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News from Dallas

It’s an exciting and busy time at Bill.com. On the heels of last week’s successful Office 2.0 Conference in San Francisco, we are in Dallas this week at the 2008 QuickBooks Enterprise Solutions User Conference.

Today, Bill.com announced our enhanced QuickBooks and QuickBooks Online Edition (QBOE) integration for small businesses and accountants -- the combination of our Web-based, on-demand accounts payable software with the nation's best-selling small business desktop accounting software creates a simple and affordable, enterprise-class solution for managing accounts payable and enhanced business bill pay.

From the beginning, we knew that integration with QuickBooks was essential and of great value for Bill.com customers. Our enhanced QB integration is a result of customer feedback and focus groups. There is no other system that pulls together a Web-based payables, document management and bill payment solution with a desktop version of QB. Check out the news release on Bill.com's Enhanced QuickBooks and QBOE Integration here.

Bill.com makes Waves at Office 2.0

Come join us at the Office 2.0 Conference happening this week in San Francisco. Bill.com’s very own vice president of marketing, Jeff Schultz, will take part in two Office 2.0 Conference panels titled,  “Money 2.0” and “Going 100% SaaS.”

The conference starts today (9/3) and continues through Friday (9/5) over at the St. Regis Hotel, south of Market in San Francisco. Office 2.0 gathers together technology visionaries, thought leaders and customers who use innovative online services and helps them collaborate on the future of online productivity. The theme this year is Enterprise Adoption. 

Jeff’s first panel, “Money 2.0”, is scheduled for Thursday, September 4, 2008, 2:15 PM to 3:00 PM. Here’s the conference agenda description:

While consumer applications are making the headlines for most Web 2.0 related news, business applications are receiving their fair share of innovation as well. Among them, accounting for individuals and small businesses has seen a flurry of activity over the past 12 months. This panel will show us how bookkeeping can be fun. 

Over the past year, Bill.com's innovation in the area of accounts payables has put the company on the forefront of changing the way businesses and accountants manage payables by leveraging features only available in a SaaS model. The features include collaborative multi-user workflow, exceptionally fast time-to-implementation, low cost, and massive efficiencies of scale that allow us to deliver services to small businesses that used to only be available to the largest enterprises. We really believe that bookkeeping in this model is not only fun, but also the best, most efficient way to do business today.

The second panel, “Going 100% SaaS,” takes place Friday, September 5, from 9:30 AM to 10:15 AM. Here’s the conference agenda’s description of the content:

More and more companies are adopting Software as a Service solutions for all their IT needs. This panel will attempt to explain the logic of such an approach, discuss the barriers to mass-market adoption and will outline the benefits and lessons learned by some early adopters.

While CRM, marketing, and conferencing/ collaboration applications have been the first to take off as SaaS solutions, we believe that financial services are the next big opportunity. Cash management and bill payment are critically important to business success and now require a greater collaborative effort between different departments and between people who are often in different geographies. However, invoice approvals and payment today are still handled in many organizations via paper-based manual processes. It’s hard to believe that a premier organization would handle customer issues by writing on paper, creating duplicates, sending (or walking) paper around the company so people can write comments before sending them back, and filing copies in a filing cabinet for future reference, yet this is what is happening in many businesses when it comes to managing invoices. Online bill payment has taken off in the consumer world and we see enhanced online bill payment and collaborative A/P taking off with businesses.

At the same time, we are big believers in the SaaS model and could never have launched our company without it. Bill.com is almost 100% SaaS internally and has been able to implement many processes that used to be reserved for later-stage companies in the areas of collaboration, accounting, CRM, and marketing. Not to mention A/P!

The St. Regis Hotel is located at 125 Third Street in San Francisco. Make sure you stop and say hello to Jeff.

 

Managing Your Cash Flow—The Lifeblood of Every Business

Managing cash flow is both a science and an art. Making sure you have enough cash in the bank while making decisions on what bills to pay, and what to do with your company’s cash, is a critical element of business operation, whether you are cash rich or cash poor.

As I was growing up, I learned from my parents' and grandparents’ businesses that cash is king. Stretching your payables and pulling in your receivables is the most important thing a business can do. There is an art to doing all that and my parents and grandparents had the gift.

When you pay your personal bills, you have to have to ask yourself several questions to make sound payment decisions—for example, do I have enough money to pay this credit card and when do I want to pay it? It’s a defined skill that entails determining what you are going to pay, in what order and when. The skills are similar when you are running a business.

The critical issues of cash flow boil down to two concepts: visibility and control. Visibility means that you know what money is coming in and what’s going out and just where you stand financially. Visibility is also giving you the access to the information you need to support your payment decisions. Control is having the power over what you are going to do with your cash at any given time. This control requires having the right tools in place so you can have the visibility and the knowledge to make informed decisions.

In many cases, when you run a business, what you pay is based on the relationships you have. The whole basis for starting Bill.com was that the complexity of the decisions surrounding cash flow and accounts payable is more than just looking at the due date and an amount, it’s looking at the whole relationship. You always pay rent and utilities first - you have to keep the lights on, but after that there is a lot of discretion that you use every day when managing your cash. It means considering what the contract says, when was the last time you paid a vendor, whether they cashed the check, what was the work they did and was it something you feel great about.

Some business owners and accountants just sit down and pay all payables based on due date, but they’re not maximizing their cash flow because they’re not taking advantage of the terms they have. If you can create a schedule and pick the dates when you make payments , you can make your money work better for you.

Many successful businesses manage cash flow using an artistic approach, knowing intuitively whom they can pay when. The intuition involves a good amount of data analysis that is not put into a systemic process. As a result it can be risky. Much of Bill.com is taking the art of cash management intuition and translating it into a process that provides tools for customers to become more methodical about cash flow. For those that have the intuition, it makes their life easier and for those that are just learning, they have the experience and intuition at their finger tips. The cash in your bank account is your working capital, so if you can stretch out your vendors an extra two weeks, you’ve just gotten yourself enough capital to hire two more people, ten more people, a hundred more people.

Managing cash flow has different implications for different sized companies; a larger-sized company would have a treasury department that uses different processes to maximize cash. On the other hand, a small business owner has a different approach and might be trying to tie the inflows and the outflows better to keep afloat.

Cash flow management plays out differently based on the economy—during a recession you have less cash on hand to meet your accounts payable obligations. It’s important to be prepared for when receivables start turning more slowly, that you have enough cash to cover what you are going to do. Make sure you have an equity line on hand to help you if you need it to do the things you want or need to do. By using tools, like Bill.com, you can manage your cash flow through the good times to weather the bad times, combining both the art and science in business.

Here are some additional links for tips on managing cash flow:

Business Owner's Toolkit: Managing your cash flow

Entrepreneur.com

Inc.com: The Art of Cash Management

Small Business Accountants Make it Work

We have big news at Bill.com. For the past few weeks, we have been incredibly busy working on the launch of a strategic alliance between CPA2Biz, a subsidiary of the American Institute of Certified Public Accountants (AICPA), and Bill.com. Through this new agreement, CPA2Biz becomes the exclusive provider of Bill.com to accountants and their clients. This is really exciting for me for a lot of reasons. The most important are 1) my belief that accountants are the most important trusted advisor for most businesses; 2) accountants benefit greatly from our service; and, 3) accounting and accountancy is in my DNA.

Here’s the DNA part: the night I was born, my mother was sorting punch cards for payroll/general ledger job for one of my folks’ biggest accountant customers. My dad and grandfather had started a data processing business in the early 60’s focused on serving accountants. They knew I was due any day and they couldn’t afford to have any errors on this job. So picture my mom, 9 months pregnant, carrying 50 lbs. of punch cards from machine to machine. Two hours later she was in labor and I was born. Combine that with the fact that both grandmothers and one great-grandfather were accountants. As you can see, accounting is in my blood, it is part of my DNA. No wonder that my first job out of college was at PriceWaterhouse, and then I worked at Intuit for a few years.

CPA2Biz provides marketing and technology services to the AICPA for its wide array of products and services. CPA2Biz also develops and manages client-focused business solutions (like payroll and banking) that enable CPAs to build stronger relationships with their business clients or employers.

I sought out CPA2Biz as a strategic partner because we both have the same mission with respect to accountants: we want to make the accountants life simpler and more efficient for basic accounting services like Accounts Payable and Accounts Receivable. We also wanted more profitable opportunities for CPAs, accountants, bookkeepers and their business clients. Bill.com offers an easy way for the two groups—small businesses and financial professionals—to work together cohesively.

For most businesses, an accountant is most important advisor the business will hire. We’ve talked about some of the other professionals who are key to a small business infrastructure . Accountants offer more than basic bookkeeping and day-to-day financial management. They prepare tax returns, offer tax advice, and help manage a consistent cash flow through budgeting and forecasting. All of this insight puts accountants in a unique position; they see more about the business than anyone else. Not just the numbers either. This is why I took my first job in accounting. The recruiting partner, Dave Sweet, said something that just made sense. He said that “accounting is the language of business and if you want to run a business you need to understand the language.” I really believe this, so make sure when you hire your accountant that you hire someone that can really advise you.

For more on the role of the accountant, click here.

So, now that we’ve established the importance of having an accountant, how do you find one? And, once you do, how do you know you’re hiring the best one for you?

Not too long ago, I advised finding a bookkeeper here. Here is a similar resource that lists and helps you find 35,000 accountants across the U.S.

In terms of finding the best accountant for you and your business, here’s an excellent article with a list of 50 questions to ask a prospective accountant.

Finally, I think it’s essential when talking about hiring an accountant, someone who will be intimately involved in the financial details of your business, to discuss the reality of fraud. There have been many horror stories about the accountant running off to the Caymans with all the money from a business—and it doesn’t only happen to Hollywood stars.

There are many ways to mitigate fraud when working with an accountant:

1. References are imperative. Use your network to find candidates, but also check as many references as you can during the interview process.
2. Keep accurate records and don’t give anyone access to your bank account until you trust them.
3. Set up procedures and processes that offer a variety of controls and separation of duties. For example, have different people handle the money that you receive and the money you pay out.

Here are more safeguards from embezzlement.

I believe that having your accountant working with you and your business using Bill.com will make your processes more efficient while providing much stronger controls and significantly less exposure to fraud.

Bill.com provides a simple way to both manage your finances and leverage your accountant—at the lowest cost with the highest impact. With Bill.com, you and your accountant will have 24/7 access to all your financial information. That means better collaboration internally and externally, better productivity and increased financial visibility. Accountants that have learned about our service have commented the following:

"Anything that makes us more efficient makes it more efficient for our clients."
“It is easier for our clients to find things.”
“It helps the client to organize.”
“It gives them procedures and process that bigger companies have.”

I think that is enough of a commercial for now but please check out www.bill.com to learn more.

I am passionate about simplifying business finances for businesses and their accountants. It’s in my blood and I have experienced the power of the accountant relationship on both sides. Good luck finding your trusted advisor and in making them more valuable.

Setting up a Small Business Infrastructure

Part III:  Tools, Benefits and Policies

Other key decisions in setting up your business infrastructure include incorporating the tools that will manage day-to-day operations and deciding what the company benefits and policies are.

Line up your tools.
Leverage technology whenever you can.  I know from experience that the Web is the best way to do business. It is the driving force of my current and former businesses and has driven many of my business decisions. All of my advisers need to connect to the Web. Most of our tools—from our phones to our financial information—are accessed online. We use Quickbooks on line, as well as, of course, bill.com and PayCycle.  For me, the web allows me to work from anywhere.  This is one of the key advantages of starting and running my own business.  As they say, “the noose is looser and the leash is longer.”  As a result of Web tools, I am able to run a 25 person business with limited infrastructure, (one day a week of outside accounting/bookkeeping help) and one day a month of IT.

For our phone system, we use Voice over Internet Protocol (or Voice Over IP). I choose VOIP for a couple of reasons but mostly because it is simpler to set up and cheaper than working with the phone company.   One Internet connection can get you as many lines as you need.  I had a hard time investing in phone lines for all employees since we will most likely move and most employees don’t use a phone to get their job done. 

Determine your Policies.
In terms of other company policies, it’s best to have a framework or, better yet, a written policy before things come up.  Figuring out policies on the fly is awkward for you and your employees.  I know this from experience.  So take a little time to decide what you want to do about maternity leave or vacation time. You and your employees will be glad to know what the policy is. 

One thing we didn’t discuss in the post about hiring employees was compensation. Something I would encourage anyone to do is to offer stock. I think it’s really important to provide stock to all employees, so that everyone is an owner. We spend most of our lives at work and all of us want to belong.  Giving stock to employees is one way of telling them that they belong.  You of course get the added benefit of employees knowing that they are an integral part of the growth and success of the company.

Another policy to mull over before making a decision is whether you want to offer the more traditional vacation time and sick leave versus an overall Paid Time Off (PTO). PTO is like having a bank account of time for your employees to draw from for vacation time, as well as sick leave, a mental health day, or an emergency. (Find more info on this topic here.) After experiencing traditional vacation policies for the last 20 years, I switched Bill.com to PTO.  The main reason is that I wanted to give the same benefit to all employees.  My experience shows that some employees never get sick while others use all of their sick time immediately.  It just wasn’t fair to the folks that didn’t get sick.  With a PTO policy, all time off is the same.  If you are not sick you get more time for vacation.  This seems like a better message to send to employees. 

At Paycycle, our health insurance covered the employee but not the dependent. As the company grew, I saw how much people were paying for their dependents.  I wanted to do more for employees but wanted to be fair to employees without dependents.  When I started bill.com, I made a decision to go with  a Health Savings Account (HSA) High Deductible  Insurance plan. The key to the HSA is that once you offer and contribute to the HSA, the employer is required to use a high deductible health insurance plan.   The HSA is an employee account that employees and employers  can invest money into to save for future medical expenses,.  Most contributions and all earnings are tax free. Employees then use the funds in the HSA to cover medical expenses not covered by the deductible of the health insurance plan. The funds contributed by the employee and employer are vested immediately and are available to the employees to use today or in the future. I made a decision at bill.com to contribute all of the savings from the higher decutible health insurance premiums and then some more to the employee accounts. Ultimately, I increased the contributions so that I felt that employees' dependents were getting some coverage.  The HSA allows me to contribute equally to those without dependents to use at some future date. If you are interesting in learning more please check out this site. Also, here’s an easy-to-understand brochure on HSAs from the Department of the Treasury.

That's the end of the series on small business infrastructure. Next we tackle customer service.

Setting Up a Small Business Infrastructure

Part II

The next two components to setting up the nuts and bolts of your business involve people and processes.

It’s important to line up your advisor relationships. Think of your key relationships as a group of advisors, whether that’s an official board or some of the people you work with on a daily basis.

Assemble a board.
You may not have one, but I highly recommend it. I found that one of the most important things in building both companies was having a board of directors. When establishing and growing a company, it's helpful to have people you respect and whose opinions you respect giving advice about business issues. But the most important thing I have found is that a board is critical for my accountability. Having a board of directors forces me to prioritize and have discussions I wouldn’t otherwise have. In short, it sets aside time for me to get out of the weeds and think more strategically about building my business.

Pick an odd number total of people for the board. (If you ever have a vote, you need an odd number.) Three is a good place to start. Hold regular recurring meetings to get the most benefit. Also, use the board for your network effect (See the post on The Network.) Because they’re tied into a wider network and can help with hiring and any kind of support you might need. BTW, never ever surprise your board. Board members understand that things happen but what they don’t want is to find out at the last minute. So when bad news is coming, involve them and get their help in finding the solution. You’ll get to a better solution and it is way less stressful for all involved.

Make friends with the landlord.
It’s very important to build a relationship with this person. I think of my father and his businesses: every time he needs more space, he calls the landlord and they work on it together. This has been true for me as well. Consider your landlord as part of your advisor circle. As you grow, you will rely on him or her to help with the physical aspects of the business.

Hire an attorney.
This depends on the type of business you are running. Does your company have special needs, like a product that requires patents and/or trademarks? Or, you may just need to have an attorney guide you through the process of becoming incorporated, or whatever your business structure is. I have always been fortunate to work with great attorneys that not only protect the legal interest of the business but also can provide valuable insight into growing the business. Think about it, a good attorney touches hundreds of businesses in his/her career and all that experience can be at your fingertips.

Work closely with an insurance agent.
Find an insurance agent to help you set up the company benefits. Once you have found that person, work together to set up your plans. Keep in mind that the decisions you make about benefits have long-term repercussions. For example, if you want complete health coverage for yourself and your family, when you have one employee will you offer the same to them? When you have 10 employees, will you offer it to them? If your company is only going to be five to 10 employees, which is the size of the majority of small businesses out there, you might not be as concerned about paying vastly different amounts (based on the family and ages of the insured) for the same benefits across all employees. But if you plan on growing bigger, then you might be concerned, for example, that those employees with families may have to pay significantly more. If so, you may then have to compromise on a plan that works for everyone. (I’ll talk more about health insurance plans in Part III of this series.) ehealthinsurance.com is an excellent resource.

Hire a bookkeeper and an IT guy.
I would argue that the two most critical pieces of your business operations are keeping your finances and your technical operations running smoothly. (Other than bill.com and Paycycle) the Bookkeeper List Web site is an excellent resource for securing your financial help.

For IT help, turn to any number of resources, including Geek Squad on a national basis, or any number of smaller, regionally-based software and hardware support companies.

Equip the office.
You don’t have to spend a lot of money to have a nice office. You can buy inexpensive furniture from IKEA or Costco, and keep décor to a bare minimum. I have done this at both companies and think it reinforces some important values for our customers and our employees. And we have managed to still make it nice.

For bill.com, we went for an open environment, no cubes, just desks and phones. We really lucked out because we got all the furniture in the bill.com office for free and at an enormous discount from a company that was going out of business. (I heard about this through The Network and jumped on the opportunity.) In addition, we got $150,000 worth of servers for $15,000. You’ve got to be prepared for moving fast on some of these things.

Stay tuned, we are not finished with setting up the business infrastructure. In Part III, we'll discuss the essentials of Tools, Benefits and Policies.

You’re a Small Business, Now What Do You Do?

How to Set Up and Leverage an Infrastructure for a Small Business

Part I
It takes more than just an idea, some money and an office to get a business up and running. You need an infrastructure. Just what does it mean to set up a business infrastructure? It takes some planning and making a few key decisions before you sign any legal paperwork. For example, on a small scale, you are going to need someone to help you with the bookkeeping and someone to help you with payroll. But there are many more considerations. Let’s take a look at a few.

First, you need to decide what type of company you want to become. As important as it was in determining the culture of your company, you will want to consider your business’ structure, keeping in mind who is in charge, how big you want the company to grow, how many employees the business will have and how you want to handle day-to-day operations. There are many business structures in the United States. Most states have information online covering the type of structure available; here’s a useful site from the state of California.

Here are six types of business structures, each with its own legal, tax and business ramifications:

1. A Sole Proprietorship is when an individual owns and operates a business by him/herself.
2. A Corporation, of which there are many types, is a legal entity that exists separately from its owners. There are many benefits to incorporation, including limiting the owners from personal liability and separating taxes from the owners and the company. Offering stocks or bonds can generate additional capital for a corporation and a corporation can live on, well past the death or retirement of the owners.
3. A Limited Liability Company (LLC) offers liability protection similar to that of a corporation but is taxed differently. One or more managers or one or more members may manage LLCs.
4. In a Limited Partnership, there must be at least one general partner that acts as the controlling partner while the liability of limited partners is normally limited to the amount of control or participation they have engaged in.
5. General Partnership is when two or more people form an association for profit.
6. A Limited Liability Partnership is designed for accountants, lawyers and architects or companies with services related to those professional areas. A limited liability partnership is required to maintain certain levels of insurance as required by law.

As a venture backed company, Bill.com, Inc. really only had one choice.  Can you guess? Yep, it is a corporation.  The primary reasons include having the potential for multiple investors and many shareholders and the need for sheltering the investors from any liabilities. 

Here are some useful links with more detailed explanations on the legal structures of businesses in the US:

• Quick MBA

• About.com:  entrepreneurs

• Smallbusiness.com

• Allbusiness.com

In Part II, we'll discuss key people and processes in your infrastructure.

Attracting Great Talent & Hiring the Right People

The most important thing you can do for your business is to hire the right people. We all know that, but do we all act on that, all the time? Probably not. In my experience as an entrepreneur, it is too easy to focus on the tasks on hand, to worry about the budget, and to not hire when we should. The last few posts I have talked about the essentials of starting a business: raising money, building a network and honing your pitch. All of the work setting up your business goes down the drain if you hire the wrong people.

Attracting and hiring talent depends on you. It will be your network through which you find the right people. It will be your ability to sell your vision that gets them excited to join. Most importantly, it will be your ability to intuit the fit with you and your team that makes your team a team. So, keep working your network and your pitch, they are always evolving and are critical to all aspects of your business.

Assembling a great team is no small feat. Attracting the right people to your company involves a number of things: your location, your company’s culture and then how they (the talent) fit with the existing team. The last point is really important. Building a team is very different than hiring an individual. You have to look for balance and traits that complement each other. It’s critical to balance both your management team (and your employees in general) with personalities and work styles that complement your own personality and the others on the team. Here at bill.com, I made sure to get a range of personalities that complemented each other. As a result, we have a well-balanced executive team feeding off of each other all the time.

This is one of the biggest lessons I've learned in my career so make sure you think about how the team will work together before you hire. In the end, it’s not just about hiring and retaining, it’s figuring out who and what you want to hire. When you are starting a company, not only do you have to think about your culture and your product, you also have to think about your own skills and personality and how great talent can balance and improve upon that.

An excellent book on balancing work personality styles is People Styles at Work: Making Bad Relationships Good and Good Relationships Better

STEP 1: Network
How do you get access to the right people? The first step goes right back to the care and feeding of your network. All the great people that I’ve hired have always come through the network. Sometimes I knew them before, but often I did not. Sometimes it was an explicit referral for an open position but sometimes I didn’t even know the position was open. Yes, that is correct, some of my best hires are for positions that I didn’t know I needed. I realized during the conversation that someone could solve a problem for me. So, while a job description is nice, it is not required. (In fact, at bill.com I have asked all of my key hires to write the job description. This is an extremely useful tool to see if the person understands the job the way you do and saves you a little work). When you are a manager, you must always be open to rethinking your organization and you must always be networking. You just never know when that natural athlete is going to cross paths with you.

What do I mean by natural athlete? Natural athletes are individuals that are independent self starters. No matter what you throw at them they will figure it out. In a startup you can never have enough of these. While star athletes, those that are experts in one thing, are important as well, the natural athlete will be more capable of adapting to the changing world of a startup.

STEP 2: Intuit
I believe there is a “love-at-first-sight” equivalent when you are hiring somebody. I’ve gotten to the point where I can tell within the first five or 10 minutes whether or not I am excited by the conversation. If I am excited it’s a great hire that I am talking to. Usually, after the interviews are complete I can figure out what it was that caused me to be excited in the first 10 minutes. It's a gut feeling. I have had lots of training from HR professionals that will tell you the gut is wrong more than it is right. That is true in the beginning of your career but less and less so as you mature as a manager. It is your job to hone that instinct and your gut so that the “love at first sight” can happen for you. BTW, part of the gut feel is whether or not I think the person is going to be a lot of fun to work with. Life is too short to not work with people you enjoy. The good news is that you are in a position to make sure that is true. So if your gut doesn’t tell your something don’t hire the person if it is a key hire. Otherwise, you’ll end up with just a “relationship” not a great relationship.

Step 3: Sell
Most of the time the best people that I hired weren’t even looking for a job. That means that once you find the people, you have to sell them. There are different components that you have to keep in mind when you are recruiting. Like all selling, think about your target audience and adjust your pitch. When you are pitching an employee, they need to see someone who has leadership and vision for the company, the product and the culture. Employees like to know that there’s a captain of the ship, on board to make the hard decisions and plotting a course. Without that, people typically don’t want to jump on board, too. For a smaller company, it’s really important to hire people who are resourceful and willing to get into the trenches and do things beyond the specific job description that you’ve laid out for them. So if you are hiring the natural athlete, they want to hear all the different ways they get to pitch in.

Stay tuned, after attracting and hiring great talent, next comes the issues and steps of setting up your business infrastructure.

The Pitch

Apologies
First, my apologies for the long time between posts. The reality is that a month ago, a family emergency came up and all of my free time away from running the day-to-day activities of Bill.com has gone to supporting my family on the other coast. I bring it up here because I think “flexibility” in one’s schedule is one of the great things about being your own boss. I might always be working but I can do it when and where I need to. This allows for a different type of “work/life balance” that is very powerful when used appropriately. Let’s save that topic for another post in the future. The subject this time is The Pitch.

The Pitch
It’s the most essential part of your communication arsenal. Without it, you are dead in the water; with it, you are alive and well. Case in point: the previous two sentences have either grabbed you or not. You will either read the rest of this post or skip over to the next thing on your mind.

Do not underestimate the power of the pitch and do not under prepare. You will refine and hone the pitch over and over again and each time you will not have prepared enough. I have been “pitching” my businesses for the better part of the last decade. I have worked with great PR and marketing folks refining the pitch and still there are times when I just come off flat. So you have to practice, practice, practice. And, if you’re like me, you don’t need anyone to tell you once you have pitched whether it’s good or not. You just know.

Here are some things to keep in mind when developing your pitch: clarity and conciseness, imagery, and repeatability.
1) Clarity and conciseness. This is the proverbial elevator pitch. I like to think of it as 30 seconds long. It needs to be brief and to the point. I changed the name of my current company because I thought of a tagline that went with the name that accomplished this in four words. Bill.com. Send. Receive. Pay. Don’t try to be clever and don’t try to use big words. If you write it out and the sentence is a run-on or is more than 20 words, it is too long.
2) Imagery. A picture is worth a thousand words, as they say. So if you don’t have time to say a thousand words, create an image that is way more powerful. BTW, it is also quite memorable. To illustrate a scene for Bill.com services, I conjure up the images of paper everywhere, lost behind desks and even the way things were done when my folks were starting their first business (punch cards). Bill.com cleans up that mess. Images you conjure up for your business will work and will be remembered.
3) Repeatability. If you don’t say the same thing every time you are at your kids’ soccer game or sitting next to someone on the airplane, then how will your target market remember it? There is a fun game, called “Telephone,” that we used to play as kids. You line up a group of kids and whisper in one ear and then have that repeated to each kid along the chain. Invariably, what you get at the end of the chain is very different than when it started. Don’t forget this when you are developing your pitch. Your message will get repeated many more times than you know and you always want the last person to hear it to be as if you were talking to them.

Now that you have it, practice! Not once or twice, but hundreds of times. When we launched at Demo last fall, I practiced my six-minute pitch more than 100 times in the final three weeks before the show. We did win a Demogod award but I still wished I had practiced more. Once thing to keep in mind is your environment when you pitch. When you are raising money from VC’s it is different than Angel Investors and it is different than being on stage. Be prepared for interruptions in the form of questions, suggestions or bright lights/flashes going off, if on stage. The more you practice by yourself with friends that play the role, or actual advisors, the better you will be.

So good luck on developing that pitch, it is an art and it is never done.

P.S.: Check out the links on the right to read some excellent articles on The Pitch.

The Proper Care and Feeding of the Network

When starting both PayCycle and Bill.com, I shared the business ideas with associates and colleagues— people that I knew—and ended each conversation by asking: “Who else do you know that could help me shape and grow the business?” This eventually led to me having an expanding list of contacts willing to help support, invest, and work with in first, PayCycle, and later, Bill.com.

I attribute the ongoing success of these companies to years of cultivating and nurturing what I call The Network.

I understand all too well the value, potential size and ultimate power of The Network. And, if you know me at all, you know how important The Network is to me. Whether you realize it or not, The Network—your network—is just as important to you, too, especially if you are in the business of starting up a company.

In the beginning, I was relentless. I got names and feedback from anyone who would talk to me. When they said they weren’t interested, I would ask “why not?” so I would be better prepared for the next person. This approach also provided invaluable information as to what the recruit, the investor or the business partner might think.

When you are starting a company, there are no early adopters for what you are building, so most of the feedback will be negative. That’s okay. That, in fact, is more important than the positive feedback.

What did I hear after my snooping around for feedback on PayCycle? Primarily, there was concern about a first time CEO (me), but they really liked the product and the strength of the team. Both of these tidbits were very valuable for me to understand in order to get future support and in crafting—and revising—my pitch (which we’ll get to next week) as I continued to build The Network.

Most of the deals that we got in those early days came through the network. To this day, the best people I’ve worked with have come through the network, and will continue to, as long as I continue to care and feed it (figuratively speaking, of course).

A lot of people choose not to develop a network, but it’s a shortsighted approach to doing business. It takes time to build a successful network. It doesn’t happen overnight. Feed it take care of it, nurture it. It’s important to maintain your relationships over time. When you are just too busy, you can pull back, but at some point, you will have to nurture it again.

If you are just starting off, it’s important to take certain steps to build your own network. Ask people that you know—your friends and colleagues—if they can give you one or two names of people who can help you, either in the market or industry you are interested in developing.

Be open to every opportunity and run it down. Be relentless, asking everyone you know, telling everyone what you are doing, using a concise pitch, and not being shy or bashful. I talked about passion for your business in the first post of this blog. You can’t be shy and still be passionate about whatever you are doing.

You can benefit from the The Network in so many ways. Here are some of the ones that have helped me the most

• Raising money
• Refining the business model/go to market strategy
• Getting amazing employees
• Finding the best business partners
• Attracting early customers
• Generating interest from the press

Caring for The Network is easy. It is all about giving. When you give, you receive and as Paul McCartney said: "And, in the end, the love you take/ Is equal to the love you make." This has always been my philosophy. So, when it comes to The Network, the more love you make, the more love you get. If you haven’t already, try it. You might be surprised.

Raising Money

In an earlier post, I briefly discussed the issue of raising money for your business. Capital is the lifeblood of any startup. The more capital you have, the faster you can learn, develop and achieve your vision. I know this is true from first-hand experience. I have raised over $40M from angel investors and Venture Capitalists to fuel the growth of both PayCycle and now Bill.com. Raising money has its downsides, mostly that you give up some control, but if you can raise it from people that you respect, the rewards are tremendous.

If you’re just starting a business, you’ve already relied on your resourcefulness in countless ways. And it’s resourcefulness and ingenuity around raising money that will get you past this stage and through many other stages of operating a business. Lack of funding is often the kiss of death for most young companies. It doesn’t have to be that way.

Whether you are raising funds for the initial launch of your company or securing a second (or third) round of financing, cash is king. You need money to create the product, research and develop several designs, and pay the people who are working with you. And if you need office space, technology, additional equipment, transportation, you’ll need even more money… the list is endless, really.

For most small business owners, funding comes from a combination of personal savings, loans and contributions from investors. As businesses grow, these sources don’t really change. Although larger businesses usually turn to more public options, many entrepreneurs continue to invest personal funds into their businesses at every stage of its life.

Basically, I break down getting funding into two options:

1. Raising money from people and investors

When my business partner, Martin Gates, and I were launching PayCycle and trying to manage the finances, we decided that we would operate for six months and not draw a salary from the business. Then after the first six months, we agreed that if we met our milestones we would work for a year at a $25,000 salary—not an easy task when you consider we live in Silicon Valley and both had mortgages to pay!

To have this plan work, we made sure we had enough money in the bank to cover 18 months. We didn’t want to go 18 months without income, but we wanted to have enough cushion to protect us while we invested capital into the building our product and team; we would rather invest money in the business—building the prototype, setting up the infrastructure for a Web application, and ultimately getting the product to a point that would excite investors.

In addition to the capital we put in, we went to our networks; we approached people who had worked with us, who already felt comfortable with our business backgrounds and reputation. We wanted them to say, “We know you, we know the market and we will invest in it.” Their response was: “We know you and trust you. Go for it.” It was humbling and empowering at the same time.

BTW, we did not ask family to invest in the business.

Mixing business with family is risky. In addition, family is less likely to be able to really judge the opportunity. They are naturally biased. Friends and business associates can judge your credibility more objectively; they ask tougher questions and force you to develop a better business model; and through them you will build a stronger network that will help the business beyond its capital needs. Also, I figured that if I couldn’t get money from people who already knew my business reputation, then I couldn’t get money from anyone.

I can’t stress this enough, getting someone to give you money makes you really evaluate what you are doing. It helps you figure out your business model and hone how you proceed.

Eventually, using the initial seed of money for PayCycle from our network of business friends and colleagues allowed us to hire more people, create a robust marketing program and then go to Venture Capitalists to show that the product had launched and had a market, at about 16 months—two months short of our 18-month deadline. We started PayCycle in August and raised VC money in December of the following year.

By the time I started Bill.com, it was a very different scenario. I reached out to an even wider network of business colleagues, who contributed based on the success of PayCycle. Having a legacy of success helps considerably.

If you don’t think you have a large network yet (we’ll talk about building and relying on your network next week), don’t worry. Your network is always larger than you think. Of course, you can always borrow from your other assets such as stocks or 401k’s. If you decide to borrow from your 401(k) retirement account, there are taxes and other penalties associated with doing this, so move cautiously. (Click here to read an excellent article on the pros and cons)

2. Raising money from banks or the Feds.

As a small business owner, it’s tough to get a loan from a bank. When it happens, the bank ends up requiring all sorts of covenants that may end up being at odds with growing the business. However, if you are a homeowner, then a home-equity loan or home-equity line of credit could work for you. The loan rates are lower than others (such as credit card) and it helps keep the business in your own hands. It’s risky, though. You don’t want to lose your house.

The federal Small Business Administration is an excellent resource for information on funding sources and as a source on its own. The SBA offers a lending program called LowDoc, which offers loans of $100,000 or less to small businesses of all kinds. In general, the repayment term on an SBA loan is five to 25 years. Check out the SBA site, which includes information on how to find local SBA offices as well as lists of participating banks in your area.

This is by no means the ultimate list so if you are still yearning for more information, check out the myriad of funding sources available out there.

Share your story: How did you raise funds for your business?