Recently, Jane, a faithful ETR reader, wrote to me, asking for some advice to help her help a start-up company become profitable — and, at the same time, prove that she is worth the considerable salary that they are willing to pay her. Let’s begin at the beginning of her story . . . “I have been reading ETR for a year now,” she said, “and putting little bits of it into use as I gained confidence. And now, my efforts are finally about to either pay off or my hubris will take me under.”

Jane tells us that she started on the road to success by using ETR’s recommendations to improve her personal productivity, which she then used that to leverage pay raises from her employer. “My performance this past year and a half has made me a reputation beyond the walls of my current employer,” Jane continues, “and resulted in an offer that nearly doubles my annual salary.

But, here’s the catch: The company is a non-profit start-up. My responsibility is to get it up and running on schedule and to make enough to repay the start-up fees within two years — plus enough additional to put down one-third of the cost of a second unit. That brings us to the reason Jane was writing to me. “I just finished assisting the CEO with developing a budget with enough wiggle room that I should be able to come in under cost. But one area that could be a real budget buster is ‘benefits and withholding.’

I would appreciate any advice on where to research what should be offered in a start-up, and what the typical withholding rates are for FICA, taxes, unemployment, and workmen’s comp. What problems should I expect?” The advice I gave her is the basic advice I give to anyone involved in a start-up business. Here’s what I said: Jane, I’ve started more than a hundred businesses and written dozens of business plans — and I’ve never once even considered the questions you are asking.

As an ETR reader, you should know my position on this: If you are starting a new venture, put 80% of your thinking into getting the SELLING MODEL right and developing CASH FLOW. The selling model is the skeleton of your business. If it’s not strong, everything you do will collapse. The cash flow is the blood. Without it, your business will not be able to live. Any middling accountant will take care of the numbers you are talking about here. You have more important things to deal with than worrying about withholding rates.

The main questions you should be looking for answers to are these:

1. “What is the one product that will sell best to our market?”

2. “What is the best price to sell it at?” 3. “What is the best medium to sell it in?”

4. “What is our most powerful sales message?”

Keep your start-up team very lean. Get experienced people to advise you. Forget about setting up the office, setting up the books, etc. Concentrate on making your first sale!

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