Some Advice on When to Take Advice
When entrepreneurs should ignore advice. Entrepreneurs are inundated with advice from customers, partners, investors; everyone has an opinion on how you could run your company better. Sometimes that advice takes of form of suggesting that your idea is a dud completely. ReadWriteWeb has a collection of bits of advice that were thankfully ignored by their recipients, which include the co-founder of Warner Bros., The Beatles, and Marilyn Monroe. In response to her idea of starting Mrs. Field's Cookies, Debbi Fields was told, "A cookie store is a bad idea. Besides, the market research reports say America likes crispy cookies, not soft and chewy cookies like you make." Still a board of advisors can help guide you through some tight jams.
How to make a small business budget. Fred Wilson explains the basics of budgeting when your company has less than 10 people. He says that you should start on your budget once you've worked up some reasonable projections for the coming year. "The budgeting process starts with a financial model," he writes. "Be very realistic. A good budget is a conservative budget." Once you've honed in on expected revenue, expenses, and cash flow, then share your plan with your team. "Some executives don't like to share the entire line by line budget with the team," Wilson writes. But he adds, "It is hard to hide information from the company. The important information leaks out eventually and if and when it does, you won't be there to provide context. So the more information you provide, the better off you will be."
Should you hire your friends? In the New York Times You're the Boss blog, Barbara Taylor, co-owner of a business brokerage in Bentonville, Arkansas talks about F.O.B.s or "friends of the business"--you know the former high school, college, church, etc. friend of the owner who's now on the company payroll. Taylor says she understands the impulse to hire F.O.Bs, but she's baffled by founders who fill key roles, especially ones with financial responsibilities and consequences, with friends. Taylor then gives two examples of businesses with F.O.B.s in charge of the books. One came to her trying to sell with $437,000 in unnamed expenses, no spreadsheet to speak of, and ended up owing back taxes and delaying their exit strategy. The other friend knew the company's financials inside and out and had the P&L statements organized into several formats for convenience. What's your experience been with hiring friends? Would you trust them with keeping your company's financials in order?
Does an MBA help or hurt young start-ups? That's the question tackled by Entrepreneur-turned-academic Vivek Wadhwa in a guest post on TechCrunch. Reacting to a 2004 Forbes piece written by Guy Kawasaki which argues that the value of an MBA for a start-up is actually about negative $250,000, Wadhwa takes the slightly unpopular view that MBA's can actually be quite useful for entrepreneurs starting a new business. Speaking from his own experience, Wadhwa explains that "my MBA classes seemed to fit our business needs like the pieces of a jigsaw puzzle. Even obscure topics like corporate finance came in handy, in IPO discussions with investment bankers and later, in raising capital for my own company." For even more spirited debate on the topic, check out the article's comments section or Vivek Wadhwa's Twitter page.
A Yelp for co-workers, not businesses. The next time you're considering an applicant for a vacant position with your business, you may have the option of doing more than merely calling their references. A new company called Unvarnished (getunvarnished.com) allows people to post reviews of their current or former co-workers, the Associated Press explains (via the San Jose Mercury News). While the site is currently in a private Beta, if it opens up to the general public, employers "will use it almost like a drug test in the hiring process," personal branding expert Dan Schawbel tells the AP.
A Brazilian start-up that cuts through the red tape. Brazil has been a notoriously tough market for start-ups, thanks in large part to the bureaucratic hurdles local entrepreneurs have to overcome, but Tech Crunch highlights a company that's making a business out of all the red tape. SEDI, started by Brazilian entrepreneur Edivan Costa, helps businesses navigate the process of acquiring and updating the myriad of proper licenses needed to open a business, cutting the wait time down to about 30 or 40 days, instead of the 150 days it usually takes. Costa spent 18 years perfecting the process, and he tells Tech Crunch that business is already up 25 percent this year.
Get this delivered to your inbox.
Follow us on Twitter.
Follow us on Tumblr.
Friend us on Facebook.
Apply now for the 2010 Inc. 500|5000
PRINT THIS ARTICLE