In 2009, former venture capitalist Elizabeth Edwards launched Metro Innovation, and the first of two successful annual regional innovation competitions in Cincinnati; a third Cincinnati Innovates competition is scheduled to start in the spring of 2011. The combination of Edwards experience helping hundreds of start-up companies, as well as launching and bootstrapping her own business, inspired her to write Startup: The Complete Handbook for Launching a Company for Less.
According to Edwards, the book is filled with do-it-yourself tips, guides and tools that can help entrepreneurs save thousands of dollars in start-up costs. It is described as “a modern textbook for entrepreneurship, covering all aspects of starting a business, including finance, branding, advertising, PR, accounting, and business law. Part manual, part manifesto, the nearly 400-page text presents proven strategies for launching a startup on a shoestring budget. The book explains how to create a profitable business model, conserve cash, and get operational fast, giving equal attention to the risks and wealth creation opportunities business ownership provides.”
Dialed-In had the opportunity to catch up with Edwards to get her insights on the book and her experiences working with the next generation of entrepreneurs.
Dialed-In: What motivated you to write the book, and why a book on Entrepreneurship?
Edwards: I’ve read hundreds of business plans and advised hundreds of entrepreneurs, so I’ve heard it all: the great ideas, the helpful tools, and the bad experiences. I wanted to write about my experiences as a VC and in starting my own company and share some of the strategy, tools, and savings that I’ve found over the years.
I love a good deal. When I would tell people about how I cut $20,000 from my personal budget before I launched my company, or how instead of spending the national average of $65,000 launching my company, I spent under $10,000, they couldn’t believe it. So I started keeping track of the tools I found and the methods I used. All-in, there’s about $100,000 in savings outlined in the book and do-it-yourself guides to branding, design, marketing, PR, legal, accounting, and IT - and anyone can do it.
Dialed-In: What business leaders, locally and nationally, have influenced your perspective on entrepreneurship?
Edwards: Locally, the list is too long to fit in this article - Steve Boord, Phil Collins, Diana O’Brien, Bill Cunningham, David Willbrand, Eric Avner, Carol Frankenstein, Pat Longo, Chris Bollman, Carolyn Pione Micheli - and everyone at CincyTech.
Nationally, Clayton Christensen, Chris Anderson, Tim Ferriss, Steven Levitt, George Friedman, Warren Buffett and Moshe Milevsky.
Dialed-In: With this book you want to arm entrepreneurs with do-it-yourself tools that can keep their business moving forward and save money. In what situations would you suggest that entrepreneurs and small business owners turn to outside services and professionals?
Edwards: I really feel that most areas of business - finance, PR, marketing, etc - are areas that anyone can master on their own. Whether to hire a professional is a question of time, budget, and most importantly, confidence.
That being said, I think you should do as much as you feel comfortable and confident in doing. If you feel like you’re not going to be able to master the skills in time, hire a professional.
Here’s an example: a few years ago I helped a laser physicist and a surgeon with a business plan. At the end of our meeting, they asked a clarifying question, “So… revenue is like sales and net income is like profit… right?” That’s when we decided that I would go ahead and do the financial model.
I realized in that meeting that just as I should never operate on myself, this surgeon should leave the finance and accounting to someone else. He’s still one of the most brilliant men I’ve ever met.
Dialed-In: Someone picks up your book, reads it from cover to cover. Now, what do you hope will be the first thing they do with the information you have given them?
Edwards: If they’re contemplating entrepreneurship, read Chapter 1 and Chapter 4 and contemplate first the pros and cons of entrepreneurship - and then the feasibility of their idea.
If they’re already an entrepreneur, Chapter 5 How to Finance a Startup, Chapter 6 Create an Unforgettable Brand, and Chapter 7 Marketing, Advertising, and Publicity are all great chapters that will help drive revenue growth immediately, save time, and help generate cash flow.
Regardless, I hope everyone will check out Chapter 2 and do the Personal Financial Makeover and save at least $20,000 a year on their personal budget.
Dialed-In: The first chapter in your book is on the pros and cons of entrepreneurship. In your conversations with entrepreneurs, what is the most common negative that you hear about from them and what do you tell people to overcome that concern/challenge?
Edwards: When you survey entrepreneurs, overwhelmingly they will tell you that funding is their biggest challenge, so I’ve dedicated a good portion of the book just to financing a startup. Finance can be complicated, so everything is in plain English, with plenty of examples.
I outlined 14 different sources of funding - grants, loans, and equity investors - as well as some more creative and less-known approaches. For each, I broke down the cost of capital (for instance, the interest rate for a loan), the maximum amount available, how long it takes, and the percentage of ‘applications’ that are actually funded.
However, in my view, funding is not the biggest struggle for entrepreneurs. As a VC, when I read a business plan, I’m looking for:
- A business model that is feasible and profitable
- A value proposition that customers want
- A brand that people will love and remember
- A marketing and PR strategy that gets the word out
- Back office operations that run smoothly and inexpensively
- A legal structure, agreements, IP filings, and insurance that protect the company’s assets and my assets
- Personal finances - budget, balance sheet, etc - that are in order
In fact, these are the major struggles for entrepreneurs - and funding is contingent on all of these things, so I dedicated a chapter to each of these topics.
I also hear a lot of concern around getting health insurance as an entrepreneur. Health insurance is a lot cheaper and easier to get than you think. I pay $85/mo for health insurance that is better than what I had with my previous employer - and a lot cheaper. I have a whole section on personal finances and getting health insurance in Chapter 2.
Dialed-In: There are some successful entrepreneurs that suggest that the only way to start out and really test how committed you are to the business is by bootstrapping it. Do you agree with that idea? Why or Why not?
Edwards: Well, some concepts just can’t be financed by bootstrapping, unfortunately - too much startup capital is required to even get going. For instance, a coal gasification plant is going to require some outside financing.
But I do think that you need to have skin in the game - your own money invested in the project - first. Banks and investors almost require this.
I don’t think you need to quit your day job right away. I believe in extensive feasibility testing and market testing.
Dialed-In: Entrepreneurs and small business leaders have to balance a lot of roles and responsibilities, from product development to sales and marketing, customer service and raising capital. How dothey get that balance right? How can your book help?
Edwards: You have to be constantly focused on critical path items and keeping one eye on the cash flow at all times.
Most entrepreneurs run out of cash before they run out of time. This book helps conserve cash and save time - in every aspect of the business.
Dialed-In: If you had to name just one, what is the most important quality in a successful entrepreneur or small business leader?
Edwards: Focus! I’m really involved in community projects, but as an entrepreneur starting out, you have to be willing to say no - or at least, “I’m sorry, I just can’t be involved this year.” The bottom line is: you’re no help to anyone if you’re out on the street.