Profits That Flow!

Today I played hooky. Yesterday Chris and I took the kids to the Coco Key Indoor Water Park. We planned an overnight on a Sunday to take advantage of lower rates and less crowds. Well... that was what we had planned.

My business hat came on as soon as I walked into this place. I really didn't know what to expect, but I was intrigued that investors determined that an indoor water park in south NJ near Six Flags Great Adventure would be a money-making endeavor. The admission fee for 1 day was $39.00 regardless of age. So, OK, I could see that weekend traffic would bring in a decent revenue - but I still couldn't see the profitability opportunity for a venture that seems geared for the colder months and would see most of the business on weekends since kids are in school during the week. Then I got there.

They are smartly marketing to the under 12 crowd. Yes, there are activities and rides on which older kids and parents can enjoy - but this is a place for the kiddies. So, let's think about this market segment. This is the population that parents want to keep corralled. Indoor, space is finite - there is no wandering off to Animal Kingdom. These are also the ages where kids have more flexible schedules, and most are not even in school yet. So, local parents who are trying to figure out in what activities to engage their children say, "hey, why not a fun water park today?" If they buy a seasons pass and go once every couple of weeks, it works out well.

We had planned on enjoying the park to ourselves on Monday, figuring that most kids would be in school. We are so naive! The place was almost as full as Sunday. Granted there were mostly smaller children this time, but there were also quite a few older kids with whom our seven- and ten-year olds were playing. I looked at the schedule and the park is smartly closed on Tuesday and Wednesday, which would most likely be dead days.

This indoor water park is capitalizing on the Chuck E. Cheese business model: a place where parents can let their kids have fun, but be within arms length of a million activities. Unlike Chuck E. Cheese it would seem that their overhead is much higher, so I am curious as to what those numbers look like (all that water and those lifeguards!). Still, I can see the consistent profits even in the summer months just from parties alone. And they smartly have a strategic alliance with the Marriott, offering "stay and play" packages.

Personally, I don't know if I would invest in such a venture - but it is always interesting to look at how others develop a business idea that seems successful. I am tempted to revisit in the summer to see how they are faring - if nothing else, the kids would be happy!

Are You A Sure Thing?

Last week (1/15/2009) a US Airways plane crash landed in the Hudson River. The pilot and co-pilot are being hailed as heroes - in addition to the ferry boat crews who reacted quickly. The members of my real estate class were discussing the incident and one had commented that the pilot was now "un-insurable" - that apparently no insurance company would cover him since he would be considered too high a risk since he has crash landed a plane.

The fact that he crash-landed "successfully" (i.e. no fatalities) would mean, to me, that he was the BEST insurance risk. He has shown his mettle in the face of adversity. If I had a choice between a new pilot who has flown less than 100 hours and has never had to deal with any plane issues and pilot Chesley Sullenberger III - it is very obvious that I am going with "Sully".

This is the problem with statistics. Statistics "would show" that Sully is a risk, but reality supports that Sully is a GOOD risk. When Verify-ED applied for angel investment, it was to our advantage that I had run a business in the past. It was even more advantageous that the business failed. The (correct) thought is that I am a better risk because I have already felt the sting of failure and most likely don't want to feel that pain again. It is a true assessment. The experience of owning Black Tie Tuxedos gave me the tenets by which I went into Verify-ED. As a result of Black Tie Tuxedos, I knew that I would not do a business as a sole proprietor (too much work for 1 person - especially a person with 3 children), I would NOT manage inventory or have crazy overhead costs, and that the market is receptive to the services I provided. Verify-ED fit all of the criteria and that is why we are here.

I am so glad that the investment community gets it - that an entrepreneur who has experienced setbacks is a great risk. Most people don't want to have multiple failures - and I am among that most.

Sully, I offer you a job to be the pilot of the private jet that I will own within the next 10 years - when Verify-ED is basking in the success that was built on the support received from investors who knew we were worth the risk. But then again, Sully will be 68 and most likely he will be in the Florida Keys somewhere living off the proceeds of the book he is sure to ghost write and those talk show circuits. Not a bad ending for "un-insurable".

Sammy The Dog

A couple of weeks ago I had saved enough money to go to the hair salon (yes! I am an entrepreneur and money is tight). Next door to the hair salon is our local animal shelter. I used to pass it every day on my commute to NYC and sometimes I would notice animals abandoned on the doorstep. Like the homeless person you pass, you feel helpless - want to help - but don't know how and you keep moving. I know one of the employees at the animal shelter, and when he saw me on the way to the salon he ran in to tell me that a man was surrendering his dog and I should come take a look since he knows that I like small dogs. I should mention that, yes, I like small dogs - but my husband was the one who specifically mentioned his preference for terriers and similar dogs. I have NEVER owned a dog. Ever. Well, of course I go and meet a man who (because of personal reasons) was sadly giving up his dog. I called my husband who informed me that I could bring a dog home but that 1) he would not be taking care of the dog and 2) the dog was not allowed in the basement. So much for the man who wants a dog. The dogs' owner suggested that I take the dog home for the weekend, and if things didn't work out that he would retrieve the dog and take him to the shelter.

I am sure that you have figured out the rest. I brought the dog home, the kids like him, he seems to like us, AND he doesn't bark. So we have welcomed a new family member: Sammy, the long-haired Chihuahua.

The tie in to business: did I save Sammy or would someone have come along? At times when I am trying to find the right contact to help our business get to the next level, I do wonder if someone will "save" us because that is the feeling of hope you have. Yes, we work hard but we are realistic that hard work is only part of what is needed to succeed. We are so dependent upon our networks to move forward and people literally do save you. Without this support you flounder. As we search for funding, we ARE looking for that "savior" - someone who believes in our tools as much as we and has the ability to financially support the endeavor. I read my entrepreneurial magazines and the stories of the lucky few who have found their financial saviors do give me hope - and isn't this the season of hope and belief in angels?

From my house to yours - HAPPY HOLIDAYS! Let 2009 be prosperous for us all!!

I Went To The Olympics!

Yesterday I attended the annual Venture Association of NJ Pitch Olympics. What an eye opener! The format of the event involved entrepreneurs presenting their products / services in 2 minutes and a panel of judges (mostly from venture capital firms) rating them on their presentations and fundability. I had actually thought of participating, but the cost was prohibitive so I went for the learning experience - and boy did I learn a few things:

1. If you can't speak well - get a spokesperson. The entrepreneurs were limited to 2 minute presentations. No questions were asked. So, with that format, why wouldn't you get a great spokesperson to present your product? I was amazed at the entrepreneurs who could barely enunciate! One company actually had a product that I felt had promise - but you couldn't understand a thing that was said.
2. You need to talk about other things than the product. The judges kept stressing that product information was important, but where entrepreneurs fail is by not giving the investor a better idea of HOW the product will be used and WHO will use it. Entrepreneurs need to give as much information as possible of the market opportunities and the specific target markets.
3. Bring notes. So many of the entrepreneurs presented off the top of their heads. Why would you do that? You are standing in front of a podium - you have a place to put your paper. Many of the entrepreneurs just came across as unprepared.

My FAVORITE pitch was from Meryl Rosenthal of FlexPaths (http://www.flexpaths.com/). She was the first to present and she was AWESOME! She presented a clear presentation that hit on all the points in which an investor is interested. Better yet: they are an alliance for our services! She missed first place by 1 point to Mattingly Sports (http://www.mattinglybaseball.com/) - and they mastered the concept of product placement (the moderator prominently held one of the Mattingly bats throughout the event).

I am very glad that I went to the event. I sat at the table with venture capitalists and got to hear a little about their thoughts. Interestingly, I was surprised at the amounts the entrepreneurs were seeking. Most were asking for about $1 million - and according to Bill Payne (angel investor extraordinaire), this is an amount that hits the angel limit but is not near the venture capital amounts. I am curious to find out what each entrepreneur's goal was by participating in the event. Who exactly were they trying to reach?

You Have Successfully Submitted Your Application

It is almost 4 am and I have finally submitted my applications for angel investment. My stomach is in knots. I feel like our business plan is well thought out and that our supporting documentation will really help, but you can't help having that feeling that if you do more it would make a difference. Doesn't matter that you don't know exactly what "more" to do, you just have this feeling.

So, the ride has truly begun.

Verify-crED: Is it a service or a product?

A couple of days ago we had our weekly meeting, and one intern asked whether Verify-crED is a product or a service? That is a good question. As she pointed out, we provide a service (credentials verifications) and allow users to purchase a product (the employer view). So it is both. Regardless of what we call it, there is MUCH interest - especially from small- to mid-sized employers who already feel overwhelmed with all that has to be done in the hiring process. Finding financing is tough. As I continue to kick myself for not getting a larger credit line when we started, I am knocking on various doors. Supposedly there is all this funding for growing small businesses, I just can't seem to crack through. First I approached our bank, who informed me that the credit line I am seeking exceeds the risk that they are willing to take. Fine. So, do I continue to max out my credit cards? I can't get an SBA loan because my husband is already on the verge of killing me so I can't even THINK about approaching the subject of using our home as collateral. I am trying to understand how angel investors and VCs work. I will let you know what I find out.