Starting a Business

How to Build a Virtual Team

In my last post, I wrote about why you should consider building a virtual team to grow your business. In this post I’ll cover how to actually build a virtual team. businessmen-786064

Technology has made building and leading a virtual team easier than ever. Many websites connect available talent with those who can use it, and free or inexpensive tools make virtual collaboration easy.

The following are steps you can work through as you build your virtual team.

1. Decide what kind of team will work for you

There are many different ways to to build a virtual team. Full time or part time. National or international. Specialists or generalists.

If part time, do you want the same people consistently or would you hire for specific projects?

National team members give you the benefit of native language skills and similar time zones. International team members are usually less expensive and can get work done while you sleep.

Of course, your team can be a mix depending on the needs for each role.

You can do some research to help you think through your options.

Chris Drucker is a prominent thought leader around building a business with virtual teams. He wrote a book, Virtual Freedom : How to Work with Virtual Staff to Buy More Time, Become More Productive and Build Your Dream Business, and a weekly New Business Podcast.

Michael Hyatt also writes about building virtual teams, including his book The Virtual Assistant Solution.

2. Find and hire

Once you decide what kind of team member you are looking for, it’s time to find the right person. Many online services can help.

eaHELP specializes in helping you find US-based virtual assistants. specializes in matching employers to full and part time Filipinos. You can hire full-time, skilled people for $200-$1000 USD per month.

Freelancer sites like Upwork (created by the merger between oDesk and Elance) help you find a variety of skills from all over the world.

Sparehire specializes in high-end finance and consulting projects that range from $50 to $300 per hour.

3. Train and delegate

Once you find the right person, you need to effectively train them to do their job and then delegate tasks to them.

Collaboration software like Slack and project management software like Basecamp make it easy to communicate and assign tasks.

It may be tempting to throw a bunch of tasks at them and expect them to figure it out. However, it may take time to gauge their skill level and how they work best. Expect to spend a lot of time with them up front to make sure they understand your expectations.

4. Lead effectively

Sometimes out of sight means out of mind, but it’s important to remember that these people are part of  your team. To help them feel good about doing their best work for you, you need to build a relationship with them just like you would with an on-site team.

Praise them for good work. Find out about their family, interests, and future goals. Acknowledge and celebrate life events, such as birthdays and the birth of children. Let them know how important they are to your team.

Building a business with a virtual team can be cost-effective and give you access to a large talent pool. However, it can take just as much work as an on-site team to find, hire, train, delegate to, and lead your virtual team.

As you invest the time and effort required, your virtual team can help you build a successful business.

Question: How have you gone about building a virtual team? 

Why You Should Consider Building a Virtual Team

Are you a business owner or manager who needs help to grow your business? Are you hesitating because you’re not ready for or can’t afford a full-time person sitting in your office? Hiring full-time employees to sit in an office you rent is not your only option for building a team.  In fact, before even thinking about local full-time employees, you should consider whether or not a virtual team would work for you.


“Virtual team" can describe a broad range of structures, but in short it refers to a team of people who work together from different locations and possibly at different times. Communication is facilitated by technology rather than face-to-face contact.

Many prominent organizations have been successful with virtual teams.

37Signals, now Basecamp, is an extremely successful software company with a team mostly working remotely throughout the world.

Michael Hyatt left the CEO post at Thomas Nelson Publishers to pursue writing and speaking full-time. Over the last few years he has built a virtual team to support his expanding product line.

The benefits of a virtual team include: 

Flexibility. You can start by hiring part-time contractors to help as needed, and you can quickly expand or contract as your needs change.

Cost. If you hire contractors, you don’t have the costs and obligations of employees. You don’t have the overhead of maintaining office space. You will also have access to areas of the world with lower cost of living, which translates to lower required pay. The Philippines and India are popular places to hire for virtual teams because of their skilled and low-cost labor.

Access to talent. Building a virtual team gives you access to a worldwide talent pool. This is especially beneficial for businesses based in rural areas, where the talent pool is small, and highly competitive markets, such as the San Francisco Bay Area, where talent is expensive and difficult to attract and retain.

Of course, building a virtual team is not for everyone and all situations.

Drawbacks of a virtual team include: 

Compatibility with the business. Some businesses simply require employees on site. You can’t build a virtual food services or landscaping team.

Communication. Technology makes virtual communication more effective than ever, but technology isn’t as good as face-to-face conversations for reading body language, for example. Also, casual conversations in the office can lead to breakthroughs.

Relationships. Related to communication, it’s easier to build strong team bonds while working side by side, day after day.

Oversight. You are not able to see when people arrive at and leave the office, and you can’t see what they’re working on. You will have to be more concerned about the end result than how your team gets there. In my opinion, that’s a better way to lead anyway, but it’s a different mindset than the traditional model.

The teams I have worked with over the last few years have have been mostly virtual. Most team members are in the US and Canada, and we also use overseas bookkeepers. It is more difficult to communicate and build strong relationships with team members in other locations, but in our case the benefits outweigh the drawbacks.

Business owners and managers should at least consider whether or not a virtual team would work for them.

Question: How have you been successful building virtual team? 

5 Essential Software Tools for Your Business Life

I love using software to boost my productivity and effectiveness. Innovative developers have created software solutions for almost any problem you can think of. Any time I have to do a repetitive task, I search for software to make it easier. source-code-583537

I recently had to convert almost 100 Word files to PDF. It would have taken me at least an hour of mind-numbing work to convert them one at a time. Instead, I searched Google for “convert Word document to PDF,” and the first result was a website that converts multiple uploaded Word files to PDF. Less than 5 minutes later I had 100 PDFs.

Besides automating one-time jobs, software can make your daily routine much more efficient.

Here are 5 essential software tools for your business life.

1. Task list

You have a lot on your plate, and you can let important tasks fall through the cracks if you don’t have a good system for keeping track of to-dos. Sticky notes and scraps of paper may work fine for luddites, but paper gets lost, and you waste time rewriting prioritized lists. I recommend task management software that syncs between a website and mobile app and has good keyboard shortcuts.

My favorite task manager is Remember the Milk. The interface is clean and easy to use with an abundance of shortcuts for quick updates. It syncs reliably between the apps on various platforms. I use the web app for heavy lifting while I’m working at my computer and the iPhone app while on the go.

I have tried several l other programs, such as Omnifocus and Nozbe, but I keep coming back to RTM. I find its simplicity, effectiveness, and efficiency hard to beat.

2. Notes

You need to keep track of a lot of information, and that information needs to be available anytime, anywhere. You don’t have time to search through papers for that account number or utility bill or copy of your drivers license.

My favorite tool for keeping track of notes is Evernote. Its easy-to-use apps for any platform sync seamlessly so you have access to all of your information on your phone, tablet, or computer. Evernote is my digital brain, and I don’t know how I would function without it. Any piece of information I need is a quick search away.

3. Email 

If you’re reading this you probably use email, but are you using email in the most effective way?

I use Google Apps for all of my business email accounts. Google Apps combines email (Gmail), document storage (Drive), office applications (Docs, Sheets, etc), Calendar, and many other tools. It allows you to use your own domain name instead of, giving your business a more professional presence. It’s inexpensive and easy to set up.

Whether or not you use Google Apps, I recommend using email right in your web browser. I gave up Outlook a long time ago, and I haven’t missed it one bit. Keyboard shortcuts and powerful search capabilities make using email in the browser much more effective (in my opinion) than managing a separate piece of software that stores data on your computer.

4. Online document storage

I store online every document I need access to. I only keep paper if original documents are important.

I use Google Drive for archiving files that need to be structured into folders. For example, I have folders in my personal Google Drive for each year of tax documents.

I use Dropbox or Google Docs/Sheets for files I am actively working on. I use Google as much as possible because I can quickly access and edit on any device, I can easily share and collaborate, and I never have to worry about version control. For example, I use Google Sheets for cash flow projections and expense reports.

I dump into Evernote everything that doesn’t need to be in a structured file system. I use the Fujitsu ScanSnap iX500 Scanner to scan everything from utility bills to kids’ report cards.

5. Business finance

It’s important to keep your business and personal finances separate, and business financial software makes it easy to track the business side. Most businesses I work with use Xero, but I’ve also used Freshbooks, Quickbooks Online, and Netsuite.

Question: What software do you find essential for your business life?

3 Important Details When Starting a Business

In a previous post  I wrote about how to get started on building a business. My main point was this: nothing else matters until you have a product to sell and customers to sell to. In my last post I wrote about how to stay on the government’s good side as you start selling your product.

In this post I’ll briefly describe the 3 other important details to take care of as you start a business. The timing depends on the nature and complexity of your business, but most of these details don't matter much until you actually start selling a product.


1. Set up business bank accounts

This is a must! Your bookkeeping will be a nightmare if you pay expenses from and receive payments into your personal bank account. This is called co-mingling funds, and it’s never a good idea.

Co-mingling funds will make it difficult to figure out how much money your business is making, and your tax return will be difficult to prepare after the end of the year.

Setting up a business bank account is easy, and your bank will tell you what documents they require.

I recommend setting up both checking and savings accounts. The savings account is where you regularly transfer estimated taxes so you’re not tempted to use the funds elsewhere.

2. Set up an accounting system

An accounting system is a way of tracking revenue coming in and expenses going out. As often as is helpful, and at least monthly, you need to look carefully at your net income (revenue minus expenses).

An accounting system does not have to be complicated. For simple businesses, an Excel spreadsheet or even a notebook might be sufficient.

However, I recommend online accounting software for most businesses. Software like FreshBooks, Xero, and Quickbooks Online are inexpensive and easy for non-accountants to use. They will connect to your bank account and automatically download transactions. You can also enter your vendor bills and payments to keep track of what you owe (payables) and invoice customers and record payments to keep track of what you are owed (receivables). You can run reports to track your business performance.

Setting up an accounting system and keeping it up to date daily or weekly is easy. Trying to do all your bookkeeping for the year at tax time is not so easy (and doesn’t give you critical information you need to make good business decisions).

3. Make sure you are adequately insured

In your personal life, you should carry several types of insurance: life, homeowner/renter, health, and auto for example.

Your business life adds additional insurance requirements. Needs vary by business type, but here are some possibilities to get you thinking:

Auto. Obviously a vehicle owned by your business needs to be insured, but check with your auto insurance provider if you use your personal vehicle for your business. You may need to adjust your policy.

Property. If you rent space for your business, you’ll need tenant insurance for liability and belongings. If you work out of your home, check with your home insurance provider to see if that affects your policy.

General and product liability. These are often bundled into the same policy, but make sure you have both. General liability insurance covers a wide range of potential claims against your business. Product liability is important because anyone who sells a product can be liable for defects, even resellers.

Professional liability. This is also known as errors and omissions insurance and is applicable to some professions, such as accountants, attorneys, doctors, and financial advisors.

This is just a sampling of the common types of business insurance. You should do some research to make sure you are adequately covered, and an insurance broker would be happy to help as well. This page on the SBA website is a good place to start.

Final thoughts

My goal is to focus you on the most important tasks required to get a business going (besides products and customers). Hopefully this puts your mind at ease by making the administrative requirements seem less intimidating.

Question: What are other important details to address when starting a business? 

3 Ways to Keep Government Happy As You Start a Business

In my last post I wrote about how to get started on building a business. My main point was this: until you have a product to sell and customers to buy the product, nothing else matters. Anything else that may intimidate you about running a business doesn’t matter until you start selling a product to a customer.


Offering a product that customers are willing to spend money on is the hard part about running business. Comparatively, the other details are a piece of cake. They should not hold you back from starting a business.

One the most intimidating aspects of starting a business is the fear of failing to meet government requirements. No one wants to get in trouble with the IRS (or equivalent) or other government agencies.

In this post I’ll hopefully put your mind at ease by briefly describing the 3 main ways to keep the government happy as you start your business. The timing depends on the nature and complexity of your business, but in most cases these actions don't matter much until you actually start soliciting sales.

1. Decide on a legal structure 

Businesses can operate under several different legal structures. The terminology and details may vary by country, but the main ideas should be the same anywhere in the world. Two of the simplest structures in the United States are sole proprietorship and LLC.

Sole proprietorship. This is the simplest way to get started. You don’t even need to take any action besides accept payment for a product or service. If someone pays you to mow their lawn, you’re a sole proprietor.

The disadvantage of a sole proprietorship is that you are fully liable for all debts and obligations of the business, including actions of employees. Your personal assets are at risk. This may not be a big deal at first, but it’s something to be aware of as you grow.

Limited Liability Companies (LLC). In the US, many small businesses use this structure. LLC's are simple and inexpensive to form (for example, $70 in Utah if you file the one required form yourself), and they provide some liability protection from your business.

2. Complete necessary registrations, licenses, and permits

Once you decide on your legal structure, you need to obtain the necessary government licenses and permits. Typically, your local government will require a business license and your state will require registration to do business (including reserving your business name). Some industries require permits, such as food services.

State and local governments desperately want businesses in their jurisdictions, and they try (as best as governments can) to make it easy for you to start. Why? Among other altruistic reasons, they want to collect more tax revenue!

All state and local governments that I’m aware of have sections on their websites dedicated to doing business in their area. They should outline exactly what you need to do to register your business and meet other legal requirements.

3. Understand your tax obligations

Getting behind on taxes is one of the best ways to get in trouble with governments. They will make your life miserable.

Understanding and keeping up on your tax obligations is not difficult, but it’s incredibly important. I recommend finding a good CPA to do your annual tax return, and this CPA can also advise you on other tax obligations. The details I mention are specific to the United States, but the same principles apply to most countries.

All businesses have to deal with income tax, which I’ll focus on here. Some businesses also have sales tax, property tax, payroll tax, and industry-specific taxes.

Employees don’t have to think much about taxes. Their payroll and estimated income tax is withheld from their paycheck, and after they file their tax returns they pay or get refunded the difference based on their actual tax owed.

In contrast, business owners must pay 1/4 of their estimated annual taxes each quarter (usually 15 days after the end of each quarter). In addition to regular income tax, you must pay self-employment tax (Social Security and Medicare). The 2014 rate was 15.3% (I know - it’s a lot).

Your CPA can help you estimate your quarterly taxes, but a good rule of thumb for many small businesses is 25% of net income (15% for self-employment tax and 10% for income tax). Until you build some history and have a CPA help you with better estimates, I recommend you transfer 25% of your estimated net income into a separate bank account as often as practical.

For example, if you're a freelance programmer with limited expenses, immediately move 25% of every client payment into your savings account.

When it comes time to submit your quarterly estimates to the IRS, you can simply transfer the funds from your savings account rather than scrambling to come up with the money.

Final thoughts

I did not intend to make this a detailed guide. You can find more detail on any of these topics from many sources. The SBA, for example, has many great resources, including this section on starting a business.

My goal is to focus you on the most important tasks required to keep the government happy while you get your business going. Hopefully this puts your mind at ease by making government requirements seem less intimidating.

Question: What are other ways to make sure the government is happy as you start a business? 

How do I get started on building a business?

Have you ever avoided doing something because you didn’t know how to get started? It happens to me all the time. For example, I have a goal this year to get involved in some sort of industry organization, but I haven’t done anything yet because I don’t know where to start.


A few years ago I saw the need to bring Dave Ramsey’s Financial Peace University (FPU) to the area I lived in Canada. I had been a huge Dave Ramsey fan for a long time, and he wasn’t well known in Canada. I thought about it for a long time but didn’t know where to start.

It only took a push from a friend and a small amount of research to get started. I found a sponsor, figured out how to order class materials, and did a small trial class with some close friends and family. With that momentum I recruited some volunteers to help, and we ended up taking about 150 families through the course in several sessions over two years.

Usually the hardest part of any endeavor is taking the first step, even if you don’t know where the next steps are going to lead you. As you start stepping, you gain momentum. With that momentum, future obstacles are easier to overcome than resistance to the first step.

In my last post, I asked if you are ready financial, emotionally, and mentally to start a business.

If you are ready, here is where to start:

1. Find a product to sell

2. Find customers to sell the product to

It’s as simple as that. Until you have a product and customers, nothing else matters. You don’t need to worry about bank accounts or bookkeeping or taxes or insurance or legal entities or other details that you might feel anxiety about.

Just get started by figuring out what you are going to sell and who you are going to sell to.

Find a product to sell

A product to sell can take many forms, and there are too many possibilities to list in this post.

If you’re not sure where to start, your product can simply be your time and expertise offered to multiple customers. Examples include bookkeeping, writing, graphic designing, lawn care, and even dog walking.

Selling your time and expertise is a good way to get started, but usually your impact (and therefore income) will be limited by the number of hours in your day. You might see an opportunity to package your expertise into some kind of digital or physical product. You might write an ebook or build an online course.

Find customers to sell to

It might seem logical to first figure out a product and then find customers to sell that product to. However, the reverse can also work.

Building an audience (or platform) is a way to find customers before having a specific product to sell. Through social media and blogging, you can position yourself as an expert in your field. As you generously give free and valuable content, you can build a loyal following.

Email subscribers to your blog are especially valuable. As you find your voice and build your following, you can ask your followers what they need help with. You can create products to meet their needs, and then you’ll have both a product and customers to sell to!

There are many resources to help you build your audience. Michael Hyatt is one of my favorite.

Then worry about the details

You can start thinking about the administrative details that go into running a business once you having paying customers.

This post is targeted to individuals with the entrepreneurial bug who want to strike out on their own. Not all businesses are this simple. Some companies raise investment capital, hire employees, and go through years of product development before taking their first customer payment.

However, the same principles apply. Every business needs to start with a solid product concept to sell and customers to sell to. Until then, nothing else matters.

Question: Business owners, how did you get started with your business?

Is it time to start your own business?

Are you an employee with an entrepreneurial bug? Do you want to have the freedom, fulfillment, thrill, and potential financial rewards of building your own business? If so, how do you know if it’s time to make the leap?


Of course, there is no one size fits all answer, but here are some questions to ask yourself.

Am I financially ready?

Building your own business can give you an almost unlimited financial upside. However, many businesses fail, especially in the early stages. Many business who don’t fail struggle along for a long time without making much money.

It’s important to be financially prepared for a slower start than you expect.

If possible, start to build your business while employed full time (as long as it doesn’t violate employment agreements). Ideally, build your business until it brings in close to as much income as your job. As long as your business is growing and future prospects seem promising, quitting your job to focus on your business will be a no-brainer.

However, this perfect scenario may not be feasible. You will probably find it difficult to replace your full-time income with part-time attention.

I still recommend starting your business while enjoying a steady paycheck. Don’t step off the dock unless a boat is waiting, even if it’s a leaky old boat.  Once your business starts generating income and appears to have the potential of exceeding your employment income, it may be time to make the jump. The boat only has to keep you from drowning while you work to improve it.

If you make the jump before the revenue from your business covers all your business and personal expenses, I recommend having savings sufficient to cover the shortfall for at least 6 months and preferably 12 months.

6 to 12 months will give you some cushion as you start growing more aggressively. Without much in savings you may be forced to bail from your business prematurely or give up control to bankers or investors.

Don't use debt to start your business! Using your own savings forces you to use more discipline. And if your business fails, you've only lost some savings. Banks won’t be threatening to take your house.

Am I emotionally ready?

Building a successful business requires a tremendous amount of grit.

I've written before about the emotional roller coaster most business owners go through. I’ve also written about the importance of resilience.

Are you emotionally prepared to handle the daily ups and downs? Can you stay the course without giving up when you experience a serious setback? Can you push through periods of self-doubt when you wonder if you have what it takes?

Running a business can be incredibly rewarding, but it will probably take some emotional pain to get there.

Am I mentally ready?

Starting a business requires tremendous self discipline and focus.

Most employees are forced to have discipline to some extent. Some are expected to show up to work at a certain time and stay until a given time. Most are given rather than choosing certain responsibilities. Some have performance reviews and a structured path to promotions.

Business owners have none of this forced discipline. You must create your own discipline.

Of course, you must serve your customers (or you won’t have any). But in most cases your customers won’t know or care what time you show up for work. The freedom to choose the hours you work is wonderful, but building a successful business usually means working many more hours than an employee.

Are you ready? 

It’s important to be as ready as possible, but no one is perfectly ready, and there is no perfect timing. You will always have doubts and worries, and the earlier you can be prepared to start, the better.

If you spend another 10 years wondering if you should do it, you’ll wish you had spent the last 10 years building your business.

If you think you can handle the financial, emotional, and mental demands of starting a business, go for it!

Question: Business owners, how did you know when it was time to start your business? 

4 Ways to Become Antifragile

A few days ago my preteen son was unable to sleep as he thought about the Nepal earthquake. He knows about the major fault lines along the Wasatch Front near our home in Utah, and he was concerned we would be involved in a similarly devastating earthquake. Do you worry about the impact that unpredictable, devastating, and rare events might have on your life? These events may include natural disasters, worldwide economic downturns, war, loss of income, or personal health challenges.

What if instead of fearing these adverse events, you can be prepared to benefit from them? Wouldn’t this bring more peace and confidence to your life?


Benefiting from chaos, disorder, and unpredictable events is a concept outlined in a book I recently listened to: Antifragile: Things That Gain from Disorder by Nassim Nicholas Taleb.

Antifragile a word made up by the author, and the concept can apply to many things. In this post I’ll focus on building an antifragile life.

Our life is fragile if it can be easily broken or damaged by adverse events. You may think that the opposite of fragile is a life is one that is not easily broken or damaged by adverse events. However, the author defines the opposite of fragile, or antifragile, as something that benefits from seemingly adverse events.

Here are four ways we can build an antifragile life:

1. Get out of debt and build a financial reserve

An individual loaded with maximum debt is fragile. Many families choose to take on a level of debt with which the minimum payments fit within their budget, but barely. They are fragile to even the slightest disruption, such as reduced income or unexpected expenses.

Other budget items, such as eating out and entertainment, can be quickly adjusted down as needed. In contrast, in most cases assets can’t be sold quickly or easily to reduce debt payments. Many types of debt are either unsecured, such as a credit card, or secured by an asset with less value than the debt balance, such as a vehicle.

Living on much less than we earn, and using the excess to build a financial reserve, will make up more antifragile. It is obvious that a financial reserve, no debt payments, and a comfortable budget will make adverse events easier to endure.

But how do we actually benefit from financial shocks? One example is the ability to take advantage of great deals. Those who had a lot of cash in 2008-2009 had unprecedented investment opportunities. The Dow Jones stock market index has almost tripled since its 2009 low. Phoenix housing prices have almost doubled. Vacation properties dropped even more than residential real estate. Businesses and business assets could be bought for cheap.

2. Maximize health

The right kind of adversity can improve our health. When facing resistance, muscles tear, and then the repair makes them stronger than before. Aerobic capacity increases as we sustain an increased our heart rate, such as while running. Exposure to a small level of dangerous microorganisms can make us less susceptible to its affects in larger quantities (i.e. the principle behind vaccines).

However, we need a reasonable baseline of health before this adversity can be beneficial. A person with a weak heart shouldn't go on a long run. A person with weak bones should not try to lift heavy weights or play basketball. A person with unconditioned muscles and tendons should not try to sprint. How many people who are older and more out of shape than they think they are pull muscles while attempting to run around the softball bases!

3. De-risk career

In the book, the author compares two brothers. One has a good education and has had a long career in the HR department of a large corporation. The other has little formal education and is a New York City cab driver. The HR brother has a steady income while the cabby brother’s income varies widely each day.

Even though the HR brother makes more money and may appear to have a better career than his brother, the author argues that the HR brother is fragile while the cab driver is antifragile. The HR brother could lose his job at any time, which would completely cut off his income. The cabby brother has more sources of income than he can possibly take advantage of (millions of people in one city). If his income drops on one day, he can quickly adjust by moving to another area within the city.

You don’t need to own your own business or become a freelancer to be antifragile. You can build a strong network and solid reputation. If you lose your full-time position, tapping your network might even lead to a better opportunity.

Another way to become antifragile is to develop a career that comfortably pays the bills while allowing time and freedom to pursue other interests, such as a side business. The author is a professor of risk engineering at the Polytechnic Institute of New York University. This position allows him the freedom to research and write his books. Einstein had a well-paid and relatively undemanding job at a patent office, which allowed him to think about his most impressive ideas while working.

4. Look for minimal downside and maximum upside

Another way to become antifragile is to focus time and attention on opportunities with minimal downside and maximum upside.  Of course, these kinds of opportunities aren’t always obvious, but it’s a good principle to keep in mind as we choose how to spend our precious time.

He uses options, the financial instrument, to illustrate this principle. Options allow you to buy the right, but not the obligation, to buy (call options) or sell (put options) something at a given price (usually shares of stock in a company). If you buy a call option, you have virtually unlimited upside as the stock goes up, and your downside is limited to the price of the option.

Education is a good example of this principle. The only downside of education is the time and cost, which are measurable before you begin, and the upside can be unlimited if applied appropriately.

Another example is working for a promising startup company and receiving equity as part of your compensation. Assuming you don’t have your own money invested, the downside is the opportunity cost of something else you could have been spending your time on and the risk of losing your job. The downside is no different than working for a big company, but he upside is potentially much greater if the company does well and your equity multiplies in value.


There is no way to predict the biggest shocks in life. By becoming antifragile we can prepare ourselves to benefit from inevitable randomness and chaos. Being antifragile can give us greater peace and confidence in our lives.

Question: How can you make your life more antifragile? 

4 Ways to Automate Your Accounting

I try to use systems in all areas of my life. Systems automate routine tasks that lead to important outcomes. Systems maximize consistency and minimize time and energy. Systems allow us to focus more on the outcome than the routine tasks that get us there. In business, these systems can take the form of processes. Accounting is a business function particularly conducive to structured processes. The value in accounting comes with the ability to analyze timely and accurate numbers that your processes generate and not in the processes themselves.


Of course, all large business have complex accounting software and processes to make sure their transactions are recorded accurately and their financial statements prepared timely.

I will focus on on 4 ways freelancers and small business owners can automate their accounting:

1. Use checklists

The less you have to think about routine tasks, the more brainpower is freed up for more important activities. Checklists are a great way to minimize the thinking required.

Checklists can be used for any repetitive task, which includes most of the activities a business engages in. Examples include:

  • Onboarding a new employee
  • Setting up a new vendor
  • Setting up a new customer
  • Closing the store or restaurant at night
  • Preparing an order for shipment

Checklists are especially helpful in nailing the month-end end accounting close, which brings me to my next point…

2. Nail your month-end close 

"Month-end close” or the “financial statement close process” might sound like a complicated activity that only big companies worry about, but it simply refers to the activities that provide accurate financials after the end of a month.

The sooner you can get financial statements after the end of the month, and the more accurate those financials are, the better decisions you will be able to make.

This process should be so well defined and refined that it’s automatic. It doesn’t mean smart and skilled people aren’t required to carry out the system, but it means these people don’t have to figure out the process every month. Instead, they can use their valuable time and brainpower to analyze the financials and identify areas for improving the business.

Checklists in a Google Sheet have worked well for me. A tab lists all the tasks required to close out month end, when each task needs to be done, and who is responsible for each. Those responsible sign off on each task, giving me a real-time status.

Setting up bank feeds helps to automate month end. Most accounting software packages, such as Xero and Quickbooks Online, connect directly to bank accounts and credit cards and download new transactions every day. Bookkeepers only have to assign the correct account code to each transaction before reconciling the account.

Software that doesn’t support bank feeds should at least support transaction import, which allows you to download the transactions from your bank account and import the downloaded file into your accounting software.

3. Use dashboards and scheduled reports

It’s good to review a full set of financial statements monthly, but you’ll often need information sooner to make decisions. While it’s not practical to perform the full accounting process more than monthly, important transactions such as sales should be recorded in real time.

As a business owner, you should have access to as much real-time information as possible. Some accounting software will email you reports on a set schedule. For example, for one company I get a daily automated email with customer payments received, new orders received, and orders shipped. This allows me to keep a daily pulse on the business.

4. Outsource your bookkeeping

It doesn’t make sense for many freelancers and small businesses to hire full-time bookkeepers. In some small businesses, employees wear multiple hats, and the office manager, for example, may double as a bookkeeper. This may work out okay if you have team members with sufficient time and are comfortable with bookkeeping.

However, in most cases it’s better to outsource your bookkeeping. This allows you to hire for specific skills needed to add value to your business. You can outsource to accounting firms, but this is often quite expensive. I recommend finding offshore bookkeepers though a service like Elance.

All of the companies I work with have used offshore bookkeepers for several years, and it works great. We pay between $6 and $12 per hour, depending on the complexity, and the bookkeepers are accurate and dependable. For example, we forward any invoices we receive, and they do the accounting software entry and file the digital copy. They also complete most of the month-end checklist.

Automate Your Business

Accounting is an obvious candidate for automation, but you can automate any area of your business. It can help to recognize anything that is done on a regular basis and think about how it can be automated.

Question: What other tips do you have for automating accounting? 

How to Boost your Career by Nailing the Job at Hand

I crave challenge and growth. I don’t like to stagnate. As a result, I'm constantly looking ahead to the next challenge. Growth and progression is a good thing, right? However, I heard some simple advice that has caused me to reconsider how I think about growth.

State Leadership: An Opportunity for Global Action: Michael Froman: Indra Nooyi

Indra Nooyi has been the CEO of Pepsico since 2006. She joined the company in 1994 and was promoted to President and CFO in 2001 before her promotion to CEO. She is rated among the top CEO’s in the world.

Her simple explanation for her career success is this: nail the job at hand.

She has given variations of similar advice in several venues, including Howard University and the UT Austin McCombs School of Business.

She’s saying focus on doing your very best in your current job or responsibility or circumstances. Don’t worry about your next job or the following one, which distracts you from nailing your current responsibility. If you nail the job at hand, the future will take care of itself.

As someone who likes to plan for the future, this advice hit me hard. I’ve been thinking about how I can do a better job of nailing the job at hand, and here are some ideas:

1. Stop the “I’ll be happy when” cycle

Sometimes we focus on the future because we are not content with the present, and we think each new step will make us happy. We’re all guilty of this. I’ll be happy when I’m out of high school and have more freedom. I’ll be happy when I’m done college and have a real job. I’ll be happy when I get married. I’ll be happy when I’m promoted. I’ll be happy when my business has more stability.

Eventually we should recognize that progression is good, but if we’re not content now, we won’t be content in the future. The way to be content with the present is to make the most of it.

Enjoy nailing the step at hand, and then enjoy nailing the next step of the journey.

2. Be grateful 

Gratitude has a powerful effect on your present state of mind.

Gratitude has a backward-looking component to it. We should take time once in a while to look back and realize how far we have come. We can be grateful for the people and circumstances that have helped us get there.

Looking back helps us be grateful for the stage we are at now.

3. Schedule time for future-focused thinking

I don’t think Nooyi is saying we should never think about the future. I believe she is saying we shouldn’t let future-focused thinking distract us from nailing the job at hand. We can limit our tendency to get distracted by the future by scheduling time to think about it.

Almost three years ago I read Michael Hyatt’s Life Plan ebook and spent a lot of time putting my life plan together. I identified the major areas of my life, and for each area I wrote down my purpose statement, envisioned future, supporting statements, current reality, habits, and goals.

Hyatt recommends setting aside time once per week to review your life plan. I schedule time every Sunday morning to review my goals and make sure I’m moving toward them. I give myself permission to think about the future and whether or not I need to make any course corrections. I need to do a better job of limiting my future-focused thinking to once per week while nailing the job day-to-day.

Nail the job at hand

As we nail the job at hand, our future will take care of itself. It worked for Indra Nooyi, and it can work for us.

Question: How do you nail the job at hand? 

"IndraNooyiDavos2010ver2" by Jeff Bedford from Arlington, Virginia, United States - posted to Flickr as Indra Nooyi, PepsiCo CEO, Speaking at the World Economic Forum 2010 Annual Meeting. Licensed under CC BY-SA 2.0 via Wikimedia Commons -

4 Ways to Develop a Leader-Leader Culture

I recently finished the book, Turn the Ship Around by David Marquet. The author was appointed captain of the submarine USS Santa Fe. At the time, it was performing at the bottom of the fleet. He tells the story of  how he turned the submarine performance around with the leadership style he developed. The leadership methods he learned also apply to building and turning around companies. Startup founders in particular can benefit by using these principles from the beginning rather than trying to change the culture later on.


The main premise I got from the book is that leaders should treat those they lead as other leaders rather than followers. He calls it the leader-leader model rather than the traditional leader-follower model.

Here are four ways to implement a leader-leader model in our organizations:

1. Use empowering language 

Words have a strong impact on our culture. Every organization develops unique methods of communication, such as acronyms and common phrases.

The author gives examples of phrases that indicate disempowerment (said by those who are led to their leader), such as “I would like to…” or “could we…” or “what should I do about…” These are passive phrases that require the leader to dictate, or at least contribute to, the solution.

On the other hand, empowered phrases include, “I intend to…” or “we will…” These types of phrases encourage people to think and decide for themselves. If the action requires the leader’s permission, the leader can simply reply, “very well,” or ask questions if clarification is required.

We can empower those we lead to act and not be acted upon, and that empowerment can start with the words we use.

2. Have a servant mindset

Leaders should consider themselves servants to those they lead. As Jesus said in Matthew 23:11, "But he that is greatest among you shall be your servant."

My job as a leader is to make it easier for those I lead to do their jobs. I can help solve problems, provide coaching, and give advice from my training and experience.

3. Specify goals, not methods

I am guilty of not following this principle. I am system-oriented, and as a leader I think it’s my job to specify the step-by-step processes for others to follow. Sometimes I think I’m the best qualified to know the best way to do things.

Periodically I'm reminded that I’m not usually the best qualified to specify the how. As a leader, I do need to work with other leaders to define and communicate priorities and goals. However, I need to let those I lead develop the methods to achieve those goals.

A few years ago I was given responsibility for the operations of a factory. The team was struggling to load outgoing trucks within a reasonable time, and they often made mistakes by loading the wrong products. As a new leader, I thought I could save the day by dictating the methods for reaching the goal of loading quickly and accurately.

I worked out of a different city, but I would spent at least a full week every month for a few months on the ground, working side-by-side with the team, showing them what I thought was the best way to reach the goal.

Before leaving, I would document the process and encourage them to follow it. Invariably, the process would break down after I left, and I would go back the next month and try to fix it again. Frustrated, I couldn’t figure out why they couldn’t simply follow the process.

After a few months I gave up. I simply told them I didn’t care how they did it, but we needed trucks loaded quickly and accurately. Miraculously, within a few weeks trucks were being loaded quickly, and mistakes were rare. Several years later, I still oversee that factory, and I have no idea what the system is for loading trucks.

4. Don't be missed after you depart

Why do we want to lead? So we can be in a position of power? So we can have a secure job? So we can make more money?

Leaders who lead followers make sure their organization and people can’t function without them. If the leader leaves, the organize is worse off, at least until another leader steps in.

On the contrary, we should lead so we can leave our organization and those around us better than we found them.

It’s hard to think that way. As a leader, I like to think of myself as indispensable. They can’t do it without me! However, this attitude is self-serving.

By following the leader-leader model, we can build an organization full of leaders. Leaders who make good decisions when left on their own. Leaders who take good care of the customer when the supervisor isn’t watching. Leaders who identify and solve problems without being directed. Leaders who continue to build a great organization after you are gone.

Question: How do you build a leader-leader culture? 

5 Ways to Love What You Do

I began my career with a Big 4 accounting firm in its IT and financial audit departments. I loved the experience and people I worked with, but at the same time I wrestled with the direction I wanted to take my career. I’ve always had an entrepreneurial itch, but I wasn’t in a position to start my own company. Gradually I came to the conclusion that I would love to follow my passion for business, finance, and entrepreneurship by supporting startups in a CFO or similar role.

smile sign

Soon after coming to that conclusion, I took the opportunity to join a startup as their CFO. Since then, I have filled the CFO role for several startups. I have been very blessed to be able to make a good living while following my passion.

However, just because I’m doing what I love doesn’t mean I always love what I do. I have days and sometimes longer periods of time when I feel bored, stressed, and/or stuck. Sometimes I feel that I’m not advancing in my career quickly enough. Sometimes I feel like I’m in over my head.

On this journey of ups and downs I have realized that it’s first important to do what you love. Doing what you love starts you down a good path. But it’s even more important to love what you do. There’s a difference.

In this way, a career is like marriage. We marry who we fall in love with, but that event is only the beginning. We have to choose to stay in love by our thoughts and actions every day. We marry who we love, and then we need to love who we marry.

Here are 5 things to do when we find ourselves no longer passionate about our passion.

1. Create a vision 

Some days are more enjoyable than others. To consistently love what we do, we need to have a clear vision of where we want our daily activities to take us. According to Simon Sinek, we need to "Start with Why." We need a "why” that goes beyond today.

2. Set short-term goals

It’s important to have a vision for what we want to accomplish, but it’s easy to get sidetracked and frustrated if we don’t have a more concrete plan for getting from here to there. Setting short-term goals helps us focus on how our daily activities contribute to our grand vision.

3. Celebrate milestones

It helps to recognize the progress we have made, no matter how slow it seems to be. Levi King, CEO of Creditera, warns that there can be danger to celebrating too much, too early, such as celebrating a fundraising closing with a lavish party. However, celebrating milestones in simple, yet meaningful ways reminds us of the progress we are making.

4. Get over ourselves

Sometimes our daily lives get mundane or difficult because we are too focused on ourselves. We are worried about what we are getting out of our careers and what other people are doing for us. We should instead focus on how we can make our customers, team members, vendors, owners, etc more successful. As we lose ourselves in serving others, our success and happiness will take care of itself.  Like Zig Ziglar says, "You can have everything in life you want, if you will just help enough other people get what they want."

5. Make a change

So far I have focused on how to maintain love for the path you are on. However, sometimes it’s simply time for a change. Sometimes the path we set out on is not the best one to continue on. Before making a change, we should carefully consider our motives. We should consider whether or not the previous four steps will get us back on track. The grass usually isn’t really greener on the other side, and any worthwhile pursuit will have periods of boredom and difficulty and seemingly impossible obstacles.

In summary, start by doing what you love, and then work to continue loving what you do. Loving what you do is a conscious choice.

Question: What helps you love what you do?

What Does It Mean To Think Big?

I recently read Zero to One by Peter Thiel and Blake Masters and Moonshot! by John Sculley. They are both inspiring books about identifying opportunities to solve world-changing problems (and building multi-billion dollar businesses in the process). Reading these books got me thinking about what it means to think big.

san fran

I grew up on a small farm outside of a small town in southern Alberta, Canada. Until I took my first plane ride when I was 19, the furthest I had been from home was a trip to Disneyland.

My parents love their quiet life, but they taught me that I can go anywhere and accomplish anything I want to. They taught me to think big.

While growing up, big was anything bigger than a town of 3500 people, and I looked forward to getting out into the big world.

I thought Brigham Young University was big with its 30,000 students in a county of 500,000 residents.

I saw that the world is big when I spent two years near Melbourne, Australia.

I didn’t think life got any bigger than California's Bay Area. While living there I was in constant awe of the many iconic company headquarters along the 101 between San Francisco and San Jose.

After living in California I moved back to that town of 3500. I had just joined a startup, and I planned to open an office in Utah after a brief orientation period. That brief stay turned into 6 years before I actually did move to Utah.

Going back to that small town helped me realize that big is not necessarily living in a big city working for a big company and traveling the big world. Big is stretching yourself beyond what you think you are capable of. Big is making the biggest impact you can on the people around you, even if that impact seems small in the grand scheme.

While living in that small town I helped 150 families through Dave Ramsey’s Financial Peace University as the lead facilitator. While living there I helped start a venture capital fund and built several startups with offices in the US and Canada. While there I turned my health around by losing 30 pounds and running a half marathon. While these are relatively small accomplishments, to me they were big.

So how do we think big if we’re not trying to cure cancer or build a billion-dollar business or become President of the United States?

What's big to you?

What’s big to you might be small for someone else, and vice versa, but that’s okay. You are you, not someone else.

What are your unique talents?

Chances are you have talents and skills that set you apart from most other people. Sometimes these are hard to identify and develop, but we all have them.

What mark do you want to make on the world? 

Think about what you are passionate about. Is it building a business? Is it helping underprivileged kids? Whatever it is, you can find a way to apply your unique talent to make a mark.

What's holding you back from taking the first step?

We often cite fear of failure as what holds us back, but what about fear of success? Do you like your comfortable life, and are you afraid success will take you out of that comfort zone? I like Eleanor Roosevelt’s famous quote: "Do one thing every day that scares you."

I believe thinking big means thinking BIGGER than we are now. It means forcing ourselves outside of our comfort zone. It means doing something that scares us. It means making our own small mark on the world.

Question: What does thinking big mean to you?

Are you a Founder, Consigliere, or Investor?

Last weekend I attended the first StartSLC conference in Salt Lake City, Utah. It brought together thousands of entrepreneurs and investors for a weekend of speakers, panels, and other activities. It’s exciting to see the development of a strong startup ecosystem in Utah! As I participated, I thought about the roles that come together to make a startup successful. There must be a founder or small group of founders. As the company gets going, the founders need consigliere (supporting staff - I had to look the word up when I first saw it). Often startups seek investors to provide growth capital.


As I met with and listened to people in these roles, I thought about what role I fit best and what it takes to be successful in each role.

Are you a founder?

Being a founder is tough, and it’s not for everyone. The role is epitomized by visible superstars like Steve Jobs, Jeff Bezos, and Mark Zuckerberg.

Founder attributes should include the following:

Confidence. Often founders leave a seemingly secure situation, such as a regular job, to pursue an idea. They must have supreme confidence in their idea and in themselves to make this leap against high odds of failure.

Focus. It can take years to build a startup into what you might consider an established, stable company. Although circumstances may call for changes in direction, the founder needs to have narrow focus for a long period of time.

Fortitude. As a startup grows, much weight is placed on the founders’ shoulders. They feel responsible for the customers, employees, vendors, and investors that have placed their faith in them. Founders must be willing to push ahead through the ups and downs without giving up.

Leadership. Founders must get people to follow them. Most importantly, customers must follow or there will be no business. Founders need team members to follow them as the company grows. They may need to convince investors to put money behind them.

Are you a consigliere?

I first saw this word in the book, The Startup of You, by LinkedIn founder Reid Hoffman. I like how it describes the supporting role. It is Italian for “counselor” and was popularized by use in the mafia, including the The Godfather book and movie. It refers to a low-key, right-hand to the front man.

Hoffman writes, "Most super talented people want to be the front man; few play the consigliere role well. In other words, there's less competition and significant opportunity to be an all-star right-hand man."

This term usually applies to THE right-hand man or woman, such as Sheryl Sandberg at Facebook. But it can also apply to any team members who support the founders.

Consigliere attributes should include the following:

Humility. They are critical to the company’s success. Hopefully the founder, as a good leader, will recognize their value, but they probably won’t get much public glory.

Loyalty. They don't need to commit to the founder for life, and they don't even need to be full-time employees. But they do need to be 100% loyal to the role they agreed to. If their circumstances change or they lose interest in the role, they should move aside so they don’t hold the rest of the team back.

Are you an investor?

You don’t need personal wealth to be an investor. Yes, investing takes money, but often investors are entrusted with someone else’s money to invest on their behalf.

This is common in the venture capital industry. VC’s form a partnership and invite limited partners (LP's), such as institutional investors and high net worth individuals, to invest their funds into the partnership. The VC's invest those funds with the expectation of providing a good return for the LP’s.

Whether investing their own money or on behalf of others, investor attributes should include the following:

Experience. Education is important, but it takes experience to recognize the makings of a good investment. They must also be capable of helping the company through the ups and downs of growth.

Quick learner. Every potential investment requires a learning curve. It may be in a new industry, and certainly every company is different. Investors need to be able to quickly size up the company and its position in the industry to make a good investment decision.

Hands off. Investors must be comfortable with helping to guide a business without being involved in day-to-day decisions and operations. This is difficult for some people.

Big picture view. Founders need to be laser focused on the specific industry segment they are competing in. In contrast, investors must stay current with trends across the economy as a whole. Even if their investments are focused in one area, they need to know how other trends may affect that area.

We Evolve Over Time

As we think about the startup role that suits us the best, we should also recognize that we evolve throughout our careers. Often people start in the consigliere role to gain experience, move to a founder role when the opportunity arises, and then move on to investing.

The opportunities and variety are what make the startup world so exciting!

Question: What roles suits you the best, and why? 

4 Ways to Prevent Personal Finance from Hurting Your Business

Successful entrepreneurs want to pour everything they have into their businesses, including time, attention, energy, and money. 100% commitment increases the odds of success in an area with high risk of failure. However, 100% commitment doesn’t necessarily mean giving everything you have. Giving too much in one area may prevent you from giving enough in more important areas. This principle applies to various aspects of life, but I will address the financial.


It’s obvious that your business performance impacts your personal financial situation. But it’s not as obvious that your personal financial situation also impacts the success of your business.

Sometimes pouring all of your money into a venture prevents you from giving something more valuable: your undivided attention. Personal financial struggles create stress, which distracts your attention from your business.

Here are four ways to avoid distracting personal financial struggles. Although I’m addressing entrepreneurs specifically, these principles apply to anyone.

1. Keep your overhead low

Keeping overhead low is a business principle that also applies to personal finance. Overhead is a company's fixed, ongoing expenses, which could include rent, utilities, travel, and debt payments.

Successful businesses keep their overhead as low as possible. The lower the overhead, the faster a startup can get to the critical breakeven milestone. The lower the overhead, the more prepared a profitable business can respond to fluctuations in revenue or investment opportunities.

Similarly, low personal overhead means you don’t need to generate much personal income to cover your basic expenses. You know you can quickly adapt to changing circumstances, such business cash flow struggles. The resulting peace of mind allows you to focus on your business.

One way to keep overhead low is to avoid debt, especially when used to purchase depreciating assets. Getting a loan to buy a vehicle, RV, or furniture set commits you to paying for it over time, no matter what happens to your finances. These types of purchases usually drop in value faster than the loan is paid down, which means you can’t simply sell the asset to pay off the loan if you don’t want the payments anymore.

Besides, debt payments get in the way of savings money for emergencies and investing, which are covered in the next two points.

2. Set aside at least six months of expenses (and don’t touch it even in an emergency)

Having at least six months of expenses in savings, while also having low personal overhead, provides even greater peace of mind. You will make better decisions for your business knowing that you don’t have to consistently take money out of the business to live on.

Consider this stash sacred. I’m being facetious when I say not to touch it even in an emergency, but something close to that should be your mindset. It’s not vacation or nicer car or home renovation money. It’s there to help you weather the ups and downs of your business.

Most startups hit rough patches, and being able to go a few months without taking money out might make the difference between success and failure. You will also be less dependent on outside capital. Taking on debt increases your business risk, and the payments add to overhead (see point 1). Giving up equity dilutes your ownership and control.

3. Develop an investment strategy separate from your business 

Entrepreneurs, by nature and necessity, are eternal optimists about their business. You know you will succeed and want to pour everything you have into it. You wonder why you should invest anywhere else when you can invest in your own business.

But what if your business doesn’t succeed? What are you left with?

No matter how confident you are in your business, you must diversify. We all know we shouldn't have all of our eggs in one basket. No matter how attractive that basket looks right now, unforeseen circumstances can quickly crush all of the eggs.

I suggest consistently investing 10-20% of your personal income somewhere other than your business. If you take just enough out of your business to live on, take out 10-20% more to invest.

You’re likely spending every waking hour building your business, so you’re not going to have much time to research other investment opportunities. The good news is you don’t need to. For most people, investing in low-cost index funds is the way to go.

If you can break away from your business to read, I recommend Tony Robbins new book, MONEY Master the Game: 7 Simple Steps to Financial Freedom. I just finished reading it, and it provides unbiased advice for minimizing fees and risk while maximizing returns, all while spending very little time.

4. Take money off the table when given the chance

At some point you may have the opportunity to sell all or part of your business. What to do in this situation is an intensely personal decision with numerous factors.

I can’t suggest what to do in every situation, but it’s often a good idea to take money off the table when given the chance. This is especially true if you’re not well diversified in other investments.

Taking money off the table doesn’t necessarily mean giving up your business. You could sell shares to a trusted partner or spin off part of your business.

In another post I wrote about creating value vs capturing value. Entrepreneurs like to create value, but there comes a time when that value should be captured.

Hold back for success 

You will be most successful by putting almost everything you have into your business. By carefully choosing what to hold back, you increase the likelihood of achieving your goals.

Making smart personal financial decisions will give you peace of mind, which will allow you to give undivided attention to your business.

Question: What personal financial strategies have allowed you to focus on your business?

What is the Difference Between Creating and Capturing Value?

I recently heard an entrepreneur speak about the founding and growth of his company. It was a fascinating and instructive story overall, but he mentioned one concept that I’ve been mulling over since. He talked about the difference between creating value and capturing value. 547915_55603419

This topic came up when asked how he decided when to take outside capital and how much. He described how he, as a founder, is focused on building value in his company. As he was looking for capital, he found that most potential investors, including venture capitalists, were more focused on capturing value. He found this to be a problem because he believed that capturing value too early would inhibit their ability to create value.

I’ve been thinking about how VC’s and other investors can help entrepreneurs both create and capture value.

First, what does it mean to create value?

The activities that make up the economy are not a zero-sum game. Gains in one area do not have to come at the expense of losses in other areas. The economy grows, and value is created, when entrepreneurs create outputs more valuable than the sum of the inputs.

The process of creating value can include focus on the following:

Creating a network effect. Some products become exponentially more valuable with more users. The classic example is the telephone. One telephone in the world is worthless, but that one phone becomes more valuable as more phones are placed into service. More recent examples include Facebook, Twitter, and other social media sites. Some of these companies created billions of dollars of value even before turning a profit because of the number of users they have been able to attract.

Building brand strength. The stronger the brand, the more a customer is willing to pay for a product. A brand is built over time through marketing and a reputation for high quality and good service. Apple is a good example of value created through brand strength. Consumers are willing to pay more for Apple products than comparable products because they trust the brand.

Developing efficient operations. Manufacturers create value by selling a product for more than the cost of the materials, labor, and equipment needed to produce the product. The more efficient the operations, the lower the cost of production. The lower the cost of production, the more value is created. Value can be considered both the profit to the manufacturer and utility for the customer relative to price.

Second, what does it mean to capture value?

Agriculture easily illustrate the difference between creating value and capturing value. Farmers create value by planting and growing crops. However, creating a valuable crop doesn’t do any good unless the crop is harvested and sold.

Value-capturing activities include:

Monetizing users. Social media companies often struggle with capturing value. Twitter created enormous value by rapidly building a large user base, but they have struggled to capture the value through monetization. Facebook’s stock has been surging because they have found effective ways to monetize through advertising.

Pricing effectively. The value of a strong brand and efficient operations can’t be captured if the product isn’t priced appropriately. Again, Apple is a great example. They earn high margins because of their brand strength and quality product, and they protect these margins by controlling their high pricing carefully across all distribution channels. It is difficult to find lower than usual price on Apple products.

Providing liquidity to shareholders. A company can capture value by monetizing users and pricing appropriately, and then they can pass on that value to shareholders by providing the ability to sell the more valuable shares. This can be done in many ways. Profits can be distributed through dividends. Private companies often raise money at higher valuations and allow new investors to buy out existing investors. The goal of public companies is to allow investors to capture value by increasing their stock price.

Real Value Must Be Created Before Being Captured

Both creating and capturing value are necessary, but it’s important to recognize where to place your focus at a given stage in your company’s growth.

In general more focus should be placed in the early stages on creating value, and as sustainable value is created, some attention can be turned to capturing that value. Even while capturing value, management should stay continually focused on creating value, or the ability to capture value will be short-lived.

Beware of artificial value, such as that created by financial engineering. Failure to recognize this distinction is one of the causes of the housing bubble and subsequent economic collapse. Low interest rates and creative financial products led to a flood of capital into the housing market. This caused housing prices to artificially inflate, creating the illusion of value creation.

Banks allowed homeowners to capture that “value" by borrowing against the inflated value of their homes. The illusion was eventually exposed, leaving behind severely underwater mortgages and general economic disaster.

Entrepreneurs and investors should work together to recognize the distinction between activities that create and capture value and prioritize their resources effectively. As they do so, they will be able to maximize both the value created and the value captured.

Question: What are other value creating and value capturing activities?  

Should Sales or Accounting Handle Collections?

I’ve worked with startups for several years. I’ve had a lot of experience with both the giving and receiving end of collections efforts. In my role as CFO, I’ve seen what brings in our receivables most effectively and what tactics best encourage us to prioritize vendors when cash is tight.

Collecting bills is a balancing act. You must keep cash flowing to pay your own bills, but helping customers through difficult times can build loyalty. It’s important to have an effective strategy for finding the right balance.

Money in hand

An important part of the strategy is defining who contacts customers whose bills are overdue. A common debate is whether sales or accounting should take this role.

Before I share my preference, here are some of the arguments for either side:

Reasons for accounting to handle collections: 

1. Sales should focus their time and attention on selling and not administrative tasks.

2. Hounding customers for payment might hurt the customer relationship.

Reasons for sales to handle collections: 

1. Sales can use their relationship to encourage payment. Faceless accounting people are easy to ignore.

2. Knowing the customers' account status and payment habits helps sales understand the customer better.

3. Sales will be more motivated to sell to credit-worthy customers if they know they also have to collect.

You can probably guess my preference from the length of my arguments. In businesses that have sales reps with direct customer relationships, I strongly prefer that the sales reps make the collections calls.

This preference comes mainly from my experience from the customer side. As I wrote about in a previous post, the startups I work with sometimes don't have enough cash to go around.

Prioritizing precious cash is difficult when I desperately want to pay everyone on time. Often my decisions about who to pay and when are based on relationships. It's easy to ignore an email or voicemail from an accounts receivable person I don't know. It's difficult to ignore a sales rep whose relationship and service I value.

Yes, there is a risk that pushing customers for payment will damage the relationship. But customers understand they need to pay their bills on time. If they're offended when asked nicely to pay, they aren't the kind of customer you want anyway.

Yes, collections takes time that a salesperson could be using to generate more sales. But they should be in regular contact and familiar with the customer anyway. Mentioning a late bill shouldn't take much extra time.

Here are some tips for salespeople who want to collect effectively:

1. Set expectations from the beginning. When onboarding a new customer, make it clear that you expect them to pay their bills on time or they will hear from you.

2. Follow up promptly. After telling them they will hear from you if they get behind, follow through. The contact doesn't have to be threatening. The day after a bill is due, give them a friendly reminder. Sometimes late payments are simply the result of a misplaced invoice.

3. Be patient and understanding. For honest business people, not being able to pay the bills is stressful. You can make it clear you expect to get paid while empathizing with their situation. Helping a good customer through difficult times goes a long way toward build lasting loyalty.

4. Blame accounting! And it will be the truth. Accounting and management set the collections policies, and as a salesperson you are just doing your job.

I encourage you to at least consider giving sales the responsibility for collections. Let the salespeople leverage their relationships to keep the cash flowing.

Question: In your business does sales or accounting handle collections, and why? 

5 Reasons Why All Leaders Are Readers

Harry S. Truman said, “not all readers are leaders, but all leaders are readers.” I love reading both because it’s enjoyable and it plays a critical role in helping me become a better leader. I normally consume at least two books per month, mostly as audiobooks through I’m usually in the middle of three or four books so I can choose what I feel like at any given time, such as a religious book for Sunday, a fiction book for when I want to relax, and one or two non-fiction books for when I’m motivated to learn.


Here are five reasons all leaders are readers:

1. Reading elevates us above our current situation

It’s easy to get bogged down in our day-to-day lives, and reading elevates us above the daily grind. It can inspire us with stories of great accomplishments. It can give us new ideas. It allows us to step back and view the forest while day-to-day we only see a few trees.

I enjoy biographies for this reason. I’ve recently read Winners Dream, the autobiography of SAP CEO Bill McDermott, and The Innovators, the story of the computer and Internet pioneers.

2. Reading multiplies our experiences 

We don’t generally experience life very quickly. Building anything of value as a leader takes time, and the process is typically challenging and messy.

Think of building a family. It takes almost 20 years to raise a child, and we only get a limited number of children to practice on. Older couples will say it takes a lifetime to build a successful marriage, and again, opportunities to practice are limited. However, by reading we can learn from the experiences of virtually unlimited numbers of successful parents and married couples.

The same applies to leading in business. We only have time to lead in a handful of business during our career, but by reading we can learn from the experiences of an unlimited number of leaders.

I wrote a blog post about the power of learning from others experiences through stories.

3. Reading allows us to spend time with smart people

You may not be able to have lunch with Michael Hyatt, Andy Andrews, Dave Ramsey, Jim Collins, or Peter Drucker (especially because he’s passed on). But you can spend as much time with them as you want by reading material written by them.

I used to get frustrated with reading. I would read a lot of books, but I didn't feel like I was retaining much of what I read. Michael Hyatt changed my outlook. In one of his podcasts he mentioned that he doesn’t read with the intent of retaining much. He reads to spend time with smart people.

4. Reading can quickly build our expertise

Without reading, our expertise will be limited to our direct experiences. We don’t experience life quickly, so our direct experience are limited.

I wrote a blog post about ways learn a new industry. The post was inspired by the wealth of knowledge I gained from reading the book, The Business of Venture Capital.

I’ve been working in venture capital for over three years now, but my experience is limited to my circumstances, such as the stage of our VC fund, the companies we work with, and my role. However, by spending a few hours reading The Business of Venture Capital, I was able to expand my expertise to all areas of venture capital.

Of course, book learning is not as good as hands-on experience, but it may open the door to opportunities for hands-on experience and make us more effective when we get the opportunity.

5. Reading gives us an escape

When thinking about reading for leaders, we normally think about non-fiction, such as leadership principles, self-improvement, biographies, etc. While I primarily read non-fiction, I believe it’s important to also read fiction.

Fiction reading provides an escape. It helps you mentally disengage from your circumstances, which facilitates rest and recovery. When you come back to real life, you can face your challenges with new ideas and renewed energy and focus.

If you want to be a leader, you must be a reader!

Question: In what ways has reading helped you become a better leader? 

5 Reasons to Consider Xero for your Accounting Software

I’m a huge fan of Xero online accounting software. I started using Xero for two companies in 2010, four years after Xero was founded (you can read more about their history here). I now use Xero for seven companies in the US and Canada. Xero-logo-hires-RGB

Before adopting Xero, I had been using the Quickbooks desktop version. I was sick of managing data files, sharing with multiple users over a network, and maintaining the IT needed for remote access. I chose Xero after researching online / cloud / Software as a Service (SaaS) accounting software.

I would have been happy to move to Quickbooks Online, but it contained only a portion of the desktop version’s features, and there was no way to directly convert a Canadian data file to Quickbooks Online. In a classic case of Innovator’s Dilemma, Intuit (maker of Quickbooks) has missed out on the rapid rise of the SaaS model.

I realize that no software is one size fits all, but I think every startup and small- to medium-size business should at least consider Xero for their accounting software for the following five reasons:

1. Xero is Software as a Service (SaaS)

SaaS software simply means that the software is hosted on servers somewhere in the world (in the “cloud”), and you can access the software through a Web browser or mobile app. You don’t have to manage software installations or data on your own equipment.

I was on the audit team while working for Ernst & Young in 2006. That experience indoctrinated me into’s “No Software” mindset even before SaaS was cool. I use cloud software for everything except Microsoft Word and Excel, and even then I prefer to use Google Documents and Sheets whenever possible.

I wrote two blog posts on this topic here and here.

2. Xero is well-funded and rapidly improving

Xero does have some drawbacks. It offers a limited number of standard reports, and reports can’t be customized beyond grouping accounts. The Global version doesn’t have check printing capability (the US version does). You can't batch pay invoices that aren't in the functional currency, which takes extra work to reconcile separate payments in Xero with one payment in the bank account.

However, over the last 4 years, the product has rapidly improved, and I am confident that the drawbacks will be addressed soon. The company has raised over $230 million and are putting those funds to work with product improvements. For example, I understand that significant reporting improvements are coming soon.

3. Xero is simple to use

Accountants familiar with any other accounting software can quickly become proficient in Xero. You don’t even need to be an accountant to use it. The menus and processes are intuitive, and help links are context-sensitive.

In many cases Xero replaces standard accounting lingo with more layman’s terms. Instead of accounts receivable, it’s sales. Instead of accounts payable, it’s purchases. Instead of post expenses, it’s spend money.

4. Setup is quick and easy

You can be up and running with a new company within minutes by running through a simple setup wizard. Uploading logos and customizing invoice templates is easy. The default chart of accounts is a good start for most businesses, and editing is simple.

Converting from one accounting system to another is usually challenging, but Xero minimizes the pain with good import tools. They even have a free tool to convert a US Quickbooks file directly to Xero.

A few months ago I converted a company mid-year from Microsoft Dynamics GP to Xero. It took some work to reconcile the ending balances in GP with the opening balances in Xero. Most of the work was getting the data out of GP. Importing opening balances into Xero was easy.

5. Xero has a large Add-on Marketplace

Xero doesn’t try to be all things to all companies. It’s not an all-in-one solution like Netsuite or SAP. It handles sales, purchases, bank accounts, fixed assets, and payroll very well. For other business functions, it integrates well with a large number of add-ons built by development partners.

For example, Xero doesn’t handle inventory and cost of goods sold. One company I work with is a manufacturer and distributor of physical products. We use Unleashed Software for warehousing/manufacturing, and it integrates with Xero to communicate the financial information.

Give Xero a Try

In summary, I highly recommend you at least consider Xero for your startup and small- to medium-size business.

It may not be worth the switching cost for companies already using different accounting software, but I think it’s a no-brainer for many startups. You can always convert to a larger (and more expensive) system when you’re on your way to becoming a billion-dollar company.

By the way, I reviewed Xero on TrustRadius, which you can read here.

 Question: What has been your experience using Xero been like? 

5 Lessons About Building a Business from a Disneyland Trip

I spent the last week at Disneyland with my family. I tried to unplug from work as much as possible, but I couldn’t help but notice aspects of my experience that I could apply to the businesses I am helping to build. Disney gets a lot of attention from business writers for good reason. At the risk of tackling a cliche topic, here are five lessons I learned about building a business from my Disneyland experience:


1. Stand out from the competition Traditionally, my wife and daughters spend five days in Disneyland, and my son and I take one of those days to do something else. Last time we went to Legoland, and this time we went to Universal Studios.

Those would be incredible parks when experienced on their own, but they don’t measure up when experienced during the same week as Disneyland. Even though we had fun, we wondered if we would have preferred an extra day at Disneyland.

Businesses have to stand out from their competition in a significant way to attract loyal customers.

2. Be present with people Disney characters are masters at being fully present with the one child at a time. Meeting their favorite characters creates much of the Disney magic that kids experience, and the characters make sure each interaction is memorable.

Meeting Elsa and Anna from Frozen is one of the most popular attractions. It requires waiting in line to get an assigned time to wait in line again later in the day. Only one family at a time is allowed in the small room with Elsa and Anna. The interaction only lasts for a few minutes, but the characters are fully present. They make kids feel like they are the only people in the world at that moment.

3. Enforce the rules In most cases, Disney “cast members” are extremely friendly, kind, and accommodating. However, they are not afraid to enforce the rules when a guest’s behavior infringes on the experience of others. We watched as someone cut to the front of the Disneyland Railroad line and jumped on the train. The conductor loudly called him out as a line cutter and ordered him off the train. The one man was probably offended, but it enhanced the experience for the many people watching.

To build a high-performance business, some rules need to be strictly enforced. Of course, unethical or illegal behavior can’t be tolerated. Lackluster performance by one member can also bring down an entire team. It’s often better to deal firmly and swiftly with one person that let an entire team suffer.

4. Bend the rules On the flip side, rules should be bent when they don’t infringe on others experience.

At the Haunted Mansion a person appeared to be cutting in line before approaching the nearest cast member. At the first the cast member good-naturedly called her a line cutter, but he let her through as she explained that she had been separated from her family who were now further ahead in line.

5. Get out of the comfortable routine This last point is not directly related to Disney, but it’s something I learned on the trip.

My family’s default is to find a hotel when we travel. There are many options, we know what to expect with the brand we choose, and it’s easy to book and cancel as needed.

We had a hotel booked for this trip, but someone mentioned they found a vacation rental through VRBO for their last Disneyland trip. My wife and I settled on a townhouse that is over 50% bigger and 60% cheaper than the hotel we had booked. It was immaculately clean and nicely decorated with Disneyland themes.

I also tried Uber for the first time. Our townhouse was about 1.5 miles from the Disneyland gates. I would drop them off every morning and pick them up every evening, which added 3 miles to my daily walking distance.

After one particularly tiring day, I wasn’t looking forward to walking back. I could have tried to figure out the bus routes or paid for an expensive taxi. Instead, I decided to try Uber. The app showed a few drivers in the area, so I requested a pickup. Within a few seconds a driver called me from across the street. I was back to our townhouse within 5 minutes, and the app automatically charged me $4 so I didn’t have to worry about payment or tip.

We often get stuck in our comfortable routine. There are many ways to rethink conventional wisdom. Consider virtual assistants instead of full-time employees for some roles. Build a virtual team to save on office space and find the best talent regardless of location. Use VRBO or Airbnb instead of a hotel. Take Uber or Lyft instead of a taxi or bus.


It’s important to take time off and unplug from work. During these times our minds can be freed from the usual distractions, making us more open to lessons we can apply to our careers and other areas of our lives.