Richard Singer, consultant

Do's and don'ts in starting a company

Richard Singer is CEO of RaiseCapital.com, a free online service for entrepreneurs to showcase ideas and capital needs. Today he shares some advice on how to establish a business.

What are the first steps in launching a business?

Studying your four C's - company, customers, competitors and collaborators - is a great way to understand whether your product or service will be successful in the current environment. This also can help to identify any immediate holes in your business idea that may need patching. Pinpoint the type of company you wish to pursue in terms of its product/service features and determine what the startup costs are. If all that makes sense, identify the demographics of your target audiences, realizing that there are three different types of customers you'll need to think about - purchasers, influencers and end users. Investigate your potential competitors and stay abreast of what they are doing. One way to carve your place is to team with established companies and organizations that sell to your customers, such as industry associations and the media.

What are the best forums for networking?

A mix of small and high-profile events is best. High-profile events allow you to network among accomplished professionals, while smaller events often give you more "face time" with those who are genuinely interested in a mutually beneficial relationship. Networking on the Internet also is effective because it does not take you away from your office or business. Effective networking can essentially be a low-cost form of marketing.

Which specific scams target entrepreneurs?

Unscrupulous brokers, investors and venture capitalists charge thousands of dollars in upfront fees. When the money doesn't roll in as promised, the business owner ends up the big loser, because any funds that have been raised generally fall out of escrow and are returned to investors. Another common scam involves stock manipulation. Some brokers merge an entrepreneur's firm into a dormant shell company that's already traded publicly and under someone else's control. The shells are essentially dead, and if you don't investigate before getting involved, your company could end up dead, too.

Can the Internet be a trap?

The Internet, while providing all sorts of legitimate opportunities, also has become a breeding ground for scams. A fancy-looking Web page with eye-catching graphics and other enticing characteristics can make promoters, well-intentioned or not, appear more legitimate than they are. It is relatively easy to verify organizations or individuals true identities, given that legitimate brokers are always registered with the state's securities division or the National Association of Securities Dealers. Scam artists typically use quick-fix tactics to get your money without allowing much time for thought, while real brokers go through the traditional steps of meeting face-to-face, mapping out a financing plan and taking time to make the partnership work.

- Dawn House