Pitch start-up ideas to ‘angels’

Dear Karen: What’s the best approach to take when trying to interest an outside investor in my start-up idea?

Answer: The most important thing you can do is target appropriate investors. Don’t waste your time with venture capital firms, which almost never fund start-ups. Pursue friends, relatives and business associates who have money and want to help. Also ask them for introductions to local entrepreneurial investors.

Private investors (sometimes called “angels”) tend to be wealthy risk-takers, said Ty Freyvogel, an author and speaker who specializes in helping entrepreneurs. “The same impulses that led them to be successful in their own ventures also shape their leisure pursuits and investment decisions,” he said.

When you find the right targets, develop a business pitch, remembering that your product or idea isn’t as important as your background. Don’t just focus on the selling points of your product; also emphasize the strengths of your team and any marketing information you have.

“Note the accomplishments of your team’s strongest members and study the competition,” Freyvogel said. “Angels have usually already been entrepreneurs. They will be impressed by your initiative.”

Keep your pitch simple, jargon-free and honest. Remain calm and be confident that the people you’re pitching to want to help. “If you’re not a good speaker, bring a member of your future team who is,” Freyvogel said.

It’s also important for you to invest your own money in this venture. Most entrepreneurs fund the majority of their start-up costs, either by using savings or by accumulating personal debt. And you’re more likely to attract outside investment if you’ve gotten the business up and running on your own.

“Create a steady customer base and stay current on your bills. Then pitch to an angel, explaining that you need investment in order to further ... grow the company,” Freyvogel said.

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Wage, hour laws apply to all firms

Dear Karen: I understand there was a recent court case involving employee meal breaks. Does this affect my small company?

Answer: California wage and hour laws apply to companies of all sizes. Although small firms rarely are targeted in class-action lawsuits for such violations, it is still important to comply with labor laws.

The California Supreme Court case you’re referencing, Murphy vs. Kenneth Cole Productions Inc., said that so-called nonexempt employees who don’t get -- or don’t take -- mandated meal breaks are entitled to an hour’s pay for their time. In addition to ruling that damages can be awarded to employees, the court also increased the statute of limitations from one year to three or four, depending on the circumstances, said Ray Gallo, an attorney at Gallo & Associates in Los Angeles.

“Some small-business owners attempt to control costs by doing things like paying less than minimum wage, not withholding taxes, working people without breaks or treating individuals as contractors rather than as employees,” Gallo said. “If they need to do things like that to increase their margins, they shouldn’t be in business.”

For most entrepreneurs, he said, the more likely problem is that employees are offered meal breaks but don’t take them. In that instance, company policy must spell out and enforce mandatory break requirements. State regulations on meal breaks are available at the U.S. Labor Department’s website: www.dol.gov/esa/programs/whd/state/meal.htmCalifornia.

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Got a question about running or starting a small enterprise? E-mail it to karen.e.klein@latimes.com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.