OnStartups.com offers the following tips for startups including:

1. Seek transparency and understanding with your partners early.  Issues get harder as time passes.
2. Startup founders work long hours for a reason.  There’s more work than there are people.  If you’re seeking balance, seek it elsewhere.
3. Bad customers will drain you of passion.  Really bad customers will drain you of both passion and profits.  Unfortunately, most bad customers will degenerate into really bad customers if you don’t do something about it.
4. If you’re changing direction often, worry a little.  If you’re changing people often, worry a lot.
5. It’s lonely at the top, but even lonelier at the bottom.  In the early days of a startup, hardly anyone wants to talk to you (except some desperate vendors).
6. Eventually, your product will need to work and do something useful.  No amount of marketing or strategy will get you around this.

Some are definitely “tough love” but valuable nonetheless.

From Entrepreneur Magazine and Yahoo are the top reasons for business failure:

1. Lack of direction. Business owners often fail to establish clear goals and create plans to achieve those goals, especially before starting out, when they fail to develop a complete business plan before launching their company.
2. Impatience. This occurs when business owners try to accomplish too much too soon, or expect to get results far faster than is truly possible. A good rule to remember is that everything costs twice as much and takes three times as long as expected.
3. Greed. When entrepreneurs try to charge too much to make a lot of money in a short period of time, failure isn’t far behind.
4. Taking action without thinking it through first. An entrepreneur acts impetuously and makes costly mistakes that eventually cause the business to fail.
5. Poor cost control. An entrepreneur spends too much, especially in the early stages, and spends all their startup capital money before achieving profitability.
6. Poor product quality. This makes it difficult to sell and difficult to get repeat business.
   Insufficient working capital. An entrepreneur expects–and requires–immediate, positive cash flow that doesn’t occur, leading to the failure of the business.
7. Bad or nonexistent budgeting. An entrepreneur fails to develop written budgets for operations that include all possible expenses.
8. Inadequate financial records. An entrepreneur fails to set up a bookkeeping or accounting system from the beginning.
9. Loss of momentum in the sales department. This leads to a decline in cash flow and the eventual collapse of the enterprise.
10. Failure to anticipate market trends. An entrepreneur doesn’t recognize changes in demand, customer preferences or the economic situation.
11. Lack of managerial ability or experience. An entrepreneur doesn’t know or understand the important skills it takes to run a business.
12. Indecisiveness. An entrepreneur is unable to make key decisions in the face of difficulties, or decisions are delayed or improperly made because of concern for the opinions or feelings of other people.
13. Bad human relations. Personal problems and conflict with staff, suppliers, creditors and customers can easily lead to business failure.
14. Diffusion of effort. An entrepreneur tries to do too many things, thus failing to set priorities and focus on high-value tasks.

Of course, as I’ve written before, the total number of business failures are over-estimated and most causes can be mitigated with some basic business skills.

(via Be Excellent)

Ryan Carson, founder of Carson Systems, offers the following productivity tips for small businesses:

• The importance of alone time.
• Questions kill productivity.
• Use of an “F-off Flag” or similar device.

(via SVN)

From The Lazy Way to Success:

10. You are unemployable. You can’t hold a job. You don’t want to hold a job. And you react to getting a job the same way a cat reacts when you try to give it a bath. 

9. You are anti-authoritarian. You can’t fathom the thought of being anything less than Boss, President, Chairman, Don, and/or Emperor. 

8. You have the uncanny ability to get other people to do all the work. 

7. You are always looking for and/or seeing economic opportunity everywhere and in everything. While at a concert, you occupy yourself by estimating the evening’s take and its gross margins instead of listening to the music. 

6. You spend more time and energy looking for easier, faster, cheaper, more effective ways of accomplishing something than if you just did the task outright. 

5. You would enthusiastically trade a life-time pass to Disneyland for one ride in the Vomit Comet. In other words, you would give up a secure, even-keeled, bland existence for a life that whipsaws uncontrollably between exhilaration and terror. 

4. You don’t see lack of money, lack of knowledge, and lack of experience as barriers to entry. You are also not deterred by the existence of formidable competition. 

3. You favor multiplication over addition and you lull yourself to sleep by calculating price-earnings ratios. 

2. You would happily invest your home’s equity and your life savings (and your mother’s life savings) in your start-up. 

And the Number One sign you are made to be an entrepreneur . . .

1. When you project future earnings, your spread sheet shows that by Year 5, you can buy Argentina and sell it to Brazil. 

From the Small Business Administration comes statistics about small businesses (PDF) from the years 2001-2004.  Overall, Small Businesses (firms with less than 500 employees):

• Represent 99.7% of all Employer Firms.
• Employ half of all private sector employees.
• Have generated 60-80% of all new jobs annually over the last decade.
• Create more than 50% of nonfarm GDP.
• Produce 13 to 14 times more patents per employees than large firms.
• Employ 41% of high tech workers.
• 53% home-based and 3% franchises.

The Congress is proposing some changes to the law that governs S-Corporations including:

1. changes to the way “Passive Income” is classified and taxed (eliminating the hidden “double taxation” by classifying dividend income correctly).
2. allow more than one class of stock.
3. allow non-resident aliens to become shareholders.
4. allow flexibility in the 75 day deadline to file for an S-Corporation.

Overall, I think all these changes would be great, which is all the more reason to form an s-corporation today!

You can view the full text of the proposed changes here.

(via Dr. Cornwall)

Our offices will be closed Tuesday for the 4th of July! 

We’ll be open first thing on Wednesday morning.