I work at a startup — it’s just over a year old. Love the people, work and mission of the company…only thing is, payroll is always late as fuck.
Right now we are going on a month and 5 days, and this is not new. He said he has been dealing with the bank flagging his accounts and not letting him access money (which maybe??) but it’s been a “bank issue” since I started 6 months ago. Also, he often reverts to Venmo or PayPal-ing us…which seems a bit odd/illegal.
Everyone is getting pretty fed up so I talked to him about it since I’m technically HR and am supposed to be looking out for employees including myself. He basically said we are all young and don’t know the startup world, where late payroll is very common; and, if we can’t take it, to quit. I have talked to my friends and connections about it and they say that this is really fucked up, but I am wondering, is this common in the startup world? To be very clear, we were not told “hey we have no investor money so payroll we be a mess and late so that’s part of the deal” when hired but promised TIMELY, twice a month, salaries.
Also to put in context we have 9 full time employees, are contracting an ad agency (whose payments are also late), and had contractors (who are now on pause because they won’t work unless paid) and no investor money since he’s self funding it as of rn.
So is this common in the startup world? I feel like payroll should always be prioritized especially when he’s paying himself on time, buying things and constantly hiring more people.
Since you guys enjoyed the last time we created a common list of VC/Investing terms here is another one:
More Common VC/Investing Terms
- Soft capital commitment: it’s when an investor says that he/she will invest money once some milestone is hit (generally that milestone is getting the lead investor). No papers are signed at this point and those commitments are very fragile. When the COVID hit most of such commitments disappeared in an instance.
- Lead investor: The first investor in a funding round; can be also referred to as the anchor investor. Those are hard to find and sometimes anchor investors get better terms for additional risk they are taking.
- Down Round: A fundraising round in which a company raises money at a lower value than before. For example, if you raise your series A at 10 million valuation and then raise Series B at 8 million valuation – that’s a down round. Horrible thing to happen with a startup and sometimes kills the company completely.
- Anti-dilution Clause: A contractual clause that protects investors from having their investment value reduced in future funding rounds. This clause protects investors from the down rounds – if she invested 2mil at 10mil valuation and a startup had to raise additional capital at 8mil, she will be given additional shares.
- Pro Rata Rights: A contractual clause that protects investors from having their stake in the company diluted. This means that investors are allowed to buy additional shares at every round of funding to maintain their stake in the company. So an early investor in Uber might maintain her 1% in the company even on the day of the IPO because of that provision (she’ll spend some extra money retaining this stake of course).
- Bridge round/bridge loan: A round of funding or a loan that helps a company achieve a certain milestone that it couldn’t achieve using money from the previous round. For example the founders have $ 100k in their account after their Seed round but they want to acquire additional 10k users prior to raising their Series A. That will cost additional $ 300k and at this point bridge rounds/loans are coming into play. Generally bridge rounds/loans are raised from existing investors.
- Cap Table: paper that provides data on who owns what percentage of the company, when did they join and at which value did they invest. One of the must-haves at every single round of fundraising.
- Management Fee: The fees that General partners of Venture funds charge their limited partners each year. VCs pay for their due diligence and sometimes provide support to the startup (such as accounting services, legal services etc.) by taking money from that management fee. If you work with a small fund, chances are they won’t be able to help you with that since their management fees are small.
- No shop clause: A clause in a term sheet that prohibits founders from sharing the term sheet with other investors in an attempt to receive a competing offer. Rarely used in real life, but if an investor wants to sign one of those with you, run a very precise background check on the investor – that might be a sneaky move by a sketchy VC.
- Party Round: A round in which a startup raises multiple investments from a lot of small investors. This is becoming a new trend because “it’s easier to raise 10k from 10 investors than 100k from one investor” – that statement isn’t always true so you have to assess the situation yourself. We recommend party rounds for founders with large networks of industry professionals who are making $ 100k+/year in salaries.
- Washout Round: A round in which founders and previous investors get significantly diluted. The new investor in this round will most likely gain majority ownership. Basically it’s like a bad version of the acquisition. Washout Rounds (similar to washout sale) happen in the situation of the company crisis – this is the last resort for a startup.
- Lock-up Period: A specific amount of time that must pass before someone can sell their shares in a startup. That’s one of the downsides of IPOs – founders of the company frequently face 6-18 months lock-up periods and that’s why some companies (like Spotify) prefer direct listing. These provisions also prevent investors in your company from running around selling your shares the next day they bought them.
Some of these terms we got from the previous post, so if there is something you’d suggest us to include in the next article – make sure to comment what it is that you want us to cover next!
And here is the link to our previous post on this subreddit: top 10 terms in fundraising
Many people dream of being an entrepreneur. They envision their business as majorly successful; allowing them to make enormous wealth, be the boss, have the freedom to come and go as they please and work how and when they want. If only this were the reality, everyone would be an entrepreneur! Unfortunately, this is not the experience for most. Being an entrepreneur can be tremendously rewarding, but it is hard work.
On average, entrepreneurs work harder and put in longer hours than their employees, while taking on much more risk.
The failure rate of new businesses is estimated to be between 30 percent and 70 percent within the first two years.
Despite the odds, thousands of people launch new businesses every year. Some will be wildly successful, some will muddle along to sustainability and others will fail. While luck cannot be overlooked, success for a new business is mostly the result of the vision, effort and ability of the founding entrepreneur.
StartupNation exclusive discounts and savings on Dell products and accessories: Learn more here
So what does it take to effectively launch a business?
Keep in mind the 10 common traits of successful entrepreneurs:
Successful entrepreneurs have a clear vision of what their business will be and can concisely articulate its purpose, goals and market position. They have identified (and can succinctly describe) the who, what, where, when and why of their business.
A successful entrepreneur is passionate about their business. It is hard work, and putting in long hours will be tough if you don’t love what you are doing. People with passion know what it is that drives them to keep working to achieve their vision.
Entrepreneurs remain tough when the going gets rough. They don’t give up easily. They can accept rejection and are willing to learn from their mistakes. They are willing and able to adapt and modify their plan in order to be successful the next time around.
- Willingness to work hard
Being an entrepreneur is harder than being an employee. To be successful, the entrepreneur must be willing to put in the time and effort required, often for little or no pay at the beginning. Successful entrepreneurs recognize the risk and necessary work that achieving their goals will entail.
Successful entrepreneurs have confidence in themselves and in their business. They must believe in their ability and in their idea. Every entrepreneur will face rejection along the way and successful entrepreneurs are those with the confidence to keep going and bounce back after a setback.
Things do not always go as planned. A successful entrepreneur is flexible. They learn from their mistakes and are willing to adapt and change as they go along. They take advice from others and are open to trying new approaches
- Can sell
An entrepreneur must be comfortable selling. Even with a sales team, the leader must be an expert at networking and be able to promote themselves and their business to bankers, customers, suppliers and staff.
- Prudent with money
Successful entrepreneurs are good money managers. They prudently invest in overhead and always keep track of the money and manage their cash flow.
- Willing to ask for and accept help
An entrepreneur needs to be a jack of all trades but the most successful entrepreneurs know their limitations, realize they can’t do everything and are willing to delegate to others. They are willing to ask for help. They seek out and pay for expert advice when needed.
No matter how successful your business, there will be bumps along the road. A successful entrepreneur is resilient and can bounce back from a setback. They use setbacks as an opportunity to learn and grow. They understand that failure is part of the game.
Running your own business can be tremendously rewarding, but not everyone is cut out to be an entrepreneur. Before taking the leap into entrepreneurship, ask yourself if you have what it takes to be successful. If you do, enjoy the journey.
The post 10 Common Traits of the Most Successful Entrepreneurs appeared first on StartupNation.
Starting a business is an exciting time. But the reality is, one in five startups fail after only one year. One of the biggest reasons? A lack of funds.
Even if entrepreneurs get traction quickly, the first year in business isn’t cheap. There are employees to manage, tools to buy, and investments to make. Even in perfect conditions, funds tend to run thin.
However successful you might be, your funds are limited. As you work to get your business off the ground, make sure these ten key sources of financial waste aren’t sapping your resources:
1. Failing to Take Advantage of Deals
Startups don’t always have to pay top dollar for their materials and tools. Smart entrepreneurs look for sales and find cost-effective alternatives before pulling the trigger on a purchase.
Get creative to boost your buying power. If you need paper and pens, for example, back-to-school season might be a smart time to shop. For year-round savings, consider joining a group purchasing organization with other startups. Because suppliers prefer to sell in bulk, GPOs can secure discounts that individual companies simply can’t.
2. Growing the Team Too Quickly
If you’re like most entrepreneurs, you’ll want to scale your startup as quickly as possible. Act too hastily, however, and you could inflate your labor costs beyond what your young company can afford.
Hiring more employees than you need can spread resources thin without adding a lot to your bottom line. Calculate how much labor you actually need before adding more people to your payroll. Your goal should be to maximize production and minimize salary costs.
Think, too, about the quality of your hires. Bringing on the first people to knock on your door can deprive you of better candidates. You want to hire the most qualified people you can find, so be patient. It’s better to be understaffed for a couple of months while you wait to find the perfect person for a role than to bring on someone who won’t add much value to your business.
3. Going Big on Benefits
Taking care of your team should always be a priority. But in the beginning stages of your startup, you simply can’t afford to offer the best benefits on the block.
So how can you attract top talent? Sell them on your vision: What do you hope to achieve? How much do you expect to grow your company, and by what date? How will you reward team members who get in on the ground floor?
Don’t forget entirely about benefits, though. Choose low-cost ones, such as generous PTO policies and a casual work environment. Hold onto your big-budget ideas until your startup has proven itself and can comfortably afford them.
4. Decking Out the Office
Entrepreneurs love the idea of having their own office space. The trouble is, desks and chairs alone can cost hundreds of dollars each.
Don’t worry about the reverse-osmosis water cooler until you have breathing room in your budget. Remember that Apple, Amazon, and Disney all started in someone’s garage.
You don’t need a lavish workspace to get your ideas flowing. Concentrate on your product or service, and invest in an office space when the time is right.
5. Failing to Plan
Your startup won’t succeed by chance. If you want to build a profitable business, you need to plan it carefully.
Failing to plan is planning for failure. Think through “what if” scenarios, such as:
- What if my star employee leaves unexpectedly?
- What if my product doesn’t get traction?
- What if my supplies are lost, damaged, or stolen?
- What if a competitor scoops me?
- What if an investor backs out?
Have a fallback plan, such as a savings account, for your startup. If you’re bootstrapping, don’t put so much of your own money into your company that you’d be destitute if it failed.
6. Taking on Too Much Debt
In some cases, debt is necessary. If you can’t build your product without taking out a loan, then go ahead and talk to a bank. But if you can invest your own money or offer equity to an outside investor, you should do so.
There is no bigger source of financial waste than debt. The problem is two-fold: the opportunity cost, and the interest rate.
When you borrow money, you’ll have less wiggle room if you need to ask for a future loan. And even if you don’t, you’ll pay everything you borrowed and then some back thanks to interest. Startups with too much debt end up using all their profits to pay off the interest — and no profits mean no progress.
7. Overinvesting in Advertising
Startups need customers to gain their footing. With that said, your first priority must be developing your product. After that, you can worry about marketing it.
Before launching a marketing campaign, you need to do some research. Not all types of marketing are equally expensive: Email and social media are practically free, while traditional ads can cost thousands of dollars to place.
To decide on your strategy and channels, ask yourself:
- What’s your target audience?
- Which platforms would reach them best?
- What makes you a better choice than your competitors?
- How much of your budget should go toward advertising?
8. Forgetting About Taxes
There’s no way around it: Businesses pay taxes. You can lighten the blow, however, if you’re proactive about paying taxes and not reactive.
When getting your startup going, reserve money from each transaction so you aren’t blindsided by a big tax bill. Set aside roughly a third of each sale — while you might get some back, it’s better to put away too much money for taxes than not enough. And be sure to take advantage of common startup tax deductions.
9. Building a Flawless Product
Every entrepreneur dreams of building the perfect product. Unfortunately, by the time they’ve perfected their product, they’re either out of money, or the market has moved on to the next big thing.
While making sure you have a sound product is important, you shouldn’t let it stop you from taking off. Build a minimum viable product, and ask for customers’ feedback to help you improve it. Being nit-picky about your product before it’s even on the market is a waste of time and money.
10. Buying Brand Gimmicks
A brand is only as good as its products. Unless yours is as good as it possibly can be — and when you’re in the startup stage, it shouldn’t be — forget about branded merchandise. Custom-printed hats and tote bags cost more than you think, and they won’t help you turn a profit.
What if you’ve promised your investors or family some swag? Start by making some t-shirts. Not only do they cost less than other kinds of printed merchandise, but you can make your own with just a heat press, some plain shirts, and a sheet of colored vinyl.
To build a profitable company from scratch, you have to manage your money wisely. Don’t let your ego dictate your spending, and you’ll be miles ahead of most new entrepreneurs.
I consulted with 23 members of these communities about their sales objectives/challenges.
Most common pattern I established so far:
- they got some traction from communities like IH, PH & Reddit but it eventually dried out
- they "sent emails to some folks but it didn't work"
- when reaching out to potential clients, they think that quantity is better than quality
- they aim too high
- they don't use tools
- they don't have a sales process
- they want to generate sales but want to spend too much time on sales-related activities
- they have a romanticized POV on what a successful salesperson is
If one of these resonates and you're looking for new customers, here's how to fix these:
- Inbound is awesome. But the traction you receive from a post eventually wears off. SEO and Paid media work wonders, but consider opening an "outbound" channel. It only costs time.
- when reaching out to someone cold, give yourself (and data) a chance. Be mindful of best practices and your sample size before drawing conclusions. ("outbound doesn't work in our space, we're in a very special industry" isn't an excuse)
- If you have 30 minutes per day to dedicate to your sales efforts, our data show that you're better off sending a personalized message to 6 different people than emailing 50 people with a generic message.
- Everyone wants to talk to the Decision Maker. Everyone wants to sell to Enterprise level firms. But consider hitting your low-hanging fruits first. Smaller firms, and someone lower in the chain of command. Turn them into a champion a work your way up.
- Excel & Trello are good for anything but it doesn't scale. Consider using tools that will help you stay organized and focused.
- You booked a meeting with someone? Awesome. Let the fun begin by remembering the 3P rules: Prepare, Prepare & Prepare. Make sure you work on your introduction (it's the first 4 seconds that count!). Start with the end in mind. Frame the call. Learn the power of asking thought-provoking questions. What happens after your call? And after? And after? Trim it down. Make it easy for them to buy.
- Sales is tough. It's the number one reason why a firm eventually shuts down. Once your product is up & running, it should be your main area of focus. Also, it's better to be consistent than doing "a blast" here and there
- Good salespeople aren't magicians. They don't know more than you do. They're just extremely organized, focused and human. They're also fired up by crazy ambition and a will to succeed.
Customer support is a huge part of a user’s experience, and one that every bank likes to say they’re great at. But there is a lot we can learn from the mistakes that U.K. banks have made.
Based on his latest research report into the user experience of a dozen leading British banks — including Barclays, HSBC, Santander, Monzo, Starling and Revolut — Built for Mars founder Peter Ramsey shares his top five UX tips for customer support.
We dive deeper into each tip, including discussing the thorny topic of call decision trees (press 1 for … press 2 for … etc.), which Ramsey advises should be depreciated in the age of mobile apps, how push notifications might be employed to provide a more Disney-like queuing experience, why hold music is bad as a concept and why it’s time to ditch the live chat bait and switch.
Get rid of call decision trees
Call decision trees are annoying to use and unnecessary for users who have access to an app. Instead of asking customers to navigate via their telephone’s numeric keypad, use in-context questions inside the app, and then put the full number, including the correct extension, behind a button.
TechCrunch: Perhaps we should clarify what you mean by “call decision trees” and — considering they’ve been an industry standard for years — why is now the time to get rid of them?
Peter Ramsey: The decision tree is that automated “press 1 for … press 2 for … ” process you sometimes have to go through at the beginning of a call. I should clarify: It’s not time to eradicate them entirely, because it’s pretty useful for people who only use telephone banking. But for anyone who has access to an app, it’s totally unnecessary.
Speaking with PYMNTS, Kirk Simpson, co-founder and CEO of Wave Financial, explored the impact that banks’ shortcomings in the SMB banking sector have had on the evolution of FinTech, neo banking, and the growing need for the financial services community to rally around its SMB customers bracing for a rough road ahead.
Read more here.
The post [Wave in PYMNTS.com] How FinTechs, Banks Can Find Common Ground To Support SMB Recovery appeared first on OurCrowd.