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Accounting for Start-ups

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How to do start-up accounting. "Using large company financial tools to measure start-up progress is like giving the SAT to a first grader," writes Steve Blank. "It may measure something in the future but can only result in frustration and confusion now." Blank says that although balance sheets and cash flow statements matter to established companies, start-ups, which he defines as companies in search of a business model, have no use for them. Blank suggests a number of other start-up metrics are useful for tracking how well the company's proposed business model is holding up. These vary by industry, but you'll probably want to measure the cost of acquiring new customers and the pace of customer acquisition. Meanwhile, Blank says that every company should track its cash: how much you're burning every month, how many months of cash you have left, and how much time it will take you to break even.

Why you shouldn't overlook an old industry. It's not even conventional wisdom it's so ingrained: entrepreneurs tend to look to new industries and new technologies as springboards for their ventures and innovation. But sometimes an old industry can offer an unsolved problem, just take the case of GreenRoad. The company, which has the backing of Richard Branson, and more recently Al Gore, helps professional drivers drive more safely thereby saving their company money on avoided crashes (via TechCrunch). None of the components for the device, which can detect over 120 different driving maneuvers, are very newfangled. A GPS chip here, an accelerometer there, but the results open up a potential $80 billion market with safety and environmental benefits. How's that for multiple bottom lines.

LinkedIn founder says goodbye to angel investing. We've already told you about how Reid Hoffman built the most successful professional networking site on the Web. Now, peHUB has a nice Q&A with LinkedIn's founder that explains why he's moved away from angel investing, whether he wants to beat Facebook to an IPO, and why he passed on investing in Mint.com.

Surf Better: the 5 Secrets to Power Browsing. Om Malick directed our attention to this useful post from our friends at Fast Company on the settings and shortcuts that can streamline your surfing. 1. The days a single default homepage are over. If you always log onto Gmail, Google Reader, and Twitter, set all three tabs to load automatically (open the tabs you want, then click "Use Current Pages" in the homepage setting. 2. Pick up where you left off by auto-restoring the last tabs and windows you had open (from Firefox's Options dialog or on the Basics tab in Chrome). 3. Accidentally closed a tab to a great resource? Ctrl+Shift+T (for PCs) and Cmd+Shift+T (for Macs) will reopen it. 4. Browsing the news and come across a link you want to check out later? Rather than having to stop reading the page you're on, you can use your mousewheel to open the links in background tabs without interrupting your flow. 5. Sync your bookmarks across browsers and computer. Xmarks extension works with Firefox, Chrome, Safari, and Internet Explorer.

Why Google Buzz fizzles for small business. Google Buzz wants to compete with the likes of Twitter, Facebook and LinkedIn, but it falls short of its competitors when it comes being a resource for small businesses, TheStreet reports. Since Buzz is currently limited to Gmail, it will be more labor intensive to tie in the new feature with your existing small business software, and there is no defined public Web space for Buzz, which means that users define public or private posts. While in the future, it is likely that Google will enhance Buzz's features to make them more entrepreneur-friendly, for now, you may want to stick to Twitter posts and Facebook fan pages to promote your business.

The new rules from Apple that got 5,000 apps banned. Apple knocked 5,000 apps from the iPhone store recently for inappropriate content. Chilifresh has the new rules that are getting developers all hot and bothered. The last one, "no apps will be approved that in any way imply sexual content" is getting a lot of flack considering the Playboy app is still being sold.

The art of the quick start. When inspiration strikes, sometimes it's best to just run with it. That's the lesson learned by Maria Elena Ibanez, a serial entrepreneur who started her latest business, a multi-million dollar line of Hispanic foods, over the course of a weekend. As the Miami Herald reports, Ibanez got the idea for her company while chatting with a stranger one Saturday at the beauty salon. By the following Monday, she had launched Intermark Foods from her home office. So much for lengthy business plans and extensive industry research. Launching a new business over the weekend may not be right for everyone, but as Ibanez explains, "If you have an idea you are passionate about, follow your instincts and see what the market wants. You can polish your idea based on the market response."

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Last updated: Feb 22, 2010




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