Up and Running Blog

investment

computers on desk

New Employee? Make a Positive First Impression!

by Susan Solovic on September 12, 2011

So you’ve decided to add to your team. Good for you. You’re focused on growing your business. And now that you’ve found the right candidate and sealed the deal so to speak, you may think the hard work is over. Let me assure you, the work has just begun, and it’s important you get it right from day one. Let me explain.

Remember, your first day of school? You probably had butterflies flickering in your stomach. What would your teacher be like? Who would you play with? Not knowing what to expect made it all pretty scary.

The first day on a new job is much like the first day of school. A new employee is both excited and apprehensive. With that in mind, you should make the new employee feel comfortable and accepted. Unfortunately, many small business owners spend a significant amount of time and resources carefully recruiting and selecting the right employee, but they drop the ball once they’ve made the hiring decision.

You only have one chance to make a good impression. (I’m sure you’ve heard that before.) That first day on the job sets the tone for your employee’s perception of your company and first impressions are often lasting impressions. As a result, employees who have negative experiences typically don’t stay around for long. That means you’re back at square one. So why not take the time to do it right.

Every business person understands the necessity of getting all the employee paperwork taken care of on the first day. But a good first experience involves much more than filling out forms.

Prior to the first day, mark off sufficient time on your calendar to personally greet the new member of your team. Don’t let them show up and sit around until you’re available. And if you already have other employees, make sure you introduce them to everyone. Spending adequate time on the first day with your new employee to help them feel comfortable and get acclimated should an absolute priority.

Be prepared. Don’t stick the employee in a make-shift work area. Plan ahead and be sure their work space is ready. They should have the proper work tools and supplies they need to get started. In addition, give them an e-mail address, initial password and telephone extension number so they feel as though they are connected. You might also want to give them a specific assignment – something they can get started on to feel as though they are contributing right away.

I remember the first few days on a job once where I was left alone in my new office with a stack of trade magazines and some old memos to review. I honestly thought they had forgotten about me. It was uncomfortable to say the least.

I highly recommend inviting your new employee to lunch. Spend a little time getting to know them better in a less formal setting.

Touch base periodically throughout the day to see how things are going. Make sure they feel comfortable asking questions and learning the ropes.

When an employee resigns from your company, it costs real dollars to fill that void — not to mention the loss in productivity. Once you’ve found a good person to add to your team, take the necessary steps to protect your investment and help ensure they stay. Make the first day a memorable and positive experience.

 

—-

Did you know Susan has a new book? You can pre-order, It’s Your Biz, right now!

Check out her website for some fun extra’s too!

{ 1 comment }

National Move to Local Investing

by Steve Lange on September 29, 2009

Since start-up funding and growth financing for small- and medium-sized businesses has been in such short supply these past couple years, I thought posting about this CNNMoney.com / Fortune Small Business article on finding novel local investment would be a welcome change.

The article, originally published earlier in September, is about owners of several types of small businesses which opened, recovered, or expanded during the current economic crunch because local patrons were willing to invest in their favorite local businesses. Several types of money raising programs are discussed, including VIP cards/treatment for shareholders, $600 store and restaurant certificates sold for $500 (20% is a pretty good ROI), as well as “shares”.

Businesses showcased include restaurants, bookstores, pub/bar, and a fair-trade retail gift store. The focus of these financing efforts is on encouraging customers to become patrons or shareholders. And shareholders are a loyal customer base. Local shareholders feel vested in the company and want you to succeed.

Look to your customer base and your community. Including them as participants in your business and fostering a buy-local awareness could bring you that shot-in-the-arm financial boost to success.

Read the entire Love a local business? Buy a share article.

Steve Lange
Palo Alto Software

{ 1 comment }

Most Companies Run on Sales, Not Investment

by Tim Berry on August 31, 2009

I had a slightly disturbing talk with an entrepreneur at a smartups.org meeting last Thursday night. Smart-ups is a local group getting entrepreneurs together in the Eugene-Corvallis area in Oregon.

Image by Chika on Flickr

This man will probably make it. There was nothing dumb or naive about him, and he was old enough to know better. But the underlying assumption he seemed to be making is worth posting about.

He asked me how he would get money to start a new venture related to worms and compost. He seemed surprised, and maybe even discouraged, by my realistic answer.

I said relatively few startups get investment; that most startups make it on their own, from grit, work and getting something they can sell to customers early on.

I told him investment is really only for companies that can grow quickly and sell out soon enough (three to five years) to make it worth the investors’ money. For the investors.

And I told him that investment is particularly hard to find these days. And that he should look at how to get his company up and running on a smaller scale, and start selling.

I was surprised and disappointed that he seemed surprised and disappointed.

And yes, we call that bootstrapping.

(Photo credit: by Chika on Flickr)

{ 1 comment }

Venture Capital Good News and Bad News

by Tim Berry on July 20, 2009

This is sort of good news: Dow Jones VentureSource says venture capital investment recovered somewhat from its dismal downturn at the beginning of the year.

Venture capitalists invested $5.27 billion in 595 deals during the second quarter of 2009. That’s way up from $4 billion in the first quarter, which was also the lowest quarter since 1998. But it’s still way down from the second quarter a year ago, $8.33 billion in Q2 of ’08.

The health-care industry is holding up the numbers: $2.23 billion on 184 deals was the first time on record that health-care investment outpaced information technology.

VC investment in IT deals, $1.88 billion on 284 deals, was slightly better than Q1 of 2009 but still very low, on a par with 1997 in money and 1995 in number of deals.

Software investment was $696 million, about half of the $1.42 billion in 2008. Energy and utilities investment fell to $317 million, less than a third of the $1.07 billion for the same period in 2008.

{ 1 comment }

5 Business Models for Social Media Startups

by Tim Berry on July 17, 2009

Are you looking at social media startup opportunities? How are you going to make money?

There’s a good practical list of Five Common Business Models for Social Media Startups by Jun Loayza on Mashable. A good reminder that business models–how you get paid–are part of the game. All five will seem familiar: There’s freemium (give a standard version free, charge for more users or more features), affiliate, subscription, virtual goods (add-ons to free games, like swords and shields and such), and the old standard, advertising.

Facebook, for example, uses advertising to get revenue, and gets relatively little per user. There are a lot of freemium sites, and fewer examples of affiliates and subscriptions.

One of the business plans I reviewed recently had an interesting explanation of why freemium wouldn’t work, and it went subscription only. I worry about that, because there are so many fremium sites.

There’s another common model that this list doesn’t include: Raise investment money, get traffic but no money, raise more money, increasing valuation, get more traffic, raise more money . . . all in the hope that there’s money at the end, when some bigger venture acquires all the stock. Actually, I think we need a tricky word for that business model . . . kite-up? Musical shares? I like that one, because, so often, whoever gets caught with the shares at the end loses.

(Image: Flickr cc image by Chego101)

{ 2 comments }

Cash For Your iPhone App: Why Not?

by Tim Berry on January 5, 2009

What’s wrong with this idea? My answer below. First, the idea, as posted at  Startup Meme:

If you think your developer skills are waiting to be brought out to the world but funding stops their creation, worry no more. Consulting firm Herman Blackbook has initiated a mini fund for such developers. The funds that can sum up to $3,000 will be given to those developers who create apps on the Twitter, AppNexus, Trulia and iPhone platforms (others as well). The New Platform Fund investments will only be given to the ten most brilliant ideas. There are many other fund providers who invest in a range from thousands to millions of dollars, and another one joining the group would be an added benefit. If your app hasn’t been considered worth money, give The New Platform Fund a try too.

What’s wrong with the idea? I hope it’s obvious to you. Investors are partners and also bosses at times, extra voices, extra management. That might be well worth it when you need hundreds of thousands or millions of dollars, particularly if you hook up with good partners, who add value.

And, disclosure, for all I know, Herman Blackbook Consulting is such a good partner. But still, God bless the child that’s got it’s own.

Here’s what TechCrunch says about that:

Let’s be honest. There is very little reason for an entrepreneur/developer to apply for the New Platforms Fund. Incubator micro-funds like Y Combinator, TechStars and Seedcamp don’t give you much in the way of capital ($15k-$20k), but at least it’s enough to live on for a few months while you work on your idea. And those funds have very deep connections in the venture capital world to get you your first round of capital after you’ve spent their initial funds. It’s not clear at all that this new fund can do any of that for you.

{ 2 comments }

$25 Million Proof That VCs Are Still There

by Tim Berry on December 4, 2008

The Huffington Post confirmed Monday that Oak Investment Partners invested $25 million last week. I read it on Venture Beat:

HuffPo, as it’s commonly called, is looking to build on its momentum from the presidential race. You’d expect a lot of that energy to dissipate, but early numbers suggest that traffic continued to grow in the weeks after the election. Not that the site is betting solely on politics; it says it will be adding local sections–it already launched a Chicago site–as well as pages focused on entertainment, living, style and the environment. HuffPo plans to spend its new funding on that expansion as well as increased advertising capabilities, acquisitions and an investigative journalism initiative. I hear that video will probably play a big role in its growth and that a book site should be launching soon.

If the advertising climate is as bad as some are predicting, New York-headquartered HuffPo will definitely need all the money it can get. It’s also good to see a news site expanding at a time when almost everyone seems to be cutting back, and to see it putting money into investigative journalism, an expensive but important pursuit that big media organizations are making less and less time for. The site can probably grow in a more cost-effective way than most traditional publications, since so many of its blog posts are written for free.

This is a third-round investment, which means that The Huffington Post already has had a couple of rounds of VC money before this one.

Still, it’s not exactly your super-new technology, clean tech vs. old tech or alternative energy, but there you have it. Traffic is way up, and at least some investors still have money to spend.

{ 0 comments }

LearnVC–Your Guide to Raising Capital

by Tim Berry on December 1, 2008

Thanks go to Brad Feld of Ask the VC for posting about Learn VC, where Jeff Boardman is putting up a basic information site providing background for new entrepreneurs, seasoned entrepreneurs and new investors.

To get started, take a look at the calculators, such as the pre- and post-money valuation. Well done.

{ 0 comments }

No Financing vs. Bad Financing

by Tim Berry on October 20, 2008

Even in these tough times, as you look toward starting up, it’s still way too easy to focus on “getting financed” instead of focusing on getting financed right, getting financed well or, perhaps, getting no financing at all.

Amazing but true: Sometimes no financing at all is better than the wrong financing.

I was at the Forbes.com headquarters in New York last week, as a judge at the Forbes.com Boost Your Business contest, which includes a $100,000 prize. By the way, if you’re interested, you get to vote on this one, so click here for details on that.

On the Forbes.com site, I discovered The Right And Wrong Ways To Raise Money, written last month by Dileep Rao. He tells a story that illustrates my point:

Take it from Consumer Products Company. (I have disguised the real name to save the owner the embarrassment.) CPC was started by a young entrepreneur with a new product. He obtained his funding from a rich investor to whom he sold a controlling stake.

When the product started to take off, the majority investor took control and threw the entrepreneur out on his ear. The poor guy sued, recovering a little over $100,000 (after substantial legal fees); meanwhile, the investor unloaded the company a few years later for over $100 million.

Seems unfair, I suppose. But, just my opinion here, there are two sides to some of these stories. That $100,000 investment is a lot of money. Would you invest that much without control? If you had the money? Maybe. With the right team, the right product, the right plan . . . but maybe not. These issues aren’t all that simple.

For another view, try Choose Investors Carefully, or Not at All, on my other blog.

Dileep Rao goes on to add some additional good advice on watching this carefully:

Then there was Healthcare Company, a contract home-care provider. HC had raised nearly $400,000 of working capital from a bank and was also planning to lease $70,000 worth of computers. About a year after the original financing, my phone rang. The frantic entrepreneur explained that while he was tracking his sales targets, he needed another $70,000 to cover working capital.

When I looked at his financial statements, I found that he had used $70,000 of that original $400,000 to buy computers because Dell (nasdaq: DELL – news – people ) was not willing to lease them. I asked him if he had looked into other leasing companies–he hadn’t. HC never recovered, and the bank foreclosed on the business.

Moral: Startup capital is precious. Do not deplete your working-capital reserves until the venture is kicking off positive cash flow–chances are you will regret it.

And I want to add my own conclusion, from a more recent post on my other blog. This is a quote from William Sahlman, whose 1997 article on business plans is one of the most-often downloaded articles on the Harvard Business Review site. He was asked how his views have changed in 10 years. One of my favorite pieces of his answer was:

The best money comes from customers, not external investors.

{ 1 comment }

Investors & minor shareholders

by Steve Lange on September 12, 2008

Business owners face risks and compromises when they sell stock in their companies or accept outside investment. Tim Berry has post on this topic several times on his Up and Running and Planning Startups Stories blogs.

Reading Tim’s blogs, and watching the Yahoo! vs. Carl Icahn brouhaha reminded me of the novel Crytomonicon by Neal Stephenson. The story jumps between World War II and the present, and includes the search for hidden treasure, cryptography, high-tech startups, international business, venture capital investors, and the rights and claims of minority shareholders.

The bad guys are bad to the extreme, and I was pleased that the good guys win in the end. Of course, this is a work of fiction and the actions of the characters shouldn’t be viewed as archetypal (truth is, after all, stranger than fiction).

Still, I would recommend this book as a good read, and as a cautionary tale for entrepreneurs who are weighing the advantages and disadvantages of giving up total ownership for venture capital or shareholders.

Steve Lange
Senior Editor
Palo Alto Software

{ 0 comments }

« Older Posts