Rent or Buy Office Property: 7 Questions to Ask Yourself

Friday, August 17, 2007 at 9:00pm by Site Administrator

Not all entrepreneurs and startup businesses are launched out of a spare room or garage. There are times when having a “real” office is more appropriate. If this is an office you’d like to have long-term, you might be wondering whether it’s worth buying or renting.

A few questions to ask yourself:

  1. Necessity.
    Do you really want a mortgage? Is it absolutely necessary? Do you know why you really want to buy property rather than rent an office?

  2. Business value.
    Can you write off enough of the mortgage to make it worthwhile over renting? If you’re running a business, you should be able to write off rent as well.

  3. Business value, part 2.
    Is there any overwhelming reason that once you set up your business office, that you have to stay there long-term? If not, then renting leaves more option for moving later.

  4. Affordability.
    Can you afford the mortage? Obviously, if it’s not about the same as if you rent, you have an added financial burden that a startup business doesn’t need.

  5. Property taxes.
    Have you factored in property taxes and the fact that they’re paid quarterly in most cities? With rent, it’s incorporated and isn’t a surprise each quarter.

  6. Incidental costs.
    What about heat, hydro, etc., costs? Have you accounted for these in your operating budget?

  7. Maintenance costs.
    For example, if you live in area that has snow, you might be responsible for clearing it within the permiter of your property, else be liable for accidents and injuries. And what about the cost of repairs, plumbing problems, etc.


Convenience

Another consideration, if you’re choosing an office over working out of the house, is break time. When you’re at home, it’s easy to take a quick nap after a long day, then get back to work. It’s a little bit harder at an office. And since startup entrepreneurs are often trying to wear every hat instead of delegating tasks, they’re usually easily worn out.

Type of Office

If you decide that buying is still worthwhile, there’s still the question of what type of property? A work/ live studio might be your ideal office type. Then again, if your workspace is too comfortable, is there a temptation to goof off? If not, a work/live studio or a loft that you can have customized are good for a startup. There’s just enough professional atmosphere to get buy, and there’s living space as well. The fact that you might be in an old warehouse can lend a quaint atmosphere. [I know that in Toronto, Canada, for example, it's been hip for a long time to create startups in old warehouse lofts. And there are lots of those in the Big Smoke.]

How Much Down?

I know someone who is self-employed and went from renting a house at $1500/m to a mortgage at much more than that. He used his rental home for his business office as well, which he’s also doing with the new place. Was it a good move? I don’t know. He seems to be fine with it, despite the additional cost. However, his business has been around for 10 years and is well-established. He’s good at saving money, and always builds a sufficient down payment before buying, even if he’s buying just a car.

If you think you can manage a mortgage, your necessary down playment will vary. Sure, there are nothing-down situations, but let’s not get into that. (Doing it wrong can bankrupt you; I’ve seen it happen to people I know well.) Obviously, the more you save up the better. But if you cannot save up at least 10%, if not 20%, in down payment, you probably don’t want to buy. You just end up with a lot of debt. Personally, I wouldn’t buy a property until I had at least 30-40% down. But that’s just me – lessons learned from lots of business mistakes.

How’s the Market?

An Oprah show segment earlier this week highlighted that in the U.S., there’s a downturn in the real estate market. It’s currently a buyer’s market. Still, that doesn’t mean you should buy, if can’t answer yes to most of the seven questions above.

Alternatives

If you live in most English-speaking countries other than Canada, you can get at least 4.5% interest for an Online Savings Account (OSA). (In Canada, it’s less.) Sticking your down payment into an account should generate enough money to make a dent into your regular rental cost. For example, 5% on every $10,000 is about $500 per year in interest, or under $50/month. So if you have $30,000 in down payment saved up, that’s roughly $150/mth in interest, which you could apply towards the cost of renting instead of buying.

Conclusion

Ultimately, you have to do what’s best for your business, and there are complex factors that determine that. But if you truly follow the bootstrapper credo, buying anything when it’s not absolutely necessary yet is just plain financially bad.

100 Bad Habits and How Much $ They Cost You

Monday, August 13, 2007 at 2:21pm by Site Administrator

Everyone has their vice. Whether it’s cigarettes, gambling, or cable TV, the cost of your bad habits can add up over time. Here are 100 bad habits and the true cost of keeping them up. Health Matters

Your health is the most valuable thing you have. Neglecting it can cost your hundreds or even thousands of dollars down the road.

  1. Smoking: From medical care to insurance, this perennial bad habit costs smokers and society about $41 per pack.
  2. Fast food: It’s easy, cheap, and tasty. But when you consider the cost of obesity, health problems, and compare it with healthier homemade options, the drive thru may be one of the most expensive places to eat.
  3. Stress: Letting stress get the better of you can cause health problems. It’s estimated to cost $300 billion in healthcare each year.
  4. Worrying: That pressing issue keeping you up at night could prove to be costly. Untreated anxiety disorders cost the US economy about $42 million every year.
  5. Neglecting the gym: If you have a gym membership that you don’t use, you’re letting your health and money go to waste.
  6. Avoiding the dentist: If you avoid the dentist out of fear, consider this: letting dental problems go untreated only makes them more costly and complicated to treat.
  7. Drinking: Excessive drinking can be expensive, both at the bar and at the doctor’s. Consider how much your drinking habit will cost you in terms of medical bills, insurance, and even DWI charges.
  8. Chewing cuticles: Your hands come in contact with many surfaces, people, and germs every day. Chewing your cuticles leaves you open to infection that can be costly.
  9. Toenail picking: Picking your toenails exposes you to germs just like chewing cuticles, but the exposure level is even higher, especially if you wear open-toed shoes.
  10. Lip chewing: Lip chewing can cause cold sores, a malady that costs about $20 per tube to treat.
  11. Hair pulling: Pulling out your hair can lead to permanent hair loss. Treatments for this affliction range from $30 to hundreds or even thousands of dollars.
  12. Eating fried food: Fried food can clog your arteries and set you up for heart disease, a problem that won’t just cost a lot of money, but can kill you, too.
  13. Drugs: The cost of drugs extends beyond their street price. Their cost to society is estimated to be $181 billion when health care, productivity losses, law enforcement and other costs are added up.
  14. Avoiding the doctor: Ignoring or not treating a problem can only make it worse and more expensive.
  15. Coffee: You’ve probably heard it before, but we’ll tell you again. Coffee habits are expensive to keep up. At $3.00 per cup, the average drinker spends $750 every year on coffee.
  16. Grinding your teeth: Grinding your teeth at night can cause serious damage and add up to major long term costs. Resin fillings can cost up to $300, and crowns generally cost more than $500.
  17. Not listening to your doctor: When your doctor tells you to exercise or eat better, do it. He’s looking out for your best interest and can save you expensive trouble down the road.
  18. Choosing fries over vegetables: Vegetables can protect you against cancer and save you money and pain in the future.
  19. Overusing salt: Do you salt your food before tasting it? You might want to think twice about that. A high sodium diet can lead to heart failure, an affliction that’s estimated to cost about $38 billion per year.
  20. Eating excessive sugar and carbohydrates: Excessive sugar and carbohydrate consumption can cause Type 2 diabetes. This type of diabetes is estimated to cost $47,000 over the lifetime of each patient.
  21. Forgetting to wash your hands: Neglecting to wash your hands opens you up to germs spread by hand-to-hand and hand-to-face contact. In the health care industry alone, poor hand hygiene contributes to approximately $4.5 billion in medical expenses every year.
  22. Eating trans fats: Trans fats are bad for you, plain and simple. Consumers are subject to expensive diseases like diabetes, cancer, and heart disease.
  23. Ignoring warning signs: If you feel like there’s something wrong, but you ignore it or put off seeing the doctor about it, you could be setting yourself up for medical and financial trouble. Your problem is likely to get worse and more expensive to treat over time.
  24. Sleeping too little: Too little sleep can set you up for obesity, which requires costly weight loss programs, larger clothing, and higher health costs.
  25. Promiscuity: Promiscuity can cause sexually transmitted diseases, afflictions that are expensive and embarrassing to treat. You may even find yourself with an unwanted child, the cost of which hovers around $250,000 over a lifetime.
  26. Not wearing sunscreen: Neglecting to wear sunscreen can lead to skin cancer. Treatments for this disease can add up to thousands of dollars.
  27. Chewing ice: Ice chewing can cause chips, cracks, enamel breakdown and other expensive dental problems.
  28. Sucking on lemons: Like chewing ice, sucking on lemons can cause dental problems that are expensive to fix, most notably a breakdown of tooth enamel.
  29. Emotional eating: Eating based on mood swings can result in an expensive grocery bill as well as higher health care costs.
  30. Drinking soda: Your daily diet coke habit could be creating lots of dental and other costly health problems.

High-Tech Habits

We’re lucky to live in a world that offers a wide variety of entertainment and communication options. But sometimes, too much of a good thing can prove to be too costly.

  1. Cable TV: Cable TV itself is expensive, but there are hidden costs coming through your receiver. Consider the cost of convenience food, lost time, dwindling energy and low-quality family time, and the true cost of cable TV is much more than the average $40 you pay monthly.
  2. Internet: Just like cable TV, excessive internet use can cost more than just your monthly bill. Spending too much time surfing the internet can take you away from more important things, like relaxing or spending time with family and friends.
  3. iTunes: Apple’s iTunes is fun to play around with, but use it too often and you may find yourself buying tracks that you don’t really need or want.
  4. Stealing your neighbor’s WiFi connection: It’s free, but if you get caught and sued, it can prove to be costly.
  5. Keeping a landline: If you have internet access that doesn’t require a landline and you have a cell phone, keeping your unnecessary landline is a habit worth breaking. You’ll save $20 to $30 a month.
  6. Online shopping: Shopping online is convenient and fun, but it can lead to overspending. You may also spend more due to shipping and handling charges.
  7. Buying too many gadgets: Our high-tech world has lots of shiny new gadgets to offer us, but that doesn’t mean we have to buy them all.
  8. Buying poor quality equipment: Money-saving habits can sometimes cost more in the long run. When buying equipment like computers, printers and TVs, opt for quality items that will last. Otherwise, you’ll end up spending more when you have to replace them.
  9. Not paying for a high speed internet connection: Time is money, and waiting around for pages to load is not an efficient use of your time.
  10. Playing video games: Video games are fun and entertaining, but keeping up with the latest consoles and titles can be very expensive. Many new consoles are priced well over $500 and require gamers to buy games at $50 apiece.

In the Car

With gas prices high and rising, it’s time to turn a critical eye towards your driving habits. Erratic driving, speeding, and other bad habits can reduce your gas mileage and set you up for expensive traffic tickets.

  1. Speeding: Fueleconomy.gov reports that "each 5 mph you drive over 60 mph is like paying an additional $0.20 per gallon for gas." That’s not to mention the cost of a speeding ticket.
  2. Ignoring warning signs: Warning signs are meant to tell you of upcoming hazards. If you ignore them, you may end up in an accident or with a ticket.
  3. Waiting until the last drop to get gas: Using the lowest levels of your gas tank makes your car use the dirtiest gas for fuel. This can hurt your fuel line and engine. A repair on the fuel system can run $100 or more.
  4. Erratic driving: Being a bad driver makes you look silly and costs lots of money, too. Rapid acceleration, braking, and other erratic driving can reduce your gas mileage by 33%.
  5. Impatience with gears: If you put your gear in drive while your car is still moving in reverse, you’re putting extra strain on your car’s drive train. It can lead to U-joint trouble, a repair that can cost up to $700, as well as transmission problems that can run $1,000.
  6. Turning your wheel to the farthest point: When you turn your steering wheel all the way to the right or left, you’re putting unnecessary strain on your steering pump, a part that can cost up to $500 to replace.
  7. Ignoring warning lights: Waiting to tend to dashboard warning lights for even a day or two can allow a small problem to become catastrophic and much more expensive.
  8. Junking up your car: If you lug around an extra 100 pounds or so in your trunk, you’re reducing your miles per gallon up to 2%. That’s up to $0.74 a gallon.
  9. Ignoring sounds: Squeaky brakes mean your brake pads are wearing down and you need to replace them. If you let them go for too long, you can wear down your rotors, a problem that can cost $400 or more to fix.
  10. Forgetting about tire pressure: Under or over-inflated tired can reduce gas mileage up to 15% and wear down your tires 15% more quickly. New tires cost about $100 each.
  11. Riding the clutch: Riding the clutch can wear it down, costing you about $500 to replace it.
  12. Wearing down your starter: Turn off headlights, air conditioning and other accessories when you start your car or you may have to replace your starter.
  13. Neglecting oil changes: Your car’s engine oil is there to keep it running efficiently. When you fail to keep it at the proper level and change it at appropriate intervals, you decrease your gas mileage and risk damage to vital engine parts.
  14. Revving your engine: Revving your engine doesn’t warm up your car, it shortens your engine’s life. Do this too often, and you may have to pay $3,000 to $5,000 in repairs.

At Work

Bad habits at work don’t just affect you; they create costs for your coworkers, customers and family. Banish bad habits to improve your earning potential and become more efficient in your work.

  1. Procrastination: Procrastination can result in missed opportunities as well as lowered efficiency, both of which can cost you in lost earnings.
  2. Swearing: Swearing makes you look unprofessional and can cost you earnings from a promotion, raise, or even make you lose your job.
  3. Chronic lateless: Constantly being late for work can cause you to lose wages or even be fired.
  4. Not taking advantage of 401(k) matching: If your employer matches 401(k) contributions and you’re not maxing it out, you’re throwing away free money from your boss.
  5. Nose picking: At a job interview, this can ruin your chances and cheat you out of future earnings.
  6. Over-expensing your business trip: You don’t need to rent a Hummer and stay at the Four Seasons. Save your business money, because it affects your bottom line, too.
  7. Believing you’re not worth a promotion: A lack of self-worth at work can cause you to miss out on lost earnings that can add up over time.
  8. Forwarding illicit emails: Forwarding inappropriate emails makes you look unprofessional and can land you in hot water with your boss, causing you to be passed up for a promotion or lose your job.
  9. Relying too much on your Blackberry: An unhealthy Blackberry addiction can take you away from more important tasks. Depending on your plan, it can also prove costly in service charges.
  10. Becoming complacent: Losing your ambition and believing that your job is "good enough" can cheat you out of a better job and larger paycheck. Even a $5,000/year raise can result in additional career earnings of over $150,000.
  11. Ignoring ergonomics: Ignoring ergonomics at work can create health problems that require the help of a costly chiropractor.

Money

Obviously, poor financial habits can cost you lots of money. These are some of the worst offenders.

  1. Waiting too long to invest: An investment of $10 per week at 8%, starting at age 30 would result in $81,202 in earnings by age 65. That same investment started at age 20 would result in $129,161 additional earnings.
  2. Waiting too long to save: Waiting too long to save follows the same principle as investment. The earlier you start, the more you’ll end up with, even if the amount you’re able to put away is meager.
  3. Forgetting a credit card payment: A late credit card payment won’t just cost you $39 in fees; your credit rating may suffer, too. As a result, you may be subject to higher interest rates and lower quality loans in the future.
  4. Not paying attention to interest rates: Neglecting to shop around for the best interest rate can cost you hundreds or even thousands of dollars over the course of a loan or life of a credit card.
  5. Gambling: Gambling may be a fun and entertaining way to make a quick buck, but it’s important to remember that the house always wins. For the average gambler in Nevada, the house wins to the tune of about $19,000.
  6. Compulsive shopping: Compulsive shopping can cause you to overspend. When done with a credit card, interest and fees can add to the trouble.
  7. Carrying a balance: Carrying a balance on your credit card account can cost you hundreds or even thousands in interest fees.
  8. Collecting clutter: Buying too much stuff costs money not only when you buy it, but when you store it, too. Consider the cost of a larger home or even a storage space at an average of $50 per month.
  9. Not keeping disability insurance: If you can’t work for weeks or months, you’ll lose earnings from that period of time and it can put your family in a money crunch.
  10. Making rash decisions: Neglecting to shop around can cause you to spend more than you need.
  11. Not keeping a budget: Spending without a budget may lead to living beyond your means, a move that can land your household into costly debt.
  12. Ignoring your credit report: You can get your credit report for free each year. If you don’t check it, you may not be able to dispute incorrect entries that can wreck your credit score and costs you hundreds or even thousands in higher loan interest rates.
  13. Using retail store credit cards: You’ve probably seen offers that tempt you to sign up for store credit cards, touting a discount on your purchases. These cards can set you up for credit card debt and a lowered credit score, costing you much more in the long run than the benefit of an in-store discount.
  14. Only making minimum payments: If you pay only the minimum required amount on your credit card balance, you’re dooming yourself to a "compound interest sinkhole." Check out this calculator to find out just how much this habit is costing you.
  15. Taking out payday loans: Payday loans are fast and easy, but they come at a high price. Some lenders charge an APRs close to 99%, essentially charging you double the original amount to borrow money.
  16. Not paying attention to small purchases: Small purchases add up. Even a $3-a-day habit can cheat you out of $750 every year.
  17. Not asking for help: If you’re going through a financial crisis, make sure you let your creditors know. They may be able to work out a temporary fix for you, saving you potentially hundreds in interest fees and late charges.
  18. Forgetting to plan for retirement: When planning for retirement, remember that time is your friend. If you make a habit of putting off saving for the future, you’ll be thousands of dollars behind when you’re finally ready to retire.
  19. Insuring too little: Underinsuring is a dangerous game. If you find yourself needing more coverage than you’ve paid for, it could cost you thousands of dollars.
  20. Not keeping an emergency fund: It’s important to keep about 3 to 6 months of living expenses socked away somewhere. Putting this off can cost you hundreds or even thousands of dollars if you don’t have funds when you need them and are forced to turn to credit cards or loans.
  21. Abusing balance transfer offers: Balance transfer offers are tempting, but their true cost can add up. Consider transfer fees and the impact of putting off paying your balance, and you’re looking at a loss of hundreds of dollars.
  22. Shopping while hungry: You’ve probably heard that you shouldn’t shop while hungry, but it’s a hard habit to break. But think about this: that additional $10 or so can add up. With weekly shopping trips all year, that’s over $500 lost.
  23. Not shopping with a list: Just like shopping while hungry, shopping without a list can leave you with an extra $10 or more in your cart. Over the course of a year, that’s $500 or more spent carelessly.

At Home

Not managing your house properly can cause you to spend more money than you need to. Energy, cleanliness and keeping track of time can all affect your bottom line.

  1. Leaving the lights on: Leaving just one light bulb on for an extra 12 hours a day can cost $3.50 a month, or $40 every year.
  2. Keeping your house too cool or warm: If you’re cold during the summer, you need to adjust your thermostat. By adjusting your thermostat one degree cooler or warmer, you can save $50 or more.
  3. Skipping showers: This hygiene issue is important. Neglecting to bathe yourself can cause you to get sick.
  4. Not vacuuming regularly: Vacuuming picks up dirt, hair and dust off of your floor. Neglect this task, and you may suffer from allergy problems. At the very least, it will cost you about $250 a year to keep up with daily allergy pills.
  5. Letting dishes pile up: Allowing mold and other bacteria to grow in your kitchen sink exposes you to all sorts of illnesses. These can prove to be costly if you need medical care or miss work due to sickness.
  6. Leaving your PC on: The energy cost of leaving your PC on around the clock can come in at $200 or more per year.
  7. Putting off studying: From high school students to adult MBA-seekers, putting off studying can cost you scholarships and remedial classes.
  8. Leaving laundry unattended at the laundromat: Your clothing can get stolen, requiring you to spend money to replace them.
  9. Avoiding dusting: Just like vacuuming, dusting helps you stay on top of allergies. Avoiding this task can cost you an average $250 a year for daily allergy pills.
  10. Letting your bathroom get dirty: A dirty bathroom exposes you to bacteria that can cause expensive medical maladies.
  11. Sleeping too late: Sleeping too late can cause you to lose your job, or worse, miss out on profitable opportunities. Remember, the early bird gets the worm.
  12. Leaving expired food in fridge: Expired food in your refrigerator isn’t just gross, it’s dangerous and expensive. It can contaminate good food, requiring you to replace it, plus you’re paying for energy costs to cool it.
Comments (11) | Filed under: Financing

Yahoo Pipes Monster Mashup Feed: 100 Venture Capital Blogs

Tuesday, July 31, 2007 at 7:00pm by Site Administrator

You might have seen our 100 Daily Must-Reads for Entrepreneurs. Now we have a Startup Required Reading: Top 100 VC Bloggers list, also not written by me. I have, however, used Yahoo! Pipes to mashup the RSS feeds of all 100 VC blogs. Both Pipes below have been published, so you can access them, clone them, tweak them, or just run them. You will need to be signed up for a free Yahoo! Mail account.

  1. 100 VC blogs feed mashup, truncated to 200 items.
    This Pipe takes all 100 venture capital blogs and mashes up their RSS feeds, filters them for unique items, sorts them by freshest items first (reverse chronological order). The resulting RSS feed is also truncated to 200 items, maximum. (I can’t get the full-list version to function; Pipes is still in beta and quirky.)

  2. Searchable, truncatable feed mashup.
    This Pipe adds a search field. You can also specify the maximum number of mashup results. There is no automatic feed, as a different URL is generated for each combination of user input parameters. So run the Pipe first, with your input, then copy the resulting RSS feed URL.


Startup Required Reading: Top 100 VC Bloggers

Tuesday, July 31, 2007 at 2:34pm by Site Administrator

Securing venture capital is often an integral part of the success or failure of any startup business, even for those who initially began as bootstrappers. While it’s no substitute for professional advice, the Internet can be a great place to research venture capital. These are 100 of the best resources.

Top Ten

While any top ten is based on personal opinion, there is no denying that these blogs have superior content.

  1. VentureBlog VentureBlog is a multi-author blog with contributors including Andrew Anker, EVP for Corporate Development with Six Apart, David Hornik of August Capital, Kevin Laws of PacRim Venture Partners, and Naval Ravikant of DotEdu Ventures. It discusses day to day issues that affect venture capitalists in Silicon Valley.
  2. Feld Thoughts Feld Thoughts is written by Brad Feld, managing director at Mobius Venture Capital. Feld writes about his own investments as well as technology, blogging, and entrepreneurship. Don’t miss his articles on term sheets, which are a great resource for entrepreneurs looking for funding.
  3. Beyond VC Beyond VC is written by Ed Sim, a partner with early stage technology VC firm Dawntreader Ventures. His blog covers venture capital and technology with particular emphasis on emerging software companies. Sim provides great advice for entrepreneurs on how they can better work with VCs to build successful companies.
  4. The J-Curve The J-Curve focuses on venture capitalism as it relates to technology.
  5. Southeast VC Jason Caplain gives his perspective on venture investing in the southeastern United States. Many of the articles focus on software, e-commerce, and digital media. This blog also provides a number of tips for entrepreneurs.
  6. Venture Chronicles Venture Chronices is Jeff Nolan’s blog. He provides links and original articles relating to the technology industry at large with an emphasis on software applications and infrastructure.
  7. VCball VC Ball is an early stage growth equity VC’s blog. He has a number of great in-depth articles for venture capitalists. Topics focus on choosing investments wisely, tax strategies, and marketing.
  8. Northwest VC Northwest VC is written by Steve Hall, a partner with Vulcan Capital. He discusses his thoughts on embedded networking and data intelligence as well as general issues relating to technology and venture investing.
  9. Infectious Greed Written by former hedge fund manager and now finance professor Paul Kedrosky, this blog covers a wide variety of issues from venture capital, stocks, and technology to gadgets and blogging.
  10. A VC Written by Fred Wilson of Union Square Ventures, this blog provides insight into the fields of emerging internet and media companies interspersed with Wilson’s thoughts on music and technology.

Foreign VCs

While venture capitalism has traditionally been dominated by American investors, non-US venture investment is growing, as is evidenced by these blogs.

  1. China Venture News China Venture News provides a stream of China-related business news directed at VCs.
  2. Venture Intelligence India Venture Intelligence India, written by Arun Natarajan, gives up-to-date information about the Indian tech industry as well as posts from businesses that are looking for VC funding.
  3. Fred Destin: A VC in Europe A VC in Europe gives the perspective of a European investor in the technology sector.
  4. Technofile Europe Technofile Europe provides information on European technology deals, entrepreneurship, and new technologies from a British perspective.
  5. Golb: Is This Israel? Is This Israel? is written by Ed Mlavsky, a major player in building the Israeli hi-tech market through venture investments. His blog focuses on these hi-tech issues as well as on investing in alternate sources of energy.
  6. VC in Jerusalem Jacob Ner-David writes about his experience as a VC investor in Israel.
  7. It’s All About Luck Danish investor Morten Lund gives his personal and somewhat informal take on his venture capital investments all over the world.
  8. Seriously Clueless Seriously Clueless is home to Indian-born Anand Sridharan who is now a principal in Singapore. He gives some valuable insight into the emerging venture capital markets in India and Southeast Asia.
  9. Venture Woods Venture Woods is a site that provides news and resources to the Indian venture community. Entrepreneurs, investors, and bankers can discuss issues that affect the market and professional community.
  10. The Post Money Value The Post Money Value is a Canadian VC’s thoughts on competition, investing and business planning.
  11. Sepulveda.net French entrepreneur and VC Rodrigo Sepúlveda Schulz blogs about marketing, gadgets, and the internet with a European viewpoint.
  12. Sortipreneur Turkish internet entrepreneur and investor Cem Sertoglu shares his experience and views on the tech investment industry in Turkey and abroad.
  13. Babbling VC Babbling VC is the blog of German based investor and entrepreneur Paul Jozefak. He provides insight on the European VC industry and technology related ventures.
  14. Shantanu Bhagwat Shantanu Bhagwat blogs about venture capitalism in the global market.
  15. From the Inside, Looking In Shin Fukushige, a venture capitalist living and working in Tokyo, writes about investing in IT software and hardware as well as general tech news.

Software Investors

Almost all VCs are interested in software investment, but these blogs are particularly focused on the topic.

  1. Software Only Jeff Clavier blogs about the web, social media, and of course, software.
  2. From Istanbul to Sand Hill Road This blog focuses on the high-tech industries of Silicon Valley from a Turkish perspective.
  3. Life With Alacrity Life With Alacrity focuses on the social software, security and internet tool sectors of investment with an emphasis on technology-based ratings systems.
  4. Mark Pincus Blog Mark Pincus shares his feelings on investing in the software and social networking fields.
  5. Burnham’s Beat Bill Burnham gives his thoughts on venture capitalism in software technology and the financial workings of it all.
  6. Our Man in Nirvana Our Man in Nirvana is where British born venture capitalist Robin Bordoli shares his thoughts and opinions on investing in the Silicon Valley.
  7. SF Venture SF Venture is home to Keith Benjamin. Keith provides his opinions on venture capital investments in the software and internet markets.
  8. Will Price Will Price discusses his opinions on technology and the VC industry. He also dishes out advice for startups.
  9. Cracking the Code Cracking the Code gives a California-based VC’s thoughts on the internet, enterprise software and technology issues.
  10. Go Big or Go Home Go Big or Go Home is the site of an Illinois investor who blogs about a wide variety of tech related issues.
  11. OC VC OC VC is home to Okapi Venture Capital’s Marc Averitt. He discusses investing in the life science and information technology industries as well as the industry in general in the Orange County Area.
  12. Ventureblogalist Ventureblogalist comes from Rob Finn, associate at Edison Venture Fund. It gives his perspective on IT technology, marketing, and entrepreneurship.

Internet Entrepreneurs

The dot.com boom may be over, but internet venture investments are still going strong. Read these blogs for insight on the world of internet entrepreneurs.

  1. Blogtrepreneur Adnan at Blogtrepreneur discusses entrepreneurial opportunities that abound online.
  2. VC Adventure VC Adventure gives Seth Levine’s perspective on the VC world and offers great advice for startup entrepreneurs. It focuses on blogging technologies, as Levine is an investor in Technorati, Feedburner and Newsgator.
  3. VCMike’s Blog is written by Mike Hirshland of Polaris Venture Partners in Boston. An initial investor in WordPress, Mike’s blog focuses primarily on internet and digital media investments.
  4. Redeye VC Redeye VC is written by Josh Kopelman, founder of Half.com. In it, Josh discusses experiences and advice in the VC field.
  5. Nothing to Say Nothing to Say is the blog of Chris Fralic at First Round Capital. A former employee of both Del.icio.us and eBay, Chris writes primarily about technology and internet startups.
  6. Tim Oren’s Due Diligence Due Diligence is about this Pacifica Fund employee’s experience living and working in Silicon Valley. It contains numerous posts on the Internet and blogging.
  7. The Perceptions and Reverie of a VC Investor and Entrepreneur This blog focuses on social networking and internet based investments.
  8. Jesse Rasch Jesse Rasch, founder of InQuent web hosting services, provides some great in-depth articles in his blog about startup investing and internet-based business.
  9. localglo.be Saul Klein, advisor to internet phone company Skype, gives his thoughts on launching internet businesses.
  10. McInBlog McInBlog is Ryan McIntyre’s blog on venture capitalism issues. McIntyre also writes musings on gadgets, technology, blogging and the Internet.
  11. The Equity Kicker The Equity Kicker is written by Nick Brisbane and covers a wide variety of issues related to venture capital. It focuses on social network and consumer internet markets.

VC Firms

These blogs are written by individual venture firms.

  1. Longworth Venture Partners Longworth Venture Partners, a Boston-based firm, blogs about emerging software, internet and media investments and issues.
  2. Alsop Louie Partners Alsop Louie Partners is written by business partners Stewart Alsop and Gilman Louie. It gives their perspective on marketing, technology, and helping business owners get started on pursuing their passions.
  3. Union Square Ventures Union Square Ventures is an early-stage venture investment group. Their blog focuses on IT and financial services, healthcare, and telecom.
  4. Above the Crowd Above the Crowd, written by Benchmark Capital’s Bill Gurley, provides great insight on high-technology business and strategy. While it’s no longer updated regularly, it can still provide a great resource for those interested in the field.
  5. The NVA Blog The NVA Blog is a technology focused blog by Newman Venture Advisors. It provides links to relevant articles as well as some original content. Much of it focuses on NVA-specific endeavors, but the blog also covers business strategy and venture capital news.
  6. Geekfishing Geekfishing is the home of the Ignition Partners blog. It deals almost exclusively with investing in the technology and telecom sectors.

VC News and Information

It’s difficult, if not impossible, to stay up to date on technology and emerging industries without reading the news. These blogs should help you stay on top of the latest happenings.

  1. VentureBeat VentureBeat is a great source for all news relevant to the VC world.
  2. Deal Flow Deal Flow is Business Week’s venture capital blog, produced by Sarah Lacy and Justin Hibbard. Written by professional journalists, this blog is carefully researched and can be a great way to keep informed about current issues and events.
  3. T.J.’s Weblog This blog provides a constant feed of news and information that is useful to the venture capitalist interested in internet-based technologies.
  4. Nothing Ventured, Nothing Gained Nothing Ventured, Nothing Gained is the blog of Jeremy Levine. It deals primarily with news affecting the venture capital world, especially in the technology sector.
  5. A Little Ludwig Goes a Long Way Written by Ignition Partners principal John Ludwig, this blog provides links to software topics and internet-based tools. It can be a great way to keep up with what’s hot and useful on the web.
  6. Deep Green Crystal Deep Green Crystal’s blog contains a number of technology guides on everything from blogging to VoIP and financial news.
  7. John Cook’s Venture Blog This blog is part of the Seattlepi.com website. It provides insightful commentary about venture investing and emerging technology.
  8. Venture Voice Venture Voice is a blog that offers a series of podcasts aimed at VCs and entrepreneurs.
  9. VentureBlogs VentureBlogs provides a stream of articles from American Venture Magazine.
  10. VC Ratings VC Ratings is a blog dedicated to providing profiles and ratings of venture capital investments and companies.

For Entrepreneurs

You can’t have venture capitalism without entrepreneurs. These blogs give advice on the give and take between entrepreneurs and venture capitalists.

  1. How to Change the World Guy Kawasaki gives practical advice for entrepreneurs who are just starting out or looking to expand.
  2. Nivi Blog This blog focuses on the world of technology investments. It also provides “venture hacks” to help entrepreneurs better understand how the industry can work to their advantage.
  3. VC Confidential VC Confidential, written by Matt McCall, seeks to encourage conversation between entrepreneurs and their investors in order to facilitate understanding of internal principles and processes.
  4. Allen’s Blog Written by an entrepreneur lawyer turned venture capitalist, this blog focuses on investments in the fields of technology and software. Allen has a great series of articles called The Ten Commandments of Entrepreneurs.
  5. Who Has Time for This? Who Has Time for This? is David Cowan’s blog and provides great articles on information security and entrepreneurship advice.
  6. Florida Venture Blog Florida Venture Blog gives straight talk for entrepreneurs interested in securing venture capital. This blog has articles focusing specifically on the southeast market.
  7. This is Going to be BIG This is a blog that seeks to help entrepreneurs find supporters. There are posts on a variety of topics from personal interests to web technology and investment.
  8. Now What? Now What? is a blog for those interested in expansion stage venture capitalism. Written by Scott Maxwell, it attempts to answer the question of what to do after you’ve taken the first steps in establishing a business and getting a few customers.
  9. The VC in Me The VC in Me is a blog that seeks to engage venture capitalists and entrepreneurs in conversation about current affairs, investing, and the media sector.
  10. Ask the VC Ask the VC is a great resource for entrepreneurs who want to get some advice on VC funding straight from the source.

Early-Stage Investors

Often, the best place to be is on the ground floor. These bloggers specialize in early stage investing and are willing to share their knowledge.

  1. EarlyStage VC Early Stage VC by Peter Rip of Crosslink Capital focuses on venture investments in the preliminary stages of business development.
  2. Seeing Both Sides Seeing Both Sides shares the perspective of an entrepreneur turned early-stage venture capitalist.
  3. Oxyfish Oxyfish gives Tom Sheild’s thoughts on early-stage venture capitalism and entrepreneurship in the tech industry.
  4. WayTooEarly WayTooEarly chronicles the process of working with venture companies in the very early stages of development.
  5. Permanent Record Permanent Record is the blog of First Round Capital partner Rob Hayes. Posts focus on early-stage venture capitalism and online business.
  6. Outright VC This blog focuses on early and mid-stage companies in the information technology, automation, power, wireless and RFID industries. Author Todd Jaquez-Fissori also gives advice to those who are looking for VC funding.
  7. Venture Capital Cafe Authored by Eze Vidra, Venture Capital Cafe provides news and articles about early-stage companies with a special focus on Israel-originated innovations.
  8. Texas Startup Blog Texas Startup focuses on topics surrounding entrepreneurship, startups, and venture capitalism in Texas.

VC and Beyond

These blogs offer a unique perspective on the VC industry, providing emphasis on investment and other interests that extend beyond most run-of-the-mill VC Blogs.

  1. Sense and Cents George Zachary discusses venture capitalism and its relationship to human nature, consumerism, and business identity.
  2. Venture Cyclist Written by venture capitalist and biking enthusiast Richard Dale, this blog has posts about both of Richard’s interests.
  3. Venture Explorer Venture Explorer follows venture capitalist Vineet Buch. Posts contain his thoughts on investments and the tech industry as well as his world travels and adventures.
  4. Sacred Cow Dung Christian Mayaud works to expose the myths surrounding venture capitalism, business strategy, and management philosophy with a distinct focus on technology and blogging.
  5. Punctuative! Punctuative! by Louisville-based investor Matt Winn, offers thoughts on the changing venture capital markets.
  6. Ego Ventures This blog by BaseCamp Investment co-founder Andrew Luter is filled with thoughts on business, technology and everything else.
  7. CleanTech Investing CleanTech Investing is written by Boston-based investor Rob Day. It focuses on issues surrounding investment in cleantech industries such as alternative energy, energy storage and efficiency, and water purification technologies.
  8. Ho John Lee Ho John Lee talks about tech investment from a distinctly market-based viewpoint.
  9. Venture Again Venture Again, by Justin Label, focuses on the cleantech investment sector of venture capitalism.
  10. BijanBlog BijanBlog is written by a Spark Capital partner. Aside from personal posts, the blog contains information about investing in emerging media, entertainment and technology sectors.

Female VCs

In a male dominated industry, these women provide a refreshingly feminine perspective.

  1. Class V Class V is written by an early-stage IT and green tech startup investor. Topics cover a wide range, from startups to world travel.
  2. Susan Wu Susan Wu discusses her experience as a VC, focusing on early stage consumer technology and infrastructure software.
  3. Adventurista Adventurista, written by Sarah Tavel, gives some insight on what being a female in the field of venture capitalism is all about.
  4. Christine.net Christine.net is published by Christine Herron, venture advisor at First Round Capital. She provides helpful articles for women who are looking to get into the field of venture capitalism as well as information on the nonprofit and technology sectors.
  5. Let the Sparks Fly Let the Sparks Fly is the blog of venture capital firm Brightspark. Brightspark focuses on helping entrepreneurs with infrastructure, enterprise, and communication software in the early stages of their growth and development.
  6. Israeli VC on Sand Hill Road Tali Aben was the first woman partner in an Israeli VC. Her blog focuses on software investing, but it also provides special insight for women on balancing careers and family obligations.
  7. Inside Chatter Internet entrepreneur and investment banker Donna Bogatin blogs about emerging web technologies.
  8. Venture Law Lines Lawyer and VC Suzanne Dingwall gives her thoughts on law, entrepreneurship, startups and investments.

This list only scratches the surface of the VC blogs out there, but it should provide you with ample reading material. With so much to choose from, there is bound to be something that can provide you with the insight and information you need to make the most of your startup.

20 Ways to Finance Your Business Startup

Tuesday, July 17, 2007 at 3:00pm by Site Administrator

Trying to finance a startup is always an excercise in masterful cash flow management and fund-seeking. Here are a number of traditional and non-traditional ways to get financing. Some are a bit more desperate than others. A couple generate capital but leave no time to use it. A few apply true bootstrapping principles by essentially building on very little capital and reinvesting all earnings until you have the amount you feel you need to start the business you’ve been dreaming about.

  1. Work overtime.
    Some employers have no weekly overtime limits, though the government does. While this method may earn you more money, it also pushes you into higher tax brackets without the time to enjoy it. Do this only if you don’t plan to start your business for several years or have no other choices.
  2. Ask for a bonus or raise.
    Overperform at work, then write up a list of “11 reasons I deserve a raise”, explaining to your boss what you’ve “done for him/her lately.” If it works, you still move into a higher tax bracket, but hopefully you haven’t added more work hours. You may have additional, stressful responsibilities, though.
  3. Get a 0% balance transfer loan.
    If you’re in the United States especially, you’ve no doubt received loads of offers for 0% balance transfer loans. If you have a good credit rating, you can sometimes receive a balance transfer check as a loan for the full amount, which you can do whatever you like with for X months. That is, it may not have to go towards credit cards or other debts. (Some issuers do have restrictions.)

    Depending on the offer, X might be 6, 12, 15, 18, or 24 months. If you do not pay the loan off in that time period, you start paying a relatively high interest rate. So if you think you can start a business in that time period and make it profitable, this is a funding option.

  4. Apply 0% balance transfer arbitrage.
    Zero percent balance transfer arbitrage is a variation of 0% balance transfer loans. The primary difference is that instead of using the balance transfer check to pay off debts, you use it to invest in something that is guaranteed to earn money before your loan is due.

    For example, if you’re offered an 18 month 0% APR balance transfer loan for $30,000, what you do is open an online savings account (OSA) and deposit the money for, say, 16 months at 4-5%. Before the loan comes due, you close the OSA, pay off the $30,000 loan, and put the interest towards financing your business.

    There are pfbloggers (personal finance bloggers) claiming to have received such loans totalling over $100,000 – all at 0%. While 5% isn’t a lot, at that loan amount, it adds up. This is a great way to leverage OPM (Other People’s Money), provided you are not tempted to buy something and can pay the loan back on time. Otherwise, it could bankrupt you.

  5. Consolidate debts.
    Obviously, you want to be responsible with your credit card debt. Overloading more debt isn’t the best way to start a new business. On the other hand, if there’s any way that you can consolidate your currrent debts for a lower monthly payment based on a better interest rate, do it. The amount you save each month from reduced interest rates could be used towards starting a business.

    If your credit rating is poor, you obviously have some work ahead of you, but you can rebuild your credit.

  6. Bootstrap and reinvest.
    Bootstrap a small business, possibly online, using minimal capital. Reinvest the profits to fund the next startup. Stairstep your profits to higher startup capital, until you have enough for your “real” idea.

  7. Sell shares.
    Once you prove yourself in some initial startup (while moving towards your real passion), bring your success to the attention of friends and family. Then offer them a block of private shares for, say, a $1000 investment each. Do you have ten or twenty friends or family members that might be interested? Would $10-20K get you started. Bootstrappers can often get started with less. Just make it clear to your private investors when they might expect a return and what their cut will be. If you don’t expect a return in five years, let them know that now. Formalize everything, or risk destroying relationships.

  8. Borrow from your registered retirement plans.
    Countries that have a registered retirement plan often allow you to borrow on your savings for specific uses. If you have a sizeable retirement contributed to by your current/ previous employer, you might consider borrowing. The drawback is that if you withdraw funds, you often have to pay income tax immediately on the amount. Depending on your tax bracket, it might not be worth it.

  9. Borrow from a life insurance policy.
    Borrowing from your life insurance policy isn’t a good idea, especially if you have dependents, but you can often take a loan out on it. And sometimes it’s worthwhile.

    To wit, Honest Ed Mirvish, a much-loved Toronto business man who passed away last weeky at 92, moved from the US to Toronto in the late 1940s. He cashed in his wife’s insurance policy for Cdn$247 and started the still-standing landmark Honest Ed’s department store. It had the most incredible bargains and helped many poor Canadian immigrants, amongst other citizens. Much later, as a multi-millionaire, he paid for two theatres to be refurbished in downtown Toronto for several shows. One was done at an extra cost of $5 million (if memory serves) to accomodate a real helicopter for Miss Saigon.

    Imagine had Mr. Mirvish not cashed in that insurance policy. Might he have been running some mom and pop shop instead? Probably not, but you never know.

  10. Refinance your mortage.
    Refinancing your mortgage is quite extreme and simply scary, unless you’re 100% certain of the success of your idea. Nevertheless entrepreneurs with vision, who were driven and disciplined have made it work. Just be sure of yourself, as doubt can kill success. You don’t want to be out on the street, literally, if something goes wrong. Though if that happens, you might be inspired by The Pursuit of Happiness.

  11. Get creative.
    Have some collectible items in the house, taking up space? That full-pattern china tea set grandma left you might be worth more than you think. Or maybe you have a few odds and ends of furniture that you can sell at the flea market. Or at Antiques Roadshow. If you’re really hands-on, you might pick up items at flea markets, fix them up and resell at a profit.

  12. Give it up.
    Or maybe you have some big-ticket items you can give up. Say, get rid of any extra vehicles, or replace the one you have with something more fuel-efficient. I don’t recommend giving up a vehicle entirely. Entrepreneurs have a tendency to need a car, unless they’re based entirely online. Or have come up with a new mode of transportation, such as the extreme stilts in the video below.

  13. Use eBay to generate some funds.
    Skip the flea markets. People are making huge profits on eBay, and honestly at that. The key is to find quality items and sell them at a profit with good descriptions and photos. One guy I met in 2003 sold $100 pens that cost him $16. That year – a bad one economically – he grossed $300,000 (although that was mostly expenses). Normally, he made $500K to a million per year, gross, on a variety of very select items.

    Even if you don’t attempt his scale, a few extra hours per week of effort on eBay might generate a few thousand dollars extra capital per month. To save time, you can often have items drop-shipped, though that will cost you.

  14. Get a business bank loan.
    While most bootstrappers do not use/want business bank loans, that does not mean it’s not an option. Of course, if you’re only in the idea stage, it had better be one unique idea that no one else but you can do. Otherwise, you need some proof of concept.

  15. Find venture capital.
    Venture capitalists are more likely to give out money for something at an idea stage than banks, but again, it had better be one solid idea. And if you’re really good with generating salable ideas, you might find yourself as an Entrepreneur in Residence.

  16. Invest in the stock market.
    For experienced investors, it is possible to raise business capital in the stock market. But if you day-trade or get into commodities, etc., you’d better have big brass ones and a healthy understanding of these financial dangerous games.

  17. Invest in government bonds.
    Government bonds are much safer than stock marketing investing, though the maximum return may be low, and take several years to mature.

  18. Consulting.
    Are you in a salaried career position now? Have you considered consulting? Not everyone who consults ends up earning more than as a salaried employee. However, you may have periods between contracts to work on your ideas, and monies earned are typically subject to different income tax rules. Talk to an accountant. And keep all your receipts.

  19. Partner up.
    A good partner is hard to find. Some people prefer to only work with friends, some never would. But two people have many more friends and relatives than one person. (See “Sell Shares”, above.) If the partnership shoe fits, wear it.

  20. Leveraging new media opportunities.
    The Internet has levelled the playing field somewhat, offering many opportunities to earn money. Take what you make, channel it into something else. For example, what I am hoping to do is use my freelance online writing earnings to invest in properties, which I’ll turn around and hopefully start a film production company. It’s a ten-year goal that I’m on my 17th year in, though I’m getting closer, now that I work online.


Innovate to Stay In Business

Tuesday, July 17, 2007 at 2:00pm by Site Administrator

Sounds like a fairly obvious directive, right? Unfortunately, not every company does it. Witness the demise of SunRocket [NY Times, free registration may be req'd], a reasonably successful player in the VoIP market.

VoIP, or Voice over Internet Protocol, is a group of related technologies that allow consumers to make phone calls over their Internet access – be it cable, high-speed dialup, satellite, power, Wi-Fi, or cellular.

SunRocket, like it’s very troubled direct competitor Vonage, are known as “pure VoIP” providers. They pretty much can only offer a few services, primarily because consumers use their regular home telephones and a special converter.

However, competitors such as Comcast, have a million VoIP customers to SunRocket’s 200,000. Why? Because Comcast is a cable company that can offer “triple play” services. Depending on the Triple Play provider, this may include TV, Internet and VoIP over the same “lines”.

Pure plays cannot offer much more than VoIP service, though a few made an attempt by offering home alarm services. So in terms of a service offering, while there is a market for Pure Plays, it’s probably much smaller than for Triple Plays. Pure VoIP providers simply cannot compete long-term, and were doomed to begin with.

Note, however, that with IPTV (Internet Protocol TV) offerings such as Joost and Babelgum, Triple Plays may very well lose their TV package customers. And with cell phone makers heading towards hybrid models that can work on both cellular networks and Wi-Fi networks (whether in your home or elsewhere), home phone providers may also start losing customers. So Triple Plays may become Single Plays – though probably not for several years.

Companies have to stay on top of these “convergence” trends in VoIP or other markets. Just preparing for the inevitable future is not enough. They’ll have to follow through and actually innovate if they want to stay in business long-term.

New Media Ways To Raise Capital

Monday, July 2, 2007 at 8:00pm by Site Administrator

You have an idea for a startup business but you don’t have the capital. That’s a pretty common scenario, having to bootstrap your way to success with very little funding. If you’re a local celebrity, you could pimp your wisdom out in the form of an auctioned business lunch. But what are the chances of that?

So what are your other options? What can you offer that may earn you a bit extra to put towards your entrepreneurial endeavors? If you’re still holding down a full-time job, here are a few tips that you could explore during a bit of free time.

  1. Blogging.
    Work from home, during the evening or weekends, writing about a topic you’re passionate about.

  2. Ebooks.
    Writing an ebook can give you authority. If done properly, of course. Give a few away, on a topic you know well, and you may find a market for selling your later books.

  3. Video tutorials.
    There is an enormous potential market for how-to videos on numerous topics. Video rounds out the offerings of an online information business, which of course includes ebooks.

  4. Microstock photography.
    If you have a skill for photography, you might have considered ways it could earn you some money. Before online stock photography houses, that was generally impossible for the average hobby photographer. With microstock photography websites, you could earn a few hundred to a few thousand dollars per month to put towards your entrepreneur fund.

  5. Voiceovers.
    It takes work to crack into, but if you have a versatile, clear voice, work well under deadlines, and have the minimal necessary equipment, Voice over work could be an option for a bit extra capital.

  6. Website flipping.
    If you have some skills in writing or giving a haggardly website a bit extra “bumpf”, you could pick up inexpensive websites, build them up with extra content and visuals, promote them, then sell them. It costs a bit of capital if you’re buying rather than building your own, but it can be mildly lucrative. Website flipping is different than buying a website for its monthly ad income because you are not holding the sites.

  7. Domain speculation.
    You might not become Kevin Ham and score $300M from domain speculation, but if you’re good at research and trendspotting, you could earn something extra without spending a lot. If you can’t come up with original domain names, you can sometimes find good ones at reasonable prices at Sitepoint Marketplace and Digital Point Forums Marketplace.

Getting involved in these activities of course makes you a digital entrepreneur – skills you can use when you do start up your business idea. The Internet makes relatively easy to succeed in this activities, compared with their offline counterparts, if any. If you’re successful in these smaller endeavors, you might one day find you have the capital to launch your business idea.

Bootstrapping a Business

Friday, May 11, 2007 at 7:53pm by Site Administrator

Diagram - transition of business financial statesBootstrapping does not mean that you can never accept capital/ loans. It simply means that if you don’t have what’s necessary at present (subscribers, revenue, product) to get a loan or investment capital, that you bootstrap your way to that level first. Some entrepreneurs start off bootstrapping, prove a certain level of success or show the solid potential of their startup, then have venture capitalists making offers. So being financed can and often is a state in the path from nothing to success. Whether you start at a bootstrapped state or a financial state, you can make it to the success state. However, call me biased, I believe that bootstrappers stand a better chance of success because of raw desire and the need to succeed. It may be bumpy along the bootstrapped path, and many mistakes made. However, it’s those mistakes made early that quickly teach you how not to do something. If you start with a whole whack of capital, it’s easy to mask the mistakes, thinking that having money will get you to the finish line sooner. Abraham Maslow’s Hierarchy of Needs would suggest that entrepreneurs that have lots of capital have no overwhelming desire to move out of their established comfort zone. It’s probably similar to the reason that most salaried employees will stay that way. Those who do break out of that thinking are often the innovators of society. Or at least innovative on there way to success. One example is Canadian Kyle MacDonald, who wanted a house for himself. He started with a red paper clip, then kept trading up and up for increasingly more valuable items. Between his website, One Red Paperclip (on free host Blogspot), word of mouth, and the occasional classifed newspaper ad, he always found someone to trade what he had at present for something "better", in his estimation. Exactly one year to the day that he started, he had his house – albeit in the bitterly cold Canadian province of Saskatchewan, but he’s happy. Now imagine if you could apply Kyle’s principle to bootstrap a business. Start with very little, maybe a service you can perform, and offer it for something else – maybe equipment, furniture, services or even money. Reinvest or use whatever you get, and refine/ improve your product or service. Repeat the process. The accumulation may be slow, but a controlled process is necessary if you don’t have loads of capital. And these days, there are hundreds of free web applications for entrepreneurs and freelancers, to help you get started.

What is a Bootstrapper?

Thursday, May 10, 2007 at 9:35pm by Site Administrator

A bootstrapper is the essence of a true entrepreneur, bootstrapping their business from start to success. Bootstrapping is a time-honored method of doing business. You start with minimal funds of your own, keep expenses threadbare, and borrow very little. If you borrow, you borrow it from yourself, possibly from savings, possibly from credit cards. You may eventually move to a financed state, once you’ve shown proof of concept, borrowing from friends and family and/or outside lenders.

Every cent of revenue earned is pumped right back into the operation, slowly growing the total profit, slowly improving the product or services, adding employees and/ or resources.

Bootstrapping means some serious sacrifice from the entrepreneur, and being innovative when the bootlaces break – simply because you can’t afford to replace them. You work with what you have at the present moment, and bootstrap your way to success.

Intersection of business successThe diagram at right shows the intersection of financing methods and business success. It’s illustrative, and by no means represents the relative success of any type of financing. Businesses can succeed or fail regardless of financing method. There are other factors at play.

Why Bootstrappers Are Likely To Fail

Bootstrappers do fail in business, for several reasons.

  1. They have little or no capital behind them, most of the time.
  2. They often have only an idea/ goal and passion, no business acumen.
  3. They have an idea of where they want to go but not necessarily a business plan. At least not initially.

Why Bootstrappers Are Likely To Succeed

But after they fail, they often succeed.

  1. They have no capital behind them, and thus they need to succeed. Contrary to popular belief, having loads of funding isn’t necessarily motivating enough to succeed.
  2. They have passion, which drives them. Passion fuels the true entrepreneur. Every mistake made early in an endeavor is a lesson learned. You can only improve from here. (I.e., make your business mistakes early.)
  3. If you have something to strive for, and an idea of where you want to go, that’s often more powerful than a business plan. But throw in a business plan, and you’re likely that much closer to success.

Passion and vision and action create a synergy, a need to succeed in business startups. This blog hopes to cover discussions on the various aspects of business: bootstrapping, productivity, general entrepreneurship, cash flow, creative financing methods, tools and more. Your participation in these discussions, in the comments section, is appreciated.

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