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NOVEMBER 2014
Issue: 72
        SMALL BUSINESS

             SUCCESS  


Welcome to Vantage Business Support & Insurance Services

 

We all know how important small business is to the U.S. economy. Some statistics that you may not know are:

(1) they represent 99.7% of all employer firms, (2) they employ just over half of all private sector employees,  (3) they pay 44% of total U.S. private payroll (4) have generated 64% of net new jobs in the past 15 yrs.

 

VANTAGE has been servicing the small business community for over 35 years. Over the years we have accumulated much knowledge, contacts and experience in helping to protecting small businesses and help them become successful and grow. As such, we will be publishing a semimonthly newsletter geared toward providing small businesses with the latest news, products, and guidelines to assist in their success and growth. Please feel free to comment and/or request topics that are important to you for us to research.
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This is just a sampling of what we feel would be important to you. We have much more to offer. If you have any questions or need more information please contact us at 877-886-8277 or click the link below.

  

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30 Avoidable Mistakes First Time Entrepreneurs Make Repeatedly - Part 3 - numbers 21 to 30

Do any of these rookie mistakes seem familiar?

21.    Stop using your lack of funding as an excuse. With today's technology, you do not need to spend millions of dollars to validate most startup ideas. You can usually validate with just a few thousand dollars that people want your product in some form or another, or will even pay for it. Haven't built your product yet because you think you need funding first? Build another product that won't cost so much. Haven't started selling your product because you think you need funding first? Richard Branson built a billion-dollar business without venture capital. You are making up excuses; go find solutions.

22.    Stop just following your passion. Passion is an energy that can power and motivate you, but easily blind you too. Passion can blind you to truth; it can deceive you. I have seen many founders blind with passion. Passion can blind you to knowing when you need to pivot or change your product. If the Burbn founders had been overly passionate about their first app, they would have never created Instagram. The trick is to get passionate about product-market fit, not about the product as it is today. Keep tweaking until you find the fit. You will know when you find it; there won't be any doubt. "When I was a commercial loan officer for a large bank, my boss taught us that you should never make a loan to someone who is following his passion." --Scott Adams

23.    Stop asking people to sign NDAs before discussing your startup. Early-stage startup ideas are not worth protecting, because they almost all suck. Yes, your baby is ugly. Sorry, but it is the truth. After you raise a few million in venture capital and you are setting up a meeting with a large public company, then you can ask to put an NDA in place. However, even then, you will have to sign their NDA (they don't do special NDAs for every startup they talk to), and thus you probably won't get much protection.

24.    Stop lying to yourself when things are not right. How long have you been telling yourself that the employee (you know which one I mean) is not pulling his weight and is causing more harm than good? How many times have you turned the other way hoping the problem will go away? Stop it. Deal with it. Today. Now. Really. You can't afford to put problems off to the side at a startup. There is no time. Deal with your problems today; stop putting them off. Stop hoping they will resolve themselves. This is business; do your job. Deal with your mess.

25.    Stop trying to get away with not knowing your unit cost. Unit cost is how much your service costs you to run per customer. "But I'm a SaaS, Lucas!" Stop it. You are a business, right? You have customers? You have service bills? Take out the fixed costs, then divide the rest of your service bills by the number of customers you have. Find out how much it costs you to support one more customer on average. Make sure you are charging your customers a lot more than their unit cost; otherwise you are a charity, not an investible business. You can't start calculating unit cost too early. It is key to understanding cash flow and profitability.

26.    Stop believing that hiring salespeople will cure your revenue problems. Reality check: Salespeople don't figure out how to sell your product. You do. The only reason you should hire a salesperson should be because you don't scale and you have been doing more sales meetings than you can handle lately. A founder/CEO doing sales calls? Yes. Never done a sales call before? Doesn't matter. Start now. It is your job to figure out how to sell your product. You need to perfect your sales pitch. You need to create a great deck that works. Once you know it works, you let a salesperson shadow you until he or she can say the same things you do.

27.    Stop postponing the calculation of your cost of user acquisition. Cost to acquire a customer (a.k.a. CAC) is one of the most important metrics an online business has. If you watch Shark Tank, you know they always ask entrepreneurs for the number up front. It has been extremely well studied by top-tier investors such as Bessemer, which has published great resources on learning about CAC. To calculate CAC, you will need to know your business numbers inside and out, which you should already know. If you don't, then figuring out how to calculate CAC will get you asking the right questions. Hire an accountant to help you double-check your work and assumptions. Like lawyers, don't try to skimp here; you future self will thank you. Like unit cost, you can't start calculating CAC too early.

28.    Stop hiring contractors instead of employing great engineers. It is so, so, so tempting to just say, "Fuck it. I'll just hire a part-time contractor to build out my prototype." Don't do it. Don't give in to the temptation. Hiring full-time employees takes longer and is harder and can cost more, but the long-term benefits will always outweigh the short-term gains. A startup is not about the product; it is about the team. A great team will always outdo a great product. Hiring full-time employees is about building a team. Hiring contractors is a Band-Aid full of dirt and bacteria. Startups are a marathon, not a sprint. It is more important to slowly build an excellent team, a motivated team, the right team ... than it is to get your product out of the door faster.

29.    Stop ignoring your Ideal Customer. "All novels are really letters aimed at one person." --Stephen King, On Writing. That person is called the Ideal Reader. Novels are subjective; not everyone will like any given novel, so you don't even try to please everyone. You try to please your Ideal Reader. Stephen King's Ideal Reader is his wife. Whenever he gets stuck, he thinks of his wife and asks himself: What would make her laugh/cry/pee her pants? When you get stuck, always ask yourself: Who is your Ideal Customer? Whom are you trying to make pee their pants?

30.    Stop picking such small problems to solve. Will someone pay for your app that increases Twitter followers? Yes. Can you grow that into a $100 million a year business? No. It is a small idea. It is a small market. There is nothing wrong if your goal is to create a small business that augments your income or might even support your whole lifestyle. But that kind of business will never get venture capital, nor should it, so don't even try. You are wasting investors' time and your time. A real startup's goal should be to change the world for the better. If increasing Twitter followers is a temporary revenue-generating bootstrapping step to a next-gen marketing platform that improves the connection between brands and customers... that is a big problem to solve. That is an investable idea.


SOURCE: Answer by Lucas Carlson, CIO at CenturyLink, Craftsman Founder at AppFog, on Quora  
DISCLAIMER OF LIABILITY

Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
 
Small Business Products



VANTAGE has a wide range of products designed to sustain Small Business success and growth.

These products include:

Health Insurance Exchange
Group Medical
Group Dental / Vision
Disability / Critical Illness
Business Liability
Directors & Officers
Errors & Omissions
Business Interruption
Key Person Insurance
Small Business Tool Box
Workers' Compensation
Employment Practices Lia
Employee Theft
Commercial Auto
AARP Sponsored Auto & Home
Umbrella
Property
Product Liability
Start-Up Assistance
Legal Assistance
Human Resources
Marketing
Business Planning


CONTACTS

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Please contact one of our 
VANTAGE 
professionals for assistance: 
 
Paul White
510-595-0904
paulw@vantagebss.com

Steve Cannon
510-595-0906
stevec@vantagebss.com

Gerri White
510-595-0926
gerriw@vantagebss.com



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Vantage Business Support & Insurance Services
2363 Mariner Square Dr., Ste. 240 / Alameda / CA / 94501
30251 Golden Lantern Ste. E376 / Laguna Niguel / CA / 92677 
 

 

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