5 Steps For Calculating Your Startups Costs

You can’t create a realistic business plan without knowing how much it will cost to get your business up and running. If you don’t have an idea of your startup costs, you won’t know how long you’ll have to bootstrap, how much funding you’ll need, how quickly to scale. In other words, without calculating your startup costs, you don’t really know where you’re going — or how you’re going to get there. And your company could fail before you even hit the break-even point.

Some entrepreneurs believe that calculating their costs is all about listing and tallying their cash outlays. This is an essential step, of course, but calculating startup costs is much more than a simple exercise in addition. Equally important is to set some milestones and build your financial plan around hitting these goals.

Here’s how:

#1: Identify your milestones.

To determine the major milestones for your company, you need to assess where you are and where you want to be. You can’t begin to identify your costs until you know what you want to accomplish. What are the important milestones for your company to achieve? Some possible milestones could be to get out a beta product, get a first product, or to gain a solid understand your market. Try to create discrete milestones rather than bundle them together.

#2: Determine what you need to do to accomplish your milestones.

Once you’ve identified your milestones, you need to think about the resources necessary to hit these milestones. Consider the following costs:

Human resources. This is often the greatest startup expense. Figure out who you will need to build your company, and then calculate their projected salaries and wages (depending on whether you hire employees or outsource). Remember to include recruiting, benefits, taxes, and other related HR costs.
Operational costs. These are the day-to-day costs of keeping your business running, including such things as your internet service and office supplies, and other inventory and equipment expenses.
Professional services. You’ll need to include costs for essential professional services, such as an accountant or attorney. Also consider what permits or licenses you may need.
Facilities. Determine, what, if anything, you will need in terms of facilities or office space.
Marketing. Your company won’t be very successful if nobody’s heard of it! Consider the cost of marketing materials, your Google AdWords campaign, or other marketing costs.

#3: Consider funding sources.

Next you need to determine if you are going to bootstrap the entity or if you want to/need to/can raise funds. To do this, calculate your burn rate (the amount of capital you will go through every month), using your total expense calculation. If you realize that you will need to raise money to cover your monthly costs, decide what potential funding source you’re going to target: friends and families, angel investors, or venture capitalists.

#4: Establish your funding goal.

There are pros and cons to each funding source, but there is no right source for all companies. It depends on your company niche, what stage your company is in, and what else you are looking for — and not looking for — in a funding partner. And, of course, it depends on how much money you need.

You may think more money is better, but this is actually a mistake. Use your expense calculations as a baseline for how much funding you will need. Add in a bit of a cushion, since it’s common for startups to underestimate their cost — but don’t add in too much. Raising what you need (and no more) is called capital efficiency– and it’s a much more telling indicator of your company’s success that your capital access.

#5: Balance your milestones against your funds.

Once you have determined what you need to hit your milestones, you need to go back and balance that against your funds. Balance your way between what you can do and what you can afford in order to reach each milestone. This isn’t a one-time process; you’ll find yourself constantly dancing between these two points.

Admittedly there will be surprises as you launch and grow – that’s why you don’t want to start with a five-year financial plan; it’s just not possible to accurately project that far out. Instead, you just want to calculate your initial costs and create a budget, and update that budget, on a quarterly basis. If you can start with a reasonable estimate of your projected costs, you’ll be better prepared to write your business plan — and positioned to build a successful company.

David Ehrenberg is the founder and CEO of Early Growth Financial Services, a financial services firm providing a complete suite of financial services to companies at every stage of the development process. He’s a financial expert and startup mentor, whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

Hiring A Web Developer? 4 Interpersonal Skills To Look For

The Internet and smartphones help us to bring our ideas to life more easily and cheaply than ever before. But before you can get your big idea out in front of the masses, you need that idea to transform from a sketch in your notebook into a working website or mobile app.

Which, in most cases, means you need a great Web or mobile developer.

However, if you’ve never looked for a quality Web or mobile developer before, the task can feel extremely daunting. Many people waste a lot of time and money running through multiple developers before they find the perfect one. Why? It’s often because you aren’t on the same page as the developer with regards to what you want, how much it’s going to cost, and how long it’s going to take.

Nevermind technical skills (those are easy enough to verify) — if you’re working on a high-tech project, interpersonal skills are just as important. These 4 qualities will help ensure you find the partner you’re looking for — the one who can bring your idea to life without wasting any of your time or money:

1. Trustworthiness.

A great Web or mobile developer isn’t just another contractor you hire to get some work done. Ideally, they become your partner. They bring skills and tools to the table that breathe life into your idea and turn your grand vision into a distinct reality. If your gut says you don’t trust them, you’re never going to feel comfortable working with them.

Without trust, chances are you and your developer will never be on the same page with anything. In the back of your mind, you’ll always be second guessing the developer’s decisions and motivations. Moving forward will become increasingly difficult as the process slows down because of the lack of trust in the partnership.

2. Passion for their work.

Someone who has a deep passion for their work is often palpably excited and positive about that work. This excitement spills over into their interactions with you.

If your developer isn’t excited to be working with you, that sentiment is going to show in their communication and demeanor — walk away!

3. Previous (positive) experience working with clients.

Some developers create incredible, high-quality work and are amazing at what they do, but they’re simply not that good at working with clients. They’re not “people” people. If your developer doesn’t have previous experience working with clients, that’s going to be a problem.

Previous experience working with clients means your developer will have an existing process and workflow in place, which creates a much smoother experience for you. They’ll be able to help prevent common problems that could arise during your project, saving you time and money.

If you’re not sure about your developer’s capacity to deliver in this respect, ask for references.

4. Excellent communication skills.

Given our increasing reliance on email as a primary form of communication, it’s easy to misinterpret what somebody is saying or how they are feeling. If your developer isn’t very good at communicating in this way, you’re likely to lose track of what’s going on with the project.

A developer who is also an excellent communicator will ensure you always have a clear overall view of the project. They’ll explain everything in layman’s terms and not drown you in confusing technical jargon. It’s part of the developer’s job to make you feel more comfortable overall about your project.

Tim Jahn is the co-founder of matchist, a curated service for freelance developers to connect with quality clients and projects. He’s also the co-founder of Entrepreneurs Unpluggd, an events and media company that helps entrepreneurs move their businesses forward. As an active member of the Chicago tech community, Tim has made his mark interviewing hundreds of entrepreneurs from all over the world.

3 Key Questions To Ask Before Hiring For Your Startup

One of the hardest but most exciting things about being a young entrepreneur, first-time business owner or even a startup manager is the hiring process. But there are a few things you have to think about before green-lighting a new startup employee, especially in the earliest stages of starting up.

Here are 3 questions to guide you:

1. Do you really NEED another employee?

When you’re first starting out, you’re hiring someone for one of two reasons: (1) because you have pushed your own limits of how much you can work in a day (aka you’re going insane by working so much), or (2), the person you’re hiring has a skill that you simply don’t have and the time spent learning that skill would not be worth it for your business.

Think of yourself — how many hours you put in, how much work you do to spur your business or the business you’re working for. Now duplicate yourself. Is there actually enough work to be done that there could be a clone of you working simultaneously and not be bored or off-task throughout the day?

And if you simply don’t have a skill needed, rethink that aspect of your business. Is there anyone else already on the team that has that particular skill? Is that task that you think needs to get done absolutely core to your business? If yes, then hire. If not, then hold off until it’s absolutely necessary.

2. How do you hire? Immediately, or a trial period?

Companies bring new hires onto the team in different ways. Some startups tend to hire people like developers on a Friday as salaried employees, and ask them to be at work on Monday — mostly because their skill set is definite and because their job takes place in a space that needs to be confined. (We can’t have our engineers working from Starbucks while writing all of our code to improve security on our site.)

Hiring business teams works a little bit differently. Many of these jobs rely on longer-term objectives and relationships that take time to build, combined with some sort of measurable ROI. At MySocialCloud, we help our employees transition from previous activities (working at another company, going to school, unemployment) to working on our team with a two-week “trial period.”

We give them a couple of tasks and some actionable items for the two weeks. They can choose how and when they go about accomplishing the tasks by the set date. After the two weeks, we go through an evaluation process: Did they complete the actionable tasks? How well were they completed? Did they go above and beyond? Did they, as ambitious people who know it takes more effort to work at a startup, take the initiative to add their own tasks to that list to help spur the business?

If all of these tasks are completed at a level that exceeds your expectation, it’s time to hire!

Pro tip: Interview A LOT of people. Look at a lot of different candidates. At the very least, it gives you a perspective of who NOT to hire, which helps you hone in on the qualities and skills of a person who truly fits on your team.

3. Do you offer equity and if so, when/how much?

When it comes to equity in a new company, there are two main pitfalls to avoid.

One is the overly generous mentality. There are some first-time founders who hand out equity for their startup like nobody’s business. They give equity to every new employee, and anyone who has helped them with advice or getting a meeting with an important person. DON’T do this! Equity at a startup is worth next to nothing, and the only way it becomes something is if you make it something. Only give it to people who really contribute (e.g. another co-founder, a technical lead on your team, etc.). And don’t forget to make it vesting.

The flip side is the “hoarding” mentality. These are the founders who know for a fact that their business is worth bazillions of dollars and they want to have it all. DON’T be this person, either. As mentioned above, startup equity means nothing unless your team makes it worth something — you can’t build a business by yourself.

You do need some people on your team to have equity (maybe not all of them, but definitely some of them). At the very least, it motivates them to work harder knowing they have a large potential payout once you reach your goals.

Stacey Ferreira co-founded MySocialCloud, a technology startup that allows people to store their usernames and passwords for all their online websites for auto-login and share websites with friends easily, during her senior year of high school with her brother, Scott. When she was just 18, she raised a seed round of funding of just under $1 million from Sir Richard Branson and Jerry Murdock.

Check out the hiring for your rockstar panel at everywhereelse.co The Startup Conference, EE14, Early Bird tickets and booths still available.

Founder Spotlight: Ryan Buckley, Co-Founder & COO At Scripted.com

Ryan Buckley is Co-founder and Chief Operating Officer of Scripted.com. Ryan holds an MBA from the MIT Sloan School of Management and an MPP from the Harvard Kennedy School of Government. Still and always a Cal Bear, Ryan graduated from UC Berkeley with degrees in economics and environmental sciences. He likes to dabble in PHP, Python, Ruby, Quickbooks, and whatever else needs to be done at Scripted HQ. Follow him @rbucks.

Who is your hero?

Abraham Lincoln.

What’s the single best piece of business advice that helped shape who you are as an entrepreneur today, and why?

Focus. Early on, in the first iteration of our company, we were building screenwriting software to help screenwriters work their way up in Hollywood. It was a lofty goal. Our first version of the product did everything from writer profiles to contest submissions and screenplay filters for producers.

It was too much. An advisor came down on us and reminded us that on our small budget (we had raised $37,000, which really felt like a lot of money) we couldn’t boil the ocean. Not even close. So we focused on one feature we were most excited about: web-based screenplay editing. Google Docs for screenplays.

That decision allowed us to hit a point where we could pivot off of that business and start Scripted.com. The reminder to focus on one problem has stuck with us, and our investors and new advisors tell us that our focus on the writing vertical is what makes us attractive.

What’s the biggest mistake you ever made in your business, and what did you learn from it that others can learn from too?

My biggest mistake was entering a market where my customers were short-term and broke. In retrospect, the business plan competition results were right: you can’t build a business around amateur screenwriters. Our first business model was having them pay subscriptions to use our product. Then we discovered reality and tried to move to a model where studios pay us to access our 100,000 scripts.

Although studios have much deeper pockets, the sales cycle proved far too long and costly. The next pivot, to sell marketing content (not screenplays) to businesses (not studios) was the business decision that worked out.

Lesson learned: Make sure your customers can afford your product and it’s not too hard to sell to them.

What do you do during the first hour of your business day and why?

I wake up at 7 a.m. and try very hard not to check email. By 7:30 I’m usually on the couch with my wife and watching Morning Joe (a terrific political morning show) with our coffee. Then I’ll either work from the couch for a bit or go straight to the office.

What’s your best financial or cash-flow related tip for entrepreneurs just getting started?

Spend as little as possible so you don’t have to stress about cash on a daily basis. Check your accounts monthly at least and always check your credit card bill for subscriptions you no longer need. Put off paying yourself for as long as possible too. It’ll make you appreciate and respect your business.

Quick: What’s ONE thing you recommend ALL aspiring or current entrepreneurs do right now to take their biz to the next level?

Subscribe to Fortune and Inc. And get a smartphone app to make it easy to read the blogs every day.

What’s your definition of success? How will you know when you’ve finally “succeeded” in your business?

When we become a talent magnet, I’ll know we’ve made it.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab , a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

Startups: Is your PR strategy outdated?

3 Key Startup Jobs To Outsource

(image: leasingnews.org)

If you’re running an early-stage startup, chances are there are some knowledge gaps in your core team. You may be strong on the technical side or a product whiz, but what about financial strategy, administration, HR? Are you prepared to manage the day-to-day of your startup, from recruiting new talent to bookkeeping to financial planning?

If you have a knowledge gap within the ecosystem of your organization, you need to fill it. But your in-house startup team needs to focus on developing your products and service, creating partnerships, and earning revenue. Your internal resources should be focused on your core competencies, not on these side tasks.

So, what should you do? Outsource — to professional consultants or groups.

The best plan is to outsource whatever services you can so as to save on the highest business costs of all — staffing costs — while getting the support you need and the assurance that these functions are being taken care of by professionals.

Specifically, you can outsource the following 3 functions:

1. CFO: If your company has closed a seed round of funding or is earning more than $250K per year, you need a CFO to handle your financial strategy and run your accounting team. Even if you’re not yet funded or earning significant revenue, you may still be in need of CFO services. For example, if you’re in high-growth mode or have a lot of activity or expenses, you definitely need a financial professional to oversee your financials.

Depending on your needs, a consulting CFO may be able to help with financial projections, cash forecasts, operating budgets, financial plans, pricing, reporting, debt management, M&A, equity and debt negotiations and liquidations. Overall, CFOs help you with business planning, providing your business plan with essential rigor. Your business is creating a product or service; finance is not your business. Look for a professional CFO who has experience working with startups.

2. Accountant: If your financial status doesn’t warrant hiring a CFO, you still need financial support; at the very least, you’ll need help with your day-to-day accounting and regulatory compliance. This could mean tracking down the best US or Canadian accounting software deals. On the other hand, outsourcing your bookkeeping to the right firm will give you the support you need for cash management, AP/AR, financial close and taxes.

You can also hire a consulting group to provide accounting support on a project basis. So, whether you need help with audit preparation or generally accepted accounting principles (GAAP), your accounting partner can give your accounting issues the attention they need — so you can focus on other things.

3. Human Resources: Any entrepreneur can attest to the fact that HR can be a total time suck. From recruiting to managing personnel issues, from compensation to benefits, from payroll to employee policies and procedures, human resources management can take over your entire schedule. And HR costs include much more than wages — all HR functions, while non-revenue driving, have an associated cost. Outsourcing your HR functions is definitely a cost as well, but when you calculate it out per employee (and figure on the invaluable savings of staying in compliance) it becomes clear that this is a necessary business cost.

While your company is in its early stages, it’s essential to get support, but only as you need it. To outsource doesn’t mean you just hand over a function and forget about it. You’ll still want to be apprised of all aspects of your startup; hiring the right consulting groups will insure that you stay informed.

Remember, you don’t outsource to make a service disappear; you outsource to reduce your cost structure and keep your internal resources focused on your business. When you outsource necessary functions on an as-needed basis, you can concentrate your internal team efforts where they are most needed: growth. And the companies you hire will help you stay on track as your company grows to the next level.

Need a cofounder, why not try CoFoundersLab.

How Startups Can Identify Their Core Values

While walking a potential investor through my first company’s office, he suddenly stopped to take a few deep breaths. I thought something was wrong until he told me, “I’ve never felt such powerful energy!” As a 21-year-old entrepreneur, I had taken our company culture for granted until that moment.

In the course of building my first and second companies, I learned firsthand that a startup’s culture is built on its founders’ true values. With this in mind, I set out to discover and define my own values as I was finishing up my second year at Stanford Business School and getting ready to start Fig, my third company.

But how do founders identify their personal values? While I cannot provide a universal recipe, I can share three questions that helped me determine my core values, and some of the ways my current team aims to align our culture with our shared values:

When have you felt most alive? Building my first startup during my undergraduate years was a deeply fulfilling life experience. I pinpointed what made the experience so rich by asking “Why?” many times over. Our team, a group of 20-somethings, was on an adventure of self-actualization. Every day, we pushed one another to grow — not just because we wanted to see the startup succeed, but also because we longed to see each team member fulfill his or her potential, professionally and personally. Once I uncovered the root of my fulfillment, I was able to articulate my passion for the value of “Becoming and Achieving” — whether it means developing product design skills to create richer customer experiences or improving my listening skills to strengthen my marriage. At Fig, we reimburse team members when they invest in their own growth and share their learning with the rest of the team.
What behaviors stir up intensely negative reactions in you? During grad school, I examined the wide range of emotions I experienced while listening to speakers and interacting with my classmates. The vast majority of the time, I felt inspired and challenged. There were a few experiences, however, that got under my skin. When speakers or classmates demonstrated airs of arrogance or coldness, I felt frustrated. As I questioned why I had these feelings, I discerned the root of my discomfort: these airs created distance between the members of a community that was usually open and supportive. Meditating on my discomfort helped me understand just how much I value another value, “Cultivating Authentic Community.” To help us connect at at a deeper level, our current team holds weekly emotional check-ins, and alternating bi-weekly team workouts and book discussions.
Are there narratives you hold sacred or value systems you can borrow from? The Torah and The Prince are two texts I found helpful in discovering my values. The Torah speaks to human dignity in conveying that all people are created in the image of their creator. By contrast, The Prince encourages leaders to pursue power by any means necessary. Distinguishing between the perspectives I cherish and those I eschew helped me understand my commitment to a third value, “Affirm Human Worth.” We embrace this at Fig by striving to honor people’s time and avoid instrumental behavior.

While all our values will drive our behavior as leaders, don’t assume all of your personal values should become part of your startup. One of your chief roles as a startup leader is to prioritize and communicate what is most important. Startup coach Dave Kashen encourages founders to “select startup values that enable team members to flourish and the company to win in the marketplace.”

Finally, give yourself and your team members grace for the moments you fall short of the ideals you hold most dear. I miss the mark more often than I would like to admit. Perfect adherence isn’t necessary to create a life-giving and high-performance culture. Your startup culture is strengthened every time team members discuss and help one another better lean into your shared aspirations.

Kevon Saber is the CEO of Fig, a mobile startup focused on personal well-being. Prior to Fig, Kevon was VP of Sales & Marketing at GenPlay Games, a mobile games developer he co-founded which has created fifteen games and $40+ million in consumer revenue. Kevon holds a BS in Finance from Santa Clara University and a MBA from the Stanford Graduate School of Business. Kevon and his family live in the San Francisco Bay Area.

Now check out 1o must read startup tips for young brands.

My Favorite Startup Wisdom Came From Critics

My mentors are not the bite-sized platitude types. And no entrepreneur I know ever actually listened to advice — otherwise, we would all be IP lawyers like our parents wanted us to be.

Sure, we nod in agreement with the advice we get, but only because the advice we get is pretty benign to begin with: hire people who complement your weaknesses, fall in love with the problem you are solving and not the product, get in touch with your customer’s feelings, add cheerful touches of color to your office, etc. I can feel you nodding.

Truly “good” advice, on the other hand, burns like dirt in an open wound. The scar tissue that forms is the armor you need to survive the entrepreneurship battle. What kind of advice is that? It’s what you remember verbatim after all the compliments are forgotten: the criticism.

Listed below, then, are my absolute favorite pieces of “advice” — and how each shaped my career to date:

1. “You know you aren’t good enough, right?” In the Lifetime movie of my life, I have a snappy reply, like, “Move over old man, ‘cause ladies are doin’ it for themselves!” In real life, I was stunned into submission as the advice-giver planted a big wet kiss on my cheek and whispered something about me reminding him of his daughter. Yuck!

But here’s what’s even more shocking: I agree with this criticism. I am not good enough to do a startup on my own. I am not a truly gifted and creative physics savant, but my co-founder and CTO, Robert Kester, is! I am also the type of person who would forget to pay quarterly payroll taxes. Luckily, the lovely Kayla Porche, our Accounts Manager, would never allow any such nonsense, and so our ship runs very smoothly.

I am not good enough in more ways than I can count, but I am very good in the few things that a CEO needs to be good at: I have excellent taste in people and technologies, I have a vision the whole company believes in, I can sell ice to Eskimos, and I am arrogant enough to ignore old dinosaurs who think they are doing me a favor.

2. “You won’t make any money.” Keep this between us friends, but I would totally do this job for free. Today I can earnestly say that my colleagues and I made the world a better place. And we do, in fact, make quite a bit of money — go figure!

On day one, you and your co-founders need to decide exactly when you want to cash in your chips and exit the company. The path you choose needs to fit your personality type as well as the true potential of your company.

Do you want to sell the company in two years for mega-bucks? OK, then you should probably follow the traditional VC route that looks to sell fast and inflated (think force-fed duck for foie gras). Generally, the company will need to have a massive market size and be easily scalable. This rules out most companies.

If you are a young founder, there is a very high chance that you will be pushed aside. Are you OK with that? When you spend your money, will it bring you joy?

Do not forget the joy multiple when considering how much money you want to make. When I go buy a new car, I get the happiness from the car and the extra joy from remembering how I came to afford that car. Unfortunately, I meet too many depressed founders who seem a bit lost. If the money does not bring you long-lasting pride and joy, then it was all for naught.

3. “You’re a b—h.” I was 12 years old when someone close to me first called me the b-word. I am all grown up now, and my response is, “Yes, but I’m a glorious b—h.”

I don’t get this said to my face so much anymore, but I still get that look. If you are confused about what this look is, try an experiment: Disagree with a 40-something-year-old VC about one of their recent investments.

Yes, ladies, being a young female entrepreneur is going to be much less fun for you than your male counterparts. The boys get more dates and the girls get thinly veiled hostility. You will not be liked for your success. But you’re not doing this to be liked, are you? (See: Sheryl Sandberg’s 2010 TED talk.)

Ignore the people trying to bring you down a peg. And do not, not, not give up and become an attorney/consultant/doctor. I am sick of being the only young woman on the entrepreneurship panel. Please join me!

Finding the starting line will be the hardest part. It may take years to form the right company, but you will be successful because you, my friend, are a glorious b—h.

Allison Lami Sawyer is the CEO and co-founder of Rebellion Photonics.

Now Check Out Warner Music Executive Ping Ho Gives Important Advice For Music Startups

Female Founder Spotlight: Jess Butcher CMO & CoFounder Of Blippar

Jess Butcher is the CMO and Co-Founder of Blippar, and chief proponent and evangelist for the new verb “to blipp.” Follow her @jessbutcher.

Who is your hero?

Margaret Thatcher. Like her or loathe her, Britain’s first female prime minister made her way in a man’s world and changed the way we think of women politicians.

What’s the single best piece of business advice that helped shape who you are as an entrepreneur today, and why?

Stop benchmarking yourself against other successful entrepreneurs or business people – it wastes valuable energy! Your personality and circumstances are unique and there is no right or wrong way to grow an innovative business. Yes, learn from others’ experiences and be inspired by them, but also make your own rules and navigate your own path. Trust your gut instinct as much if not more than the numbers, and surround yourself with people who you respect and enjoy working with.

What’s the biggest mistake you ever made in your business, and what did you learn from it that others can learn from too?

I don’t really associate with the word “mistake,” preferring “learning!”

The occasional error of judgement or wrong move can often move your business faster than the right ones. To be honest, I don’t think we’ve made any big errors of judgement — only wasted time and effort that could have been better spent — but you tend only to appreciate that in hindsight, and re-focus accordingly. Knowing when to stop and draw a line under a particular strategy or approach is critical. About-turns are not weak, they’re strong and demonstrate good leadership, but they need to happen quickly and be communicated decisively.

What do you do during the first hour of your business day and why?

A bit of Twitter and industry website browsing first thing on my train commute (to put my head up and check out what’s happening around us), then a good half-hour of writing and rewriting to-do lists and priorities for the day. The sheer number of balls I’m juggling means I’m constantly scribbling down to-do lists. (And I haven’t yet found a to-do app that is as satisfying as my multiple scraps of paper when it comes to drawing a heavy line through a completed item, a big bold star or a screaming, underlined caps item in red!)

What’s your best financial or cash-flow related tip for entrepreneurs just getting started?

Don’t pay yourselves until you have to! That, and hire a good finance director. This isn’t always possible from startup, but having that skill set within your founding team seriously helps. If you’re fortunate enough to have a product or service that you can trade for another, then “in kind” deals can help a lot with cash flow in the early days.

Quick: What’s ONE thing you recommend ALL aspiring or current entrepreneurs do right now to take their biz to the next level?

Possibly a slightly strange one — but if you haven’t already got one, find a good “better half” or at least draw closer to those real friends in your life whose support you’ll need. The life of an entrepreneur is all-consuming, with a poor work-life balance and a roller coaster of highs and lows. Having one personal, special cheerleader who celebrates your highs with you and brings you out of despondency during the lows makes all the difference and keeps you focused and balanced.

What’s your definition of success? How will you know when you’ve finally “succeeded” in your business?

For us, there’s a simple measure of success: when to “blipp” becomes as ubiquitous a verb as googling or tweeting, and as habitual an everyday behavior. Everywhere we go in our daily lives, we will be surrounded by physical images and objects annotated with Blippar ‘b’ instructions, which tell you why each is worth blipping and unlocking for a unique content experience. We will simply look at the world around us through an enhanced Blippar lens — whether via our phone or maybe even hardware we wear — and the world will instantaneously jump to life with additional content experiences.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab , a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

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11 Tools To Simplify Your Startups Accounting

Stay on Track With Indinero

“The most important financial metric for most startups is monthly cash flow. Indinero lets us easily see how much we’re spending each month by category so we can budget for the coming months.”

– Bhavin Parikh | CEO, Magoosh Test Prep

QuickBooks Eases Things

“Almost all small business accountants in the United States are familiar with QuickBooks. Thus, I recommend any QuickBooks product (although I like Online Edition the best) because it makes it easy for your to clean up books and collaborate with your accountant for tax time.”

– Eric Bahn | Founder, Beat The GMAT

Outright Shows Everything

“I’ve got Outright set up to push notifications to my phone: every time I receive a payment, my phone goes ‘cha-ching!’ It’s a good noise to hear. On top of that feature, Outright can automatically pull in data from accounts and other apps, while putting everything together in a format that makes my CPA very happy. (Disclaimer: I write for the Outright blog, as well as using the app religiously.)”

– Thursday Bram | Consultant, Hyper Modern Consulting

Go With Google Docs

“Google Docs is a great tool to manage business finances. It’s very powerful and simple to use which makes it a breeze to use.”

– Ben Lang | Founder, EpicLaunch

Pay Up With Square

“Square is a great payment processing mobile app that makes accepting credit cards a snap and moves money quickly into my bank account.”

– Benjamin Leis | Founder, Sweat EquiTees

Microsoft Excel Is Still Relevant!

“It is the industry standard for spreadsheets for a reason. With a little training, you can run circles around any closed source software.”

– Peter Minton | Founder & President, Minton Law Group, P.C.

I Owe It All to Freshbooks

“I’ve never been very good with money. In fact, at one point, I appeared on CNN as the poster child for those with shopping problems. But Freshbooks helps me keep it all together on the business side. I use it to track my time and my business expenses, send invoices (and followups), send out and receive estimates, and generate tax reports. And despite my history with money, it’s all a breeze.”

– Steph Auteri | career coach, writer, and editor, Word Nerd Pro

Wave Accounting Saves Time

“Wave Accounting is completely free and connects directly to your bank account. It automatically keeps track of all your spending for you. It’s a great product and a huge timesaver.”

– Josh Weiss | Founder and President, Bluegala

Sync With Mint.com

“Although most people use Mint.com to monitor their personal finances, many business owners don’t take advantage of doing the same thing with their business accounts. Not surprisingly, Mint’s software works similarly with business bank accounts and credit cards, which makes it very valuable to manage budgets and overall spending.”

– Logan Lenz | Founder / President, Endagon

Stick With Shoeboxed

“I used to dread tax time, because my receipts were always a mess, and often nonexistent. Shoeboxed makes it incredibly easy to keep track of all of my receipts, and then import all of the data to sites like Outright, Mint, etc.”

– Sean Ogle | Founder, Location 180, LLC

There Are Still ‘Human’ Applications…

“I have this awesome human application called a Director of Operations. She handles all the accounting, financing, taxation, and regulation. It’s like magic. I’d highly recommend getting one. They can read between the lines on all those long-winded documents and keep you from wandering into trouble.”

– Brent Beshore | Owner/CEO, AdVentures

Now check out 10 Tools That Simplify Startup Collaboration

7 Opportunities to Save on Startup Expenses

Older, more established companies have the flexibility of deciding how to allocate their budgets and spend their available funds on the resources that make their

Startup Tips,Guest Post,YEC businesses more comfortable and easier to run. But as a young startup, you have no such luxury! Because it’s important to make every dollar count while your business

is still growing, you’ll want to take a look at the following seven opportunities to save money on common business expenses:

Expense #1 – Office Space

First of all, with many of today’s alternative office space options, it’s entirely unnecessary to run out and sign a

But if you absolutely must have a traditional office for your startup, contact property management companies in your area and ask to see non-traditional spaces or spaces that the agencies have had trouble renting out. With a little negotiation, you may be able to save big on spaces that would otherwise remain empty.commercial lease to house your startup. Instead, look into incubator spaces, co-working offices and executive office rentals – all of which can provide you with flexible office space options at a much lower cost.

Expense #2 – Office Furniture

One word: Ikea.

Although, more seriously, if the world’s leading producer of cheap furniture doesn’t appeal to you, consider seeking out used or consignment furniture stores in your area, hitting up garage sales for discount items or even pulling the extra furniture out of your parents’ basement. When your startup is first growing, all you need is some place to sit and work – it doesn’t have to be pretty!

Expense #3 – Office Supplies

When it comes to purchasing the necessary office supplies for your growing startup, the lesson here is that the best offense is a good defense. Instead of looking for ways to save money on the supplies you think you need, focus instead on eliminating the need for physical supplies. As an example, if you pursue a “paper free” office, you remove the need for paper clips, staplers, staples, hanging files and a host of other associated products.

If you absolutely must purchase some supplies, try cashing in some credit card reward points to fund these expenditures. It’s an easy, creative way to free up the extra funds needed to purchase your must-have office supplies.

Expense #4 – Shipping Expenses

While there’s no way to eliminate postage fees (if your startup ships out a physical product), you can cut back on the cost of packaging products by reusing boxes, picking up free shipping containers from USPS or even collecting serviceable packing materials from other businesses in your area (grocery stores, in particular, get rid of sturdy boxes every day).

And, when it comes to the actual postage fees you pay to ship your products, be sure to shop around to get the best rates. Yes, you’ll wind up paying something, but you might be surprised by the variability in rates that exists between today’s major shipping carriers.

Expense #5 – Employee Costs

The hiring and training of employees typically represents a startup’s largest expense. As such, take the following steps to minimize unnecessary expenditures in this area:

Consider bringing on new employees as independent contractors. This will minimize your tax burden and give you more flexibility regarding the costs associated with terminating employees who don’t work out.
Invest in improving your interview process. Training a new employee, only to have him or her leave down the road due to a bad fit, represents a tremendous cost to startups in terms of lost productivity. You can reduce this fiscal waste by enhancing your hiring process so that you’re more likely to wind up with suitable candidates.
Offer benefit reimbursements – not benefit plans. Although providing employment benefits will help you to attract better employment candidates, it isn’t cheap to set up group health plans or other benefits packages. As a cost-saving alternative, consider offering employees a set monthly reimbursement for benefits that they purchase on their own.

Expense #6 – Advertising

Established companies can run pay-per-click (PPC) advertising campaigns, run TV spots during popular programs and send out highly-effective direct mail pieces. You probably can’t.

Minimize your advertising expenses by taking advantage of “free” (as in, free outside of your time investment) techniques like SEO, content marketing or social media marketing. It’s possible to generate a significant amount of traction in this way, which can drive the sales volume needed to make traditional paid advertising methods a possibility in your business’s future.

Expense #7 – Professional Fees

One last expense that you’ll likely encounter as a startup is professional fees – that is, the amounts that you pay to accountants, lawyers and others for their services.

While you shouldn’t cut them out of your budget entirely, look for opportunities to barter services or products in order to get a discount on your bill. No matter what professional skills you have to offer, you should be able to find the common ground needed to craft an arrangement that benefits both parties, while saving you some serious cash.

Sujan Patel is the founder and CEO of Single Grain, one of the top Digital Marketing agencies in San Francisco, CA. With more than 10 years of Internet marketing experience, Sujan leads the digital marketing strategy for companies like Sales Force, Yahoo, Intuit and many other Fortune 500 caliber companies.

The Dropbox Story: From 0 to 100 Million Users: How a Simple Video Can Change Your Business

Startups: Is Your Public Relations Strategy Outdated?

There’s one thing that’s consistent in this world: change. This is no less true in business; industries have to evolve to keep up with developing technology and new trends. On top of that, they have to promote their ability to keep up altogether.

In the past, public relations required a client to pay a large retainer in order to be mentioned in a sidebar or get quick features published, promoting a service or product. Today, the future of PR is online, and it includes a combination of content marketing, SEO and thought leadership. Times are changing, and there are some things you should take into consideration when you’re making decisions about your startup’s PR.

People Want to See Results

In the past, PR companies weren’t held to meeting specific client expectations. They could always hide behind saying, “How do you measure credibility and authority?” Clients consistently felt screwed over by PR companies because they were paying a sizable retainer without any way to gauge the results. With online tools, you can now track exactly where leads and opportunities are coming from. The analytic tools that are available online — like Google Analytics, DoubleClick Ad Planner, WhoReTweetedMe, and Klout – can help you get a better idea of the results of placements.

To break down sales barriers and comfort people who have previously been shafted by PR companies, pay-for-performance models should be adopted. When I switched Digital Talent Agents to this model, our client base doubled and customer satisfaction increased. Retainers have left a bad taste in many people’s mouths and will continue to be used less. Don’t ride this dinosaur any longer than you have to.

Paper Is a Thing of the Past

Instead of grabbing your morning paper off the front porch, you likely get your preferred content on your tablet or phone these days. The future is online, so print editions are becoming archaic and far less beneficial. The focus won’t be on just the initial placement of an article, but on the potential effect of it going viral. Social media can accelerate media exposure just by having the right influencer sharing it with his networks. If you don’t get the social media boost you’re looking for, there are content aggregators, like Zite, that give your content another vehicle to reach the right influencers.

Google is also rewarding site owners for the higher amounts of quality content they have available. The easier it is to find your name and your article, the more exposure you will get; that allows for a tail benefit that can last much longer than a one-day feature in a newsletter. Magazines and newspapers are thrown away after one read and don’t give you the opportunity to amplify your media exposure, but an online post can be shared over and over again.

The Best Promotion Is Not Being Promotional

Personal and company branding will be extremely important in any PR campaign. The more you concentrate on building your brand, the more press opportunities will naturally come to you. People can see through a promotional piece pretty easily, so direct your efforts toward educating people as a thought leader. It’s the best way to promote yourself without seeming like you’re being promotional. If you just concentrate on a promotional piece to bring in leads, you’ll have a short-term gain. However, if you change strategy and start developing your own content as a thought leader, you have a short-term gain and you help build your long-term brand, which ultimately is more important. It’s what everybody should be working toward. Industries and approaches change, but your reputation can last if you play your cards right.

“Mad Men”-era public relations are a dying breed. Old-school PR companies companies may still insist upon paper press releases, a trusting attitude toward the “results” they’re producing, and promotional features that focus more on what your clients can do for you than what you can do for your clients.

But if you want to keep up with changing times, ditch these efforts, and focus on PR that gives you a high return on investment every single time. Insist upon results, and you won’t feel screwed by PR companies – you’ll feel empowered by them.

John Hall is the CEO of Digital Talent Agents, a company that helps experts build their personal and company brand through producing high quality content for reputable publications.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

Now check out 5 Rules for naming your startup.

10 Ways Subscription Sales Can Increase Your Startups’ Sales

TRY TO BUNDLE AND FINANCE

“Consider bundling your products into groups of commonly utilized items, and offering your customers the chance to pay for a “package” on a monthly basis rather than all at once. For example, If your average client buys 10 widgets a year for a total of $110, offer a package of 10 widgets for only $9 per month. Basically, you’re offering in-house financing. People love that sort of thing.”

– Robert Sofia | Co-Founder & COO, Platinum Advisor Strategies

PRODUCT OF THE MONTH CLUB

“Subscription plans that automate sales are a great way to get your product out to raving fans regularly. Whether it’s a cupcake, T-shirt or fabric of the month, giving regular access to your new and best sellers can build anticipation and brand loyalty.”

– Kelly Azevedo | Founder, She’s Got Systems

INCENTIVIZE GIFTING TO OTHERS

“We have a “Mod of the Month Club” where customers choose any one of our watches for a heavily discounted price (30-45 percent off retail). We always make sure to thank these members by offering them first-looks at our new merchandise. The best perk: we offer an extra strap ($15-$20 value) in the package when customers tell us they are “gifting” the watch, gaining us new customers monthly!”

– Aaron Schwartz | Founder and CEO, Modify Watches

USE MEMBERSHIPS TO CURATE

“Subscriptions and memberships are a great way to offer customers the best of the best — wines handpicked by the best sommelier or this season’s must-have shoes chosen by a Hollywood stylist. Combine subscriptions with curators to offer customers the best of your selection.”

– Laura Roeder | Founder, LKR Social Media

HELP YOUR CUSTOMERS USE YOUR PRODUCTS

“Customers come back to companies whose products and services they use. A membership program that helps a client actually learn how to effectively use what they’ve bought makes it more likely that they’ll come back to you. That can include offering case studies, in-depth training and support far beyond the typical user’s manual.”

– Thursday Bram | Consultant, Hyper Modern Consulting

PROMOTE ACTION AMONG YOUR MEMBERS

“By positioning your membership or subscription as the best way to take action, you’ll inspire people to join. Very few things motivate people as much as spending money. If they are spending $50/month on your service, most people will actually do something with it, thus see results. These positive results become the best testimonials you’ll ever receive.”

– Sean Ogle | Founder, Location 180, LLC

START TO SUBSCRIBE AND SAVE

“Follow Amazon’s lead and implement a ‘Subscribe and Save’ program, where you give customers a discount for setting up a subscription. It’s an added convenience for the customer and it’s a nice revenue stream for the business.”

– Josh Weiss | Founder and President, Bluegala

CREATE COMMUNITY MASTERMINDS

“If you already have customers that are willing to pay for your products, there is an opportunity in bringing all of your customers together to share their ideas and network. By creating some sort of forum or mastermind platform, all of your customers will be able to enjoy an uncontested level of product support, fresh ideas, and new opportunities through your community.”

– Logan Lenz | Founder / President, Endagon

PICK YOUR PROBLEMS WISELY

“Examples of subscription services with high lifetime customer values include hosting, email marketing, and other self-service apps. The key to them is that they solve an ongoing problem. In other words, you don’t just need hosting for your website next week, you need it all the time! So, pair your product with a subscription that makes sense. For instance, web design and web maintenance packages.”

– Matthew Ackerson | Founder, Saber Blast

EVERY COMPANY IS A MEMBERSHIP!

“The key to long-term sales growth is developing a loyal customer base that you can tap into in order to sell new products and add-ons. And the best way to build customer loyalty is with a rewards program. Whether with points used to redeem reward items or randomly distributed benefits, any merchant can convert its customer list into a membership.”

– Michael Tolkin | CEO, Merchant Exchange

You can find more startup tips here at nibletz.com The Voice Of Startups Everywhere Else.

How to Find the Right Venture Capitalist for Your Startup!

This is one match that’s certainly not made in heaven — you’ve got to toil and woo several partners to finally arrive at one that best understands you and your business, and is ready to commit to you in the long term.

I’m talking, of course, about your relationship with a venture capitalist. You’ve probably heard grieving entrepreneurs who, after signing the dotted line, are quite unhappy throughout the relationship with their investors.

But there’s nothing wrong with the venture capitalist (VC) per se. You just made the wrong decision. As an entrepreneur, you’ve got to choose the right VC to work with, because the right marriage can help define how successful your business will be and how happy you will be running it.

Here are 4 key points to consider for a happy and long-lasting marriage with a VC:

1. Expertise: Choosing a VC is just like a marriage — that is, it’s a long-term commitment. You need to court first to find out whether the VC is a right fit for you. Take the time out to research whether the VC has funded companies in the domain they are operating. Research to find out what companies they have invested in and what their level of involvement has been in each of those. Do they have potential conflicts (e.g., is the expertise a by-product of an investment in a potential competitor)?

2. Adding Value: Look for investors who can add value to your business and not just give you funds. The best marriages between entrepreneurs and VCs happen when the latter can contribute to the growth of the former and when it isn’t purely transactional. Entrepreneurs need to ask, when things get tough in my venture, will this VC be a part of the solution?

3. Term Sheets: This is where you really find out what the intentions are of the person putting in the money. Look out for exit clauses; if not clearly defined, ask for them to be. Although they are not cast in stone (I know of one venture where the exit was clearly defined, but deferred as the company entered a new vertical and that added to their top line immensely, adding to a bigger valuation), it helps to know what the person with the money is really looking for.

Term sheets are very carefully crafted to fool even the best of people into believing that they’ve struck a great deal, but in reality, for the entrepreneur, that’s not always the case. So if you’re at this stage, it wouldn’t hurt to have your term sheets validated by experienced entrepreneurs who’ve gone down this road and/or a lawyer who has the relevant experience.

4. Set Expectations: Many deals are left to ambiguity, either because of lack of clarity at the stage of getting into a deal or because of assumptions made by either party. It is very important to set expectations from both ends and be clear about it. Entrepreneurs need to build trust with their VCs and vice versa. If you don’t have trust at the beginning of the relationship, it is bound to cause heartaches at the later stage.

Whatever you do, do not take this relationship for granted. You are in it for the long haul, and giving up because of a failed marriage is the last thing that you want to do with your venture. So take caution before you enter into a contract.

That said, all the best with your pitch! If it has worked out well for you, I’d like to hear your experiences and what makes your marriage successful.

This post originally appeared on the author’s blog.

Rahul Varshneya is a startup coach and the co-founder of Arkenea, an enterprise mobility and cloud solutions provider. He writes on starting up and mobile strategy at http://rahulvarshneya.com/blog.

10 Must-Read Startup Tips for Young Brands

Everyone wants a “startup” these days. Everyone wants to be a “founder” with little more than a concept, an LLC filing, some Web real estate, and a dream. But how do you really get it done? In early stage brand building, traction is king.

You’ve likely seen the HBO Series “How To Make It in America.” It chronicles the story of two co-founders and their group of friends. There is luck, drama, rejection, implied success, real success, good marketing, poor marketing, and more luck. As difficult as they make it look in that wonderful series, they actually make it look easy. In reality, think less partying, more planning, and little dependence on gimmicks and luck. This being said, with the right approach it can be done. There is still room for innovation in textile manufacturing and fashion branding.

Starting a clothing brand can be one of the most worthwhile pursuits in all of startups. There are elements of: manufacturing, design, communication, marketing, probability and statistics, industrial engineering, timing, and the almighty of them all — foresight. There are so many variables that go into a success or failure. Right now (and I repeat, right now), we are somewhat succeeding. That being said, I thought I’d share some helpful hints.

Proof of Concept

Before a single shirt was manufactured, we had our initial concept feedback. “So, let me get this this straight,” the industry executive said. “You are going to manufacture in the States? You are going to use American-sourced fabrics? And you think you’re going to succeed in the textile industry?” Well, yes.

From July 2012 and through the fall, we focused on sales, feedback, construction revision, and regional media. Between Kevin and I, we bore the brunt of these tasks. Validation via earned media was the most difficult day-to-day task.

Through this initial stage, we were purely focused on “proof of concept” in our first test market — Dallas, Texas. The media response was great! And so, we continued. Active, driven, and confident men do want something more from their dress shirts.

Spring for Traction

After starting up in April of 2012 and launching the website in July 2012 (with only one product), we are now finally leaning into the Spring of Traction. Through the summer, fall, and winter of 2012, we were silently working on perfecting our first pieces, ginning up “first adopter” sales, building relationships, establishing brick and mortar presences, improving our supply chain, not paying ourselves, and paying our taxes. With that behind us, the fun begins. This spring is focused on the push for traction.

After the foundation that we’ve set over the past year, we can begin focusing on the brand’s opportunity and/or visibility to grow within several of our proven early-adopter demographics: professional athletics, military, collegiate, and metropolitan business.

The “How To” of This Blog

What does all of this mean to a young brand? It is a meticulous process that involves quite a bit of sacrifice, help, influence, and yes, just a little bit of luck. Here are some great tips that few in the industry will share:

Start with a concept that no one else is willing to attempt. Remember, it’s even better when people tell you, “Based on the industry precedent, this likely won’t work.”
The design and manufacturing process is expensive. Allot $20k-$50k for your first product run. You will need to achieve a volume of units manufactured to achieve reasonable margins.
Spend money on your branding and your collateral. I can’t say this enough.
Understand your supply chain and have a manufacturing backup plan when those sources, printers, and cut and sew shops are over capacity.
Spend money on your brand’s website and branding videos.
If you didn’t attend a top fashion design program, find a top designer who did and hire that person. Find a way to get that person on your team.
If there are no other options at the start, plan on pouring all of your personal income into the project for the first year or two.
Keep these elements at the forefront: be first to market, drive sales, gain traction.
Customers aren’t free. Find a natural pipeline that will serve as high-conversion customer acquisition.
Ask for help and be willing to pay for it.

The market is always looking for the next great idea; be willing to sacrifice to see it through. Design really well, depict great logo and lifestyle imagery, prove your concept in a transparent way, and then focus on gaining traction as you go. When you need the push, find a well-connected and cost-effective way to move your brand forward.

This post originally appeared on the author’s blog.

Web Smith is a Sr. Analyst, Co-Founder, and Sports / Entertainment / Political Marketing Consultant and a student of strategy. Follow him at: http://www.twitter.com/web.