A Startup’s First Hires: What To Look For

Advice for all startups .  If you have worked in a large company prior to starting your own company, there are differences in who you should hire as your early stage employees in your startup versus your hires in your prior large company.   Human resources management.

Excerpt:  Early startup employees may not have the same direct financial risk in the business as a company’s founders, but they are certainly taking a leap of faith and putting their trust in a young entity that could crash and burn at any time. These people are critical to startups and small businesses around the globe.

The first employees of a new business must be up for more than just what’s written in a job description, because a startup is not the same as an established business that already has a foundation.

Read full article via A startup’s first hires: What to look for – Fortune Management.

A Small Business Survival Guide: The First Three Years

Guest Post by Sarah Levy

The survival rate for new companies, as reported by the U.S. Small Business Administration (SBA), is as follows:

• ·         Seven out of 10 new employer firms survive at least 2 years
• ·         Half last at least 5 years
• ·         One-third make it to at least 10 years
• ·         One-quarter stay in business 15 years or more.

How do you get your small business to and beyond the 15-year mark? The SBA has the following suggestions that focus on laying the groundwork during the first three years:

 Year One: Be prepared for the unexpected.
Things rarely go as planned, no matter how carefully you set up your business initially. “You may find you need to diversify your product line or that your true niche is something else,” notes the SBA. “Maybe demand for your product goes through the roof and you can’t cope or you find your suppliers aren’t as reliable as you’d hoped.”

Rule #1, then, is to have a plan and sufficient cash reserves to make adjustments to your strategy during the first year and beyond. Writing a business plan and revisiting it often can help you keep your business on course while navigating unexpected bumps in the road. The SBA advises that you think of your business plan as a living, breathing project, not a one-time term paper.

One important part of your focus should be maintaining cash flow and financial reserves. These five tips for building a six-month cash cushion come from SCORE, America’s small business mentors:

1.      Add up all your monthly expenses to calculate what a month of personal expenses really are for you.

2.      If you’re still working a day job, set aside 5 percent of your net pay each paycheck to build savings.

3.      Start with a goal of setting aside $100 week, or $5,200 a year, to form the basis of your cushion.

4.      Be sure to set aside money for taxes whenever you take a cash draw from the company to avoid the surprise of a nasty tax bill later.

5.      Start now to create a habit of saving each week.

Year Two: Reflect on and advocate for your business.
At the end of your first year in business, reflect back on your successes, failures and shortcomings. Ask yourself what you would have done differently. Find out how to get started here.

Year Two is the time to work on your business, as opposed to working in it. That means positioning yourself as a true advocate for your business, not just a salesperson.  To do this, you’ll have to relinquish control of some of the day-to-day business operations you’ve handled since day one.

“Some of the most successful brands in the world are where they are today because the entrepreneur behind the brand is out front advocating its products, its successes, and its core values,” says the SBA, which offers ideas for doing so here.

Year Three: Grow your formula and niche.
This is the year when small business owners feel they have a good handle on their financial projections, enabling them to better prepare for market and seasonal fluctuations.

“If your niche is working for you, keep focused and stay true to it,” advises the SBA. “Stay customer-centric, look for opportunities to grow in that niche, and refine your business and marketing strategy to stay ahead of the curve.”
This is a guest post submitted by Sarah Levy of MerchantExpress.com.

Traditional Marketing Planning Is Wrong for Your New Venture – HBR

Good read — however, for those with current startups and small businesses if you have not already realized this, you may just be LUCKY to be here.

 Excerpt:  Traditional marketing planning (TMP) activities have been a mainstay for the past four decades, but the theories behind them have limited relevance for new ventures facing extreme uncertainty. The old routine of analyzing existing markets, predicting an optimal outcome, and then designing marketing plans to capture that outcome is too slow and cumbersome for today’s startups.

To be successful, new ventures must eschew these theories and instead rely on effectual marketing planning. This strategy uses a different set of management processes focused on speedy action, learning through failure, and a premeditated approach to market experimentation that creates instant feedback. It can help new ventures be more successful, more informed, and more fully understood.

Read full article via Traditional Marketing Planning Is Wrong for Your New Venture – Peter Whalen and Samuel S. Holloway – Harvard Business Review.

The VC Term Sheet Decoded : Managing :: AMEX

Are you about to launch into the search for funding?  Link to the  infographic from AMEX that gives you the basic VC term sheet information and what it means.

Excerpt:  Ready to raise capital? For many new businesses, this can mean approaching venture capitalists for startup funding. And if you’re lucky enough to get them interested, you will be introduced to a term sheet. The term sheet is, in the simplest terms, the contract between investors and companies raising capital. It includes stipulations on who owns how much of the company, the terms under which the investors will supply the capital you need, and who gets what when the company is either sold or taken public. Here we decode the most important parts of the VC term sheet with the help of Jason Mendelson, co-author of Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist. This is the first step to building a knowledge base to have your funding conversations end on a note where everyone feels they are a part of a fair business deal.

Read full infographic here via The VC Term Sheet Decoded : Managing :: American Express OPEN Forum.

Analyzing a Startup, and Pivoting

Recommended for all entrepreneurs and startups.  The article addresses the basic thought process and includes some how-to —  important launch direction in your role as entrepreneur

Excerpt:  I’m involved in two startups. In both cases, we are going through the process of developing a model that evaluates all aspects of the business — our target customers, products and services, organization, infrastructure, channels, financial projections, and funding needs.

In particular, the process of building a solid financial model forces you to think through things like payroll costs, equipment purchases, research and development, sales channels, and even office space. I found myself adding new elements to every part of our business model as I focused on the financial aspects.

I was reminded this week of how important it is to view them all as a whole instead of as the individual parts. I will share the details on one of those startups in this article.

Read full article via Analyzing a Startup, and Pivoting | Practical eCommerce.

Local SEO and Its Contributions to Start-up Businesses

Guest Post by Emma Tomlinson

Major search engines like Google, Yahoo, and Bing are now more advanced and sophisticated. Their search algorithms have been developed to better cater to end-users.

One particular example is local search ranking. Imagine this: when you search for “Chinese restaurants”, you normally include a place along with the keyword to specify which location you want to find such establishments. Although this is the usual practice of browsers, this is really not necessary every time you search, especially since Google most likely knows where you are—don’t be scared of that fact.

So from the perspective of businessmen, it really means that we all have to target those customers who want geographically-specific results. Why? Because they are our biggest potential clients.

Why else would they search for “[keyword+place]” if they are not interested in the products or services offered?

This is REALLY big news for us entrepreneurs. It means that we have to cater to those “localised” queries if we want to stay on top of results pages.

If you need further convincing, here is what you need to know:

Local SEO …

Allows for an affordable access point into marketing
Although the use of the words “cheap” or “inexpensive” may be relative to your definition and mine, it cannot be denied that local SEO is cost-effective.

Now what does that even mean?

With other kinds of Internet marketing endeavours like Pay-Per-Click (PPC) or banner advertisements, you are paying for each visitor to your site. But with this localised search engine optimisation, you only have to pay professionals to tweak, enhance, and promote your website. After that, you are basically getting  free and unlimited traffic from search engines.

Gives leverage to smaller and younger businesses
One of the rigours of starting a business is the fact that you still have to introduce it to the industry. And if that particular industry is already dominated by world-renowned brands/companies, it can be quite intimidating to do so.

But not with local SEO. It allows you to level up with bigger and “older” companies simply by putting you in front of Internet surfers who are using search engines to browse for “local” products and services.

But first, how does Google, Bing, and Yahoo “find” your pages? Your keywords play a great role in this, specifically if they are relevant to a query. This is why it is ideal to use search terms and phrases that are specific and location-based.

Provides long-term marketing and advertising solutions
Building a reputation or familiarity with your customers is a tricky task, and more prominently so when you are just starting your enterprise.

But again, local SEO is the solution. It allows your domain to continuously appear on search results pages, provided of course that you are implementing clever optimisation techniques. And by being a constant on SERPs, you will be more familiar to Web users in your community.

Offers enhanced monitoring and tracking of results
Because of developments in Web analytics, it is now easier to monitor and track your SEO campaigns, including local ones. The best one that I can recommend is Google Analytics. This is a free service offered by the company that allows you to view near-accurate statistics about the visitors on your site, your bounce rate, and where your visitors came from.

CONCLUSION
Local SEO has immense contributions to your online marketing efforts. But apart from it, you should also keep your conventional optimisation methods updated.

About the Author:   Emma Tomlinson is the Head of Retail at Smart Traffic, a UK-based specialist company concentrating on Search Engine Optimisation.

Looking for the ‘Next Big Thing’? Ranking the Top 50 StartUps

Entrepreneurs and small business owners of-interest.

Excerpt:  Venture capitalists are still investing in flashy Internet start-ups, but the “Next Big Thing” is more likely to be a maker of humdrum Internet plumbing for businesses.

The Wall Street Journal’s third annual ranking of the top 50 venture capital-backed companies shows a crop of contenders that overall are focused less on online consumers than in years past.

Read full article via Looking for the ‘Next Big Thing’? Ranking the Top 50 Start-Ups – WSJ.com.

8 Surprising Startup Lessons – What You Don’t Know You Don’t Know

Great article on just the basic considerations to starting your business.  For all entrepreneurs.

Excerpt:   It takes more than a big idea and a thorough business plan to start a new business. Most entrepreneurs aren’t quite sure what else it takes until they’re well underway, and many are shocked to discover important elements of startup success that they simply hadn’t considered at all.

To find out what startups learn they really need but never though of, we asked eight successful young entrepreneurs from the Young Entrepreneur Council (YEC) for their input. The results may surprise you as much as it did these startup founders:

Read full article via 8 Surprising Startup Lessons – What You Don’t Know You Don’t Know.  From ReadWriteWeb

Practical Advice for Raising Early Stage Venture Capital – HBR

Good read on startup’s funding and venture capital — practical tips and advice.  All entrepreneur’s read recommendation.

Excerpt:  Most great businesspeople I’ve met would correctly advise an entrepreneur to avoid raising money if possible. Easy for them to say, right? But there are good reasons to bootstrap. First, you maintain control of the company. Second, maintaining control allows you to experiment and learn where the business is “naturally” going. Third, if you own the company, you can have a great exit at a low price. Fourth, if you’re able to build the company without significant outside capital that may mean your business has even more “real” legs.

But raising venture capital is sometimes a great idea. If your business has high velocity, high margins, and a huge market, venture may be a good road for you. There are some helpful resources out there on venture terms, good venture funds vs. bad ones, and questions you may want to ask a venture capitalist if you meet one.

The notes below are practical working tips on how to go about navigating venture capitalist conversations. Some of these might be surprising or seem hard to follow. But, in my experience, they’re good medicine.

Read full article via Practical Advice for Raising Early Stage Venture Capital – Michael Fertik – Harvard Business Review.

Dot-Com Bubble’s Equity Swaps Are Back

Need cash or funding to cover the needs of startup — here is an alternative that is back for another go around.  Explore well before jumping in — but it could be for you.

Excerpt:  Raaj Nemani and a pal were making plans to start their own business, an online retailer of limited-edition sneakers. But they couldn’t afford the $100,000 for high-end website design.

Then, they learned of an alternative.

Raaj Nemani and Aaron Firestein of Chicago paid for website development primarily using equity in their firm, BucketFeet Inc.

By joining forces with a Chicago website-design and professional-services firm, the pair of first-time entrepreneurs were able to get the work they needed by paying primarily with equity, instead of cash.

The swapping of equity for services is exploding, as a range of professional services providers—including website designers, attorneys, ad agencies and business consultants—seek to profit directly from the growing demand for their services on the part of U.S. start-ups.

Read full article via Dot-Com Bubble’s Equity Swaps Are Back – WSJ.com.

14 Legal Tips for Starting Up

Great list — in fact print and save.  They are basic but easily forgotten in the adrenalin of startups.

Excerpt:  Starting a company means lots of surprises, but a lawsuit shouldn’t be one. Successful young entrepreneurs explain what they wish they knew about the law when starting up.

Read full list via 14 Legal Tips for Starting Up | Inc.com.

A Novel Idea for Putting Sidelined Cash to Work – HBR

Good idea — big company cash hoard to aid the startups cash need with a win – win  —  both sides receive good value.    Cash management and funding.

Excerpt:  Even as the large companies are hoarding cash, many small and mid-sized enterprises are still facing significant challenges and hurdles gaining access to the credit markets. Loans to these companies would help chip away at our alarming unemployment rates—and even more troubling underemployment rates—as well as knock down some of the hurdles that these firms face in executing on their business and growth plans.

The challenge for these emerging growth companies is twofold. First, credit standards and lending rates make it generally difficult to access otherwise very attractive capital available at low interest rates. Second, for small and rapid-growth technology companies, the problem is compounded by the fact that, while rich in intangible assets, they typically lack the kind of collateral (equipment, inventory, real estate, etc.) banks require to secure commercial loans.

What if the idle cash sitting in the treasury accounts of our largest companies could be used as collateral to secure these loans?

Read full article via A Novel Idea for Putting Sidelined Cash to Work – Andrew J. Sherman – Harvard Business Review.

4 Steps for World-Class IT Any Company Can Apply

Information technology for startups and the small businesses.   IT is not just for the big guys.   Good read.

Excerpt:  As he sits across the table from his chief executive (CEO), the head of information technology (IT) for a small startup senses immediately this isn’t going to be the usual Monday morning review. “Our little garage operation is doing unbelievably well,” the CEO says, arching his fingers. “A year ago, no one knew we existed. But we’re already a multimillion-dollar company and we are going to be a multibillion-dollar company soon. I want an IT capability that will be the envy of the Fortune 100. We need large-scale, industrial-strength IT, and we need it immediately. I need you to tell me how we are going to do it.”

How do you build a world-class IT operation for a small company that is quickly turning into a major global enterprise?

Read full article via 4 Steps for World-Class IT Any Company Can Apply – CNBC.

Convertible Equity, A Better Alternative To Convertible Debt?

A new funding vehicle for startups is launching, read the details and why it is different than the not-so-friendly convertible debt in current use.  Cash management

Excerpt:  There has been no shortage of controversy and criticism around the convertible note, a popular investing vehicle that’s used by seed stage and angel investors. As a refresher, a convertible note is a loan that automatically converts into equity upon the closing of a Series A round of financing. Sometimes these loans have a valuation cap and/or a discount. Although these types of notes are relatively easy and cheap to form, many have argued that these types of vehicles are not startup-friendly for a variety of reasons, which we’ll explain below. Today, TheFunded.com and the Founder Institute is announcing in conjunction with law firm Wilson Sonsini, Convertible Equity, a startup-friendly seed-financing vehicle intended to replace Convertible Debt notes.

Read full article via Convertible Equity, A Better Alternative To Convertible Debt? | TechCrunch.

Siri’s Founder Dag Kittlaus Predicts The Next Big Things

Small business of-interest news  — perhaps it will also trigger ideas in the heads of other entrepreneurs.

Excerpt:  Recently, I had lunch with Dag Kittlaus – one of the most brilliant people I have ever met. I believe he will be the biggest rainmaker of this millenium. Why you may ask. Personalization is defining marketplace trends and start-ups are pushing this as a core differentiator. Everyone wants to cut through the clutter and create some form of expertise or personalized assistance. He played a huge role in the first steps by commercializing the first form of a virtual assistant – Siri.

Read full article via Siri’s Founder Dag Kittlaus Predicts The Next Big Things – Forbes.