Tag Archive | "Start-up"

Starting a Business – Forming a Corporation

Tags: , , ,

Starting a Business – Forming a Corporation


A corporation is an entity created under statute that is separate and distinct from its owners. In other words, a corporation can be created only by following the requirements of the relevant statute (in Indiana, it is the Indiana Business Corporation Law) and will not automatically be created (as can be the case with some partnerships). Once formed, the corporation is recognized as being independent from you, the owner/shareholder. The corporation is managed by directors and officers; sometimes, the directors and officers are also the shareholders. From a liability standpoint, the corporation affords you complete protection; creditors must rely on the assets of the corporation and you are notpersonally liable for anything beyond your investment and financial commitment to the corporation.

That said, lenders frequently require shareholders of smaller corporations to personally guarantee the debt of the corporation. Corporations are the most complex entities, both in terms of creation and operation. In addition to filing articles of incorporation, corporations need to adopt by-laws, elect directors and officers, and in many states, have regular meetings. There may also be annual reporting requirements with the Secretary of State in addition to annual fees.

The shares of a corporation are freely transferable and unlike a partnership or limited liability company, the transferee of yourshares will succeed to all of your rights in those shares. In other words, the person to whom you transfer your shares will be just as much an owner of the corporation as you were. This ease of transferability can have significant impact later on as you begin to implement exit strategies (that is, you are ready to retire from
the enterprise).

From a tax perspective, corporations can also be more complex than their partnership and limited liability company counterparts. Usually, a corporation is a separate taxable entity. It pays tax on its income and later, when it distributes accumulated income to the shareholders, the shareholders will pay a second layer of income tax on those dividends. This “double taxation” is a significant drawback for most corporations. There is a special type of corporation (commonly referred to as an “S” corporation) that generally is not subject to double taxation. An “S” corporation allocates income and losses on a pro-rata basis to its shareholders, although the use of losses by a shareholder is limited to that shareholder’s basis in the corporation. You must strictly adhere to rigid equirements imposed on “S” corporations, and shareholders sometimes are surprised by how easy it is to terminate an existing “S” election inadvertently.

Occasionally, a business owner might intentionally choose the double taxation of a regular corporation to take advantage of certain corporate tax benefits. For instance, while partners in a partnership cannot be employees of that partnership, shareholders in a corporation can be employees; as a result, these shareholders can participate in certain fringe benefits extended to “employees” under the federal tax law, such as flexible spending accounts. Other examples include (i) the ability of a corporation to participate in tax-advantaged reorganizations unavailable to partnerships and limited liability companies and (ii) the potential for up to $50,000 ($100,000 on a Married Filing Joint Return) of losses from the sale, exchange, or worthlessness of certain small business corporation stock to qualify for ordinary loss treatment (as opposed to capital loss treatment).

As you can see from this post and my prior business entity selection and formation posts, a good deal of thought and care must go into your decision of what type of legal form your new business should take. Quite often, the advantages of one form will be offset by disadvantages not present in another. As mentioned, within similar types of legal forms, nuances exist that make the decision all the more difficult. By identifying the right combination of advantages and disadvantages and with the assistance of competent advisors, the right choice of entity selection can help ensure your business success.

Check back soon for a post regarding limited liability companies.

Posted in CorporationsComments Off on Starting a Business – Forming a Corporation

The “Lean Start-up” Process

Tags: , ,

The “Lean Start-up” Process


I recently stumbled across the “Lean Start-Up” Process, a term coined by Eric Ries, 31, an engineer, entrepreneur and blogger. His inspiration was the lean manufacturing process, fine-tuned in Japanese factories decades ago – which focused on eliminating any work or investment that doesn’t produce value for customers.  This is a concept I am familiar with in my solo, virtual law practice – operate lean and focus only on providing good legal service.  Any effort or energy expended otherwise is of no benefit to me nor my clients.

Part of the this process also involves developing a “minimum viable product” that will please some customers, and then build the business from there, responding and reacting rapidly to market responses to product changes.

This process kind of precludes developing a formal business plan – which I do not totally agree with.  I see too many startups, particularly tech startups that do not have the luxury of significant outside funding and investors/advisors that bring business acumen to the table , flounder on the business side of things even when they have developed a great application.  Sure there are exceptions, and a business plan is not always absolutely necessary – but without some sort of focus on making a startup idea / startup application into a real, money making, viable business entity – long terms success is difficult to come by.

Below is a great slideshow that illustrates the process.

Reblog this post [with Zemanta]

Posted in Indiana Startup News, Starting a BusinessComments Off on The “Lean Start-up” Process

The 10 Ways Startup Advice Is Flawed

Tags: , , ,

The 10 Ways Startup Advice Is Flawed


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 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 someone’s 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.

I tend to agree with most of this.  I see a lot of this in the startup world – bad advice from people that really have no business handing out advice.  And I REALLY see a lot of number 9 – “success theater” as they call it.  So many start ups exude a ton of energy, maybe get a little bit of hype, but really have barely any substance or success behind the business.  The point is, be careful who you take advice from and how seriously you take that advice.

What do you think?  Received any bad startup advice lately?

Reblog this post [with Zemanta]

Posted in Running a Business, Starting a BusinessComments Off on The 10 Ways Startup Advice Is Flawed

Starting a Business – A Checklist for Startups

Tags: , ,

Starting a Business – A Checklist for Startups


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. If you have other things to add to the list, please leave a comment below.

Reblog this post [with Zemanta]

Posted in Starting a BusinessComments Off on Starting a Business – A Checklist for Startups

The “Young Entrepreneur Auction” Bill – An Interesting Idea

Tags: , , ,

The “Young Entrepreneur Auction” Bill – An Interesting Idea


Indiana Representative Sue Ellsperman (R-Ferdinand) plans to file a bill during the first legislative session of 2011 that would create a “young entrepreneur auction.”  The gist of the bill is this:

  • The Indiana Economic Development Commission would host sessions in different communities. At each session, recent college graduates would each present a business plan to representatives of the community or the community’s economic development organization. The plan would include a list of what would be needed to get the business started — such as space, exposure and mentors.
  • Leaders would go back to their communities and decide if they are interested in any of the proposals. For each one they are interested in, they would develop a bid package to offer the entrepreneur. The Indiana Office of Community and Rural Affairs would be available to help leaders create bid packages.
  • Each of the students, with the help of the state economic development commission, would review all proposals to see which would be the best for a proposed business.

For more see here.

I have not seen a copy of the bill yet, but conceptually this sounds like a great idea.  If communities around the state are able to widely participate, something like this might be successful in matching up young entrepreneurs with communities that have the facilities and talent to give them a chance at success.  Some critical considerations, at least in my mind, include:

  • Making sure there is wide participation around the state – lots of communities will need to get on board. Otherwise, what is the point?
  • If the only “community leaders” who participate wind up being real estate developers and brokers in Indy and Bloomington looking to fill empty office space at discounted rates, this will flop.
  • How is this paid for?  What will the incentives be?  Tax breaks?  Free space?  Grants?

I plan to keep an eye out for this bill and will post a follow up.

What are your thoughts?

Enhanced by Zemanta

Posted in Indiana Startup News, Starting a Business, Why Indiana?Comments Off on The “Young Entrepreneur Auction” Bill – An Interesting Idea

Free Software For Bloomington Based Tech Start-Ups!

Tags: , , ,

Free Software For Bloomington Based Tech Start-Ups!


logo_btpSome great news for Bloomington, Ind software and technology start-ups – the Bloomington Technology Partnership recently joined the BizSpark program, which provides certain software technology companies with three years of free Microsoft software, including Microsoft Windows Server, Microsoft Office SharePoint Portal Server, Visual Studio, SQL Server and more!  To be eligible for the BizSpark program, start-up companies must be:

  • privately held
  • have a software-based product or service at the core of their current or future business
  • be in business for less than three years
  • earn less than $1 million in annual revenue.

The entire press release follows:

Bloomington, Ind. — The Bloomington Technology Partnership announced today that they have joined BizSpark, an international program that provides software technology startup companies with three years of free Microsoft software.
“We are very excited to help bring cost savings to our local start up business community,” said Jeremy Sowders, Vice President of Business Development for the Bloomington Economic Development Corporation (BEDC) which manages the Bloomington Technology Partnership. “The BizSpark program by Microsoft is an innovative way to help companies during the critical early stages of development and for that reason we wanted to help make this resource available in Bloomington.”
The Bloomington Technology Partnership worked closely with the Indiana University Research & Technology Corporation (IURTC) to bring the BizSpark program to the Bloomington area. “The Microsoft BizSpark program fits right into our mission of helping fledgling start up ventures successfully transition into profitable entities.” added Tony Armstrong, President & CEO of the IURTC. “By sponsoring this program the Bloomington Technology Partnership strengthens the position of both the Bloomington area and Indiana University-Bloomington in today’s ultra competitive start up business environment.”
Microsoft programs available through BizSpark include Microsoft Windows Server, Microsoft Office SharePoint Portal Server, Visual Studio, SQL Server and more. To be eligible for the BizSpark program, startup companies must be privately held, have a software-based product or service at the core of their current or future business, be in business for less than three years, and earn less than $1 million in annual revenue. A company may take part in the program for up to three years unless it goes public or is acquired by another company. There are no initial fees to join the program, but $100 is due from the company when it exits the program.
Companies can solicit the Bloomington Technology Partnership to be their BizSpark sponsor by visiting the program’s web page at http://www.microsoft.com/bizspark/ and entering the section labeled “Startups.” After selecting the proper region, click on the Bloomington Technology Partnership as the sponsor organization.
About Bloomington Technology Partnership
The Bloomington Technology Partnership fosters the growth of Bloomington’s emerging high-tech economy. A public-private partnership established in 2008, it draws on the “best and brightest” to meet the needs of high-tech companies and their employees.
The Bloomington Technology Partnership is a program of the BEDC, a not-for-profit corporation funded through memberships from private industry, City of Bloomington, Monroe County, Indiana University and Ivy Tech Community College-Bloomington. The Bloomington Technology Partnership is funded in part by the City of Bloomington. For more information go to www.bloomingtontech.com
Source: Bloomington Economic Development Corp.

Bloomington, Ind. — The Bloomington Technology Partnership announced today that they have joined BizSpark, an international program that provides software technology startup companies with three years of free Microsoft software.

“We are very excited to help bring cost savings to our local start up business community,” said Jeremy Sowders, Vice President of Business Development for the Bloomington Economic Development Corporation (BEDC) which manages the Bloomington Technology Partnership. “The BizSpark program by Microsoft is an innovative way to help companies during the critical early stages of development and for that reason we wanted to help make this resource available in Bloomington.”

The Bloomington Technology Partnership worked closely with the Indiana University Research & Technology Corporation (IURTC) to bring the BizSpark program to the Bloomington area. “The Microsoft BizSpark program fits right into our mission of helping fledgling start up ventures successfully transition into profitable entities.” added Tony Armstrong, President & CEO of the IURTC. “By sponsoring this program the Bloomington Technology Partnership strengthens the position of both the Bloomington area and Indiana University-Bloomington in today’s ultra competitive start up business environment.”

Microsoft programs available through BizSpark include Microsoft Windows Server, Microsoft Office SharePoint Portal Server, Visual Studio, SQL Server and more. To be eligible for the BizSpark program, startup companies must be privately held, have a software-based product or service at the core of their current or future business, be in business for less than three years, and earn less than $1 million in annual revenue. A company may take part in the program for up to three years unless it goes public or is acquired by another company. There are no initial fees to join the program, but $100 is due from the company when it exits the program.

Companies can solicit the Bloomington Technology Partnership to be their BizSpark sponsor by visiting the program’s web page at http://www.microsoft.com/bizspark/ and entering the section labeled “Startups.” After selecting the proper region, click on the Bloomington Technology Partnership as the sponsor organization.

About Bloomington Technology Partnership

The Bloomington Technology Partnership fosters the growth of Bloomington’s emerging high-tech economy. A public-private partnership established in 2008, it draws on the “best and brightest” to meet the needs of high-tech companies and their employees.

The Bloomington Technology Partnership is a program of the BEDC, a not-for-profit corporation funded through memberships from private industry, City of Bloomington, Monroe County, Indiana University and Ivy Tech Community College-Bloomington. The Bloomington Technology Partnership is funded in part by the City of Bloomington. For more information go to www.bloomingtontech.com

Source: Bloomington Economic Development Corp.

Reblog this post [with Zemanta]

Posted in Indiana Startup NewsComments (2)

Featured Start-Up – Symbios Medical Products, LLC

Tags:

Featured Start-Up – Symbios Medical Products, LLC


Pain.   Anyone who has ever had a surgical procedure knows that after the procedure there is lots of postoperative pain.  Medical care facilities have historically relied on the administration of narcotics to treat post-surgical pain, which sometimes includes side effects such as grogginess and nausea.  Enter Symbios.
Symbios is a medical device company that designs, manufactures, markets and sells pain management solution; Symbios’ current products, commonly known as disposable pain pumps, deliver post-operative anesthetic pain medication (non-narcotic) to surgical sites, which according to Symbios is an economically an clinically superior way to treat pain management. Its products are used routinely on a daily basis by more than 65 medical care facilities (a number that is growing fast) as a post operative pain management solution for a wide variety of clinical procedures.
According to Symbios, a $3.2 billion opportunity exists in the acute care market for incisional surgeries and continuous peripheral nerve blocks. Published studies indicate that less than ten percent of this $3.2 billion market is currently using disposable pain pumps. The balance of the market is either still prescribing systemic narcotics or is unaware of the relatively new development and advantages of pain pumps for post-surgical pain management. Because of this, Sybmios President Herb Senft is excited about the company’s potential:
Symbios is at an exciting point in its evolution. Our market is huge, and is growing 25% or more annually. We have a very competitive product with features that our customers really like and prefer. With national coverage through a series of independent distributors, our products are being introduced to hospitals nationwide. And we have an exciting new product in development that is already catching the attention of several large industry players
A solid product – and a huge and relatively untapped market – make Symbios an Indianapolis start-up to watch!

symbiosPain.   Anyone who has ever had a surgical procedure knows that after the procedure there is lots of postoperative pain.  Medical care facilities have historically relied on the administration of narcotics to treat post-surgical pain, which sometimes includes side effects such as grogginess and nausea.  Enter Symbios.

Symbios is a medical device company that designs, manufactures, markets and sells pain management solution; Symbios’ current products, commonly known as disposable pain pumps, deliver post-operative anesthetic pain medication (non-narcotic) to surgical sites, which according to Symbios is an economically an clinically superior way to treat pain management. Its products are used routinely on a daily basis by more than 65 medical care facilities (a number that is growing fast) as a post operative pain management solution for a wide variety of clinical procedures.

According to Symbios, a $3.2 billion opportunity exists in the acute care market for incisional surgeries and continuous peripheral nerve blocks. Published studies indicate that less than ten percent of this $3.2 billion market is currently using disposable pain pumps. The balance of the market is either still prescribing systemic narcotics or is unaware of the relatively new development and advantages of pain pumps for post-surgical pain management. Because of this, Symbios President Herb Senft is excited about the company’s potential:

Symbios is at an exciting point in its evolution. Our market is huge, and is growing 25% or more annually. We have a very competitive product with features that our customers really like and prefer. With national coverage through a series of independent distributors, our products are being introduced to hospitals nationwide. And we have an exciting new product in development that is already catching the attention of several large industry players

A solid product – and a huge and relatively untapped market – make Symbios an Indianapolis start-up to watch!

Reblog this post [with Zemanta]

Posted in Featured Indiana Startups, Indiana Startup NewsComments Off on Featured Start-Up – Symbios Medical Products, LLC

When is the Right Time to Incorporate Your Business?

Tags: , , ,

When is the Right Time to Incorporate Your Business?


iStock_000001291947XSmallI work with start-ups and entrepeneurs in my law practice all time – one common question / concern I get from my clients is regarding the right time to organize / incorporate their business into a formal, legal business entity.  Some ask because they are trying to save the money associated with the process until they know that their business will be a forward concern, some ask just out of general curiosity.

As a rule of thumb, I typically tell clients they need to form a legal entity separate from themselves anytime (1) there is more than one founder or (2) the business is about to engage ANY sort of third party for ANYTHING.  The first point is obviously based on the need to put down pre-incorporation/organization agreement in writing (i.e. avoid arguments and conflicts among founders), the second based on the need to shield potential liability.

I came across an excellent posting on this topic by Yoichiro (”Yokum”) Taku, a west coast attorney who maintains StartupCompanyLawyer.com.  He has some points that expand nicely upon my second rule of thumb above, some of which I have included below:

Funding.  Obviously, if third party investors want to invest in a startup idea, there needs to be an entity to accept the investment.  Generally, I prefer to incorporate and issue founder’s stock at nominal prices well in advance of a Series A preferred stock financing because it is difficult to justify that common stock should be priced at $0.001 per share while Series A preferred stock is issued at $1.00 per share.

Launching a service/product and general liability issues.  One important reason for incorporating a company is to protect the stockholders against personal liability.  If a company complies with corporate formalities, creditors of the company generally cannot reach the stockholders to satisfy the company’s liabilities.  Thus, a company should generally incorporate before launching a product or a service due to potential liability issues, as the risk of liability to a founder increases with customers or users.

Hiring employees or third party contractors.  Although I’ve run into a situation where the former CEO of a Fortune 500 company personally paid an “employee” out of his own pocket for a year prior to incorporation while incubating an idea, most founders will need to incorporate a company if they intend to hire employees.  In addition, if an entrepreneur needs to engage third party contractors, it generally makes sense to incorporate a company so that the third party enters into an agreement with a company instead of an individual.  In addition, any IP created by the contractor can be assigned to the company instead of an individual founder.

You can find the original posting here.

Reblog this post [with Zemanta]

Posted in Starting a BusinessComments Off on When is the Right Time to Incorporate Your Business?

The Top 10 Mistakes by Start-up Businesses

Tags: ,

The Top 10 Mistakes by Start-up Businesses


Entrepreneurs are some amazing people, and create some amazing things – but they are not perfect.  Lots of entrepreneurs make mistakes Oops!!– some fatal to their start-up business, some not.  The people over at YoungEntreprenuer.com have compiled a list of the Top 10 Mistakes People Make When Starting A Business.  I have seen a lot of these lists, but this one really hits the nail on the head based on what I typically see from start-ups.  The comments to that particular post have some very valuable information on this topic as well.  Here is a summary of the list:

1) Undercapitalization

The most common reason why new businesses shut down is that the owner runs out of money. Cash flow is critical to a start-up business. You could be profitable and still have to close your doors because your customers are taking too long to pay you. Cash is king in a startup venture and you need to prepare for it.

2) Not thinking survival.

Starting a business is all about survival. How do you stay around one more day so that you can learn more about your market and close new customers?

3) Maintaining Momentum

Many new entrepreneurs have ambitions to start a business so they create a website, try to make a few sales, go all out for a few months and then stop completely. Building a business is all about momentum. If you had 24 hours to spend on a business they would be put to far better use by spending one hour a day than for 24 hours straight.

4) Trying to do it all alone.

Nobody is perfect or has the skills to do everything themselves. You need to understand what it is that you bring to the table and what you need to surround yourself with. If, for example, you are very strong at inventing but don’t want to sell then you need to find a salesperson to help you.

5) Not hiring the right people, right away.

You should begin looking at who can be brought on board to help you from the first day of starting your company. There will be tasks in any business that you, as the owner, should not be focusing on if you hope to build any sort of sizable organization. Why are you doing admin work when you should be out closing customers, talking to the media, and landing new partnerships?

6. Doing it just for the money.

If you don’t truly love your business then you won’t be successful. If you read the stories of famous entrepreneurs and how they built their organizations you will find that it all comes down to the root of loving what you are doing.

7. Getting to year 1, past year 2, and into year 3.

Many entrepreneurs have a hard time getting to the end of year one. Typically it’s because they started the business on a whim and got excited about an opportunity but didn’t do the proper research. These entrepreneurs usually run out of money and close down after a few months.

8. Building the business around your preferences, not those of your customers.

The best way to make a lot of money quickly is to find a customer who has a problem and is willing to pay you to solve it – and then you go out and build the solution. Most entrepreneurs take the opposite mentality of “if I build it, then will come” only to realize that they’ve built it and nobody is coming. Instead of talking to customers as to why they’re not coming they decided to continue building and building. Soon they find out that they’ve invested years of work and nobody is interested in buying from them.

9. Not seeking mentors.

A great way to get a business going is to find out what other people have done to achieve success and implement those strategies into your own company. Find mentors who have knowledge of your industry and will give you time out of their day to help you.You could set up a formal board of advisers and compensate people for their time but if you’re a startup you can play on the fact that most entrepreneurs are willing to help out a fellow business owner as a way to give back. If you show genuine appreciation and approach the right people, the advice you get will help make or break your company.

10. Working under a rock and not getting involved in the community.

Countless opportunities are generated by connecting with other young entrepreneurs and finding out what they are up to and how you can help. You will get new business opportunities, partners, investment, media attention, ideas for productive tools to use, advice for your company, and many other resources that otherwise would take you years of trial and error to figure out (if you ever do at all).

For more information, be sure to check out YoungEntrepreneur.com.

About YoungEntrepreneur.com

I have been an avid reader and subscriber to Youngentrepreneur.com for awhile – far before I started writing this blog.  It is a fantastic resource with lots of entrepreneurial advice, business growth strategies, startup experiences and marketing tips.

The website was founded by brothers Matthew and Adam Torren, and there is a blog managed by Evan Carmichael. Of particular value is the blog author’s personal insight, derived from his own experiences as an entrepreneur.  I especially like the entrepreneurial advice which he shares based on his own experiences. The site also has an awesome and very active forum for entrepreneurs to share advice, discuss business, and network.

Their blog contains tons of great information for entrepreneurs. One of my favorite categories is Entrepreneurship University in which experts share advice and provide lessons – extremely valuable information. Another great feature is the entrepreneur profiles. This blog is a must-read for any young or young at heart entrepreneur.

Youngentrepreneur.com is a must read for entrepreneurs, start-ups and small business. I will continue to monitor is as a great resource – you should consider doing the same.


1) Not enough money.
The most common reason why new businesses shut down is that the owner runs out of money. Cash flow is critical to a startup business. You could be profitable and still have to close your doors because your customers are taking too long to pay you. Cash is king in a startup venture and you need to prepare for it.
One option is to make sure you have enough startup capital from your own investments or outsiders (bank loan, private investors, etc). A second option is to ease into the business so that you start doing it on a part-time basis until you know that it will make enough money to support you.
2) Not thinking survival.
Starting a business is all about survival. How do you stay around one more day so that you can learn more about your market and close new customers?
At the beginning stages of a business this may mean doing work that might not be completely what you want to do but it helps pay the bills. You need to do whatever it takes to survive and get through until the business can fully support yourself.
3) Losing momentum.
Many new entrepreneurs have ambitions to start a business so they create a website, try to make a few sales, go all out for a few months and then stop completely. Building a business is all about momentum. If you had 24 hours to spend on a business they would be put to far better use by spending one hour a day than for 24 hours straight.
It takes time to develop a new company and for people to react to what you have to offer. Never lose the momentum and even if your business is only a part time initiative for you at the moment, make sure that every day you are making progress of some sort to move your company forward.
4) Doing it all alone.
Nobody is perfect or has the skills to do everything themselves. You need to understand what it is that you bring to the table and what you need to surround yourself with. If, for example, you are very strong at inventing but don’t want to sell then you need to find a salesperson to help you.
You won’t succeed by forcing yourself to do things that you truly don’t enjoy and will never be good at. Know where you stand and what value you can offer. By getting people around you who complement your skills, you will be able to achieve your goals and have a lot more fun along the way!
5) Not hiring right away.
You should begin looking at who can be brought on board to help you from the first day of starting your company. There will be tasks in any business that you, as the owner, should not be focusing on if you hope to build any sort of sizable organization. Why are you doing admin work when you should be out closing customers, talking to the media, and landing new partnerships?
But I’m broke! How can I hire someone? Even if you have a $0 budget you can find people to work for you through high school and foreign student internship programs. Once you have a budget, you can bring people on board for as little as one hour a day (what I first did) and then increase their hours when you can afford it. You need to be spending your time working on the business and not in the business.
6. Doing it just for the money.
If you don’t truly love your business then you won’t be successful. If you read the stories of famous entrepreneurs and how they built their organizations you will find that it all comes down to the root of loving what you are doing.
Money is definitely important, as most companies are for-profit enterprises, but it will often take a long time to come and if you don’t truly enjoy your work then you won’t be able to convince yourself to keep going. You can only do something that you don’t really love for so long before you give up.
7. Getting to year 1, past year 2.
Many entrepreneurs have a hard time getting to the end of year one. Typically it’s because they started the business on a whim and got excited about an opportunity but didn’t do the proper research. These entrepreneurs usually run out of money and close down after a few months.
A second challenge is getting through year two. It usually takes three years of hard work to make a business. Year one is all about the excitement of getting started. You’re high on energy and ready to take on the world. In year two entrepreneurs often find themselves still not making much money and the startup excitement has faded. You’ll need to work your way through the downturn and know that the money is coming if you keep at it.
8. Don’t build around a customer.
The best way to make a lot of money quickly is to find a customer who has a problem and is willing to pay you to solve it – and then you go out and build the solution. Most entrepreneurs take the opposite mentality of “if I build it, then will come” only to realize that they’ve built it and nobody is coming. Instead of talking to customers as to why they’re not coming they decided to continue building and building. Soon they find out that they’ve invested years of work and nobody is interested in buying from them.
The companies with the highest failure rates are restaurants because they are usually built around an owner’s personal tastes. Meanwhile, the entrepreneurs with the lowest failure rates are lawyers and accountants because they are based around a service that we all need (whether we like it or not!) Talk to potential customers, see what they are interested in, identify who has money and what their pains are and then create your product / service around them.
9. Don’t seek mentors.
A great way to get a business going is to find out what other people have done to achieve success and implement those strategies into your own company. Find mentors who have knowledge of your industry and will give you time out of their day to help you.
You could set up a formal board of advisers and compensate people for their time but if you’re a startup you can play on the fact that most entrepreneurs are willing to help out a fellow business owner as a way to give back. If you show genuine appreciation and approach the right people, the advice you get will help make or break your company.
10. Don’t get involved in the community.
Tied in with not seeking mentors is not getting involved in the small business community. Countless opportunities are generated by connecting with other young entrepreneurs and finding out what they are up to and how you can help. You will get new business opportunities, partners, investment, media attention, ideas for productive tools to use, advice for your company, and many other resources that otherwise would take you years of trial and error to figure out (if you ever do at all).
Reblog this post [with Zemanta]

Posted in Running a BusinessComments Off on The Top 10 Mistakes by Start-up Businesses

Zig While Others Zag – Why now is the time for your start-up.

Tags: ,

Zig While Others Zag – Why now is the time for your start-up.


Back in the mid 70’s, our economy was  in a recession.  Growth was down,  oil prices skyrocketed, unemployment, interest rates and inflation all rose.  Times were bad, so it seemed.

iStock_000006607649SmallThat was also the time when Microsoft and Apple were founded.

This of course is not to say that every start-up will reach that stratospheric level of success. But it is a sure sign that starting or growing a business during bad economic times is not impossible.  As pointed our by Paul Graham here, success in business is more about who you are, not when you do it.  A bad economy won’t kill you, but a good economy won’t save you.  Sure, investors and customers may be harder to come by now, but play that to your advantage. Come up with a cheaper way of doing something.  Go after investment capital while others are steering clear of it – thinking that nobody is investing (hint: they are still investing).

Want some more proof that good businesses can be founded during and grown out of a recession?  According to Gary Beach at PC World Magazine:

35 % of the 2008 Fortune 500 incorporated during a recession.
46% of the Fortune 100 incorporated during a downturn.
52% percent of the Fortune 50, 64% of the Fortune 25 and seven of the Fortune 10 all opened their doors while economic pain was all around them.
  • 35 % of the 2008 Fortune 500 incorporated during a recession.
  • 46% of the Fortune 100 incorporated during a downturn.
  • 52% percent of the Fortune 50, 64% of the Fortune 25 and seven of the Fortune 10 all opened their doors while economic pain was all around them.
WOW!

He comes to two very good conclusions.

First, if you are pining to start a company that you believe can scale to be one of the world’s most dominant firms, you shouldn’t be afraid to start it in a recession.

Second, watch your back. That 35 percent of the nation’s 500 largest public companies launched during a period like the one we’re in is stark evidence that-the recession notwithstanding-competitors are starting up all around you.

Now is as good a time as any to start or grow a business.  Adapt to the times.  Don’t focus on the economy.  Focus on your business – let others worry and be driven by fear of the economy.

Zig while others zag.

Reblog this post [with Zemanta]

Posted in Starting a BusinessComments Off on Zig While Others Zag – Why now is the time for your start-up.

Powderkeg Conference
The Speakeasy - a place for Indianapolis-based entrepreneurs, startups, and the folks who support them to work, play, and collaborate
Launch Fishers

  • Latest
  • Popular
  • Comments
  • Tags
  • Subscribe
IndianaStartup.com on LinkedIN.com