Where innovation gets down to business.

News Blog

Subscribe To This Feed           New Post

How to Build Your Start-Up Team: Part II

January 01, 2015
By Kelley Rexroad

In part one of this blog, I addressed questions I get from entrepreneurs about the first stages of building a team. Here in part two, I’d like to share my advice on other frequently asked questions related to hiring.

Q. What sort of employment contract should I offer? Should it be based on performance?

A. While contracts aren’t necessary, offer letters are key. You should be sure to define the position’s needs, the 90-day introductory period and the employment-at-will statement. And all work should be based on performance.  Don’t make promises you can’t keep – like saying they have a long career here – because if you fire them later, you have violated that promise. 

Q. Is it OK if we start by working virtually? Will that affect performance? I haven’t rented office space yet and prefer to wait.

A. Of course it’s OK, and there are several great virtual assistants you can engage. If performance standards are defined and you have the processes in place to stay on top of it, there shouldn’t be an issue – no matter where the person is working.  Virtual assistants have their own business.  They can help you make appointments, return calls, process invoices, make travel arrangements, keep your contacts up to date, create newsletters and even take care of social media or other items taking up your time.  You should be spending your time on the business, not in the business.

Q. What happens if I’m not happy and realize I hired the wrong person?

A. First, think about what you may have or have not done to contribute to the problem. If you realize it was due at least in part to something you did, you may want to meet to review performance standards and discuss how you’ll proceed differently – both the employee and you. There should be a timeframe of no more than 30 days to rectify the issue. This is key. I’ve seen too many people just fire a person, then re-hire and commit the same mistake. If you think there is or was a miscommunication, start with that.

If the person hired now needs to do a different job, you need to discuss that with him/her.  That’s one of the keys to hiring for attitude, especially in a start-up.  All hands all the time is the mantra for a start-up.  You may have a technically great person, but you should choose the person who is both really good technically and also has an over-the-top attitude to support the business.

If the person is clearly not performing, let them go. Don’t wait. Often business owners allow an employee to have every excuse for not arriving on time or not completing projects, or texting all day. If the person is not impressing you within the first few weeks with simple business tasks, the person is not for you.

Q. What do I need to know about workplace compliance issues?

A. Compliance starts with the first employee you hire. First, be sure that positions and employees are classified appropriately based on federal wage and hour guidelines. And if you think you can just forget all this and hire independent contractors, that’s probably not the answer because many times 1099ers are doing work that needs to be done, and they should be classified as employees.

During the recruitment process, follow a non-discriminatory interview process and know what interview questions you can and cannot ask. Once you hire, keep accurate time records and pay at least minimum wage and overtime if they work more than 40 hours a week (in Florida). I-9 compliance should be handled within 72 hours of their hire date.

Building a start-up team should be an exciting step in the entrepreneurial process. I hope my insights and advice help you feel better prepared and ready to meet your challenges.

Kelley Rexroad, SPHR, is the founder and principal consultant of krexconsulting, a Tampa, Florida-based firm that specializes in “people – the only resource that appreciates in business.” She is a consultant, coach, speaker and writer with experience in all areas of human resources in several industries, as well as with developing, turnaround and merger and acquisition situations. Kelley can be reached at kelley@krexconsulting.com or at 813-920-9030.

 

What is Your Business Really Worth?

November 17, 2014
By Steve Schuetz, CFA, ASA

Valuation is probably one of the most personal aspects of a business, often clouded by emotion and just plain wishing.  But even if valuation is in the eye of the beholder, we still need to approach it in a systematic way, looking first at why you need to have it done. 

It may be transactional, for the purpose of selling, financing or obtaining a new partner; for tax reasons, for gifting all or a part of the business or for estate purposes; or for financial reporting, to establish its “fair value” for an acquisition.

The purpose and the available information drive the valuation approach, which will be one of these three options: 

  1. Cost approach, which values an asset or business based on avoided cost or cost to reproduce. This may come into play with a pre-patent idea that is pre-revenue and/or without revenue projections.  However, if you want to license the idea or need to value it for other reasons, valuation may be based on how much you have spent to date.  This is usually the least desirable option because it does not include any value for future success. 
  2. Market approach: This is similar to looking at the “comps” when buying or selling a home.  By applying comparable market data for publicly traded companies (since that will be public record), we can develop appropriate multiples. This approach is of limited value for smaller businesses because meaningful comps are typically not available.  
  3. Income approach: Valuing the business based on its expected future cash flows, this takes into account discounted cash flow (i.e., the present value of the expected cash flows discounted at a rate based on the company’s weighted average cost of capital) and the residual value at the end of the forecast period.

Here are a few points to consider when applying valuation concepts to technology companies:

  • After identifying why the company is being valued, understand how company valuation is applied – whether it is a cost, market or income approach.
  • Address the key value elements and concerns, including financial statements, internal controls and the interests of strategic and financial buyers.
  • Recognize where your company is in the business life cycle.

Each valuation project is unique, but generally for tech companies:

  • Startups will often be valued on a cost approach if reasonable cash flow projections cannot be developed.  If supportable projections can be developed, investors may pay you for the upside (i.e., reasonably discounted to reflect risks and uncertainties) rather than the value at the outset (i.e., costs incurred). The more you can prove the value of the concept (e.g., by developing customers, by getting a patent, etc.), the more you may get.
  • Early stage companies will often be valued using the income approach. Having proof of concept is key.
  • Post commercialization/mature stage businesses may be valued using either the income or market approach.

As you can see, there are a number of variables involved in valuation and business owners must be able to detach themselves from their emotional connection to the business to look at the business from the point of view of the prospective buyer – and then provide the right information to get the best possible results.

Steve Schuetz is managing director for Valuation Research Company’s Tampa, Florida office, specializing in the valuation of business entities and intellectual properties. He also provides opinions of value for solvency, capital impairment and fairness. Steve is an Accredited Senior Appraiser (ASA), Chartered Financial Analyst (CFA) and former board member of the Tampa Bay Chapter of Association for Corporate Growth. He can be reached at sschuetz@valuationresearch.com.  

How to Build Your Start Up Team: Part 1

October 01, 2014
By Kelley Rexroad

Since I often get asked where start ups should begin when it comes to hiring staff, I wanted to share some of the most common questions I receive.  Here is Part 1 of a two-part blog post.

Q. So far it’s just me. What’s the first position I need to fill?

A. What’s the thing you don’t like or aren’t very good at doing? Is it dealing with vendors?  The web site? Bookkeeping? The back office seems to be the spot where most startups need to hire support.   That’s the position to fill so you can do what you do best: sell. No one can sell your product better than you.  However, if you are truly uncomfortable selling or you get easily offended when someone doesn’t appreciate what you have created, then hire someone to sell for you.

Q.At what level should I fill it? (For example, if it’s sales, should it be an experienced sales manager vs someone newer in sales?)

A. It depends. You should definitely be thinking of the next 3 years—what else will this person be able to do? Could they help with operations? Could they train other sales people? You need people who will help you grow. That first hire will determine whether you grow quickly and profitably or not.

Q. What’s the best way to find the best talent?

A. This is the fun part. Open your mind -- people are everywhere!  If you are looking for a fast paced customer service person who can multitask and run the front desk, think about approaching your favorite server. Servers “get” the concept that good service equals good money and they can handle more than one project (or table) at varying degrees of completeness. Don’t be conventional in your recruiting-that’s where everyone else is.

Q.What if my budget is limited? What are my options?

A. That’s where social media, word of mouth and focused searches through professional associations are actually a better return on your investment. LinkedIn groups are a great way. Posting the job on LinkedIn for friends to share is better than just an ad. If you’re in Florida, post the position on Employ Florida, which is supported by taxes so there is no charge to tap into that database.  

Q.What else do I need to know to do this right?

A. Before you do anything, think about your culture. What is important as an employer and what would be appealing to an applicant? If you have a strict procedurally driven company, you don’t want creative people who will want to change everything or not follow procedures. So think where process-driven logical folks would be. A local association focused on quality would be an ideal place to share your opening. If you pride yourself on the free-flowing ideas workplace for your dog product, go to places where there are people who have and love dogs

There are many more questions start up owners have about building their team and the hiring process. I’ll cover those in Part II of this blog - stay tuned.

Kelley Rexroad, SPHR, is the founder and principal consultant of krexconsulting, a Tampa, Florida-based firm that specializes in “people – the only resource that appreciates in business.” She is a consultant, coach, speaker and writer with experience in all areas of human resources in several industries, as well as with developing, turnaround and merger and acquisition situations. Kelley can be reached at kelley@krexconsulting.com or at 813-920-9030.

Following the “ALAP” Model (As Little As Possible)

September 15, 2014
By Charlotte Baker

With resources like time, money, and preservation of equity often in the balance, making as little as possible (ALAP) your business mantra might mean the difference between shutting it down and start-up success. In remembering the lessons learned in my startup years across several companies, ALAP is the most valuable concept I can pass along to the early stage entrepreneur who is passionate about gaining momentum. It’s simple and the best path to get from “Concept Company” to a “2nd Stage Business” that is ready to scale.

ALAP allows you to focus keenly on what counts at a time when you only need to be “roughly right” to get your company off the ground. Precision is not the end game of the early stage entrepreneur as there are too many moving parts. During this stage of ambiguity you need only figure out what works and focus on getting to the next stage.

Here are the main areas entrepreneurs can apply the ALAP model for maximum impact:

  1. Focus. Revenue and cash flow are the only two elements you need to focus on during the first phase. Don’t make the mistake of getting distracted by other issues that are far ahead on the horizon. By focusing relentlessly and only on revenue and cash flow, the other aspects of your business will follow if these two main objectives are aligned.  At the concept stage, don’t be distracted by the corporate cloaks of employee handbooks, elaborate marketing plans, sophisticated contracts and employee reviews. Get it off the ground! Prove the concept works.
  2. People.  Surround yourself with people who know the things you don’t. You want people who are smarter than you -- self-starters who won’t distract you from focusing on things like revenue and cash flow. Trust these people to take care of the details of the business. There are other options as well.  For example, call on friends to help. Can a friend review your website in exchange for a nice bottle of wine? Perhaps you know an attorney whom you can ask about intellectual property or trademarking over dinner. There are also people who will work at a fraction of a cost:  ask a law student to review your contracts, pay a student to do administrative tasks or get an intern. You’ll get much needed and cost-effective help and they’ll benefit from the experience. Also consider where you can outsource to experts to save costs, time and energy. To this day I still extensively outsource legal counsel, accounting and HR even though we could well justify these departments in-house. Why? Because we focus on our core skills obsessively and there is little reason to build these skills in-house.
  3. Funding. It’s better to learn real time (through making some mistakes, of course, and being hungry) and with your own hard-earned funds than to lose control or ownership of your business. So if you think you can’t do without, keep thinking. Ruthlessly scrutinize your business plan and cut back wherever you can. When my partners and I first projected we needed $2 million to get our business started but couldn’t raise that much, it was back to the drawing board with the mindset of “ok, how can we do this with as little as possible?” We whittled the amount to a few hundred thousand dollars and here we are, 14 years later, with no institutional private equity or debt. Get creative. Ask vendors to create a flexible plan for you avoiding upfront capital expenditures, extending your payables to be 10 days after the associated account receivable. To entice those first clients to give you a try, create contracts that they can cancel at any time if they are dissatisfied. Most people are eager to help entrepreneurs however they can.

Starting up is a big deal that’s ironically made much easier by keeping it as simple as possible. I hope applying my philosophy of ALAP helps you find success in your business’ early stages.

Charlotte Baker is the co-founder and CEO of Digital Hands, a Tampa-based managed security services company. She is a frequent guest speaker on topics such as building entrepreneurial companies, advocacy of women in technology and raising awareness of cyber security threats. You can reach her at cbaker@digitalhands.com.

Maybe You Should Be a Mentor

August 15, 2014
By Mike Eitler

After mentoring entrepreneurs and innovators for several years through the Tampa Bay Innovation Center, I realized I had come by mentoring naturally, having benefited from three mentors myself, both personally and professionally. I was fortunate to have been exposed to such talented people early on, including one of my professors at Penn State who helped guide me through the job selection process and actually helped me manage the early years of my career; another who was a self-made, successful executive who was a born leader; and a third, a board chairman who shared his strategic vision and skills with me.

So with that behind me, you might say I almost had no choice when presented with the opportunity by the Innovation Center to pay it forward and give back to the community by serving as one of their mentors.  But it’s certainly not a one-way street.  I learn a lot about trends and the macro environment from the innovators and entrepreneurs I meet each time. 

If you’ll allow me to evangelize a little here, I’d like to share what those of us who have been there/done that can offer to earlier-stage folks (and that’s regardless of age – we see startup owners who are young as well as others who are looking at second or third careers).   First, we can share the real-life wisdom and perspective gained from our often hard-won experience.  Next, this sharing will help them develop their self-awareness in the sense that they’ll learn how to identify what they don’t know through exposure to processes that will help them manage the situations they encounter going forward.  And finally, we can provide access to contacts or information that will accelerate their development in their own business. 

I’ve been asked what it takes to be a good mentor and I can think of at least three qualities.  First is that the best mentors possess a deep set of skills gained through their experience that help them navigate the knowledge gap with their mentees.  Second, mentors must be prepared to offer assistance with both professional and personal development, but in a way that doesn’t cause them to disengage.  And finally, a mentor with a high degree of emotional intelligence can be of great assistance in guiding behaviors through the intellectual transfer of skills.

I’ve also learned, sometimes by trial and error, a few things not to do as a mentor.  For example, we need to resist the urge to do, rather than teach.  Failing to do this robs mentees of important learning opportunities and the ability to critique their own ideas and performance.  Even when the right way seems clear, we should lead them through the intellectual exercise of finding the right solution, sometimes by asking probing questions.

As for your time commitment, that’s up to you.  You’ll be able to see what it takes to be effective.  And you’ll often know you’re effective because they’ll tell you or you’ll see the improvement in their business performance.  But even if their business doesn’t make great strides and if all you gave was increased business knowledge with real world texture, you should consider yourself a success. 

Most of us had someone who gave us a boost and I hope you’ll consider becoming a mentor.  You may realize you get as much as you give.

Mike Eitler is President of Blue Lion Consulting, which provides consulting services to owners of small and mid-size businesses facing transitional events.  He is also Vice President of Spaulding Group (www.spauldinggroupinc), a provider of investment banking and related advisory services to middle market companies looking to buy, sell, recapitalize or grow their business.  You can reach him at Mike.Eitler@BlueLionConsulting.com.

Networking Success

August 01, 2014
By Robert Graves

I firmly believe that only you can change yourself today.  And for many of us, part of that change may include expanding our business networks.   But mention networking and people often freeze – even though there are some tried and true ways to make networking the nuts and bolts of your success. 

Here are a few tips on how to maximize your time at a networking event:

  • Start a conversation:  Yes, that seems obvious, but there are some techniques that will make this easier.  First, introduce yourself – and there’s a better way to do this than most people use.  State your name with impact; what I call the “Pause, Part, Punch” approach. When stating your name, pause before your first name, then state your first name, pausing again before your last name (part), and then give your last name with a bit of a punch. You want to really drive your last name into their memory.
  • Use conversation links and build a relationship:  Use the person’s name two or three times and picture their name on a desk nameplate.  Allow the conversation to flow by asking questions that link to new questions. Ask the “who, what, where, when, why and how” questions – such as where they live, their family, their work, hobbies and interests.  People like to talk about themselves, so show genuine interest, listen to what they say and remember it.
  • Capture information:  As you work on building rapport with the person you’ve met, usually in a three- to five-minute time frame, you want to capture their information. Maintain eye contact when you ask for their business card, and present yours to them at eye level with your name facing them.
  • Set an appointment:  I call this “make a decision, make a move, make a friend.”  You might say, “I can see we might do business together in the future.  Can I get in touch with you?” And then follow up the next day with an email meeting invitation for a conference call.  Later, confirm the appointment.
  • Gaining referrals:  This is a matter of giving a referral and/or asking for one.  If the person you’ve met isn’t a good fit for your business, ask who in the room would be their perfect client and then make the introduction. You always want to make more referrals than you ask for.
  • Use social media:  Networking doesn’t end when the meeting is over.  LinkedIn, for example, is a great way to stay in touch with your business contacts. 

So, as you can see, networking shouldn’t scare you. If you walk into an event with the right tools and confidence, you can leave with friends, business references and potential customers.

Robert Graves is a director of business performance improvement for Dale Carnegie Tampa Bay. He can be contacted at Robert.Graves@DaleCarnegie.com.

Is Coworking for You?

June 16, 2014
By Danielle Weitlauf

Having the ability to work remotely from the comfort of your own couch and not worrying about anyone catching you in your fuzzy socks may sound like an ideal way to earn your living. It can be fun at first but you can quickly find yourself missing water cooler conversation or a reason to put on shoes.  Not to mention every day distractions such as laundry, dishes, family members or drop in visitors.

Faced with these downsides, many startup founders head for their local coffee shop as their “office away from home.” There is another option that may be for you.

Coworking is simply a shared work environment. Here are our top five reasons to consider coworking:

  1. Networking and Collaboration – Coworking spaces often bring together like-minded people who share interests and, possibly, experiences.  And they may just be potential clients, partners or referral sources as well.
  2. Resources – Many coworking spaces offer educational opportunities such as hackathons, meetup groups and coding classes. The coworking space becomes the hub for these groups.
  3. Amenities you couldn’t otherwise afford – Renting office space is costly when you consider that you’ll need to cover electricity, water and cleaning services as well as the space itself. It also binds you to a contract that might easily keep you in that space for a year or (more likely) three to five years. Coworking gives you the opportunity to be flexible, while still having the resources such as conference rooms, copy machines, printers and desk space that you’d have to provide on your own. Some even allow you to leave your things at a desk or have lockers for frequent users.
  4. Productivity – It takes a lot of discipline to work from home. You have to keep the television off, set ground rules with family and not get too comfortable working from your laptop on the couch (or in bed). It’s often recommended to set up a home office to avoid these pitfalls, but it’s still a challenge, particularly if family members are involved or living space is limited.  Coworking space allows you to focus on your work and be more productive.
  5. Meeting space – If you want to meet a potential client, a current client or a partner for a meeting, your dining room table isn’t going to cut it and the local coffee shop doesn’t offer any privacy.  Coworking spaces provide meeting rooms and often have technology such as LCD screens so you can pitch your big idea the right way.

There you have it. We’ve met a lot of great business people and helped grow many new companies through our coworking space here at Tampa Bay Innovation Center. Our newest venture, TEC Garage St. Petersburg, will include a brand new, large coworking space in downtown St. Petersburg. We’d like you to check it out when it opens later this year. If you’d like more information about our coworking space, contact our team at (727) 547-7340 or visit www.tecgarage.org.

Danielle Weitlauf is Business Partnership Director of Tampa Bay Innovation Center.  She can be reached at weitlaufd@tbinnovates.com.

 

What to Do When Things Start Going South

June 02, 2014
By Penny Larsen

Experts will tell you to accept and even embrace failure. That’s all well and good, but it’s only helpful if you learn the right lessons!  As an entrepreneur as well as an advisor, I’ve developed some tips that I think can help you avoid or at least minimize the missteps that are often part of being an entrepreneur.

The most important step for a startup is your business plan. The old saying that if you fail to plan, then you plan to fail is absolutely true.  Honing your message helps prospective lenders understand your business concept and helps you develop your strategy for success.  But don’t stop with the income statement – prepare your balance sheet and cash flow statement as well. 

Here are what I consider some keys to attracting financing:

  • Do I have a believable market definition – a real story to tell?
  • Do I have a realistic growth plan?  Make your projections realistic and believable.
  • How do I plan to compete and is my product/service unique?
  • Is my product/service scalable?
  • How will lenders get their money back?

Your financing goal should be to replace expensive equity lending with cheaper debt.  Or, as I often say, “you don’t need no stinkin’ partners!”

When your business starts going south, it’s usually because you’ve run out of money. A lot of entrepreneurs think venture capital is the way to go, but there are a lot of better (and more realistic) options for capital out there. Truthfully, there are few venture capital firms based in Florida, and they’re typically interested in later-stage companies anyway. Here are more likely financing options:

  • Friends and family – These are the people who are most likely to believe in you and support your business, but be sure to treat them professionally.
  • Home equity – Lenders and investors want to see that you’re all in. This is the cheapest and easiest form of financing.
  • Credit cards – This is the most common form of financing, but remember it’s tied to your personal credit.
  • Small Business Administration – The SBA no longer makes direct loans to small businesses, so you’ll need to shop banks and intermediaries for the best programs and terms.  Look for SBA preferred lenders. 
  • Product pre-sales – If you can get commitments and funding prior to the manufacturing of your product, more power to you!
  • Strategic and angel investors – Although it’s better to avoid equity partners, just remember they are looking for big returns and usually want a hand in running the business.  Ask how many investments they’ve made in the past year. 
  • Crowdfunding – A relatively new form of funding, this can be pretty expensive. 

You may never experience problems with your business – but if you do, don’t give up just yet. First, be honest about your mistakes and communicate early with your lenders.  Second, get help!  Lenders have more resources and experts than you do and it’s in their interest to see you succeed.  There are also advisors and organizations who do this for a living – so put your ego aside, find them and ask for their help. 

Penny Larsen is the founder and president of Links Financial, LLC, a financial intermediary firm. You can contact her at penny@links-financial.com.

Search by Keyword(s):
(separate multiples with a comma)

Recent Posts

1/1/15 - By Kelley Rexroad
11/17/14 - By Steve Schuetz, CFA, ASA
10/1/14 - By Kelley Rexroad
9/15/14 - By Charlotte Baker
8/15/14 - By Mike Eitler
8/1/14 - By Robert Graves
6/16/14 - By Danielle Weitlauf
6/2/14 - By Penny Larsen

Archives