Today is my birthday!

Friends and family took me to K1 Speedway. If in San Diego you should check it out. One of the best things about being an entrepreneur is that you can take time when you choose to. So today we raced.

A smart businessman said to me once, "Your goal as a entrepreneur is to replace yourself everyday." To take it a step further, you need to get rid of daily repeatable tasks. You need to focus on those things that are your strengths and that are unique to you, your value. This value is what makes your company different. It is tough to look at yourself and say that someone else can do this better than me. If they can do 90% of what you consider perfect, that is an "A" and you need to get rid of it.

Sometimes I might seem little preachy... but I love to pass along good advice that has worked for me.

Cheers,
Mike

Quiet on the home front:

This is the toughest time of year to get anything done. With all the holidays and peoples vacations, very little gets done. A friend, whom I respect, once told me, "Nothing gets done between thanksging and the end of the year."

Since things are so quiet, this is a great time to think about end of year expenses. Anything that you need to buy for your business should be purhcased for tax reasons. Also, many companies who are worried about meeting quaterly goals will defer income to the next calendar year. This strategy allows you not to have to pay taxes on the income for 14 months.

One of the main reasons business fail is due to lack of accounting and proper filing with the government. I can't say this enough. Get professional help. It is worth the dollars spent. A payroll company is imperitive. We use ADP.

Cheers,
Mike

Sometimes it's tough to figure out which way to go...

Trust you gut. Starting a business is a lot of ramming your head against a wall. You have to believe the wall doesn't exist and if you hit it just one more time your are going to have a breakthrough. Once this happens, everything starts happening really fast.

Books are a great way to make things make sense in your head. I recommend Good to Great.

We are having an Investor Summit in Lake Tahoe. The purpose is finish out the investment round. We home to have everyone signed up by the time we leave on January 2nd. This will allow me to focus on building the business.

Cheers,
Mike

Finally Solving the People Problem:

Met some great people today. I want to give props to the Conde Group, sending over some good resumes. I think we will be making a job offer. So now we have 5 staff members!

Another Question: How do I value my company for investors?

This is another tough questions. There is a delicate balance here. Giving up too much to early can reek havoc if you need more money later on. Not giving enough equity will limit your investment pool.

I have always thought that it has to be a win-win. These people may help you in a future business and you are their real investment. I feel that giving up 20-40% of a business before the first sale or product is fair. You also have to weigh chance of success with the overall potential upside. If you could invest in a company that has a chance at being the next google... you are willing to invest more and take less equity. A business in a smaller marketplace will require more equity for the same dollar invested.

Another way to value the company is upon predicted income streams. How much is the company predicted to make. This is generally based upon financials that are produced along with the business plan.

Ultimately, there is no way to predict what is going to happen in the future. There is no real science here, it is mostly throwing a dart at the dartboard.

Cheers,
Mike

Where do investors come from?

Someone asked, "where do I find investors?" This is tough one. When I was trying to raise money for financialaid.com, I called every venture capitalist that I could find on the web. I set up meetings with those who would take my call and ultimately I was turned down by 16 of the 17.
After that fiasco, we looked hard at our business plan (yes you need a solid one) and decided to boot strap it as much as we could. This worked out well for us in the end. The original three partners of financialaid.com owned 96.25% of the business when it was sold. We raised a small amount of money from friends and we were off the races. We didn't have money to burn, which kept our eye on the ball. We had to succeed.

Venture Capital works well for some people. The VC's are very bright people who can plug your business into a network of companies who will increase your chance of succeeding. This comes at price. That price is equity in your venture. And since they have money invested, they will be looking over your shoulder.

Angel Capital is another way that people raise money. These are typically groups of local successful business people who are interested in investing small amounts of money in several companies. They will typically meet once a month and have a series of new ventures that present their idea to the group.

Hope this helps.

Mike

Making things more difficult.

people are still our biggest hurdle. We are starting to get some great resumes, however, we have chosen a development framework called Ruby on Rails. This is a new object based framework which allows us to rapidly deploy products.... but we due to the fact that it is so new, we are having trouble finding people...

We have found that best way to find people is through user groups. WebSanDiego and Joe Crawford have been very helpful. We also have a grass roots effort going on.

Mike

Developer Help!

Shout out to Al Abut who put us in charge with the local Ruby on Rails Developer group. We are going to sponsor an event in January (free beer and food for members!)

Picked a great URL today for one of our products. Climber.com will be for people who are interested in increasing their income. Become an Alpha member by sending an email to Alpha@mingle.com and you will be the first to learn about this cool new tool.

Funding the Business:

Every business need funds. Sometime you can do it by yourself and sometimes it makes sense to bring in some outside investors.

We choose to raise some outside money for several reasons:

• SmartMoney: there are people who add something to business besides just money. They bring a special talent. Their investment just keeps their attention.
• Spreading the Risk: Taking investors allows you to your risk. We still invested a good deal of money into mingle however, it is not the only investment.
• Commitment to Task: When you take someone's money, you have a higher level of commitment to deliver.
  

Cheers,
Mike