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100 things you need to know to start a business (that successful business owners NEVER tell)

12) What are the signs of a professional?

  • Going from bullshit product to services to product to SaaS product. (Corollary: The reverse is amateur hour.)
  • Cutting costs every day.
  • Selling every day, every minute.
  • When you have a billion in revenues, staying focused. When you have zero revenues, staying unfocused and coming up with new ideas every day.
  • Saying “no” to people who are obvious losers.
  • Saying “yes” to any meeting at all with someone who is an obvious winner.
  • Knowing how to distinguish between winners and losers (which is the subject of an entire other post, but in your gut, you know – trust me).

13) What should the CEO’s salary be?

No more than 2x your lowest employee if you are not profitable. This even assumes you are funded. If you are not funded, your salary should be zero until your revenues can pay your salary last.

Important rule: The CEO’s salary is the last expense paid in every business.

14) When should I have sex with an employee?

When you love her and the feeling is mutual.

15) Should I ever worry about the news or the economy?

Absolutely not. The best businesses are started in horrible economies.

16) What happened to all of my friends?

You don’t have any more friends.

17) Should I spin off this unrelated idea into a separate business?

No. Make one business great. Throw everything in it. Do DBAs to identify different ideas.

18) I made a mistake. Should I tell the client?

Yes. Tell him everything that happened. You’re his partner. Not the guy that hides things and then lies about them.

19) I undercharged. What should I do about it?

Nothing. Charge the next client more.

20) I have a lot of traffic but no revenues. What should I do?

Sell your business. There’s only one Google. (Well, there are two or three Googles: Facebook, Twitter, etc., but none of them are you.)

21) I’ve been in business now for six years, and my business doesn’t seem to be growing. It’s even slowing down. What should I do?

Come up with 10 ideas a day about new services your business can offer. Try to get a customer for each new service.

I know one business in this situation that refuses to do this because their VCs are telling them to focus more. You’re going to go out of business otherwise.

22) How do I market my app?

Friends and then word of mouth.

23) Do I listen to venture capitalists?

Yes, of course. They gave you money. But then don’t do anything they ask you to do.

24) Should I care about margins?

No. Care about revenues.

25) When should I hire people full time?

When you have revenues.

26) C Corp or S Corp or LLC?

C-Corp if you ever want to take on investors or sell to another company.

27) What state should I incorporate in?

Delaware.

28) Should founders vest?

Yes, over a period of four years. On any change of control, the vesting speeds up.

29) Should I patent my idea?

Get customers first. Patent later. Don’t talk to lawyers until the last possible moment.

30) Should I require venture capitalists to sign NDAs?

No. Nobody is going to steal your idea.

31) Should I have a technical co-founder if I’m not technical?

No. If you don’t already have a technical co-founder, you can always outsource technology and not give up equity.

32) Should I barter equity for services?

No. You get what you pay for.

33) Should I build a product?

Maybe. But first see if, manually, your product works. Then think about providing it as a service. Then productize the commonly used services. Too many people do this in reverse and then fail.

34) How much dilution is too much dilution?

If someone wants to give you money, then take it. The old saying, “100 percent of nothing is worth less than 1 percent of something” is true.

35) What if nobody seems to be buying my product?

Then change to a service and do whatever anyone is willing to pay for using the skills you developed while making your product.

36) If a client wants me to hire their friend or they won’t give me the business (e.g. like a bribe) what should I do?

Always do the ethical thing: Hire the friend and get the client’s business.

37) What do I do when a customer rejects me in a B2B business?

Stay in touch once a month. Never be angry.

38) In a B2C business?

Release fast. Add new features every week.

39) What if my client asks me to do something not in my business plan?

Do it, or find someone who can do it, even if it’s a competitor.

40) Should I ever talk badly about a partner or an employee even though they are awful?

Never gossip. Always be straight with the culprit.

41) I have lots of ideas. How do I pick the right one?

Do as many ideas as possible. The right idea will pick you.

42) Should I get an office?

No, not unless you have revenues.

43) Should I do market research?

Yes. Find one customer who DEFINITELY – without a doubt – will buy a service from you. Note that I don’t say buy your product, because your initial product is always not what the customer wanted.

44) Should I pay taxes?

No. You should always reinvest your money and operate at a loss.

45) Should I pay dividends?

See above.

46) When should I fire employees?

When you have fewer than six months’ burn in the bank and you aren’t getting revenues growing fast enough.

47) For what other reasons should someone fire an employee?

  • When they gossip.
  • When they don’t over-deliver constantly.
  • When they ask for a raise because they think they are making below industry standard.
  • When they talk badly about a client.
  • When they have an attitude.

48) When should I give a raise?

Rarely.

49) How big should the employee option pool be?

15 to 20 percent.

50) How much do advisers get?

One-fourth of 1 percent. Advisers are useless. Don’t even have an advisory board.

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