How to hire super stars that won’t cost you an arm and a leg

Generally, the biggest expense in a new company is the payroll. People cost money, and without doubt, good people cost the most money. Although it is essential to have good people don’t be fooled by advanced degrees or fancy titles on your recruit’s resume. In the beginning do you really need to have the big guns doing basic work? Wait as long as possible before adding anyone to your team.

I made this mistake on my first start-up. In an attempt to get some momentum going in the early months I hired some heavy hitters to join the team. Our investor was the one to bring our mistake to my attention, “These new guys are smart. Maybe the smartest people I’ve met for a while but do you really need a CFO to make 100-odd journal entries a month? Can’t this wait a bit longer?” If you can outsource non-strategic roles until there is enough justification and cash to do so you will save yourself good money.

6. Can you raise your capital from somewhere other than venture capitalists?

How to raise money for your venture

Investors can be very important to get going but you need them like a hole in the head. Our investor asked us early on, “Can you raise your capital from somewhere other than venture capitalists?” This might be a paradoxical question coming from an investor but our billionaire was sensitive to the difficulties that these relationships cause. Investor’s desire to get returns from their investment and their blindness to subtleties can cause great tension in the company. In his words, “Investors are driven by one thing and one thing only. Don’t ever convince yourself otherwise.” If you can raise the money from friends or family, or better yet from yourself, you will avoid having to deal with venture capitalists.

Money is a huge temptation and can make you a little crazy when you are desperate to close a deal. Entrepreneurs that are up to their ears in debt make quick decisions that they later regret. Ideally founders need to consider where the money will come from before starting their business. Entrepreneurs can develop connections to investors well before or in parallel to their start-up activities. Successful businesses don’t wait until time has run out and they are desperate.

7. How can this business be scaled?

How to build a business that generates cash without increasing costs

This is my favorite question because I’m inherently lazy. Businesses that require me to work more as they get bigger scare me. I’m excited when I can see a company grow without having to increase the amount of resources needed to run it. I’ve heard it said that the best measure of a company’s success is its ability to grow regardl

What you will find in this report

The sections that this paper is divided into are based on the questions my billionaire investor used to ask during various phases of our company’s growth. Each question is itself based our investors experience in thousands of investments.

1. How to select the ultimate business partners
2. How to tell good ideas from bad ideas
3. How to make sure your ego doesn’t destroy your business
4. How to attract and manage your financial partners
5. How to hire super stars that won’t cost you an arm and a leg
6. How to raise money for your venture
7. How to build a business that generates cash without increasing costs
8. How to make sure you never confuse passion with productivity
9. How to make tough decisions and feel good about it
10. How to create a lucrative exit strategy

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Important Notes:

If you received this report from a friend or a colleague you would not have received your free copy of "8 Keys to a Successful Start-Up". If you would like your copy please go to the Fresh Tilled Soil website and sign up for your own report and you will receive you bonus report.

Also, if you like what you read in the reports you are going to enjoy reading Drawing Horses: How to Set Your Business Up For Success our popular ebook. The ebook is available for download at www.freshtilledsoil.com

____________________________________________________________

How to make the most of this report

I encourage you read and absorb these ten points. Once you have read these points I suggest you ask yourself these questions as often as possible. Also, ask yourself these questions when you are meeting other business founders and CEO’s. Evaluate all businesses and develop a habit of asking these questions all the time. How this story began

If you are lucky you will have mentors that have done well in their own business and can help you navigate the path to success. If you are really lucky these people will be in your industry and will add more than just anecdotal support for your decisions. Then there are the extraordinarily lucky few who will have a mentor that will change the way they think about business forever. Several years ago I came across such a mentor. In a series of chance connections I came face-to-face with a billionaire that was ready to share his wealth of experience. In less than 2 hours this person was able to change almost everything I knew about business. Even the most fundamental ideas about how I thought businesses work would be set on their head.

My partner and I had been working together in an online ad sales company that was over capitalized and growing mostly because of the hype surrounding the Internet. He was my boss and I was selling ad space. We quickly realized that we would be having more fun and making loads more cash if we were running our own business outside of the corporate clutches we were in. Once we made the decision to leave, our education began. In a frenzied period of deal making and late nights over our laptops we were able to attract the attention of a very wealthy investor. He invited us to meet him and some of his lieutenants in his hotel suite with instructions to “leave behind any business plans and bring just your heads”.

Although the first meeting was no more than a couple of hours the time seemed to accelerate past us. The meeting was basically a series of well-considered questions aimed at my partner and me. What was surprising though was that these questions were very simple and quite basic in nature. We had been expecting some tough questions about corporate financing and international arbitrage; instead we were answering questions about who we were and what we thought we did to help the company better. Over the next few months the relationship became financial and we struck a deal with this investor. The deal was done but the questions kept coming.

The most interesting and benign question was asked of us almost once a week on the phone and at every face-to-face meeting. Without fail I would get a call from our new investor that would start with the question “What do you do?” At first I thought this was a joke and played along by describing the company and what we did for our clients. As time drew on it occurred to me that the question was a loaded one and that my answers were not getting to the heart of the matter. Eventually I came around and asked our billionaire investor “You keep asking that question and I know you are not stupid so it can’t be that you don’t know the answer. What’s the point of asking the question?” He chuckled as he explained, “I ask it all the time because it’s the best question to get a sense of how focused people in the business are.” My silence prompted him to continue, “You see, if someone can’t answer that question confidently and in fewer than ten words they probably don’t understand what the real value of their service or product is.”

To test how true this might be trying asking yourself that question and giving the answer in ten words or less. Do you feel clear about your response or do you feel confused? The next time you get the opportunity to ask the question of someone else watch carefully how he or she answers the question. Do you need to sit down and take a break after their long-winded explanation or do you get it immediately? It’s obvious to me now that if you need a whiteboard, a PowerPoint presentation and forty-five minutes to sell your product you’re in deep trouble.

Over the period that we were in contact there were many more questions. Each question has the ability to cut directly to the problem and make sense of complex situations. Here is a list of the questions that kept on coming up.

1. Who will be involved?

How to decide who will be involved in your business.

There is an old Moorish adage that says you should choose your companions before you choose your journey. Before you embark on any business journey you have to be sure your companions are the best you can possibly choose for the path ahead. My billionaire mentor would remind us every time we needed to recruit another member of the team, “Ask yourself what are the reputations, integrity and potential of the people involved? Will these people set the company up for success or failure?”

The key here is to make sure that you not only get bright people with lots of energy and passion but also be sure to get a group that together is ten times the sum of its parts. You might have the smartest people on your team but if there is no chemistry between them nothing will get done correctly. I once founded a technology company that had the best of the best from the top engineering schools in the country. Even though we had the ultimate brain power we could find there was no passion amongst the group to drive that brain power forward towards our goals.

2. Is this a people thing or an idea thing?

How to tell good ideas from bad ideas Ideas are the fuel of any business. Good ideas can create empires and bad ideas can ruin them just as fast. Knowing the difference between good ideas and bad ideas is what allows people to move towards success. The advice we received was simple, “If you run into problems evaluate whether they are caused by people or by the idea that they are working towards. Good people can turn a bad idea into a good idea but bad people almost never change bad ideas into good ideas.”

Even the most well considered business ideas might turn out to be flawed but it’s easier to manage the obstacles when you have good people. Develop a sixth sense for evaluating ideas by constantly reading and learning how good businesses continue to remain on top. Find out from successful leaders how they “smell” the rot in a bad idea. Very often this is something that comes with practice but you can begin making a difference now by filtering ideas through your best people, whether they be partner, employees or advisors.

3. Are the founders the same people that will run the company?

How to make sure your ego doesn’t destroy your business

Starting a business and running a business for the long-term can be compared to sprinters and long-distance runners. Not everybody can be an entrepreneur and a long haul expert. Don’t believe that everybody that starts a business can be a Michael Dell or Jeff Bezos. It’s very rare that the founder of a business will have the skills to both create the business and run it once it is a mature business. If you start a company be prepared to step down or move positions when the time is right.

It’s common knowledge amongst investors and venture capitalists that most start- ups never mature beyond the first few years because the original leadership gets in their own way. In a recent report by Ernst & Young it was discovered that only about 57% of founders remain in the CEO position. Unfortunately many entrepreneurs are convinced that they can do everything and are reluctant to let the reins of the business go to someone else. In my own experience I would say that this is the number one reason why new businesses never mature or develop beyond the first energetic tears. “In all the years that I’ve been starting and funding businesses only two founders voluntarily stood down to make way for someone who would do a better job” was what we heard from our billionaire mentor.

4. How much money will you need before you make a profit? Oh, and you can cut the forecast bullshit.

How to attract and manage your financial partners

If you plan to finance your company with other peoples money you had better be very honest with them. Expectation management is the key to all successful relationships and it’s never truer than between a business owner and the investors they bring on board. Giving your investors accurate information about finances and important decisions is so important it might make or break your business. From the moment you meet with your investors you will be asked questions about what you and your future business are capable of. If you exaggerate the truth or give your investors false information it will come back to hurt you.

Part of the communication you will have with your investors, or potential investors, is to develop financial forecast for your business. Beware, forecasts are nothing more than a really good guesses so be cautious when you present your plans to the people who will finance your company. Whatever you think it will cost, double that and you might just make it before the money runs out. Plans are good guidance but be prepared to make changes to them and be quick to update your investors as to those changes. When my partner and I met with our investor for the first time we wanted desperately to impress him with our predictions of how much money we thought we could make. He stopped us short and reminded us that “Forecasts are nothing more than your best guess guys. Don’t waste my time with guesses, let’s figure out how much money we can make right now and avoid disappointing both sides”.

5. Do you really need a chief financial officer or can you get away with a good accountant?

How to hire super stars that won’t cost you an arm and a leg

Generally, the biggest expense in a new company is the payroll. People cost money, and without doubt, good people cost the most money. Although it is essential to have good people don’t be fooled by advanced degrees or fancy titles on your recruit’s resume. In the beginning do you really need to have the big guns doing basic work? Wait as long as possible before adding anyone to your team.

I made this mistake on my first start-up. In an attempt to get some momentum going in the early months I hired some heavy hitters to join the team. Our investor was the one to bring our mistake to my attention, “These new guys are smart. Maybe the smartest people I’ve met for a while but do you really need a CFO to make 100-odd journal entries a month? Can’t this wait a bit longer?” If you can outsource non-strategic roles until there is enough justification and cash to do so you will save yourself good money.

6. Can you raise your capital from somewhere other than venture capitalists?

How to raise money for your venture

Investors can be very important to get going but you need them like a hole in the head. Our investor asked us early on, “Can you raise your capital from somewhere other than venture capitalists?” This might be a paradoxical question coming from an investor but our billionaire was sensitive to the difficulties that these relationships cause. Investor’s desire to get returns from their investment and their blindness to subtleties can cause great tension in the company. In his words, “Investors are driven by one thing and one thing only. Don’t ever convince yourself otherwise.” If you can raise the money from friends or family, or better yet from yourself, you will avoid having to deal with venture capitalists.

Money is a huge temptation and can make you a little crazy when you are desperate to close a deal. Entrepreneurs that are up to their ears in debt make quick decisions that they later regret. Ideally founders need to consider where the money will come from before starting their business. Entrepreneurs can develop connections to investors well before or in parallel to their start-up activities. Successful businesses don’t wait until time has run out and they are desperate.

7. How can this business be scaled?

How to build a business that generates cash without increasing costs

This is my favorite question because I’m inherently lazy. Businesses that require me to work more as they get bigger scare me. I’m excited when I can see a company grow without having to increase the amount of resources needed to run it. I’ve heard it said that the best measure of a company’s success is its ability to grow regardl

Although the first meeting was no more than a couple of hours the time seemed to accelerate past us. The meeting was basically a series of well-considered questions aimed at my partner and me. What was surprising though was that these questions were very simple and quite basic in nature. We had been expecting some tough questions about corporate financing and international arbitrage; instead we were answering questions about who we were and what we thought we did to help the company better. Over the next few months the relationship became financial and we struck a deal with this investor. The deal was done but the questions kept coming.

The most interesting and benign question was asked of us almost once a week on the phone and at every face-to-face meeting. Without fail I would get a call from our new investor that would start with the question “What do you do?” At first I thought this was a joke and played along by describing the company and what we did for our clients. As time drew on it occurred to me that the question was a loaded one and that my answers were not getting to the heart of the matter. Eventually I came around and asked our billionaire investor “You keep asking that question and I know you are not stupid so it can’t be that you don’t know the answer. What’s the point of asking the question?” He chuckled as he explained, “I ask it all the time because it’s the best question to get a sense of how focused people in the business are.” My silence prompted him to continue, “You see, if someone can’t answer that question confidently and in fewer than ten words they probably don’t understand what the real value of their service or product is.”

To test how true this might be trying asking yourself that question and giving the answer in ten words or less. Do you feel clear about your response or do you feel confused? The next time you get the opportunity to ask the question of someone else watch carefully how he or she answers the question. Do you need to sit down and take a break after their long-winded explanation or do you get it immediately? It’s obvious to me now that if you need a whiteboard, a PowerPoint presentation and forty-five minutes to sell your product you’re in deep trouble.

Over the period that we were in contact there were many more questions. Each question has the ability to cut directly to the problem and make sense of complex situations. Here is a list of the questions that kept on coming up.

1. Who will be involved?

How to decide who will be involved in your business.

There is an old Moorish adage that says you should choose your companions before you choose your journey. Before you embark on any business journey you have to be sure your companions are the best you can possibly choose for the path ahead. My billionaire mentor would remind us every time we needed to recruit another member of the team, “Ask yourself what are the reputations, integrity and potential of the people involved? Will these people set the company up for success or failure?”

The key here is to make sure that you not only get bright people with lots of energy and passion but also be sure to get a group that together is ten times the sum of its parts. You might have the smartest people on your team but if there is no chemistry between them nothing will get done correctly. I once founded a technology company that had the best of the best from the top engineering schools in the country. Even though we had the ultimate brain power we could find there was no passion amongst the group to drive that brain power forward towards our goals.

2. Is this a people thing or an idea thing?

How to tell good ideas from bad ideas Ideas are the fuel of any business. Good ideas can create empires and bad ideas can ruin them just as fast. Knowing the difference between good ideas and bad ideas is what allows people to move towards success. The advice we received was simple, “If you run into problems evaluate whether they are caused by people or by the idea that they are working towards. Good people can turn a bad idea into a good idea but bad people almost never change bad ideas into good ideas.”

Even the most well considered business ideas might turn out to be flawed but it’s easier to manage the obstacles when you have good people. Develop a sixth sense for evaluating ideas by constantly reading and learning how good businesses continue to remain on top. Find out from successful leaders how they “smell” the rot in a bad idea. Very often this is something that comes with practice but you can begin making a difference now by filtering ideas through your best people, whether they be partner, employees or advisors.

3. Are the founders the same people that will run the company?

How to make sure your ego doesn’t destroy your business

Starting a business and running a business for the long-term can be compared to sprinters and long-distance runners. Not everybody can be an entrepreneur and a long haul expert. Don’t believe that everybody that starts a business can be a Michael Dell or Jeff Bezos. It’s very rare that the founder of a business will have the skills to both create the business and run it once it is a mature business. If you start a company be prepared to step down or move positions when the time is right.

It’s common knowledge amongst investors and venture capitalists that most start- ups never mature beyond the first few years because the original leadership gets in their own way. In a recent report by Ernst & Young it was discovered that only about 57% of founders remain in the CEO position. Unfortunately many entrepreneurs are convinced that they can do everything and are reluctant to let the reins of the business go to someone else. In my own experience I would say that this is the number one reason why new businesses never mature or develop beyond the first energetic tears. “In all the years that I’ve been starting and funding businesses only two founders voluntarily stood down to make way for someone who would do a better job” was what we heard from our billionaire mentor.

4. How much money will you need before you make a profit? Oh, and you can cut the forecast bullshit.

How to attract and manage your financial partners

If you plan to finance your company with other peoples money you had better be very honest with them. Expectation management is the key to all successful relationships and it’s never truer than between a business owner and the investors they bring on board. Giving your investors accurate information about finances and important decisions is so important it might make or break your business. From the moment you meet with your investors you will be asked questions about what you and your future business are capable of. If you exaggerate the truth or give your investors false information it will come back to hurt you.

Part of the communication you will have with your investors, or potential investors, is to develop financial forecast for your business. Beware, forecasts are nothing more than a really good guesses so be cautious when you present your plans to the people who will finance your company. Whatever you think it will cost, double that and you might just make it before the money runs out. Plans are good guidance but be prepared to make changes to them and be quick to update your investors as to those changes. When my partner and I met with our investor for the first time we wanted desperately to impress him with our predictions of how much money we thought we could make. He stopped us short and reminded us that “Forecasts are nothing more than your best guess guys. Don’t waste my time with guesses, let’s figure out how much money we can make right now and avoid disappointing both sides”.

5. Do you really need a chief financial officer or can you get away with a good accountant?

How to hire super stars that won’t cost you an arm and a leg

Generally, the biggest expense in a new company is the payroll. People cost money, and without doubt, good people cost the most money. Although it is essential to have good people don’t be fooled by advanced degrees or fancy titles on your recruit’s resume. In the beginning do you really need to have the big guns doing basic work? Wait as long as possible before adding anyone to your team.

I made this mistake on my first start-up. In an attempt to get some momentum going in the early months I hired some heavy hitters to join the team. Our investor was the one to bring our mistake to my attention, “These new guys are smart. Maybe the smartest people I’ve met for a while but do you really need a CFO to make 100-odd journal entries a month? Can’t this wait a bit longer?” If you can outsource non-strategic roles until there is enough justification and cash to do so you will save yourself good money.

6. Can you raise your capital from somewhere other than venture capitalists?

How to raise money for your venture

Investors can be very important to get going but you need them like a hole in the head. Our investor asked us early on, “Can you raise your capital from somewhere other than venture capitalists?” This might be a paradoxical question coming from an investor but our billionaire was sensitive to the difficulties that these relationships cause. Investor’s desire to get returns from their investment and their blindness to subtleties can cause great tension in the company. In his words, “Investors are driven by one thing and one thing only. Don’t ever convince yourself otherwise.” If you can raise the money from friends or family, or better yet from yourself, you will avoid having to deal with venture capitalists.

Money is a huge temptation and can make you a little crazy when you are desperate to close a deal. Entrepreneurs that are up to their ears in debt make quick decisions that they later regret. Ideally founders need to consider where the money will come from before starting their business. Entrepreneurs can develop connections to investors well before or in parallel to their start-up activities. Successful businesses don’t wait until time has run out and they are desperate.

7. How can this business be scaled?

How to build a business that generates cash without increasing costs

This is my favorite question because I’m inherently lazy. Businesses that require me to work more as they get bigger scare me. I’m excited when I can see a company grow without having to increase the amount of resources needed to run it. I’ve heard it said that the best measure of a company’s success is its ability to grow regardl

Over the period that we were in contact there were many more questions. Each question has the ability to cut directly to the problem and make sense of complex situations. Here is a list of the questions that kept on coming up.

1. Who will be involved?

How to decide who will be involved in your business.

There is an old Moorish adage that says you should choose your companions before you choose your journey. Before you embark on any business journey you have to be sure your companions are the best you can possibly choose for the path ahead. My billionaire mentor would remind us every time we needed to recruit another member of the team, “Ask yourself what are the reputations, integrity and potential of the people involved? Will these people set the company up for success or failure?”

The key here is to make sure that you not only get bright people with lots of energy and passion but also be sure to get a group that together is ten times the sum of its parts. You might have the smartest people on your team but if there is no chemistry between them nothing will get done correctly. I once founded a technology company that had the best of the best from the top engineering schools in the country. Even though we had the ultimate brain power we could find there was no passion amongst the group to drive that brain power forward towards our goals.

2. Is this a people thing or an idea thing?

How to tell good ideas from bad ideas Ideas are the fuel of any business. Good ideas can create empires and bad ideas can ruin them just as fast. Knowing the difference between good ideas and bad ideas is what allows people to move towards success. The advice we received was simple, “If you run into problems evaluate whether they are caused by people or by the idea that they are working towards. Good people can turn a bad idea into a good idea but bad people almost never change bad ideas into good ideas.”

Even the most well considered business ideas might turn out to be flawed but it’s easier to manage the obstacles when you have good people. Develop a sixth sense for evaluating ideas by constantly reading and learning how good businesses continue to remain on top. Find out from successful leaders how they “smell” the rot in a bad idea. Very often this is something that comes with practice but you can begin making a difference now by filtering ideas through your best people, whether they be partner, employees or advisors.

3. Are the founders the same people that will run the company?

How to make sure your ego doesn’t destroy your business

Starting a business and running a business for the long-term can be compared to sprinters and long-distance runners. Not everybody can be an entrepreneur and a long haul expert. Don’t believe that everybody that starts a business can be a Michael Dell or Jeff Bezos. It’s very rare that the founder of a business will have the skills to both create the business and run it once it is a mature business. If you start a company be prepared to step down or move positions when the time is right.

It’s common knowledge amongst investors and venture capitalists that most start- ups never mature beyond the first few years because the original leadership gets in their own way. In a recent report by Ernst & Young it was discovered that only about 57% of founders remain in the CEO position. Unfortunately many entrepreneurs are convinced that they can do everything and are reluctant to let the reins of the business go to someone else. In my own experience I would say that this is the number one reason why new businesses never mature or develop beyond the first energetic tears. “In all the years that I’ve been starting and funding businesses only two founders voluntarily stood down to make way for someone who would do a better job” was what we heard from our billionaire mentor.

4. How much money will you need before you make a profit? Oh, and you can cut the forecast bullshit.

How to attract and manage your financial partners

If you plan to finance your company with other peoples money you had better be very honest with them. Expectation management is the key to all successful relationships and it’s never truer than between a business owner and the investors they bring on board. Giving your investors accurate information about finances and important decisions is so important it might make or break your business. From the moment you meet with your investors you will be asked questions about what you and your future business are capable of. If you exaggerate the truth or give your investors false information it will come back to hurt you.

Part of the communication you will have with your investors, or potential investors, is to develop financial forecast for your business. Beware, forecasts are nothing more than a really good guesses so be cautious when you present your plans to the people who will finance your company. Whatever you think it will cost, double that and you might just make it before the money runs out. Plans are good guidance but be prepared to make changes to them and be quick to update your investors as to those changes. When my partner and I met with our investor for the first time we wanted desperately to impress him with our predictions of how much money we thought we could make. He stopped us short and reminded us that “Forecasts are nothing more than your best guess guys. Don’t waste my time with guesses, let’s figure out how much money we can make right now and avoid disappointing both sides”.

5. Do you really need a chief financial officer or can you get away with a good accountant?

How to hire super stars that won’t cost you an arm and a leg

Generally, the biggest expense in a new company is the payroll. People cost money, and without doubt, good people cost the most money. Although it is essential to have good people don’t be fooled by advanced degrees or fancy titles on your recruit’s resume. In the beginning do you really need to have the big guns doing basic work? Wait as long as possible before adding anyone to your team.

I made this mistake on my first start-up. In an attempt to get some momentum going in the early months I hired some heavy hitters to join the team. Our investor was the one to bring our mistake to my attention, “These new guys are smart. Maybe the smartest people I’ve met for a while but do you really need a CFO to make 100-odd journal entries a month? Can’t this wait a bit longer?” If you can outsource non-strategic roles until there is enough justification and cash to do so you will save yourself good money.

6. Can you raise your capital from somewhere other than venture capitalists?

How to raise money for your venture

Investors can be very important to get going but you need them like a hole in the head. Our investor asked us early on, “Can you raise your capital from somewhere other than venture capitalists?” This might be a paradoxical question coming from an investor but our billionaire was sensitive to the difficulties that these relationships cause. Investor’s desire to get returns from their investment and their blindness to subtleties can cause great tension in the company. In his words, “Investors are driven by one thing and one thing only. Don’t ever convince yourself otherwise.” If you can raise the money from friends or family, or better yet from yourself, you will avoid having to deal with venture capitalists.

Money is a huge temptation and can make you a little crazy when you are desperate to close a deal. Entrepreneurs that are up to their ears in debt make quick decisions that they later regret. Ideally founders need to consider where the money will come from before starting their business. Entrepreneurs can develop connections to investors well before or in parallel to their start-up activities. Successful businesses don’t wait until time has run out and they are desperate.

7. How can this business be scaled?

How to build a business that generates cash without increasing costs

This is my favorite question because I’m inherently lazy. Businesses that require me to work more as they get bigger scare me. I’m excited when I can see a company grow without having to increase the amount of resources needed to run it. I’ve heard it said that the best measure of a company’s success is its ability to grow regardl

It’s common knowledge amongst investors and venture capitalists that most start- ups never mature beyond the first few years because the original leadership gets in their own way. In a recent report by Ernst & Young it was discovered that only about 57% of founders remain in the CEO position. Unfortunately many entrepreneurs are convinced that they can do everything and are reluctant to let the reins of the business go to someone else. In my own experience I would say that this is the number one reason why new businesses never mature or develop beyond the first energetic tears. “In all the years that I’ve been starting and funding businesses only two founders voluntarily stood down to make way for someone who would do a better job” was what we heard from our billionaire mentor.

4. How much money will you need before you make a profit? Oh, and you can cut the forecast bullshit.

How to attract and manage your financial partners

If you plan to finance your company with other peoples money you had better be very honest with them. Expectation management is the key to all successful relationships and it’s never truer than between a business owner and the investors they bring on board. Giving your investors accurate information about finances and important decisions is so important it might make or break your business. From the moment you meet with your investors you will be asked questions about what you and your future business are capable of. If you exaggerate the truth or give your investors false information it will come back to hurt you.

Part of the communication you will have with your investors, or potential investors, is to develop financial forecast for your business. Beware, forecasts are nothing more than a really good guesses so be cautious when you present your plans to the people who will finance your company. Whatever you think it will cost, double that and you might just make it before the money runs out. Plans are good guidance but be prepared to make changes to them and be quick to update your investors as to those changes. When my partner and I met with our investor for the first time we wanted desperately to impress him with our predictions of how much money we thought we could make. He stopped us short and reminded us that “Forecasts are nothing more than your best guess guys. Don’t waste my time with guesses, let’s figure out how much money we can make right now and avoid disappointing both sides”.

5. Do you really need a chief financial officer or can you get away with a good accountant?

How to hire super stars that won’t cost you an arm and a leg

Generally, the biggest expense in a new company is the payroll. People cost money, and without doubt, good people cost the most money. Although it is essential to have good people don’t be fooled by advanced degrees or fancy titles on your recruit’s resume. In the beginning do you really need to have the big guns doing basic work? Wait as long as possible before adding anyone to your team.

I made this mistake on my first start-up. In an attempt to get some momentum going in the early months I hired some heavy hitters to join the team. Our investor was the one to bring our mistake to my attention, “These new guys are smart. Maybe the smartest people I’ve met for a while but do you really need a CFO to make 100-odd journal entries a month? Can’t this wait a bit longer?” If you can outsource non-strategic roles until there is enough justification and cash to do so you will save yourself good money.

6. Can you raise your capital from somewhere other than venture capitalists?

How to raise money for your venture

Investors can be very important to get going but you need them like a hole in the head. Our investor asked us early on, “Can you raise your capital from somewhere other than venture capitalists?” This might be a paradoxical question coming from an investor but our billionaire was sensitive to the difficulties that these relationships cause. Investor’s desire to get returns from their investment and their blindness to subtleties can cause great tension in the company. In his words, “Investors are driven by one thing and one thing only. Don’t ever convince yourself otherwise.” If you can raise the money from friends or family, or better yet from yourself, you will avoid having to deal with venture capitalists.

Money is a huge temptation and can make you a little crazy when you are desperate to close a deal. Entrepreneurs that are up to their ears in debt make quick decisions that they later regret. Ideally founders need to consider where the money will come from before starting their business. Entrepreneurs can develop connections to investors well before or in parallel to their start-up activities. Successful businesses don’t wait until time has run out and they are desperate.

7. How can this business be scaled?

How to build a business that generates cash without increasing costs

This is my favorite question because I’m inherently lazy. Businesses that require me to work more as they get bigger scare me. I’m excited when I can see a company grow without having to increase the amount of resources needed to run it. I’ve heard it said that the best measure of a company’s success is its ability to grow regardl

How to hire super stars that won’t cost you an arm and a leg

Generally, the biggest expense in a new company is the payroll. People cost money, and without doubt, good people cost the most money. Although it is essential to have good people don’t be fooled by advanced degrees or fancy titles on your recruit’s resume. In the beginning do you really need to have the big guns doing basic work? Wait as long as possible before adding anyone to your team.

I made this mistake on my first start-up. In an attempt to get some momentum going in the early months I hired some heavy hitters to join the team. Our investor was the one to bring our mistake to my attention, “These new guys are smart. Maybe the smartest people I’ve met for a while but do you really need a CFO to make 100-odd journal entries a month? Can’t this wait a bit longer?” If you can outsource non-strategic roles until there is enough justification and cash to do so you will save yourself good money.

6. Can you raise your capital from somewhere other than venture capitalists?

How to raise money for your venture

Investors can be very important to get going but you need them like a hole in the head. Our investor asked us early on, “Can you raise your capital from somewhere other than venture capitalists?” This might be a paradoxical question coming from an investor but our billionaire was sensitive to the difficulties that these relationships cause. Investor’s desire to get returns from their investment and their blindness to subtleties can cause great tension in the company. In his words, “Investors are driven by one thing and one thing only. Don’t ever convince yourself otherwise.” If you can raise the money from friends or family, or better yet from yourself, you will avoid having to deal with venture capitalists.

Money is a huge temptation and can make you a little crazy when you are desperate to close a deal. Entrepreneurs that are up to their ears in debt make quick decisions that they later regret. Ideally founders need to consider where the money will come from before starting their business. Entrepreneurs can develop connections to investors well before or in parallel to their start-up activities. Successful businesses don’t wait until time has run out and they are desperate.

7. How can this business be scaled?

How to build a business that generates cash without increasing costs

This is my favorite question because I’m inherently lazy. Businesses that require me to work more as they get bigger scare me. I’m excited when I can see a company grow without having to increase the amount of resources needed to run it. I’ve heard it said that the best measure of a company’s success is its ability to grow regardless of your day-to-day presence.

E-Bay is probably the best model of a scalable business in the marketplace today. More buyers and sellers gather every day under the same technology platform. Their business has evolved to the point that a million more visitors won’t require significant additions to the technology. More customers and more transactions do not necessarily mean increasing staff or infrastructure. “Build a business that operates to generate revenues even when you are sleeping”, that’s pretty good advice when you consider that you will be asleep for an average of one third of your life.

8. What’s the difference between a hobby and a business?

How to make sure you never confuse passion with productivity

The answer is simple, “A business should have more money at the end of each month than it had at the beginning but with a hobby it’s just the opposite”. If you are doing something just because you like doing it even if it’s a terrible business then eventually it’ll make you miserable. The best case is to find something you are passionate about then make sure it’s a good business model too.

Too many self-help books tell us to follow our heart and our passions. Unfortunately that confuses us into believing that our hobby can also be our business. A good friend of mine left college with a degree in finance but was not excited by the idea of working in the world of financial transactions. His favorite past-time was to take overland trips in his Land Rover across African’s heartland. He decided to create a safari business and follow his heart. It turned out to be a really tough business to run. The vehicles frequently broke down and you can’t do much marketing to wealthy overseas prospects when you are in the deepest darkest part of the African continent. He eventually closed shop and joined an investment firm that had a special interest in the travel industry. It was a match made in heaven and he made a mint doing what he loves.

9. Are you wetting your bed and or are you facing facts?

How to make tough decisions and feel good about it

Business leaders and entrepreneurs have to make tough decisions. What stops business leaders from making tough decisions is they don’t want to be perceived as nasty bosses. Tough decisions are just that – tough. Get over your ego and get used to the idea that not every step of the way is going to be paved with roses.

In one instance, after a particularly bad month we had to come to terms with the fact we had too many people and not enough work to justify their presence. Even though we had delayed the decision for months we would have to let some people go. “Ignoring these tough decisions is the same as wetting your bed and not telling anyone” our investor said. Our delay nearly cost us the company.

10. Do you have an exit strategy?

How to create a lucrative exit strategy

Have you given enough thought as to how you will ultimately profit from your venture? Businesses make the best returns when they are sold or go public but there are other ways to create liquidity events. Remember too that in this day and age it’s rare for a founder or company leader to hold their lofty positions for more than a decade. Give some consideration for yourself and for the company.

This doesn’t mean you have to write yourself out of the script before you start. It does mean that you have to plan for your future once the company is a mature entity that can live beyond your influence.

Thank you for reading this report. These ten points have given me a great advantage in starting and building businesses. I hope that you too will absorb these ideas and make them your own.

Good luck with your ventures!