startup(6/0)

Startups produce models over solutions

The product of a startup is a business model, not a solution. It is common to think in terms of problem and solution when dreaming up a startup idea. If one can find a problem and solve it, one reasons, then one has a viable business. This over-simplification hides crucial assumptions that must be answered in order to build a viable business. The business modeling tool Maurya illustrates includes only one small box for the solution (Maurya, pg.…

Launch your business with an exit plan

Have an exit strategy in mind. As Steingold poignantly asserts, “a new business doesn’t come with a guarantee (pg. 359).” Whether you ascribe to the optimist’s can-do attitude or the pessimist’s arguments for low success rates, all agree that entrepreneurship isn’t the path of those who wish for structure and security. This reality shapes the way entrepreneurs must think about entering into their venture. An individual who accepts a salaried position at a local business need not plan an exit strategy to protect herself from losing her life’s savings, but every entrepreneur ought to.…

Lean means efficient not alone

Lean startup entrepreneurs must weigh the cost of doing everything themselves. Today, if you were required to submit U.S. tax documentation for five employees you’ve hired over the year, would you know how? Would you feel confident an external audit would find no mistakes? Chances are, probably not. The effort it would take an entrepreneur to adequately understand and comply by the U.S. tax codes, the much less the regulations for employee wages, could be compared to a four-year accounting degree.…

Lean startups fit uncertain markets

Build - Measure - Learn is a model and mindset valuable for businesses in uncertain circumstances. The core process in Ries' lean startup is Build-Measure-Learn. This cycle is reversed when planning: first one determines the hypothesis (what to learn), then selects the metrics that will validate that hypothesis (what to measure), and finally creates the minimum viable product (MVP) to complete the experiment. The speed at which a company is able to iterate over these steps correlates to the speed they’re able to innovate.…

Lean startups leverage tax deductions

Tax deductions are crucial to the launch of a lean startup. Second only to a profitable business model in financial importance, tax deductions are crucial to a lean startup. Business taxes can absorb a business' profit for months - Clydebank estimates that it takes a full quarter for a small business to generate enough profit to exceed their tax responsibilities (loc. 576). For a startup with limited fund runway, taxes can quickly shorten the duration an entrepreneur has to iterate on their business model.…

Offer equity and power with utmost caution

Hoard equity like gold and protect it accordingly. When a business begins, all it may have is equity and a little startup capital. When a venture capitalist offers professional support and a sizable financial boost for a marginal 3% ownership share, many entrepreneurs feel honored by the attention given to their fledgling business and measure the 3% only by what they have in the bank - not much. The entrepreneur may think, “I have 97%, and the venture capitalist has 3%.…