Small businesses have spoken out against the Affordable Care Act, but medium-size businesses, customers and taxpayers may be the ones ultimately harmed.

Beginning next year, the Affordable Care Act will penalize employers that fail to offer health insurance to their employees. Because small employers are especially unlikely to offer health insurance (see Table 3 in this paper from the Congressional Budget Office), and large businesses are likely to avoid the penalties because they already offer insurance, the penalties seem like an attack on small business.

But the Affordable Care Act simultaneously rewards employees at small companies by heavily subsidizing their purchases of health insurance on the exchanges created by the law. Because employees cannot take the subsidies with them if they switch to a large company offering health insurance, the subsidies are, in effect, subsidies to the small businesses themselves, helping them compete more cheaply in the market for employees.

Employees at the smallest companies, with fewer than 50 employees, are eligible to receive the subsidies, even though their employers are exempt from the penalties.

Indeed, some medium-size businesses that currently offer health insurance say they find the smaller company “penalty plus subsidy” combination attractive and plan to drop their health insurance plans in order to partake in it, too, even though their participation will entail a penalty.

The Affordable Care Act also created tax credits for small business that are already available. These credits perhaps have too many strings attached to be attractive to employers, because only 770,000 employees (in an economy with more than 130 million) worked for employers claiming the credit in 2010 (see Page 9 of this report from the Government Accountability Office). The Affordable Care Act also promised to provide small-business employees a choice of health plans, but implementation of that plan has been pushed back until 2015.

Many small businesses are not as good with bureaucracy and red tape as large businesses are – that’s one reason they did not offer health insurance in the first place. The employee subsidies coming online next year are pretty complicated, as evidenced by the 21-page application that must be completed by each employee, and the fact that any one year’s subsidy has to be estimated based on historical employee data, advanced from the Internal Revenue Service to the insurer, and then later reconciled when the employee’s family income for the year can be fully documented.

I suspect that large businesses will have human resource personnel dedicated to helping company employees complete the application and obtain and accurately reconcile the subsidy to which they are entitled. Employees at smaller business may have to fend for themselves.

We also have to remember that businesses compete for customers and for employees. A business that experiences a little direct harm from the act may benefit on the whole because competitors are harmed more. This is especially true because of the heavy penalty the law puts on businesses that expand from 49 to 50 employees: that one hire will cost the employer $40,000 annually in penalties, on top of that employee’s usual salary and benefits.

Thus, the type of company that may benefit the most from the law is not necessarily large or small but a company with small competitors that have been looking for opportunities to expand their market share, and in the process bring the number of their employees to more than 49.

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This piece was originally written by Casey Mulligan, an economics professor at the University of Chicago, for the Economix blog for the NewYorkTimes.com.

Photo: Getty Images; Source: Inc.com

Looking to VCs or angels for the capital to take your start-up to the next level? Proceed with caution–not all investors are created equal. In fact, there are a handful of characteristics you should look for when you’re shopping for potential backers.

Sharmila Shahani-Mulligan, CEO and founder of ClearStory Data, a Palo Alto-based company that helps non-technical business users extract information from internal and external sources of big data, understands the benefits that come from working with the right kinds of investors–her company has closed $9 million in funding from Kleiner Perkins Caufield & Byers, Andreessen Horowitz, and Google Ventures, but it’s more than the money she appreciates. She’s also an angel investor in several Silicon Valley start-ups, sits on the boards of several others, and has a keen eye for what early stage companies need most.

Before signing with any investor who may end up owning a piece of your future, Shahani-Mulligan says you should look for these qualities:

1. Business Operating Experience

Many fledgling entrepreneurs might be engineers who have a great tech idea they’re building out yet lack experience running a business.

“Going from a technology to a product to a successful company are three very different things,” she says.

Seasoned entrepreneurs can teach you things like how to go to market, turn your idea into a product, find a perfect market fit, get customer validation, and close your first few accounts.

“That type of experience is really invaluable for the early days because the teams are usually busy coding and building the technology and not necessarily thinking about the selling and market implications of what they’re building,” she says.

2. Domain Expertise

Investors who actually have some expertise in your field have seen the market mature and can offer relevant input as you look to build your technology or product.

“Having investors without domain expertise is OK, but it’s not as rich an experience because they can’t necessarily speak to or fully understand or appreciate the technology you’re trying to build unless they’ve seen the last generation of it,” she says.

3. Help With Recruiting Talent

Your success depends on your ability to recruit great people, especially the first 20 or 30 members of your team. Investors who have robust networks can not only help fill positions across all functions and levels of the company, they can save you a lot of money in recruiting dollars.

“One of our board members is from Kleiner Perkins–he’s an ex-VP of engineering at Twitter and he comes with an amazing network of engineering talent,” she says. “Google Ventures similarly has a lot of people leave Google and they send them our way as people are looking for their next thing and that just gives you a rich flow of people that are very high caliber for technical positions,” she says.

4. Long-Term Vision

While some investors are more concerned with reaching near-term business goals, the best backers are able to take a broader view and appreciate how you’re trying to change the market or disrupt a space.

“You need investors who have the patience to have lived through the first two years as the technology is shaped and then go into the market-disruption phase, so it’s really people who understand how to balance the near-term goals of the company with the long-term vision and what it takes to fulfill the vision,” she says. “The long-term disruption is really what creates giant companies.”

5. A True Partner

Here’s what you don’t want: A relationship with your investors in which you’re merely reporting to them. Instead, you should be in constant communication with board members and investors who are thinking about you and your company on a regular basis and working with you in a day-to-day partnership.

“I feel fortunate, that’s what we have. We have a very tight partnership with our three investors and we’re in constant communication every week, every day and it’s amazing to have that,” she says.

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This piece was written originally by Christina DesMarais for Inc.com.

Communicating from the proper perspective is essential to good business results. Here are 3 ways to make you’re able to do that, every time.

Recently, when I picked my eleven-year-old daughter up from school, she began to tell me about a writing competition at school. The winner would receive a $100 savings bond. So I asked her, “What are you going to do?”

She responded, “Daddy, I need you to take me to the store and buy me pens and a notebook.”

I said, “Okay, but that did not answer my question.”

“Yes I did,” she said. “You asked me ‘what,’ not ‘how.’ But I’m just messing with you. My plan is to write a tear jerker!”

She proceeded to tell me that the pens and notebook are the tactics, her plan was to write a tear jerker, and the objective was to win the savings bond. I was amazed. She really had been listening to me talk about “Ways” all this time!

What my daughter understands is that a Way is not a person or a position, but a method of thinking and communicating. Here’s how I break it down:

• Way One thinking: identify the objective.
• Way Two thinking: develop the plan.
• Way Three thinking: execute the details.

Understanding the Ways helps us understand how we need to think and communicate in any situation with any individual at a specific moment. When you have a conversation with someone and can quickly assess which Way he or she is thinking, you’ll be able to more efficiently communicate.

As in the example with my daughter, understanding the Ways helps us tell if someone is talking about objectives, plans, or actions. Once we know that, we can respond appropriately.

If someone is talking about his or her objectives, it’s not constructive to jump in with a list of tactics that could help meet the objective. Finish discussing the objective, develop a plan to meet that objective, and then list the tactics you’ll use to execute on the plan. In the example with my daughter, I was thinking “How,” but I asked a “What” question.

The Ways of thinking are simple, but unfortunately most people aren’t aware of how they’re related to communication and execution. For example, answering phones at the office is a tactic–a “What.” Does the receptionist answer the phone because it’s ringing or because it’s part of good customer service? The “What,” or the tactic, is answering the phone. The “Why,” or the objective, is customer service.

How many of your employees understand how their tactics are aligned to an objective? I can guarantee that when people understand how their “What” is aligned with a “How,”–that in turn directly influences the “Why,”–you’ll begin to see better communication as well as increased employee engagement.

Thinking is individualistic, but communication occurs between two or more individuals. For communication to be effective, you not only have to be thinking the right way at the right time, but the individual you’re communicating with has to, too. Otherwise, you’ll both leave the conversation unclear of what you’ve accomplished.

The three Ways to think and communicate are part of daily life. We might switch thought processes on our drive home from the office, but majority of the time the Way we think and communicate does not change. I might be responsible for my companies’ “Why,” or objectives, but I know that when I get home I need to perform the tactics aligned to my wife’s plan!

By the way, my daughter came home from school the other day and said, “The teacher did not have a very good strategy today.” I’ve created a monster.

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This piece was originally written by R Micharl Rose, the CEO of Mojo Media Labs, for Inc.com. 

The catalyst for these connections is an exciting new pilot project called RFP-EZ. And the results we are seeing from this program highlight what is possible when you unleash the power of American entrepreneurs.

RFP-EZ is a new and easy way for companies to learn about and compete for government contracts – in particular, small companies that lack the experience or administrative support generally needed to take full advantage of the Government’s Request for Proposals (RFP) process, the means by which many government contract offerings are presented to the business community. The RFP-EZ platform was developed jointly by Federal innovators working in the SBA and private-sector entrepreneurs serving temporary stints in the Federal Government through the Presidential Innovation Fellows program, launched by the U.S Chief Technology Officer and Chief Information Officer team last year.  Sharing their private- and public-sector insights, the team developed RFP-EZ as a simplified platform aimed at opening up the Government marketplace to a wider range of companies and saving taxpayer money.

Applying agile development principles, the Fellows team designed RFP-EZ over a six-month period, publishing the platform’s code openly on GitHub.  The team then launched the pilot by posting five relatively simple website development and database contract offerings, four of which were also announced via the standard government portal, FedBizOps. On a per-project basis, bids received through RFP-EZ were consistently lower than those received through FedBizOps—19% to 41% lower, and over 30% lower on average. Bids made through RFP-EZ also showed less overall variation.  In addition, during the pilot period, RFP-EZ attracted more than 270 businesses that until now had never approached the world of Federal contracting.

Average of All Bids Received for RFP-EZ vs FedBizOps (FBO)

According to Office of Management and Budget’s IT Dashboard, the Federal Government will spend more than $1.4 billion on Web Infrastructure and Web Content Management Systems in FY 2014. Based on 2011 and 2012 results, we can expect about half of these projects to be under the $150,000 “Simplified Acquisition Threshold” that would make them eligible for contracting through RFP-EZ. As we refine and expand the use of RFP-EZ, we are confident that its success will grow, delivering better value for taxpayers and opening new opportunities for small businesses.

Leveraging feedback we received from entrepreneurs and Federal contracting officers, the next class of Presidential Innovation Fellows will begin work on version 2.0 of RFP-EZ, which will focus on improving the platform, scaling its initial results across the Federal Government, and adding innovative new capabilities. If your business would like to participate, we encourage you to get started by setting up a profile on RFP-EZ today. To all the businesses that submitted proposals through RFP-EZ and everyone who has given us feedback on the project, thank you for helping to bring this new capability to life – and we very much look forward to the path ahead.

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This piece was written originally by Karen Mills, the administrator of the U.S. Small Business Administration, for the the SBA.gov blog.

The Oreck family is rallying to take back their namesake vacuum-cleaner company from private equity owners in a deal valued at $22 million—a price that founder David Oreck hints is cheaper than what he sold the business for a decade ago.

Oreck, 89, has never stately publicly how much he profited from the 2003 sale of his company. But while his three sons lead the charge to buy the company’s 96 retail stores and 250-worker manufacturing plant in Tennessee out of bankruptcy, Oreck pointed out that the value of the business has certainly fallen in recent years.

“It obvious that it’s worth less today,” he said. “When I sold the company, it was prosperous, [its profit] was growing and it had virtually no debt, so it was a very healthy company.”

Asked whether his family would be buying it back at a discount, he replied: “It’s not too hard to put that together.”

Oreck Corp. filed for Chapter 11 bankruptcy protection on May 6, saying that the business has struggled against competitors and that sales have declined since 2010. The company has changed hands since the Oreck family sold it in 2003, and it’s now controlled by Black Diamond Commercial Finance LLC.

On Thursday, Oreck executives asked a bankruptcy judge to designate the family’s offer at the lead bid at a July 8 auction, according to papers filed with the U.S. Bankruptcy Court in Nashville, Tenn. Under the proposed sale timeline, other buyers would have until June 28 to put in rival bids.

Oreck officials said in court papers that a quick sale “will restore confidence on the part of consumers that they can purchase an Oreck vacuum cleaner without concerns regarding replacement parts, warranty obligations and maintenance. Employees, suppliers and retailers will be able to depend on [the new] Oreck as an economically viable and competitive enterprise.”

If the Oreck family’s offer wins, Oreck’s high-end vacuums could start disappearing off the shelves of big-box retailers. Oreck has been critical of the company’s latest shift away from selling the products through its own stores, which he said offer good customer service and give consumers a place to take their broken models for repairs.

“The intention is to move away from a big-box strategy and move to a strategy where we have channels that give us more direct access to our customers,” explained Tom Oreck, who rounded up family members to put together the offer, which includes $14.5 million in cash and the assuming of several million dollars worth of the company’s liabilities.

David Oreck said that the company’s leaders shouldn’t have focused so much on getting younger consumers to purchase its vacuum cleaners. The lightweight, sturdier and comparatively more expensive models are designed for older and middle-to-upper-class buyers, he said.

David Oreck founded the company in 1963 when many vacuum cleaner models were bulkier and heavier. The product caught on quickly with hotels, and he later began to target the residential market.

Oreck goes into more detail about the company’s latest missteps in his recent book, “From Dust to Diamonds,” which, according to a publicist’s pitch, chronicles how “venture capitalists are robbing American companies and unnecessarily contributing to the continued loss of American jobs.”

“If we prevail, I think the chances of turning this around are very good,” Oreck said.

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This piece was originally written by Katy Stech for wsj.com.

BBB-accredited firm assists Georgia pecan wholesaler after subpar experience

CHICAGO, May 20, 2013 /PRNewswire via COMTEX/ — Many small businesses have been asked to put their faith and trust in to some pretty industrious investment banking firms when they are faced with the challenges of navigating the financing needs or sale of the business. However, for far too many small and mid-size businesses, the industrious efforts made by some financial services companies seem to disappear abruptly once the initial engagement fees are paid.

“The financial services industry is no different than any other. There are good companies that serve their clients well and there are not so good companies that are self-serving,” says Ian Dolby, president and CEO of Heritage & York Financial Group.

As one Georgia pecan wholesaler discovered, not all financial companies operate the same way. Originally, the owner and CEO of a Georgia pecan wholesaler enlisted the services of an investment banking firm only to be given wildly subpar services and no support in terms of consultation and assistance. According to the pecan entrepreneur, “Communication was evasive, advisors dishonest, and the whole experience felt like a circus of the worst kind. After fees were paid and delivered, I was told that the firm couldn’t do anything to help me.”

Like most small business owners not willing to give up on their business as quickly as outsiders may be, the pecan wholesaler tried again and reached out this time to Heritage & York Financial Group, a Better Business Bureau accredited firm that specializes in debt and private equity solutions, debt restructuring, exit planning and the sale of businesses. As Steve J. Bernes, president and CEO of the Better Business Bureau serving Chicago and Northern Illinois, says, “Accreditation in the BBB is by invitation only and only those businesses that meet our high standards and pass the review process are approved by our Board of Directors.” According to Heritage & York’s clients, they earned this distinction.

“The truth is after listening to the owner of the pecan company we felt obligated to help. We felt really bad for the gentleman. We had several discussions with him and saw first-hand the poor quality work that the investment banking firm had completed on his behalf. We were shocked! It sits in our office now as a reminder of just how bad it can be out there for unsuspecting business owners. We felt we had to help,” says Dolby.

Since engaging Heritage & York, the pecan wholesaler has already established a relationship that will support him into the future. New doors and opportunities have been opened up because of Heritage & York.

“I want to thank Heritage & York for their help and insight they provided about my company. Ever since I have been working with Heritage & York Financial Group, the people have been the best help that a company could ask for. I wish I could have found them two years ago. I look forward to a strong relationship with Heritage & York for years to come,” said the pecan company’s owner and CEO.

“It’s such a shame that we run into so many of these examples where the business owner has been hurt by putting their trust in the wrong company. It comes down to the old saying, if it sounds too good to be true it probably is. In today’s world and in an industry that has been overshadowed by less-than-transparent companies, we wanted business owners to understand just how different we really are, so from the beginning we went out of our way to create a company that thrives on having honest conversations with consumers,” says Dolby.

Visit www.heritageandyork.com and call 312-775-4066 for solutions or information.

Contact:

Ian Dolby, CMAA Chief Executive Officer
Heritage & York Financial Group, LLC
115 South LaSalle Street
Suite 2600
Chicago, IL 60603

This press release was issued through eReleases Press Release Distribution. For more information, visit http://www.ereleases.com.

Copyright (C) 2013 PR Newswire. All rights reserved.

Mandy Cabot wants to make sure the shoemaking business that she and her husband built over the past 20 years remains in good hands after they’re gone. The 58-year-old co-founder of Dansko, a West Grove, Pa., company with more than $150 million in annual sales, says she fears that selling to a competitor, or a private-equity firm, would result in layoffs or other cost-cutting measures.

So last February, the couple transferred ownership of the business to its 180 employees. By “keeping it in the family” and giving workers a real stake in its future, Ms. Cabot says she hopes the company will keep going strong for years to come. “This is our baby, but at some point we have to cease being parents and become grandparents,” she adds.

As more entrepreneurs, like Ms. Cabot, approach retirement—about 30% of the nation’s business owners are 55 or older, according to the U.S. Small Business Administration—many are choosing to sell their companies to their employees, rather than outside buyers.

Known as employee stock-ownership plans, or ESOPs, the move is being embraced by smaller firms, especially those struggling to find buyers during the weak economy. Under typical plans, an owner’s interest in a business is bought out, in part or in whole—often through a bank loan—with the stock being held in trust. Employees then cash in their shares as they retire.

This week, a bipartisan group of lawmakers introduced a bill to encourage employee-ownership plans. But critics of the plans say owners who are looking for an easy exit are simply spreading the risks of business ownership by convincing employees to gamble their retirement savings. Many point to high-profile failures at shared-ownership companies, including Enron Corp., where workers lost their savings. The real attraction for owners, opponents say, is generous tax breaks that shelter capital gains and dividends tied to the plans.

Andrew Stumpff, an outspoken critic of the ESOP model who teaches at University of Michigan Law School, says it’s bad enough to risk your retirement savings in a single company. But it’s even worse if that company is your employer, he says: “If the company fails, you lose your savings and your job.” That risk is very real, he adds, citing Enron, WorldCom and Lehman Brothers as examples of large firms that offered employee-stock ownership before going bankrupt.

As of 2011, there were an estimated 10,900 employee-owned businesses across the country, a 12% increase from 2007 and a record high dating back to the mid-1970s, when the plans first appeared, according to the National Center for Employee Ownership, an Oakland, Calif.-based advocacy group. Nearly all of the employee-owned businesses have fewer than 500 workers.

Some 10 million employees are currently enrolled in these plans, representing more than $860 billion in assets, the group estimates. In the decade since lawmakers first allowed so-called pass-through entities, known as S corporations, to offer employee stock-ownership plans, the number of these firms offering ESOPs has more than doubled, according to Matrix Global Advisors, a consulting firm. Most S corporations tend to be small firms.

Norman Stein, who teaches law at Drexel University, says employee ownership under the ESOP model causes more harm than good. Many of the plans are based on a bloated assessment of the value of the businesses, especially in the wake of the recession, when buyers were looking for deals. Many workers who are participating in the plans are left holding overvalued shares, long after the original owner has cashed out: “I’m not against employees owning some stock in their employer, but not if it’s tied to a retirement plan,” he says. “It’s a troubling trend.”

Others say the plans offer costly and unnecessary tax subsidies. The Obama administration recently proposed closing a tax break on dividends paid out of employee-ownership plans—a move attacked by the ESOP Association.

“What we’re seeing is demographics meeting good tax policies,” claims Michael Keeling, president of the ESOP Association, a Washington lobby group, referring to the growing number of firms owned by baby boomers that are converting to employee ownership. “A company’s success isn’t just driven by the brilliance of the CEO, but also by its employees, and more owners feel [their employees] deserve something more for that,” he adds.

Separate studies by Harvard University and Rutgers, as well as by the National Bureau of Economic Research, have found that businesses with shared-ownership plans fared better during the recession than more traditionally structured firms, including fewer layoffs, higher productivity and stronger employee loyalty. Data from the General Social Survey, for instance, shows businesses with employee stock plans laid off workers at a rate of just 2.6% in 2010, compared with 12.1% at companies without such plans.

Dawn Huston, 31, started working at Dansko 11 years ago, sorting shoes for delivery. Now a warehouse processor, she says the idea of owning a piece of the company made her nervous at first—though she wasn’t worried about her retirement savings, since the company offers a separate 401(k) plan, she adds. Over the past year, she’s begun referring to Dansko as “our company.”

“I feel like they consider us family and it feels like a family,” she says of the switch to employee ownership.

Adele Connors, 60, co-founder of Adworkshop, a Lake Placid, N.Y., marketing agency, says a move to employee ownership “really changed the culture of our company.” Since turning over 33% of the firm to its 30 employees four years ago, she says workers are “more engaged” and that “they get that the harder they work, the more impact they have on the business’s success.” The company expects to convert to 100% employee ownership within the next few years, she says.

Kelly Frady, 43, an account supervisor at Adworkshop since 2008, says the agency’s employee-ownership plan has fostered a team spirit among its staff. “Everyone knows that you do well and your stock will rise,” she says. “It’s a driving factor in making the company succeed in the long term.” Ms. Frady, a mother of three, says she joined the agency after being laid off from a previous job at a nearby resort that had lost its financing during the recession.

Kim Jordan, who co-founded the New Belgium Brewing Co. with her husband in 1991, says employee ownership ensures that the company’s values and culture will remain intact—including its commitment to sustainable farming and an environmentally friendly production process. In December, she extended full ownership of the Fort Collins, Colo., brewery to its 480 employees.

“We’ve always tried to involve our people in the running of the business,” she says. The goal, she says, isn’t just to reward employees, but also to foster innovation by creating a company culture where workers think more like entrepreneurs.

Ms. Cabot, who launched Dansko in 1990 by selling shoes from the back of a Volvo station wagon, says the tax benefits associated with employee stock ownership enabled the S corporation to manage the long-term debt of buying out the couple’s ownership stake. But, she adds, “It’s not some tax dodge.”

The Agenda has often recounted efforts at the Small Business Administration to shift attention to larger businesses, a particular interest of the outgoing administrator, Karen Mills. Now The Washington Post reports that a program that the Obama administration has proposed to provide counseling to midsize businesses would come at the expense of counseling programs for much smaller companies.

As part of its 2014 budget, the S.B.A. seeks $40 million for an “Emerging Leaders” initiative, which the agency describes in a budget document as “a training initiative that specifically focuses on executives of established businesses currently poised for growth from communities across the country.”

At the same time, the budget proposes cutting almost $10 million, or 9 percent of what it received in 2012, from the grants it offers to small-business development centers, and $480,000, or 7 percent, from the agency’s funds for Score. Several other counseling programs would undergo cuts as well; all told, cuts to the four leading small-business counseling organizations that the agency calls its core resource partners would total $11 million.

Ms. Mills has long insisted that the agency needed to expand its focus to larger small businesses, which she has said are often overlooked as a source of new jobs, and that it could do that, as she put it recently, “without ever taking our eye off the ball on Main Street.”

The 2014 budget, however, suggests that with this broader mission, something has to give. At a recent House Small Business Committee hearing, Ms. Mills testified that small-business development centers could still compete for this money. But according to C.E. Rowe, president of America’s SBDC, the association representing development centers, the money could be used only for the Emerging Leaders program and not to offset the administration’s proposed cuts.

Under those cuts, “you lose counselors,” Mr. Rowe, known as Tee, said. “And if you rehire them for this program, they can’t serve the general population. You can’t fudge under a federal grant.”

A representative for Score, Bridget Pollack, said, “Whenever Score’s mission matches with the Emerging Leaders education program, Score will certainly work with the S.B.A. to try to participate.”

Michael Chodos, the S.B.A.’s associate administrator for entrepreneurial development, said in a statement that development centers and other counseling groups already received funds earmarked for special purposes, including the sort of classroom instruction the new program hopes to build on.

“We’re still asking for over $120 million for core services across our resource partner network,” he said. “The $40 million represents additional resources to scale up existing training, which we know brings immediate growth and job creation.”

Still, even if the Emerging Leaders program does get money, it remains to be seen if it will come at the expense of the other counseling programs. The Obama administration has tried to reduce appropriations for Score and the development centers for several years, but each time, Congress has blocked those efforts.

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This piece was written originally by Robb Mandelbaum for the “You’re the Boss” blog for the NewYorkTimes.com.

Starting a business is exciting. Selling a successful company, or going public, or handing it off to your kids–that’s exciting, too.

But what abut all the stuff in between?

The real work gets done in what Daniel Steenerson, the founder of Disability Insurance Services, the largest wholesale distributor of disability insurance products in the U.S., calls “the middle mile.”

That’s where you burn the most energy: overcoming minor and major setbacks, dealing with long-term fatigue, working through cash flow shortages, and simply trying to keep from burning yourself out.

“During the middle mile there’s a huge temptation to quit,” Steenerson says. “That’s why such a huge percentage of businesses fail in the first five years. Poor management and lack of capital are the two main reasons, but from my standpoint the real culprit is losing sight of the finish line. While you can’t get myopic and focus only on today… you also must keep your eye on where you ultimately want to go.”

Here are Steenerson’s tips for mastering the middle mile:

1. Constantly visualize the finish line.

Many business owners reach a certain level of success… and then they settle.

When you get to the point where you’re good, good becomes the enemy of great. The bad stuff often doesn’t keep you from succeeding; the good stuff does, because it allows you to settle.

Look at your goals every day. Measure your progress. Adjust your pace. Remind yourself why you started this journey, and allow the destination to inspire you.

Work with relentless urgency, and work hard every single day. A consistent, hard-driving work ethic will set you apart.

2. Keep putting one foot in front of the other.

Stay disciplined. Focus on taking small steps. The time and energy you invest will pay off.

Every day know what you’ll accomplish, how you’ll accomplish it, and keep putting that foot forward. Then measure the success of your activities.

We achieve what we measure–so keep measuring and keep moving.

3. Believe the surge will come.

Very rarely does progress come at an even pace. You may work incredibly hard for three years and suddenly there’s a big surge… and then growth levels off.

Then work incredibly hard, because the next surge will come. Stay motivated during the flat periods by planning and preparing for that surge.

4. Put your trust in execution.

Good ideas come to many people at the same time; the people who execute are the people who succeed.

Execution is a function of discipline. Without relentless execution you will never achieve greater results.

5. Simplify, simplify, simplify.

Whenever you can simplify a task, a process, the way you achieve a goal, etc., you can accomplish more in less time because you aren’t bogged down in complexity.

The same applies to training your staff: It’s quicker and easier to share what you know and do when you simplify.

6. Embrace discomfort.

If you’re willing to put yourself in a position of discomfort, you can learn anything.

Reaching a certain skill level and a certain level of affluence makes most people comfortable, and that’s where they stay unless they expand their area of comfort into areas of discomfort. Sure, you’ll fumble for a while and you’ll struggle because you really have to stretch in order to do new things.

Most people eventually feel they’ve paid their dues, but in order to gain something new, you have to give something up–usually that “something” is comfort.

7. Stay nourished.

Don’t let your creative juices run dry. Remember, what got you here won’t get you there–and in this case, “there” is past the middle mile.

We change in two different ways: the people we meet and with whom we associate, and the books that we read.

Read. Try to be an expert in a particular subject. Or expand into areas you know little about. Or both. Entrepreneurs should always have a book on their nightstands. And talk to people. Meet people inside and outside your industry. Get informed. Get motivated. Learn from others. Everyone you meet knows something you don’t know that you should know.

No matter what, don’t stop learning. It’s all about your journey, not your age. And your journey is never finished.

8. Hold yourself accountable.

The best way to hold yourself accountable is to develop the right relationships: healthy relationships, both outside of your business and especially in your business with your management team and staff.

See yourself as a servant–because you are–and be truly accountable to those you serve.

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This piece was originally written by Jeff Haden for Inc.com.

At Roozt.com, an online marketplace for brands that give back, we engage with and analyze thousands of social impact businesses every year. This provides our team with a unique macro-perspective about what pains, issues, and problems there are in our industry at any given point in time. Hands down, the largest recurring pain we hear about from social entrepreneurs is: raising money.

We started Roozt with $500, a dream, and determination to succeed. So whoever tells you that you need a lot of money to start a company is wrong. Just get going with what you have and do one thing everyday that makes progress towards your goal. At some point you may realize you need more money and fundraising is an option.

There is no perfect formula for fundraising, but the following lessons are items I’ve learned from my first hand experience in raising money as a social entrepreneur. There are five things a social entrepreneur must know before starting their fundraising.

1. Know Your Product

I can’t tell you how many times I’ve talked to passionate social entrepreneurs who, after a 20-minute conversation with them, I still have no idea what they really do. It helps nobody if you have the world’s most inspiring idea but can’t communicate it in a clear concise manner.

Another term for this is: what’s your elevator pitch? If you got in an elevator at the top floor of the Empire State Building with Pierre Omidyar (if you don’t know who he is, Google now) and he asked you, “so what do you do?” would he understand and be excited by your company by the time you guys hit the ground floor?

Here’s my elevator pitch: Roozt.com is the world’s online marketplace to discover the sexiest brands that give back at members only prices. For every member who joins, Roozt will donate a meal to an American in need. One member. One meal.

Clean. Simple. Concise. Sure there’s a lot more to it, but unless you get someone’s attention, they’ll never ask any more questions.

2. Know Your Market

What pain in the market does your product solve? How big is the market opportunity? Who are your customers? How will they hear about you? Why will they care? You should be able to answer these questions with as much clarity and enthusiasm as your elevator pitch. The fundamental foundation of every business, and what every investor looks for, is the need to solve a problem or a pain in the industry you’re focused on. It’s not enough to merely integrate a cause. If the product isn’t something people actually want or need, then nobody will buy it, you will go out of business, and that helps no one. Even if your product is exclusively designed for social impact, i.e. building a well in Africa, you need to be focused on how your product will solve a pain that wasn’t currently met until you came into the picture.

3. Know Your Audience

This does not just refer to your customers. Knowing the audience of who you are pitching your investment opportunity is just as important. By understanding who’s in the crowd and what makes them tick, you will know how to structure your presentation to get their attention, keep them interested, and get them excited.

Here are the three types of investors you should know:

The Impact Investor

Invests in organizations, entities, or ventures whose sole purpose is to create social impact, with or without a business model. These investors measure success of their investments by the SROI (social return on investment), which will vary based on the organization. They also can come in the form of grants or donations.

The Financial Investor

This type of investor cares about one thing and one thing only–the ROI multiple of every dollar invested. They are driven by capital returns, not social returns. Some are industry agnostic, some invest exclusively in the areas they know best. They separate social good and business as two separate sectors. Traditionally this is the angel investment and venture capital community.

The Financial Impact Investor

This is the hybrid investor category, of which we are beginning to see an influx of the above two sectors to form a well-rounded group of individuals who care about both financial returns and social impact. They believe that making money and making a difference do not need to be mutually exclusive. They are savvy, experienced business people with a social conscious about the world around them. They may seem like a mythical creature, but I promise you, every community in America has them. Having personally raised significant capital for Roozt from financial impact investors, I can promise you, they are out there if you look hard enough.

Knowing which of these investors you are pitching to will drastically change the tone, content, and focus of your pitch. Often times, social entrepreneurs will have three different versions of their pitch deck depending on who they are talking to. Each investor has different motivations, and you better know what they are before walking into that meeting, otherwise you’re in for a long (or short) pitch…

4. Know Your Numbers

Data–one of my favorite quotes pretty much sums it up: “In God we trust. All others bring data.”–W.E. Demings. If you do not know the key performance indicators (KPI’s) of your organization, what drives them and what affects them, it will be virtually impossible to convince anyone to give you money. This applies to both for-profit and non-profit organizations. Take the time to really understand the numbers around your business, industry, market, customers, product, COGS, and operations so you can know exactly what you need to do to be successful and explain that to investors. Your ability to take complicated matters and turn them into easy-to-digest chunks is critical because you generally only have a few minutes of an investor’s time to get them interested.

5. Know How to Pitch

Whether you realize it or not, you are pitching yourself, your product, your cause, and your company every time you open your mouth, write an e-mail, or hop on a call with someone. That means how you e-mail, the materials you share, what people can see about you on Facebook, Twitter, and LinkedIn, to the actual pitch presentation you give, are all critical in the closing process. If you make a bad impression at any given stage, you may kill your chances before you even get started. Spend time to craft thoughtful e-mails, do your research, control your online reputation on social media sites, and practice, practice, practice! To become an expert at something they say it takes 10,000 hours of practice, so don’t worry if you bomb your first pitch. When a potential investor says no, and you will hear a lot of no’s, learn to ask them why and for feedback. Then use that feedback to get better and fix things before you talk to the next potential investor. Howard Schultz, founder of a small company called Starbucks, heard over 200 NO’s when he was first pitching his crazy idea for a coffee shop to investors. Every no you hear is one step closer to a yes–so press on, learn, adapt, and never give up.

Ok, phew! Sorry I had to put on my stern pants on for a bit in this post, but more often than not so many inspiring social entrepreneurs lose site of these critical items and shoot themselves in the foot immediately out of the gate–and that’s the last thing I want to see happen.

Trust me when I tell you that there is nothing more exciting than getting that “I’m in!” e-mail, call, or meeting from an investor who believes in you, your concept, and the change you have set out to create.

If you find yourself having trouble with anyone of these tips, seek out the advice of someone who will shoot it to you straight. Constructive and candid feedback is the best way we learn what we’re doing wrong and get one step closer to achieving our goals.

“Twenty years from now you’ll be more disappointed by the things you didn’t do than the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.” –Mark Twain

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This piece was originally written by Brent Freeman for Inc.com.