On Thursday, President Obama signed the Jumpstart Our Business Startups (JOBS) Act into law, Forbes reports. The Act makes it easier for startup companies to raise capital and gives companies more flexibility in the manner in which they go public.
The “crowdfunding” elements of the Act are probably the most exciting. These provisions allow all kinds of startups, from tech companies to food vendors, to solicit funding from the general public, a practice that used to be illegal.
The hope is that by relaxing funding regulations, the JOBS Act will help foster a rise in new businesses and encourage technological and business innovation. This growth would then lead to increased employment.
The Act potentially offers a great opportunity for startups and small businesses to get the boost in capital they need to succeed. Tanya Prive, founder of social networking service Rock the Post, offered five steps to help startups get on the right track to becoming a “hiring organization” under the Act:
- Do the paperwork: Get your business plan, incorporation documents, financial forecasts, and a team bio together.
- Do market research: Gather the facts and data that will help you back up your pitch and secure funding.
- Make an Excel sheet: Include all of the contacts you currently have and start asking people you know to share any relevant contact lists they may have. This is important because crowdfunding requires a lot of work on the startup’s part in developing its network and appealing to those contacts for funding help.
- Make a video: A video is an effective way to summarize your entire project and sell yourself. Projects with videos are overwhelmingly more successful.
- Develop your pitch: Think about the needs of your audience and develop the best way to frame your business idea in order to address their concerns.
The SEC now has a grace period of 180 days to implement any additional laws that may be needed to accommodate the JOBS Act. In the mean time, startups should begin working on the list above.
- Find a Chicago Employment Law Attorney (FindLaw)
- JOBS Act: 5 Things to Look Forward to (and 5 to Dread) (CNET)
- How Will the JOBS Act Affect Small Business? (FindLaw’s Free Enterprise)