photo credit: Marco Bellucci

There are a few ‘best’ questions related to startups which pop up in our mind now and then. Questions such as - when is the best time to startup? Which sector is the best to startup in? Which is best - funding through revenues or investors? In this post we attempt to answer these questions precisely. The post is inspired by a very good article I came across recently.

The Best Time
Anytime is a good time to startup with a slight tilt towards starting up during a recession. And why is that? That is because if you survive turbulent times then you definitely learn how to manage a business given any other time or scenario. The tough times teach you. On the contrary if your startup has flourished because of the boom period then it will be difficult for you to sustain in times of drought.

What do GE, Disney, HP and Microsoft all have in common? They were all startups that took off the ground during steep declines in the U.S economy.

The Best Sector
If we take a close look at all companies today, we will find out most of the companies started as outliers (extreme deviation from what their original idea was) , and then with time grew in mass and had a bunch of companies following them to form a so called ‘best sector’. Was there an aircraft manufacturing sector before a Boeing? Not really. So the tip here is not to worry about the sector, just do your business where you have a sustainable competitive advantage in what you’re offering.

Investors
Always keep in mind that investors have different motivations from entrepreneurs. As an entrepreneur, you want to build a company over a long term and as an investor, you want to exit with a good value over the next 7 years (entrepreneurial investors are really rare to find).

Your first option should be getting your funding from customers (revenues i.e.) And if you need outside investors then keep in mind the time frame in which you have to generate real value and a ground-breaking idea that will get you an actual investment. And of course, shape your pitch according to different investors – be a good marketer.

photo credit: billaday

The Wikipedia definition of a Term sheet – a bullet-point document outlining the material terms and conditions of a business agreement

It can be described as a non- binding document (like a Letter of Intent) which records two or more parties’ intentions to enter into a future agreement.

Venture Capitalists (VCs) backing out of a term sheet agreement for any reason can be very harmful to a company’s reputation.

If the VC has agreed on the conditions of a term sheet earlier, and then for some reason has backed out, then it’s not his fault. The term sheet by no means is legally binding upon any party involved in the contract.

VCs generally have valid reasons before they decide to back out from investing. Any void term sheet can be devastating for a startup company. If one VC backs out of an offer, then other ‘potential investors’ will look at a startup suspiciously and raising investment will become difficult.

Just remember – be diligent, don’t over promise and NEVER forget that a term sheet is not legally binding.

Read the following articles for a greater insight on the matter:
http://www.readwriteweb.com/start/2010/02/how-your-term-sheet-affects-yo.php
http://cdixon.org/2010/02/03/backing-out-of-a-term-sheet/

It was at Bessemer that I learned you never back out on a term sheet except in cases of fraud etc. I never saw them back out on one nor have I heard of them doing so

photo credit: Pardesi*

A very common similarity that I have noticed in human behavior is that ‘we want to do something, but we don’t end up doing it’. I want to have a successful career but I disrupt my interview. I want to be thin but I over eat. I want to excel in my job role but I don’t complete my tasks for the day and so on.

How can the rationale behind this behavior be explained? Seth Godin in his recent post explained the phenomena – why is it so difficult to do what we say we want to do?

Answer: The Lizard Brain (Resistance)

Resistance – The voice at the back of our head telling us to go slow, not take risk, compromise and back off. This resistance grows further as we get closer to an insight – the truth of what we really want. Lizards (a physical part of your brain) hate change, achievement and risk.

An advice to entrepreneurs is to block the lizard brain. Be open to change and development, compromise, have meetings, fear critics, take risks and pacify the lizard.

The lizard brain is here to stay – it’s your job to figure out how to ignore it

The lizard is a physical part of your brain, the pre-historic lump near the brain stem that is responsible for fear and rage and reproductive drive. Why did the chicken cross the road? Because her lizard brain told her to.

photo credit: karindalziel

In the age of ‘information explosion’ it is becoming increasingly difficult to manage and organize data. And for a startup organizing and control at an early stage is really important. The following web apps will make sharing and collaboration much easier for a startup:

Basecamp: A great web-based project collaboration tool. It brings the people involved in a project together and makes communication easier. Assigning tasks, sharing files, tracking time and meeting deadlines – all becomes easier with basecamp. It has a 30-day free trial period and then you can choose from various reasonable plans available. A highly recommended web app to use – it doesn’t break your bank and provides first-class collaborating service (both internal and external).

Dropbox: It provides online storage space. There are so many files and documents that need to be stored and accessed frequently and dropbox makes this very easy. Not only storage but features like file sharing and offline backup of your files (which any member of your staff can access) are also provided by this tool. It is relatively inexpensive and easy to use.

Google Apps: This is a web-based collaboration and communication tool for businesses launched by Google. Calendars, e-mail, contacts, document sharing are a few features of this tool. Very useful and highly recommended for all startups.

Dimdim: It’s an outstanding tool to conduct web conferences online. The application works entirely from your web-browser – no need to download anything. Save on traveling expenses and conduct meetings, presentations and seminars online.

For more information on this, visit:

http://www.readwriteweb.com/readwritestart/2010/01/5-web-apps-to-keep-your-startu.php

photo credit: star5112

Startup founders can pay back their investors by either selling the business to bigger companies or offering shares to the public (IPO). Public offering seemed to be the ultimate goal of every startup since it promises continuing returns and expansion. Yes, its true many startups still dream of a place on the NASDAQ and startups like Twitter, Facebook, LinkedIn, Zynga also want to go public rather than sell.

But in a recent survey of startups by venture capital firm DCM, only 19 percent wanted to go public. Many startup founders mentioned that a major barrier to go public was the strict regulations for public companies. They believe that there is so much emphasis on paperwork and legislation that a startup can’t focus on actually building a business. Newer restrictions are making public offerings less and less attractive for startups.

"People don't want to run public companies anymore because they don't want to get dragged through the mud," said Rob Coneybeer, a managing director at the investment firm Shasta Ventures

Read the article below for more information:
http://www.mercurynews.com/business/ci_14218184?source=rss&nclick_check=1

photo credit: Joshua Rappeneker

None of us are unaware about the economic downturn and how it has affected businesses – small or big. You have the idea, drive, creativity, plan and resources to launch a startup but there are certain aspects you should be careful about when launching a startup in the midst of the recession.

Focus, discipline and building value – three tips for Startup launches and the rest follows. Seth Godin, (the Marketing Guru and founder of Squidoo) in an interview with Mashable gives more light on this matter. Here is what he had to say:

http://mashable.com/2009/02/04/seth-godin-advice-for-startups/

Understand that in a down economy, not only is there less money for people to spend on you, but you have to spend less money to make stuff that’s worthwhile.

photo credit: jaeWALK

The staff of any business/startup can be divided into three categories; A, B and C. The people belonging to “category A” – the extraordinaire and really talented people are the ones every business wants to keep. A huge problem arises when the “A players” decide to quit and the company goes haywire in trying to keep them from resigning. Suddenly star treatment is provided and all sorts of promises about the future are made to them. But does this work? Will the A star worker not resign?

After reaching a saturation point where you feel under-appreciated or mistreated, an employee will leave regardless of any newly created incentive. The star treatment and incentives aren’t enough to hold back the employee. Instead identify such employees from the beginning and keep them motivated and happy.

The article below is a great read and talks about first hand experience of an entrepreneur:

http://www.bothsidesofthetable.com/2009/11/16/dont-roll-out-the-red-carpet-on-the-way-out-the-door/

Don’t roll out the red carpet on the way out the door, but roll the red carpet inside the organization.

photo credit: jekert gwapo

Starting up a business can be an exciting and challenging process. Right from arranging funds, market research and product development to building a team and accounting for day to day expenses – the entire process can be cumbersome, overlapping and time-consuming.

To make your life a bit easier, over here we have listed the basic tools and tips you need to follow to manage your expenses and accounting:

1.QuickBooks - Have your startup’s financial information right on the computer screen.  This is a must have for all startups and small businesses. Create bills, invoices and even tax preparation and layout – we highly recommend QuickBooks for all startups.

2.ADP or Ceridian - Both ease the payroll services of a startup. From payroll processing to employee payroll tax filing, all available through a single software. Sign up for either of the services right away.

3.Don’t mess with the Revenue Services and make sure you pay all your taxes on time. Stick to be conservative.

4.Keep Receipts for EVERYTHING. From the small expenses to the slightly bigger ones, make sure you keep a track of all. As a startup, (or even otherwise) every single penny counts.

Very basic tips but very crucial for your startup

http://radio.weblogs.com/0103807/stories/2002/08/29/marketing101AccountingTipsForStartups.html

photo credit: gbaku

The importance of ‘right’ workforce in a startup can hardly be over-emphasized. You must hire the right people – especially the ‘early employees’ must be perfect.

The hiring procedure of a startup should follow a two-way approach – not hiring the wrong people and hiring the right people (the former is much more important). Hiring a wrong employee can be detrimental to the growth of a startup.

The main confusion arises in identifying the ‘right’ people for your startup. No matter how experienced you are, there is always a dilemma when it comes to hiring for startups. In the following paragraphs we attempt to outline some important points you should consider when hiring for your startup venture:

•    Instead of spending a lot of time going out and finding the perfect person, let the perfect person find you

•    Change the “what can they do for me” line of thinking to “what can my startup do for them?” It’s not only the responsibility of big companies to ‘create value’

•    Generalists and Specialists – both are important for your startups so try maintaining a balance

•    Hire talent, not skill – the talented employee will automatically learn the skills

•    Have a probation period before actually hiring (you should date before getting married)

•    Experience is important but don’t ignore the people with a ‘warrior attitude’. Reminds me of a post by Seth Godin I came across recently.

Your startup is developing in the Information Age so take full advantage and look out for the best talent. Detailed information on this subject is available in the following articles:
http://onstartups.com/tabid/3339/bid/1278/5-Quick-Pointers-On-Startup-Hiring.aspx
http://onstartups.com/tabid/3339/bid/185/Startup-Hiring-Why-You-Should-Date-Before-Getting-Married.aspx

I’ve been in the startup business for a pretty long time now.  One of the things that I’ve found hardest to do is find and recruit exceptionally talented individuals.  This is not particularly surprising, I think all businesses (big and small, young and old) have this challenge.

photo credit: M i x y

Let’s start by explaining what Inbound Marketing is all about – the style of marketing that focuses on getting found by customers (when they need) and not ‘pushing’ your product or service (referred to as Outbound Marketing) is known as Inbound Marketing.

As a customer when you need to buy a product/service, you don’t solely trust the ad or newspaper release. Suggestions and feedback from friends, family and other customers influences your decision in a big way. And getting this ‘feedback’ has become so much easier with the advent and rise of the Internet and Web 2.0.

All you today need to do this type your query in a search engine and here you go! You have hundreds of reviews, suggestions, feedback (negative too) in one search. Traditional Marketing methods are effective but with the rise of Web 2.0, inbound marketing is definitely the future.

Now as a startup you need to go out there and market your product or service. Inbound marketing is the one stop solution to all your marketing strategy confusions. Your website, SEO techniques, blogs and social media like Facebook, Twitter, LinkedIn etc all come under the Inbound Marketing umbrella.

 As a startup you gain the following benefits from Inbound Marketing:

1. Better Relationship Management – which can lead to higher prospects to client conversion
2. Loyalty factor can lead to more sales
3. The methods of implementing it are far less expensive and as a startup you can’t spend heavily due to financial constraints
4. Easy to use and ready-made tools available online

Inbound marketing can be related to what Seth Godin describes as ‘relationship marketing’ which can turn out as long-term strategy for your startup business if implemented wisely.

Three quick points for Startups: Content, SEO and Social Media

(1) It Costs Less - Outbound marketing means spending money - either by buying ads, buying email lists or renting huge booths at trade shows. Inbound Marketing means creating content and talking about it.

For more information visit:  http://blog.hubspot.com/blog/tabid/6307/bid/4416/Inbound-Marketing-the-Next-Phase-of-Marketing-on-the-Web.aspx