Penny Pinched: Beyond Bootstrapping

‪Time to pull up your socks and start bootstrapping. Got a great idea but it's still in your head? Not sure if any customers would give your idea a second look? Still trying to figure out the startup game? Bootstrapping is great way to give you and your idea some validation and a jumpstart. It allows you to take the time and effort to assess and tweak your idea using your own funds before seeking rigid external investors. The obvious case study is Sara Blakely who grew her Spanx empire to over $1 Billion without the help of investors. ‬

‪However, you don't hear about the other side of bootstrapping! Extreme and obsessive budgeting will impede your progress! Penny-wise pound-foolish will slowly become ton-foolish and it will negatively impact your startup. This is an avoidable #entrepreneurfail. Bestselling author Ramit Sethi attests that we are cognitive misers – making it a waste of mind energy to save a few bucks on lattes (or chewing gum or whatever your vice). We instead should focus on growing the big opportunities, and shrinking the big gaps.‬

‪Allocate a budget to your startup, and draw the line between personal and business expenses. Sacrifices are, of course, necessary when you bootstrap. But allow for small indulgences of things you really enjoy, which will help you get through when you are strapped in. ‬

‪As you assess your expenses, think of them as absolutes. You must remember that as an entrepreneur, your time is priceless and worth more than ever before. It is OK to outsource tasks that don’t help you grow your bottom line. This attitude allows you to get an objective look at what you are spending and helps you focus on the big line items thus saving you time and money as you reach success. ‬

Are you bootstrapping your business? Has it impacted your personal spending drastically? Tell us about it in the comments below.

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Outreach Out of Hand: The Social Media Vortex

Beware of the gigantic social media time vortex.

15 tweets, 6 updates and 8 status messages later, you realize your whole day has disappeared! The lure of social media is hard to resist. Instant gratification, constant validation, and the illusion of productivity make the channel irresistible. It's also so easy! So you can understand why many first-time entrepreneurs, even without a product or customer, turn to the social media first. I was definitely guilty of this: before I had a concrete business idea, a paying customer, or a vision, I created 3 twitter accounts supporting my future business endeavors! What a waste of time, in retrospect.

The irony is that clients and a real business comes from value, trust and relationships, not necessarily “twoots and tweets” on the new social media site of the week. (With so many new social media sites popping up, it’s now even hard to keep track of them!) Reliable business comes from opt-in loyalists who honestly love your business and your value proposition. Of course, don’t ignore social media, but spamming groups asking for likes with irrelevant content doesn't make a sustainable business. Random fans, friends and followers who are not truly committed your brand will waste your time, and result in low engagement levels. And to spend so much time building a base on a third-party network can be dangerous as you can be a victim to their policies and fate. The popularity of current “hot” social media destination may be history before you even know it.

Nurture your fans instead of aiming for large social media numbers. Create some exclusive content and offers for them and show them some love. And (we've all been guilty of this), no need to post when there is nothing useful to say! Your loyal followers will understand. In the long run you'll have more time to dedicate quality to those real customers who love your work.

Are you guilty of falling into the social media trap? Tell us about it in the comments below...

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Take a Taxative: Don't Get Audited!

Ah, taxes. A mandatory thorn in your side. What to expense, what to allocate, what to deduct and what to account for… it's quadruple the headache for an entrepreneur.

If you are an entrepreneur who gets your taxes done for you, you're not in the clear as you still have to gather all your statements and receipts. And for those small business self-TurboTaxers out there, here are some tips to prevent getting audited:

• Just because you are wearing your company tshirt to the gym doesn't make your Gatorade purchase a business expense! 
• That fancy weekend home you rent? Even though you plan to dream about your business there, it is not an expense line item. 
• And how about those groceries you bought in order to keep your sustenance for the big investor meeting? Nice try, not deductible.
• Those antidepressants you are taking because you just lost your biggest client? Nope, Uncle Sam will not approve. 
• How about those toys you bought to make up to your son when you missed his game because you were working? Good one, but not happening. 
• And then there is home theatre system that you bought to unwind after a long day of work? Negative!

Just to be on the safe side, if you have any doubts, run your taxes by an accountant! It may save you some pain in your Audit nerve in the long run.

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Co-Founders Keepers: Finding the Right Partner is Tough

"I can do it all myself" declare many new entrepreneurs as they decide to go solo.  They choose to overlook that co-founders can complement skills, help propel business and provide investment amongst many other things.

Unfortunately, it is difficult to find a suitable co-founder.  So it's common to have solopreneurs represent their ventures as 'we' and 'my team'. And why shouldn't they? They are indeed the CEO, CFO, CMO, Developer, Assistant, and Gopher. As an entrepreneur makes progress, taking the time and effort to find a cofounder or a team to supplement his/her skill-set will prove valuable. VCs often prefer teams with complementary skills to protect their investment.

Some great resources to find the perfect match include: CoFoundersLab and FounderDating. Be ready for the tough conversations up front, as author of The Founder's Dilemmas, Noam Wasserman, suggests. He reminds us to discuss equity based on output not just an arbitrary percentage. It's prudent to have the expectations set upfront. It's one less thing you will have to juggle on your journey.

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Who's coming with you?

"Don't forget to strap in your friends and family! It's going to be a bumpy ride." No one can deny that starting your own venture is like a roller coaster ride, but those closest to you probably have no idea that they are also in for a stomach-churning adventure.

As you embark on your entrepreneurial journey, you, and your friends and family need to be prepared for internal turmoil and drama. Your only certainty is no paycheck, no steady income, no fixed schedule and no predictability. Everyday something in the news, on acclaimed publications or trending websites, may send dismay through your spine. Whether it is a new well-funded competitor launching the same product as you, or perhaps an expert claiming your industry is dead, this isn't a ride for the weak or complacent. And this is just the beginning.

However, this emotional ride is the only path! So don’t worry. Pivot as necessary, be strong and make sure your loved ones take their (e)motion-sickness medicine. Free fall coming up!

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Checks and Imbalances in the Entrepreneurial Mind

 

Pull out those rose-colored glasses. Optimism signals confidence, abilities, perseverance and positive outcomes. These are clearly the traits startup founders need to get their first customers, funding or boost employee morale. Sounds great doesn't it? I can almost hear the applause.

There are two potential problems though. When harsh reality kicks in, the zealous entrepreneur may not even realize it, or casually brush it aside. Secondly, there is such a thing as too much optimism. Potential customers and VCs can see right through that. Really, you plan to launch in a month and you haven't even created a prototype? Or really, the price of the product is less than the cost of its components? The only person you are fooling is YOU!

Find a mentor, advisor or a board of directors who will tell it like it is to keep you grounded in reality!

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Strategic Backlash: Why can't you focus on a strategy?

What is the vision for your organization? What are the key decisions and turns you anticipate? Who decides the overarching next steps?

In a large organization, you've got your CEO / President / Managing Dictator (misspelling intended) that sets the strategy for the organization – the long term growth plan, the key priorities, the budgets.

And in your own venture, your strategy is constantly adapted. You may attempt to set your own strategy based on your vision and experience. However, as you start, it seems like every new customer sets your strategy, your vision and influences your day-to-day activities! As the key decision maker in your own organization, you soon realize that the influencers pulling you in different directions are and will always be your existing customers and potential leads.  The best way to focus on a strategy is to develop key relationships and understand what drives your customers.

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