Successful Startup 101 Magazine - Volume 2, Issue 1 Page 3
About the Author
Chuck Blakeman started and built eight businesses in the U.S., Europe and Africa. He is the founder of Crankset Group, providing business advisory for leaders and companies worldwide. He is a TEDx and worldwide speaker, author of best-selling books Making Money Is Killing Your Business, and Why Employees Are Always A Bad Idea, and a contributor to Inc., Harvard Business Journal, Entrepreneur, CNNMoney.com, and NYTimes.com. He regularly advises businesses and does keynote talks and workshops throughout the U.S., Europe and Africa.
@ChuckBlakeman
10 Tough Quandaries That Lead Entrepreneurs Astray
By Martin Zwilling
Most entrepreneurs struggle with many startup Founders dilemmas in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. People may jump into the lifestyle to be their own boss, achieve great wealth, start a new trend, or all the above. The dilemma is that these goals are usually mutually exclusive.
For example, is the person who starts a new trend likely to be the one who controls it through the growth phase? In a famous study of 212 new ventures a few years ago, Harvard professor Noam Wasserman found that half the Founders were no longer at the helm after three years, and over time 80% were forced out. That’s not an attractive statistic if you crave control and power.
Don’t wait for the harsh reality of the demanding business world to start thinking about these tradeoffs. The research from Wasserman and others outlines the following top ten dilemmas that every Founder needs to deal with sooner or later in their career as an entrepreneur:
1. The make money or serve humanity dilemma. Your great idea for the next Facebook may make you wealthy, but it probably won’t help the hungry. The answer is to look hard inside yourself, to see what makes you happy and satisfied. If living on Raman noodles while you make the world a better place is fine, skip the investors and growth race.
2. The right time to start dilemma. The right time to jump is a function of favorable career, personal, and market circumstances. While it’s unlikely that all three of these will ever be true at the same time, most experts don’t recommend jumping at the first opportunity, but first gaining some skill, financial, and business experience first.
3. The founding team size dilemma. Should you start a company solo or find co-Founders to help you? With one or more co-Founders, you gain complementary skills, spread the workload and responsibilities, and reduce the risk. The downside is loss of control and financial dilution. In my view, two heads are always better than one.
4. The co-Founder relationship dilemma. While long-time social friends and family may seem like the natural choice for co-Founders and team members, these relationships often get in the way of hard business decisions or necessary business adjustments. Old co-workers or new friends with complementary skills usually make the best partners.
5. The Founder’s title and role dilemma. Usually co-Founders expect to get a C-level title associated with their area of interest, like CFO for the financial expert. Make sure these titles are handed out only to people who are willing and able to accept the responsibility and workload of the associated role. It’s tough to downgrade titles and roles later.
6. The compensation model dilemma. Every founding member wants to be compensated richly for the risk and the unknown. You have very little money, and you don’t want to give away your equity. Recognize that the best people don’t work for free. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones.
7. The right investors and right time dilemma. You don’t want to take money from friends and family, but it’s too early for Angel investors and VCs. No one wants to put in money until you have a product, and you need money to build the product. Bootstrap if you can, otherwise climb the pyramid of family, friends, Angels, and VCs.
8. The right motivated employees dilemma. Very early, you need generalists who can cover multiple areas, but you can’t pay for experience. Later you need specialists and managers. Offer low cash early, with bonuses or stock options for milestones, to people in your personal network. Later use LinkedIn and other job sources for professionals.
9. The Founder succession dilemma. Startups are usually founded by product or service experts who don’t enjoy the various growth phases. Should the Founder keep the company small, try to adapt, or step aside in favor of a seasoned business executive? Transition to a specialist role, plan to exit, be prepared to be pushed out, or plan to fail.
10. The control and growth dilemma. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. If you prefer a private company with organic growth, keep control within friends and family, and prepare for the long haul. Otherwise exit and startup with another idea.
Not facing these dilemmas squarely and honestly is one of the biggest pitfalls facing every entrepreneur. You can’t have it all, just like your startup can’t be all things to all customers. You have to focus on the things you can do and love to do, and do them better than anyone else. Turn these top ten dilemmas into your strengths, and you will have a competitive advantage, as well as the fun and satisfaction you sought to find in the entrepreneur lifestyle.
About the Author
CEO & Founder of Startup Professionals, Inc.; Advisory Board Member for multiple startups; ATIF Angels Selection Committee; Entrepreneur in Residence at ASU and Thunderbird School of Global Management. Published on Forbes, Gust, Young Entrepreneur, Harvard Business Review, and Huffington Post. Feel free to follow me on Twitter StartupPro or Circle me on Google+.
Avoid These 3 Mistakes As A New Entrepreneur
By Dale Partridge
In 2003, I started my first business. It was a fitness company called “The Fit Image.” We offered in-home personal training and massage therapy to upscale individuals in Southern California.
I was a new entrepreneur at the time and had slowly built up a strong clientele and a few loyal employees. Looking back, I made lots of big mistakes. I hurt people I worked with, missed out on killer opportunities, and was insecure as a leader.
Seven companies, $18 million, and over 100 employees later, I have identified most of my blind-spots. I’ve made the mistakes and now understand how to avoid them. Of all my experience as an entrepreneur, here are my top three mistakes to avoid in your early years.
1. Employees Are Not Like You
As an entrepreneur, we sometimes believe the rest of the world shares our disease. But they don’t. Most of society is completely content with working for someone else and letting their dreams remain dreams. Early on, I made the mistake of expecting my staff and vendors to work like me, think like me, and act like me. But creation is your gift, not theirs.
Speak to employees how they need to hear it, not how you want to say it.
2. Be Transparent But Don’t Forget Your Position
A mentor once told me, “Entrepreneurs get paid well because they bear the weight and responsibilities that employees don’t have to.” I remember I would often find myself complaining to my staff about how hard it is to run a business. This was not healthy transparency. It was prideful complaining and I had no good reason to share it. This is pressure and workload that was required of me, not them.
It’s lonely at the top. Deal with it or go work for someone who can.
3. Success Is Not About Money But Freedom
The entire entrepreneurial arena is so ridiculously focused around money that people who work 80 hours week and make $200,000 per year think they’re successful. In my opinion, they just have two $100,000 jobs.
Success is freedom.
If you’re capable of keeping expenses low and eliminating debt, then making $6,000-$9,000 per month is likely sufficient. If you can make that in 10 days per month, that’s what makes you successful. Like I said in my previous article, “you can always make more money but you can’t make more
memories.”
Are you a new entrepreneur? Have you defined your blind-spots? What have you learned so far? Let me know in the comments below.
If you’re interested in starting a new business and don’t know how, I launched a new 12 month program for $99/m on November 1st. If you’re interested you can sign up to be notified here.
About the Author
Dale Partridge is a social entrepreneur and founder of Sevenly.org. Described as "a mind who feels the trends before market," Partridge teaches leaders and organizations how to position their brand, love their people, and develop profitable corporate social responsibility programs.
He's a renowned expert on branding, consumer psychology, and marketplace trends. He is an avid speaker and has been featured in various business publications including the cover of Entrepreneur Magazine, Fox News, NBC, INC Magazine, Mashable, MSN Money, Forbes and the Los Angeles Times. Dale resides with his wife, Veronica, and daughter, Aria, in Bend, Oregon.
The Habit of No
By Ethan Austin
Most people at startups are in the habit of saying yes.
This new year if you are looking for a resolution that will transform your startup, get in the habit of saying no.
The Habit of Yes
The habit of yes occurs when a founder asks you to help him with something that “will only take half an hour,” or when a co-worker asks you sneak in a “quick” bug fix to the weekly sprint because it’s an “easy fix and should only take ten minutes.” We’ve all been there and our natural inclination is to say yes.
There are lots of reasons why we say yes but most of them have to do with the fact that saying no feels rude. Yes, on the other hand, leads to happy co-workers, happy founders and a conflict-free environment. Yes, for lack of a better word, is nice. It is pleasant. It is agreeable. And everyone likes yes.
The Danger of Yes
But yes is a dangerous habit to fall into. Saying yes here and there might seem harmless. But all those little yeses add up. They compound on each other, and they can transform a decisive strategy with clear objectives into an all-you-can-eat buffet of tactics and activities with no common goal.
The true cost of yes is far greater than most of us realize. When we say yes to the small things, we’re also saying yes to switching costs. We’re saying yes to scope creep. We’re saying yes to shipping late.
Falling into the habit of yes is like running a marathon where every three miles you decide to run in a different direction for a quarter mile before getting back on course.
The habit of yes means never crossing the finish line before your competitors, or worse yet, never crossing at all.
Everyone wants to be respectful of their co-workers but invariably saying yes to every request is actually disrespectful to the company. Yes leads to mediocrity. Yes is execution’s achilles heel. Yes is a non-confrontational cop-out. It circumvents the reality that we need to make hard choices.
Ultimately, yes isn’t respectful. Yes is the insidious startup killer.
The Habit of No
The habit of no is one of the healthiest habits your startup can develop.
At its most basic level, the habit of no is about accepting the reality that all ideas are not equal. The habit of no means ruthlessly prioritizing ideas, setting goals and then sticking to them. No is having the conviction to eliminate the good in order to get to the great.
The Path To Greatness is Paved with No
The reason that no is so important is simple: no company has ever achieved greatness by being good at ten different things. They achieve greatness by being best-in-the-world at one thing.
The best companies have a singular thesis about what the future looks like and then maniacally execute against that thesis. They ignore the outside noise. They know exactly where they are going and then say no to any ideas that don’t take them closer to achieving their goal.
Take Google for example. Today Google offers everything from cloud storage to grocery delivery but that is not how Google won the Internet. Google won the Internet because long before you could use Google to video chat with Nana halfway across the country, Google figured out how do one thing 10X better than anyone else in the world: sell ads on the search engine results page.
The same idea can be applied to investing in public stock markets. No one has ever become a billionaire by betting on index funds. Investors win big when they have a thesis about what the future looks like and then place all their chips on the sector or company they think has the greatest chance of creating that future. The greater the risk, the greater the reward. The startup world is exactly the same.
Moonshot or Bust
To fully understand why the habit of no is so critical for startups, it’s necessary to understand the binary dynamic of how venture-backed startups operate.
If you are at a venture-backed startup, by definition your singular objective is growth. You’re not aiming for single or double digit growth. You’re shooting for 1000% YoY growth.
Your objective is to land a moonshot or die trying.
Startups that fall into the habit of yes never hit the moon. Instead, they divide their time between a handful of activities and end up doing all of them at a B+ level. In the real world getting a B+ is an okay outcome, but in the binary world of startups a B+ is the same as an F. B+ work might get you 85% towards the moon, but it will never, ever, ever get you all the way there.
Once you realize that B+, A- or even A work isn’t good enough to hit the moon, it necessarily changes the way you have to operate.
Developing a Habit of No at Your Startup
When a startup has a culture of yes, the people who have the courage to say no may get labeled as unhelpful, selfish or “not a team player.” But this couldn’t be further from the truth.
The habit of no is actually all about teamwork. It’s about acknowledging what is required for everyone to reach a common goal, respecting this common goal and giving your company and your co-workers the best shot of achieving it.
If your startup’s goal is to land on the moon, the next time someone asks you to do something that pulls you off course from achieving this goal, you should politely decline.
If you’re afraid you might ruffle some feathers, share this blog post with them in your response.
Or even better yet, have an open discussion with them. Show them your prioritized list of tasks you are working on in order to achieve the overarching company goals. Once all the information is on the table, decide together if the new task is more or less likely to move you closer to your company goals.
The habit of no can be scary but it can also be transformative. It starts with one person and then it spreads. It’s certainly not the easiest habit to develop, but if you can commit to keeping your head down - to executing on a common goal, and inspiring others around you to do the same, you might all look up one day and realize: “Holy shit! We’re on the moon.”
About the Author
My name is Ethan Austin. I like startups and I like burritos. But more than either of these things, I like helping people. I have started two companies with the goal of making the world a tiny bit better. One is called GiveForward and the other is called DealGooder. Over the course of building these companies, I’ve been lucky enough to receive incredible advice from mentors. I decided to start this blog as a way to pass on some of these lessons to others trying to hack it in the startup world. I also just wanted an outlet to write about burritos.
6 Stress Busting Tips for Self Employed Business Owners
By Jenny Okonkwo
For many small businesses, the income tax filing process is an overly complicated, time consuming process due to the following reasons:
Poor Record Keeping
What cannot be supported or proved, gets added back to taxable income. Incomplete records is probably the No 1 reason why in many cases, small businesses may be parting with more of their hard earned income than they need to.
Limited Cash Management/Expenses Tracking
Small businesses often do not have the time or capacity for consistent cash monitoring. Poor record keeping is likely to leave them exposed to higher income tax liabilities which become a challenge to settle without adequate funds. Also, at the end of the tax year, it becomes a ‘guessing game’ as to how best to categorize and allocate the expenses.
No Budgeting and Forecasting Processes
The use of budgets and forecasts help to profile a business in terms of targeted revenues and expenses. They could be useful as a basis for helping to validate the completeness and accuracy of the actual books and records as a basis for tax calculations.
Lack of Month End Procedures
Month end procedures encourage a level of organization in maintaining the business books and records. The result is cleaner book-keeping to ensure the correct transactions are posted in the corresponding period in the accounts.
Here are some suggested actions to alleviate some of the pain during the tax filing process:
1. Move away from the ‘Shoebox’. Develop a filing system so that you are able to immediately access invoices, expense documents, store till expense chits / receipts, bank and credit statements by month
2. Watch the Cash. Aim to have your suppliers on longer payment schedules than your customers if at all possible. Who wants to take out a loan to pay their taxes?? Open a separate bank account and put aside the HST / Income tax estimate of your revenue as you receive it
3. Introduce month-end procedures. As mentioned above, this will force you to improve your record keeping
4. Build a yearly budget, and flex it monthly, based on what actually happened. This will help you to stay on track with expenses and highlight areas that require urgent action
5. Buy in the expertise for ‘x’ days per month to help you get organized with the above responsibilities which then allows you to focus on the core activities of your business
6. Separate your personal and professional expenditure. Use a separate bank account and dedicated credit cards for your business, for easier tracking of revenue and expenses.
Despite the above, some of you may choose to stick with the ‘Shoebox Method’ of managing your business finances. If so, may I recommend that you install some type of ‘navigation system’….that way, come tax time, you’ll actually know where the Shoebox is!
About the Author
Jenny Okonkwo helps businesses reduce financial risk to maximize commercial opportunity. She does this by helping them resolve compliance issues and improve their financial and business processes. This article was originally published on the author’s blog, https://jennyokonkwo.wordpress.com/ and has been republished with permission.
Building a Business with Friends: Difficult, But Not impossible
By Cristopher Ramirez
Being an entrepreneur is hard. The tasks an entrepreneur must undertake are many and quite complicated. Especially if you haven´t been in the job market a long time or you just graduated from college and you have 0 experience in the real world, like I was 2 years ago.
So one of the things I usually recommend to entrepreneurs that are beginning their ways into entrepreneurship is to gain or establish an alliance with a partner. And having a partner is a resource that can get you to avoid many troubles; finding someone that can support you or give you advice on what to do next is incredible valuable.
And even more valuable when this partner or partners are close friends. And it’s not uncommon that a group of friends start a business, especially in these times.
I have experience of beginning a business with friends. It’s hard but not impossible, in order to succeed you gotta take notice of a series of aspects, which I’ll enlist next:
Not all your friends are good business partners
When you build a business or project with friends you tend to consider other friends of yours to join your venture, just because of that bond. You feel a responsibility to include friends who are close to you into the project, but this action could be catastrophic. Not everyone has what it takes to become an entrepreneur. You must surround yourself with capable people and with a dedication to push your business idea forward. If you want to recruit a friend to your business project, you must first evaluate his/her abilities and discuss with your other business associates why you think these individual has the potential to improve your teamwork.
Work time not equal to friend’s time
One of the first subjects to define with your business partners/friends is that planning meetings or work meetings are precisely just that. Your business necessity must be discussed and arranged first. There’s nothing wrong with chatting with your friends about what’s happening on their lives but, it had happened to me that when you begin with these topics you end talking about it for several minutes, even for hours and then the business topics are postponed or taken lightly. So you should establish work hours that must be accomplished.
Work is done, whether you’re friends or not
When starting a business, everyone on board need to have assignments and responsibilities. These must be delivered, like in any other job. Avoid that any of your friends, or even yourself, get advantage from your friendship and ask for time extension to accomplish their assignments or avoid their responsibilities. I don’t mean that you have to lack flexibility but every member of the team must be committed to this venture. If some of your friends don’t show a great dedication is better to take a minute and think if they’re really that important and necessary to your team.
Getting out of the business is not equal to stop being friends
The day may come when one or more of your friends would want to step out of the business. Leave them do it! They will have their motives, you must not try to retain them just because of your friendship. Doing this could trigger many disappointments and that the job can’t be done. It should be clear that no one is in this business because you made a friendship pact or something like it, like any other job many people come in and many go out. And independently of the way your friends decided to step down from your business, this must not affect your friendship.
Everybody’s success, everybody’s failure
When you release your business idea into the real world, despite it succeeds or fail, you must remember that is everybody’s idea and the rewards or mistakes that your enterprise faces must be surpassed by everyone. Failing is not an excuse to blame somebody, all of the business partners have something to bring to the table that adds value to the business and it is everybody duty to see for the progress of the venture. In the same way, when you achieve your goals: don’t take all the credit for yourself.
Starting up a business with friends can be a huge challenge but it has its advantages; for example, it reduces stress, it boost confidence, there’s a continuous flow of ideas and the most important you hugely enjoy the work.
If you have friends that want to start a business with you, GO FOR IT! It would be hard but you will learn a lot and you will have a lot more fun. I assure you that.
About the Author
Cristopher Ramírez is a mexican entrepreneur, writer and motivator. Author of “Imperio Emprendedor: Mentalidad para la Era Startup”. He loves entrepreneurship and his main goal is to help other to achieve greatness, to become the best they can be. Follow him on Twitter: @Cris_Rmz
How to Avoid Falling Short of Your Sales Goal This Year
By Jill Konrath