Do you have a brilliant business idea but aren’t sure how to get started? As a mentor, leader, and Founder at the Financial Policy Council, my dream has always been to empower entrepreneurs turn their visions into thriving companies.
This comprehensive guide draws on decades of my experience advising startups to walk you through every step – from conception to growth to exit. Following this advice will save you tons of money, time and aggravation.
Enjoy the ride… You will thank me one day for this.
Here is the lay of the land.
1. C Corp or S Corp or LLC?
When structuring your business, choose a C-Corporation if you envision eventually seeking outside investment or an acquisition exit. C-Corps provide the share structure and credibility preferred by investors. S-Corps offer pass-through taxation benefits but limit shares. LLCs provide liability protection but lack corporate structure. Assess your goals and needs to pick the right form. Consult attorneys and accountants to ensure compliance.
2. What state should you incorporate in?
Delaware is the clear choice for establishing your business’s credibility. Over 50% of public companies and 66% of Fortune 500 firms incorporated there due to Delaware’s business-friendly laws, respected Court of Chancery, tax advantages, and status as a gold standard among investors. The onboarding process is straightforward. Costs are reasonable. Consider maintaining an operating presence elsewhere while headquartering in Delaware.
3. Should founders vest?
Absolutely. Founder vesting over 4 years with accelerated vesting on exit protects the company from co-founders departing early with substantial shares. Vesting also motivates founders to build long-term value. Make vesting contingent on active involvement and achieving milestones. However, restrict vesting provisions and exercise windows that are overly burdensome or trigger unintended tax consequences.
4. Should you go for venture capital money?
Only once you have a strong product-market fit and metrics indicating scalability should you pursue venture funding. VC money can rocket fuel growth but also dilutes control. Try bootstrapping your MVP first. Then seek angel investments. If exponential growth demands capital intensity upfront, VC support can help you aggressively expand, hire top talent and fuel marketing – provided your oversight and governance is buttoned up.
5. Should you patent your idea?
No – establishing real customer demand is far more important initially than legal protections. Filing patents early can be costly and tie up resources. Instead, focus first on building an excellent product and getting traction. After validating your idea with customers, consider filing provisional patents to lock in key IP and assess the competitive landscape. Then convert these to full patents with an experienced attorney. Avoid over-patenting incremental innovations unlikely to be copied.
6. Should you require venture capitalists to sign NDAs?
No. Reputable VCs will refuse to sign NDAs to evaluate thousands of business ideas. They rely on professionalism, ethics, and a strong track record to build trust. The best way to protect IP is to file patents and limit technical disclosures in initial meetings. Share your secret sauce only once you have a strong relationship paired with an investment term sheet. Instead of NDAs, ensure thorough vetting and reference checks on potential investors.
7. How much equity should you give a partner?
Formally divide ownership based on key contributions like managing the company, raising capital, originating the core concept, driving sales, building the product, etc. Weight these elements judiciously but equitably based on value added. Vesting further enables rebalancing as roles evolve. Due diligence on co-founders’ character and competencies are vital. Avoid “partnerships of convenience.” Build a complementary team unified behind your collective vision.
8. Should you have a technical co-founder if you are not technical?
Absolutely, unless you can afford to fully outsource development. Having a strong technical co-founder will enable you to build MVPs fast, iterate quickly based on user feedback, and stay nimble responding to technology shifts. They also bring credibility when recruiting engineering talent and attracting tech-savvy angel investors. Be wise in equity grants to technical partners based on their proven expertise and ongoing contributions.
9. Should you barter equity for services?
Tread very carefully. Early employees deserve stock as incentives, not vendors you pay in cash. However, some critical partners may warrant small equity in lieu of fees if capital constrained. For commoditized services, stick to cash payments to avoid unnecessary dilution. Carefully assess whether any expertise is so mission-critical that equity is justified. Structure milestone-based vesting. But for most services, pay in cash and keep your equity.
10. How do you market your app?
Organic efforts are best for fledgling apps with limited resources. Share personally on social media and run cost-efficient campaigns. Email users individually with onboarding tips and special offers. Recruit micro-influencers in your niche. Pursue PR opportunities and user referrals. As capital allows, invest in paid channels, strategic partnerships, and affiliate programs. Retain flexibility to adapt messaging and tactics to user data.
11. Should you build a product?
Start offering your solution as a service first. Get detailed feedback from early adopters before productizing. Identify which manual processes deliver the most value. Build MVP products automating these high-impact workflows. Phase additional capabilities based on commercial validation. Services help improve demand, while minimizing upfront development costs. Enable flexibility to quickly meet changing customer needs.
12. How much dilution is too much dilution?
More dilution is better than bankruptcy. If funding enables growth, incrementally higher valuations can offset dilution. Aspire to give up as little control as feasible. But don’t let fear of dilution prevent you from accepting smart capital that can take your business to the next level. Weigh the benefits of growth capital against dilution. Diluting a small percentage of a far larger pie may benefit all shareholders’ long term.
13. What if nobody seems to be buying your product?
First, identify why with rigorous customer interviews. Are you solving the right problem? Is the solution lacking? Is branding ineffective? Once you pinpoint issues, be willing to adapt. Repurpose what works into related services that see demand. Pivot intelligently by leveraging hard-won insights, technology, and skills into validated customer needs. With serious issues, consider sunsetting products lacking traction if capital is tight.
14. If a client wants you to hire their friend or they won’t give you the business (e.g., like a bribe) what should you do?
Politely refuse such improper requests which raise ethical issues. Stress your commitment to hiring the most qualified candidates based on merit. If they persist, it may be best to walk away from the business relationship entirely. However, first clarify context in case you misunderstood their recommendation. Many cultures heavily weigh referrals in hiring. If no impropriety is intended, properly vet any recommended candidates as you would normally.
15. What do you do when a customer rejects you in a B2B business?
Persistence and relationship building is key. Maintain regular contact providing valuable content to prospects that rejected you. Look for ways to add value without a hard sales push. Build rapport and trust over time. With their permission, keep them updated on your progress milestones like new products, satisfied reference customers or funding rounds. Position yourself as a trusted advisor versus a transactional vendor. When the timing is right, humbly ask for their business again.
16. In a B2C business?
Iterate rapidly with frequent product updates and compelling content to engage users. Analyze usage data to surface pain points and improve retention. Let quality and word-of-mouth build gradually. Run referral programs rewarding sharing. Compensate influencers and loyal power users to organically amplify reach. Build a User Advisory Board for product feedback. Consistently deliver more value than customers expect.
17. How do you get new clients?
Existing satisfied customers are the best source of referrals. Wow them with your service and industry knowledge. Identify which of their peers also stand to benefit from your offering and request introductions. Develop win-win channel partnerships with non-competitive vendors serving your clients. Participate actively in trade associations and events for your niche. Publish thought leadership content demonstrating expertise. Continuously expand your network.
18. What’s the best thing to do for a new client?
Overdeliver in the first one hundred days to lay the foundation for a loyal long-term relationship. Identify hidden pain points they may have overlooked and solve them. Deliver unexpectedly fast turnarounds and proactively communicate. Leverage unbilled time to ensure flawless execution. Send small gifts showing appreciation. Seek frequent feedback to head off any minor issues before they escalate. This early investment in delighting clients leads to lasting mutual benefits.
19. What if your client asks you to do something not in your business plan?
Say yes within reason if you can deliver it profitably. Going above and beyond on ancillary requests builds tremendous goodwill. But be transparent on capabilities and don’t overpromise. If the request diverges heavily from your core competencies, politely refer them to a trusted partner better positioned to help. Follow up to ensure their needs were met to their satisfaction even if you were not the direct provider.
20. I have lots of ideas. How do I pick the right one?
Pursue multiple promising ideas in parallel initially. Devote time to crystallizing each concept and assessing feasibility. Seek external feedback to pressure test assumptions. Talk to real prospective users and industry experts. Look for people willing to pay for initial services or MVP products that embody each idea. The right concept will reveal itself based on user enthusiasm, commercial viability, and operational leverage. Let demand and unit economics guide your focus.
21. What is the sign of an amateur?
Amateurs undermine their credibility in multiple ways: demanding NDAs without value; seeking VC funds pre-traction; fighting with co-founders; worrying excessively about dilution; name dropping celebrities; asking for introductions to celebrities; lying about meeting times; lacking evidence of a profitable model; rejecting reasonable offers; business planning versus customer validation; and more. Avoid these missteps.
22. What is the sign of a professional?
The hallmarks of savvy professionals include phasing from services to products; relentless cost optimization; tireless persistence selling; maintaining focus amid scale; exploring ideas rapidly until product-market fit; saying “no” to bad deals; taking every meeting with proven winners; skillfully conveying profit potential; never compromising on ethics; and embodying positive leadership virtues. Model these qualities.
23. When should I hire people full time?
Ideally bring on full-time team members only once you have ongoing customer revenues sufficient to pay at least six months of salaries and benefits. Before product-market fit, leverage technical advisors, or outsource contractors to avoid extensive burn. Scale your team judiciously aligned to revenue growth. Be prudent with new hires but sell aggressively to fuel expansion. Aim for a 6–9-month cash runway when staffing up.
24. How long does it take to raise money?
For an extremely compelling business, you may attract funding in under six months. However, a year of diligent relationship building and pitching is more typical for most startups. If your fundamentals like team capabilities, market potential and traction are lacking, securing investments could take many years – or never materialize. Realistically anticipate a lengthy fundraising journey. But don’t give up easily if you are delivering real value to customers.
25. Should I get an office?
Avoid the cost and distractions of formal office space until you raise adequate funding or have steady profits to pay for it. Work from home or find economical co-working spaces conducive to productivity and collaboration. Meet customers at their site or places convenient for them when required. As you scale, facilities can enable culture and operations. But don’t saddle yourself with expensive overheads prematurely.
26. Should I do market research?
Client-driven research is ideal – find one user who will pay for your initial services or MVP. Engage potential customers early through problem interviews and prototype tests versus abstract surveys. Immerse yourself in their worldview. Validated learning beats speculative business planning. Balance quantitative data with qualitative insights on pain points and needs. Let real-world usage guide your product, not theoretical research alone.
27. Should I pay taxes or pay dividends?
Taxes. Never pay dividends while scaling. All available capital should be reinvested in growth, not distributed to shareholders. Operate lean at early stages to provide a long runway without the need for dividends. Once profitable, optimize structures like S-Corps and LLCs to reduce tax liabilities if possible. But avoid “pre-revenue dividends.” Instead provide upside through appreciation in company value.
28. What should the CEO salary be?
If not yet profitable, pay yourself no more than 2x the lowest salary in your company. Founders should make personal sacrifices to build fundamental value before drawing substantial income. Investor capital should fund operations, not exorbitant executive perks. Once profitable, benchmark reasonable compensation against industry norms and performance. But pay yourself last pre-profitability – your reward is equity upside.
29. When should I fire employees?
Once you have less than six months of cash burn runway remaining without evidence of an imminent growth inflection. With capital tight, move quickly to reduce salaries through role consolidation and attrition before resorting to layoffs. Communicate proactively with remaining team members post-reduction. As a last resort, reduce your own salary further before trimming staff to essential roles. Handle terminations with compassion.
30. What other reasons should one fire an employee?
Toxic behaviors that must be promptly addressed include persistent underperformance; bad attitudes reflecting poorly on company culture; violating company values; spreading rumors or gossip; mistreating colleagues or customers; degrading leadership behind their backs; rejecting constructive feedback; stealing IP; sharing confidential data; falsifying documents; surfing jobs sites at work; and circulating negativity on social media.
31. When should you give a raise?
Rarely, unless an exceptional contributor is being recruited away. Promote from within first before hiring externally if there is high performer ready for more responsibilities. Consider one-time spot bonuses rewards over inflationary ongoing raises. Budget for broad compensation increases during annual planning based on merit and market data. Get creative on non-cash rewards like additional vacation days, work flexibility, public praise, and development opportunities.
32. How big should the employee option pool be?
The employee stock option pool typically ranges from 15% to 20% of the fully diluted shares outstanding. Set aside at least 10% upfront. Consider incremental 3–5-year vesting. Allocate judiciously to core talent based on responsibilities and equity value add. Budget for refresh grants. Given liquidation preferences, common stock is already substantially diluted, so smart OPS design is key to still incentivizing teams.
33. What if one client is almost all of my revenues?
Although concentration risk is always a concern, avoid abruptly turning down work from a major customer paying your bills. Instead, reduce dependency proactively over 2-3 years as your business scales. Incentivize your sales team to win lots of new logos. Expand offerings to existing strategic accounts. But in the near term, keep your largest customer very happy with excellent service that strengthens their loyalty.
34. What’s the best way to sell anything?
Demonstrate compelling ROI – quantify how your solution will provide a large return on their investment in your product or service. Paint a before and after picture of the dramatic improvements and cost savings achievable. Share case studies with hard numbers from existing clients detailing the positive outcomes and measurable value they realized. Sell the future benefit versus purely features.
35. What’s the best way to talk about your competition in a meeting?
Avoid attacking competitors. It looks insecure. Instead, acknowledge all choices, but position yourself as bringing unique strengths versus alternatives. For example: “Many good solutions exist for this problem. We find that our approach resonates with leaders who value deep industry expertise combined with rapid time-to-value.” Stay focused on your differentiators.
36. Should I ever worry about the news or the economy?
No. Adverse macro conditions can create opportunities for resilient entrepreneurs. Economic downturns decrease costs by easing hiring and reducing rent. Focus on delighting customers and optimizing operational efficiency, not external factors you cannot control. Build fundamental business strengths aligned to customer needs rather than reacting to short-term events.
37. What happened to all of my friends?
Friendships inherently evolve when dedicating yourself to the intense demands of entrepreneurship. Maintain close ties who align with your values by proactively setting aside dedicated time and communicating openly on changing dynamics. You may grow apart from some. But forge new friendships with advisors, investors and fellow entrepreneurs traveling similar journeys who understand your mindset and can provide support.
38. How do I charge more for my services?
Avoid simply increasing rates across the board which can alarm customers. Instead, introduce new premium tiers offering exclusive expanded features or service levels. Transition customers incrementally to higher tiers as the add-ons deliver value. Offer discounts for annual prepayment. Add-on fees for ad-hoc services like expedited delivery. Track time at a granular level to quantify expertise applied; highlight this in value conversations.
39. Do I charge per hour or per project or per month?
When starting out, charge per project to maximize flexibility as you refine offerings. Once established, evolve core solutions into packaged monthly subscriptions. This provides predictable recurring revenues that investors value highly. Maintain hourly or per project billing for ancillary services outside the standard packages. Write rigorous contracts protecting your interests for large custom projects.
40. How do I prepare for a meeting?
Thoroughly research all attendees and their employers. Review past interactions. Identify potential needs and pain points. Anticipate objections and concerns. Prepare customized solutions and messaging that resonates with each stakeholders’ role and priorities. Develop rapport by asking insightful questions demonstrating domain expertise. Listen actively. Follow-up promptly with next steps reflecting all feedback.
41. What is the most effective email marketing?
Highly targeted and personalized outreach converts best. Work from targeted lists of past customers or prospects who recently bought related offerings from competitors. Segment carefully. Personalize subject lines and content. Test various calls-to-action. Ensure compliance with modern anti-spam laws. Refine based on open and click-through data. Automate staggered touches for lead nurturing. Retain personal tone in writing.
42. Should I give stuff for free?
Selectively. Free tools or resources help engage users. A basic Freemium version establishes value. Free trials convert fence sitters. But don’t expect meaningful conversion rates from free users. Limit functionality to incentivize upgrades. Focus on providing core value users will pay for. Promotions should be temporary and qualified. Remember, free customers demand the most support.
43. Should I blog?
Yes, blogging establishes expertise and organic reach. Post regularly about addressing problems and milestones in your industry. Share unique insights, not just product pitches. Write in an authentic voice highlighting challenges overcome. Respond to comments and build community. Promote new articles through social media.
44. Should I care about margins?
Prioritize revenue growth and customer satisfaction over margins initially. With scale, optimize pricing and operations to improve profitability. But in the early days, focus on sustainability and scalability over margins. Once established, invest to increase efficiency, conversion rates or retention if it drives the bottom line. Mature businesses must maintain margins, but growth trumps margins for unproven startups.
45. Should I spin-off this unrelated idea into a separate business?
No, remain laser focused on your core business to build momentum in one area first. Once established, you can leverage your operational infrastructure, funding channels and professional network to greater advantage on additional ideas. Make your initial venture a spectacular success. Register related business names defensively but develop in parallel only if adequate resources exist without distraction.
46. Should I hire people because I can travel on a seven-hour plane ride with them?
Character fit is crucial but avoid using purely personal criteria like travel compatibility when hiring. Conduct skills assessments and reference checks to ensure candidates have the required competencies, values, and track record of success for the role. Rapport is great, but shared professional purpose and complementary skill sets matter more. You’ll be working together far more than traveling.
47. Should I negotiate the best terms with a VC?
Aim for reasonable terms, but don’t sacrifice relationship fit chasing every last base point. Challenging economic climates or lofty valuations require investor partnership more than ever. You want investors who will support you in tough times, not just easy ones. Carefully vet values alignment and temperament. Aim for shared vision and a value-add board versus adversarial interactions.
48. Should I even start a business?
Develop skills, experience, and a professional network first. Build assets through working or side hustles. Once established, hard-won wisdom and capital increase your odds of navigating the challenges of entrepreneurship. Bounce ideas off trusted mentors before leaving steady jobs. Gain operational expertise. Then start your venture armed with relationships and resources to smooth the path.
49. Should I give employees bonuses for a job well done?
Structure clear incentive plans upfront aligned to company objectives. But avoid one-off cash bonuses. Public praise and job enlargement often motivate more than surprise bonuses. Consider gift cards for meals/experiences, extra time off or work flexibility. Contribute to learning programs. Spot bonus budgets can add up fast. Non-cash options foster loyalty and morale without entitlement.
50. If my customer just got divorced, what should I say to him?
Express genuine empathy and compassion for their situation. Share that you’re available to talk further if helpful. Offer flexibility with project timelines if needed. Listen without judgment. Ask how you can support them during this difficult transition. Avoid insensitive humor or flippant advice. Your understanding ear will deepen loyalty in tough times.
51. When should I give up on my idea?
If you see no momentum building around your solution after 6-12 months of sincere efforts to validate and refine it, consider a pivot. Lack of customer pull despite extensive attempts often indicates problems. But stay objective – ideas sometimes take many years to gain traction. Determine if struggles stem from implementation versus the concept. Stay nimble and willing to adapt approaches while stubborn on vision.
52. Why didn’t the VC or customer call back after we met yesterday, and it was great?
Temper expectations. For potential investors or customers, you’re pursuing, a single meeting is just the very start of relationship building. Patience is key. Follow up promptly with requested information to continue conversations. Build rapport over multiple interactions, not just one pitch. Earn attention through consistent valuable contributions tailored to their needs versus a sense of entitlement.
53. Should I hire a professional CEO?
No, at least not until you have substantial scale – over 50-100 employees and $15-30M+ in revenue is a rough guideline. As founder, your vision, passion and sacrifice establish the culture and path. Professional managers prioritize predictable execution versus risk taking.
First build the foundations for scalable systems. Then add management bandwidth preserving entrepreneurial spirit.
54. Should I hire a head of sales?
Again, not until you are somewhat established. The founder must personify the sales effort in early days when credibility and relationships are paramount. Roll up your sleeves. Once you have clear product-market fit and repeatable sales processes, bring on a VP Sales to train and manage a team. But don’t relinquish sales responsibilities prematurely or lose touch with customer needs.
55. My client called at 3 a.m. Should I tell him to respect boundaries?
No, demonstrate dedication to customers whenever they need you. Notify loved ones that your work hours may be highly irregular as you build your business. Never complain about unreasonable clients. You want vocally satisfied customers as referrals. Assign team members specific on-call roles if you’re unable to personally cover 24/7.
56. I made a mistake. Should I tell the client?
Yes. Transparency builds trust, even when difficult. Don’t cover up errors. Be proactive in taking ownership. Detail how you will prevent it recurring. Reflect humility and sincerely apologize. Offer reasonable concessions or refunds for inconvenience. Turn mistakes into demonstrations of your integrity and commitment to continuous improvement.
57. I personally need money. Should I borrow from the business?
Only once your startup generates sufficient steady cash flows to repay reliably without impacting operations, payroll, or strategic programs. Separate personal and business finances completely. Manage your personal burn rate conservatively. Explore personal loans based on your creditworthiness if needed before tapping business funds. Communicate transparently with investors on any planned borrowings.
58. I just bought two companies. Should I put them under the same roof and start consolidating?
No. For at least two years post-acquisition allow newly acquired businesses to operate independently. Fully understand their unique customer value propositions and culture first. Let leadership run their organizations semi-autonomously after locking in key talent. Move cautiously aligning systems and goals to avoid talent flight. Premature consolidation attempts often destroy value.
59. Should I quit my job?
Don’t rush to quit. First validate demand for your product or services concretely. Start as a side project balancing both. Build sufficient early traction and customer pipeline. Once you have a buffer of savings to pay personal bills for 6 months, phase into your startup as primary focus. Avoid a “startup famine” gap by conservatively ramping down your current job as the new opportunity ramps up.
60. What do I do when I have doubts?
Consult mentors who have built successful companies for guidance navigating uncertainties inherent in entrepreneurship. Weigh whether doubts stem from valid external signs or inner lack of confidence. But most importantly, speak to customers. Their real-world usage and feedback will indicate whether concerns are justified or unfounded. Avoid insular over-analysis; let customer perspectives anchor decisions.
61. I have too much competition. What should I do?
View competition as validation that you are pursuing a real market opportunity worth tackling. Sharpen your positioning on strengths your competitors lack. Obsess over delighting customers more than the competition does. Outwork and outhustle others. Build trust through remarkable responsiveness and service. Stay nimble, adapting faster to market shifts. Turn competitors into motivators to keep executing at peak intensity.
62. My wife/husband thinks I spend too much time on my startup.
Have an open and honest dialogue on expectations and priorities. Entrepreneurship requires sacrifices and many founders invest most free time into their startups initially. However, also plan regular quality time to nurture your relationship and health. Schedule focused couple and family time on the calendar, honoring it as you would other commitments. Find ways to involve your spouse so they feel connected to your journey.
63. Should I expand geographically as quickly as possible?
No. Concentrate on dominating your local niche first. Once you perfect business fundamentals in a smaller area, expand systematically to adjacent markets. Premature complex remote expansion distracts focus and dilutes scarce resources. Wait until you have an optimized playbook fine-tuned from local learnings. Build density and economies of scale in a region before diversifying territory.
64. I undercharged. What should I do about it?
Don’t radically increase pricing on existing customers. But use new buyer conversations to test higher pricing reflecting your increased capabilities. Segment customers into premiere tiers unlocking additional exclusive perks and access. Ensure early clients still receive high-touch service to preempt perceptions of being undervalued. When adding team members or features, factor required overhead into pricing future business.
65. I have an idea for an app but don’t know how to execute. What should I do?
Sketch wireframes of all screens and interactions first. Hire a great designer to refine these and make mockups that look like a real app. Next, document detailed functionality requirements for developers. Choose an agile technical partner to build an MVP app in phased sprints based on validated learnings versus fixed specs. Expect multiple iterations guided by user testing before product-market fit.
66. I want to buy a franchise in X. Is that a good idea?
Consider buying an existing franchise only when the current owner needs to sell due to the “three Ds” – death, divorce, or debts. These life events pressure owners to sell at favorable terms. Thoroughly vet the brand power and unit economics. But buying a discounted business from a motivated seller often makes more sense than expensive new franchise fees and builds.
67. I have a lot of traffic but no revenue. What should I do?
Getting significant traffic without corresponding revenues indicates serious monetization issues. You likely lack a viable business model built on true value to specific users versus general popularity. Be willing to pivot your positioning and offerings toward revenue-generating use cases, even if less scalable. Don’t let vanity metrics like unqualified traffic cloud judgment on delivering real customer value.
68. I have no traffic. How do I get traffic?
Head back to the drawing board. Lack of organic interest validates you have not achieved product-market fit. Make that your singular priority before trying to drive volume traffic. Speak with users to identify needs. Refine messaging and features to resonate with a well-defined target audience. Traffic without conversion is worthless anyway. First build something people genuinely want, then traffic will come.
69. Should I hire a PR firm?
No. In the early days, focus on products and customers not publicity. Once you have strong organic word-of-mouth and referral traction, earned media will follow. Refine your positioning and stories. Build authentic relationships with reporters focused on your industry. Maximize your own social channels first. Then court select media where you can share something truly unique.
70. My competition is doing better than me across every metric. What should I do?
Take a step back. If competitors consistently outperform you across the board, your business fundamentals may be flawed. Consider an honest restart versus doubling down on a shaky foundation. Bring on advisors to objectively assess your positioning, product, and go-to-market. Be willing to fully rethink aspects that clearly aren’t working. Cut losses quickly when needed.
71. XYZ just sold for $100 million. Should I be valued at that? I’m better!
No. Do not use inflated valuations from recent outlier deals as justification for unrealistic asks of your own. Every company and situation differ. Focus on communicating your core value proposition and demonstrating real traction relative to similar stage peers. Savvy investors will peg you to metrics warranting, not vanity. Sell vision paired with evidence.
72. Investors want to meet me and customers want to meet me. Who do I meet if I need money?
Prioritize investors if raising capital is urgent for fueling growth. But make the most of any customer meetings also. Ask them to provide testimonials, referrals, or references to reinforce credibility. Remember investors base decisions on your ability to win and retain paying customers. Satisfied users who vouch for your solution sway investors more than anything.
73. If an acquirer asks me why I want to sell, what should I say?
Avoid throwing your company under the bus. Frame it positively. For example: “We’ve built a strong foundation but see greater potential to accelerate growth with the resources and market access of a larger parent company. Together we can scale impactfully to help even more customers. I’m excited by the prospect of our team taking on expanded roles in the combined entity.”
So, there you have it – a comprehensive playbook for launching and growing a successful startup! Let the FINANCIAL Policy Council guide you in bringing your entrepreneurial dream to life. Our proven expertise and resources empower business founders across all industries. Let’s build the future.
74. How do I build my advisory board?
Recruit independent advisors with complementary domain expertise like technical, marketing, operations, finance, or legal. Ideally 2-4 people you connect with well. Compensate with equity vesting over 2-3 years or cash retainers. Clearly define expectations and meeting cadence. Leverage them as sounding boards and for connections, not day-to-day work.
75. Should I relocate to Silicon Valley?
No need initially. Location matters far less in the internet age. Build your company based on access to customers, talent, and affordable cost structure. Expand to hubs like Silicon Valley
once you raise larger rounds for operational needs or strategic hiring. Avoid high-cost areas pre-funding out of convenience versus merit.
76. How do I split equity with future team members?
Allocate 10-20% equity in an employee pool for subsequent 3–4-year vesting grants. Hire slowly until funding milestones are achieved. For founding team, distribute equity based on who created IP versus runs day-to-day operations. vesting protects against early departures. Incentivize long-term contributions.
77. Should I start a company with only an idea?
No. Ideas alone have little inherent value. First develop proprietary solutions, IP and expertise solving a problem. Validate demand through early sales or users. Upon traction, incorporate and formalize the business. Starting a company too early burdens you with legalities before needed. wait until tangible value created to form an entity.
78. How much control should I give investors?
Maintain decision control in carefully negotiated shareholders’ agreements. But also, value investor expertise on your board. Go beyond pure control mindset to win-win collaboration. Accept reasonable oversight as natural for material capital investments. Build alignment through regular communication of context behind decisions.
79. When should I start trademarking my company or product names?
Register your preferred company, product, and domain names as early as possible once fairly certain and before public disclosures. But file official trademark applications only once market validated and prepared to invest in defending marks. Register defensive variations to guard against cybercasters.
80. Should team members report to me or each other?
Establish clear roles, responsibilities and reporting lines avoiding confusion on authority. Size dictates structure – maintain flat org in early days with all reporting to you before adding management layers. Define success measures for autonomy. But stay accessible and collaborate cross-functionally.
81. How do I budget and manage cash flow?
Carefully control spending early on. Have a 13-week cash flow forecast constantly updated. Extend runway with credit only if absolutely necessary. Build economies of scale before fixed office space. Keep receivables moving – don’t let invoices languish. Optimize payables without impacting credit. Model growth assumptions conservatively.
82. When should I create a board of directors?
Once you raise outside financing from institutional investors, form a board with 2-5 members including independent directors. Maintain control initially by appointing the majority. Expand and diversify later. Select for guidance value-add not just representation of investors. Define committee roles like audit and compensation.
83. How quickly should I look to hire a CFO or COO?
Not until requisite scale. As founder, you must spearhead operations and finance initially. Outsource specialized functions like accounting/tax prep if needed. Consider a fractional CFO to close books and manage audits. Only appoint a full CFO/COO once you have a complex business needing dedicated senior operators with public company experience.
84. What metrics should I track?
In SaaS: LTV, CAC, Churn, MRR, Payback Period, Customer Lifetime, Net Revenue Retention. Beyond SaaS: Customer Acquisition Cost, Customer Lifetime Value, Customer Loyalty, Net Promoter Score, DAU/MAU, ARR, Payback Period, CAC:LTV. Instrument analytics to calculate core metrics automatically.
85. How do I account for the probability of failure in my projections?
Apply conservative assumptions to all key drivers: adoption rate, market size, pricing, costs, etc. Model base, upside, and downside cases. Assess fundraising needs for 18-24 months of runway. Probability weight plans based on benchmark startup failure rates, like 75% for pre-seed. Quantify risks.
86. Should I take a salary or pay dividends?
Never dividends before profitability. Pay yourself a minimal amount, just enough to cover personal costs as you build the business. Salaries come after funding other operating needs. Once profitable, take reasonable salary aligned to market rates before distributions. Dividends invite double taxation versus reinvesting net income.
87. How do I value my startup?
No standard formula exists. Pre-revenue valuations are highly speculative. Once revenue generating, apply risk-adjusted revenue multiples discounted by dilution. Weigh market value comps but focus on metrics proving your model. Accurately valuing startups is challenging – optimize for building value, not vanity valuations.
89. How do I assess team capabilities?
Validate skills through past accomplishments, not just claims. Require demonstrable examples of success in previous roles. Check references thoroughly. Probe problem-solving abilities with
hypothetical scenarios. Assess work ethic and resilience. Ensure alignment to company values. Don’t ignore soft skills and emotional intelligence.
90. When should I start applying for patents?
After thoroughly researching existing IP, determining your invention’s uniqueness, and confirming market demand. Provisional patents establish priority pre-validation. But assess costs versus benefits – patents must align to the business model. Some innovations thrive sans patents. Time markets properly.
91. Should I move where my startup is incorporated?
No need initially. Delaware incorporations are standard despite location. Focus first on your personal productivity and proximity to clients/talent hubs. As you scale, expanding operations to your state of incorporation may provide tax advantages and administrative ease. But incorporate based on merits, not geography.
92. What should be in my pitch deck?
Quickly communicate your vision, progress to date, team, traction, product, market potential, financials, use of proceeds and valuation ask. Visuals are crucial. Limit text. Demonstrate your thoughtfulness. Excite investors in your big vision while evidencing pragmatism scaling a real business.
93. When should I create an advisory board?
Once you raise material outside funding or achieve strong early commercial traction. Advisors can provide expertise scaling business models, organizational design, capital raising, and other areas founders need supplemental support on. Define their scope. Offer equity and involvement in milestones.
94. Should I use a Traditional or Agile development approach?
Agile is ideal for early-stage ventures. Ship often. Embrace minimum viable products to gain feedback. Add features iteratively based on data versus big bang launches. Adapt to user input. Waterfall methods lock you into rigid requirements that often miss market needs. Stay nimble.
95. How can I convince great people to take a chance on joining my unproven startup?
Sell your vision, values and why their role is critical to success. Offer career growth opportunities. Highlight your traction and metrics demonstrating potential. Provide competitive comp including meaningful equity upside. Support their goals. Treat them like owners. Build their faith in you.
96. What is the best way to ensure a strong company culture?
Lead by example. Celebrate core values regularly. Foster transparency, autonomy, and ownership. Make new hires carefully align to culture. Onboard thoroughly. Listen and gather input often. Enable professional development. Keep communication open even during hard decisions.
97. When should I create departments like Marketing, Finance, HR?
Not until necessity arises with scale. Centralize functions initially. Outsource specialized skills like recruiting. Consolidate roles like having engineers handle website and content. Only departmentalize once your team and organizational complexity demands it. Don’t silo too early.
98. How extensively should I rely on outsourcing and contractors?
Prioritize controlling core IP and competencies internally. But vendors enable flexibility on needs outside focus areas. Leverage specialized experts on project basis. Maintain connections to tap additional bandwidth as needed. Scale internal teams only once strategy and economics validate.
99. How can I get candid feedback on my startup’s weaknesses?
Ask trusted advisors to critically assess your business. Create anonymous surveys allowing anonymous input. Talk to early terminated employees. Use strong critical thinking skills to play “devil’s advocate” yourself. Analyze losses rigorously. Listen to customer complaints thoroughly.
100. What metrics indicate my startup is ready to scale?
Consistent revenue growth, high customer lifetime value relative to acquisition costs, increasing margins, repeat purchase rates exceeding thresholds, low churn coupled with high retention, referrals, and loyalty, strong NPS, and target CAC:LTV ratio achieved. Don’t scale prematurely before proving profitable unit economics.
Conclusion:
Starting a successful business is a monumental yet rewarding undertaking. This comprehensive guide outlines key insights and lessons learned from founders across industries to set you on the path to startup success. While the road is long, remembering to start lean, solve real problems, build a great team, delight customers, and constantly adapt positions you for growth. Implementation is everything – a mediocre idea well-executed will exceed a great idea haphazardly managed. Stay resilient through the ups and downs by focusing on creating real value versus quick wins. With dedication and perseverance, your startup can gain traction and change the world. The journey requires sacrifice but fuels lasting impact. Maintain perspective on what truly matters most to you beyond just financials.
Summary:
In summary, this exhaustive guide covers critical topics like structuring your business, funding, developing products, hiring a team, protecting IP, acquiring customers, operations, marketing, accounting, scaling, exits and more using a comprehensive Q&A approach. Key lessons include focusing on solving real needs, starting lean, hiring complementary skill sets, obsessing over customers, continually testing, and adapting, driving growth through referrals and repeat sales, being judicious with equity, raising capital only when needed, staying persistent through failures, maintaining ethics, and focusing on value over hype. Follow this bootstrap-first mentality, validated learning approach to incrementally turn ideas into thriving businesses. Stay hungry and humble.
Call to Action:
If you are energized to manifest your entrepreneurial idea into a sustainable business, the time to start is now. Commit to consistent action, not just inspiration. Tap into your network’s expertise through advisory roles. Join communities to find co-founders. Begin identifying customer pain points and product ideas. Validate demand by pre-selling. Start building and testing MVP versions. Map out an 18–24-month operating plan. Bolster skills through courses and mentors. Research legal regulations. Line up service providers. Apply to startup accelerators. Enter competitions to hone your pitch. Lock down IP protections. Crowdfund for initial capital if needed. Share progress to build accountability. Embrace the grind required to turn vision into victory. You got this!
The Financial Policy Council’s Role:
The Financial Policy Council supports entrepreneurs across all stages of their startup journeys. Through assistance in helping them to secure investment funding, we empower bold founders with the tools required to aid them in seeking capital to build and scale their innovative businesses. Our team of entrepreneurial members provide hands-on mentorship and expertise derived from decades of experience fostering growth. Our events and network offer access to valuable connections with customers, partners, and influencers. Policy initiatives create regulatory frameworks that encourage entrepreneurship and innovation. Knowledge resources such as this guide deliver practical learnings and best practices so founders can avoid common pitfalls. Startups of all sizes and industries partner with the FPC’s member entrepreneurs to accelerate impact and confront arising challenges. Our comprehensive support ecosystem enables ambitious entrepreneurs to make their dreams reality. Together, we can transform our lives.
For over 25 years, the FPC has supported startups from inception to IPO and beyond. Our 360-degree support ecosystem provides the critical community, knowledge, advocacy, and funding to empower bold entrepreneurs to make an impact. We’re invested in your success – let’s build the future together.
If you found this comprehensive startup guide insightful and wish to stay updated on the latest tips for entrepreneurs, consider joining the Financial Policy Council. The FPC empowers founders with actionable intelligence to launch successful companies and make smart growth decisions. Visit www.financialpolicycouncil.org to access blogs and resources for entrepreneurs, connect with experienced founders and advisors, and help shape policy conversations that support startup communities. Together we can build the next generation of innovative businesses.
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