Entrepreneurship Tips — Financing

  The correct answer is “They cannot”. Banks do not lend to high-risk ventures. Their interest rates cannot support the 80% failure rate the venture capitalists get in selecting companies. Any bank that did this would be out of business very quickly. Banks lend to companies that have proven cash flow to pay the interest and principal monthly or assets to back up the loan only. It is just the maths. Generally, six-quarters of positive cash-flow and financial statements is required. VCs have a similar success rate to throwing darts, or random selection, BTW, even after a $5M infusion of...

  And beat the odds that only 1 in 6,300 will reach this level of annual sales. The attached diagram shows the skills, systems and experience needed on that team. Each cell would take at least 5 years’ experience to acquire and master that skill area. So, we are looking at 100 years of experience cumulative for the company as a whole. Most people think they are “ready to scale” as soon as they have some sales. This is never true. In fact, you need at least 4 levels of stuff in 5 business areas, or your odds of success...

There are many factors, and it is too complex to offer a standard answer. You need to hire a consultant that is a CEO/Founder with lots of experience to discuss things for 1–2 hours. One way around this is to set hourly rates for the founders and track time to allocate it according to contribution. Shares are earned with seat equity. A simple spreadsheet with monthly invoices submitted by everyone is easy to do. There are plenty of software solutions for this too, but likely best only when it gets complicated with many founders. People and Founders are never “equal”...

Ideas are worthless. And it would be totally legal for them to steal them. Maybe you are confusing patents, copyrights and other intellectual property. An “idea” has no legal protections. And you can be pretty sure you are not the first one to have any given idea too. And if anyone can steal a single “idea” and replicate your business, it is a very bad business. What you need is lots more including many things like a business model, target market, product/service and hundreds of ideas. Companies need a team, plan and many protectable ideas. These are protectable intellectual property...

A reasonable salary for any CEO or founder is a $100K to $200K today. This depends on their experience and market value which could easily be $500K+. A CEO with ten years in that seat is worth $300K to $500K base salary, but investors want them to have skin in the game and urgency too. Like a salesperson you never pay them enough in base salary to be totally happy, or financially comfortable. Stock value should be the main long-term motivation. At 20% capital gains tax, not 50%+. What is more important is that the base salary is a small...