12 Entrepreneurs Share Tips For Hiring Your First Employee

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.

It’s time to hire my first employee. With no prior hiring experience, what’s your best advice for me?

1. Don’t Hire a “Mini Me” 

Brittany HodakWhen hiring a first employee, it can be tempting to look for a “mini me.” Don’t. Every employe  is critical in a small business. It’s much better to hire someone with complementary strengths and interests than someone who is like yourself but a few years more junior. Look for a candidate who enjoys the things you hate and excel at areas that intimidate you. Then, empower them to succeed. – Brittany HodakZinePak 

 

2. Imagine How You Would Feel If You Had to Report to the New Hire 

Shawn PoratI like to imagine what it would feel like if I had to report to my first hire. When I interviewed my  first employee and started thinking about reporting to them, I immediately realized they were not a good fit. The communication and leadership skills were lacking. I’ve used this test for every interview going forward, and it has protected me from many bad hires. – Shawn PoratScorely 

 

3. Outsource or Ask Your Friends in That Industry 

Michael HsuIf you are not hiring core production employees, you may not know what you are looking for. In this case, consider outsourcing because while it “feels” like it’s more expensive, it is almost always cheaper due to existing expertise. Otherwise, ask your friends who are in the industry for help. When I was hiring a developer, I called up all my buddies in the industry for advice on what to look for. – Michael HsuDeepSky 

 

4. Put Candidates on a Probationary Period 

 Firas KittanehSet a 30-, 45- or 60-day probationary period for new hires so that you can vet them on the job. It’s increasingly difficult to filter candidates out based purely on their resume and a couple of interviews because many have become well-trained at selling themselves. However, few will succeed on the job, so using a “trial” period will allow you to hire them on a contract basis and limit your risk. – Firas KittanehAmerisleep 

 

5. Hire Slow 

Bill LyonsYou’re not going to eliminate bad hires all together, but the best way to avoid them is to not attract them in the first place. Spend time on the basics: background checks and real reference checks, but also implement real behavioral assessments that are tailored to the performance-driven culture you want to create. The best thing that works for us is multiple interviews, job shadowing and auditions. – Bill LyonsRevestor 

 

6. Consider Contract and Part-Time Work 

John RoodDon’t forget that there are plenty of good people who are looking for part-time work, either because they are freelance or to supplement their income. By hiring someone part time, you take less of a hit on your cash flow. As a bonus, you get great experience managing a team without all the pressure of full-time employment. – John RoodNext Step Test Preparation 

 

7. Don’t Settle for the First Person Who Lands in Your Lap 

Peggy ShellHave a plan, be consistent, and stick with it. With people falling onto your lap or low-hanging fruit from referrals, you’ll be tempted to hire people who are “good enough.” You don’t have to settle. Follow a process that is well thought out and aligns with the job description you have worked hard on. Hiring takes time, but don’t let that inconvenience you from learning throughout this process. – Peggy ShellCreative Alignments 

 

8. Prepare and Be Honest 

Maren HoganIt is absolutely key to know what you need. Many first time hiring managers hire people just like them. Don’t interview desperate (which means you should make your first hire slightly before you need them), and listen when someone tells you who they are the first time. For example, I send an email to all potential candidates explaining exactly what to expect. It weeds out any shaky candidates. – Maren HoganRed Branch Media 

 

9. Hire Attitude and Train Talent 

Douglas HutchingsThe first employee is going to help set the culture for the many more to come. Everyone will need training to get up to speed, so hire for attitude. By definition, you are probably doing something that has never been done before, so you need someone who is passionate to be a part of your vision. The wrong attitude will be contagious to everyone who comes next and that is extremely hard to fix. – Douglas HutchingsPicasolar 

 

10. Understand That Job Descriptions Are Perfect, Humans Are Not 

Eric MathewsIt is important to realize that when you write a job description, you are creating in your mind a perfect, idealized version of a candidate. That candidate doesn’t exist in real life. During the selection process, know that you aren’t compromising on the idealized version of the candidate; more so, you are determining if there is a net benefit to your organization from adding the candidate. – Eric MathewsStart Co. 

 

11. Test Real Skills, Not Just Credentials 

Anthony PezzottiIt’s easy to default to a resume when deciding if a candidate would be a good fit; however, successful business owners will test real skills during the interview process to ensure they are solid on the team. This process can range from an on-the-spot test to a quick homework assignment. These tasks will help set the tone for the position and weed out any unfit applicants. – Anthony PezzottiKnowzo.com 

 

12. Prioritize People Who Have Done Their Own Things 

Adam SteeleAlmost everyone I’ve hired has had a side project or something of significance that they were doing before I hired them. The barrier of entry to doing something interesting and putting it in front of thousands of people is low enough that most people should be able to talk about personal projects that have received attention. These are people who have the will to work and experience with feedback. – Adam SteeleThe Magistrate 

12 Unique Biz Publications Every Entrepreneur Should Read

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 “off the beaten track” biz publication more entrepreneurs should read and why?

1. OkDork.com 

 Firas KittanehSerial entrepreneur Noah Kagan gives us all an inside look into how he grows his businesses and optimizes his life in okdork.com. He publishes infrequently so you’ll always have time to read his next blog post. I find one of the best ways to grow is through peer leadership and advice from a fellow entrepreneur always feels more relatable and actionable.

– Firas KittanehAmerisleep 

 

2. Search Engine Watch 

Tim ChavesI’d recommend giving Search Engine Watch a look. Inbound marketing has a lot of potential for anyentrepreneur, so I don’t think you can be completely ignorant about issues around search engine optimization.

– Tim ChavesZipBooks 

 

3. CB Insights

Doreen BlochCB Insights is a company that focuses on venture capital research, and their daily newsletters provide some of the best business content that I regularly read. The writing is irreverent, mostly focused on startups and entrepreneurs, and very timely to themes in technology and fundraising. CB Insights is one of the best and most entertaining ways to stay on top of business news.

– Doreen BlochPoshly Inc. 

 

4. Stratechery.com 

sean ogleI enjoy reading Ben Thompson’s Stratechery.com. He has a really interesting look at strategy and business, especially as it pertains to technology. He covers a lot of wide-ranging topics, but most of them highlight what is happening in social media and with brands like Google, Facebook and Amazon. He always has a good take and is able to break down complex ideas and explain them simply.

– Sean OgleLocation Rebel 

 

5. Bulldog Reporter 

Sharam Fouladgar-MercerThough much of Bulldog Reporter’s content is geared toward public relations and communications professionals, there are a ton of articles that are universally useful to entrepreneurs of all types. For example, Bulldog recently published a piece on how to get the most out of your exhibitor booth at an event or industry-specific conference.

– Sharam Fouladgar-MercerAirPR 

 

6. The Mogul Mom 

Cynthia JohnsonI love The Mogul Mom because it’s for all mom entrepreneurs and covers everything from both worlds. Her articles cover all types of topics, like social media, productivity, product development as well as work-life balance and issues that impact female entrepreneurs.

– Cynthia JohnsonIpseity Media 

 

7. OnStartups 

Andrew O'ConnorOnStartups was started by serial entrepreneur Dharmesh Shah, the founder of Hubspot and Pyramid Digital Solutions. There is extensive content from Shah and guest writers as well as an online Q&A community where software entrepreneurs can engage with others about startups, business management, technical issues and more.

– Andrew O’ConnorAmerican Addiction Centers 

 

8. Wait But Why

Mark KrassnerTim Urban publishes an incredible blog called, Wait But Why, which takes deep dives on topics that range from relationships to space travel. Once in a while, Tim talks about business and entrepreneurship, but I think the real benefit to his blog is seeing how he thinks. Tim takes incredibly complex topics and makes them easy to understand, a skill more people in business would benefit from cultivating.

– Mark KrassnerExpectful 

 

9. The Kiplinger Letters 

Eric MathewsWe need unbiased, accurate business and economic forecasts. For over 90 years both executives and entrepreneurs have quietly used The Kiplinger Letters (not magazine) for such a weekly digest. The Kiplinger Letter consistently provides accurate forecasts of industries, businesses, companies and technologies poised for rapid growth — before the crowd “wakes up.”

– Eric MathewsStart Co. 

 

10. Success 

Brittany HodakAlthough it’s not exactly “off the beaten path,” Success isn’t traditionally considered a business publication. However, it’s the most inspiring magazine I read each month. I read it cover to cover and listen to the executive interviews that accompany each issue. I recommend it to every entrepreneur looking to further his or her company.

– Brittany HodakZinePak 

 

11. Mars Dorian 

Drew HendricksMars Dorian is a blog that mainly focuses on marketing tips that tell you why your business card needs an overhaul, how to get a following on your blog quickly, and how to improve your branding efforts. It’s practical, usable advice.

– Drew HendricksButtercup 

 

12. Duct Tape Marketing 

Peter DaisymeI like Duct Tape Marketing because it is a blog that focuses on developing an online presence beyond just social media. It also includes numerous tips on how to create online videos as well as leverage various tools to generate results-oriented content.

– Peter DaisymeDue Invoicing 

10 Mistakes Entrepreneurs Make When Hiring Their First Employees

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 mistake entrepreneurs can easily make when hiring their first employees?

1. Hiring Friends/Family Without Experience 

Amber AndersonIt’s easy when you first get started to think about hiring the people who are closest to you — like friends and family. But your first few hires are critical to your success. You want to make sure you hire team members who have the skills you need to fill the gaps in your company. In the long run, hiring someone you know who is not prepared can impact your relationship and your bottom line. 

– Amber AndersonMORE 

2. Going Cheap 

Diego OrjuelaYour first employee is a very big expense for a small company. Typically, we want to hire for the size of our company and employ someone who is not very costly to hire. But this first hire is critical. It will define the early stages of your business and should not be brought in based on what salary you are willing to pay. Bring in someone with experience, with talent. A good hire will prove invaluable. 

– Diego OrjuelaCables & Sensors, LLC 

3. Hiring Someone Just to Fix a Problem 

Joey KercherThe biggest mistake I have made is just hiring someone to fix a problem. The problem starts with the entrepreneur. If you do not have a process or roadmap to fix the issue, hiring someone to attempt to fix it will cost you more in the long run. Ensure you understand what the problem is, and ensure you give proper training to make sure they will be successful as they grow with your company. 

– Joey KercherAir Fresh Marketing 

4. Hiring Employees Who Are Just Like You 

Brian LischerWe tend to gravitate towards like-minded personalities in our lives, but I’ve found it’s best to keep this tendency in check when hiring. There’s nothing worse than ending up with a conference room full of clones (even if those clones are all highly skilled at their positions). A lack of diversity in personalities stifles creativity and is a nightmare to manage. 

– Brian LischerIgnyte 

5. Not Having a Well-Defined Role 

John RoodEarly in my business I had a vague thought that I had too much work and should hire someone. I hired a smart young professional. However, we quickly ran into problems; I hadn’t thoroughly thought through exactly what she would do. My mistake was hiring before I had thoroughly defined the role and responsibilities, so I didn’t have the right framework for finding the right fit. 

– John RoodNext Step Test Preparation 

6. Hiring Too Fast 

Duran InciHiring too fast without properly vetting potential hires. Let’s face it, fast growth forces us to hire quickly, but better vetting of candidates can prevent problems down the line. Slow down and put greater emphasis on really hiring the right people for your business needs. Find out what kind of expertise you need and hire them first; they will have the greatest impact initially. 

– Duran InciOptimum7 

7. Skipping Background Checks 

Zach BinderHiring first employees may be a casual process, so there may be no background checks or in-depth checking on them. This is a huge mistake. There needs to be a formal process for ensuring you are hiring the right kind of people, especially if you have trade secrets or a disruptive idea and you don’t want anything stolen. 

– Zach BinderRanklab 

8. Not Having An Employee Proprietary Information and Inventions Agreement 

Doug BendIt is crucial that anyone who does work for your company signs an Employee Proprietary Information and Inventions Agreement. The agreement makes it clear that the work they do for the company belongs to the company. Investors will want to see the agreements in place, and it is the best way to protect yourself from showing your company’s secret sauce only to have the hire set up a competing company. 

– Doug BendBend Law Group, PC 

9. Hiring an Employee Who Doesn’t See the Founder’s Vision 

Piyush JainYou should make sure that your first employee understands your vision and can grow into it. If he/she is willing to grow with the vision, then they will drive it without worrying too much about the salary and efforts. Your first employee will become an inspirational figure for your other employees. When I hired my first employee, I communicated my vision to him and he has been with me since 2009. 

– Piyush JainSIMpalm 

10. Not Building ‘a Team’ 

Adam SteeleIt’s important that the first set of people you hire be able to work closely together. Your first employees will play a large part in your company culture, and you need them to be people that work well with and play off of one another. Hire your first set of employees with an eye toward building a functioning team. 

– Adam SteeleThe Magistrate 

9 Ways Knowing How You Think Will Help Your Company

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.

How has understanding whether you’re a “big picture” thinker or a “detail-oriented” thinker helped you move your business forward?

1. Make a Conscious Effort to Incorporate the Other Mindset 

Leila LewisWhen you understand what type of mindset you naturally approach business with, you can then make a conscious effort to incorporate the other mindset and/or seek out team members to help. For example, if you’re naturally a big-picture person, set aside time in your schedule to work on the details or assign a detail-oriented person on your team to help bring the big picture to life.

– Leila LewisBe Inspired PR 

2. Understand Past Successes and Failures 

Charles BogoianRealizing that I’m more of a detail-oriented thinker has allowed me to better understand and evaluate why certain business decisions I’ve made have worked and, more importantly, why others have not. I have been able to avoid repeating mistakes because of this and our customers have recognized the growth of our business over time.

– Charles BogoianKenai Sports, LLC 

3. Talk Through Big Decisions With Colleagues 

Justin BlanchardI tend to be a detail-oriented thinker. When I decide on a goal, my efforts go toward achieving it. I don’t spend much time re-assessing whether it was the right goal in the first place. I’ve learned it’s beneficial to take a step back every now and then to reconsider, and to talk to colleagues who might see something I don’t. Talking has often helped me see “big-picture” issues with my approach.

– Justin BlanchardServerMania Inc. 

4. Reevaluate Decisions and Opinions 

Roger LeeUnderstand what type of lens you use to see the world and what the alternative is so that you can be more rigorous when reevaluating your own actions. Asking myself, “Do I think this only because I’m a detail-oriented thinker?” and “What would a big-picture thinker do in this scenario?” expands my options and helps me arrive at an optimal solution, not just the one that I’m comfortable with.

– Roger LeeCaptain401 

5. Distinguish Between Working “In” or “On” Your Business 

Kristopher Jones (1)The difference between being a detail-oriented or big-picture thinker really comes down to the critical distinction between working “in” or “on” your business. Details matter most when you are working in your business — the day-to-day stuff like meeting payroll, hiring new employees and selling stuff. In contrast, the big picture is working on your business, like future goals and opportunities.

– Kristopher JonesLSEO.com 

6. Surround Yourself With Different Thinkers 

Mitch GordonI’m definitely a big-picture thinker, and that’s not always a good thing. I tend to miss important details along the path to success. Realizing that I need to surround myself with detail-oriented people has been a huge part of the success of Go Overseas. We have three co-founders and our strengths are well balanced. We’ve also grown to more deeply appreciate the value each of us brings to the table.

– Mitch GordonGo Overseas 

7. Focus on Strengths and Delegate to Others 

Daisy JingThis realization allows me to delegate better knowing that detail-oriented tasks should be given to someone else. It also allows me to better decide what task I should spend more time on and to whom I should give a task to. My business moves forward as my strengths complement my team’s individual strengths. As a big-picture thinker, I allow the details to come from my team.

– Daisy JingBanish 

8. Find the Right Team 

Michael GleasonAs a former physicist, there is a duality in nature that I find everywhere in business. Both big-picture and detail-oriented thinkers are key to driving an organization. The difficult part was understanding my strengths — based on conservation laws — and recruiting complementary executives to create a holistic team.

– Michael GleasonConsumer Brands, LLC 

 

9. Train at Both 

Ross ResnickYou actually have to be both. No matter which one you think you are, you have to train yourself to be a big-picture thinker and a detail-oriented thinker. Otherwise, you’re either going to be stuck on the little things or you’re going to be in the clouds.

– Ross ResnickRoaming Hunger

12 Items You Should Never Forget To Include in a Partnership Agreement

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 should you absolutely not forget to include in a business partnership agreement?

1. What Will Happen if it Doesn’t Work Out 

Sharam Fouladgar-MercerThis should be a given, but let’s talk about it for the sake of reiterating its importance. Any business partnership agreement should clearly outline what steps will be taken should the partnership go astray. People despise discussing this, but the reality is that we live in a world where disagreement happens and it’s best to have a plan in place in case it does occur.

– Sharam Fouladgar-MercerAirPR 

 

2. Equity Valuation and Buy-Sells 

Chris SmithNames, ownership equity, and how the business is going to be operated are always must-haves. However, most problems arise when there’s not a clear method for valuing the equity down the road, or when there’s no buy-sell agreement included. Always know how equity is valued should it need to be sold to or purchased by another partner, and don’t forget to properly fund your buy-sell agreement.

– Chris SmithSuperius Ventures, LLC and Smith Simmons, PLLC 

 

3. Legal Inclusions 

Peggy ShellWhile it’s important to include standard legal items, such as non-solicitation of your employees, confidentiality, and ownership of work product, one important thing to never forget is clarifying the business relationship. The Department of Labor errs against employers in situations where a business partner might be considered an employee, so including clarifying language is key.

– Peggy ShellCreative Alignments 

 

4. A Vesting Schedule 

Chris BrissonOne of the biggest mistakes I made in my company early on was the fact that my partners and I vested immediately. The was a problem after one year when my partner decided to stop working and took another job. I was left holding the bag to grow the company while he still had shares in the business. A typical vesting schedule has a four-year cliff. Be sure to set this up in the beginning.

– Chris BrissonCall Loop 

 

5. How a Buy-Out Will Be Paid 

Elle KaplanIn the event that a partner splits, it’s vital to determine how they’ll receive their fair share of the business. If this isn’t in writing, they could request all of their payout at once, and feasibly bankrupt the business. By determining a payout structure, you can ensure a clean, positive break-up.

– Elle KaplanLexION Capital 

 

6. Roles and Responsibilities 

Murray NewlandsRoles and responsibilities should be clearly delineated from the beginning and in writing so there is no confusion, and to minimize or even eliminate conflict. It keeps everyone on the same page from the start and lets each partner go out and get done what they need to without question.

– Murray NewlandsDue.com 

 

7. Operating Agreements 

Tommy MelloThis is the foundation of the business that handles everything from A to Z. In most agreements, you should discuss what happens if one partner has health issues or wants out. Also, take consideration of voting rights and who is on the hook for what. All the key elements should be discussed and documented in the operating agreement. This is the prenuptial agreement for business partners.

– Tommy MelloA1 Garage Door Service 

 

8. Expectations for Hours, Vacation and Company Budget 

James McDonoughEveryone has very different expectations for how many hours they should put in, how much vacation, and generally on what and where the precious company budget should be spent. Sit down with your partner and draw out what a year would look like for all expenses and time commitment with best/worst case scenarios. You will uncover some interesting discussion areas.

– James McDonoughSEE Forge creators of FAT FINGER 

 

9. How Costs Will Be Shared 

Cody McLainMost individuals enter into partnerships based on the fact that there could be a high return in the form of equity. Equity is fantastic, but the reality in accounting terms is that the individual who shoulders the most costs will in effect be the one with the greater equity. Cost sharing is an important part of equity sharing, and it informs how the pendulum of equity will swing over time.

– Cody McLainSupportNinja 

 

10. What if a Partner Is Injured or Dies? 

Cassandra BaileyYou have to think about a business partnership agreement as if it’s a prenuptial agreement. Even if you hope nothing bad will happen, you still have to prepare for the worst. Have steps in place in case an acquisition or a merger occurs. If a partner is injured or if the partner dies, there needs to be a solution in the agreement.

– Cassandra BaileySlice Communications 

 

11. Non-Compete / Non-Disparagement Clauses 

Kristopher JonesUnfortunately, business partnerships don’t always work out. In fact, sometimes business partnerships can go wrong and a former partner can abruptly quit only to start a competing business. The partner may also say nasty things about you or your business. Therefore, it’s very important to include a non-compete and non-disparagement clause in a partnership agreement to eliminate issues later.

– Kristopher JonesLSEO.com 

 

12. General Expectations 

Ismael WrixenUnexpressed expectations are equal to premeditated resentment. Although you can include conduct and expectations in a separate document, it should be a part of your partnership agreement. Otherwise, you could end up resenting your partner, and that’s not good for business. You need to be on the same page in terms of the goals you’re trying to achieve, even if you have your differences.

– Ismael WrixenFE International 

The Differences Between Silent Partners and Investors

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.

How is a silent partner different from an investor and when should you consider one vs. an investor?

 

1. An Investor Helps Directly With Operations 

Angela McCroryAn investor is someone who not only invests in a company but also plays a role in the daily operations and management decisions. A silent partner usually invests a large sum of money but prefers not to be involved in the daily operations. If you are looking for advice and help, you want an investor. If you need a cash infusion to grow, but already have a plan outlined, go for a silent partner.

– Angela McCroryRukkus 

 

2. A Silent Partner Adds Funding While Minimizing Feedback 

Hongwei LiuActive investors want (and expect) to be helpful. Silent partners want to invest in your company but trust in existing management and active investors to make the decisions. A company should take silent partners if the goal is to add funding while minimizing feedback. Active investors should be sought after to lead funding as they provide valuable insight to help you get to the next milestone.
– Hongwei Liumappedin 

 

3. The “Silent” Partner Comes With Ups and Downs 

Kenneth CucchiaMy initial investor was silent (usually pre-seed/seed). As a 22-year-old kid with a fat check, I was happy as could be. I would have done some things differently knowing what I know today, but that’s the beauty of entrepreneurship. It’s the game that never ends and there’s no rule book. My advice now would be to get an initial investor who can guide you instead of letting you think you know it all.

– Kenneth CucchiaDeals4Meals.com 

 

4. The Difference Is Trust 

Tyler HanwayA silent partner trusts you because of past experiences together and provides money to grow the business. He or she is not involved in the day-to-day operations and the relationship is less formal compared to investors. Although it may be easier to find investors, if you are able to find a silent partner in the early stages of your business, you’ll be able to spend more time building the company.

– Tyler HanwayConsumer Brands, LLC 

 

5. Truly Silent Partners Are Basically Investors 

Brennan WhiteSilent partners are basically investors with founder-level upside. Even investors are expected to help with advice, introductions, hiring, etc. If your partner is truly silent, the financial contribution has to be massive to make sense. Especially in today’s investing climate, it’s easy to find more traditional investors.

– Brennan WhiteCortex 

 

6. Silent Partners Have Limited Liability 

Nicolas GremionSilent partners may have a say in the overall operations of the business, but generally stay out of the daily affairs. One benefit is potentially being less liable in the event of legal actions. Silent partners can take a limited-liability partnership in the company. As such, they may have more influence on the overall business than an investor, while still being protected in case of a lawsuit.

– Nicolas GremionFree-eBooks.net

 

7. A Silent Partner Is Less Involved 

john ramptonA silent partner really isn’t a partner at all except to provide some money to fuel the startup’s growth. The silence can be nice to a certain degree, but I’ve always found it more helpful to have an investor that provides advice, counsel, contacts and more — or even, in some situations, rolls up their sleeves and pitches in. Going it alone can be scary and take even longer.

– John RamptonDuecom 

 

8. Their Role Depends Entirely on Your Agreements 

David MainieroThe distinction between taking on “outside” investors and starting with or bringing on “inside” (silent) partners entirely depends on how you’ve constructed your operating agreements or equity structure. You need to consider the role of your capital providers and what role you want them to play. Do you need their networks? Just their money? Their advice?

– David MainieroInGenius Prep 

 

9. Silent Partners Don’t Have as Much Control as Investors Do 

Vishal ShahSilent partners hold an equity position (just like angel investors) but do not have substantial control over the business any more than the founders do, as they hold the same class of common shares. It makes the most sense to have silent partners if you are only looking for capital infusion in exchange for equity, but do not wish to give up control of your business.

– Vishal ShahNoPaperForms 

 

10. The Difference Is in the Return 

Nicole MunozA silent partner is taking a risk investing with you, and they’ll usually expect a bigger return on their investment. On the flip side, an investor is someone who gives you money and relies completely on you to generate the return. There are key differences in the way the SEC classifies silent partners and investors, so do your research before you decide which route to take.

– Nicole MunozStart Ranking Now 

 

11. Silent Partners Don’t Exist Unless They Are Family 

Andre ChandraSilent partners are never silent, and rightfully so — it’s their money! The closest to a silent partner are family members, who may still love you no matter what happens to the money, but even this can vary from family to family. Rather than becoming a silent partner, I would much prefer a loan.

– Andre ChandraI Print N Mail 

 

12. A Silent Partner Is a Passive Participant 

Alfredo AtanacioA silent partner is an appropriate alternative when you’re not looking for someone to actively contribute to your business, share responsibilities or share in the company’s profits. You may want to seek out an investor if you are looking for more involvement in your company. Legally, bringing in an investor is complicated, so you need to be clear that it’s the right source of financing for you.

– Alfredo AtanacioUassist.ME 

 

13. Consider a Loan Before a Silent Partner 

Justin BlanchardInvestors typically bring value in addition to cash. Silent partners don’t contribute more than money — or they don’t unless they think you’re not maximizing the value of their investment. Silent partners may not stay silent. A loan gives you the cash infusion without risk of interference unless you default. Which you choose depends on your business’ needs, but talk to a lawyer regardless.

– Justin BlanchardServerMania Inc. 

Strategies for Bootstrapping When One Co-Founder Has Greater Financial Assets Than the Other

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 your best advice to startup co-founders who plan to bootstrap their business, but one has greater financial assets to contribute than the other?

 

1. Offset Cash Contributions With Additional Labor 

Charles MoscoeI’ve entered into founder agreements where different founders offer a different level of capital contribution, but that can be offset by additional responsibilities. For instance, for a startup that I am involved in now, I am financing the majority of the capital spend with the understanding that I will recoup my investment first, but my time commitment as a result is substantially less. – Charles MoscoeSkinCare.net 

 

2. Draft an Operating Agreement and Plan for the Worst 

jeff epsteinYou should draft an operating agreement that accounts for all the assets (and time plus energy) contributed to the business. The reality is many partnerships don’t last — planning for the worst (a breakup) will allow all parties to have full transparency on the range of outcomes and a full understanding of how to calculate the value of their contributions. – Jeff EpsteinAmbassador 

 

3. Keep It Equal 

Jared BrownIt doesn’t matter whether one founder has a million to invest and the other just has ,000. If the business can succeed with just ,000 from each founder, keep it equal. It makes things much simpler and is better for overall accountability. If the business needs more funding, the extra money should be considered a loan, not an investment. – Jared BrownHubstaff 

 

4. Distribute Equity Fairly, Not Equally 

Nicole MunozThis may be counterintuitive, but splitting equity 50/50 isn’t the best solution for co-founders. Because each founder brings a unique set of skills, resources and assets to the table, equity should be divided based on those attributes rather than equally. Careful consideration now about how to divide the company fairly will eliminate many headaches and unnecessary battles down the road. – Nicole MunozStart Ranking Now 

 

5. Put Together a Spreadsheet 

Andy KaruzaYou need to put together a spreadsheet that adds weight to each person’s contribution. We devised a spreadsheet that places weighted values on how much a founder brings to the company in terms of cash, hours, intangibles, ideas, resources and unique management processes/documentation created. Agree to the value of these inputs collectively; then use it to determine fair equity compensation. – Andy KaruzaFenSens 

 

6. Balance Equity 

john ramptonBalance equity and cash put into the business. If one person is putting in equal time but more money he should get more of the pie over the other person. Paul Graham put together a very simple equation for startup founders bootstrapping. 1/(1 – n). In the general case, if n is the fraction of the company you’re giving up, the deal is a good one if it makes the company worth more than 1/(1 – n). – John RamptonDue 

 

7. Think in the Opposite Direction 

Blair ThomasWhether one founder has more capital than the other shouldn’t matter as much as what does the business actually require? If a founder can invest 10 times more than another, that doesn’t mean they should. Find the lowest capital commitment required to get the business off the ground so that founders can garner equity equal to the expectations they had in place while bootstrapping the company. – Blair ThomasFirst American Merchant 

 

8. Differentiate Between Financial Capital and Sweat Equity 

Ross BeyelerWhen posed with a situation where one partner can contribute more (financially) than another, consider creating two classes of stock and treating financial investments in the company different than ‘sweat’ investments. Split the business as desired based on your partnership structure, and then treat whatever investment is made by one partner the same as you would an external investor. – Ross BeyelerGrowth Spark 

 

9. Hire a Lawyer 

Kristy SammisUse whatever extra assets one of you has to hire a very good lawyer. In all seriousness, expert legal guidance is critical and always worth it in the long run. No one ever said, “Gee, I wish our working agreement had been less clear.” Whatever arrangement you come to, it’s not enough to get an agreement in writing; get a fantastic, ironclad agreement in writing. – Kristy SammisClever Girls Collective, Inc. 

 

10. Allot 20 Percent to Each Area: Finance, Operations, Sales/Marketing, Founder and Product 

Erik HubermanSplit equity according to which aspect(s) each co-founder contributes. If you can’t have a fair conversation on equity, don’t go into business together. If one finances the entire thing, that 20 percent is his. Split the percent for Founder evenly. It comes down to why you’re partners. Who’s the “product person?” Who’s got sales? How do you divide the work? – Erik HubermanHawke Media 

 

11. Have Active and Passive Roles 

- Engelo RumoraOver the years I have seen (and been involved in myself) way too many business relationships that go south due to someone not pulling their weight. The best way to go about this is to always have one person doing all of the work and the other person being more passive but investing most if not all of the funds. This keeps things simple with everyone knowing what is needed from them. – Engelo RumoraList’n Sell Realty 

 

12. Deferr Payouts 

Dan GoldenIf you’re keen on keeping a 50-50 split amongst co-founders, consider a deferred payout for the co-founder with greater financial assets. This lets one of the co-founders take larger draws upfront, and then even out the payouts once the company has grown beyond the early bootstrapping days. Sure, there’s some risk, but startups need cash to hire and scale. – Dan GoldenBe Found Online 

 

13. Be Balanced and Fair 

Julian MillerJust because a contribution isn’t financial, doesn’t mean it isn’t valuable. I was at a well-paid corporate job and my co-founder was five years into a Ph.D. when we met. His contribution was potentially giving up five years of work to bet on our company. Because we aligned on what it meant to contribute from where we were, it was easy to build a solid, equitable base for our company. – Julian MillerLearnmetrics 

 

14. Have Skin in The Game 

Bryanne LawlessMake sure both partners have skin in the game, whatever it may be. If both partners aren’t equally invested into the company, where both need to be held accountable, the partnership will be uneven and the work-relationship could end poorly. – Bryanne LawlessBLND Public Relations 

12 Unique Ways Startups Can Improve Their Employee Onboarding Process

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 startups can improve their employee onboarding process?

 

1. Have Weekly Check-In Meetings 

Rob BellenfantA lot of startups are so focused on hitting their acquisition goals they forget about employee satisfaction and retention. Don’t limit your view of onboarding to a stack of paperwork. Treat it as an ongoing process that follows the employee through their probationary period. At TechnologyAdvice, our talent manager holds weekly check-in meetings with each new hire for their first 90 days.  – Rob BellenfantTechnologyAdvice 

 

2. Have a Buddy System 

Doreen BlochAt the start of the onboarding process, assign the new team member a more experienced peer as a ‘buddy’ of whom they can ask questions and get feedback in their first few weeks on the job. It’s an easy thing to do but is often overlooked in the onboarding process. Having a buddy system for the new employee will enable them to ramp up faster. – Doreen BlochPoshly Inc. 

 

3. Give New Employees a Crash Course in Every Part of the Business 

Chris SavageGive new employees face-time with someone from every part of the business, including executives, sales, marketing, engineering, customer success, etc. There’s no such thing as too much context when it comes to employee onboarding. This crash-course method gets new employees thinking about how the business works together from a granular and a 10,000-foot perspective — both are crucial for success. – Chris SavageWistia 

 

4. Create Self-Service Processes 

Russell KommerTake the load of HR by creating automated forms that guide new employees through pertinent queues and requested material. You will alleviate bottlenecks in the onboarding process, and be able to scale without adding to your HR staff.  – Russell KommereSoftware Associates Inc 

 

 

5. Have an Onboarding Interview One Month In 

David CiccarelliThe best way to improve your employee onboarding process is to consult your most recent hires. You can do this by arranging a follow-up interview with every new hire and your HR department about one month into their employment with you. Ask about what your training schedule was like for them, what they enjoyed, what could be improved on for next time, etc. Your new hires are an untapped resource. – David CiccarelliVoices.com 

 

6. Create an “Onboarding Box” 

James SimpsonFor every new hire we create an “onboarding box” full of goodies tailored specifically to that person. It includes things like company swag, gift cards, and random knick knacks that they can appreciate. We bundle this with the employee handbook and have it waiting on their desk on their first day. – James SimpsonGoldFire Studios 

 

 

7. Use Virtual Reality 

Jared BrownUsing virtual reality to onboard employees may not be efficient (it’s costly and time-consuming to develop), but it is unique and has the potential to be highly effective in the future, especially in a remote team setting. New employees can simply slip on a headset and be guided through the different processes, introduced to the brand, and more. – Jared BrownHubstaff 

 

8. Plan for the Worst But Hope for the Best 

Lane CampbellGet the legal agreements done by a lawyer with experience and prepare a comprehensive checklist of everything the employee will need to access digitally, and be ready to revoke all of that when they leave the company. Make sure you own whatever they work on and that you can revoke access and secure your business when they leave. Don’t leave anything to chance.   – Lane CampbellfastAdvocate 

 

9. Use Camtasia for Training Videos 

Marcela DeVivoUse Camtasia to record training videos of tasks that will be performed by new employees. Every time you onboard a new employee, create a video and support that video with a document explaining processes. As you hire for new roles, you create new videos and store them all on a dropbox or folder to be used for future hires. With each new hire, invest the time in creating training materials. – Marcela De VivoBrilliance 

 

10. Invest in a Management System 

Joey KercherFind a system that can manage it. We currently use BambooHR, which helps with keeping all HR files in one place. It has a place to manage all tasks that need to be completed to get a new employee set up, which also includes training. This system will even help create a training system for each hire in each department. – Joey KercherAir Fresh Marketing 

 

11. Get Signed Company Culture Statements 

justinWe make every employee read and sign our company culture standards of excellence. Ensuring they are 100 percent on board with our teams’ commitment to one another and to our customers has built a significantly improved culture that starts with our hiring process.  – Justin SachsMotivational Press 

 

 

12. Introduce Them to Customers 

brandon bruceA lot of companies wait until after onboarding and training to let new hires talk to customers. We do it right away. There’s no better way to feel and be part of the team than to start serving customers. – Brandon BruceCirrus Insight 

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