Snapshot
Second Chance
By David Worrell
After selling her company the first time around and watching it fail, this entrepreneur is back for round two.
Banking on the idea that corporations undermanage and overspend on magazines, books and software, Julie Auslander co-founded Corporate Subscription Management Services with David Rifkin in 2003. But what seemed like an overnight success was actually nearly 25 years in the making.
In the 1980s, Auslander founded her first company, Corporate Subscriptions, but sold it to a newly public buyer at the peak of the 1999 IPO market. By 2002, due to mismanagement and a tumbling stock market, all that remained of the original business was a few disgruntled customers.
That was enough to push Auslander back into action. She saw a chance to rebuild the Ramsey, New Jersey-based company using better technology and better processes. She used the proceeds from the original sale to craft sophisticated software and highly interactive web-based services that would lure old customers back and bring in new ones.
This year, the company will post nearly $11 million in revenue and serve more than 75,000 corporate and professional subscribers. "After just five years, I'm back to the same point I was after 15 years the last time," says Auslander.
Auslander attributes her success and drive to restart the business to her relationships with past customers. "That's how businesses weather hard times and flourish," she says. "Businesses don't buy things, people do. And they wanted to see us succeed."
TheBuzz
Our Town
By Christopher Percy Collier
VC firms are helping small-town companies hit it big.
When Frank Greer of Greenville, South Carolina (population 57,428), needed to raise capital to grow his IM-device company, Zipit Wireless, he quickly realized his biggest obstacle wasn't who he was or, for that matter, what his company was all about. It was more an issue of where he was. "A lot of venture capital firms like to be close to the companies they invest in," says Greer, 46, "and we are a long way from Boston and Palo Alto, [California]."
Then Greer discovered Meritus Ventures, a London, Kentucky-based VC firm that invests in tech-based companies in Southern Appalachian areas defined by the U.S. Census Bureau as rural. In other words, Greer's small-town roots were part of the package. As a community development VC (or CDVC) company, Meritus focuses on achieving what's called a double bottom line--financial and social returns. CDVCs, certified by the government in part to generate wealth and jobs in low-income and rural areas, often provide perks, such as money for operational assistance and for the use of federally guaranteed debt.
In Zipit's case, a deal was struck, catapulting the 2007 startup to projected sales of several million dollars this year. Deals like this don't happen every day, but they're becoming increasingly common: According to the Department of the Treasury, the number of CDVCs has increased from eight to 80 in the past decade. "These kinds of investments are becoming more popular," says Meritus co-founder and fund manager Grady S. Vanderhoofven. "Even traditional venture capital firms are beginning to look in this area."
And the thinking among venture capitalists is that this is just the beginning. "There is a very large talent pool of entrepreneurs out here," says Vanderhoofven. "And unlike in Silicon Valley, there's still very little competition." So hitting the big time no longer requires a swanky, big-city address. Thanks to CDVCs, ideas that come from small-town America are just as viable as those hatched in a high-rise boardroom.
For more information on CDVCs, visit cdvca.org.
It's now or never
By Carol Tice
Can't afford late payers? Here's how to get paid on time.
Entrepreneurs are notoriously bad at getting customers to pay up--a problem that often leaves businesses starved for cash, says Alice Bredin, small-business advisor for OPEN from American Express. "Business owners are worried about damaging the relationship," she says. "They also have lots of other things to focus on, so they may not be putting the time and focus on collections that it deserves."
But entrepreneurs are getting wise. A March study by OPEN shows that the number-one tactic small-business owners plan to use to improve cash flow is a more aggressive approach to collections. To get started:
- Set up a payment system that offers incentives for customers who pay on time.
- Create a tracking system so you know exactly when bills are late. Then follow up immediately.
- Make sure you have accurate billing information for invoicing and collection.
- Consider outsourcing collection duties to an outside bookkeeper, CFO or accounting professional. They won't have a personal relationship with customers like you do, and they'll be firm with late payers.
This story appears in the August 2008 issue of Entrepreneur. Subscribe »
