Written by Jeff Sloan and Rich Sloan, Startup Nation is an extremely useful, all-in-one guidebook for entrepreneurs everywhere. Key lessons from the book:

40% not 80% of businesses make it past the 5 year mark.
- Jeff Sloan and Rich Sloan, Startup Nation

Four Major Skills for entrepreneurs:

Great selling skills
o Enjoy being around people.
o Easily accept rejection and move on.
o Love the feeling of closing a deal
Marketing Skills
o Ability to appeal to peoples needs and wants
o Gets gratification from seeing their ideas have their intended affects in the market place.

Creative skills
o Thrives on creativity
o Enjoys problem solving
o Enjoys the process of invention but not necessarily selling an invention or idea

Analytical skills
o Enjoys thinking through existing systems and processes and making them work better.

Types of Business – What Fits You? What’s Hot?

- E-commerce
- Ebay-preneurship
o Large, targeted market
o In 2004, eBay estimated more than 430,000 people were making a living selling goods on ebay.
o 135 million users in 28 countries
* Franchising
o Business in a box. Proven concept
o Lose a share of revenue and control

- Home-based
- Brick and mortar
- Multilevel marketing
- Licensing
o The licensee takes the risk of production and marketing and keeps the lion share of profits, paying the licensor a royalty of 5% to 10%.
o If your idea isn't patented, try to get a confidentiality agreement before submitting proprietary information to anyone or company.
o Try networking into the company and find an internal advocate for your idea.
o Saying "no" is a safer choice for big companies than taking on new products. Anticipate and address concerns
o "Not invented here" syndrome at big companies can be difficult.
o If you are offered a license agreement, be sure to consult with a trustworthy specialized attorney.
o Always negotiate a "minimum" annual royalty payment, which you will receive whether or not the company is making sales of your product.
o “In general, “net” royalties are calculated against the gross price of the product mines shipping, insurance, taxes, and an allowance for returns. But “net” is a subjective term, so defining it is crucial. You may have to agree to a marketing allowance, usually not more than 5 percent. The licensee may also want to amortize the capital costs of tooling if your invention has to be manufactured. Just be sure you don’t let the licensee include general costs of doing business, such as salaries or rent, in their calculations of new royalties. And never let them talk you into a royalty arrangement where they have to make a profit before you get your money. You’ll end up never getting paid.
o Always negotiate a “minimum annual royalty” payment, the minimum amount the licensee must pay you even if they don’t sell a single unit. With this requirement, they either pay this amount or lose their exclusive rights to the product.

Key elements of "hot" businesses
o They address a "screaming need". Something the market really wants already.
o Find a niche and fill it.
o Streamline your operations. Example: Dell
+ Sells over the internet, cutting out retail expenses
+ Customer-financed just-in-time production of each computer
+ Pays its suppliers on 30-day terms
o Leverage technology
+ This edge allows online retailers to keep costs low as opposed to their brick and mortar brethren.
o Kick up your customer service
o Be the expert in your industry
o Monitor the trends; macro and micro
+ The graying of America
+ Women and Hispanics are examples of population segments that have ever increasing buying power
+ Desire to be more healthy and more spiritual
+ Mentoring is becoming highly desired
+ Disintermediation – Cutting out the middleman

The Defining Dozen; 12 questions that lay the groundwork for a strong business plan
o What is your idea?
+ Clear and concise. Layman's language
o How does your idea address a need?
+ Is your idea revolutionary (more upside, greater risk), evolutionary (less upside, less risk), or simply copycat?
o What model suits you best?
o What's so different about what you offer?
+ Do heavy market research, know your competitors
+ You have to be the expert in your field
+ Focus on the strongest distinctions for your product, service or business
o How big is the market and how big will you grow?
+ Think of your target audience like an archers target with the different rings representing different tiers of customer need. Focus on the smallest likeliest target first then move out.
+ Be realistic and know your market well.
o What's your role going to be? What part will you play in the business?
o Who's on your team?
o How will your customers buy from you, and how much will they pay?
o How much money do you need and how much will you make? Detailed expenditure and revenue projections.
o How will you measure success?
o What are your key milestones?

The Formal Business Plan
o Looks Matter in terms of your presentation
o Executive summary: concise, 2-4 pages. Build your case. Need in the market place and how your business uniquely meets that need.
o Business description: complete, detailed description of the business (key suppliers, strategic partners, facilities etc.) Contrast yourself from other providers. Give facts and figures, cite your sources.
o Market analysis: comprehensive research of target market. Cite your sources. Hammer home your competitive advantages. Include milestones.
o Marketing and Distribution: start to make your case. How you will sell your idea or product.
o Personnel: who is on your team?
o Exit strategy: the ultimate destiny of the business.
o The Financials:
+ Written narrative of key business assumptions
+ Income statement – P&L
+ Balance sheet
+ Statement of cash flows
+ Cash management report
+ Key takeaway: "No matter how tightly you plan the first year in business, in the real world there will inevitably be variations in the amount--and timing--of revenues and expenditures. How sensitive to these variations will your business be?" This is the key consideration. Too little cushion, and your business will be at risk.

Your Elevator Pitch (answers the following questions)
o What's the idea?
o What’s the status of your idea?
o What market need does your idea address?
o What feedback do you have indicating you're onto something hot?
o How are you going to get people to buy what you offer?
o What's special about you or your team?
o What's the total funding you're seeking?
o What's the funding strategy?
o What's the projected return on investment?
o What's next? Finish with a strong question like "Can I walk you through my business plan - it really outlines how big this opportunity is."

Business entities
o Sole Proprietorships
+ Easy to start and maintain
+ Low cost
+ No double taxation
+ Personal-liability exposure
o Partnerships
+ Allows for multiple owners both active and passive
+ Provides liability protection for passive owners
+ No double taxation
+ Personal-liability exposure
o Corporations
+ Well know and universally understood
+ Low risk liability
+ Can sell stock to investors to raise money
+ Expensive
+ Must be detailed and meticulous in accounting, taxation and reporting matters
+ Double taxation
o Limited Liability Companies
+ Low risk of liability
+ No double taxation
+ Can have multiple owners both active and passive
+ Not as widely known or recognized in Texas

Creating your own brand

Create a "marching brand"
o First, identify your brand attributes
o Understand your target audience
o Promote your brand consistently across the board.
o Create a quality logo
+ Its more cost effective to develop a two-color logo vs. four color.
o Create a web presence, Key questions to ask
+ What will the maintenance cost be?
+ Where will the site be hosted?
+ Will the site be optimized for search engines?
* Creating demand for your brand
o Grassroots marketing
+ PR - can generate editorial content that you don't pay for
+ Establish yourself as an expert or go-to guy in your field
+ Promotions; often useful and effective
+ Direct mail
+ Email communications
+ Networking: join groups and associations important to your business

Finding the Funding That’s “Just Right”
- The Goldilocks approach – Finding the right funding for your specific needs.
- Financing options
o Bootstrapping
o Debt Financing
o Angels
o VC’s

First find out what you need money for, and when you'll need it.
o Build off of the financial needs projected in your business plan. Spend ever dollar wisely.
o Timing is critical. Will vary based on your business model. See chart on pg 189 for difference b/w high-tech, fast-growth businesses and most other businesses.

How much money do I need?
o See cash-flow projection in business plan. "If you believe you’ve accounted for the most critical and the most necessary expenses in your forecasted budget, and if you believe your revenue projections are conservative and accurate, your cash flow projections will indicate when cash shortages will likely occur and by what amount. Make sure you'll have sufficient capital to help you get through these shortfalls."
o Bootstrapping - use of your own money to jumpstart your business.

Getting the money w/o giving up equity
o Traditional debt financing. Banks will want to see evidence that the business is viable. Always confirm that you understand the terms of the loan completely.
o SBA Loans
+ 7(a) Loans issued by banks but backed by the SBA. They can be used for working capital and fixed assets
+ 504 loans – These loans are clearly earmarked for fixed assets such as land, buildings, major equipment etc.
o Friends and family. Your relationships will change. Be upfront about strategies and risks.

Using your equity to raise money
o Angel investors
+ Usually $25,000 to 1 million
+ Upside
# Will invest in pure start up
# Will invest for equity
# Mentorship
# Patient
+ Downside
# Hard to get their attention
# You give up equity
# You lose control
# They want formalized reporting
o VC's
+ Upside
# Usually 1 million and more
# Good source of additional funding once their in
# They’re helpful in bringing about exit opportunities for the business
+ Downside
# Rarely invest in pure startups
# Typically require you to already have experienced management and the beginnings of revenue
# They require a significant amount of control
# Exit strategies are usually a sale or IPO
o Do your homework and don't lose control.

The Power of People
- Power Brokers wield influence and are powerful allies

- Find people with proven skills
- Find people with potential
- 3 important HR pointers
o Don't try to fit round pegs into square holes
o Don't promise what you cannot deliver
o New blood can turn into bad blood
- Keeping great employees
o Recognize the whole team
o Communicate more than you think you need to.
- The value of mentorship
o Find someone who can lend an experienced, critical eye to your business.
o Consider structuring your interaction

Do not forget your customers
o They pay the bills. Your business cannot survive without them.
o Customer service pointers
+ Communicate your CS vision statement to your employees
+ Make CS real, put systems in place to ensure good quality
+ Define what you mean by customer service and measure the results
* Bottom line
o Mediocre people typically cannot make even the greatest idea into a success, whereas great people can make even mediocre ideas succeeded.
o Build a solid team
o Focus on your customers

In your first year of business, work from your heart and keep you mind in the game.

Five things to help you succeed
o Be bold. Don't become complacent. "Just because you're on you way doesn't mean you can put your business on autopilot."
o Keep the entrepreneurial spirit alive.
+ Jumpstart the vision
+ Communicate the vision
+ Create a culture of entrepreneurship
+ Stamp out the 9 – 5 mentality
+ Organize the Org chart
+ Remember to reward the entrepreneurial behavior
o Keep innovating by listening to customers and tracking competitors.
+ "Avoid the common pitfall of innovating without receiving feedback from the market."
+ "Beware of competing only on price."
+ Watch the competition
o Work hard and work smart
+ Take 5 minutes at night and 10 in the morning to assess an plan for upcoming day.
+ Delegate early and often. Break away from the attitude that you're the only one who can do it right, esp. if you have built a strong team and have accurately assessed your own strengths and weaknesses. Focus on the things where you create the most value.
+ Get rid of inefficiency.
+ Remember the three categories of relationships: customers, employees, owners (CEOs of communication).
o Constantly manage your burn rate.

Strategies to Optimize the value of your business
o Develop a committed and capable team that could continue on with the business after the sale.
o Build solid relationships with vendors, retailers, customers.
o Establish customers and contracts that generate recurring revenue.
o Develop a marching band.
o Develop a portfolio of proprietary products and the patents and trademarks that protect them.
o Avoid overburdening your business with debt.
o Take a lower salary over time. Instead of milking company profits along the way, plow to profits back into the company in order to position yourself for a bigger payoff at exit

[From the Great Books  Series. Also see The Success Manual  - Encyclopedia of Advice, which contains summaries of 100+ Most useful books.]