Small Business | money news blog

26 09 2008

Cuil’s $200 million attack on Google

Posted by: in Small Business

Filed under: Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Small business

For the most part, I’ve been an avid user of Google (NASDAQ: GOOG) since it launched ten years ago. It’s nearly like a natural reflex for me.

I’m not alone. In fact, this partially explains why mega players such as Yahoo! (NASFDAQ: YHOO) and Microsoft (NASDAQ: MSFT) can’t seem to make any headway.

So, that’s why it was notable when a new search engine hit the internet: Cuil.

The hook? Well, there are more pages indexed. And, the interface is flashier. In other words, it’s the anti-Google approach. Interestingly enough, the two founders, Anna Patterson and Russell Power, are former Google employees.

However, when Cuil launched, the messaging was fairly striking; that’s, the mission was to be the Google-killer.

In the end, Cuil got a harsh lesson. For users — who have many choices — there must be compelling reasons to make a change. Simply put, Cuil fell well short of expectations. For example, a good number of search queries were off-the-mark. As a result, the media slammed Cuil.

According to Techcrunch, Cuil’s traffic has plunged since the July launch. It also looks like the company’s vice president of product, Louis Monier, has resigned his post (he is a guru of search and a former Google employee).

Something else: Cuil has raised two rounds of venture capital (the latest round was for $25 million). And the valuation? A whopping $200 million (this is according to the analytical work of PE Data Center). In other words, investors will probably need to wait quite a while to get a return — if ever.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website.

26 09 2008

Entrepreneur’s Journal: Small businesses feel the squeeze

Posted by: in Small Business

Filed under: Microsoft (MSFT), Oracle Corp (ORCL), Lehman Br Holdings (LEH), Small business

I talk to quite a few small business owners. And just a year ago, things looked pretty good.

But with the sudden credit crunch — and slowing economy — things have certainly turned for the worst. Unfortunately, I know a variety of people who have had to close down their businesses. Hey, even mega companies, like Lehman Brothers (NYSE: LEH), are having a hard time staying afloat.

Well, this is the topic in a piece in the New York Times. Basically, it looks like many small business owners are looking for alternatives, such as full-time jobs (if they can find them) or going back to school.

Actually, this should be no surprise. Running a small business is extremely difficult and time-consuming. And, because of the lower margins, it doesn’t take much for a profit to become a loss.

Moreover, some of the biggest problems are in ailing sectors, like housing, construction, finance, travel, and so on. Something else: rising energy and commodities prices are making things even worse.

No doubt, things look pretty glum. But keep in mind that some of the greatest businesses emerge from such times. After all, just look at Microsoft (NASDAQ: MSFT) and Oracle (NASDAQ: ORCL). These companies started during the mid 1970s, when the U.S. economy was mired in stagflation.

In other words, if you have a great idea for a business — and want to take some risks — then give it a shot.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the internet Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website.

26 09 2008

Emdeon looks for a healthy IPO

Posted by: in Small Business

Filed under: Private equity, Morgan Stanley (MS), Small business

Despite various reforms, health care still represents a growing part of the U.S. economy — consuming about 16% or $2.1 trillion of GDP. In fact, the growth rate is expected to be about 6.7% per year until 2017 (amounting to $4.3 trillion or 20% of GDP).

A huge component of these expenditures is administration (representing about $360 billion or so). And, this is what Emdeon is focused on. The company has recently filed to go public.

Basically, Emdeon provides revenue and payment cycle management solutions. This involves connecting payers, providers and patients. Some of the abilities include pre-care patient eligibility and benefits verification, claims management and adjudication, payment distribution, payment posting and denial management, and patient billing and payment collection.

All in all, Emdeon has built a solid platform. Last year, revenues came to $808.5 million, with adjusted EBITDA of $182.8 million (90% to 95% of revenues are recurring in nature). The company’s system processed 3.7 billion transactions last year.

Emdeon is backed by two major private equity firms: General Atlantic and Hellman & Friedman LLC. And the lead underwriter is Morgan Stanley (NYSE: MS).

You can locate the prospectus at the SEC website.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He’s also the founder of BizEquity, a valuation website.

Continue reading Entrepreneur’s Journal: Do you really need a business plan?

26 09 2008

Entrepreneur’s Journal: Do you really need a business plan?

Posted by: in Small Business

Filed under: Books, Entrepreneurs, Small business

I read many business plans. And, unfortunately, there are many that are lackluster. After all, an entrepreneur doesn’t want to get bogged down in process.

Then again, there are several examples of successful businesses that didn’t have formal business plans. For example, Compaq Personal was based on the scribblings on a napkin.

And yes, I concur you don’t need a business plan.

However, the fact remains that a successful business still needs effective planning (former President Dwight Eisenhower once said: “the plan is useless, but planning is essential”).

Well, the good news is that Tim Berry — who is the founder of Palo Alto Software (the biggest provider of business plan software) — has recently published a book on the topic. The title is spot-on: The Plan-As-You-Go Business Plan.

Of course, this can be a broad topic. Hey, don’t many business books talk about planning?

This is true. But Tim focuses on the needs of small businesses; that’s, those key things that move the needle.

26 09 2008

Brand.net gets a $10 million pickup

Posted by: in Small Business

Filed under: Google (GOOG), Yahoo! (YHOO), Next large thing, Small business

This week, I had a opportunity to talk to Elizabeth Blair. She joined Yahoo! (NASDAQ: YHOO) in 1998 and then became the company’s vice president of business operations for the global operating group. Yes, she got a great education in the on the internet marketing space. Interestingly enough, she also has a law degree from Harvard and even practiced M&A and securities law.

Well, Blair has leveraged her experience into an upstart venture: Brand.net. The company recently raised a $10 million Series B round. The investors include: Norwest Venture Partners and InterWest Partners.

Essentially, Brand.net is an on the web advertising network focusing on major customers. The platform is more than just some technology, though, as Brand.net has assembled a top-notch team of brand experts.

Of course, as seen with companies like Google (NASDAQ: GOOG), the search-based ad business has become a big profit machine. But this is only one part of the advertising game. Of course, branding is a big market in the ad market, so why can’t it be the same for the online world?

Certain issues still need to be worked out, such as dealing with user-generated content or finding ways to measure performance. No doubt, these are tough problems. But , if companies like Brand.net can find some creative solutions, it should open up another large growth opportunity in the on the internet world.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Continue reading Entrepreneur’s Journal: Jumpstarting things by purchasing an existing franchise

26 09 2008

Entrepreneur’s Journal: Jumpstarting things by purchasing an existing franchise

Posted by: in Small Business

Filed under: Small business

A franchise can be a great way to start your entry into self-employment — and strong income. Yet, there are still risks — such as with site locations and hiring employees — and lots of upfront costs.

But there’s another approach; that’s, purchasing an existing franchise (which is known as a “resale”). What are some things to take into account? Well, let’s take a look:

Track Record: With some due diligence, you can determine whether a franchise is successful or not. Besides getting the financials, you can speak to customers as well as vendors.

26 09 2008

ZocDoc — new service to help find and book a physician

Posted by: in Small Business

Filed under: Next large thing, Entrepreneurs, Small business

When Cyrus Massoumi ruptured his eardrum (during a flight), he tried to find a qualified ENT. Unfortunately, the process took a grueling four days.

Interestingly enough, this experience was the spark for an interesting venture: ZocDoc. In fact, the company recently announced a $3 million round of funding from Khosla Ventures.

True, the on the internet healthcare space is fairly crowded with major players like Google (NASDAQ: GOOG) and Microsoft (NASDAQ: MSFT). However, while they are focused on medical records, ZocDoc’s mission is on something that often gets neglected - searching and scheduling of physicians. With ZocDoc, patients can search the database on criteria such as specialty, location and insurance qualifications (which can be critical). All in all, it’s an interesting idea with a big market potential.

As of now, ZocDoc is only limited to Manhattan and Brooklyn. Moreover, the site has only a few specialty categories, such as dental and dermatology. But all this should change soon since the company now has some capital to move things forward.

Currently, the site has about 30,000 registered users and the growth rate is a torrid 50% per month — an indication there is a serious need for the service.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements. He also operates MergerBook.com.

Continue reading Entrepreneur’s Journal: Using an SBA loan to buy your dream business

26 09 2008

Entrepreneur’s Journal: Using an SBA loan to buy your dream business

Posted by: in Small Business

Filed under: Small business

Starting a business can take months — and can be pricey. Also, it’s tough to anticipate some of the problems you’ll run into. That’s why buying a business can be a good substitute.

So where do you get financing? One approach is to get a Small Business Administration loan.

Basically, this is like any other business loan. However, the main difference is that the loan is guaranteed up to 85% from the SBA, which is a federal program. Because of this, there are usually advantages versus conventional loans, such as:

Longer terms (10 years for the business, and 25 years if there’s real estate involved).
Lower interest rates (prime rate plus 2.25% to 2.75%)
Lower down payments (20% to 30% or so). In fact, the down payment also includes seller financing.

OK, what does it take to get such a loan? Let’s take a look.

26 09 2008

John Nichols showed the power of finance

Posted by: in Small Business

Filed under: Entrepreneurs, Small business

John W. Nichols, who is the co-founder of Devon Energy (NYSE: DVN), died recently. He was 93.

As should be no surprise, his life provides many lessons for budding entrepreneurs. Interestingly enough, his innovations were not necessarily about creating new products. Instead, he was an innovator of finance.

Nichols started his career as an accountant and audited the financials for oil companies. Leveraging this experience, he started an oil company in 1941. With sky-high income taxes, Nichols structured innovative financial automobiles to minimize the bite from Uncle Sam. For example, he was the first to register a public oil & gas drilling fund with the Securities and Exchange Commission.

And it was a hit — he attracted massive sums of capital from wealthy individuals (even Hollywood stars like Barbara Stanwick).

No doubt, Nichols biggest feat was the creation of Devon. He formed the venture in 1971 with the help of his son, a lawyer.

The financial innovation didn’t stop as Nichols developed the so-called royalty fund, which became a standard in the oil industry.

It was also a massive spur for growth. After all, Devon is today a $43 billion company.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the internet Guide to Decoding Financial Statements. He also operates MergerBook.com.

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