Welcome back to Part 3 of frequently asked questions(FAQ) on how to start and build a business. Click here to read Part 1 and Part 2.
FAQ About Starting And Building A Business (Part 3)
• When should I hire people full-time? When you have revenues.
• How long does it take to raise money? In a great business, six months. In a mediocre business: infinity.
• Should I get an office? Not unless you have revenues.
• Should I do market research? Yes, find one customer who definitely, without a doubt, will buy a service from you. Note, I don’t say buy your product because your initial product is always not what the customer wanted.
• Should I pay taxes? No. You should always reinvest your money and operate at a loss.
• Should I pay dividends? See above.
• What should the CEO salary be? No more than two times that of your lowest employee if you are not profitable. This even assumes you are funded. If you are not funded your salary should be zero until your revenues can pay your salary last. The CEO salary is the last expense paid in every business.
• When should I fire employees? When you have less than six months burn in the bank and revenues aren’t growing fast enough.
• When should one have sex with an employee? When you love her and the feeling is mutual.
• When should one fire an employee? When they gossip. When they don’t over-deliver constantly. When they ask for a raise because they think they are making below industry standard. When the talk badly about a client. When they have an attitude.
• When should you give a raise? Rarely.
• How big should the employee option pool be? Fifteen to 20 percent.
• How much do advisers get? One-quarter of one percent. Advisers are useless. Don’t even have an advisory board.
• How much do board members get? Nothing. They should all be investors. If they aren’t an investor, then one-half of one percent
• Should you take the offer to buy your company? Yes. In cash.
• What is the only effective e-mail marketing? Highly targeted e-mail marketing written by professional copywriters and the e-mail list is made up of people who have bought similar services in the past six months. Corollary: If you have zero skills as a copywriter, then everything you write will be boring.
• Should I give stuff for free? Maybe. But don’t expect free customers to turn into paying customers. Your free customers actually hate you and want everything from you for nothing so you better have a different business model.
• Should I have schwag? No.
• Should I go to SXSW? No.
• Should I go to industry parties and meet-ups? No.
• Should I blog? Yes. You must. Blog about everything going wrong in your industry. Blog personal stories that you think will scare away customers. They won’t. Customers will be attracted to your honesty.
• Should I care about margins? No. Care about revenues.
• Should I spin off this unrelated idea into a separate business? No. Make one business great. Throw everything into it. Do DBA (a legal term for “doing business as”) to identify different ideas.
• Should I hire people because I can travel on a seven-hour plane ride with them? Don’t be an idiot. If anything, hire people who are the opposite of you. Otherwise, who will you delegate to?
• When should I say no to a client? When they initially approach you.
• When should I say yes to a client? Every other conversation you ever have with them after that initial no.
• Should I have sex with an employee? Stop asking that.
• Should I negotiate the best terms with a VC? No. Pick the VC you like. Times are going to get tough at some point and you’ll need to be able to have a heart-to-heart with them.
• Should I give employees bonuses for a job well done? No. Give them gifts but not bonuses.
• What should I do at Christmas? Send everyone you know a gift basket.
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