Office Makeover: Change of Space

With a little help from the experts, this business owner stepped up to the challenge of overhauling his company's shoddy off ice-space design.

It's 9:30 a.m., and you need another cup of coffee. On your way to the break room, you stumble over computer cables and weave around employees who are conversing in the hallways. Fifteen minutes have passed by the time you get back to your office. By midafternoon, you have a headache and one heck of a backache. For most of us, it's all in a day's work.

When it comes down to it, the modern office setup is a pain. Today's office environments aren't keeping up with the nature of work today, where employees go from working solo to working on collaborative projects. "The idea that we can define one space for an individual that will accommodate all those different types of work is somewhat flawed," says John Michael, president and COO of Ivan Allen Workspace LLC, an Atlanta furniture and design firm that works with companies large and small. "We need a range of settings for people."

In a 2001 study, the American Society of Interior Designers found that 57 percent of the 382 office employees it surveyed were dissatisfied with the layout of their offices, saying it negatively impacts communication, access, comfort and efficiency. The layout of an office should aid employees instead of hindering them, says Rita Carson Guest, founder of Atlanta-based interior design firm Carson Guest Inc.: "People spend so much time at work, you want to make them as comfortable as possible."

Seeing the Light

Mark Metz is co-founder and CEO of Optimus Solutions LLC, a 6-year-old technology solutions provider in Norcross, Georgia, with nearly 200 employees. The company has grown to occupy two buildings totaling 27,000 square feet. Now for the twist: The two buildings are located a quarter-mile apart in a suburban Atlanta office park. The five-minute walk between buildings has become a drag on productivity. "Our current space is not laid out well for our business," says Metz, 41. "It's certainly not easy to knock on somebody's office or step into their cubicle." Other aspects of the company's current office setup bug him, too. There isn't enough natural light. The guest reception area isn't very welcoming. Managers' offices are too far away from employees, tucked away against the wall.

Recently, Metz decided to sink $1 million into a three-month project that will bring all the company's employees together under the same roof in a nearby 40,000- square-foot building. The goal is to have a space where employees are more happy and productive, Metz says.

The new building will have wraparound windows so every employee gets natural light and a beautiful view of the woods outside. And instead of traditional fluorescent ceiling fixtures, employees will find ambient lighting, where light is bounced up against the ceiling and back down around the workstation, reducing glare and reflections on computer screens and making it easier to work longer without eyestrain and headaches. With ambient lighting, "you never see directly into any light source. They're all being bounced to you," says Frank Farrington, principal of the Atlanta-based Farrington Design Group, which was brought in as part of Optimus Solution's design-build team. "It's soft and comfortable."

Managers' offices will be in the middle of the office, surrounded by employee workstations. Everyone will be just feet away from each other-an important design element to Metz. "Our company is very much a teamwork type of environment where salespeople, consultants and technical people need to work together to handle a customer's problem," he says. "We want to help facilitate that. Having a face-to-face conversation is much more valuable."

New workstations will be installed to increase teamwork and communication. Smaller, efficient workstations and ergonomic chairs provided by Ivan Allen Workspace will create more efficient use of space and storage. Cubicle walls in the new office will be reduced to a maximum height of 54 inches, tall enough to offer a bit of privacy and cut down on peripheral distractions, but short enough that workers don't feel isolated. Lowering the cubicle height will also improve air circulation. Cubicles will be arranged in "neighborhoods" of six workstations. Says Farrington, "The goal is that they'll be operating much more efficiently."

Making an Impression

Metz wants a design that's more open, flexible and user-friendly. Small lounges where employees can stop for a chat will run the course of the building. Understated tones--creams, taupes, light greens and golds--will provide a calming backdrop. "We'll allow the [employees] to provide the color and the action in the space," Farrington says. Other innovative elements include carpet laid in small squares, so torn or stained pieces can be replaced easily, and wireless networking that will cut the number of cables running along the floor.

Metz is excited about the plan for a bigger reception area with plasma-TV displays and miniworkstations so visitors can work while they wait. Conference rooms will be located near the reception area for vendor and client meetings. Having the conference rooms near the reception area means visitors won't have to walk through the middle of the office, disturbing busy employees. "We'd like to have an area that customers and vendors are more impressed with because the office looks better," Metz says. "And it's more efficient."

In the end, Metz hopes the new space will lead to better communication and teamwork, and provide a boost to recruiting and retention. "I think it's going to be great," he says. "It's going to foster more teamwork. Our employees are going to be happier, because it's going to be an area where they can get their job done [more easily]."

Update: Looking Good!

Optimus Solutions LLC, an IT solutions provider in Norcross, Georgia, moved into its new digs at the end of January. "We're very happy with the outcome," says CEO Mark Metz. "We feel we accomplished our goals with the redesign."

His favorite elements are the open floor plan and the ambient lighting. "There's not a cubicle in the building where you can't stand up and see a panoramic view through the windows," he says. "And all the [ambient] lighting will be easier on the eyes." The final design also allows the office to be reconfigured for everything from training to additional cubicles or whatever else the company has in mind. "This adds tons of flexibility for us," Metz says. "There's room to grow."

But trading spaces didn't happen without a few headaches. Metz learned that having too many minds involved in the decision-making process was a quick ticket to a quagmire. Optimus eventually designated the company's IT director to be the point person for the project, and things finally got moving. "Put one person in charge," Metz advises.

Another temptation for entrepreneurs is to create their own version of Trump Tower. Aim for functionality over flair so you get efficiency out of the space for years to come, says Metz, who bought used $200 desks that he found at a corporate liquidation sale for his company's managers, including himself. "[Some desks] still had tags on them. They hadn't been used," he says. "I got them for a fraction of the cost."

It's still too early to measure the impact on productivity, but the vibe around the office is, well, optimal. "Everyone has been thrilled. Morale is way up," Metz says. "Hopefully, [employees] will be happier and more productive."


Chris Penttila is Entrepreneur's "Staff Smarts" columnist.

Tech Makeover: Server Them Right

Like many growing businesses, The Innis Company, a career transition and management company in Dallas, doesn't have an on-site IT person. And its technology is acting up like a 2-year-old.

CEO and founder Karyl Innis decided to do something about it. If some of The Innis Company's technology woes sound all too familiar to you, it's probably because these problems are common for entrepreneurs everywhere. Before turning to our tech experts for answers, here's some background information about The Innis Company: The firm was founded in 1994 and has since expanded to include several lines of businesses and offices in Dallas, Houston and Santa Fe, New Mexico. Sixteen full-time employees and about 30 workstation computers fill out the lineup.

Besides the employees, The Innis Company's career transition clients have access to some of the business's computers. "Our business has gotten more complex," explains Innis. "That's what my problem is. All of a sudden the technology ends up looking like a patchwork quilt, and I don't want to have an on-site tech person."

Step one was identifying the company's biggest trouble spots. Innis settled on several main issues: Getting the servers in their Dallas and Houston offices to synchronize their ACT! contact management databases, and creating a technology management plan to use as a road map for the business.

Syncing Feeling

We went straight to the source for much-needed help with the ACT! synchronization issues. Innis and Paul Selby, senior ACT! product manager for Best Software, spent some time talking it over. Innis describes the problem at hand: "Our people in the Houston office, their info is never current. They're working off of old data." Innis is looking to stem the Houston workers' frustration and lost productivity. We won't go into all the nitty-gritty technical details of the discussion, but will instead look at some of the tips Selby provided.

ACT! users will be familiar with the compress and re-index function. It had been several months since The Innis Company last used it. According to Selby, "Compress and re-index is kind of like changing the oil in your car. The more often you do it, the less likely you are to have a problem with your ACT! database. I'd recommend a more regular compress and re-index of the database, once a week or so." Selby also suggested looking into ACT! for Web, which works over the Internet as a possible alternative to trying to get the two different servers to synchronize.

A final suggestion that The Innis Company found most interesting is to give VPNs a try. Essentially, this would allow them to skip the whole syncing step and have the Houston workers connect to the Dallas database through a secure Internet connection. "You might see some speed issues there that I will warn you about," says Selby.

Getting a Boost

Though The Innis Company is committed to making its current technology work, it has accepted that certain upgrades are inevitable. Chris Merrill of outsource IT services company Thrive Networks Inc. recommends upgrading their server software from the outdated and unsupported Windows NT Server to the newer Windows Server 2003. The reasons go beyond just availability of support and software patches to another possible solution to the ACT! difficulties.

"The benefit of moving to 2003 is that Microsoft has built in some remote access technologies. This is a technology that 80 percent of our customers are using," Merrill says. These terminal services would allow the Houston office workers, as well as remote workers, to connect to the master database in Dallas in a fast and secure manner. Syncing two databases would no longer be required. Any entrepreneur dealing with similar issues and still running NT should check into this.

Along the same lines, The Innis Company has added PCs as they've grown and ended up with different hardware and operating systems all on the same network. The biggest culprits are the Windows 98 machines that make it difficult to prevent inappropriate downloading. Merrill suggested replacing these older machines with newer systems. With an upgraded server and desktops, it would be easier to implement downloading controls at the server level to put a stop to Kazaa- and Napster-related incidents.

What's the Plan, Man?

For advice on creating a technology plan, we asked Rick Buddine, IT consultant and CIO of Buddine Information Technology Corp. "In terms of a general technology plan, the best thing you can do is to give yourself room to grow," says Buddine. "That means planning some flexibility. You have to do some shopping and [educate] yourself. There's no shortcut for understanding the technologies that are out there."

For help in making technology decisions, Buddine recommends checking into business forums, inquiring how other companies handled similar issues, and hiring an outside consultant who is not involved in sales. For purchasing, he suggests skipping the latest cutting-edge technology and going with proven hardware and software that's one generation back. That's a sentiment Thrive Networks also echoes.

With the advice from our experts, The Innis Company is poised to change from being reactive about technology to being proactive. Though they've had some unsatisfactory IT providers, they've just brought on board a new player, Matt Everhart of IT consulting firm Everhart Group (which has since been purchased by technology services company Ronald Walker Associates II Inc. of Colleyville, Texas), who will be working with them to implement some of the suggestions they received and build up documentation that will map out exactly what sort of networks and systems they are running. -Amanda C. Kooser

Update: Give 'Em Tech

Since speaking to our experts a few months ago, The Innis Company, a Dallas-based career transition and management company, has been busy getting its technology on track. CEO Karyl Innis went to work with Denise Shedrick, vice president of business development who's also in charge of the company's technology.

The first thing Innis and Shedrick did was formulate several strategies, including a new technology mission statement. "We are in charge of our own technology, not somebody else. We'll create a plan and hire outside help to implement our plan. We'll ask for their input, but we'll manage them to our plan," says Innis. That may sound basic, but it lets Innis and Shedrick take control of their technology rather than continuing with their old break-and-fix approach.

Concrete steps that The Innis Company has made include updating their server to Windows Server 2003 edition, looking into migrating a few machines at a time, and setting up separate servers and networks for their employees and clients. That last move is a huge boost for manageability and security. Shedrick says their hopes of using Windows 2003 terminal services to share their ACT! database didn't work out, so they instead have the Houston office connecting into Dallas via a VPN. It's slow, but it's a step in the right direction. They hope to get the terminal services up and running eventually.

"I do feel that we were able to make a whole lot of progress in a short period of time," says Innis. With a new computer upgrade plan in place and several IT contractors they can call on, the people behind The Innis Company are finally making their technology work for them.

Marketing Makeover: New and Improved

The fallout from Silicon Valley's depressed economy has certainly affected local businesses--and Innovative Installers Inc. in Fremont, California, is no exception. Founded by siblings Mirzett Evans, 43, and Glenda Heldris, 58, the company provides a variety of services related to office space and relocations, including installation services for modular office furniture, space planning and layout consultation, office moving and setups, and furniture repairs and replacements based on an ergonomic evaluation. Launched in 1992, the business banked more than $2 million in sales for 2003.

But because of economic concerns in the area, Innovative Installers has decided it needs to ramp up its marketing efforts. Though there are some signs of an uptick in the financial fate of the region, Heldris believes the service sector will be the last to rebound. It's especially frustrating because, according to Heldris, "Businesses are looking for ways to save money, and if we could show them how we could save them money, we could do well."

Innovative Installers uses a mélange of marketing methods, including a Web site, cold calls, direct mail, a brochure and Yellow Pages advertising. To date, its most successful tactics have been referrals, cold-calling and the Yellow Pages. The company's main objectives for its marketing are to achieve greater name recognition, to leverage its satisfied customers to get more clients, and, of course, to make more money. The target market for Innovative Installers' services includes midsize to large companies, schools, hospitals, city and state offices, and research facilities, as well as government contracting.

Making It Better

We assembled a top-tier board of experts to diagnose Innovative Installers' marketing missteps and make recommendations for solutions. Here's a roundup of their recommendations, based on an evaluation of the business's current marketing strategies.

  • Brochure: Innovative Installers uses a rather nondescript and homemade-looking tri-fold color brochure. The front cover shows a photo of the company's headquarters with the inexplicable headline, "We blend in . . . to stand out." This headline in no way intrigues a prospect or even indicates what Innovative Installers has to offer.

Although Innovative Installers professes to work with several large companies, its marketing materials, especially the brochure, lack the aura of a polished company. According to Marlee J. Ehrenfeld, president and creative director of MJE Marketing Services LLC in San Diego, a firm that provides advertising, PR and marketing services, the brochure doesn't project "any level of sophistication or knowledge of what big business is looking for." Ehrenfeld believes the company should completely revamp its image with a new name, logo and collateral materials. She also suggests including some "glamour shots" of successful projects. The tag line "Exceeding your expectations is our goal" is utterly generic and could be used by just about any company.

Sam Parker, co-founder of Justsell.com--a Web community for sales and marketing professionals in Richmond, Virginia--and co-author of the e-book 50 Ways & Places to Find New Business, is a bit kinder about the brochure, noting that it "attempts to address the benefits of working with Innovative Installers," includes all service offerings, and lists multiple contact methods. But Parker concurs that the tag line should be removed, and the front cover--including the headline, logo and photograph--should be completely overhauled.

  • Web site: The company's site, is clean and easy to navigate, but panel experts noted that the "Request for Quote" link is inoperable. Parker suggests that a more descriptive and easier-to-spell domain name might make good marketing sense. (It's a breeze to have several domain names pointing to one site, so Innovative Installers would not have to give up its current URL.)

Miki Dzugan, chief marketing guru for Rapport Online Inc. in St. Paul, Minnesota, a company that helps clients use the Internet as a business promotion and relationship-building medium, praises the site for its great graphic appeal and the no-frills copy. Dzugan recommends that Innovative Installers use descriptive marketing copy on its home page because it helps make the site easier to locate on the Web when matching terms are typed into search engines.

Bob Phibbs, aka "The Retail Doctor" and author of You Can Compete: Double Sales Without Discounting (Brixton Manor Publishing), notes that the site is too generic overall and could benefit from photographs showing people rather than just office environments. Phibbs disagrees with Dzugan about the site's copy--he thinks it's too formal and suggests "plain speak, please."

  • Sales letters: Innovative Installers uses sales letters for "cold" mailers to prospects. Heldris scans the business pages and sends a congratulatory letter to those noted for professional achievements. The good points of the letters are that they're short, to the point and mention well-known customers. The letters could stand some editing, though, and some rethinking about calling a cold prospect by his or her first name. Phibbs suggests describing a similar project that Innovative Installers has recently completed--to show prospects that Innovative Installers has experience with a particular type of job.
  • Public relations: Innovative Installers works with a PR firm and has had success with placing articles with publications such as the Silicon Valley/San Jose Business Journal. Alyson Dutch, CEO of Brown & Dutch Public Relations Inc., a Malibu, California, company specializing in high-profile brands and bringing entrepreneurial ideas to the mainstream, suggests that the company develop a positioning statement, which can be used throughout all its marketing efforts, including advertising, signage and PR.

Dutch also advises Innovative Installers to make a list of all trade publications, business journals, consumer newspapers, magazines, and radio and TV outlets that reach prospects. Examples of media to target include the Los Angeles Business Journal, the San Jose Mercury News and National Public Radio's Marketplace.

It's important for any PR initiative to have a trendy hook-for example, a pitch on how a badly designed office space can psychologically affect employees, or what kind of impact it can have on a company's bottom line. The return on investment of a well-executed PR campaign is compelling: Dutch's firm has recorded results of 150 to 1,500 percent ROI, which is almost impossible with paid advertising.

After meeting with our experts, Heldris and Evans couldn't wait to start implementing changes. Check out "So Far, Looks Good" for the lowdown on how Innovative Installers likes its new look and how the makeover aided sales.

Update: So Far, So Good

When we first approached Innovative Installers about allowing our panel of experts to critique its marketing plan and offer recommendations for improvement, the company fearlessly allowed us to dig around in its marketing nether regions. After evaluating the company's sales letters, brochure, Web site and corporate identity, some of our advisors were in the friendly "keep up the good work" camp, while others took a blunt "this stinks, you've gotta change it now" stance.

Sister and brother Glenda Heldris and Mirzett Evans wasted no time putting the panel's advice into action. Since getting its marketing rehabilitation prescription, Innovative Installers has hired a sales and marketing manager, redesigned its logo, updated the copy and look of its brochure, and revised its Web site. The company is also building a database of contacts for telesales and direct-mail efforts, and continues to work with a PR consultant.

Prior to the makeover, Heldris explains that the company knew it needed to make changes but was in "the mode of doing business and hadn't concentrated on what everything looked like." With the economic malaise in California, Innovative Installers admitted it needed to pay greater attention to the look and feel of its marketing. Heldris and her team are using the experts' advice to focus on the specifics of brand building and plan to "aggressively tackle the campaign in 2004."


Kimberly L. Mccall is Entrepreneur's "Sales Force" columnist.

Finance Makeover: Seeing Green

To say 2003 was a busy year for Sara Walder and Drew Golin is putting things mildly. The owners of InterSolutions Inc.--a temporary-staffing company in Washington, DC--wed in February, refinanced their Capitol Hill home two months later to buy office space for their company, depleted virtually all their savings to buy yet another house in November (converting the original home into a rental property), and expect their first child to arrive about the time this magazine hits newsstands. To top it off, they've just launched a new joint venture and pushed their existing business in several new directions.

"I guess you could say we have a lot of things going on at once," says Walder, who launched the business in 1997 while studying for a graduate degree in ecological anthropology at The Catholic University of America in Washington, DC. Golin, who joined InterSolutions after the marriage, said the company is growing nicely, but that the couple now needs a "personal business plan" to address family finances.

After interviewing the couple, money manager Dolores Kong agrees with Golin's assessment. "Sara and Drew have a lot going for them in their personal financial situation," says Kong, a certified financial planner at Financial Perspectives Planning Services Inc. in Boston and host of a daily radio show on the city's WBIX-AM. "But things can be improved."

The business Walder founded started slowly but has grown quickly in recent years as she moved into increasingly new and different areas of property management. Likewise, Walder's home in Capitol Hill had also doubled in value over the previous three years, so the newlyweds decided to refinance the place and use the equity as a down payment on a building for the company in the nearby Eastern Market neighborhood. Then, in November, the couple opted to use most of their remaining personal savings to make the down payment on another home in the same area, renting out Walder's original home. The bottom line: In less than a year, one mortgage had become three.

Walder and Golin say they want to make sure they're set up just as well in terms of their personal finances as they are in their business finances. Kong has some specific ideas about how to accomplish that. "They need to build up their cash reserves, or 'bulk up,' as Drew described it," Kong says. "And they need to do some tax and estate planning, beef up their insurance coverage, better diversify and streamline their investment portfolio, and start thinking about saving for the new baby's education."

One of the biggest weaknesses Kong identifies in Walder and Golin's personal finances is that their business and all three of their real estate properties are in a tight geographic area. If the city's economy takes a turn for the worse, their business revenues could drop at the same time they have trouble renting out Walder's previous home. With little savings to fall back on, Kong says, Walder and Golin could find themselves in trouble. She told Walder and Golin they should aggressively rebuild the savings they depleted to buy the real estate. The normal rule of thumb is that people should have three to six months worth of living expenses set aside for safe keeping, but Kong says Walder and Golin would be better off with six to 12 months' worth. That should be one of their first budget priorities.

"We also feel we need an emergency plan," Golin adds. "It's just something we have to get done." With parenting in the picture for the first time--and the obligations that come with it--Walder and Golin also need to seriously rethink their estate planning and life insurance decisions. With a dependent to think about, both agreed that boosting life insurance was a priority. Even before talking with Kong, they had looked into adding to Golin's $250,000 term policy and buying life insurance for Walder for the first time. Kong suggests that each get at least $1 million worth of insurance, possibly more.

Since neither has a will at this point, let alone other estate-planning documents, that's another relatively painless area the couple can fix. For a few hundred dollars, they can each have a will drawn up, along with a health-care proxy and a durable power of attorney. The most important issue, all agreed, was that they address who the baby's guardian would be if Walder and Golin were somehow incapacitated or killed.

Kong also suggested that the couple split their educational savings dollars. To pay for private elementary and secondary schools, she said they should start putting $2,000 per year--the federal limit--into a Coverdell Education Savings Account. Although the contribution does not qualify for a deduction, it can grow tax-deferred and later be withdrawn tax-free to cover the cost of prep schools or college.

But Walder and Golin know they will need to save more than $2,000 annually to pay for their child's future college bills. With that in mind, Kong says they should look at Washington, DC's 529 College Savings Plan, which offers much higher contribution limits, tax-free growth and withdrawals, and an age-based investment portfolio that becomes more conservative as Junior gets closer to high school graduation.

As for their own investment portfolios, Kong says the couple needs to organize its holdings first and foremost. Walder has the bulk of her SIMPLE IRA in relatively expensive Class C shares of the Strategic Partners Moderated Growth mutual fund, and Golin's is entirely in an ultraconservative money market fund. Walder's nonretirement account, a gift from her mother, is largely concentrated in technology stocks.

Kong suggests that Walder figure out the tax basis of her fund shares inside the SIMPLE IRA and sell some, especially if she can lock in a taxable loss to offset other gains. She should build the retirement account around more than one holding, anyway, Kong says. And since an IRA is a long-term investment, Golin's account should be in something with more upside potential than the paltry returns offered by a money market fund.

Walder says the couple appreciates the help in clearing up their muddled investments. "We both have IRAs; we both have stocks," she says. "But what do we do about college funds? What about the 529 account? Where do we put it all?" InterSolutions topped $1 million in sales for the first time in 2003 and, Golin says, will come close to $2 million this year. That's up from the $13,000 Walder says she made from the company during her first year out of graduate school. Including the owners, the company now has seven full-time employees and two part-timers. For the sake of their budding company and their budding family, Golin says, it's time he and Walder followed Kong's advice.

"It really is about quality of life," he says. "The money has to be there to do the things we want to do. That's what this is about."

Update: Banking on It?

Sara Walder and Drew Golin, owners of temporary-staffing company InterSolutions Inc. in Washington, DC, realize that the road to a hellish financial situation is paved with the best of intentions. Still, two months after talking with Entrepreneur about getting a financial makeover, the couple had yet to put Kong's advice into practice.

"It's the problem a lot of people have," says Golin. "With all that's been going on, it's been really difficult to deal with it." After putting 20 percent down on their new house last December and hiring several new employees for the business, "we're pretty much extended," as Walder puts it.

Once their baby is born this spring and things settle down, the couple expects to be back in position to start rebuilding their savings and putting together an education fund. The best of intentions, in other words, are still there.


Scott Bernard Nelson is Entrepreneur's "Personal Finance" columnist.

Money-Raising Makeover: Growing Up Is Hard to Do

After nine years in the Marines and the National Guard, Brad Cunningham left military service in 1996 to start something new. The discipline and planning skills he learned in the military have paid off: His company, 8-year-old eBridge Technologies Inc., has won numerous awards for its innovative software design and IT services. But Cunningham, 38, is now engaged in a surprising fight for the financial capital that eBridge needs to grow.

Based in Greenville, South Carolina, eBridge seems poised for greatness. With A-list customers like Fujifilm and Liz Claiborne, the company's annual revenues are approximately $700,000 and have been growing steadily at 20 to 25 percent per year.

While the company has great technology and a solid financial base--80 percent of its revenue is recurring--it flounders when it comes to signing new clients. Its nine employees are overwhelmingly involved in customer support and application development. Says Cunningham, "You get bogged down in customer service and improving the current product, and don't have time to concentrate on sales."

The long-term answer, Cunningham believes, is to raise some significant growth capital and hire a small army of sales and marketing people. "I'd like to hire a business development manager for channel sales, a senior sales and marketing person, and a couple of sales and [administrative] people, plus collateral, trade shows and advertising [to support them]."

But such bold battle plans come with a big price tag. Cunningham estimates that the total cost for his aggressive growth plan will be about $1.5 million. Advisors and investment bankers told him that he should be ready to part with 30 to 35 percent of the equity in eBridge to get the money. That pegs the current company valuation at about $3.5 million. Armed with that advice and all the confidence he can muster, Cunningham is on the hunt for an investor.

With limited resources, the first thought was to search for capital close to home. "We went to our local [entrepreneurial development council], which includes corporate, academic and entrepreneur members," he says. That network led to a good-size list of prospects: high net-worth individuals, and VC and private-equity funds. Cunningham whittled the list down to the most likely investors--those who had been active recently and who could appreciate his own entrepreneurial spirit. "We focused more on angels, thinking that VCs would require a lot more [planning and negotiation]."

Road Trip

But the list of active investors in Greenville was not long. Cunningham's local leads quickly petered out, and eBridge was left looking to regional cities, including Atlanta and Charlotte, North Carolina.

Traveling on a shoestring, Cunningham began pitching his business plan to angel forums as far afield as Nashville, Tennessee. "They all told us that if we were located there, they'd fund us; but they didn't want to reach past their local sphere," complains Cunningham. And relocating the company didn't seem like the right answer.

Near and far, the story is the same: Investors aren't enlisting. "We've made close to 100 pitches," Cunningham laments. "We've been blown away by how positive people are about our business model, our customers and our products. But nobody's opened a checkbook."

Many investors, he says, would like the company to post higher revenues before investing. But that's a Catch-22 for eBridge. Without the investment, sales efforts are limited. Without the sales, funding opportunities seem scant.

For now, there is no Plan B. "If the money's not there, we'll just keep doing what we do," Cunningham concedes. "But we're watching some of our market opportunity go by."

What's the solution? We talked to the following experts to find the best way for Cunningham to attract investors so he can get eBridge on track to faster growth.

The Entrepreneur

Mac Lackey founded, built and sold two technology businesses and is currently a founder and managing partner of BlackHawk Equity, a private investment and consulting company in Charlotte, North Carolina. Here's his advice:

"One immediate challenge Brad faces is his valuation. A true market value for his company is probably closer to $700,000--about the same as his last 12 months' revenue--and it could be even less. Lowering the valuation will lower one barrier that is keeping investors away. Brad should also be prepared to put more of his own money into the deal. Many investors like to see 25 to 35 percent of a founder's personal net worth invested in the [company].

"Finally, to attract angel investment quickly, eBridge could look for a smaller amount of money--say $250,000--using a 'guaranteed note.' Guarantee the repayment of the investor's money by tying it to business and/or personal assets. Use the money to prove you can get some new sales, and then go for more money with the momentum you have created.

"I think eBridge can lower its capital requirement and start doing some things that will generate momentum before going after bigger dollars. If Brad really believes in the business's potential, he should take on some additional risk personally and prove it. Once he's seeing some good results, efforts to raise larger amounts of capital will be much easier."

The Advisors

Rich and Jeff Sloan are the founders of Birmingham, Michigan-based StartupNation.com and Sloan Ventures, a venture development firm that has raised more than $60 million for its portfolio of companies. Here's what they suggest:

"Some key attributes are lacking and may be contributing to Brad's fund-raising challenges, including: 1)a clear vision to dominate his niche, 2)a track record of exciting revenue growth with existing customers, 3)rapid growth in the overall customer base, and 4) a sustainable competitive advantage. More than any of these, though, eBridge's fund-raising woes result from the amount of funds they're seeking. At $1.5 million, Brad may be caught in fund-raising 'no man's land.' It's less than interesting to VCs and may be too high for angel investors in this risk-averse market.

"We recommend two possible options for this round of financing:

  • The Blended Round: Lower the equity portion of the raise to $750,000, a better amount for angels. Then, if your current receivables or other assets are insufficient as collateral, get a line of credit from a bank for the remaining $750,000 by asking your angels to act as guarantors.
  • The Aggressive Round: Raise $6 million to $12 million on a much more ambitious and exciting 'niche domination' business plan to entice VCs to participate. Identify a lead VC to help you organize the meetings with co-investors to fill out the round."

The VC

Mark Dunkel is managing partner of the Southeast Technology Fund, a $120 million VC fund in Atlanta that invests in software and IT companies. Here are his comments:

"There are many emerging technology companies, like eBridge, looking for capital, but few investors still have the stomach to invest in technology after being hammered by the tech bubble. The best advice for Brad may be simply to be patient. Eventually, things will turn around, and he'll find the right investor at the right time.

"There are two areas that eBridge should continue to work on. One is the management team. The adage that 'money follows management' is truer today than ever. While Brad has a solid personal background, there is always room to add executive team members with recent experience building large software companies. Investors love to see people who have done it before.

"Finally, eBridge could beef up their investor presentation in two ways: 1)Show more clearly how revenues for each current client have grown over the years, and 2)illustrate the strengths and capabilities of the software more succinctly. I felt those areas were worth highlighting in the company's pitch documents."

Update: Cashing In

Since speaking with our experts about raising money, software design and IT services firm eBridge Technologies Inc. has made significant progress. The Greenville, South Carolina, company posted a profit in 2003 and is already projecting 25 to 30 percent revenue growth for 2004. And while eBridge president Brad Cunningham is still looking for more money, he seems to be getting more interest from other sources, including venture banks and VCs.

"We have really had a better response from institutional investors than angels," says Cunningham. That was a welcome surprise, since most of his fund-raising efforts last year focused on individual investors.

Now it looks like the "aggressive round" strategy that Rich and Jeff Sloan--founders of StartupNation.com and venture development firm Sloan Ventures--suggested may be a real winner. Not only is Cunningham in discussions with a VC and a major venture bank, but other software companies have also expressed an interest in licensing or buying his product.

Meanwhile, Cunningham has recruited a seasoned CFO/financial consultant and has also signed up an outsourced sales team. And here's the icing on the cake: One of his products is now available direct through IBM's Web site and in IBM's global solutions catalog-an honor reserved for very few IBM-approved software packages.


David Worrell is author of the e-book Finding Funding.