Wednesday, June 20, 2007

10 Must Read Books

1. Buffettology: The Proven Techniques for Investing Successfully in Changing Markets That Have Made Warren Buffett the World's Most Famous Investor

I NEVER buy books on stock market. And neither should you. It's a waste of time. The only person you should listen to is Warren Buffett. After all, he is the riches investor in the world and the second richest man after Bill Gates. Warren Buffett once said that he doesn't care about the price. He cares about value. If you never read Buffetology before, it'll be a real eye opener for you.

2. Words that Sell

Words That Sell lists the words and phrases that stimulate sales, grouping them in a logical, easy-to-find manner. The three basic sections of a sales presentation are the grabber, the description, and the clincher, and these sections comprise the core of Words That Sell. Once you find out that you can REALLY make a ton of money merely from an ability to put words down on paper, you'll want to know WHAT to say and HOW to do it. This book does an awesome job teaching that.

3. The Art of the Start

Guy Kawasaki wrote the best book on startups. This book is about starting a business, or a new branch of business within an existing one. And about what it takes to get the funding and momentum you need to be successful. It's about putting aside the ridiculous corporate culture of "mission statements", vision statements, binders and all the rest. Guy Kawasaki helps you to think about the most important aspects of your business and your personal motivation for starting it. In short it's about why the world needs your product or service, why you need to sell it, and how to get there. Much of the content is focused on the mechanics (and pitfalls to avoid) of making formal pitches to venture capitalists, banks and the like. There is also some content dedicated to advertising, marketing and PR, and how *not* to do those things as well. If you're not smart about it, advertising and marketing your new business will financially sink you, with no real profit to show for it, so pay attention to the advice given here!

4. On Bullshit

This book is a fascinating journey into the meaning of truth, lies and BS. It was surprisingly thoughtful and like anything thoughtful it fertilized more thought. At least for me it did. I think it was worth the investment in money and time.

5. The Millionaire Next Door

The title might sound cheesy, but the book really does share insights on what affluent, and successful really mean. It gives a great lesson on status symbols, and the proper attitudes towards work, and money to build wealth. What appealed to me the most, is that this is by no means a "get rich quick" book, or even a "get rich" book. It does however outline character traits of those among us that have become successful, and shows the many traps that most people, including high earners commonly fall into.

6. Bootstrap: Lessons Learned Building a Successful Company from Scratch

I thoroughly enjoyed reading this book, for a multitude of reasons. Ken details the entrepreneur's issues when bootstrapping a company quite well (we bootstrapped our company also, and ran into many of the same problems). I enjoyed reading more about how Ken FELT while the company was growing. As an employee, you don't often know how the CEO feels about anything (Ken is good at controlling his emotions). Turns out he had similar feelings most entrepreneur's do when starting a company.

7. Little Red Book of Selling

If you’ve been a regular fan like I have of frenetic sales guru Jeffrey Gitomer’s columns in the Business Journal, you’ll want to grab his infamous power book on selling, The Little Red Book of Selling. Like all of his stuff, it’s a straight ahead, well traveled, often brilliant collection of practices on getting the advantage in selling, both over yourself and your competition. Like most of what Jeffrey writes, it holds application for both the individual sales pro and the entrepreneur. Let me briefly show you how this little book is big on take away value.

8. The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich

I've read a lot of great books, but this one is the one is truly unique. The ideas found in this book are immeasurably valuable. In this book you will find the secrets you need to live the life you dream of living. Tim is a gift to this world because he has been so generous in writing a book that candidly explains in great detail how to work less and make more. I've never seen any other book with more practical wisdom on the art of success. I've dog-eared most of this books since it's so full of great ideas. If you're an entrepreneur or want your life back, you must buy this book.

9. Secrets of the Millionaire Mind

Eker's claim to fame is that he took a $2,000 credit card loan, opened "one of the first fitness stores in North America," turned it into a chain of 10 within two and a half years and sold it in 1987 for a cool (but now somewhat modest-seeming) $1.6 million.As you read through Eker's book, you realize that intuitively you might have "felt" some of these things all along but DIDn't follow through. I very much enjoyed this book. It's certainly one of the better books about building wealth and I think that everyone can benefit from it regardless of their current level of income.

10. Street Smart Internet Marketing

Justin Michie is a successful business entrepreneur who made the life-changing decision to become a full time internet marketer, after he found himself frustrated with the long hours, excessive stress and constant employee management of his offline businesses. So he sold his businesses, left the employees, long hours and stress behind, for the freedom afforded by online marketing. He now makes more money in fewer hours and enjoys much more free time with his family. But the book is really valuable because of street smart internet marketing techniques that Justin shares in his book.

Thursday, June 14, 2007

Top 10 Reasons to Join a Startup

Joining a startup company is a no-brainer. The pros far outweigh the cons. Whether you’re just graduating, or you’ve done your time “working for the man” now is the perfect time to make the jump.

Go work for a startup company.

Here are 10 reasons why:

  1. More influence. With a smaller team, each person at a startup has more say. You should have more opportunity to voice your opinion and influence key decisions. And you want that, right?
  2. More ownership. You might not be the founder, but you’re darn close. You should have some equity (or stock options.) Both a sense of ownership, and actual ownership are wonderful things; they’ll give you one more reason to work better and harder.
  3. More meaning. The best startups are built on top of a strong purpose and vision; a raison d’etre that truly resonates. It’s a startup’s rallying cry and it provides other likeminded people with true meaning in their work.
  4. More comraderie. Startup teams have to gel beautifully to succeed. Doesn’t mean you’ll always get along, but a little Saving Private Ryan never hurt anyone.
  5. More diversity. There shouldn’t be much pigeonholing at a startup; you’re going to do and see a lot of different things. You will be thrown out of your comfort zone. You will get a chance to expand your horizons.
  6. More learning. Startup environments are crash courses in business and life. You’ll learn more in 6 months at a startup than you will in 4 years at university.
  7. More connectivity. With less (or zero) levels of bureaucracy, everyone is closer to one another. You should be well connected to your CEO as well as the network of customers, vendors, VCs, friends, etc. that surround the startup.
  8. More emotion. Working at a startup isn’t a constant high. Far from it. But it is intense, and the emotional charge you’ll get on a regular basis is a worthwhile learning experience.
  9. More future success. I don’t have any statistics to prove this, but I bet you that startup employees go on to bigger and better things. Whether it’s higher paying / more interesting jobs or starting their own companies, your resume and personal story benefit considerably from living the startup experience.
  10. More fun. Startup employees have more fun. It’s just the way it is…

The job market for startup and early-stage companies is very strong. There’s no shortage of opportunity. Top talent can pick and choose amongst a slew of startups eager to hire. The risk is low.

Granted, not all startups are created equally. Not all startups may give you the benefits described above. You can’t dive in eyes closed and expect to find the perfect fit. Make sure you ask the right questions before joining a startup. Plenty of smart people have suggestions on the questions you should ask before joining a startup, so you shouldn’t have a problem being prepared.

But make the leap. Join a startup. It’s worth it.

Wednesday, June 13, 2007

ENTREPRENEURIAL DEATH TRAPS

Here is an excellent article on mistakes to avoid for an amatuer entreprenuer.

Not long ago a friend of mine, a successful entrepreneur, was crying on my shoulder. "Fred, he said to me, "when I started my company I knew I needed a Mr. Inside, and I knew a good one, my friend George. I offered him 50% of the company. He'd have jumped just as quickly for 20%, but I liked the fairness feeling of being 50-50 partners.

Today, after five years of hard work, we're nicely profitable on $10 million of sales. We're pulling really good money out in salaries. We have every fringe benefit we can think of. Best of all, we've only scratched the surface. I can taste $25 million in sales in two to three years. At that level, we'll be the undisputed king of the mountain in our industry, and making so much money we won't know what to do with it."

"Gee, Lee" I said, "I'd like to be of help, but I'm having a hard time figuring out where the problem lies."

"It's George" he said. "I went into his office last week and said to him, George, we need to get away from here for a couple of days and map out a new business plan designed to triple our size by 1999."

"And what did he say" I asked.

He said, "Gee Lee, that's nice. Right now I've got to leave for my golf lesson. I'll be back by two, however, and we can talk about this. Quite frankly, though, it sounds like a helluva lot of work to me."

"Fred", Lee said to me, "George hasn't been in here on a weekend in almost a year. He's never in before 8:00 A.M. anymore and never here after 5:30. We're losing momentum and I can't carry this company by myself. He doesn't want to risk the investment that would be required to pull the thing off. And being exactly a one-half owner of the company, he can and does veto anything he wants. I'm going absolutely nuts."

I didn't have a good answer for him. As I was driving to a board meeting right afterwards though, I thought to myself, I'll bet that that's the tenth time in my career that I've heard this 50-50 partnership tale of woe. Why do such otherwise smart people keep doing this to themselves? After no more than an instant's reflection, I knew the answer. Because they've never been there before. Because "equal partners" seems so human-naturally fair. Boy, what a beguiling trap, even deathtrap, this has been for countless entrepreneurs, I thought.

But wait, I reflected, there's more! What about the three (or four) (or five) musketeer's death trap. Although in one sense it's a corollary of the 50-50 partnership deathtrap, in some ways it's even more insidious. You know the story. Three friends decide to start a company. They split the ownership absolutely equally, they draw identical salaries, they're going to make decisions "by consensus." It's the logical, "fair" thing to do. One of them (perhaps the oldest or the one whose idea it was originally) reluctantly assumes the presidency because state law requires there to be one.

What a recipe for failure! There are three primary problems with this set-up. First, this company has no leader, no one ultimately responsible for its success or failure. Second, sooner or later a major, honest difference of opinions will arise. What do they do then? Third, the reluctant president will almost inevitably come to see himself as "a little more than equal." If they have any success, for example, and get written up in the local or trade press, guess whose picture the reporter will want? Guess whose quotes will be plastered all through the story? Guess which other two people are going to hang the article on their family room dart board?

The solution? Pick a CEO and treat him like one. Give him the largest equity position and salary, even if they are only symbolically larger. Somebody has to sit where the buck stops.

By now I was on a roll. There was a cardboard box lying on the passenger seat of my car. I flipped it over to reveal its blank bottom and started scribbling notes relating to other deathtraps all over it. By the time I reached my destination, it was covered up. I counted them. There were exactly 25. Wow, I thought. I could turn this into a speech and get invitations to deliver it in places like Lawrenceville in November! And the rest, as they say, is history.

Sadly, so are thousands of otherwise good little companies history. Entrepreneurs face all kinds of potential adversity -- some kinds can kill them, some kinds merely set them back a little. Some kinds are unpredictable, others much more so. The saddest failures that I have witnessed are the conceivably predictable, lethal ones, the ones that could and should have been avoided.

As senseless as small business deaths are which fall prey to the many-times-tripped death traps, they can be damnably difficult to avoid. Many of them appear in the form of beautiful, well-worn paths which logic, greed and even common sense might suggest taking. How tragic that they take entrepreneurs over cliffs time and time again.

To compound the challenge of avoiding such a demise, none of these paths is assuredly fatal. The important point is that they can be, and have been for many others. Each should be avoided or tempered if at all possible.

We've already covered two, the 50-50 partnership deathtrap and the three musketeers' deathtrap. Although I have put the lot of them in no particular order, the third is potentially the ugliest, because when it strikes, it is only after a long run of euphoric success. For lack of a better term, I call it the One or Two Customer Overreliance deathtrap.

Let's say that you own a small, young machine shop. You're limping along, hand-to-mouth, at about $50,000 of sales/month. Then one day you get a call from a buyer at the largest industrial company in the county. He's in a jam. He needs $100,000 worth of aluminum housings in two weeks and his regular vendors are backed up for a month of Sundays. You meet with your four machinists. You know you're crazy but you take the job. You man a milling machine yourself and the five of you work 'round the clock and deliver the last of the housings at 7:00 A.M. on the deadline date. You've saved the guy's bacon. He's appreciative. Two years later you're doing $5 million in sales, $4 million of it from this one customer. You're personally pulling $300,000/year out of the company and there's enough left over to fund your working capital needs. Your bank is only too happy to finance your new equipment needs and your new, expanded building. (Back in the old days when you were a banker's pariah, you had to buy your original equipment used, out of your savings).

What do you think this guy's thinking? That this is risky? Hell, no! I'll tell you what he's thinking! He's thinking he's a genius, a role model, the envy of his friends. He's thinking that his major customer is damned lucky to have found him. In fact, he's thinking that their continued success is due in no small part to his talent and hard work

I mean, is this an accident waiting to happen or what? How many times in situations like this has such a buyer ultimately called and said something like, "Gee, Bob, 'fraid I've got a bit of bad news. As you probably knew (he didn't), our union contract has a no-layoff clause, and what with the recession and all, we've re-assigned 60 employees to our machine shop. We're bringing all of our machine shop work back in-house."

Bam! In one fell stroke this guy's running a million dollar company with a $3 million break-even.

Now, I am not necessarily suggesting that this poor slob should have turned any of this juicy business down. What I am suggesting is that he should have been working like mad to build the rest of his business, and thereby reduce his dependence on this customer. What I am suggesting is that in situations like this he should have been renting used equipment, not borrowing for new, etc., etc.

How could he have been so dumb?! Simple. It surely didn't feel threatening to him while it was happening, and he had never passed that way before.

Picking up the pace a bit, here are the remaining 22.

4. "Mousetrap" Teams

A handful of brilliant scientists or engineers disappear into a basement and emerge six months later with an absolutely gee-whiz prototype that by all rights should run circles around the competition in the marketplace.

They have, in short, invented a "better mousetrap". The world, though, to their great frustration and confusion, does not beat a path to their door.

This should not be a surprise - no one on this team has ever commercialized technology before. Doing this well is every bit as difficult and specialized as coming up with the product itself. It is absolutely critical that this talent be found in at least one key member of the team, and preferably the CEO.

5. Inadequate Pricing

In my friend Bill Stolze's marvelous book Start-Up, he notes that "there is no start-up strategy more likely to fail than one predicated on being the lowest price competitor." Adopting such a strategy is roughly equivalent to Luxembourg insisting on settling a dispute with the U.S. with ICBM's. I would add that the statement which causes me to lose my last meal the quickest (always accompanied by big smiles, no less) is: "We're going to have the best product at the lowest price!"

The message: Price to market. Gross margin is your best friend. It can absorb all manner of adversity with two exceptions: philanthropy or pricing stupidity (actually, in this case, the two are synonymous).

6. Insufficient start-up capital

Let's give our hypothetical founders credit and assume that they prepared a cash flow projection before their launch. History shows that 90% of the time, first year sales and gross margin do not reach expectations for whatever perverse, Murphyish reason. Both affect cash needs negatively. If each founder originally chipped in the limit of his second mortgage potential, it might already be time for the fat lady to sing.

Don't start a company if you cannot assuredly come up with more capital than you think you'll need. It's almost certain that you'll have to.

7. Failure to Look at the Downside

Some have called "spreadsheet spread" a plague. Even if it is, it doesn't often feature the forecasting of downside scenarios.

Consider, for example, the case of a manufacturing start-up. Three critical assumptions drive the cash flow projection - product development time, sales and gross margin. Most entrepreneurs tend to be overly optimistic with respect to all three. If the assumptions for the three are six months development time, sales of $20,000/month growing at 25% per month and 60% gross margin, but the truth turns out to be nine months, $10,000/month growing at 25% per month and 50%, the effect on cash needed would be substantial.

Looking at the downside possibilities in advance, monitoring actual performance against budget and developing fallback plans is just about the only effective medicine for failed fundamental assumptions.

8. Failure to Look at Industry Norms

Most failed entrepreneurs claim "undercapitalization" as the culprit. More often the truth is that performance did not match the capitalization available. Overoptimism in a different form is the villain again.

With minimal effort you can learn (via trade journals, annual reports, Robert Morris Associates' Annual Statement Studies, etc.) whether your industry is closer to a 30% or a 55% gross margin business; or whether its top performers earn 4% or 18% pre-tax. Counting on industry-unrealistic performance has drained many an initial capitalization.

9. Lack of focus

A new venture's most precious resource is talent. Doing one thing well from scratch is an enormous challenge. Tackling three or four at once is inviting across-the-board mediocrity or worse.

Carefully sort through your opportunities before you start. Focus on the marketplace and the competitive environment. Then pursue the daylights out of the best of them.

10. Bringing on the Vulture

The bad news is that while all money is green, it is not all equal. There really are vulture capitalists out there, and they don't all work for venture capital firms. They're obstructive, controlling, heavy-handed and mistrustful.

The good news is, there are also investors out there who are gems - experienced, connected, constructive, supportive - and they don't all work for venture capital firms, either.

How can you tell a jerk from a gem, before the fact? Do two things. One, ask around among the service providers - the lawyers, the accountants, the bankers. They know who the good guys and the bad guys are. Two, ask for as long a list as exists of references of CEO's of companies that firm or individual has backed, after which, call them and grill them mercilessly.

11. First Class from the Start

Show me a start-up in fancy space with lots of glass and chrome, all new furniture and equipment, and a management team drawing salaries at least equal to their old ones, and I will show you a prescription for failure. This is analogous to throwing a graduation party for yourself in the first semester of your freshman year.

Most of the best entrepreneurs I've seen have had an uncanny ability to spend a nickel in six places. They not only know that cash is, to use my favorite cash flow phrase, more important than their mother, they also realize that lack of cash is death. They part with it only when it makes a true difference, only when it stands to directly impact their objectives.

12. Inappropriate Distribution Path to Market

Sales reps are the most appropriate distribution path for start-ups, because there are no costs until and unless they sell something, right? Maybe they are, and maybe they're not, but certainly not for the reason cited. And the real danger is that word "unless", as there is nothing more expensive than no commissions owed because no sales were made. There are dozens of nuances to using reps, and for some products (big ticket, high-tech products, for example), sales reps are flat-out ineffectual.

In a similar vein, I have hardly ever seen a business plan which did not highlight how trade show attendance and trade journal advertising would lead to worryingly high backlog (this is the "if they see it, they will buy" theory of sales). Short of Microsoft-sized budgets for these, I have never seen them meet expectations. The keys to the marketplace almost always lie elsewhere, and are usually nowhere near as expensive.

13. Emotional Litigation

It has been said that a lawsuit is a machine which you go into as a pig and come out of as a sausage. I am virtually allergic to litigation, and especially small business litigation. Justice is all too often not done. I have seen too many, multi-year, multi-hundreds of thousands of dollars, bile-producing, emotionally straining, outrageously distracting lawsuits end up with all parties agreeing to drop all actions out of acute, mutual frustration.

I am not suggesting that there aren't circumstances where litigation should be pursued. What I am suggesting is that the vast majority of the time entrepreneurs would be better served by biting their tongues hard, settling out of court and getting on with building their businesses. This is not easy to do when you've been wronged! But before you decide to bring a legal action, talk to some peers who have been through the experience. The horror stories are out there in abundance.

14. Product Never "Ready" for Market

It's time to pick on the scientists and engineers again. Some just won't show their baby to the world until it's perfection itself.

This is an unattainable goal. Technology evolves. There is always an improvement that can be made, a bell or whistle that can be added. When you've developed your product to the point where it represents a clearly superior choice, freeze the design and hand it over to the sales force.

15. Low Barrier to Entry Growth Industry

Video retailing, oversized chocolate chip cookies and quick change oil franchises burst onto the scene virtually overnight. In each, there has been a tremendous shake-out of Johnny-come-slightly-latelies. CD-ROM-based multimedia products are prime candidates for being next.

If industry visibility is high and barriers to entry low, the growth rate of supply will in all probability exceed the growth rate of demand all too quickly.

16. Inadequate Market Research

A book could be written on this phenomenon alone. Suffice it to say that a failure to do adequate market research, including getting out into the marketplace and talking to at least a dozen prime customer targets before committing to a product strategy, is asking for trouble.

17. Failure to Segment Market

The U.S. tent market is $100 million. You plan to sell high-end backpacking tents and expect to be shipping $5 million worth of them in five years. All you have to get is 5% of the tent market, right? No sweat, piece of cake.

Wrong. On closer inspection, one discovers that circus, funeral and special event tents make up 30% of the tent market; moreover, the military represents 20% and backyard family tents 20%. Finally, the two largest backpacking retailers, representing 20% of the market, own captive suppliers. That leaves 10% of the $100 million. The truth is that your falling-off-a-log $5 million sales objective represents 50% of the actual, segmented market.

18.No Reason for Customer to Change

The best entrepreneurial efforts I've seen have flowed from the development of a competitive matrix, i.e., a comparison by vendor (competitor) of all of the major factors which buyers consider when making a purchase decision. If, in reviewing such a matrix, you cannot reach the conclusion that any fully informed buyer would be crazy not to seriously consider purchasing your product, the buyer has no reason to switch to you....and probably won't.

19.Payback Can't Be Calculated

If you intend to sell your product on the basis of cost savings, make sure that these savings are clearly calculable. A claim of raw material scrap reduction can be demonstrated up front; one that promises to reduce employee back injuries probably cannot. The latter is a much tougher sale than the former.

20. Failure to Admit a Mistake

Psychologically, one of the most insidious death traps is the one which might be titled "we have too much invested in this initiative to walk away from it now" - in other words, the good money after bad judgment. For all kinds of reasons (fear, ego, etc.), these judgments are tough to make objectively.

The appropriate mind-set for looking at such situations is as follows:

* To date, this has been a major disappointment.

* At some point, the level of exposure could become so large as to threaten to take down with it the healthy part of the business.

* Most importantly, the money invested to date is gone - our cost basis is zero!

* The appropriate question to ask yourself is, "Would we invest the needed funds in this project today if it was presented to us as a fresh opportunity?"

21. Step Function Growth

Every once in a while I see a venture which is doing so well that sales grow by leaps and bounds for long periods of time. When such a happy event occurs, it is altogether too easy to succeed oneself into bankruptcy. So many things can get out of control - credit checks, hiring, customer service, quality control, etc.

If business ever gets so good that you feel out of control, you probably are. Step back, take an objective look at things and adjust accordingly.

22. Betting the Ranch

Contrary to legend, great entrepreneurs are not high risk takers. They are not afraid to take a moderated risk which is largely within their control, but they would never bet the ranch, whether on an acquisition, new product or anything else. They will not risk all that they have, even for what appears to be a "sure thing." It is amazing and frightening how a "great opportunity" can quickly grow to need three times the cash flow generated by an old, "cash cow" line of products.

23. Ignoring the Handwriting on the Wall

Holding on to old ways, continuing to rely on original, bedrock assumptions in the face of mounting evidence to the contrary, can take a healthy company down in an amazingly short period of time.

Some years ago the stuffed toy industry began to quickly shift to offshore production in order to reap the benefits of low wage rates. A previously successful domestic manufacturer reacted to its eroding market share by cheapening its line, thereby reducing product quality and image, while addressing the wage cost differential only marginally. Needless to say, this did not produce the desired results. Ultimately the firm admitted the inevitable and redirected it

Delivered by Frederick J. Beste III, Mid-Atlantic Venture Funds, L.P.

Tuesday, June 5, 2007

The Entrepreneur’s Guide to Web 2.0: Top 25 Apps to Grow your Business

Are you doing a good job meeting the needs of your small business? Keeping a good handle on finances? Networking? Do you have a system for organizing your marketing strategy? Do you even have a marketing strategy?

If you are running a small business, you know that to be successful you need to be a jack-of-all-trades. The smart way to manage everything from company finances, to client relations, to marketing, is to use the right tools – tools that are simple enough that they won’t require you to spend a lot of time and money you don’t have setting them up.

In this guide we cover the 25 best web2.0 applications for entrepreneurs who are looking for simple, cheap, and effective solutions to solving some of the tasks facing their small business or startup. The 25 applications selected were chosen both on the basis of their usefulness for the individual small business manager as well as their effectiveness in providing community support and networking opportunities for users.

Finances, Money Management, Payments

You’re in business to make money. However, if you can’t manage your finances, payments, and assets, you’re going to find that expenses start to creep up, financing runs short, and your ability to plan for the future is nil. Thankfully, the following five apps are designed specifically to help you manage your finances. With these apps, you’ll know where every dime is spent and what you owe at all times, allowing you to start planning your company’s future rather than always trying to play catch up.

  1. Prosper.
    Prosper
    Got a business idea but little or no capital? Prosper is a new type of peer lending service which brings individual lenders and small business borrowers together. Each loanee creates a profile, describes what the loan will be used for, and what interest rate they are able to pay. Lenders indicate how much they are offering, at what rates, and who they want to offer sums to. So your loan may come from multiple sources, or a single person. Alternatively, if you already have a group of investors you already know, such as friends and family, Prosper manages the transaction’s lifecycle for you. Regardless of whom you borrow from, Prosper takes a small percentage for managing each loan. For the entrepreneur looking for alternative financing, peer lending can be a great solution. The only downside, however, is that everyone knows your business, literally and figuratively.
  2. Dimewise.
    Dimewise
    Dimewise lets you record your purchases/expenses and categorizes them. Then, when you’re wondering where the heck last month’s budget went to, you can produce a pretty pie chart showing you exactly what you’re spending your money on. You can also set recurring expenses as well as track balances in one or more accounts, which will make it easier to predict what your future months’ total expenses will be. Of course, you could do much of this with a spreadsheet, but Dimewise lets you do it from anywhere with a web browser, and saves you the time of setting up macros.
  3. NetworthIQ.
    NetworthIQ
    NetworthIQ, winner of an SEOmoz web2.0 award, will help you keep track of your company’s finances as well as your personal net worth. It also includes a fun tool that lets you compare your income to other entrepreneurs of the same age or industry, so you can keep track of your company’s success relative to your peers.
  4. Wesabe.
    Wesabe
    Wesabe goes a step further than both Dimewise and NetworthIQ by integrating its financial organization and planning tools with your bank account. This allows you to complete a monthly accounting report and simultaneously use that report to manage and pay your bills. In addition to this added function, Wesabe also serves as a meeting point for other entrepreneurs to discuss financial advice. While this application won’t be robust enough to meet the needs of larger companies, for small startups Wesabe can serve as a one-stop finance resource.
  5. Instacalc.
    Instacalc
    Whether you’re rolling in the dough or just squeaking by, every entrepreneur has to crunch the numbers. There’s no easier tool to do long financial equations than instacalc, which will also give you a variety of charting options to display your figures. And if you need to go beyond basic algebra, calcoolate will help you add up all your moola in ways that would make your calculus teacher proud.

Timesheets, Invoicing, Billing

For a small business to succeed, managers need to maximize the amount of time they spend on developing the business, and try to minimize the time they spend on mundane tasks like creating timesheets and invoices. The following three web2.0 apps are all designed to help you cut the time you have to spend on these mundane tasks while simultaneously increasing your company’s accuracy and effectiveness in doing them.

  1. FreshBooks.
    FreshBooks
    FreshBooks is an app designed with the web-based entrepreneur in mind. Not only does the program let you bill clients via email with professional-looking invoices, but clients can also pay you online via PayPal, Authorize.net, and other options through FreshBooks. The wide range of invoicing options is certainly enough for most small business owners, and because the generated billing reports the application generates can handle imported data, FreshBooks will work well with your current billing system.
  2. Harvest.
    Harvest
    If after a long work day you often find yourself trying to wonder what exactly you did with all your time, both you and your small business would probably benefit from some time tracking. GetHarvest offers ten reasons why you should use their time tracking solution, including professional quality reports, Internet-based access, daily data backups, and privacy. Perhaps the most important feature is the application’s ability to analyze the hours worked by your entire staff, thus enabling you to identify company-wide inefficiencies.
  3. SidejobTrack.
    SideJobTrack
    SidejobTrack is billed as a software tool for the part-time independent contractor. If your startup involves providing services for a number of different clients, this all-in-one finance app is ideal for you. With SidejobTrack you can organize all the various jobs and services you’re performing, send estimates, do invoicing, tax reporting and even manage projects.

Communication and Collaboration

A common ingredient in every small company’s success is teamwork and communication. We’ve got both covered here with five web applications designed for conferencing, voice communication, text chat, team/project management, live customer support, and workspace sharing.

  1. Campfire.
    Campfire
    The much celebrated product company 37 Signals has a suite of award-winning tools for collaboration and productivity: Campfire for group chat, Basecamp
    for collaboration and project management, and Backpack for organization (calendaring).Among these, the most useful tool for small business owners is Campfire. The application offers password-protected chat rooms to which you can invite clients, vendors, colleagues, and employees. These secured rooms are an excellent place to conduct negotiations that may involve sensitive company data without fear of having that information compromised.
  2. Meebo.
    Meebo
    If you’ve used any of the text chat IM clients such as AIM, Yahoo Messenger, Google Talk, or MSN Messenger (aka Windows Live Messenger), you’re aware of one fundamental problem: they don’t play nice together. If you have one contact on one IM and another contact using another service, how do you stay accessible to both of them? You could open a whole group of IM clients and chew up your free RAM memory, or you could use Meebo as a web-based bridge. For online companies where an increasing amount of business is conducted over IM clients, making yourself accessible to everyone through a bridging app like Meebo can mean the difference between success and failure.
  3. Userplane.
    Userplane
    Userplane offers a suite of communication and conferencing tools, the most useful of which is called Presence. Presence is the new hot niche tool in telecom, be it over the Internet, cellular networks, or the good old regular telephone system. The technology allows a communication system to “know” where a user is and to reroute calls and messages accordingly to the specific device he is near. For those entrepreneurs who work from home, the office, and the road, this app is really helpful.
  4. ConceptShare.
    ConceptShare
    Of all the above conferencing and collaboration solutions, none of them is suited for creative live interaction, such as having multiple people in different locations designing artwork or editing a document. ConceptShare solves the need for having a way to collaborate on a project in real-time by providing a creative workspace where employees can add to and modify graphic presentations. Changes made on the artwork or web design are even tagged by contributor, so different filtering combinations will allow your team to look at a variety of different filtering options.
  5. Near-time.
    Near-Time
    Near-time offers collaboration tools including group calendars with event and activity tracking, private shared weblogs, author pages, categories and tagging, and more. Near-time is designed specifically for small businesses, work groups and professionals, which no doubt includes the collaborative entrepreneur.

Organization

As a small business owner you don’t have the luxury of having a personal assistant to keep you organized. But just because you can’t afford to devote hours or dollars to staying on top of things, doesn’t mean that it can’t be done. The following three apps are designed to help you quickly and easily keep track of deadlines and schedule your work week so you can focus on the most important task, building your business.

  1. Google Calendar.
    Google Calendar
    There are numerous web2.0 calendaring applications out there, including CalendarHub, Planzo, and spongecell. But what sets Google Calendar apart from the rest is its ease of setup and use. With Google Calendar you can quickly set up multiple calendars for different projects or clients, as well as link up to public calendars which can help you stay synched with your client’s activities. And for the entrepreneur on the go, Google Calendar even lets you check on your schedule from a mobile phone through SMS messaging.
  2. Remember the milk.
    Remember The Milk
    Have you ever tied string around your finger to remind yourself of something but then forgot what it was?Remember the milk can help you and your company remember all of the days important details. The app will let you set and receive reminders via email, SMS and IM. And to minimize the total number of apps you’re running independently on a daily basis, Remember the Milk even works as an add-on to Google Calendar.
  3. Neptune.
    Neptune
    Neptune is the ultimate in practical planning. This web2.0 application won a spot on this list primarily because of its ease of use and simplicity. It’s a GTD (get things done) type of to-do list application with multiple project folders and drag and drop task reordering. Neptune also sends you email each day reminding you what your most urgent task for each defined project is. And for those of you daunted by the idea of having to go in and constantly update your to-do list, Neptune will even allow you to set up events and reminders simply by mailing items to your personal inbox.

Networking, Social Spaces

While big companies can afford just wait until contacts come to them, as a small business owner you have to go out and make your own opportunities. That means being proactive about developing relationships with people in your niche and finding new ways to introduce yourself and your company to prospective clients. The two apps in this section are designed to help you to be more effective at professional networking.

  1. LinkedIn.
    LinkedIn
    LinkedIn is the new, hot, de rigueur networking tool for professionals and entrepreneurs. It builds on the concept of six degrees of separation, which says that every human being is connected to every other human being through at most 6 people. Entering into a network means being able to take advantage of business opportunities, asking for, or offering advice, and letting people in your network know about your projects. The best part? You’re connected to everyone that your direct connections are networked with. That means that you can quickly expand your contacts and develop your professional reputation with minimal effort, since you already have something in common with the other person (a common contact).
  2. Ning.
    Ning
    Ning is easily one of the most unique web2.0 application sites out there. Ning takes web2.0 to a whole new level by letting you build your own networking and social space. The plug-n-play social space creator will allow you to create your own community space for other entrepreneurs and potential clients in your niche to communicate and share ideas. With hundreds of pre-fabricated modules no programming is needed to get the space up and running making it just the sort of marketing boost your company needs.

Content Creation, Office and Productivity Tools

No matter the service or product that your startup company sells, you are going to need to maintain accurate records if you want to stay productive and steer clear of legal issues. But since you’re already strapped for time, recordkeeping is often one of the first dropped tasks if a small business doesn’t have a good plan in place to make sure that it gets done. In this section we cover four of the best web-based apps to help you take notes, write documents, preserve records, and create spreadsheets. When used correctly, these tools will minimize the time it takes you to make and keep hard copies, records, and backups so that you will actually follow through and get them done.

  1. Zoho.
    Zoho OfficeSuite
    Zoho has one of the most well-rounded offerings of web-based tools for the entrepreneur/ business person, including an Office Suite (Writer, Sheet, Show, Wiki, Virtual Office), Productivity Tools (Projects, CRM, Creator, Planner, Chat), Polls, and website monitoring. One of the most useful applications, however, is Zoho Challenge, which lets you test and evaluate job candidates using a combination of multiple choice and descriptive questions. Candidates can then be emailed results for one or more tests. Perhaps the best feature is Zoho Writer, a superb web-based replacement for Microsoft Word. Zoho Writer’s only limitation is its own popularity, which has been known to cause slow server response times. By using a web-based writing program, your employees and clients will be able to access their work at any time without the need for email attachments.
  2. ThinkFree.
    ThinkFree Online
    ThinkFree calls itself “the best Online Office on earth.” Their suite of apps includes ThinkFree Online, Server, Desktop, and Portable. Of these numerous tools, the two most useful for entrepreneurs are ThinkFree Online, a document management and sharing application, and Desktop, a Microsoft Office compatible word processing, spreadsheet, and presentation tool. Together, these two tools will allow small business owners and their employees to access a project no matter their location.
  3. MyStickies.
    MyStickies
    Does your business involve online research, but keeping a pad of paper and a pen handy for notes seems arcane to you? Or maybe you’ve made the cost-effective choice to try to make your company paper free. Whatever your reason, MyStickies is one of a number of digital sticky note apps (among others are stikkit, jotcloud, sticky tag, and webnote) available to you to quickly record short notes. In addition to putting post-its on your desktop, MyStickies will also let you put digital stickies on a particular web page so that when you return to the page later on, you won’t need to spend time trying to remember where you were in your research.
  4. EyeOS.
    eyeOS
    If your company would benefit from having multiple employees having access to the same documents, images, and programs, but they’re spread around the world, a shared online operating system might be the answer. EyeOS, one of the new breed of web-based “operating systems” is one of the best options available. EyeOS is Open Source and can either be downloaded and installed to your own server, or run off their public server. Once EyeOS is setup, anyone with the correct username and password can access the “desktop”, no matter where they are located. That means that if you and your employees are frequently working off the same data or tools, EyeOS may be the ideal application for your company.

Promotion, Marketing, Sales and Support

Fortune 500 companies have entire departments devoted to branding, marketing and supporting their products. For the small business owner, however, you need to replace all those departments and still have time left over to meet the other needs of your company. As the face and driving force behind your startup, it will be largely up to you to get your product in front of new customers, control the way it is perceived in the market, and answer questions from potential clients. The following four Web2.0 apps are all designed to maximize the effectiveness of your time by helping you promote your product and provide customer support.

  1. Veetro.
    Veetro
    Veetro is designed to be a one-stop organizational and promotional application for small businesses. It offers a wide range of tools from invoicing and project management to customer support.The most useful aspect of Veetro, however, is its emphasis on client development and sales. With built-in lead tracking, email marketing, customer support and direct advertising functions, Veetro is an excellent tool for small businesses that are making a push to expand their client base or break into a new niche.
  2. eBay.
    eBay
    eBay is the classic early web2.0 application because of it’s pseudo-social network reviewing system. For small businesses trying to generate buzz, selling a few early product examples on eBay is a good way to get your product out early without a lot of overhead cost. In fact, some people legitimately make their living selling products full-time on eBay, though it’s not necessarily as easy as all those $97 e-books would have you believe. But if you’re an entrepreneur with volume purchasing and drop-shipping experience or just looking for some pre-launch exposure, eBay might be perfect for you.
  3. Qoop.
    Qoop
    Qoop, there it is. When it comes to promotional/ advertising efforts for your small business, Qoop is an excellent resource as it allows you to create calendars, posters and other “memorabilia” with your company’s logo added. Qoop goes beyond sites like cafepress by taking numerous web2.0 photo sharing sites and networks including photobucket, webshots, and flickr and mashing them up. So if you have, say, a flickr photostream, you can create custom calendars using your images. Qoop has also partnered up with sites like blogprinting and fundprinting to outsource volume printing.
  4. Bonus App: YouTube.
    YouTube
    Don’t underestimate the value of YouTube to a business, especially because of its pseudo-social network and category tagging. Real estate agents use YouTube to post video walkthroughs of properties they’ve listed on their website. Other web2.0 applications in alpha and beta stage post screencasts of their “secret” software to create some buzz. The innovative entrepreneur will come up with some way to utilize YouTube or similar sites such as revver to promote their business. If new media advertising doesn’t work for your company, you might want to promote via traditional TV through spotrunner. Spotrunner lets you pick pre-shot footage snippets to mashup, and then finds you budget ad spots with TV stations across the USA.

Being an entrepreneur has always been a high risk/ high reward venture. This year, more than 50% of new startups will close up shop before they reach their first anniversary. And while you cannot control things like market fluctuations, being smart about how you spend your time and energy can dramatically improve your company’s chances of success. This article has introduced you to 25 of the best Web 2.0 applications, all of which are designed to help you organize, control and promote your company, so that by working smarter you can maximize the chances of your startup’s success.

Monday, June 4, 2007

20 Things Not to Do Before Starting A Business

  1. Don’t quit your day job.
  2. Don’t incorporate. Seventy five percent of all businesses are sole proprietorships, and they already make money.
  3. Don’t get a bank account. Your personal banking account will work just fine if someone wants to write you a check, or if you need to pay for something.
  4. Don’t rent an office. Work from home. It won’t require a first, last and security deposit. Plus, it’s tax deductible.
  5. Don’t hire an attorney. What’s an attorney going to tell that you didn’t already know, or couldn’t figure out on Nolo or in a good bookstore? There are only two times to call an attorney: if you’re in jail, or if someone else’s attorney contacts you.
  6. Don’t hire an accountant. Quickbooks Simple Start will get you going.
  7. Don’t get a loan. To get a loan from anyone, even your family, will require that you do too many items on this list. And besides, if you get a loan, you know work for the bank — not for yourself.
  8. Don’t hire anyone. Don’t hire someone if you can do it yourself. For everything else, use contractors and give them 1099.
  9. Don’t get a business license. I’m not advocating that anyone cheat the government. Once you can sell your product/service, go out immediately and get all of the necessary business licenses and permits in your jurisdiction.
  10. Don’t try to patent anything. It takes 1.5 to 2.5 years to get a patent. Who knows what the market will look like then.
  11. Don’t design a logo. You are your own brand, you don’t need a logo.
  12. Don’t waste time picking a business name. As a sole proprietor, you already have a business name: your own!
  13. Don’t advertise. Advertising costs money, and takes time to perfect. Selling takes only you.
  14. Don’t buy office supplies. If you need a pencil, get one out of the kitchen or your son’s backpack. You are working from home, aren’t you?
  15. Don’t buy any equipment. Outsource everything. Fedex Kinkos can handle all of your printing, and instead of splurging on a postal meter head down the post office. Need something big? Rent it! If it’s not something you can rent by the day, maybe there’s another local business with one. Can you rent it during their off hours in the middle of the night?
  16. Don’t try to find a partner. What do you need a parter for? Capital? Don’t take loans. Need someone with some sales experience? If you the inventor of your product/service can’t sell it — no one will be able to.
  17. Don’t join the Chamber of Commerce. Chambers of Commerce have great mixers where you can meet and network with other local business people. Right now, you don’t need to network, you need to sell! Plus, you can always go as a visitor.
  18. Don’t tell all of your friends about the business that you’re going to start someday soon. Every minute that you spend telling someone you love about your future business is one less minute you have to either try to find someone to buy your product/service or to refine it. Plus, everyone knows an “entrepreneur” that is all talk and no action: don’t be one yourself.
  19. Don’t write a business plan. Sure you need to know what you’re going to do and how you’re going to make money, but don’t waste time formatting it into a structured plan.
  20. Don’t get a business telephone number or mailing address. You have a cellphone, use it. If someone needs to mail you something, have them send it to your house. You’re working there, remember.