Near the close of every good meeting, just before the handshake, the customer usually asks, ‘what’s it gonna cost us?’ Before you ask that famous question, check out this article on FastCompany.com. Do, however, keep in mind that we love startups, and they are the reason why we exist. If there is a reason, a way, and an entrepreneurial spirit leading the cause, we will pull out all the stops to take your napkin concept to launch!
This article was thoroughly enjoyable. Or maybe what I found so interesting was the story in itself about the “solopreneur.” An item so useful – yet so spontaneous – is a commodity in this day and age. Lee Loree became fascinated by the different sleep patterns and the magnitude by which the night’s sleep affect one’s day. He developed the “Sleep Tracker,” which essentially sits on one’s wrist while he or she sleeps, and wakes the person up at an optimum time, as to avoid morning grogginess. Which to me is a god-send, feeling how I do when I wake up at 6:30AM after being in a deep sleep. In fact, I feel less terrible in the morning when my sleep is somewhat restless and when my alarm goes off, I am already half-awake. Also, interestingly, Lee chooses to keep his company a single man business, for reasons of wanting to spend time as a husband and a father, hence the article’s title, “Solopreneur.” An unique story of thought, innovation, and a man’s choice to stay grounded.
Going off of the inspirational, insightful tone Driscoll maintains in his article, the story of Victoria Tifft certainly embodies the article’s title, “Small Business Person of the Year.” Tifft was serving in the Peace Corps in the African country of Togo when she developed malaria. After recovering from such a traumatic experience, she launched her own firm, Clinical RM, to help battle infectious diseases by means of vaccines and medicines. Of course, not everyone has such an amazing story to tell about their startup business, but the point here is really to become passionate about something – start a business because you want to make a difference.
I enjoyed this article by Rory Driscoll. He essentially explains how the yearning desire to simply become a “founder” is not enough to create a successful, lasting business. I especially enjoyed one of his closing statements – “If you have a vision to change one small part of the world – go for it.” I feel like so many people these days, particularly those in their twenties, have a sense of entitlement…that they don’t have to put in the time and energy like those of the earlier generations to rack in the money. Wanting to become a founder just for the sake of being a founder is too egotistical to ever allow for a business to truly thrive in the long run. Founders have to be passionate, self-aware, and most importantly, have realistic plans of what exactly they wish to do.
This is an interesting take on how one can create a successful start-up business. Haden offers six tactics that must be followed in order to keep a business afloat. He introduces his article by stating, “Warning, this ain’t easy,” just to emphasize that his suggestions are easier said than done. His first tip: “Live like a college student.” This could be a great strategy for a young, up-and-coming entrepreneur, who has little to no expenses aside from his or herself. Haden’s tips may be more difficult to employ for those with large expenses and/or dependents. However, I do feel that this article could be of great use to the founder with little experience, young and independent enough to endure an exhausting schedule.
I want to talk to the opportunity-costers out there who are working through the decision to make the leap into a startup. It’s very simple- don’t do it.
A few years ago, I met a person who was contemplating quitting her job to do a startup. She explained that she was trying to figure out how long and how much to devote to the startup. She was looking at the salary that she would get in a ‘real company’, how long it would take for an exit, doing a discounted cash flow…blah, blah, blah.
I commented that she didn’t need to spend one more second thinking through the decision and should focus all of her energy on a traditional job search. She thought I was being a wise-a$!, until I walked her through the back-of-the-envelope opportunity cost analysis. This is easy, even for the non-quants (my benchmarks are a little dated, but the outcome will be roughly the same with current data I’m sure):
[(1/57) times .2 times .05 times $117 million] all divided by (1.05^5)
The terms are:
1/57 – ratio of deals pitched to deals funded by VCs
.2 – ratio of VC backed firms that return anything
.05 – your expected ownership at the time of exit
$117 million – average exit valuation for VC-backed M&A activity
1.05^5 – discount the value back to today using 5% per year, assuming an exit in 5 years
If you do the math, the answer is a little north of $16K. Yeah, $16K!
In my 25 years as a startuppist, I’ve had the great privilege of working with a disproportionate number of ridiculously smart technologists and experienced business people. What conclusions should we draw about these people given the math – they’re all crazy; they’re all unemployable; they’re all just stupid?
No way. These folks were able to get beyond the math and focus on building a product, serving customers and building a business.
How you interpret the first term, 1/57, says a lot about your potential for thriving in a startup. An entrepreneur says, “Great, now I know that I need to talk to 58 high potential investors in order to get my important new company funded. Let’s get to work.” An O-coster logs into iTunes and downloads a book about cheese.
Starting up isn’t about ignoring risk. It’s about developing a deep understanding of the risk, constructing an execution plan that mitigates the risk and committing to doing whatever it takes to positively tilt the risk profile. So wipe the Facebook fairy dust out of your eyes and get back to work. You have a long row to hoe. And it will be worth it.
Performing a business assessment is a great way to create a snapshot of different aspects of an organization. The resulting information can be used by both startups and established businesses to understand the needs and challenges they are facing while also identifying solutions for moving forward.
C-leveled offers assessments to provide you with the business intelligence needed to insure success and growth. We begin by helping you identify, measure and understand the key drivers of your business including performance, industry benchmarking and financial management.
The deliverable association with our assessments is your scorecard. It will provide an overview of where you may need to improve. In addition, the scorecard allows you to track ongoing performance against geographical and industry-based benchmarks. Once a high-level assessment has been completed we also provide companies with the ability to perform a diagnostic-level assessment for a more detailed analysis one specific are of performance. Learn more on our Assessments and Scorecards page.
Your startup is expanding and hiring the first set of full-time employees. Now is the time to build the infrastructure to support payroll and taxes. But where do you start? Check out these 10 Steps to Setting Up a Payroll System written by the U.S. Small Business Administration . Then consider adding C-leveled’s Performance Package which provides access to our knowledge center with more than a hundred sample documents and templates to help as your small business grows including the Payroll Budget Estimate Worksheet, Employee Salary Worksheet and Expense Report Templates.
Another year is quickly coming to an end. Now is a great time to begin planning for the upcoming year and setting goals for your business. The first step to looking ahead is understanding where your business has been and what it looks like now.
C-Leveled’s business portal can serve as that starting point. Our Essential Package is a helpful, self-service assessment tool. Completing the steps within our “Essential” checklist will provide you with a scorecard analysis and financial snapshot of your business.
An investment of $150 for this level of membership also includes access to our portal for a year and serves as the first step for building a framework for success in 2012.