Starting you own business isn’t easy—especially in today’s economy. We brought together a diverse group of Utah entrepreneurs to discuss the challenges and opportunities they experience day after day. The group discussed securing startup funding, hiring employees, and the impacts of social media and other technology. They also offered advice for those thinking about taking the entrepreneurial plunge.

A special thank you to Kirton & McConkie for hosting and sponsoring the event. We’d also like to thank Jeremy Hanks for moderating the discussion.

Our panel included:

Back Row:

Hal Widlansky, Mangia

Ben Peterson, Bamboo HR

Trajan King, Snirk.com

Mike Alder, BYU

Matt Peterson, Utah Fund of Funds

Matthew Wood, Connect Networks

Tyler Dabo, Utah Business

Middle Row:

Kirk Ouimet, Page Mass

JD Gardner, ZenPrint

Jeremy Hanks, Doba

Kent Thomas, CFO Solutions

Jesse Stay, SocialToo.com

Rachael Herrscher, TodaysMama

Seated:

Ryan Caldwell, EnticeLabs

William Borghetti, Senside

Steve Spencer, One to One Interactive

Dan Young, PC Laptops

Not Pictured:

Kelly King Anderson, Startup Princess

What is the biggest challenge entrepreneurs are facing today?

WIDLANDSKY: Finding capital. Any entrepreneur or venture capitalist will tell you that 80 percent of businesses fail because they don’t adequately capitalize. You can find great people and have a great idea, but if you don’t have enough capital to get it out of your garage, it’s a nonstarter and you are going to go back to your day job.

This is the most challenging economy in the 15 years I have been doing this. When we raised money for City Search in 1996, we went public with a nickel of revenue. It was ridiculous. You can have hundreds of thousands of dollars in revenue now and still not get money. We raised a million dollars in angel funds, and we went to try to get financing from a bank to buy $80,000 in servers, and with a million dollars in the bank they said no. So understanding what your capital needs are and what the right capital sources are and then finding that capital is absolutely critical—and that’s probably the biggest challenge right now.

CALDWELL: I think it depends on what stage your company is at. Early, it is by far the lack of a structured system to help entrepreneurs. There are a lot of people willing to help, but there’s not a really structured system to take people through. It blows my mind that Utah doesn’t have Tech Star or something like that. With a community as strong as it is, to not have a place where people from BYU come in and are able to network or to be able to have access to legal resources or financial advice or accounting advice or tech advice or funding advice. So I would say at an early stage lack of a structured system is the big one.

At our stage where [EnticeLabs] is now, it’s finding the right talent. I think that a lot of the talent we are looking for is just difficult to find. I talked to some of the other CEOs that are further along than I am and they talk about how they had to move to Point of the Mountain to be able to get talent from [Salt Lake City and Utah Valley].

On the funding side, I think there are plenty of people who want to invest. Entrepreneurs just need the structure and the connections to be able to meet the right people or be able to present the idea in the right way. If it’s a great idea and you go and pitch it, I think you are going to get funded. We raised money on the date the stock exchanged dropped 777 points. That’s when we raised our money. That’s the day we signed. So I think you can get money. I just think that you need to have those connections. We have gotten better over time in utilizing those connections, but I think Utah could use the connections better.

SPENCER: I agree that we need to put people with relationships together with people with ideas— that would be huge for so many entrepreneurs. I’ll tell you one of the things I see getting better right now that I think has been the biggest challenge over the last year has been the unknown, and I think looking forward it makes you thankful for what you’ve got. As much as we all wish that every deal we walked into, somebody said, “Yes, I will consume your service,” it’s getting to where it’s almost a blessing when somebody can say no, because the chaos of the last year and a half, you go in and somebody thinks they can consume your service or product and you get weeks or months down the road of the cycle and then they find out that some area of their company is doing worse than they expected or the economy affected them this way or that way and all the sudden they pull back and put things on hold. So it’s nice that right now, it seems like people are either, “Yeah, I want to do a deal,” or, “No, I don’t want to.” And you are almost thankful when people say no. Not because you didn’t want the deal, but you are not wasting your time like I think we have a lot over the last year.

THOMAS: I have watched as a lot of people come to me and say, “I need you to help me raise money.” And we have had 125 or 130 transactions, almost a half billion dollars that we have participated with our clients. And one of the things that we see here is this independence that is great about Utah and it’s one of the reasons why we all want to be entrepreneurs; but there’s also a sense that I know everything I need to know and don’t confuse me with the facts. So I get a lot of deals, and the first thing I say in many cases is, “Is this really a company or is this a better licensing opportunity? How are you going to build a company around this particular thing?” And especially if capital is difficult to get to.

I think for the right businesses there’s plenty of capital, but there isn’t plenty of capital for everybody. And in some cases that’s a blessing, because capital for everybody would be the worst thing that happens because it stops entrepreneurs from really thinking outside the box and boot-strapping their business and recognizing where the mistakes are.

BORGHETTI: It’s funny, back in the 1999 to 2000 time frame, we were awash with capital and I would hear the complaints about not enough capital. I think no matter what the environment is, there will always be entrepreneurs who complain about capital. I think the reason for that is we forget that the initial introduction that we have to capital to get an idea started is a very different need than it is a year later, when you have a little revenue and things are starting to fire. The type of investor you bring in is markedly different than the one you needed a year ago. And it’s the same for when the business progresses—the types of capital you need and the terms you get are different. And it’s something that’s not always known to entrepreneurs when they get started. Entrepreneurs need to understand that there’s a set of realities that surfaces later as the company evolves and matures. That’s definitely an issue.

The economy is something that has almost completely transformed our company in the last six to nine months. It’s like driving a car. As soon as the business slows, you have to pay attention in the rearview mirror more than you used to. When you are making money and revenues are growing, you don’t care as much about the expense line. I think that fundamental shift has caused new questions to be asked by entrepreneurs in terms of how does this product or service react in a down economy or in a recessionary economy? What’s the value process? Does it change? How is it altered? This is an interesting time. It opens new opportunities, but also creates challenges related to building businesses and being an entrepreneur and fundraising. It’s unchartered territory. How has today’s economy hurt or helped your business?

WOOD: One thing I have noticed is because of the way the economy has turned out, people are reevaluating what they knew about business, reevaluating their approach and realizing that the same old same old isn’t going to work, and they need to invest in new technologies and invest in their own infrastructure and be able to build processes and technology that is actually going to make them more profitable. I think people on the cutting edge understand—they not only know the technology, but know the applications of the technology and they are benefiting from that. So really understanding the business implications of what you are building and creating or presenting as a service, whatever it might be, there’s a lot of opportunity there. I think that’s why we are seeing success. HERRSCHER: This sounds harsh, but right now is a great opportunity to cut dead weight. This has been a great time for us to optimize our business. We have centralized much more of our revenue, taken a lot more of our own power back, and have better employees because of it.

GARDNER: There’s the saying, “The rising tide lifts all ships,” but right now it seems like we are in the desert, and the water is going down, down, down. I think people are starting to get more scared and self-interested. But if you can take that, as a business owner or as an entrepreneur, and understand that’s a reality we are all living in, and then try to make the best of that within a win/win relationship.

I also think there are tons of opportunities with very talented sales people and business development people out there. Normally those people would have high demands—big pay and benefits like working from home. Now they just want a solid retainer. Those deals are sweet from a business owner’s standpoint. But you have to take advantage of the fact that those deals are there for pretty much the first time in a long time.

KING: I think one of the greatest things about the economy is that everything is on sale, from human capital to renegotiating deals with people. And I think that that gives an entrepreneur a lot more leeway.

What have you had to sacrifice to chase your entrepreneurial dreams?

CALDWELL: You have to be crazy to be an entrepreneur or be a glutton for punishment. There are parts of it that are brutal, but it poses major opportunities. I look at my life and the opportunities that I have had as a result of being an entrepreneur, and how much better certain parts of it have been. And I think parts of it are really tough. Time is a challenge you have to sacrifice. Everyone at [EnticeLabs] works crazy hours—half the office is there past midnight. People are really passionate about what they are doing. I don’t think it’s all about the paycheck. They have taken huge pay cuts and they can get higher paying jobs right now. I think it’s just that they say the long-term benefit is easily worth the short-term sacrifice. But I think if you find the right people, they are doing it gladly because it’s getting them somewhere 10-times faster than they could otherwise. So in the long term, it’s not a sacrifice.

WIDLANDSKY: I think one of the things that gets sacrificed, and a lot of entrepreneurs do this, is balance. At my last company, I had about 600,000 frequent flier miles in three and a half years, and I missed the entire first year of my daughter’s life—something I’ll never get that back. And after the third time going through that, I said, “I’m not doing this anymore,” and I made a conscious decision to be home. Maybe I’m not home every night at 7:00, but I make a point of being there for the dance recitals and my son’s track meet, because I’m not willing to sacrifice certain things anymore. But in exchange, I sacrifice other things. I no longer make the mega salary I made when I was running a division of the big company.

SPENCER: The fact of the matter is you don’t get strong by being strong. You build muscle by breaking muscle, right? It is not our success in business that taught us how to succeed in business. It’s the scars. It’s the horrific, terrible, horrible deals. It’s the friendship that you lost. It is that contract that went bad. It’s that investment that wasn’t as smart money as you thought it was. It’s all those things that make us strong. I think as much as we get all excited about entrepreneurialism, and there is a lot to be excited and passionate about, I think it’s important that we share the bad times. Make sure that people new to entrepreneurism are told the good and the bad. You have to prepare yourself for a lot of hard times or you are not going to survive this.

CALDWELL: I think the difference is a lot of entrepreneurs don’t mind the hard times. YOUNG: What’s interesting is so many people think the higher up the food chain they go, that life is going to be easy. I say, “You are going to have to put in more hours and intensity as you go up the food chain because you aren’t going to have the time to chill out as much when you want the family time.” Your “me” time definitely drops.

WOOD: When I became an entrepreneur, my reliability shot way down because I had no idea of the challenges ahead of me. When it comes to your family, you have to reevaluate often what you should be doing to make them happier. What can you do or sacrifice more?

STAY: You have to make a conscious decision to spend more time with your family. This summer I took the family to Boston and spent a full month out there, and that’s something I wouldn’t be able to do with a normal job. I worked while I was out there and I was able to get things done, but I was able to see the sights and spend some time. So I think it’s an advantage, as an entrepreneur, that we have that control to spend more time with our family. It’s a matter of making the conscious decision to do it.

THOMAS: But you get addicted to your computer. It’s not like there’s an Alcoholics Anonymous you can go to for help. I’ve got 90 clients, 90 bosses. There’s an opportunity for something to happen every day. I have a personality that says, “I need to do this right.” I’m constantly pulled to my computer—it’s is with me everywhere I go. It becomes a conscious fight, and my family is who suffers when I don’t remember to turn this thing off and get away.

HERRSCHER: I run my business from home and I have to be able to change on a clip. I have to be at my computer, so I’m there at 5 a.m. And when the kids get up for school, I turn into breakfast-making, homework-out-the-door, see-you-later mom. You switch modes. And if you are in a business that should be in business, you are always going to have stuff to do. Always. You could work 24 hours a day and never run out of something to do. Discuss the challenges and opportunities entrepreneurs have when hiring their first employees.

CALDWELL: If you are honest, you can save yourself a lot of time and hassle by hiring the right people. You say, “If you want to work here, you are this kind of person. And if you are not this kind of person, you don’t want to work here.” You make it clear to who you’re about to hire. You paint that picture and you lay it out honestly. Because the people who don’t want to work as hard as you expect them to—you don’t want them to work there.

KING: You have to find out what motivates everybody. As a new CEO, I made the mistake of assuming everybody was like me and they were motivated by money. And I learned some people just want to be thanked. So you can save a lot of money by just thanking them. But some people want recognition, some want money, some just want to be involved in something. It’s different for everybody, and you need to find that.

Secondly, people want leadership. If there’s somebody on your team who isn’t cutting it, they expect you to get rid of that person and make changes and lead, because that’s what your job is.

GARDNER: As a CEO, originally I said to my employees, “You don’t have to know everything that is going on in the business. You don’t even have to know the high level strategy. Just focus in on this narrow piece that we need right here and now.” And I think that can be effective, but long term it is not as effective. If you can paint the broad strategy so all of your employees not only get it, but feel like they buy into it and had a role in shaping that strategy, then they’ll be committed. You can do a good job saying, “Here is our strategy. This is exactly how you plug into that,” and you give them projects that are very tailored around what their sweet spot is in terms of skill set. But play up how important what they are doing is in terms of the broader strategy. I think that’s critical because what you are trying to do is get the responsibility off of you as the owner and onto the employees as a shared responsibility.

SPENCER: I completely agree with the concept of transparency. I guess I hear the word “transparency” a lot in entrepreneurism. I would say probably more my style than transparency is honesty. I don’t think everything has to be transparent, but you have to be completely honest. Where I would draw the line, and it is one of the areas that I have seen a lot of entrepreneurs really struggle with, is before communicating the truth to the troops, you have to have a sounding board somewhere. If you don’t have somebody to talk to and say, “So and so is terrible. He is undermining the company. I don’t know what to do about it,” or if you can’t say, “I just can’t come up with a way to incent this group to do this thing because they are underperforming. What do I do?” If you have no peer, your stress will start to bleed downward. You will find yourself with an employee asking you, “What’s going on? You all right?” And you will pull the door closed and share your stress. And then you’ll share a few more things. And the next thing you know, that line between leadership and professionalism starts to get broken. So I would just say one of the best ways to manage employees well is to make sure that you have the support structure that you need.

WIDLANDSKY: Every hire is critical. When you bring someone into your company, you are bringing someone on who you are going to have to count on to do X. And it’s always easier to hire someone than to fire someone. When you hire someone, you really must determine whether they can do the job, not whether they are smart enough to learn how to do the job. I always try to hire someone smarter than me in whatever they are doing, because they will figure out something I haven’t thought of. And do they fit whatever your company culture might be? Do they get charged up about things your team gets charged up about? And also, what happens when you increase the pressure and stress? Finding the people who are smart, play in the sandbox and don’t crack under pressure is key. And you have to know those things on day one.

How have advances in technology and social media impacted your business?

STAY: Social media has enabled me as an entrepreneur. I am now able to build relationships with other business contacts, with media contacts, with investor contacts in ways I was never able to do from Utah. And that’s what has changed. It’s enabled me to surround myself with smart people. These technologies have enabled me to network in ways I have never been able to do before. And that’s the change I have noticed.

BEN PETERSON: For me, social media has created another way to waste time. I don’t care if you had your latte and a muffin for breakfast. I think there’s strength if you go on there for a specific reason. From a business strategy standpoint and a general knowledge standpoint, I think it’s a great resource to get information to better prepare yourself. But at the same time, I think if you are not careful, you will get lost in it.

SPENCER: If it increases sales, let’s bring it in. But social media has made it so everybody is in front of everybody all the time. It may not be at work and any part of the person’s job responsibility, but what the employee says is out there. Everybody just became a publisher. Everybody is their own publication company, and what they think and what they feel and their political opinions and their hobbies just became public record. And it’s about them and it’s about your company. And if you’ve got one person who has their own blog, they’re saying something about your company. And there’s a lot of liability there. So there’s power in social media. But we have yet to see the real ramifications of the legal repercussions of it.

HERRSCHER: One good point is the liability—liability is big. Every company, whether you think you play in the social space or not, should have a social media policy that every employee signs off on. It’s huge. Have every single employee in your organization sign off, “Here is the standard you will abide by and this is what will happen when you don’t. This is how you talk about our clients. This is how you don’t.”

On the flip side, social media can generate a lot of attention to your company. I have been featured in BusinessWeek because of Twitter. I have sat down and had lunch with Oprah producers because of Twitter. Twitter now accounts for more than 15 percent of my referred traffic to my site. I am in touch with every major PR and ad agency in the company because of Twitter. So you can use it to your advantage.

WIDLANDSKY: I think what’s important to remember about any technology, whether it’s social media or cell phones, is that they are tools. Understanding that these are tools and there are things that they are great at and things they are useless for is key. It’s what you consume and the choices you make about how you use the tools that makes them valuable or useless to your business.

WOOD: There are tools out there that are good tools and tools that are bad tools. As a developer group, we try to really hammer down how to build technology well and deliver it to the clients, and they are able to expand on that hopefully using us and not bringing new people in that are going to ruin it. I think any technology that is new and introduced—you have to really tear it down to build it well and how to build it stable. A lot of the businesses didn’t do that.

BORGHETTI: We have a technology platform that we sell and we license to other companies and help those companies communicate more effectively to their customers. We use our own tool a lot, not only among ourselves but to communicate with our prospects and customers. It’s interesting to see the ways that your customer uses your technology. I think it’s really exciting to see not only how we are using it, via cost savings and improved efficiencies, but to see how our customer is using it—that’s probably the greatest thing. From a wealth management perspective, whether it be from a health care perspective, real estate, anything that can help accelerate a sale is important.

What advice would you give to aspiring entrepreneurs?

HANKS: Every company is a technology company. It used to be that if you built software, you were a technology company. But today if you want to start a plumbing business, you’re a technology company because you have to understand how technology can support and scale your business. SPENCER: My piece of advice is to stop thinking about your company as a Utah company. Because with technology, the barriers are broken down.

BEN PETERSON: The great thing about being an entrepreneur is being able to control things, but sometimes our lives get out of control because we let our business control us.

KING: I would say to always have a mentor. No matter what stage you are in your career, it’s good to always have a mentor and seek after mentors that can help you.

THOMAS: I think the fastest way to create client or customer or employee loyalty is to prove to people that you will always make decisions in their best interest, not your own. You have to give before you receive. It doesn’t mean you don’t have to stand up and do the right things, and sometimes you have to make really, really tough decisions and you have to let people go and call the shots the way they are. But at the end of the day, I think whether it’s employees or customers or clients, they have to know that you are going to make decisions in their best interest. That creates an incredible amount of loyalty, and that translates into higher profitability and value for shareholders.

CALDWELL: I would say just know what you are getting into and love it. Accept it for what it is. It has its hard parts, but love the hard parts as much as the good, and build a team that feels the same way about it.

OUIMET: From a startup perspective, I have seen that some days are super scary and others are super exciting, and it can shift from one to the other. My advice would be just to embrace that. Understand that sometimes it is going to be super hard and other times it will be super awesome.

BORGHETTI: I get asked a lot by entrepreneurs who are looking to raise capital and 99.9 percent always say, “Well, who are the investors I need to talk to? Can you give me an introduction here? Can you give me an introduction there?” I have always felt that the best resource for an entrepreneur is other entrepreneurs. And the reason for that is the ones who have raised money are plugged into the investment community and can give you the honest scoop of who is good to work with, who isn’t, who has money, who doesn’t. Those types of discussions will help you avoid a lot of pitfalls that are so common in the investment process. Surprisingly, everybody wants to go straight to the source, and oftentimes you can burn a bridge easily doing that and not really get good results.

YOUNG: My advice is to make sure you are not just having an entrepreneur attack of the moment and that you are willing to follow through. Some people are happier working for other people in the long term and they are not meant to be entrepreneurs.

GARDNER: My advice to any entrepreneur, especially a young entrepreneur, is if it starts to feel like you are playing house, you probably are. It’s really easy to get in the mode of, “Yeah, I’m building a company.” But if you go back and review what are you doing to build that company, and out of 100 things you can shoot down 90 of them, that’s a recipe for disaster in about a year from when you get started. And so I would just say keep focused on a high level. Don’t let the small day-to-day stuff drag you down. Focus on results every single day. Do something that is going to drive your business forward. In an early stage company, it’s all about the results, the people, your product and you revenue.

WIDLANDSKY: A venture capitalist who I just met with gave me great feedback. He said, “Don’t let the bozos get you down.” There will always be people who don’t believe in your business, who don’t get it, don’t understand it, and say you are going down the wrong road. Understand that they have a perspective and point of view. And, listen to what they say and take what is valuable from it and dismiss what is not valuable. There will always be people who don’t believe you can be successful, and those aren’t the people that you want to surround yourself with. You want to take the perspective of understanding what they are saying, disagree with it if you disagree, learn from it if there’s value, and then move on. Surround yourself with people who get what you are doing and believe what you are doing, and who think it can be as big as you do.

MATT PETERSON: Having been a failed entrepreneur and now somebody who consults and hears pitches literally over a hundred different companies every year, the biggest piece of advice I have is to understand the risks in your business. You may think that you have the best business idea, and maybe you do, but it’s very critical that you not be so myopic in your view of the world. Clearly be able to understand and identify the risks involved in your business.

WOOD: I think one of the biggest keys to success is to surround yourself with people who you feel are better than you. It not only makes a better working environment, but it helps you drive your success.

HERRSCHER: We all write business plans, and we want to be right. I think one of the biggest things I have learned in business is be wrong and let that benefit you. Our business plans are living, breathing documents. Everyone in my company updates their business plan once a quarter. That doesn’t mean we change the whole thing, but we adjust and we adapt and we keep moving. Be willing to be wrong and change.

STAY: I’d say build business that builds community. Your business should be one that enables your customers, your users, to build their own communities and in that sense it promotes itself. I think the most successful businesses out there are the ones that enable their users or their customers to build their own communities.