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UPDATED: 4/17/19
Every entrepreneur possesses specific goals & objectives for their new business. Most goals & objectives take multiple steps to reach or exceed the original expectation(s) of the entrepreneur. Milestones represent the steps to achieve goals & objectives. While many milestones may be unique to your specific startup, there are certainly a few you need to take note of since they apply to 98% of every startup. Below is a list of the many milestones that my past startups went through. They were recorded on many calendars dating back to 1998 when I first started in my third car garage in Houston, TX. Most entrepreneurs will reflect on your calendar of milestones and realize it represented your road-map to success. To make it easy to stay organized, I have broken down the milestones into categories that match your progression as a startup. It is important to note that the "Kick-off" category of milestones are all required. Get them out of the way so you can focus on the meat and potatoes of really starting your business by knocking on your first door and getting the first dollar in the bank! I threw in a few pre-qualifiers that will help determine if your business idea has legs. Determine if Your Idea is a Business
Pre-Business
Pre Kick-off
Revenue
Traction – objective is to start getting your new company out within your targeted marketplaces and established. Traction is not centric to just marketing but should also be focused on getting your business working toward its initial foundation.
Business Development
Team
Resources
Remember the objectives of working your milestones - keeps your priorities straight and in order, drives accomplishments and accountability, and keeps your most precious asset (time) on what's important. Your feedback is always welcome! Scott E McGlon is the President of McGlon Properties, LLC and the author of many blog post on MP Blog. He has been a serial entrepreneur, entrepreneur-in-residence, investor, and president/CEO of many successful start-ups since 1998.
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 Before we get to the 50 questions, the first question you need to ask is do you even need a partner. With roughly 22% of startups starting as partnerships, it certainly is a popular choice but is not close to the 78% that start as a sole proprietorship. There are a lot of pro & cons to a partnership but before signing on the dotted line, make sure you ask the following questions with your planned partner sitting right next to you!
Company Name, Location and Hours 1. What are the partners’ names? Are they individuals, corporations or Limited Liability Companies? What is the designated name and purpose of the partnership? 2. Is each partner cool with the company name and tagline? Will we register the company name and tagline as a trademark? 3. Where will the office be located? Will we own it or rent it? Will any partners work out of a home office full-time or part-time? 4. What will be our working hours? What autonomy will partners have to set their own hours? Do we need to service clients during any certain time each day? How often will the partners meet to discuss business? Can the partners agree on a minimum number of hours each will work each week no matter what? Contribution to Capital - an entry on the shareholders' equity section of a company's balance sheet that summarizes the total value of stock that shareholders have directly purchased from the issuing company. 5. What will each partner contribute to the business in terms of:
Accountability 7. How will each partner measure the job performance of the other partner(s) and hold each accountable for meeting expectations? It is critical that expectation/roles of each partner are clearly drawn out with key performance indicators established. Taxes 8. What partnership structure will be chosen and how will that affect our taxation? e.g. general partnership, limited partnership, limited liability partnership (LLP) limited liability company (LLC). Look at each closely and make the best decision that all partners agree with. Liability 9. Will the Agreement limit the joint and several liabilities that partners have by law for their partners’ behavior? Will the partners’ contractual commitments and representations bind each partner? 10. What is the liability and repercussions if one of the partners does something illegal while representing the company? 11. What is each partners specific percentage responsibility to company debt? 12. How will authority and decision making be structured? Will the partners operate by general consensus? Or, will it be based on share of ownership? What is the tie-breaking mechanism used to avoid deadlock? Will partners have authority to control certain functional areas of the business without the approval or involvement of the other partners? What is the authority to act on behalf of the company without unanimous agreement? 13. What is the procedure for borrowing money in the company name? When does borrowing require approval of the other partners? What is the scope of expense account authority before needing to consult with the other partners? Responsibilities 14. Who will handle what? How will your roles and responsibilities be divided? Who will have what management duties? 15. How will workload be assigned and monitored? Each partner must be open to the other partner(s) holding them accountable. Always remember the end goals & objectives of the company and take all pride out of the equation. Personnel 16. How will the partners choose a lawyer, accountant, banker, insurance agent or any other professional service provider? 17. What process will be used to expand and admit new partners? 18. How will the partners hire employees or contract workers? 19. How will the partners select third-party vendors and suppliers? 20. How will the partners select customers or clients? Insurance 21. What kind of business liability and/or property damage insurance will the company purchase? Who decides on the coverage and limits? 22. Will we provide medical, life or disability insurance or a pension plan for the partners and employees? 23. Will the partners provide key man insurance on the lives or disability of the partners? Will the company pay for all legal fees if one of the partners gets sued in the company name? Ownership and Compensation 24. How will ownership percentages be determined? 25. If one partner had the original idea for the business, should he/she receive compensation or additional ownership rights? 26. How will profits be apportioned? How will losses be allocated? 27. What amount of profits will be withheld for investment back into the business? 28. How will salaries or draws against profits be determined? 29. How will company perks be assigned? Cars, event tickets, dinners, etc. 30. What other benefits will we provide? Vacation, holidays, bonuses, sick time, etc. 31. How will we provide for the unexpected? Serious family illness, disability, or some other life event that disrupts a partner’s ability to work productively? 32. What extent of absence from productive work will require renegotiation of the partnership agreement? 33. Who will keep the books? What financial statements will the partners receive? How regularly will they be prepared? 34. Are there any restrictions on engaging in other outside business activity? 35. Will partners forbid conflicts of interest and direct competition – require each to sign an NDA and non-compete for example? Note that this is illegal in some states. Buy/Sell Agreement 36. What happens to the business assets if a partner dies? 37. How will the value of the partners’ shares of the business be determined? 38. If a partner leaves, will the company pay for his share? Can a departed partner remain as an investor? 39. Will a departing partner receive the same amount for his share if he joins the competition? 40. What restrictions and approvals apply to a partner selling his share of the business to a third party? 41. Do the other partners have a right of first refusal for the shares of a partner who dies or leaves? 42. Can partners be involved, including owning, another business? 43. What is the process for firing a partner for incompetence or malicious behavior? What happens if a partner becomes impaired by drugs or alcohol, or gets arrested? 44. What process will we follow if an outsider offers to buy the business? What valuation method will the partners agree on? 45. Upon dissolution of the partnership, how will shared assets be divided? 46. Who gets the rights to intellectual property, customer lists, company files and records? 47. Who can continue to use the company name and logo? 48. What method of alternative dispute resolution (arbitration or mediation) will be used in lieu of litigation to resolve disputes between the partners? How will the arbitrator/mediator be chosen? 49. What is the procedure for amending the partnership agreement? 50. If a partner fails to make a contribution as provided in the partnership agreement, or otherwise violates the agreement, what are the consequences? Yes, these questions can be a little over-whelming. While some are more important than others, they are all important to avoid the inefficiencies they can cause if each are not accompanied with an answer that all the partners agree on. As they say, life and business will go by much smoother if your ducks are in a row. Scott E McGlon is the President of McGlon Properties, LLC and the author of many blog post on MP Blog. He has been a serial entrepreneur, entrepreneur-in-residence, investor, and president/CEO of many successful start-ups since 1998. by Scott E. McGlon
Irrational and passionate optimism is a "must have" in your entrepreneurial arsenal if you are going to make it through the ups and downs of owning your own business. That has been written and said many time and in many ways. This "blind faith” topped with a lot of "passionate drive" will get it done. Or will it? Do you believe that either you have what it takes be a successful entrepreneur or you don't? Thinking you have it, reading about it, studying it, talking about it, and certainly not acquiring ownership in a business gives you the title of a "successful entrepreneur". If you look closely at all of those who have a proven record in being an entrepreneur possess characteristics that 95%+ of the population simple doesn't have - no matter how much education, money, or connections they have. So, yes, in my opinion, you either have it or you don't but let's dig much deeper. Everyone has heard the long-standing stat that "two out of three businesses fail". But what the stat doesn't show is the continuance of a certain percentage within the 66% failure rate and how the failure fueled and refined their quest to get up and try again. Every successful entrepreneur has failed at some point in their career. More importantly, some of the most successful people I have met have hit rock bottom at least one time prior to making it big on their own. The difference is simple: failure either scares you enough that quitting becomes a real option or completely drives you to another level to try even harder. Unfortunately, I would say at least 95% fall under the "once failed - won't happen again" group. Successful entrepreneurs don’t let being rejected or failure keep them down. This "pride blocker" is part of the most successful entrepreneur's DNA. This is great and everything but doesn't really define the secret sauce that is truly the nucleus of every great entrepreneur. While a lot of folks look at life full of wins and losses, most entrepreneurs look at it as wins and learned! Going back to the certain percentage within the 66% failure rate, the one characteristic they come out on the other side with is experience with failure - a set of negative variables that ended in failure. So, what is the secret that every entrepreneur should know? Take note - most entrepreneurs that have achieved success consistently deploy well thought out mental strategies to manage disappointment. Huh? What a minute - all my life I have been told "be positive" and "think good thoughts". That's perfect when you are in the 5th grade! Every great entrepreneur has a well-defined parameter of his or her business. It's almost like thinking through every scenario possible that could go wrong and having primary, secondary, and tertiary plan lined up ready to be executed without one ounce of frustration or distraction setting in. This is where both resiliency and determination overcome and bury the many challenges any business owner faces - especially in the first 24 months being in business. Without a doubt, the majority of new entrepreneurs invest a lot of time knowing every aspect of everything that they think is going to go right. Unfortunately, there isn't a lot of time invested in thinking about everything that's not. It's the bold and challenging road of determining every possible roadblock that you think could potentially happen and creating a game plan to counter it. This line of thinking and planning will also assist your pursuit of getting funding. The ability to answer the tough questions thoroughly are the ones who usually get the biggest investors interested. Good luck! Scott E McGlon is the President of McGlon Properties, LLC and the author of many blog post on MP Blog. He has been a serial entrepreneur, investor, and president of many successful start-ups since 1998. by Scott E McGlon
INTRODUCTION In 2013, e-commerce will surpass $1.5 trillion in revenue. Online merchants are estimated to lose 1 percent of revenue in fraud and an additional 3 percent annually in wrongly declined transactions or charge-backs. Simply put, the majority of e-commerce platforms merchants are using today (internal or external) do not protect against fraud at a level that could significantly reduce losses incurred by losing billions in potential clean revenue. Typically, fraudsters detect or stumble upon areas with weak online check-out security points. Often online merchants simply do not do enough to set up rock-solid security features and processes that go well beyond the basics. This white paper’s main objective is to introduce the different ways you can check the validity of every order you receive through your online store and provide tested viable solutions against the significant liability fraud creates for many online merchants. TO START To start, the fraudster’s are looking for websites that do not do the basics in making sure each online order is valid. Unfortunately, there are thousands of sites that do not do what’s necessary to limit fraudulent activity on their sites. Many online businesses lack the in-house capability to carry out such complex anti-fraud tasks efficiently and at sophistication levels that work. Some online businesses can get away with limited fraud detection internal processes due to the certain categories that have a much lower probability in receiving fraudulent orders. These categories include, but are not limited to, low-end specialty goods, custom or made-to-order goods, grocery or perishable items, raw materials, and heavy or bulky products (furniture, etc.). Fraudsters love small, high-end products like jewelry, electronics, and collectibles that can easily be resold in almost any market. It is highly recommended that you do your research before investing into certain high-risk product categories. There are over 100 risk indicators that look for footprints in both online and offline data to determine the validity of a transaction. Knowing and understanding the various risk indicators and what your company can actually execute in regards to the highest level of fraud detection is critical. A simple example of what a fraudulent transaction looks like starts with the addresses used in a transaction. A consumer making an online purchase from an IP address located in Atlanta but has a billing address in Mexico City, Mexico and a ship to address going to Miami should kick out and immediately either put the order on hold for review or decline the transaction altogether. Depending on the complexity of the fraud detection solution your company goes with, the more risk indicators that are integrated into your solution, the higher probability you will stop fraud in its tracks. Over the last few years, the automated level of sophistication fraud detection solutions has been impressive. This is great for merchants and bad for the fraudsters. For example, some solutions use social media in qualifying transactions as legit or not by seeing which country the card was issued and the strength of the consumer’s social profile on Facebook, Twitter, LinkedIn, and other social networking sites. If the consumer’s LinkedIn account indicates they live around Los Angeles and the issuing card bank was in Switzerland, fraud detection solutions today can flag the order within seconds or minutes of being completed. OPTIONS There are many things you can look at regarding how to detect fraud. Below outlines some of the more popular ways to detect fraud that can be coded into your shopping cart steps. Depending on your complexity level in how much you can control the ways to detect fraud, you can create a scoring system that determines the level of validity of each order you receive online. The following is ranked based on what is done most frequently. 1. Credit card authorization at time of sale but capture funds at shipping – this option is becoming more popular as e-commerce companies develop their internal SOP’s for fraud prevention. By only authorizing your customer’s credit card allows extra time to review the information and details before you collect payment or ship the order. 2. Address match requirement - by requiring the bill to address to be the same as the ship to address will distract many fraudsters at checkout. This is a top choice and is sometimes bundled with #1 above. By only using this method is not recommended. Fraudsters have been known to wait for delivery at the bill to address and sign for the package. 3. If the distance between bill to & ship to is different, call and verify the reasons why with your customer. Just talking with the customer using their bill to phone number verifies whether or not the order was placed and the right ship to address was entered. This option is not used with high-volume online retailers due to the inefficiencies it causes. 4. IP Geo-Location or Proxy Setting (U.S. – accept, foreign – reject). This is simple for most hosting and shopping carts available today but the fraudsters are getting smart by linking to U.S. based IP address or masking their foreign IP address. 5. Different names on bill to / ship to and not noting it as a gift in the cart. Using different names on the bill to address and ship to address is a definite red flag. Depending on the shopping cart software you use, blocking transactions that have different names can be a sign of a fraudster who plans to intercept the package at the delivery point that requires a signature. A “Gift” check-box option in the shopping cart (if checked) allows this rule to be ignored. However, it is recommended that you call your customer to verify the information entered is correct. 6. ARPS, or Average Revenue per Sale, is another great indicator of fraud. If online sales ARPS is currently $100 but suspicious orders are hitting at $200+ throughout the day or week, it is a good idea to flag these orders and verify them with the customer on record. It is not recommended to only use ARPS as the determining factor for fraudulent activity. 7. If you sell a highly targeted product (jewelry or electronics for example), it is recommended to flag all first time customers. Some companies use this as an opportunity to call and verify the purchase and welcome the new customer to your company. Others use first time customers with at least one additional potential fraud violation before contacting them by phone. Do not verify suspicious activity using chat or email. 8. If you have an online order that shows time on site less than 50% of site average coupled with another fraud violation could equate to fraud activity. It is recommended to call the customer to verify information, request they recite the purchase, and total spent on order. 9. Develop if/then logic based on your target customer demographic historical stats or business intelligence and build your own potential fraud profile. If you have built your shopping cart in-house or work with one of the larger content management system (CMS) or shopping cart providers, you should be able to build out a more comprehensive demographic with a goal that highlights “misfit” customers (successfully checked-out) or visitors. The higher the sophistication, the more fraudulent activity your online business will catch. 10. Flag all high-risk geographies in the United States and, if you ship internationally, worldwide as well. Firewall rules can be set that do not allow transactions from South Africa, India, Russia, China, and Southeast Asia that are known for fraudulent activity. Also parts of Los Angeles, Chicago, Miami, and New York City can be flagged by originating zip codes. 11. Guest checkout vs. registered user checkout. Fraudsters avoid sites that require you to register before checking out since most information is verified during registration. One of the more important aspects of fraud detection is just paying attention to details of each order. Customer service representatives need to be on the lookout for the obvious potential threats of fraud including ship-to phone numbers that are entered as “(123) 456-7890” or a fake domain extension within the email address provided ([email protected]). Before getting excited about a $1,250 online order that just hit, review all elements of the order either manually or through fraud detection rules. It is critical your CSR’s and sales team ask all the right questions and complete a thorough due-diligence before fulfilling unordinary orders! It never ceases to amaze the number of transaction that slips through the cracks by simply ignoring or not catching the easiest signs of fraud. To utilize the prevention methods above while optimizing the efficiencies of your customer service department, it is recommended to first define what capabilities you have with your current shopping cart. If you have an in-house IT department, it is much simpler to integrate the most thorough fraud-detection strategy. If you outsource your e-commerce platform, you might be more restricted but most “top-shelf” CMS and shopping cart companies offer fraud detection components within their platforms. Because of the many different product categories sold online, the majority of these platforms require the clients to “turn on” the fraud detection components. Either option, it is recommended to define the level of detection you are shooting for to reduce fraudulent orders getting through your system. The level should be based on what fraud is costing your business today before a plan and budget is put in place. Most third-party fraud detection companies use a scoring system that meets their client’s objectives to eliminate fraudulent orders. For example, ABC Enterprises, LLC sells high-end GPS tracking devices for multiple applications. Because their sales are both in the electronics and technology industry, their exposure to fraud has hit as high as 7% of gross sales. ABC built a scoring system that best countered the fraudulent activity that they collected. Their example of scoring also included deducting points on checkout information associated with low probability of fraud. The scoring system that ABC put in place automatically declined orders that scored 25 or higher, put all orders on hold that scored 15-24, and fulfilled orders that totaled 14 or less. ABC Enterprises, LLC Fraud Score Sheet:
The flexibility that comes with a successful scoring system to detect fraud is the flexibility you have in what you score, how you score, and the threshold that ultimately defines whether or not the order can be fulfilled, put on hold, or denied altogether. Many companies tweak their fraud scoring system throughout the year by lowering the threshold totals during the holiday season for example. In the example above, ABC found through its business intelligence that the majority of fraud orders had Yahoo email account with low time on site. So, ABC gave all orders with Yahoo email accounts a score of 10 plus another seven points if the visit was also under two minutes. Just on these two parameters, ABC saved over $2Mn in potential loss sales in the first year of implementing their fraud scoring system. A strong fraud detection process has other benefits as well. By successfully defining the characteristics that drive fraudulent orders specific to your online initiatives, allows growth in other markets that were previously cautious in going after. CONCLUSION A well-designed and implemented online fraud detection plan is based on both the transactional and historical business intelligence analysis. The more in-depth the analysis and understanding your core customer demographic, the stronger your fraud detection will be. Any online business can significantly reduce the chance of fraud occurring if both the scoring rules and excution is successfully implemented. The sooner that indicators of fraud are available, the greater the chance that losses can be recovered and address any weaknesses within your SOP’s or CSR training. Effective detection techniques tailored to the merchants order history through scoring every order will build a stronger wall and serve as a deterrent to potential fraudsters. As e-Commerce continues to grow, online security is an increasingly important issue that you must assertively address to keep your business protected from unnecessary losses. Unfortunately, statistics clearly show the continued growth in both fraud and Internet-based scams. Using every tool and resource to counter fraudulent activity will save you both time and money. It is important to collaborate with other similar e-commerce companies to review what anti-fraud initiatives that have worked well. Good luck! Scott E McGlon is the President of McGlon Properties, LLC and the author of many blog post on MP Blog. He has been a serial entrepreneur, investor, and president of many successful start-ups since 1998. by Scott E McGlon
If you really want to be proactively positioned with potential investors, you must be able to answer what I call "the critical ten". These questions remove any doubt in potential investors minds that you, as a founder of a start-up, have what it takes to get your start-up to a self-sustaining business. Over the past few years, "boiler plate" answers, "canned" presentations, and flying start-up lingo and buzz-words are in almost every executive summary, business plan, and/or start-up presentations to seed, angels, or VC's. If you get nothing out of this blog entry, take the following with you: show sincere passion and be yourself. There is nothing more unappealing than listening to a young founder going over-the-top to try impress the investor(s). My simple advice to every start-up is to be upfront, honest, and straight-forward with the answers to the following questions:
Relax! Being cool under pressure defines confidence with an audience that knows it well. Understanding these questions and presenting the right answers will determine the level of success you achieve with any investor that you get in front of. Now, go get'em! Scott E McGlon is the President of McGlon Properties, LLC and the author of many blog post on MP Blog. He has been a serial entrepreneur, investor, and president of many successful start-ups since 1998. As a start-up looking for seed or early-round capital, you should avoid both "tire kickers" and "information/idea seekers" in the process even if you think it could serve as additional experience or networking. After spending many hours building a qualified investor list, nothing could be more frustrating than having an investor (angel or VC) waste your time and, more importantly, your resources.
However, tire kickers can pose much more long-lasting negative risks to your investment seeking process including losing the legitimate investors along the way. So, to avoid this, it is critical that you recognize who is legit and who is not. The following are four techniques that you can execute that helps deter this possible liability in your investment deal process. Again, your goal is to spend 99% of your time in quality conversations with the right, pre-qualified investors. 1. Review past Transactions/Investments: Most investors do not mind talking through their past successful deals. Approaching every investor with the same goal of eliminating tire-kickers or information/idea seekers sets the tone early in your conversations. So, ask for details of past transactions, investments, or even consulting contracts with other start-ups that the investor has been involved in. All sophisticated investors should have at least one of the following apply:
2. Build a Quality Teaser: As we have previously seen, one of the most important steps to eliminate tire kickers from your process is to build high-quality teasers on your business. A strong teaser is defined as straightforward and informative. More sophisticated and discerning capital providers are wary of sensationalist and promotional material, and will often discount valuable deals if they are advertised excessively. If you build your initial potential investor list with your ideal buyer in mind, it is much more likely that your process will be clean and precise. To ensure your teasers are high-quality, you should avoid:
3. Keep Notes on Relevant Investors: One of the best ways to prevent tire kickers or info seekers from slowing your capital deal is to prevent them from ever learning about your company. If you mass distribute or broadly auction your opportunity, the probability of attracting partial interested investors is significantly higher. Quality of your investor contacts, not the quantity, is what you need to focus on right out of the gate. It is critical for any business or start-up to have relationships with potential investors and to fully understand their expectations and interests. Keeping track of the interests of your potential network of investors requires detailed notes on all of your connections that specifically fits your expectations as well (move fast, has contacts, brings experience to the table, etc.). 4. Prepare and then Communicate: No matter how well you write your teaser, deck, and/or company intro-video or keep notes on potential investors, some less than "tire kickers" seem to always creep in the process. Every business owner needs to have the objective of identifying and eliminating from conversations as early as possible. The best way to do this is through experience, preparation, and validation. While early-stage preparation and planning may seem lengthy and unnecessary at the time, it can save you tremendous time later and assist in your credibility with the true investors that are interested in your company. Preparation can take on many legs including so get organized on what you want to ask to your vetted list of qualified investors. Your question list should produce productive answers in helping you further qualify an investor. Lack of engagement, slow to return emails, voice mails, and weak questions are all red flags that the investor might just be a tire kicker. Another approach is including a cover letter in front of your NDA outlining the type of investor you are looking for and your investment stages before going to a Series A financing. If this approached is used, it is critical that it is professional, straight-forward, and non-offending. Info/idea seekers and tire kickers will often indicate interest early on but later back out once the specifics of the investment is known. Having a cover sheet to your NDA is an easy way to document your expectations right out of the gate. Some investors will request a formal introduction which is usually a 10-30 minute conversation. Make sure you take this opportunity to ask questions as well. Remember that your due-diligence on potential investors is just as important as their due-diligence on your company. Asking the right questions and outlining your fair expectations equates to credibility and raises the possibility of your opportunity to be shared within the investment community. By following these four guidelines, you will increase your deal speed, close more deals, and build lasting relationships for your future ventures. |
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AuthorScott E McGlon is the President of McGlon Properties, LLC and the author of many blog posts on MP Blog. He has been a serial entrepreneur, entrepreneur-in-residence, investor, and president/CEO of many successful start-ups since 1998. “Success is walking from failure to failure with no loss of enthusiasm." - Winston Churchill "The few who actually
go out and take extraordinary initiatives are the envy of the majority who sit back and just observe." “The LORD makes firm the steps of the one who delights in Him; though he may stumble, he will not fall, for the LORD upholds him with His hand.” - Psalm 37:23-24
“Keep away from people who try to belittle your ambitions. Small people always do that, but the really great people make you feel that you, too, can become great.” "It is more important in what you become than what you achieve. What are you going to become in pursuit of what you want?" - John Marsh, Marsh Collective
“Work harder on yourself than you do on your job" - Jim Rohn
"The secret to success is very simple: EVERYDAY if you do quality work, take initiative, act on innovative thoughts, and are assertive in your actions all backed by faith, the dividends will consistently flow your way." - SEM
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