Nonprofits find it hard to raise money with grants. Renewable energy is being run by for-profit NGO's which tank at any given moment of stress. The nonprofit model is where the rubber meets the road provided there are meaningful fund raising efforts.
The cart is therefore the non profit and energy coops, while the horse is the foundation. The foundation has to think outside the box in fundraising as well. I have those ideas and will instill them in 2012. The more foundations are created, the more grant choices these non profits and energy coops have, thus more meaningful jobs, more economic activity, more taxes, more profits for NGO's that are for profit and the cycle goes on and on. A foundation has its name aptly, it is what we need as an economic source, and lots of them. Contact me if you want to learn how to turbocharge your foundation in funding sources.
Tuesday, December 27, 2011
Saturday, December 10, 2011
A new day
So where are we two years later: We have credit card offers in the $50,000 a piece, we have a line of credit of $150,000 in place. This all because we followed a strict rule of engaging great credit in the corporation and now are set up in case of a rainy day.
The corporation test is thus complete. The person that was being trained failed. He failed to engage other lenders who liked our business plan, when it came time to act in an oral interview he froze. For me it is a lesson learned, not everyone is cut out to lead companies. I however am ready to start the next phase.
The plan now is a second corporation run completely differently where there are no board meetings, it removes the issue of double taxation on profits, and can still issue stock, and can still have a number of investors.
A note on the previous model and an errata. I said large numbers of shareholders can be found. Anything over 100 investors has to be an IPO that is regulated by the SEC where shares have to be sold by certified and registered stock brokers.
100 shareholders is doing pretty good however, just make sure you qualify them, not everyone is ready to be a shareholder.
Next company is in real estate and will build shareholders within family and friends at no cost. Income is derived from referrals and brokers who enter into contracts for these referrals. A website needs to be established for this to work. That is my task over the next few months. Launch date expected in 1st quarter 2012.
The corporation test is thus complete. The person that was being trained failed. He failed to engage other lenders who liked our business plan, when it came time to act in an oral interview he froze. For me it is a lesson learned, not everyone is cut out to lead companies. I however am ready to start the next phase.
The plan now is a second corporation run completely differently where there are no board meetings, it removes the issue of double taxation on profits, and can still issue stock, and can still have a number of investors.
A note on the previous model and an errata. I said large numbers of shareholders can be found. Anything over 100 investors has to be an IPO that is regulated by the SEC where shares have to be sold by certified and registered stock brokers.
100 shareholders is doing pretty good however, just make sure you qualify them, not everyone is ready to be a shareholder.
Next company is in real estate and will build shareholders within family and friends at no cost. Income is derived from referrals and brokers who enter into contracts for these referrals. A website needs to be established for this to work. That is my task over the next few months. Launch date expected in 1st quarter 2012.
Friday, August 21, 2009
Day 15
Well for a weak and a half of tar and the roof and the odor it is finally over with. Now I can think clearly. So where were we last week? Recapping I neglected to put in one thought. I leave it up to you to find the merits. Most investors will want to see mountains of data to support any R&D project. Getting to the all encompassing proposal with the almighty prototype that will blow them away. Well take this idea and throw it away because if you want to do a startup, it is best to have a tiny amount of intellectual property because more than likely there are problems. In the startup phase, if it is a tiny project from the beginning, and grows every day or week, you are giving the organization what it needs: the soul of the intellectual property. I cannot stress how important that is to future funding. It is everything to future funding as the intellectual property has a better chance of being compliant and less hassle with venture capital and their due diligence.
So what does a prototype then represent? I would say as others have, written out in one paragraph, what it represents and what you are doing. Make it simple and concise and do not bore your audience. Understand who your audience will be as the tone of the paragraph will change from group to group. Your prototype will then be an extension of that paragraph. Should it work? That is up to you. I would say you want to capture your prototype in one single picture. What that picture says should fill in your opening paragraph’s gaps and create the whole picture in a simplistic way. That is it, and why? Because when you are in that elevator with Bill Gates, you have 30 seconds to convey your thoughts in a compelling message that will make your listener want more. You then whip out your picture of what it is you are doing, and wait for the “aha” moment. That is your aim that an “aha” happens, and if you can recognize it, then ask for the seed money or whatever else you have in mind. Just remember that whatever you ask for no matter how neat and cool your new application is, the market has to be there.
Market and what is it? Do you want to monopolize a concept? Good luck trying to fix value to it. There is an old saying in the music business: “Do not worry about Guitar Center moving right next to your music store, competition is good” This is sage as competition is what defines your market and competition therefore is good, you just find their product gaps and fill it. Monopolies are for the birds. Why do you want to battle all the forces in the market place when competition takes most of it on for you. And well before you arrived on the scene?
A note on teams. This is very important and should be your first priority to establish. You see if you can put together teams and be successful you do two things: 1. You demonstrate a unique ability in convincing others to agree on your seed concepts. 2. You get there faster. Why on earth do you want to drive yourself mad being the only one in your whole world that believes in what you do? Now remember you do not have to bring people on board to be in the team, they can be your lawyer, your accountant, or your banker. They can be on the other side of town or the other side of the world. In fact with programs like Cisco’s WebEx, there is no reason to physically have a single place to meet. The board could meet in their homes and the same goes for engineers, programmers, sales people etc… So you ask how to do I keep them motivated and in my control that they do not steal things and they work. This is not as complex as it sounds.
Stock options are a great way to keep people motivated, especially with a company that has a forward thinking CFO. In fact the companies that have CFO’s, 9 times out of 10 do much better than the corporations that get by without a CFO. To me the CFO is the make or break person in the long term sustainability of any company. Another way to keep people in line and keep people motivated, is to let them see at any given moment what the company looks like, and what their efforts are doing to the bottom line. If an employee sees that what they do affects their own stock options, they are more willing to do the right things that earn the company money. There is a nifty program out there from Net Suite. You also can couple it with Packet 8 phones services. It’s expensive, but if at some point you have employees you better have a system like Packet 8’s and NetSuite’s to enable you to daily track the performance of the company, and again, the employees that do the work and make the company revenues need to see their daily impacts to the ends of the financials, to the sales, to the R&D costs. This is not only a great way to keeping employees, but enables everyone to have a sense of acting not just as an employee that goes home everyday not too excited about work, but instead infuses a shareholder excitement that leads to thinking outside of the box, (a book to read : A whack on the Side of the Head, Roger von Oech), being more creative and being excited about brainstorming. This is what fails in large corporate structure, the excitement is just not there anymore. Politics and back stabbing are what usually gets people to the top and those obscene bonuses. Those companies today are almost all in financial trouble. Instead your nimble and dynamic startup has the capability of fostering all the good and right ideas that creativity generates.
I am not going to get into the mechanics of stock options only to say this. Bring on board experienced and excited CFO’s. Do your background checks and make sure you know every company this person has worked for. Use E-Source with the Federal Government to begin the process and hire a company that specializes in background checks. I would not concern myself with FICO credit score, as the story they tell has little to do with day to day operations. Instead it is far more important that this person is telling the truth in the places and times they have worked. The power the CFO has over the millions of dollars in the business is immense. Make sure your President has the capacity to overview all accounts. With the right kind of person your stock option plan can be easily crafted from the CFO and the financial expertise and long range planning that position brings. Along with a capable legal team, your stock options will be an attractive force to finding and retaining top expensive people. There just is no other way to do it. Employees need to trust the plan will work. You need to feel good about the plan too. Nothing worse than over estimating company potential. Better to underestimate and have something great to talk about at your annual meetings.
That's enough for now. I will talk more on the mechanics of marketing.
This is exciting if you are at this point! We are!
So what does a prototype then represent? I would say as others have, written out in one paragraph, what it represents and what you are doing. Make it simple and concise and do not bore your audience. Understand who your audience will be as the tone of the paragraph will change from group to group. Your prototype will then be an extension of that paragraph. Should it work? That is up to you. I would say you want to capture your prototype in one single picture. What that picture says should fill in your opening paragraph’s gaps and create the whole picture in a simplistic way. That is it, and why? Because when you are in that elevator with Bill Gates, you have 30 seconds to convey your thoughts in a compelling message that will make your listener want more. You then whip out your picture of what it is you are doing, and wait for the “aha” moment. That is your aim that an “aha” happens, and if you can recognize it, then ask for the seed money or whatever else you have in mind. Just remember that whatever you ask for no matter how neat and cool your new application is, the market has to be there.
Market and what is it? Do you want to monopolize a concept? Good luck trying to fix value to it. There is an old saying in the music business: “Do not worry about Guitar Center moving right next to your music store, competition is good” This is sage as competition is what defines your market and competition therefore is good, you just find their product gaps and fill it. Monopolies are for the birds. Why do you want to battle all the forces in the market place when competition takes most of it on for you. And well before you arrived on the scene?
A note on teams. This is very important and should be your first priority to establish. You see if you can put together teams and be successful you do two things: 1. You demonstrate a unique ability in convincing others to agree on your seed concepts. 2. You get there faster. Why on earth do you want to drive yourself mad being the only one in your whole world that believes in what you do? Now remember you do not have to bring people on board to be in the team, they can be your lawyer, your accountant, or your banker. They can be on the other side of town or the other side of the world. In fact with programs like Cisco’s WebEx, there is no reason to physically have a single place to meet. The board could meet in their homes and the same goes for engineers, programmers, sales people etc… So you ask how to do I keep them motivated and in my control that they do not steal things and they work. This is not as complex as it sounds.
Stock options are a great way to keep people motivated, especially with a company that has a forward thinking CFO. In fact the companies that have CFO’s, 9 times out of 10 do much better than the corporations that get by without a CFO. To me the CFO is the make or break person in the long term sustainability of any company. Another way to keep people in line and keep people motivated, is to let them see at any given moment what the company looks like, and what their efforts are doing to the bottom line. If an employee sees that what they do affects their own stock options, they are more willing to do the right things that earn the company money. There is a nifty program out there from Net Suite. You also can couple it with Packet 8 phones services. It’s expensive, but if at some point you have employees you better have a system like Packet 8’s and NetSuite’s to enable you to daily track the performance of the company, and again, the employees that do the work and make the company revenues need to see their daily impacts to the ends of the financials, to the sales, to the R&D costs. This is not only a great way to keeping employees, but enables everyone to have a sense of acting not just as an employee that goes home everyday not too excited about work, but instead infuses a shareholder excitement that leads to thinking outside of the box, (a book to read : A whack on the Side of the Head, Roger von Oech), being more creative and being excited about brainstorming. This is what fails in large corporate structure, the excitement is just not there anymore. Politics and back stabbing are what usually gets people to the top and those obscene bonuses. Those companies today are almost all in financial trouble. Instead your nimble and dynamic startup has the capability of fostering all the good and right ideas that creativity generates.
I am not going to get into the mechanics of stock options only to say this. Bring on board experienced and excited CFO’s. Do your background checks and make sure you know every company this person has worked for. Use E-Source with the Federal Government to begin the process and hire a company that specializes in background checks. I would not concern myself with FICO credit score, as the story they tell has little to do with day to day operations. Instead it is far more important that this person is telling the truth in the places and times they have worked. The power the CFO has over the millions of dollars in the business is immense. Make sure your President has the capacity to overview all accounts. With the right kind of person your stock option plan can be easily crafted from the CFO and the financial expertise and long range planning that position brings. Along with a capable legal team, your stock options will be an attractive force to finding and retaining top expensive people. There just is no other way to do it. Employees need to trust the plan will work. You need to feel good about the plan too. Nothing worse than over estimating company potential. Better to underestimate and have something great to talk about at your annual meetings.
That's enough for now. I will talk more on the mechanics of marketing.
This is exciting if you are at this point! We are!
Friday, August 14, 2009
Day 8
Intellectual Property:
The idea of intellectual property comes in several flavors. While most would consider a project "think" intellectual property that may one day get patented, there are many other forms of intellectual property that get created every day the business is running. Many would call the day to day operations the trade secrets that are the life blood of the business. Whatever you call it, intellectual property is where the rubber meats the road and if taken into account as confidential, can lead the road to success, and treated with a lack of understanding can lead to a road of failure.
I would like to say at this point you have a team of people you implicitly trust with your intellectual property. Do not be vague with this group and disclose, disclose, disclose. First and foremost in this team is the legal team, next is your banker, and last is your accountancy group. All of these people are your connection to outsourcing those vital elements you either cannot or will not do yourself. Take you banker as an example, you one day you will want to show that banker you’re all trusted and highly confidential business plan. You trust your bank and your banker in turn trusts you. That could and should result in one day obtaining business loans or trade funding loans. If you disclose everything to your banker the likelihood you will succeed is increased.
Who do you not trust with your intellectual property, anyone who does not share your core company values, doesn't have an equity stake in the company, and/or anyone else that you would not hold harmless. This is basically the rest of the world. Shh is what is appropriate. Create business plans for this rest of the world that is vague and does not give away your core secrets. This blog is a perfect example; I do not share anything with you that would give away our vital intellectual property.
Finances:
What are the norms in starting on a shoe string, yet having a company full of potential wealth. Stock options are where a corporation beats out any other form of business entity. An LLC needs members and member certificates are the equivalent to shares in a corporation. Member certificates are very difficult to market. In California, an LLC is also restricted to non professionals. That means anyone with a license to operate IE; attorneys, engineers, accountants, architects all cannot form LLC's in the State of California. LLP are for those groups but again what do you market when you need to equity fund your company? A C corporation can easily take care of that.
Cheap stock! Yes $0.001 per share par value is done every day with start-up corporations. Let’s say day one your corporation has a value of just $10,000 dollars. That means 10,000,000 shares are initiated. You may want to split share between preferred and common shares 40/60% respectively. You may want to have about 25% in the common share reserved for stock options, and another 5% in reserve for future use. The balance goes to the founders. The preferred shares you probably will not do anything with in the near term. These shares are reserved for your venture funding series requirements. I would again parse this out into 3 divisions so that you do not sell all your shares in one series A offering. You never know and there are plenty of non public companies that offer series C shares.
In your small corporation your stock value is a function of your balance sheet where your retained earnings is a major factor in determining the stock value.
A note about your Dun and Bradstreet tm rating. First compliance, or everywhere you disclose your account information, your address equals what the State department of State has in their database. Did you also know that if you use a cell phone that is unlisted as your main company number, or a VOIP phone number that is unlisted will negatively flag your company as risky? PO box companies and companies that use virtual offices stand a very good chance of D&B tm ranking your business as risky. And trying to get rid of a high risk category from D&B tm is almost impossible to do.
A word to the wise, call up D&B tm if you are unsure how you must go ahead with your start-up. Another thought, it is okay to have a business out of your home and is advisable if you cannot afford an office. Remember HP tm starting up out of their garage! Apartments are great places to work all night if you are programming. They usually are located close to eating establishments too. An unfriendly business park is not too pleasant a place after hours.
Where we are at: We have completed everything license-wise and compliance-wise and are ready to commence operations. It is something that I can only say is more than satisfying. Getting to this point, I have spent a good 15 hours every day. It is a lot of hard work but where we are today, with two minds working on a laser focused ideal, it is all worth it and if we succeed it is the ride of our lives!
A simple hint for funding your company. Look in your closets, garages and attics and see what you can sell on eBay tm . Start an eBay tm and PayPal tm account in the corporations name. All sales sweep into your corporations accounts. Use QuickBooks tm to show those sales as loans to the company and pay yourself back when revenues from what you actually do start to flow in. Try to get to revenues before you seek venture capital. Unless you have the latest and greatest new medical device it is highly likely venture capital will own the majority of your company and direct its future. Is that something you want?
Next week: Corporate minutes, agendas, and annual meetings.
My disclosure:
I am not an attorney, I am not offering anyone anything more than they can find online with some simple research. You are not to use anything I say in running your business and will hire competent legal, securities, and accounting advice. There is a wealth of information online from competent sources that will help and guide anyone looking to form a start-up corporation. I am merely illustrating our very simple example from week to week. Again I do not give legal advice and anything I say in the blog should be taken as such. Seek competent legal advice from a competent attorney. I am also not offering any advises on securities nor am I offering any securities up for sale or purchase. Again hire competent securities advisors people who are FIRNA and SEC licensed. I do not offer any accounting nor any tax advice, hire a competent CPA for accounting compliance.
Subscribe to:
Posts (Atom)