Pitch Deck Advice CEO at Ecquire & Cavalry. Investor and COO at mudwtr.com Mentor to the Thiel Foundation, Entrepreneur in Residence at Fairbridge, Advisor to MistoBox, 2Shoes, Culinary Agents & Zagster. MS in Accounting, MS in Investment Management. Author of the Beginner's Guide to Sales and How to Get your First 1,000 Customers. In my fourth startup company that started from an idea to profitability and beyond. Raised money from venture firms like Founders Fund, Great Oaks and NFX. Call for help with traction, retention, fundraising, minimalism, how to get more customers and when shit gets tough.
I live in Tucson when I'm not traveling. It's very cheap and very beautiful. There's a large community of triatheletes that live here for the abundance of bike and running trails as well as amazingly beautiful pools. Get me anytime if you want to know more. Hope this helps.
The items that you're talking about in this situation would be immaterial in my opinion. Before you even get to the technicalities of accounting properly for something like this, do you really want to start a new business where your first transactions on your financial statements are transferring assets (furniture is not an asset even) that are all worth essentially nothing right now? Your entire focus should be on getting customers and not speaking with an accountant about the treatment of something that doesn't matter.
Yes. We have a small CPA firm that works for us but they do bookkeeping separately for a small monthly fee. It's one of the best things you can do for a few reasons that include providing more accountability to you as a leader.
Bookkeepers are not the same as a CPA firm but ususally CPA firms have bookkeepers. Bookkeepers simply make sure that each month your financial statements look right by reconciling the different accounts where money comes in and money goes out. It only takes a couple hours each month for them and it's not expensive compared to what happens at the end of the year if something's wrong and you have to step away from what you should be focused on to work on taxes and investigating expenses. Not having to worry about monthly reconciliation, taxes, on top of getting recommendations and input from them made this one of the he best decisions we made. I'd recommend at least trying it for a couple of months.
I originally answered this question in Quora. Here's my interpretation:
Very tough to sleep most nights of the week. Weekends don't mean anything to you anymore. Closing a round of financing is not a relief. It means more people are depending on you to turn their investment into 20 times what they gave you.
It's very difficult to "turn it off". But at the same time, television, movies and vacations become so boring to you when your company's future might be sitting in your inbox or in the results of a new A/B test you decide to run.
You feel guilty when you're doing something you like doing outside of the company. Only through years of wrestling with this internal fight do you recognize how the word "balance" is an art that is just as important as any other skill set you could ever hope to have. You begin to see how valuable creativity is and that you must think differently not only to win, but to see the biggest opportunity. You recognize you get your best ideas when you're not staring at a screen. You see immediate returns on healthy distractions.
You start to respect the Duck. Paddle like hell under the water and be smooth and calm on top where everyone can see you. You learn the hard way that if you lose your cool you lose.
You always ask yourself if I am changing the World in a good way? Are people's lives better for having known me?
You are creative and when you have an idea it has no filter before it becomes a reality. This feeling is why you can't do anything else.
You start to see that the word "entrepreneur" is a personality. It's difficult to talk to your friends that are not risking the same things you are because they are content with not pushing themselves or putting it all out there in the public with the likelihood of failure staring at you everyday. You start to turn a lot of your conversations with relatives into how they might exploit opportunities for profit. Those close to you will view your focus as something completely different because they don't understand. You don't blame them. They can't understand if they haven't done it themselves. It's why you will gravitate towards other entrepreneurs. You will find reward in helping other entrepreneurs. This is my email: email@example.com. Let me know if I can help you with anything.
Your job is to create a vision, a culture, to get the right people on the bus and to inspire. When you look around at a team that believes in the vision as much as you do and trusts you will do the right thing all the time, it's a feeling that can't be explained. The exponential productivity from great people will always amaze you. It's why finding the right team is the most difficult thing you will do but the most important. This learning will affect your life significantly. You will not settle for things anymore because you will see what is possible when you hold out for the best and push to find people that are the best. You don't have a problem anymore being honest with people about not cutting it.
You start to see that you're a leader and you have to lead or you can't be involved with it at all. You turn down acquisition offers because you need to run the show and you feel like your team is the best in the World and you can do anything with hard work. Quitting is not an option.
You have to be willing to sleep in your car and laugh about it. You have to be able to laugh at many things because when you think of the worse things in the World that could happen to your company, they will happen. Imagine working for something for two years and then have to throw it out completely because you see in one day that it's wrong. You realize that if your team is having fun and can always laugh that you won't die, and in fact, the opposite will happen: you will learn to love the journey and look forward to what you do everyday even at the lowest times. You'll hear not to get too low when things are bad and not to get too high when things are good and you'll even give that advice. But you'll never take it because being in the middle all the time isn't exciting and an even keel is never worth missing out on something worth celebrating. You'll become addicted to finding the hardest challenges because there's a direct relationship between how difficult something is and the euphoria of a feeling when you do the impossible.
You realize that it's much more fun when you didn't have money and that money might be the worse thing you could have as a personal goal. If you're lucky enough to genuinely feel this way, it is a surreal feeling that is the closest thing to peace because you realize it's the challenges and the work that you love. Your currencies are freedom, autonomy, responsibility and recognition. Those happen to be the same currencies of the people you want around you.
You feel like a parent to your customers in that they will never realize how much you love them and it is they who validate you are not crazy. You want to hug every one of them. They mean the World to you.
You learn the most about yourself more than any other vocation as an entrepreneur. You learn what you do when you get punched in the face many many times. You learn what you do when no one is looking and when no one would find out. You learn that you are bad at many things, lucky if you're good at a handful of things and the only thing you can ever be great at is being yourself which is why you can never compromise it. You learn how power and recognition can be addicting and see how it could corrupt so many.
You become incredibly grateful for the times that things were going as bad as they possibly could. Most people won't get to see this in any other calling. When things are really bad, there are people that come running to help and don't think twice about it. Tal Raviv, Gary Smith, Joe Reyes, Toan Dang, Vincent Cheung, Eric Elinow, Abe Marciano are some of them. I will forever be in their debt and I could never repay them nor would they want or expect to be repaid.
You begin to realize that in life, the luckiest people in the World only get one shot at being a part of something great. Knowing this helps you make sense of your commitment.
Of all the things said though, it's exciting. Every day is different and so exciting. Even when it's bad it's exciting. Knowing that your decisions will not only affect you but many others is a weight that I would rather have any day than the weight of not controlling my future. That's why I could not do anything else.
From a P&L standpoint, if the revenue comes through your accounts at all, it's good to have a gross revenue line because you'll be carrying a cash balance on your balance sheet from these transactions before you reconcile with the marketplace that would appear high. Every organization is different but consider looking up showing Gross Revenue and then Net Revenue in your income section. Net Revenue is not to be confused with Net Income.
Keep it so simple that anyone at your company can understand the process and the steps for using the CRM. If there's no accountability or confusion with the company's process, you'll be one of those companies that says their CRM sucks when it's more a testament of your own internal controls that suck.
Here's a sample process:
1. Not everyone you ever talk to is a prospect or worth being in your CRM. Decide with your team the one question you can ask anyone that determines if they're a qualified prospect. This question should speak to the pain point you're solving. For example, if I was trying to sell Expensify to someone I might ask "Do you guys spend alot of time managing expense reports?". If they say "yes" then add them as a prospect and add data on how large the deal might be and if they have a budget to make a purchase. If they say no then add them to a Mailchimp newsletter if they are interested in getting updates. Make sure there's a call to action in the newsletter that would allow you to know if they ever become a prospect.
2. The next step is getting them appropriate information and/or including scheduling a demo to get them interested in using your product. The goal is to get them to a free trial if it's an individual or a small pilot.
3. After a pilot phase you'd want to convert them to a paying customer. The activities at this stage will be more building the relationship and supporting any issues or concerns they have with the pilot.
4. Once a paying customer you want to turn them into evangelists or testimonials or referrals you can use for your site or for press releases. This is an often missed step and significant opportunity. Continual engagement with an already paying customer helps to improve the product but an evangelist for your company is the most valuable asset you have: More customers from referrals without any cost.
In conclusion, you're looking to identify where each prospect is in the funnel and know what the next steps are at any given time to move them across the funnel.
Prospect > Pilot > Customer > Evangelist
(A good service for this in the early stages of your company is StrideApp.com)
Creating a follow up task at each stage and with each interaction is critical. Your day should be divided among getting new prospects in the funnel and following up with existing prospects.
Adii's answer is a great one.
I travel alot so I like to invite customers to a lunch or a coffee if I'm in their area to find out if we can help them in any other way or to hear feedback on what they don't like or what we can do to be better. Having them involved on a meaningful level where you can share your vision with them creates the most meaningful and valuable relationship you could hope to have with a customer. It goes a long way and creates evangelists for your brand. That's ultimately why you want to delight your customers.
I recently just sent this email to Steve at Kontagent, one of our customers, as he was a customer reference for an investor in our company:
Thanks again for the time with Eric. We're gonna know Wednesday on their decision. They said it went well and if we get approval, I'll be in town the 6th or so. I'd like to buy you lunch or a coffee if you're interested.
And as good as your feedback has been, could you tell us what you don't like about Ecquire?
Thanks again, Steve and let me know on both items.
Engagement and Referrals.
Engagement answers, "Do people like this and how much?".
Referrals answer, "Is this good enough to refer to other people like me?"
At an early stage company, you're still not quite sure of the best way to monetize but you cannot monetize without seeing engagement.
For an early B2B SaaS company, getting customers is more difficult than building a product. If your early users or customers are not referring the product, the limited people, time and focus you have still needs to be put into improving the product.