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The business startup costs that are the least complicated for startups tend to be our "fixed costs" like office space, utility bills, or software expenses incurred. While these start-up costs grow with any new business, they don't scale the way our variable cost projections do when starting a business.

Fixed Costs vs. Variable Costs

The reason we separate our fixed costs versus our variable costs is that we want to isolate our startup cost categories to focus on what will truly drive our business plan. Things like scaling our advertising costs will have an exponential effect on our revenue, for example.

But our fixed costs don't have nearly this impact.

Our fixed expenses do "grow" over time, but not exponentially. Therefore we tend to separate...

Startup Founders are busy. In the long list of things competing for your attention, cap table management is probably not high on the list. However, not having an accurate record of your company’s ownership structure can lead to costly mistakes down the road. Employee trust can be undermined if stock option grants are not handled properly, and closing a round of finance can be delayed, or even placed at risk if cap table errors or omissions are revealed during the due diligence process.

Captable.io is a cloud-based tool designed to make cap table creation and scenario modeling as easy as possible. Built by Founders for Founders, Captable.io is a free product that guides you step-by-step through the cap table creation process, prompting key ...

The SBA helps small businesses that may not be eligible for traditional bank loans by guaranteeing large portions of the loan on the entrepreneur’s behalf.

These loans are generally available through your local bank who relies on the SBA to back the loan in order to make it easier for them to take the risk of lending a new business without a significant amount of collateral.

Who’s eligible for a SBA loan?

Although the loans are backed by the SBA, they still require some basic underwriting by the bank to make sure the borrower can manage the loan similar to a standard bank loan.

What about poor credit?

The SBA may be underwriting the loan, but they still want to make sure it can be paid back. Standard credit risk factors (such as your score)...

Entrepreneurs have quite a few options available when raising capital that generally fall into three categories — bootstrapping, debt and equity.

Investors want to find the right fit. They want the right location, market size, and traction, among other things.

Funding your business isn’t as easy as saying, “I want to speak to investors who will give me a big check for my great idea!”

Even the best ideas often require a long period of proving themselves before any investor is willing to support them with a check. Along the way, there are several forms of capital that entrepreneurs use to address their needs.

How Most Businesses Get Funded

The most common way companies get funded is to start with their own capital, known as bootstrapping. The...

Private equity is a type of investment typically reserved for companies that have already grown to a larger size and are looking for a particular growth or exit strategy that isn’t available through traditional financing.

When private equity makes sense

Most startup or small businesses have little use for private equity. Technically, venture capital is considered private equity, but for the purposes of this explanation let’s leave venture capital out of it.

If you’re a startup with just an idea, you’re likely way too early for private equity. Typically private equity firms are looking for later stage companies that require much larger sums of money, usually at least $5 million, in businesses that already have some sort of assets to leverage...

Next we're going to analyze our financial statements and operating expenses to see if they accurately reflect all of the financial transactions we just inputted. If you're using your own accounting software to update your company's income statement that works too.

The nice thing about our handy Income Statement is that once we plug in all the values, the story from there is essentially told. All of our columns add up and ultimately tell us the honest truth – “did we make any money?”

Did We Make Any Money?

How we use this information is key. The Analysis step here is about getting all the troops rallied (assuming we have troops to rally) and ask:

“What did we just learn, and what changes do we need to make?”

Unlike a Profit and Loss Statement, ou...

With today’s fast-paced, ever-evolving and competitive market, a lot of companies decide to create a board of advisers that can give them fresh ideas and recommendations to keep up with today’s world.

For small companies, creating a well-run advisory board can give them an edge over their rivals. An advisory board that is composed of experienced people can help a company increase sales and flourish in their chosen industry. Seems pretty straightforward, right? But not a lot of companies do this or, if they do, do it right.

The Basics: What is an Advisory Board?

An advisory board is a group of consultants who provide advice and give support to the management of a company. They have no authority or power to arbitrate in corporate matters. The...

More often than not, financing gets a bad rap. Sure, Apple can mark up a product as high as it wants, and McDonald’s can increase the price of hamburgers, but when the product is money, customers and merchants start to question the ethics behind the markup.

Yet financing these markups has the power to make a positive impact on both the economy and your business. Companies that can overlook the negative stigma and provide financing options will create a viable business model and attract long-term customers from a variety of backgrounds. Here’s why:

Financing Makes Economic Sense

To understand how financing impacts the economy, let’s take a look at the United States’ savings rate over the past five decades. Trading Economics reports that pers...

As startup Founders, we are constantly focused on making sure our fledgling companies have enough runway to grow. We believe that if the company’s bank account runs out, the company goes bankrupt and it’s game over.

But that’s not always true. It’s often not until your personal bank account runs to zero that your startup is truly done for.

The fact is that startups don’t truly go bankrupt until their Founders go bankrupt. The problem is that Founders are often so focused on the startup’s finances that they overlook their own ability to stay afloat in the process. I call this ability your “personal runway,” or the amount of time that you can stay alive and fed, regardless of the health of your business.

Back to Basics

I learned all abou...

What is one surefire tip to find investors and/or making the right impression on an investor?

The following advice around how to find investors is provided by members of Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

1. Have Your Legal House in Order

I’ve seen investors decline to invest in startups because their founders were so unsophisticated about legal formalities and/or because there is no documentation about intellectual property ownership. Before you find investors, you need to form a legal entity...