place a higher priority on securing their future livelihoods. For these and other counter-cyclical businesses, recessions are anything but disastrous. Investigate whether the business you are starting does or could have a counter-cyclical aspect that enables you to profit from a downtrodden economy.

It’s Been Done

Perhaps the most convincing case for starting a business during a recession are the many household-name companies that did it before you. Microsoft is the biggest example, but it is hardly the only example. A cursory Google search returns dozens of successful businesses that were founded during tough economic times. CNN explains that Proctor & Gamble, for instance, was founded during The Panic of 1837. Amidst devastating bank failures and what CNN calls “the greatest economic decline since the birth of the country”, P&G adapted to its circumstances and prospered by supplying the Union Army during the American Civil War. Today, Proctor & Gamble sells some of the most recognized products in the world, including brands like Duracell and Pringles. Burger King, IHOP, FedEx, CNN, MTV, Trader Joes, Sports Illustrated, General Electric, and even Wikipedia were all started during various recessions over the last thirty years.

You can be sure that each of these founders were doubted, ridiculed and scorned to one extent or another. But many years later, there they are: not only still around, but in most cases, doing better than anyone could have imagined in their wildest dreams at the time of their founding. The point is not necessarily that you will succeed to the extent these businesses did, but that recessions did not stop those businesses from succeeding and need not stop yours.

The Takeaway

In short, recessions are often the ideal time to get your company into motion. The key is to mostly ignore what politicians, journalists and non-businesspeople say about you or your goals. Train yourself to stop thinking in vague, sweeping phrases like “the economy” and “business.” Instead, resolve to focus on the fundamentals of succeeding in your particular kind of business.