Monthly Archives: March 2012
Tips for Your Startup
In the comments on my Startup Technology Stack post, Joe asked the following questions:
1. What are your top 5 tips for incorporation for someone who is new to the process?
2. What would be your top 10 “need to knows” or advice before starting your own company?
I tried to answer the first question here. This post will answer the second question. Let’s see if I can make it to 10:
1. Get started. What’s stopping you? There are business ideas that will require a lot of capital and all of your attention. If you don’t have the time or money to do one of those, do something else. I kept my full time job when I started Sharp Analytics and I worked nights and weekends until I felt like I could make the switch. There are a lot of investors who will tell you not to do this. I understand why they say it, but in most cases I don’t agree.
2. Your idea is less important than your execution. I discuss ideas vs. execution in this post and my thoughts on the subject haven’t changed much. This is important if you want to start a new business because a lot of entrepreneurs spend too much time fine tuning the idea and not enough time executing. A good idea with great execution has more value than a great idea with crappy execution.
3. It’s hard to fly solo. I like having a partner. There are a lot of drawbacks to having a partner too — for one, you can’t just do whatever you want. But that’s the point. A good partner will hold you accountable and help you see holes in your reasoning. And there’s a lot of work to do. It’s nice to have someone share the load and make up for your weaknesses.
4. Sell early. There are at least two schools of thought on this. I subscribe to the idea that you need to sell early and often. Entrepreneurs, especially technology entrepreneurs, tend to wait too long to sell. If you are a technology entrepreneur, take advantage of the iterative development processes that have replaced traditional systems development. Your iterations should be short and inexpensive. Start selling as soon as you have a prototype and then use the iterative development process to deliver value to your customers. I read a book recently called “Nail It Then Scale It” recently. It was written by a couple of smart people but they advocate that entrepreneurs should “stop selling” and spend time interviewing potential customers. There are two problems with this. The first is that you should never stop selling, the second is that customers see things as they are, not as they could be. Innovation requires you to see things as they could be and then you have to sell that to your customers. The Innovator’s Dilemma addresses this quite well. Read it.
5. Make sure your spouse is on board. On more than one occasion, I have had entrepreneurs ask me what they should do if their spouse isn’t sold on the idea of entrepreneurship. I tell them not to do it. It’s not worth it. I’m not saying it isn’t worth trying to persuade your spouse, but it isn’t worth doing unless you have your spouse’s full support. Entrepreneurship is very rewarding, but it’s also a challenge that affects your whole family. I absolutely love being a business owner but it really isn’t for everyone and if things get rough (which they will) you will want the full support of your family.
I’m not sure I’m going to make it to 10 tips tonight, but that’s a start. Here are a couple of posts from the archive that might be useful:
1. A post on uncertainty: http://www.crappytogood.com/2011/06/uncertainty/
2. A post about the difference between a good entrepreneur and a crappy one: http://www.crappytogood.com/2009/05/the-yo-yo-entrepreneur/
Incorporating Your Startup
In the comments on my Startup Technology Stack post, Joe asked the following questions:
1. What are your top 5 tips for incorporation for someone who is new to the process?
2. What would be your top 10 “need to knows” or advice before starting your own company?
Great questions. I’m not sure I have 5 tips about incorporation and 10 need to knows, but I’ll give it a shot. This post will answer the first question regarding incorporation.
Incorporation
There is a lot of good information on the web about the various types of entities available to you. Some of the specifics depend on the state you live in but the general principles of LLCs, S Corps, C Corps, etc. are similar in all 50 states. Each type of corporation has its advantages and its disadvantages and you could make a case for any of them. I think the most common mistake is to just start a business without creating the corporation (regardless of the corporation type). You can do this and you will be treated as either a sole proprietorship or a partnership (if you are partnering with someone). Without a corporation you have no good liability protection and generally very few tax advantages. Resist the temptation to get started without spending the money to create your corporation.
In general, I prefer the LLC structure because it’s simple and governed almost exclusively by your operating agreement. Profits and losses flow through to your personal tax return. I would probably choose an S Corporation (or create an LLC and opt to be taxed as an S Corporation) if I wanted to pay myself a wage and take distributions. And I would choose a C Corporation if I was seeking outside investment.
A couple things to keep in mind:
1. Generally, I would start simple and move to something more complex as the situation demands. You can start as an LLC, make an S election if you need to and later convert to a C corporation as your situation changes. You may lose some carry forward losses in a transition, but it’s usually not the end of the world.
2. You should really consult with an accountant or an attorney as you make this decision because your individual situation may vary. There are a lot of variables and you should be able to get the consulting and filing done for about $300 – $500. In the grand scheme of things, this is a relatively small price to pay for protection and potential tax advantages.
And again, whatever you decide, decide to incorporate if you want to build a business. And open a separate checking account, for heaven’s sake.
Startup Technology Stack
This post is mostly for my own reference, but it might be handy to other people who want to get a business off the ground. Every time I start a business I spend a certain amount of time evaluating solutions to get things going. I’m nerdy enough to enjoy it, but it is also time that could be better spent generating revenue. One thing to recognize is that as soon as I post this, it will be outdated but it’s still a good starting point.
Phones
You have to have a phone and there is some great technology out there now to help you manage this. I would start with a Google Voice account. You can always move into a virtual PBX service like Jive (http://www.getjive.com). We use Jive at Franchise Foundry and its great. But I would start with a Google Voice account pointed to your cell phone. It’s simple and cheap.
Website
It used to be that websites were hard. Now they are easy and you should have one that doesn’t look like garbage. I would use GoDaddy.com to purchase your domain because they can also host the domain for you and they have one-click installations of WordPress. I currently host most of my sites at DreamHost (http://www.dreamhost.com) and I love it. They also support one-click installations of WordPress and I like their control panel. But if you aren’t sure of what you are doing, I think GoDaddy is the perfect solution. You can have a domain purchase and a basic site template up and running in under an hour.
Email, Calendar, File Sharing
I think the only real solution for a small business is Google Apps. Once you have your domain setup, you can create a Google Apps account (http://www.google.com/a) and verify that you own the domain. This give you a corporate email account, shared calendars, the ability to share files and to chat with your co-workers. You can have all of this setup inside of an hour, including the account creation.
Every team member should also have a Dropbox account (http://www.dropbox.com). It’s free for up to 2Gig and you can get more space by inviting others to join. Dropbox lets me easily access my files from anywhere. I like that I can share files, but the thing I like best is that I know I have a recent backup of everything I do (I have a Time Capsule backup as well, but there’s something nice about the simplicity of just storing my files in the cloud from the beginning).
Project Management, CRM
I’m a huge 37 Signals fan and I think every small business should have a Basecamp account for project management (http://www.basecamp.com). It’s dead simple project management. Make sure you create this after you have created your Google Apps account so you can setup your project teams with your corporate email accounts.
While you are at it, if you need to track a sales funnel, you should sign up for Highrise — a Customer Relationship Management (CRM) tool from the team at 37 Signals (http://www.highrisehq.com). It’s very slick. I had the chance to evaluate a new CRM called Stride (http://www.strideapp.com). Stride is probably the simplest CRM tool you will ever find and if you can support your sales process with Stride’s bare bones approach you absolutely should. I found it was lacking some key features that I have come to depend on in a good CRM, but that might be because I’m stuck in my ways. If simple works, do it.
Bonus Tech: Email Campaign Management
Not every business needs an email campaign management tool, but if you do I really love MailChimp (http://www.mailchimp.com). It’s easy to create and manage email lists and campaigns and the reports are useful. You can also use MailChimp to create a list by adding a list signup form to your site. MailChimp walks you through the entire process, making it easy for non-technical business owners.
Summary
Things have changed a lot since I put together the technology infrastructure for my first startup. It used to be that you had to purchase a server and buy licenses from Microsoft. You can get started with almost everything I listed above for free. Most of it will cost you a monthly fee once you get up and running, but you can scale into it. And you can stop paying for it when you stop using it.
If you have anything you would add (or remove) from this list, let me know. I’d like to keep this updated with additional information so that it can become a one-stop shop for getting the technology infrastructure for your business up and running so you can focus on generating revenue.
