61–70 of 348 posts
So true. There is an immense amount of pressure within startups to 'bend the rules', and I think this hits the nail on the head.
> In the early days I would often let potential customers think we already had a feature they wanted What. How is this even remotely acceptable? If discovered it destroys your credibility. Among your employees it destroys your credibility. If I was an employee and found out that this was happening, I'd be extremely upset. I wouldn't trust a thing you say. If you'll lie to customers, you'll lie to me.
What. How is this even remotely acceptable? If discovered it destroys your credibility. Among your employees it destroys your credibility. If I was an employee and found out that this was happening, I'd be extremely upset. I wouldn't trust a thing you say. If you'll lie to customers, you'll lie to me. Your optimism is endearing, but the vast majority of companies I've done business with do this. Often companies I've…
You (not you the person I'm replying to, 'you' the company/sales person) that are taking money from somebody based on an untruth. It's outrageous, regardless of how often it happens. I have the right to know what I'm getting for my money. Don't lie to me, ever.
Also, if you are conservative you'll have a spreadsheet that models your worst and best cashflow prognosis for the next 6 months to a year out. If you find yourself consistently outperforming the 'best' case in spite of an unchanged business outlook then it's high time to start checking things.
FedEx, Evernote, Intuit, Zappos, Airbnb – I’m endlessly inspired by those founders who faced near collapse but simply refused to give up.
These stories can be inspiring, but remember that they suffer from survivor bias. The companies that do go under don't get as much attention in the financial press.
Sometimes the reality is that it's time to shut down. Give up on one thing, move on to the next thing.
Earlier quoted context omitted.
Except that if you miss paying rent, they let you know, and quickly.
Making sure your bills are paid is the responsibility of any adult. If you're running a business, messing up your taxes should be one of your deepest fears. The general sense I got from the story was: We were young and stupid, but instead of doing drugs, we convinced VCs to give us $3.8 million, which made us believe that we knew what we were doing.
> In the early days I would often let potential customers think we already had a feature they wanted What. How is this even remotely acceptable? If discovered it destroys your credibility. Among your employees it destroys your credibility. If I was an employee and found out that this was happening, I'd be extremely upset. I wouldn't trust a thing you say. If you'll lie to customers, you'll lie to me.
Two things: 1. In my limited experience with pitching/salesing when you say "Yeah I think we can probably build that" the customer/client will take it as "We already have this". There is no amount of rational talking and explaining you can put in place to prevent this. If they ask for something, and your answer is anything but an unequivocal "No." they will think you already have it. 2. Isn't the whole concept of MVP…
Of all the financial mistakes you can possibly make running a company, withholding payroll taxes and then failing to remit them is probably the worst. Be thankful you caught this before the liability exceeded your available funds, because company operators are apparently routinely held personally liable when there's a shortfall, and I'm not sure that debt is even dischargeable in bankruptcy. What's worse, minor versi…
You can even get in trouble when you don't owe anything. Moving in and out of W-2/Corp-to-corp status many years ago, we set some consultants up on W-2. Then we changed up the mix, went back to just me, and I went on W-2 with another consulting firm for a while. Got a letter from the state tax guys. Even though nothing was owed, we were supposed to file forms with all zeroes on them. There was a fine, yadda yadda. Un…
Yep. I recently got a Texas sales tax certificate for my unincorporated side business. Even though I am not doing anything yet, because I have the certificate every quarter I have to log in to a state website and check a box that says I had no sales. Not doing to on time will cost me $500 per incident (I think).
Earlier quoted context omitted.
I've done it when I incorporated my consulting business. I didn't know how to do my own payroll. Hey, it happens, oh ye wise and holy one!
Screwing up your personal taxes in a consulting business is a debacle but also a rite of passage for consultants. It happens to everyone. Screwing up payroll tax withholding for employees is financial catastrophe. You've taken money from your employees on behalf of the government, but then kept it. Your liability in that case can be criminal, maybe even if you didn't deliberately defraud the government. So, those two…
It happens to a lot of people but certainly not to everybody.
As a rule of thumb in the first two years you simply want to reserve 50% of your gross until you get a better handle on what your deductibles are and what it is that you exactly owe and then you can slowly home in on the correct amount to reserve. Too many variables to get closer but 50% should cover all but the most extreme cases.
Simply open a savings account and park that 50% there right after you invoice. If you're invoicing with GST/VAT/whatever it is called where you live then you get to subtract out the VAT first, then do the 50%, then add all the VAT back in and save that.
Mistake 1: Taxes This thing about not noticing that you weren't paying payroll taxes wasn't a "mistake." It was pure head-in-assery. How can you "miss" the fact that you weren't being subtracted for payroll taxes? One quarterly / annual review after another, for 3 years? It's like running a personal budget, and "missing" the fact that you aren't paying rent.