Screen Shots - Advertise on Television

New online services offer small businesses an affordable opportunity to advertise on television

By JEANETTE BORZO
August 20, 2007

Once considered prohibitively expensive, advertising on television is fast becoming a viable option for small businesses, thanks to new online services that provide everything from customizable templates for commercials to commercial-placement services.

Spot Runner Inc., Los Angeles, Pick'n'Click of Fort Lauderdale, Fla., and Spotzer Media Group BV of the Netherlands are among a new breed of online TV-ad production companies that offer an inexpensive and practical option for small firms.

Spot Runner gave timely help to BizFilings.com, a 30-person firm in Madison, Wis., that allows customers to form legal entities without hiring a lawyer. Although BizFilings has been in business for 10 years, it hadn't developed national brand recognition. Meanwhile, new rivals have continuously popped up, making it increasingly important for the company to stand out in the markets where it competes.

BizFilings turned to Spot Runner, which has an online library of templates -- already-produced commercials cataloged by industry and that require only customized voice-overs and titles. "I spent an hour browsing the library and a half-hour writing the voice-over," says BizFilings Marketing Director Troy Janisch. Within two days, the company had a finished TV commercial. The company previewed it and approved it online. "We were on the air within three weeks," adds Mr. Janisch.

The cost: Mr. Janisch says that after paying Spot Runner's standard one-time set-up fee of $499, BizFilings has paid an average of $45 each time its 30-second commercial has aired regionally on cable television networks such as CNN, ESPN and Fox news, and an average of $1,650 when the commercial ran nationally on those networks. And in every market where the commercial has run, he says, BizFilings has seen a "modest to major" boost to its business. BizFilings is a unit of Dutch publisher Wolters Kluwer NV.

Cookie Cutter

Choosing a template for a commercial won't express the uniqueness of a business or produce something as slick as a custom-designed commercial created by a leading national agency. Indeed, it's not always possible for a small firm to find the right TV spot. "The [Spot Runner] library has a great selection of TV spots for realtors and other common types of businesses," says Mr. Janisch. "The more unique your business is, though, the more challenging it is to find a spot."

Still, for a small business on a budget, it can be cost-effective. Tony Martinelli, office manager at a 10-person dental office in San Diego, estimates that a three-week TV campaign produced by Spot Runner that the office ran earlier this year in San Diego County produced enough new business to pay for the cost of the ad more than six times over.

After running TV ads for the past 15 years or so, Clarke Auto Inc., a Hudson, Ohio, auto dealership, last year hired Pick-n-Click, a service run by the Zimmerman Agency of Omnicom Group Inc. The general manager of the dealership, Darrell Fall, says it's easier, quicker and more effective to point to what he wants rather than explain it. Pick-n-Click offers a library of video to which customers can add titles or voice-overs, though for now it caters only to auto dealers.

"We've used this to help eliminate time and to produce better ads," Mr. Fall says. Before airing any commercial he has created, he adds, he always consults his advertising agency. "I'll have them check it because they're the professionals," he says. "I know my business, but they know the commercials."

Exclusive Rights

Most small businesses that use a template-driven commercial-creation service compete in different markets, so there is little risk of rivals choosing the same ad. Pick-n-Click, Spot Runner and Spotzer, for example, all offer exclusive rights to a commercial in the markets in which the customer operates for at least as long as the commercial runs. But if a company competes on a national basis, it may want to go a step further and pay to have the ad template permanently removed from the library, as BizFilings did.

"It's a very creative ad," says Mr. Janisch. "People are convinced that the guy in the ad works for BizFilings."

Of course, just because such services make it more affordable for small companies to create and air TV commercials doesn't necessarily mean that small firms should do so.

For one thing, TV commercials aren't as all-powerful as they once were, says Peter Kim, senior analyst at Forrester Research Inc. in Cambridge, Mass. The rise of digital video recorders makes it easier for consumers to skip commercials, for example, says Mr. Kim, adding that the effectiveness of TV commercials depends a lot on a company's target customers.

Companies targeting 18- to 26-year olds, for example, may not want to advertise on TV because people in that demographic spend more time online (12.3 hours weekly, according to Forrester data) than they do watching TV (10.7 hours weekly). Boomers between the ages of 51 and 61, meanwhile, spend only 6.6 hours online weekly but 13.7 hours watching TV. A small ad budget "might be better spent on alternative media," says Mr. Kim.

Greg Sterling, principal analyst at Sterling Market Intelligence in Oakland, Calif., says, "These spots ideally would complement other ads in other media and/or online." He concedes, though, that many small businesses can't afford a "multifaceted strategy."

Placement Services

Some of the new breed of online services specialize only in the placement of TV ads.

Softwave Media Exchange Inc., based in Irvington, N.Y., offers an online system for placing already-created commercials. Its Web site, SWMXTV.com, works as an online marketplace for buying, selling and managing advertising time. In return for transaction fees on executed orders, the site lets businesses tailor TV campaigns to meet their budget, audience demographics, desired time of day and region.

Rather than having to negotiate the process with multiple stations or networks to find out about rates and available times, firms can see a host of networks and stations in one place and do all the negotiations quickly and simply in one spot. After a firm posts its campaign and price parameters on the site, broadcasters can accept, refuse or counter those parameters online.

As an indicator of just how big this market niche might become, some large companies are exploring it. Google Inc. is running a trial of a similar service for placing commercials with satellite-TV provider EchoStar Communications Corp.

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Visit the Web sites:
spotrunner.com
http://www.swmxtv.com/
pick-n-click.com
spotzer.com
services.google.com/ads_inquiry/tvadsbeta

--Ms. Borzo writes about business and technology from California. She can be reached at reports@wsj.com.

The Secrets of Serial Success

How some entrepreneurs manage to score big again and again and...

By GWENDOLYN BOUNDS, KELLY K. SPORS and RAYMUND FLANDEZ
Staff Reporters of THE WALL STREET JOURNAL
August 20, 2007

Five years ago, Tom Scott and Tom First realized they would never have to work again. Friends from college, the pair had launched a juice brand called Nantucket Nectars from the back of their island boat and catapulted themselves -- the self-dubbed "juice guys" -- into the stuff of entrepreneurial legend as their beverage took off nationwide.

They sold a majority of their company to Ocean Spray Cranberries Inc., and when Cadbury Schweppes PLC later bought the entire business for an estimated $100 million in March of 2002, both men were set for retirement -- and they were only in their mid-30s.

But there was no retiring in their futures. Today Messrs. Scott and First are both deep into new ventures that, for now at least, appear headed for success. Mr. Scott leads Plum TV, a New York-based company that operates local television channels in historic, affluent markets such as Aspen, Nantucket and Martha's Vineyard, and has had notable investors including Starwood Capital Group CEO Barry Sternlicht, singer Jimmy Buffett and former Viacom CEO Tom Freston.

Mr. First is in the midst of a new start-up: O Beverages LLC, in Cambridge, Mass., which markets a line of naturally flavored waters already sold in nearly 20 states through Safeway, Balducci's and Bristol Farms, among other stores. In between Nantucket Nectars and their current ventures, the two men started a beverage-distribution-software company that was sold to a publicly traded technology company.

WSJ's Raymund Flandez speaks to New York entrepreneur Ari Meisel, 24, who has founded four companies -- including three before he was out of high school.

"I'm a crazy competitive person, so there's no way I'm stopping," Mr. First says. "I like being in the trenches."

Call them serial-preneurs. While some entrepreneurs struggle their whole lives to bring one idea or product to market, there's another breed: those who do it once, twice or three times more, disproving the notion of beginner's luck. In some cases, the brands and people are household names, such as Steve Jobs with Apple, Pixar and NeXT. But the ranks also are populated with lesser-known entrepreneurs who fly under the radar, hitting one start-up home run after the other.

"I really believe that some people are kind of entrepreneurial adrenaline freaks," says Wayne Stewart, a management professor at Clemson University in Clemson, S.C. "They really get their kicks by starting businesses."

SERIAL ENTREPRENEUR AS CAREER

PODCAST: What can students do to prepare for a career as a serial entrepreneur? Wayne Stewart, a management professor who teaches entrepreneurship at Clemson University in Clemson, S.C., discusses that and other topics with the Journal's Kelly Spors.

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In 2000, Mr. Stewart published a study with two other researchers looking for common traits among serial entrepreneurs -- which he defined as those who had owned and operated three or more businesses. Of the 664 entrepreneurs studied, only 12% fit the bill. But those who did scored higher in all three categories examined: They had a higher propensity for risk, innovation and achievement. They were less scared of failure. And they were more able to recover when they did fail.

Beyond that, many serial-preneurs bring tactical advantages from their first venture to apply the second and third time around. For instance, they recruit top talent from their original companies to subsequent ventures. They double-dip financially, getting money -- and connections -- from people who backed their earlier brainstorms. Several lean heavily on a trusted partner for financial, professional and emotional support in whatever endeavor they undertake.

More than anything, however, the greatest, and more crucial, challenge among repeat entrepreneurs is figuring out how to rekindle for future ventures the innocence, love and hunger that fueled their first enterprise. Despite hitting it big early with Nantucket Nectars, Messrs. First and Scott both struggled after the sale to find a business that inspired them as much as being the juice guys.

"A lot of the drive early on was the drive to not have to leave Nantucket, or write the résumé, or go do anything else. We were hustlers," says Mr. First. Adds Mr. Scott: "What happened was that while approaching the things we love -- boats, water, weather -- we stumbled on juice. I've learned from this that it doesn't matter what I'm good at. It matters what I like."

What's the Motivation?

So why do some entrepreneurs who strike gold once continue to start over? A general contractor might launch a business because he has certain skills, and then stick with it until retirement. Or a banker will work her way up the corporate ladder, happy with the security of a paycheck and benefits, and retire once she has saved enough. By contrast, serial entrepreneurs' main job is the act of creation -- and thus they keep creating new businesses, often after they no longer need the paycheck.

"Most people can't understand why someone who made $10 million would do it again," says Seth Godin, who founded Yoyodyne, an interactive direct-marketing company bought by Yahoo in late 1998. He's now running a new online venture called Squidoo, a free tool that lets users build Web pages about any topic within a searchable community. "That's because most people don't like working, and they think it's irrational to keep working," he says. "But most entrepreneurs don't care about money; it's a tool."

For instance, Scott Jones was a multimillionaire by age 30, having co-founded the company Boston Technology, maker of a voice-mail system now used by many telephone companies world-wide. He retired, and learned how to fly planes and perform aerobatics, but was quickly bored. So he went back to work and has since co-founded Gracenote Inc., an Internet-accessible music database used by iTunes, as well as a robotic-lawn-mower company and a search engine that uses human guides in real time. Those years not creating, he says, were "the most unhappy years of my life."

Moreover, serial entrepreneurs harbor an unusual appetite for risk -- something they can inherit from their parents. Dan Bricklin, 56, has started four companies in his lifetime; his first Software Arts, was sold to Lotus Development Corp. in the mid-1980s. Mr. Bricklin's father was a small-business owner who ran a printing business, as did his grandfather.

" See a chart: Voices of Experience: Perspectives on starting multiple companies from people who have been there as founders or co-founders

Mr. Bricklin, who now runs Software Garden Inc. in Newton Highlands, Mass., says he feeds on the thrill of starting something new and untested. "It's like that sense of walking across a stream on the rocks -- sort of knowing where you're going, but sort of not." As for risk? "If you actually seen the ups and downs of a business, and your family isn't terrified, that makes it a lot easier to do yourself."

Likewise, Tim Miller caught the entrepreneurial bug at age 18 when he received about $500,000 after his father sold a company. Mr. Miller stashed that money away, planning to invest in his own company one day. Fifteen years later, he dipped into the fund to start a software firm called Avitek Inc. based on an idea his then-employer didn't want to explore. Mr. Miller recalls how family members fretted about the danger of going it alone, with his brother specifically questioning his judgment after he hired his fourth employee: How could he possibly put other people's livelihoods on the line?

"But it never truly occurred to me that I would potentially need to let any of them go at any point," Mr. Miller says, adding that he believes successful entrepreneurs "see opportunities where other see risk." He sold Avitek in 1999 for about $13.5 million, without layoffs, and is now running a venture called Rally Software Development Corp., based in Boulder, Colo.

The Value of Teamwork

Mr. Miller didn't succeed alone; he had a partner, Ryan Martens, who now works with him at Rally Software. Their compatibility is an asset whose value Mr. Miller finds hard to quantify. While Mr. Martens as the chief technology officer is deeply invested in software development, Mr. Miller is the business guy. "I think great leaders build teams," Mr. Miller says, "and those teams have some glue and they tend to stick together."

Whether by design or not, on second and third ventures, serials often surround themselves with familiar faces. Partly it's about familiarity and trust. Messrs. Scott and First both tapped ex-Nantucket Nectar employees for their newest ventures. They typically talk to each other several times a week, and Mr. Scott is an investor in O Beverages. "We've never doubted the other's total respect and having the other person's good interest at heart," Mr. First says.

Repeat relationships are also about expediency. Elizabeth Cogswell Baskin has run four companies, including two advertising agencies and a book-packaging operation. Now 46, she's the CEO of Tribe Inc., a $3 million Atlanta advertising agency that works with brands including Porsche, Home Depot and UPS, and peppered throughout Tribe's ranks are faces from her previous companies. "I think it is a huge shortcut to hire someone you already have a relationship with," Ms. Baskin says.

At age 77, Jack Goeken lays claim to having helped start a string of well-known enterprises: MCI, InFlight Phone, Airfone and several others. Now, he's deeply involved in a new start-up, Polybrite International Inc., a Naperville, Ill., company that produces a screw-in LED light bulb that will fit in normal lamps. His daughter Sandra, 49, has worked with him on every venture since MCI, and says one of her father's greatest strengths is "herding tigers" -- that is, finding entrepreneurial, and sometimes difficult to manage, individuals who can make a project happen, but then making sure they don't stick around too long.

"A team can come in and do a great start-up and make history, but the team that does that isn't the team to run it for 10 years," Ms. Goeken says. The key, she says, is to let those people know they'll be taken care of after a sale, so they don't hold a company's progress back worrying about a job. Bringing them on in the next venture is one inducement. Plus, she says, "they are a known entity and you take the risk out of the equation."

There are drawbacks to repeat employees. Mr. Godin, for one, believes the strategy can inhibit a fresh start. "One good thing is 'beginner's mind' -- people looking at something for the first time often have a fresh insight," he says. Plus, new businesses have different needs. At his first start-up, Yoyodyne, he says his team worked 21 hours a day in "emergency mode" -- a pattern he didn't want to repeat. "If I put the whole team together again, I don't know if we could have worked in anything but emergency mode."

More Money, Please

By contrast, hitting up the same investors, Mr. Godin believes, is almost always smart -- particularly if you made them money the first go-around. "They are doing everything on trust," he says.

David Neeleman, the founder of JetBlue Airways Corp., says treating investors fairly and staying close to them between ventures is critical -- as is giving them an opportunity to invest in subsequent ventures. In fact, he says, all of JetBlue's investors, except George Soros, had been investors in his first airline, Morris Air. "I just went back to the investors of Morris Air and said, 'Do you want to do it again?' " He raised $90 million for JetBlue from his old investors and $40 million from Mr. Soros. Mr. Neeleman stepped down as JetBlue's CEO earlier this year after a series of high-profile flight cancellations, though he remains chairman.

What's more, serial entrepreneurs find many of the contacts, and information, they pick up with early ventures can pay off down the road. They court vendors, customers, trade groups, chambers of commerce -- even if they don't need them right away. While working in earlier ventures for her father, Ms. Goeken often spent weekends in foreign countries instead of going home, inviting business contacts to dinner. For many years, she mailed 1,400 Christmas cards all over the world, learned about different religions and picked the brains of partners' low-level employees about their country's customs.

"It may not be that important to you right now, but they might have something to teach you," she says. "I'd invest more than just getting the deal done. And time and time again, I went back to the same people in new ventures."

A Question of Desire

One of the hardest tasks serial entrepreneurs face is recapturing the drive and direction that fueled their first venture, without letting the first success overshadow or dictate what they do next. Sometimes, it's as simple as learning to let go. Says Ms. Goeken: "Walking out of Airfone was the saddest day of my life. When I finally pulled myself together, I never looked back. I don't miss a single company now."

Other times, it isn't so clear-cut. After Nantucket Nectars was sold, the founders started a beverage-distribution-software company because it seemed a natural evolution from being the juice guys. Trouble was, both men hated software, and left before the company was sold.

"I felt like I was turning into a sheep," says Mr. Scott. "I started wondering what I'd do about the rest of my life and was insecure, afraid and slightly depressed." Finally he pushed himself to understand what got him to Nantucket Nectars, and arrived at a rather amorphous answer: passion.

"We were passionate about ice, and pumping out sewage systems on boats; juice was just one of 50 things that we liked," Mr. Scott says. With Plum TV, he loves the civic nature of local TV -- even though it's about as far from juice as you can get. "I think the best entrepreneurs are like artists and painters," Mr. Scott says. "It's about creating. It's not about business."

Likewise, his partner, Mr. First, also fumbled at different enterprises, including starting a grocery store, until his wife said to him, "You're bored stiff, aren't you?" That set off a period of his own soul-searching -- eventually, leading him full circle. What he loved most, it turned out, was what he had already done: building a consumer-products company. So in early 2005, he launched O, and the first bottles hit the Boston market that spring.

Mr. First concedes that he sometimes feels the burden of re-entering a field he once dominated. Consumers don't pick up O and want to drink it just because Nantucket Nectars was a big hit; he doesn't have the "Tom and Tom" story -- he doesn't even have the other Tom.

"I constantly think about how I was the cool guy at Nantucket Nectars, a juice guy," Mr. First says. "I'm risking going back into the same industry and being a loser."

Still, Mr. First says, he's slowly learning to use the previous success to grease wheels where he can: Grocery chains, for instance, believe if he can do it once, he can do it again. The same is true with investors. "It gives me credibility," he says, "and the fight is too tough to leave a weapon in the bag."

--Ms. Bounds, The Wall Street Journal's small-business news editor in New York, served as contributing editor of this report. Mr. Flandez is a staff reporter in the Journal's New York bureau and Ms. Spors is a staff reporter for the Journal in South Brunswick, N.J.

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Return to story

Write to Gwendolyn Bounds at wendy.bounds@wsj.com, Kelly K. Spors at kelly.spors@wsj.com and Raymund Flandez at raymund.flandez@wsj.com

Fast Money

Factoring isn't for everybody. But for companies that need cash quickly -- or don't want to hassle with banks -- it's one way to go.

By RICHARD GIBSON
August 20, 2007

Businesses often need more cash than they have on hand. It may be for an emergency, a fleeting opportunity or, sometimes, such ordinary events as a payroll to meet.

How to be prepared and avoid a cash-flow squeeze? Short of having an ATM in-house, many firms are using what once was a controversial way of obtaining quick money.

It's called factoring, and it's based on a simple idea. A business sells its invoices or accounts receivable to a firm that specializes in collecting their payments. That firm, called a factor, advances most of the invoiced amount -- 70% to 90% is common -- to the business after checking out the credit-worthiness of the billed party. After the bill is paid in full, the factor remits the balance to the client, minus a transaction, or factoring, fee.

The process can be swift. Once the factor is satisfied that he or she will be paid, money from an invoice can be in the hands of the issuing client within 24 to 48 hours. Indeed, for many businesses, the biggest attraction of factoring is not being held captive by slow-paying customers.

"As a subcontractor for glass and glazing on construction jobs, we'd have to wait 30 to 60 days for our money," says Theresa Woods, controller at Metropolitan Glass Systems Inc., a Tampa concern. So her company began using AmeriFactors Financial Group, based in Celebration, Fla., to collect its bills. "We'd get our money on the spot," Ms. Woods says.

Help at the Start

Some businesses use factoring to get started. Because it is the financial soundness of their customers that most concerns a factor, firms with scant history can nonetheless sell their invoices. "We weren't profitable then, so didn't qualify for bank financing," founder Alton Johnson of Bossa Nova Beverage Group says of the juice maker's early days.

While Mr. Johnson says venture capital was a possibility, he decided that even with factoring's higher interest rates, paying them was preferable to selling part of the company. Factoring got the Los Angeles firm through a critical start-up and growth period, he says.

Although it has helped many businesses get on their feet, some that have factored accounts receivable to meet their cash-flow needs say they viewed it as a stopgap measure.

"It's something we will wean ourselves from over time, as we're able to establish other funding -- which we're working on," says Jeff Brain, chief operating officer of SFGL Foods Inc., a Glendale, Calif., concern that markets seafood gumbo and other items under the Smokey Robinson brand.

Perhaps chief among factoring's drawbacks is its cost. A factor may charge several percentage points more than a conventional lender.

"We know we're not the cheapest form of financing," says Jonathan Schuster, chief operating officer at Premium Financial Services, a factor in Santa Monica, Calif. And for some clients, he adds, "we're a temporary fix, not a long-term solution." But he and other factors can rattle off lists of clients who have been with them for years -- some because they consider banks to be, in Mr. Schuster's word, "intrusive."

Factoring's origins go back thousands of years, to the Mesopotamians. It was also a vital source of financing for American colonists who would ship furs, lumber and tobacco to England. Subsequently, one of factoring's biggest users was the U.S. garment industry, where the time between procuring cloth to be made into a suit, say, and being paid for the final product could be many months.

Today, though, the process is at work across the commercial landscape. Some factors specialize in certain types of businesses, such as trucking, construction or health care. Industry sources estimate that billions of dollars in accounts receivable will be factored this year.

Changing Ties

One reason cited for factoring's increased popularity is what some entrepreneurs say has been the breakdown of the personal relationships that once characterized banking. A decade or so ago, Roger Shorey, president of Accurate Metal Fabricators Inc., Kissimmee, Fla., says he could call his bank and say, "'I need $40,000 in my account,' and they would say, 'OK. The next time you come in you can sign the [requisite] papers.' "

Today, Mr. Shorey says, he'd have to do the paperwork before receiving the money. "That makes factoring more attractive to a guy like me," he says.

Factoring isn't for everyone. It probably wouldn't be economical for a firm that sends out thousands of small-denomination invoices, because of the service fees a factor may assess for reviewing each one for risk.

Another deterrent some cite is a negative connotation tied to factoring's garment-industry heritage, where companies factoring often were found to be financially fragile. A related commonly held impression is that a company uses a factor because it isn't credit-worthy enough to deal with a bank.

The U.S. Small Business Administration says it doesn't have a position on factoring as a financing source. However, it contends that some firms "may be able to find more advantageous terms and conditions through the use of an SBA-guaranteed business loan."

Advocates point to various ways factoring can save a business money. Since the factor handles credit checks and bill collections, a business can reduce its overhead by not having to staff for that in-house. Moreover, because factors won't accept a questionable invoice, businesses can avoid the headaches -- and losses -- that come in dealing with a customer who turns out to be a deadbeat. In those instances, factoring becomes a safety net.

"Any time we get a new customer we forward the name [to the factor] and they check them out immediately," says Tampa Bay Press President John Hedler, who has sold accounts receivable for a decade or more.

Depending on what his factor, AmeriFactors, learns, it may suggest a maximum line of credit his firm should extend to a customer. And while that vetting may deter Mr. Hedler from a sale, AmeriFactors is "really doing us a favor," he says. "Otherwise, if somebody doesn't pay, you have to have an attorney go after them, and it comes out of my pocket."

Factoring can be a big help for those who want to do business overseas but worry about being paid. That's especially true for smaller companies that have little or no experience abroad, or lack the financial means or connections to collect from a customer thousands of miles away.

Mr. Shorey of Accurate Metal Fabricators says he often uses factoring to obtain discounts for his Florida kitchen-cabinet company by paying for large quantities of supplies upon delivery, knowing that he can cover that check by factoring invoices. On a $120,000 truckload of steel, the discount could be $6,000 or so, he says. That's more than enough to cover his factoring costs, Mr. Shorey says. "So I'm using Kevin's money to make money," he says, referring to Mr. Gowen, AmeriFactors' CEO. Businesses also can save money by paying cash on delivery, of course -- something factoring may facilitate.

Even one-person operations can benefit from factoring. Stephen D. Lemish, a lawyer in El Cajon, Calif., who specializes in court-appointed work for indigent people, uses Premium Financial to collect from the courts and other government agencies.

"You can't usually bill until a case is over, and that could be anywhere from two months to a year," Mr. Lemish says, noting that his bills sometimes can run to several thousand dollars. Of factoring as a business tool, he says, "For anybody who has a big cash-flow problem, I would recommend it."

--Mr. Gibson is a special writer for Dow Jones Newswires in Des Moines, Iowa.

Write to Richard Gibson at dick.gibson@dowjones.com

Entrepreneurs try a variety of Recruiting Tactics

Big Fish, Smaller Ponds

To hook executives of large companies, entrepreneurs try a variety of recruiting tactics

By SUZANNE BARLYN
August 20, 2007

LinkedIn Corp. had just moved to its Mountain View, Calif., offices last May when Patrick Crane visited to interview for the job of the company's head of marketing. Workmen were swinging hammers, and cardboard was scattered across the floors. But Mr. Crane, then a marketing executive at Yahoo Inc. in nearby Sunnyvale, was intrigued by the idea of leaving a corporate giant to help build an industry leader.

"The place was a mess, and that was part of the charm. There was a sense that everyone's sleeves were rolled up, and that was extremely attractive," says Mr. Crane, 34, who got the job at the four-year-old online networking service for business professionals.

Mr. Crane is among a crop of executives at large corporations who are being lured to significantly smaller companies. Executives who make this move may sacrifice salary, support staff, perks and prestige. But the small-business chiefs recruiting them are finding that other motivators can attract big-company talent, such as greater responsibility, a more collegial corporate culture, the absence of bureaucracy and the chance to help build a business and cash in if a young company eventually goes public. And in many cases they're using personal salesmanship to seal the deal.

LinkedIn CEO Dan Nye says he tries to appeal to executives' desire to make more of a mark than they might at a big company. "I point out, 'You have 20 to 25 years left in your career. Are you going to be the person who didn't take any risk and just lived a conservative, quiet life? But if you take this risk, even if it doesn't work out, you're going to feel great that you tried.' "

Offering Options

Tom Szaky, the 25-year-old CEO and co-founder of TerraCycle Inc., a maker of organic plant food, has hired several large-company veterans at fractions of their previous salaries. He finds it easiest to attract older executives looking for a second career, who might have even taken a retirement package from their previous employer -- "people who don't really need the job but want to get back in the game." But he also recently hired a midcareer executive away from Philips Electronics NV to be vice president of sales.

Mr. Szaky leans heavily on his vision of TerraCycle as an environmentally friendly company with a social conscience in his recruiting, but he also sweetens the deal with stock options that anticipate the four-year-old company going public, something he says it may do in five years.

Alan Johnson, a compensation consultant based in New York, says many executives moving to smaller companies hope that stock options ultimately will allow them to recoup at least five times what they sacrifice in salary. But, of course, it's a gamble -- one that depends on both the company's fortunes and the general direction of the stock market.

REELING THEM IN

The Challenge: How can small businesses lure executive talent away from big companies?

The Tactics: Most small companies can't compete with bigger rivals on compensation alone. But other motivators can help attract managers, including greater responsibility, a more collegial corporate culture, the absence of bureaucracy, and the chance to build a business and cash in if it eventually goes public.

The Clincher: The passion that a small-business CEO shows for his or her business can be a crucial factor in persuading a big-company executive to move to a smaller company.

Some small-company CEOs eventually conclude that they need to lure talent with big money. Derek Mercer is CEO of Vurv Technology in Jacksonville, Fla., a 290-employee human-resources technology company. He first decided to offer candidates greater compensation in 2001, when he wanted to promote the company's software and services to larger businesses with potential accounts over $1 million. "I have to compete with the big companies" for accounts of that size, he says. And to do that, he felt he had to be more competitive with them on compensation. "Paying significant salaries was a big step for me."

Raising the Scale

Mr. Mercer first added a vice president of sales for a salary of more than $200,000 and a bonus plan of up to 50% based on achievement, plus stock options. Subsequent funding from venture-capital firms made the higher compensation more affordable.

Today, Mr. Mercer offers a vice president of sales at least $250,000 in base salary, a bonus plan of as much as 150% of salary, and stock options. Before the company raised its sights, the same position would have come with only $65,000 in salary, a bonus of up to $65,000, and one-third as many stock options.

Last year, the increased compensation was key as Mr. Mercer recruited Michael Gibson from Dell Inc. to become Vurv's senior vice president of global sales and business development. Mr. Gibson, 45, hadn't considered leaving Dell until a recruiter approached him about Vurv. He was intrigued partly by the company's clients, which include Goldman Sachs Group Inc. and Coca-Cola Co. But he wouldn't have taken the job at a much lower salary, he says, unless the company gave him a significant equity stake, something Vurv wasn't offering.

Money, though, is only part of the incentive for executives to move to smaller companies. "It's not always about the dollars -- it's about what you do and the environment you're in," says Holly Nelson, vice president of finance and controller of Eos Airlines in Purchase, N.Y. The airline, founded four years ago, flies 757s between New York and London, each outfitted for only 48 passengers. It pays competitive salaries, but Ms. Nelson still earns about 10% less than she did as senior vice president, controller and chief accounting officer for JetBlue Airways Corp.

Ms. Nelson, 50, who joined JetBlue in 2001, was attracted by the opportunity to help build another airline. "There's something special about [it.] You make a much bigger difference on the ground floor," says Ms. Nelson. Jack Williams, Eos's CEO, says that in recruiting Ms. Nelson, he was able to "articulate a solid vision of where Eos could go from the space we're in and convince her that there's a real opportunity to build out a lifestyle brand."

Eric Smith, 41, who left his position as a sales director for Philips Electronics in 2005 to become vice president of sales for TerraCycle, started with the new company at 20% of his previous salary. The stock options he received from TerraCycle helped cushion the blow, but the company's eco-friendly mission and social agenda also drew him. TerraCycle packages its organic plant food in used plastic bottles, some of which are gathered in collection drives at schools, and it established its headquarters in the depressed inner-city area of Trenton, N.J., creating some jobs for residents.

"The key is having [executive candidates] believe in the dream of what you want to accomplish," says Mr. Szaky, the CEO.

Executives who move to smaller companies also often find that they can make a greater impact on the business in a shorter time than they could at their old jobs. There's far less bureaucracy at a small business, so decision making tends to be smoother and projects generally move quickly.

"It's easier to get what you're trying to move into action," says Samantha Hanson, 40, vice president of human resources for Vurv, who previously was a human-resources director for Best Buy Co. She developed a company compensation strategy within just 90 days of arriving at Vurv, a task that often gets bogged down by the need for board input and approval at large public companies.

Many executives also are able to move up the chain of command by moving to a smaller company, like Mr. Crane, the new head of marketing at LinkedIn. "Going from being a leader to being the leader has huge appeal," he says.

Contagious Enthusiasm

Mr. Crane also says he was swayed by the passion that Mr. Nye, the LinkedIn CEO, expressed for his company's work -- an attribute that many large-company executives cite as a reason for moving to a smaller business.

"One thing I found with Dan and other members of his staff was a contagious enthusiasm, a belief in a very singular mission," says Mr. Crane.

TerraCycle's Mr. Szaky has had a similar effect on interviewees. "I don't know what word I can use to finger what he is," says Mr. Smith, the company's new vice president of sales. "But there's an aura almost when you meet the guy. He makes you believe" in the company's mission.

A culture that keeps employees similarly enthusiastic can be another key in luring top talent. Vurv's Mr. Mercer believes that the three former big-company executives who joined his company last year were swayed in part by their visits to its offices. The open floor plan, with glass walls surrounding the few offices, promotes teamwork, he says. Shouts are regularly heard from the recreation room, where employees play foosball and build camaraderie, he says.

Even small touches like the free meals LinkedIn provides daily for its employees can help make an impression. The food enhances employees' sense of value to LinkedIn and provides opportunities for outsiders, including job candidates as well as potential investors from Silicon Valley, to share informal meals at the company, says Mr. Nye.

He describes food as one small expense that quietly attracts interest by promoting the company from the inside out. "When we create an environment that is casual and respectful -- at relatively small costs -- we attract, retain and motivate exceptional people," he says.

--Ms. Barlyn is a writer in Washington Crossing, Pa. She can be reached at reports@wsj.com.

If You Want to Stand Out, Join the Crowd

Trade-Group Activity Is a Good Way to Land On Recruiters' Radars

By SARAH E. NEEDLEMAN
August 14, 2007

To find candidates for a senior finance job that opened up last month, executive recruiter Ed Kaye scanned the roster of a relevant industry association and quickly homed in on a longtime member. He placed a cold call, and the recipient, a manager at a similar company, agreed to interview for the position and was eventually hired.

Mr. Kaye, a senior partner at recruiting firm GSP International in Woodbridge, N.J., isn't alone in searching associations' membership directories to identify talent. The strategy is the most common way recruiters find potential candidates who aren't actively looking for a new job, according to a recent survey of 450 members of the Society for Human Resource Management.

"It never hurts to be involved in associations," says Nancy Grossman, a recruiter for Capital H Group, a human-capital consulting firm based in Chicago. "You become more visible to recruiters and it shows you are committed to staying on the cutting edge of your field."

Recruiters and company hiring managers say they also often seek out potential hires at the meetings, conferences and other events that professional groups host. "Trade shows are great fishing expeditions for recruiters," says Barry Shulman, a principal at San Francisco-based recruiting firm Shulman Associates Executive Search Inc.

To increase your odds of landing on a recruiter's radar, participate in association events instead of just attending them, advises Todd Weinman, a regional director at recruiting firm Lander International LLC. "If you're somebody who comes to chapter meetings and always asks outstanding questions, a recruiter will definitely take notice," he says.

John Cronin, a managing director at Capital Finance Recruiters Inc. in Leonia, N.J., recommends nurturing relationships with the recruiters you meet and being patient. He recently placed a candidate he met 10 years ago at an association meeting into an information-technology-audit position at a large East Coast health-care company. "We always kept in touch and finally it worked out," he says.

Another way to boost your exposure to recruiters is to get involved in a professional group's management team or local chapter, says Wendy Alfus-Rothman, an executive career coach in New York. Run for a board seat, volunteer to be on a committee or offer to speak at a seminar, she suggests. You're likely to get to work closely with the organization's leaders, as well as gain opportunities to showcase your skills, she says.

Ray Manganelli, a vice president and senior managing director at Tunnell Consulting, learned about his current job through his work as a board member of the Association of Management Consulting Firms. The group accepts companies as members, not individuals, and Dr. Manganelli represented his employer at the time. During his tenure, he and Tunnell's representatives got to know one another, and in 2003 the company created a position for him. Dr. Manganelli now serves as the AMCF's board program chairman on behalf of Tunnell, which is based in King of Prussia, Pa.

Many associations post job ads on their Web sites, and some limit access to the ads to members. Corporate hiring managers and recruiters say they like to advertise on these sites, sometimes exclusively, to target trade-group members. "All the good candidates seem to belong to a particular association and the ones who aren't as skilled usually don't," says Bob Hatcher, president of Executive Network Inc., a search firm near Chicago that specializes in the food industry. He estimates that 40% of the candidates he places into jobs are identified through trade groups.

Job seekers say belonging to a professional association also allows them to easily connect with others in their field, which often results in job referrals and provides useful insights. While most groups charge an annual fee, it is typically far less than the cost of a career coach, who typically charges between $100 and $250 an hour, according to Frank Fox, president of the Professional Association of Résumé Writers & Career Coaches in St. Petersburg, Fla. Still, there may be other costs involved in attending annual meetings and conferences, including travel.

Networking with fellow members is unlike schmoozing with professionals in nonindustry-specific settings, says Debbie Lew, a senior manager at accounting firm Ernst & Young LLP in Los Angeles. "Members will spend a little extra time with you because there's that connection," she explains.

Ms. Lew says she learned about her current position in 2004 after conversations with several fellow members of the Information Systems Audit and Control Association. After she had tapped their knowledge about the accounting firm, several of them volunteered to give her a referral.

Within a week, Ms. Lew says, she received a call from a practice leader at Ernst & Young asking her to interview for a manager position she hadn't seen advertised. Several ISACA members were among those evaluating her candidacy, she says, and they acknowledged recognizing her from the group's events. Before leaving the interview, she had a job offer in hand, she adds.

Ms. Lew says she pays ISACA an annual membership fee of $120, plus $25 a year in dues for the organization's Los Angeles chapter. "It's definitely a great deal," she says, adding that she also receives discounts on the group's educational events and certification exams and other benefits.

The cost of joining associations varies greatly and often depends on the type of membership. For example, the Public Relations Society of America charges between $60 and $225 a year for national membership, plus as much as $80 annually to join one of its local chapters. The American Institute of Architects charges fees ranging from $338 to $819.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

Firms Go Online to Train Employees

Virtual Classes, Videos Give Workers Flexibility And Save Owners Money

By RAYMUND FLANDEZ
August 14, 2007

A few years ago, David Dam, head of sales development for Golden Harvest Seeds Inc., was frustrated with his company's sales-training program for 250 employees and 2,000 independent crop-seed dealers. Mr. Dam would rent meeting rooms for 30 people, and only 15 would show up. He had trouble finding great trainers. Fuel prices were making travel more expensive, and the sessions took valuable time out of workers' days.

But in the spring of 2004, Mr. Dam's company tried planting some seeds in a new field -- online training.

Golden Harvest hired EJ4 LLC, a video-based online trainer in St. Louis, to produce and post online videos for teaching sales reps how to sell Golden Harvest seeds. Mr. Dam tracked the results and found that employees were watching the videos, mostly on Saturdays or Monday mornings. Sales increased, as did demand for more courses, and training costs fell to less than $100 per person from between $175 and $200.

"This would have been next to impossible if we had just standard [face-to-face] training," Mr. Dam says. Now, Golden Harvest, of Waterloo, Neb., offers about 120 training courses on its internal Web site, with 2,000 page views a month. "We're getting more done with less money," he says.

Flexible Learning

For small businesses looking to cut costs and increase efficiency, online training classes and videos are becoming more available -- and more attractive. Some businesses are turning to specialists in training, such as EJ4. Meanwhile, inexpensive or free management and training courses also are available on Web sites of some big companies, such as Microsoft Corp. and Hewlett-Packard Co., and Small Business Development Centers, which are funded in part by the U.S. Small Business Administration in Washington.

On-demand e-learning, delivered over the Web or by audio or videodisc, has become the second most popular approach to learning and training for small businesses, after print-based materials, says Steven S. Wexler, director of research and emerging technologies for the eLearning Guild, a Santa Rosa, Calif., trade group. About a third of its 17,000 U.S.-based members are small businesses that use some form of online training. In comparing the learning approaches of large and small businesses, people in smaller organizations are engaging more in "cutting-edge" training with online games, private Wikipedia-type sites, blogs and podcasts, he says.

Ken Cooper, a partner at EJ4, says companies typically can obtain unlimited online training from his firm for $100 for each employee per year. The typical online course, he says, averages 10 minutes and includes as many as 70 slides with text, animation and video making it visually appealing. Classes can be downloaded for use in video iPods or hand-held sales devices.

Some online-training providers also customize classes. EJ4, for example, can film a company's own managers or other staff teaching a specific course.

Such training galvanized Golden Harvest workers, Mr. Dam says. The company set records in new customer acquisitions and new dealer recruitments. In 2005, the first full year of the online training, the company's revenue jumped 14%, or about $30 million. (Mr. Dam declined to disclose total annual sales.) The firm was recently acquired by Swiss agribusiness Syngenta AG.

Free Classes

Microsoft offers officeliveseminars.com, a small-business resource with free, downloadable online seminars on topics like time management, guerrilla marketing, franchising and sales. The site is separate from Microsoft's officelive.com, where the company markets and sells Microsoft products and business services.

In March, H-P expanded its online offerings for small businesses with free online classes, how-to guides, business templates and success-story videos. H-P's Learning Center for Small and Medium Business is available to anyone. (Go to http://www.hp.com/sbso/ and click on "online classes" at the bottom of the page.)

The classes aren't limited to H-P products; they also teach how to use other companies' software tools, including Microsoft Access and Publisher, Adobe Acrobat and CorelDraw. Other topics include networking and data management, marketing materials and computer skills. A "Business Toolbox," containing how-to guides on computing, networking and other technology, can also be found at H-P's Small Business Connection Web site, www.hp.com/go/sbc.

'To the Point'

Bob Perry, who owns a cemetery-mapping business called topoGraphix in Hudson, N.H., has been taking the H-P online classes periodically for nearly three years, and says it has been a huge help for him.

Mr. Perry, who is dyslexic, has been downloading classes on the CorelDraw software program to help him learn to develop more mapping techniques for his clients. His business is converting paper-based cemetery maps into digital versions and conducting on-site surveys using a Global Positioning System, satellite imaging and ground-penetrating radar to find unmarked graves.

"The programs are very simplified, direct and to the point," says Mr. Perry, who used to take some courses like Excel at a local college but found it too time-consuming.

Write to Raymund Flandez at raymund.flandez@wsj.com

Blog It and They May Come

Small businesses find blogging can be useful -- but awfully time consuming

By SARAH E. NEEDLEMAN
August 20, 2007

A few months after launching a blog early last year, Get It In Writing Inc. started seeing traffic to its Web site soar.

Today the small marketing-copywriting firm in Boca Raton, Fla., draws as many as 150,000 unique visitors a month to its site, compared with an average of only 100 before the blog, which features advice and trends on marketing and resides within the company's Web site.

But Allison Nazarian, the company's 36-year-old founder and president, says all that traffic didn't lead to more sales right away. In fact, the site's sudden popularity even brought on a new financial burden. "We ended up having to upgrade our Web site's hosting plan so it could accommodate that level of traffic," she says.

Now, the number of new clients is finally on the rise, as are sales, she says. So far this year, 25% of new prospects have come by way of the company's Web site, http://www.getitinwriting.biz/. Before the blog was launched, it was 1%, and most new clients came through word-of-mouth and referrals. Sales also are up by 18% so far this year from a year earlier, she adds.

Blogging is "worth it," says Ms. Nazarian, "but you definitely need patience."

Most owners use blogs -- which are easy to set up and require little technical savvy -- to drive people to their company Web site. But entrepreneurs also use them to get consumer feedback or answer commonly asked questions. And some blogs serve as stand-ins for Web sites as a way to describe what a business does.

Nice to Visit, but...

Still, getting people to visit isn't the same as getting them to buy.

"A blog can help you...establish your credibility and expertise, and that is what encourages people to click and buy," says Debbie Weil, an author and corporate blogging consultant in Washington, D.C. "But it takes time achieve it. You don't get instant high search-engine rankings. It's a fallacy to think you blog and you sell."

Small-business owners often create blogs to boost their company Web sites' search-engine rankings. High rankings can help draw more visitors to a site because people tend to click on the top results of a search first.

WRITE IT UP

What's New: Small-business owners are increasingly turning to blogs as a marketing tool.

The Uses: Most owners use blogs to drive people to their Web sites. For others, it's a place to post information and get customer feedback. Some even use a blog in place of a Web site.

The Caveat: Although a blog may get more people to visit a site, it won't necessarily get them to buy.

Search engines rank blogs with fresh content higher than ones that are rarely updated, says Caroline Melberg, president of Melberg Marketing Inc., an online-marketing firm in Wayzata, Minn. So the higher a blog is ranked, the greater the chances of consumers finding it, she says.

Indeed, fresh blog content has brought lots of visitors to Ms. Nazarian's site. In addition to writing two to four brief entries on her blog each week, she posts lengthy ones twice a month titled "Amazing Advertisements." These generate the most traffic, she says, and feature snapshots of clever advertisements from around the globe, plus pithy commentary. The company promotes the entries by submitting them to user-generated social Web sites such as Digg.com and Reddit.com, which publicize online items recommended by members.

Feeding the Appetite

But coming up with compelling content on a regular basis for a blog can be time consuming. Ms. Nazarian says a contract employee responsible for Internet marketing at her firm spends between one and five hours scouring the Web for interesting ads to profile in just one "Amazing Advertisements" entry.

Other bloggers are having better luck turning blog readers into customers.

Since Tracy L. Coenen started her blog, Fraudfiles, in November 2005, she has seen a considerable boost in revenue for her private forensic-accounting practice, Sequence Inc. The Milwaukee-based firm's revenue rose 31% last year from 2005, and is expected to climb 50% this year from 2006, Ms. Coenen says. She spends about 30 to 45 minutes a day posting as many as three entries on her blog, offering news and opinions about her specialty. The blog is located within the company's Web site, http://www.sequence-inc.com/.

Before the blog, Ms. Coenen says, "I don't think I ever had a case that came to me because of my Web site." She says she currently handles about 20 cases a year, and six have come from the blog since it launched. She adds that each case generates revenue ranging from $5,000 to $25,000.

Making the Link

Ty's Toy Box Inc., an online retailer based in Erlanger, Ky., has lured people to its blog about trends in the toy-licensing industry by having other blogs and Web sites link to it. The company arranged a link-exchange agreement in April with TheToyGuy.com, a Web site from toy-industry expert Chris Byrne that features news and product reviews.

"We coordinated it so that occasionally our blog and Chris's blog are about the same issue, but from different perspectives," says George Stolpe, vice president of business development and media relations for Ty's Toy Box. The two blogs link to each other in each post, he says.

Ms. Melberg says the links help boost a company's search-engines ranking because blogs recommended by external sources rank higher than ones without link referrals.

According to Mr. Stolpe, Ty's Toy Box pays a free-lance writer to maintain its blog and says the total cost for it is "a very minimal amount." He says while he can't quantify the blog's role in the near-triple-digit average growth in sales every year since its start, he has no doubt it has played an important part.

Sharing Information

For some businesses, a blog isn't so much about bringing in new traffic to boost sales as it is about sharing information with customers and getting feedback.

In May, Michael Hyatt, chief executive officer of Thomas Nelson Inc., posted an entry in his blog, michaelhyatt.com, asking for input on the cover design of a new book that the publishing company was preparing to put out. Readers were invited to select one of three images, and the company went with the picture that earned the most votes.

But the commentary hasn't always been positive. Two years ago, Mr. Hyatt wrote about how Thomas Nelson, which has about 650 employees, donated around 100,000 bibles to victims of Hurricane Katrina. Several readers posted comments on the blog that criticized the effort, including that donating resources such as food and shelter would have made more sense.

But Mr. Hyatt, who devotes about three hours a week to blogging, says the reaction only bolstered the authenticity of his blog as a source of honest communication between the company and its customers.

Jonathan Ham, an independent enterprise-security consultant in Missoula, Mont., uses his blog to answer client questions that may be of wider interest. He adds new entries to his blog (located within his company's Web site, jhamcorp.com) about twice a month. Mr. Ham says he's under no pressure to write more often because he isn't concerned about boosting traffic to the company's site.

Better Than a Site

In some cases, blogs are actually taking the place of a company Web site.

Take London-based tailor Thomas Mahon, whose blog, called English Cut, is about the tailoring process, or as he puts it, "what happens when you order a suit for $4,000." Mr. Mahon's entries discuss his normal business routine, including his travels to meet clients and photos of him cutting and stitching materials. He says his Web journal helps lend more credibility to his work than a Web site could because he can profile projects as they're being developed without the professional help he would need to regularly update a Web site.

Before launching his blog in late 2005, Mr. Mahon, who employs five subcontracted tailors, says he landed all client accounts through word-of-mouth -- even though he had a Web site, which he has since abandoned. Now he gets twice as many referrals and has had to limit the number of suits he can produce a year to about 150. Previously, he made between 50 and 60 suits a year.

--Ms. Needleman is a reporter for WSJ.com in South Brunswick, N.J.

Write to Sarah E. Needleman at sarah.needleman@wsj.com