Author Archives:John B. Vinturella

Cash Flow

What is cash flow, and why is it important?

Simply, cash flow shows how cash comes into and goes out of a business. Cash flow statements report where money comes from, where it goes and when the cash flows occur. Most often, a company tracks cash flow in three categories: operating, financing and investing.

  • Operating Cash Flow is the cash generated day to day when a company sells its goods and services. When customers pay for these, cash flows into a company. Cash flows out when a company pays for the materials, labor and benefits, utilities, maintenance, and shipping needed to provide and deliver its product. Cash also flows out when: 1) interest is paid on loans and 2) federal, state and local taxes are paid and 3) inventory increases. When inventory decreases cash flows in. After-tax profit is the difference between the incoming and outgoing cash flows.
  • Investing Cash Flow is comprised of 1) the cash spent when a company invests in itself and 2) the cash returned when it sells assets. Investment cash is used to buy capital assets, another company, a proprietary process or a brand. Capital assets include equipment, buildings, or land having more than one year of operating life.
  • Financing Cash Flow measures 1) cash inflows when a company borrows money and 2) cash outflows when a company pays off debt or when it pays dividends to its owners.

At the end of any time period—a day, a week, etc.—a company’s cash balance is equal to the cash it had at the beginning of the period plus the sum of the three cash flows.

Cash flow statements are important because they help a company manage its cash, receivables, payables and inventory levels and because they help owners decide whether they can afford an investment or whether they should take on or pay off debt.

Someone starting a business should consider using an accountant to set up his/her cash flow and other accounting and financial systems.

Courtesy, Thane Brown

Thane Brown worked more than 36 years for Procter & Gamble in both engineering and manufacturing roles, retiring as the Director of North American Engineering. After P&G, he taught Engineering Economics at UC and UD and wrote a textbook on the subject. He is now a member of the Greater Cincinnati SCORE chapter. For more information, go to www.scoreworks.org or call 513-684-2812.

Four Businesses Named SCORE Greater Cincinnati Clients of the Year

Contact: Melinda Zemper Sept. 24, 2014
Phone: (513) 706-3737|
Email: mzemper@fuse.net

Four Businesses Named SCORE Greater Cincinnati Clients of the Year
Cincinnati and national SCORE celebrate 50th birthday

A nonprofit that builds self-esteem in girls through art, video production studio, exhibit fabricator and a tax franchise were named top greater Cincinnati SCORE Clients of the Year Sept. 19 at a Maketewah Country Club luncheon meeting.

A Brush of Hope headed by Aimee Lowrance of Mason; JYSproductions led by Jason Young of Kenwood; Exhibit 3 Fabrications headed by Dave Johnson of Hebron, Ky.; and Liberty Tax, headed by Gina Pinto Williams of Hyde Park were all named top clients for their determination, professionalism and success.

Williams also received a national SCORE award recently in Washington, D.C. as the ‘Top Small Business Franchise of the Year.” She is also slated to be named “Distinguished Hispanic Ohioan” by the state of Ohio for helping educate the Hispanic community on financial and fiscal responsibilities.

Mike Martin, outgoing SCORE chairman, said that 10 million aspiring entrepreneurs and small business owners have been helped by SCORE chapters since the organization was founded in 1964. Each year SCORE nationwide provides small business mentoring and workshops to more than 375,000 new and growing small businesses.
In greater Cincinnati, which includes 19 counties in southern Ohio, northern Kentucky and southeast Indiana, last year alone, SCORE’s 100 experienced counselors mentored 1,500 small business clients and created more than 305 jobs.
Fifty six percent of SCORE clients are women; 28 percent are minorities and 12 percent are veterans. Seventy percent of Cincinnati SCORE clients last year were starting a business and 30 percent were already in business.

Jim Stahly, incoming greater Cincinnati SCORE chairman, said that the federal government funds only a portion of each of its 350 chapters nationwide. “We get a 47 to one leverage on every dollar we get from the U.S. government,” said Stahly. “Locally, it only costs $137 for each job we create locally. And we do it all on about $11,000 from the federal government. The rest is covered by fees received from the 55 small business seminars we conduct annually and the generosity of many corporate and individual donors.”

SCORE’s business partners include: Jim Kummer of A Caring Choice; Cheryl Stamm and Corey Drushal of Bad Girl Ventures; Barbara Wagner, of Chase Law School at Northern Kentucky University; Jeffrey Holtegel, Cincinnati State University; Rochelle Thompson and Yvette Simpson of the City of Cincinnati; Chasta Postler, CMC Properties; Robert Killins, Greater Cincinnati Foundation; Dr. John Clarkin, Haile College of Business at Northern Kentucky University; Patrick Longo and David Main of Hamilton County Development Center; Albert Hallenberg, Hamilton County Library; Chris Lawson and Antony Seppi, Hamilton Mill; Robin Washienko and Connie Condo of Huntington Bank; Ann Schoenenberger of the Kenton County Library; Ian Murray of Murray Multimedia Resources; Ella Frye of KNY Re-Kindle; Kyle Horseman, Mark Peachey and Trey Grayson of KNY Chamber of Commerce; Sue Wilke of P&G Alumni Foundation; Glenn Clevenger of Small Business Administration Cincinnati Office; Shannon Feucht of SBA District Office; Chip Bonny, Stephen Wilson and John Rost of LCNB National Bank; Dr. E. Gregory of Small Business Development Centers; Rebecca Volpe, Small Business Development Centers- NKU; Donna Amos of Solopreneur Solutions; Lew Goldfarb of University of Cincinnati Law Clinic; Robert McEwan and Dr. Tom Dalziel of University of Cincinnati; John Bosse of Cincinnati USA Regional Chamber of Commerce; Joseph Hinson of the West Chester-Liberty Township Chamber Alliance; Beth Tu-Hoffman of Willow Ridge Plastics; Thomas C. Moore; Greg Neissen of Mt. Washington Bank; Bonnie Deer; Michelle Hummel of Webmedia Experts; Richard Curry Sr. of LPL Financial; Amanda Greenwell of Uptech; Karla Boldery of Greater Cincinnati Urban Award; Howard Kaplin of Kaplin Litwin Kaplin; Carmen Krupar of Cybervise Limited; Emilie Johnson of OTR Chamber of Commerce; Alysia McDonald of Duke Energy Foundation; John Barrett, Ed Babbitt and Michael Laasch of Western & Southern; Dean Gregory of Montgomery Boathouse; and Mark LaRosa and Michael Selker of LaRosa Inc.

For more information about greater Cincinnati SCORE, its counseling, team mentoring, and seminars and workshops, go to www.scoreworks.org or call (513) 684-2812. # # #

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Innovation

Innovation, in a business context, is generally thought of as the product or application of creativity. Peter F. Drucker suggests that innovation “is the specific instrument of entrepreneurship.”

Mr. Drucker further suggests that there are seven sources of innovative opportunity. Four of these relate to a specific industry or service sector: the unexpected; the incongruous; process needs; and structural change. The other three relate to the human and economic environment: demographics; changes in perception, mood, and meaning; and new knowledge.

Let us observe some of these factors at work in a coffee shop venture. The unexpected factor in the success of gourmet coffee shops is the willingness of the consumer to spend two or three times the cost of a generic cup of coffee for exotic, flavored or brand-name coffee. An incongruity is the popularity of fat-free desserts (“healthy” indulgence) to go with that coffee. The structural change in the industry is the emergence of franchises.

Environmental changes have also contributed to this phenomenon. As the “baby-boomer” generation has aged, the preferred place to meet has moved from the bar to the health club to the coffee shop.

Let us consider information about some current trends to see if we can relate them to potential opportunities in the context of Professor Drucker’s categories. For each, see if you can possibly find a niche on which to build a business:

  • The unexpected The International Association for Financial Planning is observing a rapid (to the point of unexpected) increase in calls requesting referrals for financial planners. A spokesperson for the IAFP says, “People are realizing that financial planning is not just for retirement or saving for a child’s college education; it’s for all stages of a person’s life.”
  • The incongruous Many Americans are feeling pressed for time, incongruously wishing to lead simpler, easier lives without giving up those activities that take the most time and effort. The opportunity lies in offering personal time-saving products and services that relieve these people of tasks that they find less than fulfilling, not worth the time, or unpleasant.
  • Process needs Individuals and businesses are spending unprecedented sums of money to acquire the education, training and skills necessary to remain competitive in a rapidly evolving marketplace, creating opportunities in consulting and training.
  • Structural change The health-care industry will flourish because of an aging population, myriad technological advances and people’s expectations of readily available medical care. One of the industry’s fastest growing segments is home-based health care, which is well-suited for entrepreneurs because of its ease of entry.
  • Demographics The aging population referred to possesses a combination of leisure time and discretionary funds that makes them a great market for new ventures in services relating to their comfort and recreational needs.
  • Changes in perception, mood and meaning The amount of money that citizens and businesses spend on security products and services is growing rapidly; the preferred method for many forms of purchase is increasingly becoming the Internet.
  • New knowledge The new smart phones have created opportunities, almost becoming computers with the right software.

Owner’s Checklist for Starting a New Business

Background work

  • assess your strengths and weaknesses
  • establish business and personal goals
  • assess your financial resources
  • identify the financial risks
  • determine the start-up costs
  • decide on your business location
  • do market research
  • identify your customers
  • identify your competitors
  • develop a marketing plan

Business transactions

  • select a lawyer
  • choose a form of organization (proprietorship, partnership, or corporation, for example)
  • create your business (register your name, incorporate the business, etc.)
  • Get a web domain compatible with your chosen company name, or get an appropriate domain name first and let it guide selecting the business name.
  • prepare a business plan
  • select an accountant
  • select a banker
  • set up a business checking account
  • apply for business loans (if applicable)
  • establish a line of credit
  • select an insurance agent, obtain business insurance

First steps

  • review local business codes
  • obtain a lease
  • obtain a business license or permit (if applicable)
  • get a federal employer identification number (if applicable)
  • get a state employer i.d. number (if applicable)
  • get business cards
  • set up at least a basic web site
  • line up suppliers (if applicable)
  • get furniture and equipment
  • join professional organizations, subscribe to trade journals
  • set an opening date

Break-Even Analysis


A significant advantage of some business ideas is that the venture can break even at what seems to be an easily achievable volume. A technique for quantifying that volume, called break-even analysis, examines the interaction among fixed costs, variable costs, prices, and unit volume to determine that combination of elements in which revenues and total costs are equal.

Fixed costs are those expenses necessary to keep the business open, and are not impacted by sales volume. They will include such things as rent, basic telephone expenses and utilities, wages for core employees, loan or lease payments, and other necessary expenditures. An entrepreneur should also include a living wage for himself/herself as a fixed cost.

Variable costs include those expenses that change as a result of sales volume. This can be a relatively simple relationship, as in cost of goods sold, where for example the variable cost of baked goods sold at a coffee shop is what we pay the baker for them, $0.30 each. Variable costs can also be very complex; for example, higher sales in one area of our business may increase long distance charges. Labor costs may be fixed for full-time employees, then, as sales increase, some overtime is incurred until additional personnel can be justified.

Generally, an initial break-even analysis focuses on a relatively narrow range of sales volume in which variable costs are simple to calculate. The variable cost in a coffee shop is simply the cost of goods sold. For a pizza delivery operation, it might be the cost of ingredients, and some cost allocated for operation of the delivery vehicle. A general term often used for the difference between selling price and variable cost is “contribution margin,” or the amount that the unit sale contributes to the margin available to pay fixed costs, and generate profit (we hope).

Now let’s take a look at how break-even analysis can be helpful to us. For this example, let’s assume we have determined that the level of fixed costs (salaries, rent, utilities) necessary to run a coffee shop on a monthly basis is $9,000. In addition, a cup of coffee that we sell for $1 costs us $0.25 for the bulk coffee, filters, and water.

The contribution margin of a cup of coffee is, therefore, $0.75. We can now calculate how many cups of coffee we have to sell to cover our fixed costs:

Break-Even = (Fixed Costs) / (Contribution Margin)

= $9,000/$0.75 = 12,000 cups of coffee per month

Let us say, further, that the fixed cost estimate was based on being open 6 days a week, 8 hours a day. This converts roughly to 200 hours a month, so we have to sell 60 cups an hour. This is a cup a minute for every minute we are open.

Does this seem feasible? Let us assume not, and evaluate some options.

(1) Cut expenses

Remember that we are still in the planning stage here, and experience has shown that prospective entrepreneurs almost always underestimate expenses. Let’s pass on this approach.

(2) Raise prices

We could plan on charging $1.25 per cup from the beginning, for a contribution margin of $1 per cup. The arithmetic is easy; to cover $9,000 in fixed expenses we need to sell 9,000 cups of coffee per month. The most important factor here is what the competition is charging.

(3) Broaden our product line

For the sake of clarity in demonstrating relationships between price, cost, and sales volume, we have considered a simplified version of how a real coffee shop might operate. The market severely constrains the amount we can charge for an ordinary cup of coffee, and a one product shop would have limited appeal. Perhaps we could also offer gourmet coffees, which cost us $0.50 per cup to brew, at $2.00 per cup. We could also offer baked goods, which cost us $0.30 each, at $1.30.

Suffice it to say that the break-even calculation now becomes a bit more complex, and outside what we are trying to accomplish here. Feel free to try it on your own.

This has been a very brief overview of how break-even analysis can be used in helping the entrepreneur better understand the relationship of the financial factors involved in measuring the feasibility of a proposed venture. From a preliminary analysis of selling prices that the market will bear, prevailing costs, and reasonable expectations of sales volumes, the entrepreneur can avoid making serious mistakes and may discover significant opportunities.

Sharpen Your Unique Selling Proposition

In his book, The Road Ahead, Bill Gates of Microsoft writes of “friction-free capitalism” made possible by developments in communications, chief among them the Internet and its World Wide Web. In this context, “friction” is everything that keeps markets from functioning as the “perfect competition” of economics textbooks. This friction can be a function of distance between buyer and seller, costs of overcoming this distance, and incomplete or incorrect information.

Friction manifests itself by causing barriers to entry for new competitors, limiting the number of outlets from which the consumer has to choose. Large companies, with multiple sales outlets, and economies of scale, have greater power to direct the marketplace.

The degree of friction in the developed world has been decreasing for some years now. Affordable air travel, overnight delivery, improved telephone and fax communications have shortened distances. Credit cards and toll-free numbers have spawned at-home shopping from sources across the country.

The Web has taken the friction in our economy down another notch. In principle, we can sell products and services to a worldwide audience as easily and effectively as our largest multi-national competitor.

In the friction-less economy, the challenge of differentiating ourselves from the competition becomes even greater. Successful small businesses tend to be those who can find some competitive edge, even when their product or service is similar to those around them.

Marketing professionals often call a business’ competitive edge their “unique selling proposition,” or USP. Pinpointing and refining one’s USP, however, is not a simple matter. An approach is unique only in the context of our competitors’ marketing messages.

Some marketing messages go beyond product and service characteristics. For example, Charles Revson, founder of Revlon, insisted that he sold hope, not makeup. Similarly, United Airlines sells “friendly skies,” and Wal-Mart sells “always” the low price. Do these slogans convey how each company views their customers? Does their selling proposition appeal to your preferences?

Sharpen your USP:

  • Put yourself in your customer’s shoes; satisfy their needs, not yours.
  • Know what motivates behavior and buying decisions.
  • Find the real reasons people would buy your product instead of a competitor’s. Ask them!
  • “Shop” the competition, be open-minded about your product, and never stop looking for ways to make your product stand out.

Try now to recast your business idea in terms of its competitive advantage. Prepare an industry analysis (size, customers, trends, and competitiveness). Identify what you see as your specific market, and estimate the share you think you can capture.

The Web can be a powerful research assistant. Virtually every major business puts product and service information on the Web, including business directory services and magazines.

Search engines can help in improving your understanding of your industry, and the key success factors. Test the resources available on the Web. Visit sites of major companies in the industry, where appropriate. Search the archives of business magazines for articles that give background and statistics.

SCORE Greater Cincinnati Selects Betsy Newman as Executive Director

Contact: Melinda Zemper

Aug. 1, 2014 Phone: (513) 706-3737
Email: mzemper@fuse.net

SCORE Greater Cincinnati Selects Betsy Newman as Executive Director Hyde Park resident is author, speaker, business consultant Betsy

Newman of Hyde Park, a speaker, business consultant and author of five leadership and career-enhancing books, has been selected executive director for the greater Cincinnati SCORE chapter.

She begins her duties August 4.

“Her role will be to take SCORE to even higher Score Executive Directorlevels of achievement and recognition,” said Bill Haman, SCORE counselor and selection committee chair. “The director’s position will strengthen our internal operation and consistency and externally enhance our standing and prestige in the community.”

Greater Cincinnati SCORE is one of the nation’s most active and acclaimed. The chapter won National SCORE Chapter of the Year in 2005. Two Cincinnati SCORE clients achieved national recognition in 2013 for SCORE Outstanding Woman-Owned Small Business and SCORE Outstanding Non-Profit.

“Betsy’s credentials, qualifications, references and connections in the community make her an outstanding selection for the position,” said Jim Stahly, incoming SCORE chapter chair. “In her private consulting company she has been engaged by P&G, Fidelity, Dow Jones. GE, Bethesda Hospital, Deloitte & Touche, and Xavier University.”

In 2012, Newman completed a five-year contract with Cygnus Corp. as director of a $10 million government project. She has also been a keynote speaker at 100-plus conferences and seminars.

She was a nominee for the Enquirer’s Woman of the Year and YWCA Career Woman of Achievement awards and serves on numerous community boards.

Nearly 100 working and retired executives volunteer to counsel entrepreneurs and in-business owners throughout southwest Ohio, northern Kentucky and southeast Indiana in marketing, operations and finance through individual and group counseling sessions and low-cost and no-cost seminars. This year, national SCORE celebrates 50 years of assisting entrepreneurs and small business owners with advice on managing their business challenges.

“As a group we possess the expertise to help virtually any business of any size in any industry,” said Mike Martin, SCORE chapter chairman. “Our members enjoy helping small business owners see more clearly the pathway to success.  They are individuals who have achieved success in their own careers and place great value on giving back to their communities.”

For more information about greater Cincinnati SCORE, its counseling, team mentoring, and seminars and workshops, go to www.scoreworks.org or call (513) 684-2812.

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Financial Issues in Business Startup


A primary inhibitor of business start-up is that few people have the financial cushion to give up a job for the uncertain income of a start-up venture. In a recent survey, about 30% of new business founders identified inadequate funding as their biggest hurdle, and a similar amount said lenders were too conservative. About 15% reported being unable to find investors, and a similar amount claimed a lack of collateral.

The prospective new business owner approaching a lending institution should keep in mind the “five c’s of credit:” character, cash flow, capital, collateral, and (economic) conditions. Character consists of the borrower’s integrity, experience, and ability; particularly close attention is paid to a borrower’s credit history, which is a matter of record. Should you decide to try to fund a startup through a commercial lender, the remaining criteria are addressed in the loan request.

The loan request should include a credit application, financial information such as tax returns and personal financial statements, and a brief business plan emphasizing projected financial performance of the new venture. The plan should demonstrate how the business will generate sufficient cash flow to repay the loan, specify collateral, and show the borrower’s personal investment.

In addition to servicing the loan, cash flow should also cover operating expenses, and provide for some re-investment for the increasing financial demands of a start-up venture. As collateral, banks will often lend up to 80% of the market value of real estate, and up to 50% on business assets such as equipment, inventory, and current accounts receivable. Lenders and investors often require that the bulk of start-up monies be provided by the business owner. This assures these stakeholders that the owner is committed, and has confidence in the financial projections.

When the entrepreneur can not meet the requirements of commercial lenders, and does not have a favorable arrangement with partners or other investors, the remaining options are difficult and expensive. These options include public-sector guarantees, finance companies, and the venture capital market.

Even where the start-up investment consists largely of other people’s money, the amount of financial risk for the entrepreneur is beyond what most can responsibly handle. For many with the financial means, the stress of bearing complete responsibility for the company’s direction and performance is the discouraging factor.

Once the venture is off the ground, a new set of challenges faces the entrepreneur. A recent survey showed their major concerns, named by more than half of respondents, were: “getting new business/clients;” “managing my time;” and, “promoting my business.” Another interesting question was what they missed about the corporate world. The top three responses were “company-paid health insurance,” “a regular paycheck,” and “retirement plans.”

Various estimates have been made for the failure rate of business start-ups, based on various concepts of failure and of appropriate survey methods. The consensus seems to be that less than half of new businesses survive the start-up “trauma.”

Perhaps, a major reason for what seems to be a high failure rate is that it is so easy to start a business. There is no institutionalized check of qualifications in the U.S.; on the contrary, our tax dollars fund the Small Business Administration and other agencies and programs that encourage business formation.

Another survey showed that over 80% of entrepreneurs would take a pay cut if that is what it took to keep the business going. Just over a third would sell the business, even if a good price were offered.

The 11 Harsh Realities Of Being An Entrepreneur

From OnStartups

The 11 Harsh Realities Of Being An Entrepreneur

There’s always talk about the end game in the form of an acquisition, funding announcement, or eventual flame out. Hollywood has even made a movie about the founding of Facebook that glamorizes startup life instead of showing what it really is: a day in day out marathon of work with very little glamor. We rarely hear about the harsh realities that entrepreneurs face and the journey that this entails. This isn’t meant to be a downbeat and negative article, but actually quite the opposite. By knowing the harsh realities that lie ahead, you can be prepared when they come about so you can solider on. Here are some of the harsh realities that come with the territory of being an entrepreneur.

Your First Iteration of an Idea Will Be Wrong

The first iteration or implementation of your idea will often be wrong. That’s not because you’re not smart, not doing the right things, or some other reason to come down hard on yourself. As it turns out, this is actually a good sign. No idea survives its first interactions with its customers and requires you to synthesize feedback to adapt to the customer. You could be prideful, not listen to what your customers are telling you, and keep things the way they were. In the end, that just leaves you with no customers and a product you may not even use yourself. It’s okay if things change up a bit when it comes to your idea and its implementation.

Your Friends And Family Won’t Understand What You Do

“You’re an entrepreneur, so that means you’re un-employed?” or “Oh that’s nice.” are some of the many reactions you will get from close friends, family members, and others over the course of starting your company. Even if you achieve milestones that are worthy of praise (customers, fundraising, new traffic levels, press,etc.) and denote success in the entrepreneurial world, people still won’t understand what you do. Unless you build one of the few consumer success stories that come around every few years, things probably won’t change here. The b2b space is even more difficult to explain as most people aren’t your customer, especially if it’s a niche workflow. This is okay and sometimes even a relief to know there is more outside in the world than just techies and entrepreneurs. Just because they don’t understand it, doesn’t mean you’re doing something wrong or unacceptable. I doubt Larry Ellison can have most of his family understand Oracle (that database company that stores information), but things turned out pretty well for him at the end of the day.

You Will Make Less Than Normal Wages For A While

If you got into entrepreneurship first and foremost for the money, then you are in the wrong business. Sure you may one day sell your company, but that day is probably far far away. Even then, there are usually earn out clauses, vesting still in tact, and a whole lot more. Even if you raise a good chunk of cash, your money is better spent on hiring the best talent than paying yourself a higher wage. There’s nothing wrong wanting to make money, but in the beginning it’s going to be rough. You will make less than most of your friends, especially the ones doing the “normal” paths of things like finance. It’s a litmus test in its finest form though. If you truly love what you’re doing, the capacity to have a large bank account takes a back burner to completing your mission. Sure you need some basic creature comforts, but luxury items almost seem silly as you will not have the time to truly enjoy them.

Everything Takes Twice As Long…If It Even Happens

Multiply everything by two, including the things inside of your control. When things take longer, you sometimes think that you’re doing it wrong or no one really cares. In reality, everyone else has multiple deals and responsibilities on the table. By factoring this into the expectations of your startup, it makes a lot easier to prepare for launching products, closing deals, and more. Also, be persistent and get the other party what they need as soon as possible. On the flipside, most deals just never work out. It may be an acquisition all the way down to a simple business development deal. There are always many moving parts and excitement that can just fade. That’s okay though. If you’re building your company upon one deal or a silver bullet (more on that below), then you need to re-evaluate things. Don’t be depressed when a deal falls through as that is just the nature of the beast.

Titles Mean Nothing. You Will Be a Janitor

Hey there Mr. CEO, Chairman, and Co-Founder! As a co-founder of a < 10 person company with a product that doesn’t have customers, titles really don’t mean much. Everyone will be doing a little bit of everything, including cleaning the toilets. Don’t try to mask the grind of being an entrepreneur with some superficial title. In reality, you should love and embrace the nitty gritty of those first days. Business cards are nice to hand out, but they really shouldn’t say more than co-founder or something else. Maybe someone inside the company plays more of the CEO role (speaking and being the face of the company), but that doesn’t really matter in the early days. You have to be humble and you have to be willing to do whatever it takes. You don’t have a staff of 50 to throw the task on to either. If you don’t do it, it won’t get done. Sure you could also try to optimize for efficiency, but that’s almost counter productive as the early days of a startup requiring doing so much, that it’s hard to just cut something out.

There Is No Silver Bullet

There shouldn’t be and usually never is a single deal that can make your company. Certain deals or customers can take you to another rung on the ladder, but there are still many more rungs to climb along the way. You shouldn’t look at a deal as the end game to the startup, but a means to a specific milestone that is in the near future. A deal can be taken away far faster than it can be given to you. By training yourself to diversify your risk and the milestones that advance your company, you control the destiny of your company, NOT one single partner. The success of a startup is the compilation of luck infused with many little wins along the way.

Customers Will Frustrate You

Having customers is a great thing, but dealing with support is a whole other ball game. If you’re in the consumer world, expect to deal with customers that don’t notice the obvious even with your fancy pants UI/UX in place. You will also get an influx of feedback that is often contradictory. One customer wants it in red, another wants it in blue, and a third wants it combined to become purple. The key to dealing with customers is to respond to everyone, but have a strong rule of authority. If you succumb to customers frustrating you and do everything you say, you quickly end up in a far worse position.

You Can’t Do It All Yourself

Some entrepreneurs have a superhero complex that they feel they can do everything themselves or with just one co-founder. They think that it’s possible to scale the company with just two to three people. This just results in being overworked and unfocused. Know when to let go of your pride and bring in people that are often smarter than you are. By bringing in others to work with you, there’s also an ability for each team member to be laser focused on what they’re best at.

There Is No Such Thing As An Overnight Success

In some cases you may be able to find out that your idea just won’t work or that you are one of the lucky few that get acquired early on. Other than that, be prepared to work on your startup for many many years. The press often makes it seem as if success happened overnight, but the entrepreneurs themselves spent a lot of time with the company over the course of many years. Startups aren’t a 5k, but an all out iron man competition.

Building A Team Is Hard

Finding co-founders by themselves is very hard just by itself. Finding a group of individuals smarter than yourself across a broad range of skill takes up way more time than you would ever think. In the early days, you may be super excited about your company, but it’s often hard to get a large group of others equally excited. They may have their own ideas they want to work on, be comfortable with a cushy salary, or generally just not interested in what you’re doing. Just because you’re excited does not mean others will be excited. If you’re lucky enough, you will hit a certain period of growth explosion that requires you to hire rapidly and be a great judge of character on the fly. This is a dangerous period for a startup as the company is still small enough that the wrong DNA can make things take a turn for the worse, but you cannot be as granular with hiring these employees as your first 10.

There Are Forces Outside Your Control

Last, but not least, you have to understand that you cannot control everything in the universe. Markets collapse, the government intervenes, tragedy strikes, and other unforseen circumstances. You don’t let this make you quit. It’s like a roadblock on the way to a concert, sports game, or party you want to get to. You may have to sit in traffic or take an alternate route, but as long as you are determined to get there, you will end up at the event. In the words of the late Randy Pausch “Brick walls are there to show you how bad you want something.” Once again, this isn’t a deterrent to becoming an entrepreneur, but just a reality check to make sure you’re prepared. Many companies die because people just give up . Hopefully this article does some small bit in helping preventing this. Life as an entrepreneur is hard, but if you really love what you’re doing and have the determination, you WILL do it.

What are some of the harsh realities you have faced as an entrepreneur and what have you done to overcome them? Leave your responses in the comments.

Effective Elevator Speeches

Effective Elevator Speeches that Leave a Lasting Impression
by Julie Brander

An elevator speech is a short introduction of who you are and what your company does in about 200 words or less. It should highlight your uniqueness and focus on the benefits that you provide. It is delivered in an enthusiastic upbeat way, introducing yourself, shaking hands, having eye contact, engaging the potential client and handing out a business card.

A good elevator speech would include:

  1. The services or features that you provide.
  2. The benefits that your clients will receive from these services.
  3. Include successful client outcomes.
  4. Create an opening sentence that will grab the listeners attention, the best opening lines leave the listener wanting more information.
  5. Finally your elevator speech has to sound sincere, engaging and delivered with passion.
  6. Always introduce yourself, shake hands and have a business card to hand out

This essential networking tool will allow you to grab the attention of anyone you wish to do business with.

This would be an example of mine:

Hi, my name is Julie Brander and I am a SCORE counselor with 20 years of business experience, I have my MBA and Real Estate License. I help people start and expand their businesses. I’ve helped clients get business loans who have been turned down. I’ve helped clients with their marketing plans in which they have increased their business and helped with business plans in order to get bank financing. SCORE counselors are available free of charge to help you with all your business needs. In Cincinnati, please contact us at 513-684-2812 or visit us at www.scoreworks.org.

Elevator speeches are intended for very brief encounters in an elevator. But elevator speeches are not just for elevators! You can use it whenever you introduce yourself to anyone who asks you what you do. It could be in the supermarket, waiting in line, at any networking event or where ever you are.

So, who can describe with passion, precision and persuasiveness what you do better than you? A great elevator speech makes a lasting first impression, showcases your professionalism and allows you to position yourself. And if you want to network successfully, you need an elevator speech!

Thanks to Julie Brander, New Haven SCORE