Wednesday, September 21st, 2011
This is a good case-study (or maybe just a story) of what it’s like to set up accounting and other things for a fictious startup business. As you can see there are lots of complications involved and things don’t always go so easily. In any case I found it a pretty entertaining read.
When we were last with Dick and Jane on Finance Fridays, our fearless entrepreneurs were figuring out how to split up their founders equity and account for an investment from Jane. While they’ve been hard at work on their product, they’ve also incorporated the company, now named SayAhh (thanks Mac!) as a C-Corp in Delaware. They’ve done a bunch of other mundane things, such as establishing a business checking account and depositing Jane’s $50k in seed capital, but like all good early stage entrepreneurs, they’ve spent most of their time obsessing about their product, talking to a few potential early customers about what they needed, and coding away on their MVP.
Dick and Jane had limited formal business accounting experience, but they both knew how to balance a checkbook. They reached out to their friend John, a CFO at a late-stage VC-backed company in Boston that was about to file an S-1 to go public. John took an hour out of his day to do a conference call with Dick and gave them advice on how to set up their accounting system. His advice included the following,
John also mentioned a bunch of other stuff that Dick didn’t write down because they weren’t really sure what it meant, but it included phrases like 409a and VSOE. Feeling overwhelmed, Dick emailed his friend Josh, the CEO of an early-stage startup in Boulder, to see how they figured out all of this stuff. He summarized Dick’s advice and Josh replied: “That’s great advice and you should do all of that stuff – eventually. But, for now, focus on the following:”
Dick and Jane followed Josh’s advice. It required a small investment of time and money to get QuickBooks up and running, but it was a manageable distraction from building SayAhh’s core product.
To be successful, you need to know about a wide range of issues affecting your business. However, you do not have to become an expert on each and the degree to which you need to understand various issues evolves along with your business. It is easy to get caught up in all the administrivia of of forming a company, building a business plan, and developing financial forecasts that you fail to spend time building your product.
How do you know what matters most when? This is where developing a network of trusted and qualified mentors comes in handy. While John was trying to be helpful, his advice missed the mark because he didn’t have a lot of experience at the early stages. In contrast, Josh was an experienced entrepreneur who had started several companies and likely learned his lessons through experience. As you build your business, surround yourself with as many Josh’s as you can. And, as you grow, make sure you find mentors like John to help you at at the appropriate stages.
As Josh suggested, when you first start your business you should focus on building systems and processes that allow you to accurately capture as much data as possible from the start. QuickBooks and other accounting software programs will do this for your finances, but you should also implement tools for tracking other key metrics (e.g. customer behavior, support inquiries, marketing analytics). You can and will become increasingly sophisticated in analyzing and interpreting that data over time, but you cannot analyze it if you do not have it.
Additionally, at all points in the development of your startup – including on Day 1 – you should focus intently on forecasting your cash flows as accurately as you possibly can. Running out of cash will either kill your company or force you into a very painful financing round. Know exactly when you run out of money, well before the time you hit a wall and go splat.
See the Original Story here
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Wednesday, September 7th, 2011
This company Tango is going to move all their stuff to the cloud. As you can see Could Computing is comming to accounting systems soon. There are lot of implications considering that you’re using financial data. Some people think the cloud isn’t the best place in the world to going storing company sensitive information. We shall see, but for now Tango2 looks to make the move!
Intacct, a leader in cloud financial management and accounting software, today announced that Tango2, a growing healthcare IT consulting firm, is moving its financial applications to the cloud by replacing Microsoft Accounting Pro with Intacct. Tango2, with a national practice that has doubled in size each of the past four years, needed a more robust financial management and accounting platform to accommodate its growth. The move to Intacct’s cloud computing-based system will provide Tango2 with easier access to granular financial and operational data, while enabling the firm’s remote consultants to input and access info from anywhere.
Tango2 provides comprehensive and reliable consulting services to healthcare organizations located throughout the United States. Through its customized approach and collaborative attitude, the firm helps healthcare organizations develop cost-effective operational solutions that support the delivery of quality patient care. This approach led to rapid and consistent growth, and Tango2 quickly outstripped the capabilities of its previous financial applications.
See the Original Story here
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Tuesday, August 2nd, 2011
The Lowest Price we could find is $16.99 $9.62
If you’re interested in real estate investing, you may have noticed notice the lack of coverage it gets in mainstream financial media, while stocks, bonds, and mutual funds are consistently touted as the safest and most profitable ways to invest. According to real estate guru Ken McElroy, that’s because financial publications, tv and radio programs make the bulk of their money from advertising paid for by the very companies who provide such mainstream financial services. On the other hand, real estate investment is something you can do on your own–without a large amount of money up front! Picking up where left off in the bestselling The ABC’s of Real Estate Investing, McElroy reveals the next essential lessons and information that no serious investor can afford to miss. Building on the foundation of real estate investment 101, McElroy tells readers:
- How to think–and operate–like a real estate mogul
- “The Top Ten Real Estate Markets to Watch”
- How to identify and close expert deals
- Why multifamily housing is the best real estate investment out there
- How to surround yourself with a team that will help maximize your money
- How to avoid paying thousands in taxes by structuring property sales wisely
- Important projections about the future of real estate investment
- And more.
Review:
The book of the week was The Advanced Guide to Real Estate Investing by Ken McElroy. I think I may have a slight obsession toward real estate books because no matter how many times I read them, I never get bored and I always pick up another tip or remind myself of one I may have forgotten. And… McElroy is one of my favorite authors on the subject. He gives it to the readers straight and concise. I appreciate a person that doesn’t need to add a lot of fluff to their writings.
This week’s book was, like last week’s post, a sequel book. The first book the correlates to this book is The ABC’s to Real Estate Investing. I reviewed it last July… let’s look at the bulk of that post before we get started on this one:
“I know that after reading this book I could make six figures in the business of real estate investing in 5 years or less. The first step is exactly that: Making a goal for yourself. Tell yourself that you want to make more than $100,000 annually in 5 years in multi-unit real estate investing. The goal you set for yourself has to measurable- “over $100,000″, Time based- “5 years”, and specific- “multi-unit real estate investing.”
And now that you have your goal, it is time to hit the ground running. You will need to find a team because great things are seldom done alone. You will want a lawyer, accountant, engineer, etc. People that you can turn to and ask questions when they arise during your research. Another great thing about having a team to help you with your real estate dreams is you have people to keep you accountable. If you have ever worked out.. weight-lifting, running, or biking. You know it is so much easier to succeed when you have a partner to help you through.
You will then have to go out and find your ideal real estate. McElroy line-items just about everything you will need to look for when you are researching. This can be a fun time. Once you find the right property for you, this book will tell you how to find the “right” asking price. In the book there are detailed guides to writing your letter of intent to your buyer and how to go through the final process of acquiring your property.
After you have your property you will need to decide if you are going to be the property manager- the person that handles the landlord duties- or are you going to outsource that job to property management company. I recommend outsourcing for any property over 8 units. Let someone else handle the rent checks, leaks, broken appliances, flooding, evictions, background checks, criminal checks and the list goes on. Outsourcing this job will allow you to work on researching other properties or continuing career goals. Property management companies will charge between 8% and 14% depending on the number of units and the company. However, remember that like all things, you get what you pay for.
As you venture into this new world of Real Estate Investing you may start small with a duplex or a small apartment complex. If you follow the guidelines laid out in this book you will have a steady cash flow to reinvest in new larger properties. The goal that I previously outlined in this review is not far-fetched. If you are motivated, put the excuses aside, believe in yourself, and really go for it you can reach this goal. In the current economy you have a goldmine of opportunity. Go do some research and put yourself out there. Interest rates are low and everybody is selling. It’s a buyer’s market, so take advantage!”
You can see how much the original book got me psyched up. This one got me pretty excited too. I know that when I start to lose a little bit of fire, I can read a Rich Dad series book and get myself refocused and back on track mentally. And trust me, it’s needed sometimes. When you start to think big and do big things, you will have everyone tell you that you shouldn’t try and you need people around you to encourage you… even if some of those people are authors with words inside a book.
In the Advanced Guide, McElroy is thinking even bigger. He writes about multi-family investing on a very large scale. The buildings talked about in this book range from 100-400 units. That is very large, especially if you haven’t done any real estate investing yet. However, I think that large apartment complexes are the right way to go after you get your feet wet. When you have large apartment complexes you will most likely purchase the place with an on-site management company. This is a huge perk because it allows very close management of the property. If you have a ton of duplexes you don’t have the luxury of on-site management, meaning bad tenants (heaven forbid you end up with very many) can get away with more bad things.
Additionally, the purchasing power you can muster when you buy a large apartment complex can be staggering. Investors are more likely to invest one big lump sum instead of the same amount invested over 50 different duplexes at different times. Besides the amount of time you would be consuming to get 50 different meeting times with managers to show them due diligence on each property. You would have to somehow find the time to do due diligence on 50 difference duplexes. It just makes more sense in terms of efficiency to consolidate your efforts into one sure-fire investment.
I do think that if you are planning to do a big project like the ones outlined in this book that you need to first start small. This is what I call getting your feet wet. Go ahead and save a sizable amount of money for a down-payment. Depending on where you live anywhere from $5-15k will work. Then find some nice duplexes or fourplexes, do your due diligence on each property and work with your team to determine whether it is a good investment and then go for it. The most difficult thing for people during all of this is taking the “risk.” Well, if all the numbers work out and your team feels good about it. The “risk” is probably much more minimal than you think. I encourage you all to get your feet wet and go for it… You will be taking one big step toward financial freedom and the ability to live the lifestyle you desire.
I think this book was a great sequel and I encourage you to pick it up and give it a read if you have the courage to give it a try. Again, McElroy is a great author and I have loved every book I have read by him and I think you will feel the same. As always, if you have any questions on the book don’t hesitate to ask. I would be more than happy to help anyone that wants it.
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