The 10 Ways Startup Advice Is Flawed

Brian Powers — Wed, 21 Oct 2009 21:12:42 +0000

President Barack Obama unveiled initiatives to help small businesses, saying the U.S. has “a long way to go” to ensure that credit flows to an area of the economy hit hard by the recession.

“There is still too little credit flowing to our small businesses. There are still too many entrepreneurs who can’t get the loan they need to open their doors and start hiring,” Obama said in a speech at Landover, Md.-based Metropolitan Archives, a family-owned firm that stores and delivers paper files for large companies. “There are still too many who are struggling to make payroll and stay open. And there are still too many successful small businesses that want to expand further and hire more but just don’t have the capital to do it.”

I read an interesting post on Gigaom.com this morning titled “The 10 Ways Startup Advice is Flawed.” It focuses on advice given by people perceived as successful start-up entrepreneurs – attacking the premise that someones status (i.e. wealth, fame…etc) may not necessarily be related to what they did as a start-up – and that therefore their advice is not sound. Here is a key excerpt from the post.You can read the whole post here.

1. Maybe the thing they did really didn’t cause them to get rich. A lot of startup stories are after-the-fact rationalizations or outright myths. As they say in Latin (and on the “West Wing”):Post hoc ergo propter hoc. In other words, just because something takes place after something else, doesn’t mean the two have a causal relationship.

2. Maybe they got lucky. After all, as my grandmother used to say, “Even a blind pig eventually finds a truffle.”

3. Maybe they did the thing they said and it was actually a bad idea, but they were in the right place at the right time. A lot of powerful businesses (especially network-effects businesses) are largely resilient to incompetence.

4. Maybe the thing they did worked, but only in conjunction with some other unnamed factor. For example, many visionaries partner with a heads-down, practical type.

5. Maybe the thing they did worked, but it only under certain circumstances. For example, perhaps it worked in their industry and not in yours, or only in certain phases of growth, or for certain kinds of teams.

6. Maybe the thing they did used to work, but it doesn’t anymore. For example, perhaps competitors now know how to counter such a move.

7. Maybe the thing they did worked, but for a different reason than they think. For example, perhaps it was the feedback of their customers, not their grand original idea, that was key to success.

8. Maybe they didn’t really do the thing they said they did. Most of the mythological startup stories are highly misleading. Many of us remember the past the way we wish it had been rather than the way it actually was.

9. Maybe they’re not really rich and/or famous. A lot of startup energy goes into what I call “success theater” –- that is, convincing the world that you and your startup is successful. Next time you’re listening to a guru, ask yourself: How do I really know that they’re successful? What is their definition of success? What’s mine?

10. Maybe they have an agenda. Ask yourself: Does this person stand to benefit if I follow this advice? The VCs I know and trust are honest and very pro-entrepreneur, but I routinely hear others give advice that entrepreneurs should be suspicious of. Fundamentally, their incentives are based on having a portfolio of startups. As an entrepreneur, you have a portfolio of one. Think about that the next time a VC advises you to swing for the fences.

The 10 Ways Startup Advice Is Flawed (gigaom.com)
U.S. to Boost Small-Business Loans (online.wsj.com)
Bailout refocusing on small business (msnbc.msn.com)

Starting a Business – A Checklist for Startups

Brian Powers — Thu, 16 Jul 2009 12:22:03 +0000

If you are starting a business, there are a number of things you need to consider when you are in start-up mode, beyond what you might normally think of (i.e. the business name, business location, sales and marketing…etc). From a legal perspective, here are a few things you should carefully consider:

What form of business entity should you choose? There are multiple entries on this blog dealing with the various types of business entity a start-up can choose from.
If there will be multiple owners (i.e. shareholders, partners or members), how will control of the business be structured?
How much and how often will the business owners be paid?
How will business records be maintained?
Will the business hire employees, independent contractors, or a mix of the two?
What type of / how much liability insurance will the business need?
Will the business enter into a lease for space? Or will it buy and develop its own real estate?
If the business will have employees, will it provide benefits? How will the business handle payroll?
What types of banking relationships will be necessary?
Will the business need to raise capital? If so, will it be through debt or private equity?
Will any sort of license or permit be required to conduct business?

These are just a few things that should be considered? Need help sorting through your start-up business questions? Contact start-up business attorney Brian V Powers.

Startups: Hire Entrepreneurs, not Employees (startupprofessionals.com)
Is a Recession the Perfect Time to Start a Business? (myventurepad.com)
Tax Advice from a Former IRS Auditor (businessweek.com)

IndianaStartup.com » Small Business

The 10 Ways Startup Advice Is Flawed

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Starting a Business – A Checklist for Startups

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