Quick Take

Not Too Hot

Love the game, not the name. That's what Barnes & Noble (BKS) told Christi Smith, founder and president of PFF Entertainment, about her board game, PervArtistry. Smith's $150,000 company had some success selling the R-rated blend of Pictionary and charades online and in adult boutiques, but hit a wall taking it to the masses. "They couldn't get past the title," says Smith, 36. So Smith and her partner and husband, Ted Scofield, redubbed the game Sexy Slang and inked a deal with the giant bookseller.

Entrepreneurs with "unmentionable" products must walk a fine line. Making them acceptable for polite conversation may cut off your marketing legs. "Watering down the brand can take all the zing out of it and as a result it may go unnoticed," says Laura Ries, president of Ries & Ries, an Atlanta marketing firm. Instead, try to build an audience through word of mouth and publicity.

But Smith is banking on Sexy Slang being just edgy enough. The game will be in Barnes & Noble stores this spring.

Weather or Not

Niche financial companies such as San Francisco's WeatherBill and New York's Storm Exchange now offer a way for small companies to hedge the weather: They can buy contracts for a specific day, week, or quarter, receiving payment if weather clobbers revenues. Storms aren't the only problem. Ray Luciano, co-owner of the 10-employee Spencer Malay Hair Salon and Spa in Atlanta, sees fewer walk-ins on sunny weekends. Last year, he bought four $2,000 contracts from WeatherBill. Three paid $10,000 or more. One paid nothing, because it rained.

Click Here for Money

If the sputtering economy has you wondering where to turn for cash, consider one of the new crop of social lending Web sites. With some variations, the sites match people who want money with those willing to lend it, usually at more favorable interest rates than those of traditional banks. Following San Francisco-based Prosper, which launched in 2006, came Zopa, Lending Club, and Virgin Money. Zopa connects borrowers with credit unions and began lending in the U.S. in December. Lending Club started as a Facebook application in May and now is available in all 50 states. British Virgin founder Richard Branson bought CircleLending, which formalizes loans between family and friends, and relaunched the site in October as Virgin Money. And GlobeFunder launched in January.

Refinancing personal debt is the biggest draw, but most sites say 20% to 30% of their loans go to businesses. After tapping out two lines of credit from local banks, Direct Textbooks founder Chris Lindgren turned to Prosper to help the Salem (Ore.) textbook price-comparison site. Lindgren applied for the maximum $25,000 loan, offering to pay 17.5% interest. Lenders bid down the rate to 10.2%, and Direct Textbooks had the cash within two weeks. "Considering our credit situation, I might have ended up paying more," says Lindgren. Or not getting a loan at all.

Feeling Unstimulated

Congress' proposed economic stimulus package, worth about $160 billion, is aimed primarily at sparking consumer spending through tax rebates for those who earn under $75,000 annually ($150,000 for married couples). The bill also contains some handouts for small businesses: They will be allowed to deduct about 50% more for equipment and write off twice as much for expenses. As of early February, the House had passed the bill, but it stalled in the Senate.

Those are mere scraps for entrepreneurs, say many experts. "The investment incentives for businesses are very secondary in all of this and won't do very much to stimulate capital formation or jobs," says Joel Prakken, chairman of Macroeconomic Advisers in St. Louis. "By the time this is enacted it will be a tax break on equipment that [small businesses] have already bought."

Even though consumers will have more money in their pockets, that doesn't necessarily mean they will buy more products and services from small businesses. Says Steven Rogers, director of the Larry and Carol Levy Institute for Entrepreneurial Practice at the Kellogg School of Management at Northwestern University: "About a third of the money will get saved, not spent, and another third may not be spent for six months." Too little, too late.

Back to BWSmallBiz February/March 2008 Table of Contents

The Aging of Abercrombie & Fitch
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