Gust

AUGUST 7, 2023

From your vantage point as the company’s leader—and perhaps its only employee—you can readily track the arrival and departure of customers, the growth or decline of revenues, and changes in profitability as costs rise or fall. When your startup is very small, it’s fairly easy to gauge its health.

Analytics 91

Analytics Metrics Revenue Employee 91

Gust

AUGUST 8, 2012

One class of clear business opportunity, which wouldn’t exist in an ideal world, is created by the service that seemingly makes it as difficult as possible for potential paying customers to make it take their money. When it comes to inefficient outcomes and customer dissatisfaction, it’s hard to beat the U.S. Hallelujah!

Customer 143

Customer Southern California San Jose Marketing 143

Gust

JUNE 19, 2012

The Cost Equation for a Startup is Better Than Ever. I come from a high-tech software background, and only a few years ago, it would cost at least a million dollars ($1M) for a team of professionals to produce any commercial software product. Most plans are pretty good about estimating direct costs but bad about underlying expenses.

Startup 180

Startup Forecast Angel Investor Software 180

Gust

SEPTEMBER 16, 2012

In today’s world of distributed data, global reach, and powerful incursion technologies, how do I protect my data and my customers’ data? Executives need more data accessible to their team everywhere, but at what cost? User privacy.

Technology 162

Technology Agile Architecture Distribution 162

Gust

NOVEMBER 8, 2022

You can’t succeed in business without an operational model that delivers value to customers at a reasonable price, with an underlying cost that allows you to make a profit.

Business Model 91

Business Model Green Revenue Operations 91

Gust

AUGUST 16, 2023

Startup business insurance protects your company, investors, board, property, and customers from lawsuits. Think of insurance as an investment in your business designed to cover the financial cost of unforeseen liabilities and business losses.

Startup 70

Startup Design Cost Customer 70

Gust

DECEMBER 15, 2013

In today’s Internet world, enterprising entrepreneurs have found that they can find out and do almost anything they need, from incorporating the company to filing patents, without expensive consultants, or the cost to hiring and firing employees. Need expensive resources up front. You need a prototype. You need specialized equipment.

Bootstrapping 183

Bootstrapping Sweat Equity Entrepreneur Technical Review 183

Gust

AUGUST 24, 2014

The alternatives range from giving it away for free, to pricing based on costs, to charging what the market will bear (premium pricing). It’s great for customers, but not for startups, unless you have deep pockets. Cost-based model. Use it when your new technology gives you a tremendous cost improvement. Freemium model.

Revenue 184

Revenue Startup Retention Internet 184

Gust

NOVEMBER 8, 2012

Broadly speaking, meaningful patent reform could involve making it harder to patent insignificant or trivial innovations; severely limiting or abolishing software and business method patents; limiting damages that can be awarded; and reducing or shifting the enormous costs involved in patent litigation. Free Speech. Healthcare Reform.

Silicon Valley 187

Silicon Valley San Francisco Intellectual Property Accredited Investor 187

Gust

JANUARY 4, 2012

The only exceptions that come to mind are if the IP seems likely to provoke costly litigation, costs too much to develop, or taints the startup with some kind of ties to other ventures or people that give it a checkered past. As we’ve discussed, obtaining a patent can be a slow, costly and difficult process.

Intellectual Property 143

Intellectual Property IP Startup United States 143

Gust

DECEMBER 7, 2014

At least wait until later, when you ready to scale, and have some “leverage” based on a proven business model, some real customers, and real revenue. Fundraising and investor governance are never-ending tasks, which will take real focus away from building the right product and finding real customers.

Bootstrapping 191

Bootstrapping Entrepreneur Startup Burn Rate 191

Gust

MARCH 9, 2014

This combination will almost certainly get your plan tossed by potential investors, who understand all too well the need and cost for marketing in today’s environment. Viral marketing costs real money these days, which usually means adding at least an extra zero to budget estimates. Do something unique to get customer attention.

Marketing 146

Marketing SEM Viral Social Media 146

Gust

MARCH 30, 2014

The name of your business has a tremendous impact on how customers and investors view you, and in today’s small world, it’s a world-wide decision. When creating a name, stay with words that can easily be spelled by customers. Make your business name one that customers can pronounce and remember easily. Avoid unusual spellings.

Naming 174

Naming Cofounder Algorithm .Net 174

Gust

OCTOBER 26, 2014

Bootstrapping avoids all the cost, pain, and distractions of finding angels or VCs, and allows you to keep control and all your hard-earned equity for yourself. Use voicemail, a world-class website, and personal customer service, with small expenses, to beat your big competitors. Every outside hire increases your cost and risk.

Bootstrapping 176

Bootstrapping Startup Merger Salary 176

Gust

DECEMBER 22, 2011

It’s possible to have a company with literally millions of customers (users) that employs only a handful of people, working in a small rented office, with hardware and software costing in the tens of thousands rather than millions of dollars. Instagram is a textbook example.)

Intellectual Property 149

Intellectual Property Technical Review Software Review IP 149

Gust

NOVEMBER 18, 2012

Early customers and contracts in progress add value. Every customer contract and relationship needs to be monetized, even ones still in negotiation. Assign probabilities to active customer sales efforts, just as sales managers do in quantifying a salesman’s forecast. Calculate replacement cost for key assets (cost approach).

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

Gust

FEBRUARY 16, 2014

They envision a stable environment after that point, and may have convinced themselves that they will be safer and happier with a livable income, maintaining a loyal but flat customer base. Once they see you have developed credible traction, they can grab your space with less cost (meaning lower price) than you had to put into developing it.

Startup 156

Startup IP Employee Cost 156

Gust

AUGUST 22, 2012

Just getting through the day in these countries can try the patience of coddled westerners, accustomed as we are to a relatively high level of efficiency, customer orientation and reliable infrastructure. Perhaps most importantly, IT and Internet business are simply a breed of their own.

Technical Review 172

Technical Review Egypt Morocco Russia 172

Gust

DECEMBER 29, 2013

In almost every state, you can incorporate as an LLC with a minimal effort, and a cost in the hundred dollar range. Carrying a non-performing employee probably triples the costs, since you are paying two people to do the job, and at least one other is de-motivated by the inequity. The simple answer is to do something, and start simple.

Startup 183

Startup Intellectual Property LLC Burn Rate 183

Gust

JUNE 23, 2014

I can attest from experience that publishing a regular blog to properly showcase your brand value, even before you have it, is a most cost effective approach in time and money. Feedback from your blog will tell you quickly whether anyone agrees with your assessment, and whether you have a customer base waiting. Find potential partners.

Startup 174

Startup Cofounder Social Media SEO 174

Gust

OCTOBER 31, 2011

Obviously we can find many critical success factors, like finding and retaining high-value customers, which apply to companies that are product centric or services centric. Customers don’t like people who don’t show their passion and love for the job. . Being the low-cost commodity level service provider is not a recipe for success.

Angel Investor 143

Angel Investor Venture Capital Partner Networking 143

Gust

AUGUST 5, 2012

Explain in terms your mother could understand, and quantify the “cost-of-pain” in dollars or time. Terms like “every customer needs this” and “next generation platform” are far too soft, and should be avoided. Clearly define the customer, channel, and revenue model associated with this solution. Solution and benefits.

Business Plan 182

Business Plan Sweat Equity Exit Strategy Intellectual Property 182

Gust

AUGUST 10, 2014

Projecting the financials should be the last step of your business plan preparation, since it assumes you already know the opportunity size, customer buying habits, pricing, costs, and competition. Financial projections for investors should always show an annual cost of goods sold and gross margins line, as well as revenue.

Liquidity Event 176

Liquidity Event Equity Venture Capital Merger 176

Gust

OCTOBER 11, 2011

For example, “I just patented a new cell-phone technology that will double battery life for half the cost. Focus on customer benefits rather than features, indicating real pain, rather than just nice to have. A product may be great, but it won’t make a business if you don’t hit customers with money to spend. About 150-225 words.

Elevator Pitch 174

Elevator Pitch Startup Differentiation Distribution 174

Gust

NOVEMBER 3, 2013

But why not learn as well from the mistakes of others, without suffering their cost, time, and pain? Even a non-profit has to generate revenue (or donations) to offset operating costs. You may have the solution to the world hunger problem, but if your customers have no money, your business won’t last long.

Intellectual Property 183

Intellectual Property Startup Viral Early Stage 183

Gust

MAY 29, 2012

Tell me what it costs to produce one unit, what the channel pays for it (if channels are relevant) or what the buyer pays for it, what it costs to ship, and so on. . Most plans are pretty good about estimating direct costs but bad about underlying expenses. I want unit economics. Often this is part of a good forecast.

Business Plan 174

Business Plan Forecast Channel Cost 174

Gust

MAY 11, 2014

But before you conclude that your funding problems are solved with grants, you should consider the direct and indirect costs of grant funding: Grant applications are bureaucratic. Professional help costs money. Grants start as small a few thousand dollars, but can provide millions of dollars in capital to new ventures.

Seed Money 164

Seed Money SBIR Dilution Government 164

Gust

JULY 8, 2012

For angel investors, early-stage means there is a good business plan and maybe a prototype, but no customer revenue. For VCs, early-stage means customer revenue is less than $10M. Lean startups operate on minimal money, an open source environment, and assume multiple iterations, with customer feedback, to get it right.

Early Stage 177

Early Stage Finance Seed Stage Entrepreneur 177

Gust

JUNE 15, 2014

Customer expectations these days can be unreasonable.”. Exceeding customer expectations is my competitive advantage.”. “I I select vendors carefully, and manage them well, to keep my costs down.”. “I’ll do the best I can, but the economy is totally unpredictable right now.”.

Entrepreneur 174

Entrepreneur Bootstrapping Employee Restful 174

Gust

NOVEMBER 10, 2013

Entrepreneurs forget that investors are looking for commercial products to make money, rather than R&D sunk costs, so investment hopes are sunk as well. Results, if positive, are used for marketing a product directly to customers. If these required tests are common and low risk, VCs may jump in at this stage. Commercialization.

Developer 148

Developer Warrant Angel Investor Early Stage 148

Gust

JUNE 22, 2014

I can attest from experience that publishing a regular blog to properly showcase your brand value, even before you have it, is a most cost effective approach in time and money. Feedback from your blog will tell you quickly whether anyone agrees with your assessment, and whether you have a customer base waiting. Find potential partners.

Startup 125

Startup Cofounder Social Media SEO 125

Gust

DECEMBER 5, 2011

Here are a few thoughts on a process that will keep you on the right track: Get real customer input first. Temper your product with actual market and customer feedback. Show your prototype to real customers, and listen. Quantify the pain points. Analyze how competition will react.

Technology 167

Technology Angel Investor Early Stage Viral 167

Gust

AUGUST 19, 2012

Explain in analogies your mother could understand, and quantify the “cost-of-pain” in dollars or time. Here is how and why it works, including a customer-centric quantification of the benefits. Define the characteristics of the overall industry, market forces, market dynamics, and customer landscape. Business model.

Elevator Pitch 146

Elevator Pitch Exit Strategy Burn Rate Merger 146

Gust

DECEMBER 16, 2012

Remember to aim the content of both of these at investors, not customers. In most cases, a Microsoft Excel spreadsheet is adequate, with projection formulas for revenue, costs, and cash flow over the next five years. Close at least one initial customer. Prepare an investment-grade business plan. Free trials don’t count.

Angel Investor 179

Angel Investor Intellectual Property Elevator Pitch Angel Groups 179

Gust

OCTOBER 11, 2012

But if you have a completed product with traction (such as a million monthly unique visitors with rapidly growing conversion rates to paying customers) you will find investors falling all over themselves to meet you, even if you are operating as a one man show out of a shack on the beach.

Delaware 122

Delaware Stock Options Cofounder Stock 122

Gust

OCTOBER 7, 2012

“No competitors” may mean no market (give up now), or customers are happy with alternatives (keep their car rather than ride the new fast train). Time is your biggest enemy, and customer feedback is your biggest ally. Customers are more forgiving of early visible changes in direction, and the cost is much lower for you.

Stealth 131

Stealth Entrepreneur Incubator Engineer 131

Gust

NOVEMBER 22, 2011

For instance, if your company is only a few weeks old and you have zero customers and your product offering is still in design, don’t expect someone to hand over $10 million to fund your efforts. If your startup is at the wrong stage for the investor you are approaching, fishing for money is a waste of time for both of you. Growth stage.

Venture Capital 171

Venture Capital Investment Bankers Angel Investor Initial Public Offering 171