Do you know how much of your cash flow arrives via checks delivered by the United States Postal Service? If you don’t, go find out NOW. The survival of your business could hinge on it.
Today’s news of the receipt of another suspicious letter sent to elected officials immediately made me think of the 2001 anthrax mailings and how the resulting postal mail delivery slowdown nearly finished off my startup.
2001 was a rough year, and we were struggling to keep the doors open. The dot-com bubble was almost completely deflated, and it had simultaneously erased our lower-tier client base and caused our top-tier clients to cut back. Then came the September 11 attacks, which put even more downward pressure on business. While sad about broader events, me and my team were resolved that life and business would go on, even as we continued to juggle cash flow to keep the doors open.
But cash flow requires cash, and our accounts receivable split was roughly 75% checks delivered by the postal system and 25% by electronic credit card payments. As the postal system slowed down to clean up anthrax in sorting and delivery facilities, our daily mail volume decreased 90-95%. Our cash receipts tanked accordingly.
Ongoing conversations with vendors around our already late payments became even harder and meeting payroll was a real concern. Through heroic efforts on the part of Kris Bourne, we made payroll and kept the vendors from suing us for late payments. But it was close. At our lowest point, we had only a few weeks of cash on hand to fund operations.
As things returned to somewhat normal, we moved to ensure that another delivery interruption wouldn’t impact us as severely.
We shifted as many customers as possible to monthly, automatic credit card payments by offering discounts on service. For customers who wanted to continue to pay by check, we shifted many of them from monthly to quarterly payments. For new small accounts going forward, we required credit card payments.
Combined, these measures increased our average prepaid balances significantly, had the ancillary benefit of reducing our accounts receivable aging, and ensured that if the mail stopped flowing again, we would still have steady cash flow.
Are you prepared?
Fundraising is a funny thing.
If you’ve never done it, it appears to be a light-sucking black box. Magical things happen in there, and some people go into it and never come back out.
If you’ve done it, you know it’s really a fragile, transparent, little glass box, easily shattered. But then, HA! HA! the joke is on you! It’s a solid crystal that you accidentally drop on your foot, crushing a toe. Then it melts like an ice cube and you’re bailing out your sever room because somebody’s dishwasher two stories up and 100′ feet over, leaked aaaallllllllll across the supporting beam that sagged directly above same-said server room. And that turns out to be another one of those Mayberry-esque moments in ancient corporate history, happening way before you deposit close to a million dollars into the bank, (AND HOLY FUCK THAT TELLER DIDN’T EVEN BLINK WHEN I PUSHED THE DEPOSIT SLIP OVER. Was I on surveillance? Did I look like a drug lord with machine guns strapped over my back, rudely hidden under a way too clean duster that also made me look like I might wear a mechanical exoskeleton under it? Wonder what the bandwidth is looking like today…)
Wait, where was I?
Oh, that’s right.
Fundraising is standing in someone who thinks they’re very important’s office, and you are neither offered the courtesy of a seat, nor the acknowledgement of an introduction to a person sitting very far away on the other side of the person who thinks they’re very important’s office. And then they have the temerity to ask for a board seat with their investment.
And. They. Never. Send. In. Their. Fucking. Paperwork. Even. After. You. Call. And. Get. Promises. Because. They’re. A. Douchebag.
(I’m still amazed at how many people are absolutely incapable of saying no, especially myself!)
And then you visit a Zen temple inside of a converted church, begging for more money from another former Microsoft executive manager who did send in their paperwork, and they give you Zen homework:
“When you think you’ve cut to the bone, you haven’t. Look again.
And it’s a dismal, quiet drive home with the CFO and COO, because everyone is thinking the same thing.
Posted in digital.forest, Entrepreneurship, Internet, Life, Microsoft
Tagged entrepreneurship, humor, leadership, Microsoft, startup life, startups, writing
Hiring good people is hard. Finding a good intersection between attitude, skills, experience, and cultural fit can take a long, long time.
My stack-rank of what’s important is cultural fit, attitude, experience, and skills.
Skills can always be taught and some experiences are out of reach unless you’re in the right place at the right time. Attitude goes a long way and cultural fit can be the difference between a team that hums and a startup that craters. (I’ve seen both.)
I use three questions to screen on attitude and cultural fit:
- “If you were independently wealthy, how would you fill your time?”
- “Has anyone ever asked you to do anything illegal, and if so, how did you respond?”
- “What’s the worst thing about computers?”
These open-ended questions provide ample follow-on lines of questioning to help you drill into areas that are important to you.
As a bonus, I’ve found question #3 is a litmus test for tech hires, especially if you can keep a neutral face and provide no body language feedback while they are answering. People confident in their skills generally pause for a second before going off on a rant. People who are less confident in their skills or are afraid of giving you the “wrong” answer will often melt down.
Some executive hires will push for a fancy title, usually a step grade above what they were before. If they care that much, you should consider that they may not be the right cultural fit for your company. But if you need their skills and they seem like a decent fit, give them just about any title they want because they’ll be happier, which will make them more invested in doing a good job.
But do bicker about it for a bit to appear like you care and that you’re weighing their qualifications.
Only call for money when the market is having a generally up day.
Most angel investors who pay attention to the market will feel richer and be more likely to get that check in because they feel like they’re investing their profit instead of their capital.
Think how you might feel about loaning $50 to a friend if you found a $100 bill in the street. Same psychology.