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Tell HN: My startup is making money and I don't know what to do

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Re: Tell HN: My startup is making money and I don't know what to do

#51

Post by sliverstorm »

sthielen wrote: post #26
ChuckMcM wrote: post #20

Are you paying yourselves salaries? Do you have an actual office? Benefits? etc? I would suggest that you not get ahead of yourself with "making it big" and instead focus on making it a solid business. Get to the point where you're paying yourselves and everyone who works for you a market rate salary and benefits, and you have office space, and you're cash balance is growing. Basically this is the classic definition…

No salaries, no office. My two cofounders and I have been throwing everything we've got into this; we're all broke. Our business model requires people actively maintaining property listings at each school, and then growing student traffic at that school and then, once we're established, securing advertisement deals. Our rationale behind raising funding is that we can either cut corners and struggle and keep adding on…

Right, that's exactly what Chuck is advising you to not do. You have your sights set on the stars; "How do we land big advertising deals", "How do we spread to lots of different campuses fast". Chuck is advising you make sure you can walk before you try to run :)

To throw in my 2c, you shouldn't have to land the huge advertising deals and spread to fifty campuses just to make enough money to pay the three of you guys. If you require a nationwide presence just to make enough money to pay three salaries, the business doesn't work. But it doesn't sound like that is the case, so it should be doable to reach a level of income where you can pay yourselves without expanding too much yet. Then grow.

Re: Tell HN: My startup is making money and I don't know what to do

#54

Post by mmaunder »

First ask yourself if you really are making money. Does the amount of money you will bring in equate to market rate salaries for you and your co-founders 12 months from now? With some money left over for growth?

If the answer is yes then it sounds like you have a business on your hands. Create a cash flow plan. It should show how much you'll be bringing in and how much you'll be spending on a month by month basis. Do it 18 months out. Make it as close to reality as possible.

Then try really really hard to make it work without raising money. If that means you grow a little slower, that's OK. If it means you have to be a bit more frugal, that's OK because that's the cost of your own company's stock. (The alternative being, you sell that stock and get money to grow the business, so you lose that chunk of ownership).

Assign someone as your CFO. They're the cash-flow tzar. Anytime someone wants to spend, they have to go through that guy. The tzar should also have a talent of finding new pockets of money even when it seems that you're about to run out.

Just because you're going to get a TON of offers from investors doesn't mean you should raise money. I'm sure you get a lot of offers from credit card companies too.

Once you raise, your definition of success is no longer 1 million bucks a year in revenue and $300,000 a year salaries for you and your two buddies (which would be awesome right????!). Instead you're going to have limits on how much you can pay yourself, who gets to be boss and how much of a boss you get to be, and your definition of success becomes $10 million a year in revenue instead or you raise again and again and then you have to IPO.

Re: Tell HN: My startup is making money and I don't know what to do

#55

Post by sthielen »

ChuckMcM wrote: post #45
sthielen wrote: post #26

Earlier quoted context omitted.

No salaries, no office. My two cofounders and I have been throwing everything we've got into this; we're all broke. Our business model requires people actively maintaining property listings at each school, and then growing student traffic at that school and then, once we're established, securing advertisement deals. Our rationale behind raising funding is that we can either cut corners and struggle and keep adding on…

Well that helps clarify the question considerably. > No salaries, no office. My two cofounders and I have > been throwing everything we've got into this; we're > all broke To put it nicely, "So what?" (I know that sounds cruel but trust me it isn't) What you have is a bit of traction, you don't actually have a business yet and as such its probably too early for any but the most inexperienced of investors to invest in…

Haha don't worry about the harshness--comments like yours are why I posted here.

The point I wanted to make with needing to hire people is that it becomes more cost-effective to have one "listings manager" maintaining 35 schools (we've budgeted for four "listings managers" total, once we're fully operational at the 150 campuses--the job mostly a lot of calling), and one sales person handling multiple schools, etc. The more schools we've onboarded, the more effective our HR spending is going to be.

We've calculated revenue per campus as well as cost per school/cost per student/revenue per student and all that, it's just not something we're really comfortable discussing publicly (if you want, feel free to shoot me an email at sean-at-universityniche.com).

Re: Tell HN: My startup is making money and I don't know what to do

#57

Post by danesparza »

sthielen wrote: post #21
cglee wrote: post #13

First, decide if you really need to raise money. Can you bootstrap (ie, self fund) your business? Too many people immediately go for capital when they don't need it. It's extremely distracting and not all that necessary. You should only look into raising capital if you have a capital constrained opportunity or problem. So many problems initially look like money problems, but they're really disguised as something else…

We've been bootstrapped since the beginning, but, as much as we don't want to admit it, we're starting to outgrow what we can do as our very limited personal savings start to decline. Yeah, it's cool to have some money in the bank after doing these advertising deals, but it's not nearly enough that it's sustainable right away. We have plans to expand to 150 schools across the country, and if we do that we project to…

"as our very limited personal savings start to decline. Yeah, it's cool to have some money in the bank after doing these advertising deals, but it's not nearly enough that it's sustainable right away."

Bootstrapped = your profits are able to grow as your company grows. It sounds like you have an expensive hobby at the moment. Either scale back your operations so you're profitable or grow your numbers.

Re: Tell HN: My startup is making money and I don't know what to do

#58

Post by danesparza »

mmaunder wrote: post #54

First ask yourself if you really are making money. Does the amount of money you will bring in equate to market rate salaries for you and your co-founders 12 months from now? With some money left over for growth? If the answer is yes then it sounds like you have a business on your hands. Create a cash flow plan. It should show how much you'll be bringing in and how much you'll be spending on a month by month basis. Do…

OP also posted "as our very limited personal savings start to decline. Yeah, it's cool to have some money in the bank after doing these advertising deals, but it's not nearly enough that it's sustainable right away."

It sounds like they have revenue, but they do not have profit.

Re: Tell HN: My startup is making money and I don't know what to do

#59

Post by sharemywin »

I'm not sure your upside is very big. you might what to think about where you go from there. 150 universities. real busy once a year when everyone is looking for housing but not much most of the year. how big were you advertising deals? have you had anyone re order adverting? Any business owner is willing to give a couple kids just to starting out $200. Most investor would want this to be at least $10M business. 60k per year per university. 5k mo per univeristy. Not trying to be negative but, I would hate for you to chase a bad path when you can focus on what could work. if someone has better incite let me know? Also, maybe you want to talk to the group doing rent a sales force. saw it a couple of days ago on here.

Re: Tell HN: My startup is making money and I don't know what to do

#60

Post by mrfusion »

cglee wrote: post #13

First, decide if you really need to raise money. Can you bootstrap (ie, self fund) your business? Too many people immediately go for capital when they don't need it. It's extremely distracting and not all that necessary. You should only look into raising capital if you have a capital constrained opportunity or problem. So many problems initially look like money problems, but they're really disguised as something else…

Can you expand on the bookkeeper idea? What would their job entail? Can it be part time? Any tips on finding someone?
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