Which Startup Salary Is Right For You: Zero or $300,000 per year?
Not a day goes by without someone haranguing CEOs for being paid too much, and in some cases, I’m sure the critics have a point. It’s a bitter pill to swallow when you read about a CEO exiting a firm with a golden parachute after sagging profits and perhaps a few rounds of layoffs. But it’s important to remember that those contracts – which suddenly seem totally unfair – were usually written at a time when the CEO was being recruited and the board had to make the offer attractive. I suspect few of us are worried about having to someday handle the bad publicity that comes with a golden parachute, but the question of a founder’s or small business owner’s salary is a very practical matter and some guidelines would be helpful. So let’s outline a few scenarios and offer a rule-of-thumb or two. Zero pay. Many times founders will get their companies going as a side project. They hold onto their day jobs and do the best they can, working evenings and weekends to get their company started. Another zero-pay situation is when founders live off savings and credit cards to get their business rolling; this is a personal “burn rate.” Upside: Taking no pay during the formative months creates a truly a “lean” startup. Living off savings and credit cards will help prove your commitment to angel investors. Downside: If you’re working a 9-5 job, it not only steals time from your startup, it steals focus, which your company desperately needs. You may be the only one with the talent and vision to push the project ahead. And if there is family involved, the pressures can prove fatal. Basic salary. This option would be to take a salary equivalent to what you were making before you founded your startup or a figure that is roughly equivalent to your basic living expenses. Upside: This removes some worries for you and your family. It allows you to focus on your business and not have to divide your time or priorities. You can supervise your team better and they know that they can depend on your direction and availability. It can bring a degree of normalcy to the crazy world of startups. Downside: You may not be able to afford to pay yourself the kind of salary you were earning before you started your own business. It could push your startup’s burn rate into dangerous territory. If you make things too cushy on yourself and don’t have any skin in the game personally, investors may balk at your commitment. $100,000 to $200,000. If you’re the CEO of a startup during the first round of serious funding (Series A) this is the general range you can expect for your salary. Famed Silicon Valley investor Peter Thiel has taught a startup class at Stanford University and he asserts that no startup CEO should be paid more than $150,000 per year. He says: A categorical rule of thumb that Founders Fund has developed is that no CEO should be paid more than $150k per year. Experience has shown that there is great predictive power in a venture-backed CEO’s salary: the lower it is, the better the company tends to do. In fact, Thiel will not invest in startups where the CEO is...
read moreThis Week in Small Business: Learn from Street Vendors and Stanford Biz Brains
Marketing and sales Strategies, fundamentals and inspiration Ready to pick up some marketing tips from businesses far smaller than your own? Listen to what some Southeast Asian street vendors have to offer. Speaking of small, in this teeny-tiny post, Bernadette Jiwa makes the point that marketing should be invisible. Account-based marketing – the practice of marketing to an individual or prospect as an audience of one – is gaining efficacy with the latest wave of targeted advertising. Know the lingo: The Reality Behind 5 of Marketing’s Biggest Buzzwords. Learn what the politicians know so well: Going negative works. There was a lot of snow and ice this winter and that caused a lot of potholes. Here are five B2B marketing potholes you need to avoid (infographic). Creating good vibes is a great way to do branding and marketing. Here’s an Australian company involved in the Pay it Forward Movement. Email The folks at Kissmetrics have some very sound advice on how to build your email list ASAP. Social Media/Digital Your employees may be your best social media evangelists. Scan these case studies. If you need Instagram marketing inspiration, here are eight accounts you should be monitoring. And for branded content inspiration, check out this “Best of April” article. Social selling guru Tim Hughes lays out five fundamentals and compares the process to the old cold call strategy. If you’ve heard about SEO but aren’t serious about it yet, go over these essential tools and principles. Content Intel’s tech culture magazine IQ gets more than 2 million readers a month. Luke Kintigh shares his insights in this interview. Campbell Macdonald, Pathful founder and CEO, explains three ways to start measuring the ROI of your content. Cruise through this gallery of 22 free content marketing tools and you’re sure to find a new one to add to your list. Dollars and Marketing Sense You can probably get 10,000 people to see the cat video you’ve posted, but does it make any difference for your bottom line? Here’s a hard look at “vanity metrics.” Limited marketing budget? Can you pull together $100? If so, here’s a decent breakdown on how to spend it. Even great apps fall on their face in terms of ROI. Understand the basics of marketing your app. Google has more to offer on the subject. Leadership, management and productivity Chances are you’ve heard of speed dating to make a personal connection. But 10 minutes with the right person can also mean new contracts for a business owner. Here’s how they did it in Buffalo. You can’t walk away from your website, even if you did a good job with its original design. Look over these reasons you may need a redesign and see it it’s time. While a company’s success is shaped by its practices, its longevity is determined by its values, says Robert Spector. Things move quickly today. To say on top of new apps and social media, try taking these steps. Speaking of apps, here are 12 small business apps for the Apple watch. A small business owner in Florida decided to raise pay across the board 35-50 percent. Smart idea or just another “Florida man” story? Automated CRM and renewals are helping a local pest control company maintain its growth. This Buffer compendium features advice, tools and...
read moreGet Caught Reading These Great Business Books in May
Sometimes the causes and topics that are honored with their own days, weeks or months are, at best, a little sketchy. But in May, we have something I believe we can all support: May is “Get Caught Reading Month.” I once heard a person say something to the effect that every important, history-changing idea comes from a book. I’ve never been able to find who said that originally, but I think it’s true. All the ideas that have shaped history have started out in books. Despite the proliferation of electronic media, I think this is true even today. It’s true on a personal and business level as well, so in honor of Get Caught Reading Month, I’m going to point you toward some books that have been extraordinarily meaningful to me over the years. I consider them modern classics. The Unexpected Tour Guide, by Jeff West. As a young man embarks on a career, his journey is interrupted and guided by a mysterious homeless man whose perception and insight border on the surreal. Here’s one comment from an Amazon.com review: “As a person who has been in sales for my entire (30+ years) career I can testify that Jeff’s book is based on true and timeless principles that build relationships and revenues.” Adversaries into Allies: Win People Over Without Manipulation or Coercion, by Bob Burg. Drawing on his own experiences and the stories of other influential people, Burg offers five simple principles of what he calls “ultimate influence” – the ability to win people to your side in a way that leaves everyone feeling great about the outcome and about themselves. One comment from an Amazon.com review: “What I appreciate about this book is that it’s not just about influencing and persuading others; it’s doing so the *right way* so that people feel good about themselves the situation, and about you. This is a departure from many books I’ve read on influencing, especially in the realm of eeking out a sale.” Be the Best at What Matters Most: The Only Strategy You will Ever Need, by Joe Calloway. Simplify, focus, and win by outperforming all your competition on those things that create real value for the customer. This is about substance, not flash, and the ultimate “wow” factors of high quality performance, consistency and relentless improvement. From an Amazon.com review: “This book had a big impact on how I lead my 100+ employee company. The concept of Be The Best At What Matters Most has driven me to focus my communications, our goal setting and our long term planning on those several things that matter more than anything else.” Grow a Pair: How to Stop Being a Victim and Take Back Your Life, Your Business, and Your Sanity, by Larry Winget. We’ve all heard the phrase “grow a pair,” but Larry’s advice isn’t about anatomy – it’s about attitude. To get the success we want, we need to reject victimhood in favor of being assertive and finally taking some responsibility. From an Amazon.com review: “”Frankly I find this book incredibly disturbing…What I find disturbing is how right Larry is! He writes about how soft we have become as a society, as parents, so-called leaders and more. How the need to grow a pair is greater than ever.” The Freaks...
read moreHow Your Business Can Benefit From Summer Help, Interns
With Spring Break now behind us, summer vacation is the next big watershed event for students and many will be looking for summer jobs and internships. The long, slow recovery that has followed our last recession has not been much of a job creator, and it has been especially unkind to youth, ages 16-24. I encourage you to find a way to provide some opportunities for this group. If they don’t learn what it takes to hold a job when they’re young, it doesn’t bode well for their future, or the future prosperity of our country. Follow the rules In today’s regulatory climate, there are more rules for bringing unpaid interns on board. I discuss these and provide some background on this Wall Street Journal video and you’ll find additional information on the Small Business Administration website. Be sure you’re on the right side of the rules, if you’re not going to pay your interns. Don’t wait until the last minute to make your decision on summer help or an internship. It’s really important that the young people who come to work with you are able to “hit the ground running.” For many, this will be their first experience in the workforce. Make them feel productive immediately; otherwise they will get the wrong impression about work and employers. Finding candidates There are several websites that connect employers and interns. Among them are: Internships.com Internjobs.com Youtern.com However, it’s probably smarter to focus your strategy a little closer to home. If you’re looking for a college student, do a Google search like this: “name-of-local-university post internship.” You may find that you can post a position online or at least get the contact information you need. It’s also a great idea to contact the high schools in your area. Many will be willing to help you connect with students. Preparation steps As I mentioned at the top, be sure that you have everything ready to go when your intern or summer employee shows up on the first day. This means you should have planned what type of duties this person will be performing and who will be handling the direct supervision and training. Please don’t spring this responsibility on someone at the last minute and be sure to select an employee who is comfortable with youth and a good teacher. Also, be sure you provide quality workstations for your summer help. A pet peeve among interns and youth workers is that they get shoved off onto the corner of a table or some other “desk” that has been jerry rigged. Hey, these summer employees have been sitting at the “kid’s table” at Thanksgiving all their lives; it’s time to show them some respect and begin to make them feel like adults. Only then can you expect them to perform like adults. Here’s one more thing for you to consider: There’s a good chance your summer youth employees know more about social media than you do. If you can combine that familiarity with the principles of social media marketing, you might have a winning combination on your hands. In fact, your young workers may be teaching you a few things before the summer is...
read moreMatch Your Hyper-Local Marketing with Hyper-Local Customer Service
Let me toss an idea out to you: Business practices follow marketing practices. Illustrating this concept with an example will clarify what I mean: For some time now, marketing has been getting more and more targeted. “Hyper-local” marketing today is quite common, consequently hyper-local business practices need to follow suit. We are seeing this played out with a variety of experiments and startups in product delivery. The peer-to-peer transportation services are branching out to deliver products – food orders, for example. Similarly, not a week goes by that I don’t read how Amazon.com or another retailer is experimenting with deliveries by drone or home grocery deliveries. Making upgrades easy Sprint is doing something along these lines in some of its markets. When one of their customers is eligible for a phone upgrade, they get an email or text message inviting them to make the move. This is hyper-local marketing. The twist is that when customers opt-in to the upgrade, a technician will personally deliver their new phones – a hyper-local business practice. Let me take a step back for a moment. One path to business success is the ability to quickly recognize trends. I’m pointing out a trend in sales and service that your business might be able to capitalize on. If you are a small local business, you probably have the ability to meet the needs of a customer who’s right around the corner better than your large national competitor. Find your opportunities It’s time to do some brainstorming. Can you service your customers in their location? Can you take advantage of Uber, a traditional local cab company, or maybe even a neighboring business to make speedy deliveries? If your dry cleaning shop is near a pizza delivery service, why not work out a deal that benefits both businesses? (Just be careful with the pizza sauce!) Being able to have personal contact with a customer is extraordinarily valuable, if you’re ready to recognize and take advantage of the opportunities. For example, it wasn’t too many years ago that having a FAQ webpage was seen as an excellent tool for customer service. However, can a page of static FAQs ever sense that the customer has bought the wrong product, or needs an add-on? Or will your customers ever develop a personal appreciation for a FAQ webpage? Boost customer value We fight desperately to get customers through our doors, but we often see achieving that goal as having knocked in the game-winning run in the bottom of the ninth inning. In reality, it’s still the top of the first, even once a sale has been made. If you can find ways to work with your customers “where they are,” it opens up beautiful opportunities for you to increase the depth of your relationship with them and separate yourself from your competitors. That translates to a very long customer lifecycle, significantly adding to your long-term...
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