9 Pros or Cons of Working With More Than One Angel Investor at a Time

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is one pro or con of working with more than one angel investor at a time?

 

1. Pro: Support and Vision

Jennifer MellonTrustify’s Angel Investors are an incredibly supportive group of individuals. They are motivated for us to succeed, understand our business, and trust our leadership. They provide us with key introductions, help us penetrate various verticals we want to explore and offer unwavering support of our vision. Working with multiple angel investors, who are all a good fit, can be incredibly beneficial. – Jennifer MellonTrustify 

 

2. Con: Not Agreeing With Each Other 

dave-nevogtWhen you have one angel investor, you can devote your time to working closely with that person, bouncing ideas back and forth, and turning your project into a collaboration. While this is possible with two or more angel investors, it’s less likely to happen because you will have two parties taking up a similar role, and collaboration will take more coordination/cooperation. – Dave NevogtHubstaff.com 

 

3. Pro: Access to Their Portfolio Companies

 Firas KittanehAngel investors are generous with their introductions and often invite you to tap the other entrepreneurs in their network. With multiple angels backing your business, you can leverage their collective influence and connections to grow your business. Even if one of your angels is unresponsive or declines to offer an intro, you can simply name drop them when requesting meetings with other founders. – Firas KittanehAmerisleep 

 

4. Con: Keeping Your Story Straight 

Kevin XuOne con is that you want to make sure your story delivers a congruent message to all investors. Most importantly, you want to make sure they all understand that message the same way. If they don’t, that can be a problem. – Kevin XuMebo International 

 

 

5. Pro: Access to Multiple Minds 
Chris BarrettFinding multiple strategic angels makes sense. This way, you can create your own mind trust of experts who believe in you and are financially invested in making sure you have the knowledge to succeed. Diversity is extremely important in all aspects of your startup. Attracting several angel investors from different backgrounds allows you to develop your business, with multiple safeguards in place. – Chris BarrettPRserve 

 

6. Con: Giving Away More of Your Business

Peter DaisymeEvery person you bring in as an investor will want a piece of your business. That means the more people that come on board, the larger chunk of your company you are no longer in control of. While you get more money, it also means you will have a larger amount of equity to give away when it’s time to pay them back. – Peter DaisymeDue Invoicing 

 

7. Pro: Expanding Your Business Network

Dustin CavanaughA pro to taking on multiple angel investors is the opportunity to expand your business network by acquiring new stakeholders who are incentivized by the positive performance of your business. The more investors you have, the larger your business network grows. – Dustin CavanaughRenewAge 

 

 

8. Pro: Increased Odds of Success 

Anthony PezzottiBy utilizing more than one angel investor, you’re bringing double the years of experience, advice and guidance to your venture and vastly increasing your chances to succeed. According to a study done at Harvard Business School, businesses funded by angel investors are much more inclined to remain in business longer, experience substantial growth, and see a larger rate of return. – Anthony PezzottiKnowzo.com 

 

9. Pro: Choosing One to Represent

Hongwei LiuAll  In my experience, angels can be active or passive, in that they want regular updates or are content with others actively managing the company. A pro I’ve found is having one lead angel who can speak for all others in a round, and who is interested and able to actively contribute in governance. They also must be credible and respected enough for other angels to take a back seat to them. – Hongwei Liumappedin 

 

11 Sabotaging Startup Mistakes New Founders Make When Managing Cash Flow

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is a common mistake new founders make when managing cash flow that can easily jeopardize the future of their startup?

 

1. Not Having a Line of Credit

Kenny NguyenIt’s great if you have sales that are going to be very profitable for your company. However, if you have to buy a lot of materials/time upfront to execute the sales or sell to companies that mainly have longer paying invoices, you may run into a cash flow problem. Getting a line of credit with a bank can make or break your business. I always tell founders to get one before they need it. – Kenny NguyenBig Fish Presentations 

2. Trying to Buy Growth

Jonathan ShokrianA lot of founders think of their bankroll as a never-ending gobstopper, that burning absurds amounts of cash to grow overnight is healthy, and funding is always available. However, it’s important to remember that growth doesn’t always equal a healthy business, and money can and will run out eventually. Building a brand takes time. Healthy businesses are grown organically and slowly. – Jonathan ShokrianMeUndies Inc 

3. Locking in Real Estate

Kim KaupeNew founders tend to get overly ambitious when it comes to building their company — they need employees, an office, furniture, the works! However, locking into a long-term office contract can create a huge hole for your cash to flow out of every month. Even worse, if the business isn’t churning out enough in profits, there is no way to extract yourself from the payments to your landlord. – Kim KaupeZinePak 

 

4. Not Reinvesting Back Into The Company

Anthony PezzottiMost business owners will start out by pocketing whatever the business earns, acknowledging any company profit to be their salary. However, if you don’t reinvest back into the business, you’re essentially starving the company’s growth. It can be bothersome to put your well-deserved dollars back into the company, but in the long run, your business will be better for it. – Anthony PezzottiKnowzo.com 

 

5. Not Having a Reserve

Elle KaplanOften, startup owners will operate on a thin margin and spend almost every dollar as soon as they get it. This “grow or die” mentality can be great during good periods of business, but can prove disastrous when you have unexpected expenses or a slow period. Similar to a personal emergency fund, startups should always have some money reserved for surprises, even when everything is going well. – Elle KaplanLexION Capital 

6. Letting Tax Time Be a Surprise

Laura RoederToo many business owners forget about taxes when looking at their profitability. It’s easy to just count the money in the bank, forgetting that a significant chunk of it is going to need to be handed to the government. Don’t just assume that you’ll have cash leftover when tax time comes. Budget for your yearly tax bill every month so that you can stay on top of your real cash flow situation. – Laura RoederMeetEdgar.com 

7. Mindless debt, Salaries and Spending

Alisha NavarroI come from a background of bootstrapping and grassroots. Mindful debt, well-planned out debt, debt that increases sales all are examples good debt. Thinking you should make a huge salary just because you are the CEO is dangerous. Think of your company as a long-term investment; you don’t want to take the money out before it matures. You want to reinvest generously. – Alisha Navarro2 Hounds Design 

 

8. Accepting Sales With Bad Payment Terms 

Chris GowardMost new entrepreneurs don’t realize they can negotiate terms and get access to much more cash than they imagined. Consider the difference between a typical Net 45 payment upon completion compared with a 50 percent up-front deposit and Net 15 on completion. The difference could mean thousands of dollars in saved interest. You can set the expectation for how soon and how often you’re paid. – Chris GowardWiderFunnel 

9. Not Keeping Updated Records or Books

Andrew O'ConnorBecause most founders lack the financial knowledge or accounting acumen, they may not realize the need to keep books and financial records as updated as possible to understand the current cash flow and what is still outstanding. A good automated accounting system can provide a way to avoid this mistake. – Andrew O’ConnorAmerican Addiction Centers 

 

10. Assuming One or Two Good Months Is the New Normal 

Adam SteeleIt’s great when things start to really pick up for your business, but it’s dangerous to assume that you’ve arrived because you met your goals for a short period. Make sure you’re on steady ground before you increase spending to match new levels of income. It may not last for very long. – Adam SteeleThe Magistrate 

 

 

11. Looking at Analytics Platforms Instead of Quickbooks

Carter ThomasFounders often look at the analytics platform being used inside their company to gauge success. They may see a certain number in Google Analytics E-Commerce data, but that doesn’t account for returns, credit card fees, chargebacks and failed payments. Your P&L statement, however, is the ultimate mirror for your financial health. – Carter ThomasBluecloud Solutions 

14 Ways of Splitting Equity With Co-Founders or Employees Without Giving the Company Away

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

1. Founder Vesting 

jeff epsteinIt’s imperative to have founder vesting with multiple co-founders. Founder vesting implies that the longer the founders work together, the more they earn (typically over 3-4 years). It’s a pretty standard practice and solves a lot of potential problems that may arise if one of the founders chooses to leave or is removed from the team. – Jeff EpsteinAmbassador 

 

2. Vesting Over Time 

John RoodEveryone should be on a vesting schedule, including co-founders. The worst situation is to have someone quit and walk away with a bunch of stock. Unfortunately, this happens all the time. Protect yourself by having everyone on a multi-year vesting schedule. – John RoodNext Step Test Preparation 

 

 

3. Grunt Fund 

Lane CampbellInstead of signing a static agreement with your co-founders, it makes more sense to use something like the Grunt Fund by Mike Moyer to allocate equity based on who is contributing to the business. It’ll help set the venture on the right path. – Lane CampbellCreately 

 

 

4. Performance Incentive-Based Equity 

Dustin CavanaughA great way to structure equity assignments for early stage founders and employees without giving away the farm is to establish set performance-based metrics. This motivates and incentivizes all stakeholders to reach their performance-based goals while simultaneously protecting the company from assigning equity where it is not earned or deserved. – Dustin CavanaughRenewAge 

 

5. Contracts 

Nicole MunozEquity often dictates who makes the decisions within your company. Decide who’s in charge first, and then develop contracts that make it clear who is responsible for what aspects of the business. You can easily justify a higher equity stake if you are also responsible, as CEO, for the difficult work of growing your company. –Nicole MunozStart Ranking Now 

 

6. Discount to Market 

Nicolas GremionRather than flat out giving out stock based on position or performance, sell shares to founders and employees at a steep discount (AKA the insider deal). Perhaps go as far as making it a rule that, for example, during their first year, everyone has to invest 10 percent of their salary back into the company. They’ll be motivated to see it grow while the company itself benefits from the extra cash infusion. – Nicolas GremionFree-eBooks.net 

 

7. Equity Calculator 

Ajay YadavThe simplest way to do split equity is to use the co-founder equity calculator tool on foundrs.com. I recommend not splitting equity 50/50 because it will help prevent delays and conflicts in decisionmaking, allowing you to move the company forward more quickly and under a unified vision. – Ajay YadavRoomi 

 

 

8. Equally 

David CiccarelliMy partner and I are in a unique position because, not only did we found the company together, we’re also married. Since marriage is an equal union, we took the approach that equality should apply in the company as well. Our first agreement was a 50 percent split when we established the first legal structure, a partnership. When we incorporated, we kept the same 50/50 split. – David CiccarelliVoices.com 

 

9. Standard 10-15 Percent Stock Option Plan

Kristopher JonesAllocating equity to key employees assumes – in the future – you intend to raise capital, sell your company or take your company public. Therefore, it’s critical to align your personal interests with those of your team. Based on experience raising capital, as well as buying and selling multiple companies, I recommend that you implement a standard 10-15 percent equity pool in the form of stock options. –Kristopher JonesLSEO.com 

 

10. Four Years With One Year Cliff 

Hongwei LiuAs every founder knows, the challenges a startup faces are completely different every six months. It’s hard to know if someone, be it a founder or early employee, is going to grow with the company, if their skills on Day 1 will be as valuable on Day 1,000. Somake sure everyone is vesting (four years with one year cliff is standard). And don’t be afraid to have an annual heart-to-heart between founders. – Hongwei Liumappedin 

 

11. Hybrid System 

Joshua LeeWith co-founders, I like to split the company evenly. This aligns us because it’s in each of our best interest to apply 100 percent effort and creativity to the company’s success. For early employees, I like to award ”phantom shares” that vest based on timelines and reaching agreed on performance milestones. Chobani yogurt CEO, Hamdi Ulukaya, followed a similar path with his employees.  – Joshua LeeStandOut Authority 

 

12. Milestone-Based 

Raoul DavisDivvying up equity to team members can dilute the valuation of the company.  The best way to justify the equity that was shared to an investor is by tying it to performance.  If team members earned equity based on completing significant milestones, it becomes much more digestible. – Raoul DavisAscendant Group 

 

 

13. Deferred Rewards 

Brandon StapperYou can assign bonuses that are redeemable at any schedule you like. Shares can be non-redeemable until retirement, for example. On the other hand, you don’t want to give away too much fluff. Employees deserve to enjoy their compensation as they see fit. – Brandon Stapper858 Graphics 

 

 

14. Revenue Sharing Rather Than Equity 

Blair ThomasCo-founders should always have skin in the game, but early employees that are seeking wealth beyond their normal salaries can be incentivized with revenue sharing rather than with raw equity. This gives them the motivation they need to operate at high capacity and push the business forward without robbing the company of much-needed equity come time for investment or exit. – Blair ThomasFirst American Merchant 

15 Mistakes Entrepreneurs Make When Deciding on an Exit Strategy

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

 

1. Trying to Exit as Fast as Possible 

Kim KaupeEntrepreneurs can get so excited about how quickly they can exit that they fail to look at the big picture. The mantra of start it, pour gas on it, and sell it fast isn’t always the best strategy. If Mark Zuckerberg had taken the first offer he received for Facebook, he wouldn’t have nearly as many zeros in his net worth. Take time to look at the big, long-term picture before selling fast. – Kim KaupeZinePak 

 

2. Not Understanding Cash Up Front Versus Earnout 

Nick ChasinovA buyer will often need the entrepreneur to stay on after the sale, which will dictate the payment terms, typically in the form of a performance-based earnout with future upside. Committing to an earnout with performance-based triggers that are out of your control can be catastrophic. Once you relinquish ownership you are not in charge, so it is critical to negotiate the cash up front. – Nick ChasinovTeknicks

 

3. Issuing the Wrong Types of Shares 

john ramptonEarly on in business you will decide on the types of shares that are issued. This can ultimately sink or swim your business into an exit strategy. Make sure you’re issuing the correct types of shares to founders, employees, investors, advisers and anyone else getting shares so that you don’t screw yourself out of an exit strategy. – John RamptonDue 

 

4. Giving Into Pressure From Others, Like Investors 

Peter DaisymeWhile investors do have a say in your exit strategy, it’s a mistake to just give into pressure from others when deciding on an exit strategy. Often, those pressuring for the exit are just looking for that fast return and not considering the health or benefit for the business. Waiting a bit longer for a better offer could even yield more return. – Peter DaisymeDue 

 

5. Taking the First Offer 

Murray NewlandsThe first offer may not be the best offer for your business. It’s easy to get excited and just say yes to the first bidder. A “wait and see” strategy is better as word gets around that someone is interested in your company. This may generate better offers and drive up the demand. This also gives you time to further study the offer. – Murray NewlandsDue.com 

 

6. Looking Only at the Money on the Table 

Andrew ThomasThere’s more to an acquisition than just the check you receive. This acquirer will now have control over your product, customers and brand. There’s also a great chance that you’ll be working for them the next couple of years. Avoid the mistakeof just selling for the money. Consider your mission and ask if this company will help you enhance your ability to reach the goals you set for yourself. – Andrew ThomasSkyBell Doorbell 

 

7. Not Understanding What Drives Value 

Mark DaoustI see many entrepreneurs spend a lot of time and energy building their companies in ways that add little to no value to their business. Worse yet, many plan for an exit but implement strategies that actually hurt their value. When planning your exit, keep in mind four principles: reduce potential risk, demonstrate growth prospects, make it easy to transfer and make it easily verifiable. – Mark DaoustQuiet Light Brokerage, Inc. 

 

8. Focusing on an Exit From the Start 

Jennifer MellonBuilding a company that is built to last, one you could still be running 40 years from now, is the greatest exit strategy you can implement. If you build a great company, the rest will fall into place. Focusing on an exit can lead to mistakes, sloppy processes and a faulty foundation. – Jennifer MellonTrustify 

 

 

9. Not Hiring a Banker 

Kristopher JonesThe key to getting multiple offers and the highest price for your business is to hire a banker. A banker or broker will have the requisite experience to prepare you for a road show, help you schedule dozens of meetings with prospective buyers and help you negotiate term sheets. Furthermore, once you decide on a buyer, the banker will help you through a successful due diligence process. – Kristopher JonesLSEO.com 

 

10. Over-Valuing the Business 

Nicole MunozIn order to earn the highest profit from the sale of your business, you need to directly correlate your valuation of the company to your book of business. When you prepare to sell, the buyer will not have the same emotional ties to your company that you do. Therefore, supporting the sale with excellent accounting records ensures you receive the full amount you expect for your business. – Nicole MunozStart Ranking Now 

 

11. Not Considering the Lifestyle Factor 

Jesse LearExit strategy plans are typically very money-centered and can fail to account for the possibility that you could end up loving what you do. Ask yourself why each potential exit strategy sounds attractive to you. For example, if your motivation behind pursuing acquisition is personal financial security, will you still be motivated to sell when you’re making a $1M/year salary? – Jesse LearV.I.P. Waste Services, LLC 

 

12. Being Afraid of Talking to “Competitors”

Andy KaruzaMany entrepreneurs are worried about getting close to competitors or even talking to them. In fact, these very same competitors could make for an easy acquisition. If you’re in the process of looking for an exit, start talking to the right people over at your competitor’s company. Don’t divulge critical details, but keep the discussion open at a high level until qualified interest is determined. – Andy KaruzaFenSens 

 

13. Not Thinking Two or Three Moves Ahead 

Doug BendRegardless of which exit strategy you pick, you are likely to go through a due diligence review. It is wise to work with an attorney to go through a mock due diligence process to make sure that all of your legal ducks are in a row before engaging with a potential exit partner, rather than having to scramble to get everything in order once you have found an ideal exit strategy. – Doug BendBend Law Group, PC 

 

14. Viewing the Value of Your Company Through Your Eyes Only 

Peter BonacIt is a mistake to view the value of your company through your eyes only. The true value of your company depends on the buyer, so it is best to view it from the buyer’s perspective. As every buyer will see different values in your business, ask yourself what areas of your company will add the greatest value to that particular buyer and grow those areas to make them more appealing. – Peter BonacBonac Innovation Corp. 

 

15. Not Adequately Training Key Team Members 

Andrew SchrageIf the company falls flat on its face after you leave, the person you’re handing it over to isn’t going to be very happy. Even worse, the transfer of the business may not happen at all if the other party sees this as a risk beforehand. – Andrew SchrageMoney Crashers Personal Finance 

The Pros and Cons of Marketing Automation for an Early-Stage Startup

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is one pro or con of marketing automation for an early-stage startup?

 

1. Pro: You Can Scale Quickly With Minimal Resources

Diana GoodwinMarketing automation can be a lifesaver for an early-stage startup that has to gain traction quickly because it allows a startup to quickly reach a large number of prospects with minimal manpower. Marketing automation has come a long way, and there are many hacks to ensure that yourcustomers still feel like they are getting a customized or personal message, despite the automation.

– Diana GoodwinAquaMobile Swim School

 

2. Pro: It Sets the Stage for Efficiency from the Start

Peter DaisymeWhile many stress that they don’t have enough hands to take care of all the work in a startup, it’s good to think lean and efficient from the start with as many marketing automation tasks as possible. This gives you more time to develop your messaging and personalization strategies as well as access greater amounts of data than if you had focused on manual marketing tasks.

– Peter DaisymeDue.com

 

3. Con: Automated Tasks Are Too Easy to Forget About

jared-brownWhen you’re starting out it’s important to save time and work efficiently. Marketing automation makes sense, but it also makes it easy for you to forget the process. Unless you’re automating menial marketing tasks like data entry, I recommend doing your marketing manually until you get a good understanding of the process and everyone involved.

– Jared BrownHubstaff

 

4. Con: You Don’t Know Who You Are Yet

Murray NewlandsSending out automated messages about your brand before it is fully formed is a mistake. During this time, who you are and what you offer could change. Without a personal touch, you might only confuse your audience. It’s better to wait until a later stage when this identity if more fully formed.

– Murray NewlandsDue.com

 

5. Con: You Don’t Get to Know Your Audience

Nicole MunozBrands that automate too soon may risk the advantage that comes with getting to know your audience on a deep, personal level. People buy from people. So to sell to your ideal customer, you have to understand every single thing that motivates them to buy from you over yourcompetitors. Engagement is the only way to do this. Be certain you know exactly who your buyers are before you automate.

– Nicole MunozStart Ranking Now

 

6. Pro: No Audience Is a Bad Audience

Andrew Namminga (1)Using automation to grow social accounts is great for early-stage startups. Whether the growth is targeted or not, having a following in itself encourages growth. Of course, engagement will be low, but it’s better to have a decent following with low engagement than it is to have no following with no engagement.

– Andrew NammingaAndesign

 

7. Con: You Can Lose Focus on the Main Objective

Zac JohnsonAutomation is great, but it can also lead to distraction and lack of focus. A good example of this would be if you were focusing on customer support and built a knowledge base to essentially “automate” any and all support questions. If you completely automate this process, you’d be lacking in support and missing out on the user experience. This same principle applies when starting a business.

– Zac JohnsonHow to Start a Blog

 

8. Pro: It Helps Startups Define Engaging Language

Nick EubanksWhile direct human interaction is critical in the early stages of learning about a company‘s ideal customer profile, automation can also provide big wins in helping define engaging language and offers. With a thoughtful and well-defined conversion funnel up front, startups get the advantage of quickly gaining insight into what offers drive responses.

– Nick EubanksI’m From The Future

 

9. Pro: You Improve Efficiency

Marcela DeVivoWith the limited resources usually associated with early-stage startups, it’s important to maximize efficiency from the beginning in order to accelerate growth. Startups that invest in marketing automation from the very beginning can do more with less. Reducing labor overhead is a massive savings for startups, who can then use savings to invest in sales and marketing.

– Marcela De VivoBrilliance

 

10. Con: You Don’t Know What a Good Lead Looks Like

Vik PatelGood marketing automation requires an understanding of leads and their behavior, which differs for every company. The major benefit of marketing automatization is the ability to send personalized marketing content. But, unless your business understands what a good lead looks like and which content is likely to increase conversion rates, it’s difficult to design effective automation processes.

– Vik PatelFuture Hosting

 

11. Con: It’s Easy to Make Mistakes

Myles VivesIt’s easy to spread yourself out too thinly as an early-stage startup. Marketing automation might sound great, but it takes time and expertise to set up properly. If you have no experience with automation or cannot hire an expert, you risk sending your customers the wrong emails at the wrong times. Your customers will know that software is really behind your email messages.

– Myles ViveseREACH

 

12. Pro: You Get Valuable Data for Later

Patrick BarnhillUsing marketing automation as an early stage startup is the immediate collection of data. By automating your marketing processes up front, you will get data collection early on without having to spend too many hours on marketing. This data will become more and more valuable as you growyour company.

– Patrick BarnhillSpecialist ID, Inc.

12 Ways to Gain Insight Into What Your Customers Are Thinking

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What’s one unique way to gain insight into what your customers are thinking?

 

1. Launch a Chat Service on Your Site

Aaron SchwartzEvery time we make a major product change, we open a chat service on our site so fans can give us immediate feedback. Our preferred product is Olark, since it’s extremely easy to integrate and truly affordable. You can wait for folks to ask questions, or you can even interrupt them and ask, “How can we help?” The more you can ask for feedback in real time, the better.

– Aaron Schwartz, ModifyWatches.com

 

2. Use Heatmaps

Adam SteeleHeatmaps are one of the most interesting things to happen to e-commerce, in my opinion. Tracking the movements of people’s eyes hasn’t only told us how to arrange our web pages better, it’s also taught us things like which product angle attracts the most attention or which features customers read first. I think they give you more than a customer would even know how to tell you.

– Adam SteeleThe Magistrate

 

3. Ask Them

Elliot BohmPick up the phone and call a random sample of customers. You’d be surprised at the suggestions and comments you receive. There are survey and website tools, but phone calls can get the best response and show customers you care.

– Elliot BohmCardcash.com

 

4. Poll Them

Jonathan LongSend out a survey to your customer base using a platform like SurveyMonkey or a similar service. If you really want to trigger a high response rate, offer a discount or special offer as incentive. You will see a much higher completion percentage if you offer something of value. Even the smallest of “bribes” will result in a much larger data pool of feedback.

– Jonathan LongMarket Domination Media

 

5. Beta Test Your Product

Andrew ThomasBeta testing is a great way to learn about your customers before releasing your product. In our experience, beta testing gives us real user feedback that lets us challenge our assumptions instead of guessing how a customer will use our device. Make it clear in the beginning that you want their unbiased feedback. This gets them excited about being heard and contributing to the process.

– Andrew ThomasSkyBell Video Doorbell

 

6. Have Your Team Ask and Listen

Darrah BrusteinI’m in the business of events, so I have the fortune of being face-to-face with my customers. I tend to find I only get the extremes of feedback as the founder, so I utilize my team to talk with everyone else and get their real thoughts, praises and critiques. After each event, I have my team submit that feedback to me while it’s fresh so we can process it and do with it what is needed.

– Darrah BrusteinNetwork Under 40 / Finance Whiz Kids

 

7. Try Popup Chat Boxes and Surveys

A great way to learn about your audience (while also increasing conversions) is to implement a popup chat box or survey while users are live on your site. This is a great time to approach them with a simple popup that says “How can I help?” You’ll be amazed by how many different questions you’ll receive while also potentially seeing a nice jump in signup conversions.

– Zac JohnsonHow to Start a Blog

 

8. Try Usability Testing Videos

Marcela DeVivoPay for a service like usertesting.com to film your actual customers using your site. Having that kind of direct insight into different segments of your customer base can help you fine-tune your design, marketing materials, images, etc. It’s one thing to “think” about how they’ll use your site, and another to physically watch them doing it. There’s much to be gained!

– Marcela De VivoBrilliance

 

9. Start a Facebook Q&A Group

Joshua LeeWe follow our friend Ryan Levesque’s “ask method.” Attempting to mind read your customers is often as successful as throwing darts in a pitch black room with no dartboard on the walls. Start simple. Create an open company Facebook group dedicated to Q&A. Set a company representative to monitor the group and answer quickly during business hours. Publish those business hours to set expectations.

– Joshua LeeStandOut Authority

 

10. Get Feedback on Product Pages and Immediately After Checkout

Patrick BarnhillThe lack of human touch with e-commerce can make it hard to get valuable feedback. Try embedding a simple “Was this product description helpful” button after the content section of product pages. Also add a simple way to collect feedback right after a customer checks out.

– Patrick BarnhillSpecialist ID, Inc.

 

11. Learn From Those Who Didn’t Buy, Rather Than Only Talking to Customers Who Did

Jake DunalpWhen we talk about bridging the gap between sales and product, it’s important to make sure the product is talking to customers who didn’t buy as often as those that did buy. Gravitating only toward people who liked us makes us miss out on key learnings about why others didn’t. This is key for increasing conversions and reducing churn.

– Jake DunlapSkaled

 

12. Listen to Your People

Kevin ConnerYour sales and customer service teams know your customers better than anyone. But to get this information from them, you need to be intentional in gathering it. Schedule a time to meet with them about this. Prior, be sure to formulate great questions, such as: Who is our ideal customer? What do our customers love/hate about us? What do we not offer that our customers need or expect from us?

Kevin ConnerWireSeek

How to Decide Between Venture Capital or a Small Business Loan

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

In what situations should I pursue either a small business loan or venture capital?

 

1. You Need Help Through Rough Times

Adam SteeleI look at VC funding if I have solid plans for development and growth and I have projections available already that suggest that’s a profitable option. Generally, I don’t go for business loans unless the opposite is true. Business loans for me are about riding through the rough spots. For that reason, I tend to borrow much less money in loans than I might try to raise as capital.

– Adam SteeleThe Magistrate

 

2. You Aren’t in a Hurry to Grow

Aaron SchwartzTaking venture capital is a slippery slope. You get cash quickly, but then your interests in possibly selling the company for a nice “personal win” need to disappear. If you want to retain ownership and grow slowly, take out a loan. If your goal is to build something huge, bring on the capital, expertise and network of a VC firm.

– Aaron SchwartzModify

 

3. You’re Expanding Rapidly

Manick BhanVenture capital is extremely helpful if you need to move fast, whether you’re developing a new product, scaling your company, or increasing the size of your staff. Venture capital can be a great for an influx of cash, but it often comes with clear expectations of where the company will go with the money. However, if you’re looking to bridge a small gap, loans can be a great way to stabilize cash flow.

– Manick BhanRukkus

 

4. You Already Have Steady Revenue

Brandon StapperProfits don’t come from growth; they come from efficiency. With that in mind, if you already have a revenue stream, why would you sell equity to a venture capitalist? You’re just giving away a share of your success. Venture capitalists are designed to help companies with major research and development needs — taking a gamble before revenues are in place. If revenues are solid, go for a loan.

– Brandon Stapper858 Graphics

 

5. You’ve Weighed Risk and Reward

Corey NorthcuttAs a three-time bootstrapped founder, I hate unnecessary risk. But I respect that some businesses can’t be profitable enough at every stage. There’s always a weighing of risk/reward with financing. Does the loan require a personal guarantee? How much equity and “breathing room” do the VC’s terms leave you? The answer falls entirely on the specifics, so read the fine print.

– Corey NorthcuttNorthcutt Inbound Marketing

 

6. You Aren’t Planning to Grow Very Big

Cynthia JohnsonSmall business loans are designed for those small business owners and freelancers who are not planning on growing very large but could use the capital to set up an office and cover expenses until they get some clients and revenue coming in. VC is really for those startups that are looking at a much bigger scale.

– Cynthia JohnsonAmerican Addiction Centers

 

7. You Need $1 Million or More

Daniele GallardoIf you have committed customers but you require cash to purchase materials to fulfill the orders, then go for a business loan. You know you are going to get your money back, and you know when. I see the loan as an instrument to give you some elasticity in short terms. For anything else, especially if the sum is the scale of $1 million and higher or longer time scale, I would look into VC firms.

– Daniele GallardoActasys

 

8. You Want Someone to Guide You

Jayna CookeThis decision ultimately depends on if you want additional resources or not, and if you do need additional resources, make sure you are connecting with a venture capitalist that is able to provide this. You have the opportunity to get investors that have invested in similar industries, they know the struggles and can from there connect and help guide you. Business loans are more hands off.

– Jayna CookeEVENTup

 

9. You Expect to See a Large Return

Chris BrissonIt’s all the rage to get a VC firm to back you, when in most cases you just need capital to grow your business. Keep in mind that most VCs will want to see a 10 times return on their investment. So unless you have a business or startup that will see large returns, don’t even waste your time. We got a loan from American Express and a line of credit from the SBA to grow our business.

– Chris BrissonKickaConference

 

10. You’re in a Hurry

Anthony PezzottiRaising money from VCs can take months, sometimes years with strenuous efforts. Small business owners with poor or non-existent credit can have a very difficult time obtaining a loan from a bank, and may even have to give collateral in order to secure the business loan. With Kabbage, you’ll find out instantly if you’re approved. They offer flexible funding, and have fewer requirements than a bank.

– Anthony PezzottiKnowzo.com

 

11. You Want the Less Expensive Option

Mark CenicolaWhen cash flow is sufficient to cover loan payments and repayment in full is likely, a loan is going to be a much less expensive option. If you borrow $1 million, you may pay 10 percent per annum. With venture capital, you’re going to give up a minimum of 10 percent equity in your business. If you increase the value of your business tenfold, you’ve effectively given up $10 million in value to a VC.

– Mark CenicolaBannerView.com

 

12. You Want Full Control

Andrew SchrageThe biggest factor would be the amount of control you want regarding how the money is used. A bank will let you spend the money basically as you wish, whereas a venture capitalist may have certain conditions. Plus, a VC will probably want or have a say in the growth and direction of your operation. If you want to be the sole influencer, choose a small business loan.

– Andrew SchrageMoney Crashers Personal Finance

15 Unusual Ways to Find an Investor

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

Name one unusual way I might find an investor.

1. Your Former Boss

Brian PallasHaving known you professionally from a previous work experience, your former boss might be the best person to invest in your company in case he or she likes the idea.

– Brian PallasOpportunity Network

 

2. An Angel Group

Nick ChasinovThere are angel investing groups all throughout the United States that are actively seeking prospective new members. One unusual way to find an investor is to attend an angel group meeting as a guest to evaluate the opportunity as a prospective member. You will have full access to all attendees and an opportunity to network with a potential future investor in your company.

– Nick ChasinovTeknicks

 

3. Friends and Family

Nicole MunozThose closest to you might be more inclined to invest in you. Offer them a fair return on their investment, and make sure you stick to it. When you start small with those you know and who know you, you can fine-tune your process so that when it’s time to reach out to larger investors, you’re confident, professional, and well aware of what it takes to do business.

– Nicole MunozStart Ranking Now

 

4. An Adventurous Hobby

Adam SteeleFinding an investor who is passionate about your work is the holy grail, and finding them is easier when you already share a passion. Active hobbies like skiing have made it easy for me to meet people who work as hard as they play, and some of them have been in a good position to invest if I wanted to pursue that.

– Adam SteeleThe Magistrate

 

5. Customers

Nicolas GremionThey know your products and/or services. Hopefully they also enjoy using them, and they have some money to spend. So who better to ask? Done the right way, your customers should also appreciate that you’re trying to grow and offer better products/services. By demonstrating you have their best interest at heart it’s a win-win.

– Nicolas GremionFree-eBooks.net

 

6. Thought Leadership Articles

Brittany HodakI write regularly for Forbes — and semi-regularly for several other outlets — and although I’m not explicitly writing about my company, every piece is a reflection of it. I’ve had multiple VCs inquire about ZinePak because they landed on an article I wrote and saw that I have a marketing company. Writing is a wonderful way to boost your profile and reputation as an expert in your field.

– Brittany HodakZinePak

 

7. Social Clubs

Peter DaisymeSocial clubs are reemerging in major cities around the country and world for professionals and entrepreneurs to meet up and socialize. This offers a more low-key way to network that could potentially connect you to an investor over a social event, game of tennis or round of golf.

– Peter DaisymeInvoicing

 

8. First Class

Carter ThomasWhile this isn’t groundbreaking, it’s definitely not an actively pursued strategy for startups and founders. I’ve met some of the most influential people in first class simply because I have no competition for attention and the environment is self-qualifying. They know I’m legit because I’m there and I have to time to build a relationship before the pitch because I have more time than others would.

– Carter ThomasBluecloud Solutions

 

9. Someone You Don’t Expect

Christopher KellyTreat every person that you meet as being, at most, one degree removed from being your future investor, because they probably are. Next time someone asks, “What do you do?” answer as if they asked, “How can I help you?” This format works for investment, but it is just as applicable to business development or any other thing that you are trying to develop.

– Christopher KellyConvene

 

10. Vendors

Piyush JainWe are an IT services company and work for lots of startups. Sometimes, when a project is really good and our client lacks some funding, we also take some equity in the project. Lots of IT (also non-IT) vendors provide this option. Talk to your vendors and see if they would be interested in investing. It not only brings you money, but can reduce your cost.

– Piyush JainSIMpalm

 

11. Local Business Owners

Ismael WrixenIt might seem counterintuitive if they have a brick-and-mortar store and you’re starting a business in the online space, but you might be surprised to find that there are owners out there with enough capital and enough interest in modern business to want to invest in a startup.

– Ismael WrixenFE International

 

12. Meet Walter

Brian David CraneI really like Meet Walter, which is a powerful data-backed tool to help narrow down whom you should be pitching to. This is an “unusual” way to find an investor in that the tool can present people you’ve never heard of and who’ve invested in companies like yours.

– Brian David CraneCaller Smart Inc.

 

13. School

Drew HendricksIn more universities and colleges, there are programs and seminars led by investors and business people interested in moving into the investment world. As a student with a potentially good business idea, this is a good place to connect as the instructor may want to mentor and fund you after working with you over the course of a semester or other program.

– Drew HendricksButtercup

 

14. Outdated Advertising Platforms

Nathan HaleWith all the new ways we can get and stay in touch, we often forget there are still other avenues of communication. There are investors who aren’t on LinkedIn, Twitter or Facebook, who still read the local paper, and who may know how to use Craigslist but have never been on Instagram. Use those odd channels to fish out potential investors; you’ll be surprised with what you find.

– Nathan HaleFirst American Merchant

 

15. Your Parents’ Circle

Alexandra Levit 2Millennial business owners often have high-performing parents. These parents and their friends, who are usually members of the Baby Boomer generation, are retiring from traditional work and looking for smart and intriguing places to invest their time, expertise and money. Work with your parents to host a party or outing where you share information about your business without a hard sell.

– Alexandra LevitInspiration at Work

11 Reasons Crowdfunding Campaigns Fail

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What’s one reason why a crowdfunding campaign fails?

1. There’s Not Enough Buzz

Drew HendricksWhen it comes to a crowdfunding campaign, you have to hustle to create the buzz around it, convincing others that people are really “hot” on your idea. Once investors start rolling in, the momentum can take over, although you still need to continually leverage social platforms, influencers and all types of channels to remind people of your campaign. Talk about it continually.

– Drew HendricksButtercup

2. There’s Not Enough Incentive

Miles JenningsNo matter what your crowdfunding campaign is focused on, those contributing need some kind of incentive to give their money — product and/or service. They need to know that they will get something out of the deal.

– Miles JenningsRecruiter.com

 

3. You’re Not Understanding Your Target Audience

Stanley MeytinOften companies feel they have a great idea but fail to test it out before creating a crowdfunding campaign. It is important to first put in the research and understand who your target audience is. Create value, educate people and be sure your product or service is something people are really interested in, and market to them in the right way.

– Stanley MeytinTrue Film Production

4. You Have No Proof of Concept

Corey NorthcuttNot having a concise pitch can kill a campaign. So can a poor proof of concept. Before you ask for money, make sure you can demonstrate the value of your creation; not just talk. Even better, demonstrate its viability in the marketplace by drumming up demand and presenting evidence of as a part of the pitch.

– Corey NorthcuttNorthcutt Inbound Marketing

 

5. You’re Not Showing Your Audience How They’re Connected

Angela RuthBeyond the list of takeaways for certain contribution amounts, most campaigns don’t really connect with their audience of potential investors because they never say what the product or service will do for them. It may give a list of benefits, but there is no connection to an issue or problem the audience has or relates to. This connection would get them to invest or attract more people.

– Angela RutheCash

6. You’re Using Low Quality Video

Kristopher JonesIn most instances, I think it’s OK to pull out your iPhone, shoot some video, and post it to your Facebook page or YouTube channel. However, when it comes to launches a successful crowdfunding campaign, I don’t believe you should skimp on video production. In fact, I think you should invest several hundred dollars in making sure your video is shot professionally edited and polished.

– Kristopher JonesLSEO.com

7. You Fail to Build Trust

Andrew ThomasMost crowdfunding projects fail to deliver to their customers. Over two years later, our campaign is still one of very few crowdfunded hardware projects that fulfilled its orders. Visitors are aware of this, and crowdfunding projects fail because the campaign doesn’t build enough trust. Be trustworthy in your video, be realistic with your claims, and make a quality campaign page with good images.

– Andrew ThomasSkyBell Video Doorbell

8. Your Video Doesn’t Tell a Story

Derek CapoStories are the best way to sell anything and the only way you can effectively do that on crowdfunding campaigns is to have the right video to deliver the message effectively. Your video has to connect with the audience and has to feel genuine. If it doesn’t, then it will be difficult to get anyone to follow you or buy into your story.

– Derek CapoeFin

 

9. Your Product Doesn’t Solve a Problem

Obinna EkezieLet’s start with the No. 1 reason that crowdfunding campaigns succeed — your product solves a problem. If your product doesn’t solve a problem, you likely won’t succeed. Before you post your product, test it out on people who will give you honest feedback. If you’re leveraging crowdfunding to build a prototype, make sure to outline the product as much as possible and seek as much feedback as possible.

– Obinna EkezieWakanow.com

10. You Set the Wrong Goal Amount
Ayelet NoffIn crowdfunding campaigns, image is everything. If, within the first few days, your campaign is not able to achieve its funding goal, reporters coming to your page won’t write about it because it will appear like a doomed campaign, and backers won’t back you for the same reason. That’s why it’s better to set a conservative goal that you can actually succeed in raising. Once achieved, the sky is the limit.

– Ayelet NoffBlonde 2.0

11. You’re Relying Too Much on the Crowdfunding Platform

Fan BiNew entrepreneurs often tell me they’re going to launch their product on a crowdfunding platform — great. So I ask them how big their email list is, how many bloggers and publishers are ready to write about the launch. Huh? They think if they get traction on the platform, crowds will rush to their campaign. Even though that’s true, you need to first solve for the initial traction part.

– Fan BiBlank Label

14 Pros and Cons of Having a More Involved Relationship With Your Investor

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is one pro (or con) of having a more involved relationship with your investor where you actively seek or get advice?

1. You Get Brutal Honesty

Angela RuthWhile this can be a pro or con, a person who knows you better will tend to be more brutally honest about how they see things. The advice will hit at a much more personal level for this reason. While it may not always be something you want to hear, it is most likely something you need to hear. The tough love of a closer relationship with an investor can be what helps create change.

– Angela RutheCash

2. They Have Seen It Before

jeff epsteinGreat investors are happy to share advice from other portfolio companies. We’re fortunate to have a great relationship with our lead investors and provide insights from experiencing many of the issues we face. From high-level strategy to tactics, we can leverage to push forward as fast as possible.

– Jeff EpsteinAmbassador

3. They Want to Run Your Business

Blair ThomasInvestor advice is almost always welcome; so long as there’s a boundary between what is acceptable and what is not. It is important that an investor offers you advice in his or her area of expertise, but sometimes an investor can mistakenly feel that they know how to run your business, offering insight where it’s not needed, which could be detrimental to your operations.

– Blair ThomasFirst American Merchant

4. They Can Help You Network

Adam SteeleInvolved investors are probably the kind who have been working in your industry for a while. Their experience may have involved working with some of the biggest leaders in your field, and it’s possible that they’re willing to help put you in touch with them. The most experienced investors are often networking goldmines, and if you don’t know who you need to talk to, they likely do.

– Adam SteeleThe Magistrate

5. You Can Overshare

Miles JenningsAlthough its great to have a close relationship with your investor, you want to try and be sure not to overshare too much while seeking advice and being open with this individual. This doesn’t mean you need to hide things from them, but you shouldn’t be stressing your investors out with every little detail and up and down within your business. Keep conversation focused on your relationship.

– Miles JenningsRecruiter.com

6. They Support You During Tough Times

Nicolas GremionWe keep our investors updated in both the good and the not-so-good times. And while I was anxious to report bad news at first, I’ve learned that our investors are truly supportive. So don’t be shy to reach out to them in tough times. They may prove to be the help you need.

– Nicolas GremionFree-eBooks.net

7. You Might Take the Wrong Advice

Brian SmithSome advice you pay for, and some advice you’re paid to take. Taking good advice from an investor may make the next round easier to raise. But take the wrong advice and the next round may not happen. There’s a reason you have (or should!) set aside equity for advisors and board members. Surround yourself with smart guidance, not just rich advice.

– Brian SmithS Brian Smith Group

8. They May Know Too Much

Derek CapoSometimes it may be best that they don’t know everything. For example, if they get a sense that you aren’t getting along with your co-founders that may scare them from investing in the next round, especially if that said co-founder was a major reason for investing in the company. In a case like this, if they already know the issue, be transparent and ask for advice on what you’re struggling with.

– Derek CapoeFin

9. They Can Provide an Outside Perspective

Corey NorthcuttWe tend to be blind to ourselves. Nobody ever thinks they have an ugly baby. More than just an investor, any outside perspective helps, and getting feedback on how you’re doing from more angles is always a good thing.

– Corey NorthcuttNorthcutt Inbound Marketing

 

10. They Think About You in Their Off-Hours

Brennan WhiteGetting investor feedback is usually a great thing. However, the more powerful thing about a close relationship with an investor is that they are more actively thinking about you in their off-hours. For us, the investors we talk to most are constantly bringing leads, making introductions, and helping move the mission forward. They’re subconsciously working on the project at all times.

– Brennan WhiteCortex

11. They Help You Stay Focused

Brandon StapperI want investors to know that I do not operate in a vacuum and that seeking advice is part of my job. However, I tend to stay more focused dealing with investor input. I know what I want, get my questions answered, and then go back to work.

– Brandon Stapper858 Graphics

 

12. They Feel More Ownership Over the Investment

Andy KaruzaOne good reason to involve your investor by seeking advice is that they feel more ownership over their investment. This is one of the top two most important concepts for any investor. If they feel more involved, they will be more at ease and will trust you to make the right decisions. They will also be more likely to help you lead on your next round if they have a personal stake in the company.

– Andy KaruzaFenSens

13. They Don’t Have All the Context

Matt DoyleAn investor, as close as they may be, is still someone who has their livelihood to protect. You need to be very, very careful about venting about things that they may not be able to put in the proper context. You could accidentally leave them feeling threatened or conflicted about their investment even if there isn’t a real danger.

– Matt DoyleExcel Builders

14. They Share More of the Experience

Obinna EkezieChances are your investor has experience in many aspects of building a successful business. Therefore, it makes sense to keep your investor as close as possible at all times, and actively seek advice when his or her experience can help you make the best decision. Building a business should not be a test. You should do everything within your power to succeed, and one way is to keep investors close.

– Obinna EkezieWakanow.com