What makes people happy in retirement? That’s the question Michael Finke has been researching for many years now. He’s the chief academic officer of the American College of Financial Services, and was one of 16 experts who spoke on at TheStreet’s Retirement, Taxes, and Income Strategies symposium held recently in New York.
But first a little background. Finke has been researching the question of what makes people happy in retirement because he wants to know to what extent does what people do with their money make them happy in retirement. “Is it better if they have a lump sum? Is it better if they have a pension, or some kind of annuitized income?”
And what he found was this: There seems to be three pillars of happiness in retirement. The first pillar is money, which he says is good news for those of who are actually saving for retirement. “You are happier if you have more money,” Finke said. “So money is a pillar.”
It’s never too late – or too early – to plan and invest for the retirement you deserve. Get more information and a free trial subscription to TheStreet’s Retirement Dailyto learn more about saving for and living in retirement.
And it shouldn’t be any surprise, he said, that health is also a pillar of happiness. “You can have all the money in the world, but if you’re not healthy, you’re not actually gonna enjoy your retirement,” Finke said.
But most of his newest research is on social well-being. For instance, the extent to which you have good relationships with your spouse is is one of the strongest predictors of happiness in retirement. “So make sure you invest in that as much as you’re investing in your 401(k),” Finke said.
The other predictors of happiness in retirement are, according to Finke, friendships and the depth of friendships and the number of friendships that you have with other people. “And even when we look at spending, what we see is that social spending is what really makes people happy,” he said.
Spending money on all sorts of other stuff that we think might make us happy in retirement doesn’t really make us that happy. “It is social spending that makes us happy,” Finke said.
So that’s the foundation of his research in life satisfaction in retirement. “You have to have all three of those if you’re going to be satisfied, and all of them are an investment,” said Finke.
What is an investment in retirement? According to Finke, an investment is anything that requires a sacrifice during your working years in order to build value. “When you save for retirement, it means that you’re living a little bit less well,” he said. “You’re setting money aside that you could have spent today, and you’re (going to) spend that money in retirement.”
Health is an investment, too, said Finke who recalled his early days as a food consumption researcher. “The whole reason I got into finance was because I took a doctoral class in investments because I wanted to understand investments theory, but my theory was that the same thing that motivated people to save money for retirement is the thing that motivated them to engage in healthy behaviors like eating better or exercising, and so that’s an investment in your future as well,” he said.
Relationships are an investment as well and it takes ongoing investment and time and resources to be able to maintain those friendships “so that you can actually draw from them in retirement,” said Finke.
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And if you haven’t made those investments — and men are especially bad at making investments in friendships — you’re not going to be as happy in retirement, he said.
Women, by contrast, invest more. “Women have more deep relationships than men do by the time they get to retirement,” he said. And that, said Finke, actually creates a big issue because very often women have friends outside of the relationship, and they want to spend time maintaining that investment with their friends.
A man’s social circle, by contrast, is at work. “And by the time they retire, they’re relying more on their spouse,” Finke said. “In an opposite-sex couple, they’re relying on their spouse for that, to spend time with them, to go on vacation with them and have lunch with them, and sometimes that creates a bit of friction in retirement.”
Finke also noted that married retirees, in general, are happier, but the happiest group is women who are newly divorced between the ages of 60 and 65. “That’s the happiest group,” he said.
Over the past few years, societal impact has been growing as an area of interest for businesses. Business leaders, myself included, have voiced the belief that businesses should have a purpose beyond profits, and uphold a responsibility to society and the environment.
Although this school of thought is sometimes met with skepticism from those who doubt the commitment of businesses to do good, there is new research suggesting that businesses are actually taking significant action to improve their impact on society and the environment.
According to a new report from Deloitte Global, societal impact has become the most important factor organizations use to evaluate their annual performances, outranking financial performance and employee satisfaction. These findings are based on a survey of more than 2,000 C-suite executives across 19 countries. This shows a shift, even just from last year’s survey report, in which executives expressed uncertainty about how they could influence the direction of Industry 4.0 and its impact on society.
What is driving this change? There is no one answer. Almost half of executives surveyed (46 percent) reported that their efforts have been motivated by the quest to create new revenue streams, and a similar percentage said that initiatives that have a positive societal impact are necessary for sustaining or growing their businesses. An organization’s cultures and policies were also cited as motivation (43 percent).
External pressure continues to be a major driver as well. According to Deloitte Global’s series of inclusive growth surveys, some of this drive comes more from public sentiment, which is increasingly influencing business leaders’ decisions related to societal impact by encouraging them to reevaluate their strategies.
Purpose in action
When it comes to societal impact, businesses are beginning to put actions behind their words. Seventy-three percent of surveyed CXOs report having changed or developed products or services in the past year to generate positive societal impact. What’s more, 53 percent say they successfully generated new revenue streams from these socially conscious offerings.
While some leaders have started to see profits from positive societal goods and services, there is disagreement over the question of whether initiatives meant to benefit society also benefit bottom lines. Fifty-two percent see societal initiatives as generally reducing profitability; 48 percent said that such initiatives boost the bottom line.
Despite these concerns, leaders report a commitment to initiatives that benefit society. There’s probably a short term vs longer term element in this regarding the sustainability of business which may have influenced the answers.
Strategically integrated
Beyond products, services, and new revenue streams, leaders are integrating societal impact into their core strategies. Executives say they have been particularly effective preparing for the impact that Industry 4.0 solutions will have on society. They’re also building external partnerships and joint ventures, and strengthening ecosystem relationships to make a greater impact.
Whether driven by finding new sources of revenue, or the need to respond to external pressures, businesses across all industries seem to be moving towards improving their societal impact. It is heartening to see that leaders are incorporating these considerations into their strategies, as well as operations. When societal impact is seen to be an integral part of a business’s makeup, the most meaningful results can be achieved.
David Cruickshank was elected into the role of Chairman of Deloitte’s global organization, Deloitte Touche Tohmatsu Limited, in June 2015 having served on its Global Board for eight years from 2007. Prior to this, he was Chairman of the UK member firm from 2007-2015. He is a Chartered Accountant and a graduate in business and economics from the University of Edinburgh. David is co-chair of the World Economic Forum’s Partnering Against Corruption Initiative and a Board Member of the Social Progress Imperative.
Today, many firms are active on social media, but not all of them are experiencing transformational change and return on investment. Why do some businesses succeed, while others fail? Join us for a fireside chat on why Social Business has become too important to delegate completely to a junior social marketing team and why going forward, CEOs, CMOs, management teams, and boards must personally own and drive Social Business strategy and re-architect traditional business models and client engagement models.
Fireside chat with Clara Shih, CEO and Co-Founder, Hearsay Social and Kristin Lemkau, CMO, JPMorgan Chase.
The story of the fastest-growing private company in America, a profitable technology startup called Freestar whose revenue growth since 2015 has been a staggering 36,680 percent, starts with a calendar.
Not a buzzy new calendar app. Not a life-altering meeting request. A printed wall calendar. One of those relics with pictures of animals or landscapes that we all used to tack up in the kitchen.
This particular calendar–Tempe12–had, well, swimsuit models. Arizona State University co-eds in bikinis, to be exact. “All the girls had to have a minimum 3.0 GPA, so they had beauty and brains,” explains Freestar co-founder David Freedman, without a trace of sheepishness. Freedman, who launched the calendar when he was a 22-year-old fifth-year senior at ASU back in 2004, has come a long way since then. But he draws a straight line from that fairly crude start to his current success.
Freestar, you see, sells solutions and services that help publishers make more money online by optimizing their advertising operations. When Tempe12 was just getting started, Freedman sold all its ad space to local businesses. The calendar took off, expanded to 21 other colleges by its third year, and drew attention from Playboy and Howard Stern. Tempe12 had a website with photo archives and decent traffic–but no efficient way to make money.
In 2008, Freestar’s other co-founder, Chris Stark, joined Freedman, taught himself to code, and started scaling Tempe12’s online ad business. Other publishers noticed and asked for help, so Freedman and Stark launched a consultancy–DigitalMGMT.
“Smaller publishers would get requests from an advertiser to spend money on their website, and they didn’t even know how to sell it or how to serve it,” Freedman remembers. He and Stark could help. They had no secret formula, no proprietary technology, but they were crafty and entrepreneurial and understood an industry that was evolving every month.
“The biggest problem we had at that point was that we’d take a client from making five grand a month to 50 grand, and some other company would come in and buy them,” says Stark. “Our success meant having to always find new clients.”
In 2014, Freedman and Stark set out to raise around a million dollars and then spent most of it purchasing nine small publishers–webdesignledger.com, webresourcesdepot.com, a stock photography site called lostandtaken.com–thinking that they’d “juice the revenue and sell them off,” Freedman recalls. It was the birth of Freestar–and it was a big mistake.
Almost immediately, Freedman and Stark realized that publishing a swimsuit calendar didn’t give them any real editorial expertise. They also realized that focusing on scaling their own websites put them in competition with the sites for which they consulted.
But around the same time, Stark began experimenting with a new technology that was revolutionizing online advertising: header bidding. Until then, many Web ads had been bought in a split-second auction process that went like this: A publisher sent out a request to advertisers to bid on an ad space, and the software would automatically accept the first qualifying offer.
Ads could be sold in real time–but publishers couldn’t weigh offers against one another, potentially missing the best ones. Publishers also had little sense of who was buying ads, which left their sites vulnerable to shady operators. “It was as if you were selling your car at an auction, and they let only one person into the room at a time,” Stark explains. “That person could offer whatever they wanted–and you had to either accept or reject their offer.”
With header bidding, a snippet of code sent a request to all potential advertisers simultaneously–and then selected the best offer. Suddenly, publishers earned more from each ad, and they had more control over which ads ran on their sites. A decade after Freedman started dabbling in ad sales, Freestar took off like a rocket.
“The beautiful thing is, when you start making people more money and helping them run their businesses better, they typically have pretty big mouths,” says Freedman. “Word travels quickly.” Today, Freestar works with more than 300 publishers, including Barstool Sports, Snopes, and Fortune.
Coindesk, which covers all things cryptocurrency, saw ad revenue increase 300 percent in the first month it worked with Freestar, says Jacob Donnelly, the publisher’s managing director of digital operations. Freestar, he says, has made it unnecessary for Coindesk to hire anyone to handle advertising operations. “That lets me think more strategically about revenue generation,” he says, “which is huge.”
Freestar generates its own revenue by taking a small percentage of the ad dollars that flow through its technology. The company hauled in $37 million last year and expects to cross the $100 million mark soon. It now employs 40–including a new face up top. Freedman and Stark aren’t big on job titles, and neither was ever formally CEO or president.
About a year into the company’s breakout growth, the founders tried to hire Kurt Donnell, a well-regarded media executive in their hometown of Phoenix, but failed to bring him on.
Two years later, they tried again, and Donnell joined as president this past January. What changed Donnell’s mind? “They had executed on everything they said they were going to do two years prior,” he says. And, he adds, “the growth was just astonishing.”
But, in my experience, Europe embraces vacation–sometimes in ways that make no sense. I’ve frequently found restaurants that close for two weeks during peak tourist season–because the owners want to take their own vacation time. I’d think they would close in the offseason and make money while they could, but the vacation culture is strong.
This summer, my family is basically staying put, for a variety of reasons. We’re making a couple of short trips, but otherwise staying in our home in Switzerland (which, admittedly, is a prime vacation spot in and of itself). And it’s impossible to get anything done.
My lawyer has been on vacation for the past three weeks and will be back next week. I have some things I need her to look at, and they have to wait.
Getting a doctor’s appointment? Good luck! At least the walk-in clinic runs year-round.
While this affects my day-to-day life because I’m physically here, it can also affect your business, even if you’re based in the United States. When someone says, “The Geneva office is closed for three weeks,” they aren’t joking, and no one around here even bats an eyelash. So, how do you do the international part of your business when everyone else is at the beach? Here are some ideas:
Plan ahead
This is going to happen every year. Some countries are worse than others, with everyone going at the same time. One of the problems is that European schoolchildren tend to have shorter summer vacations–six weeks is common–compared with the 10 to 12 weeks American schoolchildren get. Don’t cry for the poor, suffering schoolchildren here–they get an additional eight weeks throughout the school year.
But those six weeks are going to vary from country to country. German and British schools tend to get out at the end of July, while Swiss schools close the last week in June. So, you’ll have better luck with your London office in July than you will with your Swiss office. Go ahead and ask when peak vacation season is and plan accordingly.
Partner with larger companies
While small businesses can be excellent partners, if you will need people year-round, without fail, a large company will be a better bet than a small one. The multinational corporation isn’t going to shut down its Paris office for the summer, but the small business might close its doors for the entire month of August. Ask when you are building relationships. They won’t think to bring it up, because it’s often a normal part of doing business here.
Embrace vacation yourself
Go. Take a vacation. Step away from the office and your phone and your laptop. Europeans have proved that the world doesn’t end if you go on a vacation. If you’re good at what you do, people will be waiting for you when you get back. It’s OK to take some downtime.
Just make sure that if you do come to Europe for your vacation that the restaurants will be open in the small village you thought looked charming. Otherwise, you may be miserable during your vacation.
Like millions of her peers, Nicole Read graduated with thousands of dollars of debt. Unlike most of them, she’s getting direct help from her employer to pay it back.
The 26-year-old’s job at event organizer Live Nation Entertainment in Beverly Hills, California, comes with a benefit that may be starting to catch on at U.S. companies: Contributions to her student loan bills. Offering such an incentive helps businesses lure prospective employees as they grapple with tight labor market conditions marked by a jobless rate near its lowest in almost five decades.
In Read’s case, it’s $100 a month. As a result, “I’m paying like $30 over my minimum payment every month, so it’s gotten me to pay off my interest a little quicker,” she said. “It just kind of gives me a bit of breathing room.”
Such plans are spreading. They were on offer to staff at about 8% of U.S. employers in 2019, more than double the 2015 level, according to an April survey by the Society for Human Resource Management.
Another study by business adviser Willis Towers Watson found that 32% of firms are considering introducing a similar benefit by 2021.
“If you have a young demographic, offering benefits like student loan repayment could be the way to go,” said Alex Alonso, chief knowledge officer for SHRM.
Pronounced competition for talent and the elevated debt burden for a generation of Americans making their way into the workforce are driving the change. Millennials make up more than half of Live Nation’s U.S. labor force.
The balance on outstanding student loans reached $1.6 trillion at the end of the first quarter, and more than a quarter of that is held by people younger than 30. The effects reverberate through their social and economic lives, making it harder to start a family, buy a home or purchase big-ticket items, research shows.
The federal government is considering giving companies a break for helping employees with their debt.
The Employer Participation in Repayment Act, introduced in the House and Senate in February, would provide tax relief to firms that do so. It has bipartisan sponsors, including Democratic presidential candidates Seth Moulton and Amy Klobuchar.
Other Democratic contenders, like Senators Bernie Sanders and Elizabeth Warren, have proposed more sweeping fixes that include writing off loans.
’Win-Win’
“Helping employees get out of debt faster is a win-win, both for the employee and for our productivity,” said Katie Wandtke, director of human resources at Cybrary, a cyber-security firm based in College Park, Maryland.
It’s not just smaller shops adopting the benefit. Larger companies, including professional services powerhouse PricewaterhouseCoopers, are catching on too.
Live Nation began offering the benefit in early 2017 and has helped employees save over $4 million. More than 80 of the company’s workers have been able to completely pay off their loans, according to Live Nation.
The event organizer works with startup Tuition.io, which specializes in helping companies set up such programs and has clients including Estee Lauder Cos. and Staples Inc. There are other platforms in the market too, including Goodly, which works with Cybrary, and Gradifi, used by PwC since 2016.
Paying an extra $30 a month more than the minimum, like Read says she does with her employer’s help, makes a difference.
For example, for a 10-year loan of $50,000 at 5%, it would save close to $1,000 in interest payments over the life of the loan – allowing the borrower to clear the slate eight months early.
“Jobs in the entertainment industry like this one, they’re not high-paying jobs necessarily,” said Read. “So this kind of helps offset that wage difference and it’s really helpful for people like me.”
The Bitcoin price has been on a tremendous run in 2019, roughly tripling its price in U.S. dollars since the start of the year. That said, Morgan Creek Digitalco-founder
Anthony Pompliano thinks the party is just getting started.Pompliano has predicted that the Bitcoin price will reach $100,000 by the end of 2021, and he was recently asked to explain his point of view during an interview with CNN’s Julia Chatterley.
Digital Gold and Loose Monetary Policy
In the past, Pompliano has described the trend towards loose monetary policy combined with Bitcoin’s upcoming halving event as the “perfect storm” for the rise of the digital asset. Pompliano explained this theory during his CNN interview.
“Whenever we get to a recessive period or kind of slowing growth, central banks have kind of two tools: They can cut interest rates, which they did yesterday, and they can print money (quantitative easing). And so, when they do both of those things, it usually takes anywhere between 6 to 18 months to feel the effect of those tools, and what it’s going to do is it’s going to coincide with the Bitcoin halving,” said Pompliano.
A halving event in Bitcoin is when the amount of Bitcoin that are generated by miners every ten minutes is cut in half. Bitcoin’s monetary policy was “set in stone” when the network went live back in 2009, and the scheduled issuance of new Bitcoin is halved roughly every four years.
Originally, 50 Bitcoin were created every ten minutes. Next year, the number of new Bitcoin created in each new block will drop from 12.5 to 6.25.
While gold has historically been viewed as a safe haven asset in times of monetary easing, Pompliano covered a couple of the benefits of Bitcoin over gold during his CNN interview.
“The difference is, between Bitcoin and gold, with Bitcoin, we know exactly how many is getting created, so 1,800 Bitcoin are going to be created today. The second thing is we know the total supply available, which is 21 million. So, it’s not: Hey I wonder how much is in the ground. We know exactly how much it is, and we can actually go and audit or verify the software code of the system,” said Pompliano.
I’m a writer who has been following Bitcoin since 2011. I’ve worked all over the Bitcoin media space — from being editor-in-chief at Inside Bitcoins to contributing to Bitcoin Magazine on a regular basis. My work has also been featured in Business Insider, VICE Motherboard, and many other financial and tech media outlets. I’m mostly interested in the use of Bitcoin for transactions that would be censored by the traditional financial system (think darknet markets and ransomware) in addition to the use of bitcoin as an unseizable, digital store of value. Altcoins, appcoins, and ICOs don’t make much sense to me. Find all of my work at kyletorpey.com. Disclosure: I hold some bitcoin.
A little less than two-thirds of Americans want to start their own business. Perhaps surprisingly, this is true among both younger and older workers. Like the drive to write a book ( 81% of Americans) or work as a full time freelancer (soon to be half of all workers), starting your own business is a widely shared dream.
For good reason. People who work for themselves tend to love it. Although it comes with the complexity of having to manage every piece of an operation, as well as the stress of knowing that success rides completely on your own shoulders, there’s nothing quite like being your own boss.
Once you have your idea set, you need to do your research.
Starting your business will inevitably be a learning experience, but you want to get as much information as you can beforehand. So take some time to study your planned market. Ask questions like:
• What kind of competition will you face?
• Who is your target consumer?
• Where will you locate your business?
• What are the logistical and practical concerns about that location?
• What do consumers like and dislike about the existing market for your product?
• What do consumers say they want right now?
• What kind of spending power does your target consumer have?
Your market will be different depending on the nature of your business venture. A corner store has entirely different demographics and challenges than a web-based service vendor. In both cases, though, it pays to know your audience. Literally.
2. Write a Business Plan
The business plan is the blueprint for your company. It’s where you’ll apply your research and planning into one document that describes in detail the who, what, when, where, how and why of your new business. In it you will address issues such as:
• Who you will market to;
• What you plan to sell;
• When you anticipate hitting certain benchmarks, your timeline for development;
• Where you will locate this business, whether online or brick and mortar;
• How you will operate this business day-to-day;
• Why this business, what opportunity did you see in the market.
Your business plan should also address critical issues such as:
• Monetization and cash flow. How do you anticipate making your money and turning a profit?
• Specific challenges you anticipate and how you will overcome them.
• What will it take, step by step, to operate this business and create this product?
The business plan article linked above goes into more detail, and the Small Business Association has a template here. Both are worth reading in further detail, because starting a business without a business plan is like setting off on a road trip without a map or GPS.
And, of course, don’t forget to pick a terrific name.
3. Get Feedback
Now stop.
Writing your business plan should be exhausting. This should be a detail-oriented document that takes a hard look at your planned venture and how, precisely, it will work. If you’ve done it right, by now you should be ready to tear into the building phase of your new business.
Instead, take a step back and solicit feedback. Call friends, family and colleagues who might have some knowledge of the industry you’d like to enter. Seek out mentors or professional guidance if possible. Get their opinion of your business plan. They might have questions you didn’t think of or notice something that slipped by you.
Hopefully this business will be around for years to come. You can afford a small delay while you get a few more eyes on your proposal.
4. Find the Money
Cards on the table, this is the hardest part for most entrepreneurs.
Not every business needs a lot of startup capital, but you will almost certainly need some. How much will depend a lot on what you want to do. A web-based services firm might require very little in the way of funding, while a retail store can require a substantial amount of cash to pay for rent, inventory and staff.
This is something every entrepreneur faces, and small business owners turn to a variety of sources for startup capital. No matter where you get funding, expect to invest at least some of your own money. Lenders and investors will want to see that you have “skin in the game,” to use industry speak. Beyond your personal accounts, called self-funding, small business owners also rely on:
Bank Loans
Many businesses start with a small business loan from local banks.
You will need to have all of your paperwork in order to pursue a loan. Expect the institution to ask for details from your business plan, including monetization strategy and financial projections. If you have trouble securing a loan, you can turn to the Small Business Association which runs a loan guarantee program to help make this type of financing more accessible.
Personal Loans
While not an option for every entrepreneur, many people do rely on loans from family and friends.
If possible this is typically better than securing a loan through the bank. You’ll likely pay little interest and will have more generous terms in case of default. However, it also depends on knowing people who have that kind of cash lying around.
Grants
While not lavishly funded, programs such as Grants.gov operate small business grants for entrepreneurs.
Investment
Professional investors typically look for potentially large-growth business opportunities. Depending on the nature of your intended company, this could be a good fit for you.
A venture capital firm is unlikely to sink money into a small legal practice or restaurant. These tend to be low-growth relative to the returns that they seek. However, someone looking to launch a new product or web-enabled service, something with high potential scalability, might be a good fit for the private investment model.
Local angel investors, such as those found through AngelList, are more likely to invest in a regionally focused business. While beyond the scope of this article, you can learn more about finding private investors here.
Crowdfunding
Crowdfunding has become an increasingly common source of startup capital for small businesses. This model tends to reward retail style projects (someone looking to create a specific thing that catches the public’s eye). It can also be an excellent way to hone your sales pitch to a general audience.
For more information on financing, the SBA has a comprehensive information sheet on common sources of funding here.
5. Choose a Location
Where you locate may determine some of your legal obligations and paperwork, so it’s best to get that done at this step.
As much as possible you should try and do this with specificity. While you’re not ready to sign a lease just yet, the closer you can come to a specific address the better. Meanwhile, if you’ll be starting this company online, now’s the time to pick up your domain if you haven’t already.
Pay attention to local laws! We cannot overemphasize this. The best location can be killed off by a zoning ordinance that makes your business illegal on that particular street corner. Municipal laws can be petty and confusing, so make absolutely sure your business is street legal.
6. Establish Legal and Tax Structures
If at all possible, at this step you should retain the services of a lawyer and/or accountant. You will absolutely want professional advice. Otherwise, you run the risk of missing details that come back to bite you down the road. We also must note that nothing here constitutes legal advice. This is just a general primer on what you need to know.
Now is when you’ll actually begin forming your business and filling out the necessary paperwork with federal, state and local governments. This can involve (but is not limited to):
Choosing Your Corporate Structure
There are many types of businesses you can form, including LLCs, S-Corporations, partnerships, sole proprietorships and more. Those listed here are the most common corporate forms for a small business. The right one for you will depend on issues like cash flow, number of participants and how you want to structure potential liability. You can read more about this issue here and here.
Register Your Business
How you have to register, and with who, will depend on your specific corporate form. However, if you have formed a corporation of some sort you will have to file articles of incorporation to create this legal structure. For more information on registering your business, see this resource.
Register With State and Federal Tax Agencies
You will need a tax number and may need an employer ID number. The SBA has a guide to finding and filling out your appropriate tax forms here.
Determine Any Licenses and Permits That You Need
Depending on the nature of your business, you may need a license to operate. The SBA has a database of federal and state licensing requirements here.
Be certain to also look up zoning and location-based regulations. You may need additional permits based on where you’ve chosen to operate your business. These are typically a city-level concern.
7. Open Bank Accounts and Sign Leases
Once your business has been properly formed you can begin to act in its name. Now is when you can start actually executing on many of the opportunities you’ve already lined up.
Open bank accounts in your new business’ name. Take out a corporate credit card and, if your bank offers it, work to pre-establish a line of credit. You will find this easier to do now that your company exists and has established funding, although it may not become an option until you have operated for some time.
Go out and actually get the funding you secured earlier, because now you have someplace to put it. You should have already gotten the “yes” by now from someone, but you don’t want to deposit corporate seed money into your personal checking account. This may technically constitute a felony that rhymes with “schmembezzlement,” and is poor form either way.
With the money in hand and a functional checkbook, now is when you sign the necessary leases on real estate.
8. Take Care of Little Details
Once again step back and take stock, because the best ideas can be broken by the smallest details.
Make sure your business has comprehensive insurance for issues ranging from fire to property damage and legal liability. Many business owners overlook that last issue, and it can be a career killer if someone slips and falls or even just decides they don’t like you.
If you will hire employees put a documented process in place for hiring and firing. Have your workers compensation and unemployment insurance paperwork filed and in order.
If you haven’t already, talk to both a lawyer and an accountant. This is especially critical if you will employ people. Even if you don’t formally retain an attorney, buy a few hours of an employment lawyer’s time to make sure you have your bases covered. Figure out how your business will do its accounting and have that system set up and operational, whether you’ll do it yourself or have hired a professional.
9. Start Making Things
Now, at long, exhaustive last, we get to the fun part. It’s time to start actually making things.
You have the money, you have the location. You have all of your paperwork filed and are legally bulletproof. Now begin making your product.
How you do this will, obviously, depend entirely on what you specifically do. A manufacturing company will need to source suppliers for raw materials and the necessary machinery. (Because you took our advice and checked out all the local laws you won’t need to worry about any noise complaints from the neighbors.) A retailer will source vendors and set up an inviting, fun storefront. A consultant will finish making her office look tasteful and professional.
A restaurateur should stock the kitchen, buy appliances and write out a menu.
The details of getting to work depend entirely on your industry and profession. Fortunately, you’ve got a well written business plan for figuring out what those details are. Whatever you do, though, now’s the time to start actually doing it.
10. Scale and Hire
Your business is operational. Now’s the time to think about how to keep the lights on.
Some businesses will require employees from the very beginning. A cafe, for example, is almost impossible to run alone. Those employees are part of your startup costs and will be with you from the very beginning. As your business grows you may have the luxury of hiring more people to take some of the work off your plate.
Now is also the time to begin marketing.
To be fair, this is something you should be considering all along. You should always think about how to get your business’ name out into the community. Don’t let up once the doors open. Look to social media, advertising, foot traffic and local networking to get people in. Talk with other businesses in the area about collaboration efforts.
This is where you get to be creative. This is the fun part of being an entrepreneur. If you’re at step 10 you’ve earned it. So enjoy, because this is your business.
Recently, I had the occasion to observe a group of employees who were working in a toxic work environment. I witnessed the decline of self-esteem in each one of them as they endured month after month of poor leadership and dysfunction in their workplace. I was truly amazed at the change to the countenance of each of these employees as their situation continually grew worse.
If one could have taken a before photo of these employees prior to their being in a toxic environment and then an after photo when they were months into it, the physical manifestations of the negativity they endured would be staggering. Slowly, I observed each of these employees reach their breaking point and one by one resign from the company. Each of them had good paying jobs with fabulous benefits, but the toxicity they dealt with each day was so unbearable that no amount of money would have made it worth the cost to their own self-worth.
They left their jobs without having new jobs lined up because they recognized that the toll the toxic environment was taking had become far too great to stay another day.
Many of you may not be in such an extreme toxic work environment that you are willing to quit your job before having secured a new one, but most will have the occasion to deal with some level of toxicity in the workplace and could benefit from a few tips on how to cope with it when it occurs.
I believe the most important thing is to recognize when working in a toxic environment is that it is NOT a reflection of who you truly are. Often times in a toxic workplace there is an abundance of tearing others down, passive aggressive leadership, destructive gossip, conniving politics, and abundant negativity. When you are surrounded by this daily it can really start to affect your own self-worth. It is imperative that you learn to separate the negativity you are swimming in daily from the reality of who you truly are. I personally think this demoralizing effect is the biggest danger to staying long-term in any toxic environment, and to combat this you will have to find ways to daily remind yourself that you are not a reflection of your current surroundings. Placing positive and uplifting quotes on the wall of your office or cubicle that will help keep your spirits lifted can be very helpful in these circumstances. Also, taking time out each workday to take a short walk by yourself is a great way to detach and allow for positive self-talk to remind yourself of the qualities you possess that make you amazing. Find ways to remind yourself of who you truly are.
Another important coping step is to realize that you cannot control what other people say and do, you can only control your own actions and reactions. The sooner you accept that the better for your own mental well-being. This realization allows you to let go of owning other people’s negative behavior and it empowers you to focus on improving yourself. The more you can focus on improving yourself in a negative environment the better, because when you finally get the opportunity to escape the situation you are in, you will get to take all the personal growth you have made along with you. No doubt that growth will help you to be even more successful as you move forward.
Finally, try to focus on turning your bad situation into a good learning experience. Most often our strongest personal growth comes from living through our most difficult situations. When you are working in a toxic environment, try to pay close attention to the lessons you can take away from the experience. Perhaps you can learn the qualities in a leader that you never want to emulate. Perhaps you can learn the management mistakes that you would not want to repeat if the opportunity for management ever comes your way. In every bad situation there is something you can learn that will help you become a better person, so focus on each lesson you are learning.
As difficult as a toxic work environment may be, never allow yourself to become less than who you are meant to be out of anger or spite for your current employer. Always conduct yourself with integrity and always put in your very best effort toward the job you were hired to do. It is easy to fall into the trap of giving up on the job, but the bottom line is that as long as you are taking a paycheck you have an obligation to give an honest day’s work.
Don’t allow yourself to justify personal bad behavior on the failures that exist your company’s leadership. I realize that at times it feels like the only way is to fight back in a toxic situation, but the reality is that doing so only hurts your own integrity. Know that your reputation will continue far beyond the company you are with today, and nothing is worth trading your integrity over.
Do your absolute best every day at your job and the word will get out to other companies of your incredible character and work ethic. People talk far more in the business world than you may realize, and the word of your positive or negative behavior will spread farther and wider than you may think, so never do anything that you need to be ashamed of.
Continue to search diligently for a better work environment to switch to, and be sure to let others know that you are interested in new opportunities for work. Then give your very best at work up to the very day when you can joyfully hand in your resignation letter and move on to bigger, better, and happier things.
~Amy Rees Anderson I share my insights as an entrepreneur turned mentor & angel investor (twitter: @amyreesanderson)
Sid Sijbrandij knows a thing or two about building, scaling and even walking away from companies. His current venture is doing over $100 million in revenue and is valued at over $1 billion.
Originally from the Netherlands, Sid Sijbrandiij is now the founder of one of Silicon Valley’s unicorns that is powering the web through developers worldwide. It’s not his first startup rodeo either.
Sid Sijbrandij recently appeared on the DealMakers podcast. During the exclusive interview, he shared his entrepreneurial journey, the process of finding cofounders, bootstrapping versus raising millions, his addiction to fast-growth startups, and many more topics.
Seizing Opportunities
Sid Sijbrandi seems to have always had a gift for spotting business opportunities.
During high school, he studied applied physics and management science. He chose a kind of program that blends the benefits of an M.B.A., with getting good at several engineering disciplines.
In his first year at college, he also started his first company.
The idea came from a fellow Ph.D. student that had made an infrared receiver you could use to skip to the next song on your computer (the only thing that played an MP3 song at the time). He started buying these infrared receivers from him and selling them in the U.S. You’d send him an envelope of dollar bills, and he would then send you a printed circuit board.
Ultimately, his two cofounders didn’t agree on growth plans concerning hiring more people. Sid wanted to hire faster, so he didn’t have to spend as much time on it, while his cofounders wanted to optimize for free cash flow. They ended up parting ways amicably.
The Two Most important Things for Launching with Cofounders
Sid has experienced several startups and says his two big takeaways when it comes to cofounding a company are:
1) To be smart with the shares
2) To be sure you and your cofounders are aligned in vision
For example, automatically making everyone an equal cofounder, even if they come in way later in that process, can be a mistake.
Sid says it is important that shares “are aligned with their contribution to the company. It’s very important if you start a company to have vesting of your shares as well.”
This helps avoid the free rides, because if someone leaves with all the equity, then people that need to invest like VCs are going to be like, “Why am I investing for just 50% remaining of the business.”
In the Netherlands, Sid didn’t find the goal of local companies to grow really fast. If you do want to grow a company really fast, he says it is beneficial to be somewhere like the Bay Area, where everyone just assumes that is the goal.
Not just your cofounder, but also your accounts person and your lawyer, and everybody else requires the growth mindset.
Passion for Growth
After graduation, Sid spent a few months at IBM and could have stayed there. He had an interest in strategy consulting, as well as building a recreational submarine.
He made a balanced scorecard of all the different ways to make that decision. One of the criteria being, “Is this a good story to tell in a bar?” He showed his dad who said it was a ridiculous way to decide on your career but was very supportive either way.
So, he called someone interested in a submarine venture. His pitch was, “Look, you should really hire me because I have a job offer from IBM. Otherwise, I’ll start working there, and we both don’t want that.” He got the job.
He built the first onboard computer for the submarine. Today, U-Boat Worx is one of the biggest builders of recreational submarines. If you go on a cruise, and they have a submarine, it’s likely from U-Boat Worx.
Still, after five years, it just wasn’t growing at a pace that kept Sid interested. He then went on to do a part-time stint on an innovation project with the government as a civil servant.
During this time, he really got to know himself, and how fast-growing companies with a continuous string of problems to be solved were what kept him interested.
Funding Your Startup
After starting and selling app store Appappeal, Sid turned open-source software GitLab into a fast-growing venture that is on its way to an IPO in 2020.
He took the proceeds from his previous venture, doubled it in bitcoin, and began bootstrapping GitLab.com.
Sid got the first few hundred signups through an article posted on Hacker News. Then together with his cofounder applied and got into Y Combinator. The race to demo day, where they would present in front of top tier investors, was on.
Compressing their three-month plan into just two weeks, the GitLab team had a highly successful demo day, landing Ashton Kutcher as an investor.
There was so much interest in their seed round, they rolled right into the Series A financing round. They’ve since followed that up with a B, C and D financing rounds, raising a total of $158 million at $1.1 billion valuation.
Today, some of their investors include Khosla Ventures, Google Ventures, August Capital, ICONIQ Capital, 500 Startups, and Sound Ventures to name a few. It doesn’t get much better than that as a hyper-growth startup.
In order to do this, Sid and his team had to master storytelling. This is being able to capture the essence of the business in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Embracing The Remote Work
Sid states they “don’t do in person.“ At Gitlab they encourage having meetings with webcam. They believe there’s something to see in the other person even if it is via video.
To put this into perspective, every day, employees have a company call, and it’s a thing you do with a limited set of people. In this regard, there are about 20 in each group, and they just hangout.
During the group calls there are all types of topics discussed that vary from movies to magazines. Topics are not necessarily work-related.
Sid and his team very much believe that their company is more than just, “Hey your work…”
As part of Gitlab‘s culture, the social interaction plays a key role and they have a lot of ways in which they facilitate this inside the company. Even if this happens remotely.
M&A Made Simple
Recently Sid and GitLab have been very active when it comes to acquisitions on the buy-side. That includes Gitorious in 2015, Gitter in 2017 and Gemnasium in 2018.
When it comes to acquiring companies, they’ve made the process incredibly simple, and are actively looking for more companies to buy.
In this regard, they like to acquire teams that have built a product before. Preferably a team that made a great product, but didn’t get distribution. Especially because typically they shut their existing product down.
To make things easier, they have an acquisition offer page. It even includes a calculator, so you can go online and calculate how much they’re offering.
Listen in to the full podcast episode to find out more, including:
When to pull the plug on your startup
The advantages of SAFE notes for raising money
How GitLab does meetings and culture around the globe
I am a serial entrepreneur and the author of the The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley
Not yet as rich as you always wanted to be? Don’t worry, because today we’re going to dial you in for some “rich guy” dividend favorites that’ll pay you up to 9.9% every year.
Private equity is a lucrative and secretive world. It’s often limited to accredited investors, which means these funds require you to have $200,000 or more in annual income to qualify.
If you’re living on dividends alone, this might be challenging. Fortunately, there are some private equity plays that you can buy just like individual stocks. They trade for as cheap as $12 per share and they’ll pay you dividends from 8.8% to 9.9% along the way:
Contrarian Outlook
Private equity (PE)—funds that can invest in the equity and debt of privately held companies, which we typically can’t get our hands on—is generally touted as outperforming the stock market.
The American Investment Council, which advocates for private investment, points out that research from the 1990s and early 2000s showed that “private equity outperformed public markets by 3 to 4 percent each year,” and a 2019 paper investigating more recent “vintage years” finds that “that private equity continues to generate returns that are 2 to 3 percent above the returns of public markets.”
The downside? Privately held private equity firms aren’t exactly easy to tap, and you typically need to have seven digits to get in.
But here’s a back door that you and I can access. We can buy PE-esque investments just like regular stocks with a single-click! The trick is handful of little-known publicly traded companies called business development companies (BDCs).
Congress created BDCs in the 1980s to spur investment in America’s small and midsize businesses, the same way they created REITs in the ‘60s to help mom ‘n’ pop investors tap the real estate markets. And like REITs, BDCs get a generous tax break—if they dole out 90% or more of their profits as dividends to you and me.
Thus, business development companies not only let us access a big pool of investments you and I otherwise couldn’t otherwise dream of accessing, but also deliver sky-high yields that are among the highest you can find in the stock market. The caveat, of course, is that they do come with heightened risk, and not all BDCs are gems.
Today, I’ll show you three notable BDCs—yielding between 8.8% and 9.9%—that should be on your radar screen.
PennantPark Floating Rate Capital (PFLT)
Dividend Yield: 9.7%
Let’s start out with a yield juggernaut: PennantPark Floating Rate Capital (PFLT), which will get investors awfully close to a double-digit yield at current prices.
PennantPark provides access to middle market direct lending with, as the name implies, a heavy focus on floating-rate loans, though it’ll invest anywhere across the capital structure (senior secured debt, subordinated debt and others).
Its primary target is private equity sponsor-backed companies with $10 million to $50 million in EBITDA. It avoids capex-heavy businesses, as well as fickle industries such as fashion and restaurants, but it still has plenty of sectors to play with. Portfolio companies include the like of primary-clinic operator Cano Health, marketing services provider InfoGroup, and WalkerEdison, whose furniture can be found online via companies such as Amazon.com (AMZN), Target (TGT) and Home Depot (HD).
PennantPark typically leans toward the low-risk but low-reward end of the BDC spectrum, which historically has served it just fine. However, the BDC’s last earnings report raised some credit-quality concerns. The company reported that four of its portfolio companies were on “non-accrual,” which essentially happens when a payment is more than a month overdue, or there’s some other concern about a company’s ability to make a payment.
The BDC was subsequently nailed in May on the news. That has me wary. And the floating-rate nature of its loans, while attractive during periods of rising rates, isn’t a significant advantage right now.
New Mountain Finance
Dividend Yield: 9.9%
New Mountain Finance (NMFC) targets companies middle-market companies, too, investing between $10 million to $50 million across the debt spectrum in businesses that generate annual EBITDA between $10 million and $200 million.
NMFC likes to say that it invests in “defensive growth” industries. It’s a silly, contradictory term, sure. But the qualities it covets in its portfolio companies are, in fact, pretty attractive: high barriers to competitive entry, recurring revenue, strong free cash flow and niche market dominance.
To be fair, New Mountain, like PennantPark, is heavily weighted toward floating-rate loans, which make up 93% of the portfolio. But NMFC is a few steps in the right direction. Its credit quality is stellar – only eight portfolio companies have gone on non-accrual since inception in 2008, and there were no new non-accruals over this past quarter. Better still, the company is a bastion of consistency when it comes to covering its healthy dividend with net interest income (a core measure of profitability for BDCs).
New Mountain, which trades at only a sliver of a premium to its net asset value right now, still should be fine in the current environment. Keep this BDC in mind should the Fed’s hawks ever take over again.
Ares Capital (ARCC)
Dividend Yield: 8.8%
Ares Capital (ARCC) is a slightly more modest yielder compared to the previous two picks, and you likely won’t snag it for a significant discount. But that’s OK—ARCC is worth a small premium.
I’ve beat the drum on ARCC a few times, including in February 2019, but also going back more than two years, in January 2017. I said at the time that the company’s investment spread, as well as a $3.4 billion merger with American Capital, “should benefit ARCC in just about any market environment,” and that “in short, ARCC is going places.”
Ares Capital, Wall Street’s largest BDC, invests primarily in first and second lien loans and mezzanine debt of middle-market companies. A high priority is placed on “market-leading companies with identifiable growth prospects that can generate significant cash flow.” Its portfolio of roughly 345 companies touches numerous sectors, including business services, food and beverage, healthcare, IT and light manufacturing.
Ares’ core earnings and net realized gains have exceeded dividends every year since 2011, by increasingly wide margins. In fact, the company’s operational performance has been so robust that it has hiked its payout twice since this time last year.
Bottom line: ARCC is a standout in what typically is a difficult industry to invest in.
However, I’m not sure I’d commit capital to this stock right now. Given its recent run up, I’d like to see a pullback for a lower risk entry point.
I graduated from Cornell University and soon thereafter left Corporate America permanently at age 26 to co-found two successful SaaS (Software as a Service) companies.
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