As you all know I just wrapped up my Business Plan Series and will be starting a Marketing Plan Series next week.

So I started thinking about what smaller bits of advice I could organize in a great ongoing series of posts. This is where I came up with “Rules for Entrepreneurs”.

These rules will range from how to hire lawyers, leveraging PR the right way, setting up your first site, how and when to hire your first sales person, putting together your sales/venture pitch, etc.

I would welcome from all of you requests for how-to’s that will help me provide you and the rest of Venture Files readers with the rules that will guide you through building a successful company.

I have heard this from many people I have met “I really want to be a VC”. First, why are you asking me when I am not one and don’t have a desire to be one? Let me direct you to some people in the industry and a few who left it to get a good perspective on the business. So I went ahead and asked the question “do you think people should really become VC’s”. Surprisingly, many said no. Why? I will tell you.

The origins of this post were motivated by Seth Levine’s post today How to get a job in Venture Capital revisited his earlier post, How to become a VC and it seems to hit on the same advice that I got from my VC friends in the business.

The gist of it seems to revolve around either going to a top B-school, being a banker or consultant, working in a startup or starting one of your own.

So instead of telling you how to become a VC, let me take a different angle and tell you why you don’t want to be one.

Everyone acts like they want to be your friend but all they really want is your money

When you are an entrepreneur you go to networking events in the hope of meeting investors, you leverage VC networked lawyers and accounting firms to get you introductions. What are you there for? To get money. As a VC you are just on the other side of the table and now when you go to dinner parties you are faced with the “Doctor’s dilemma”. That is when they find out you are a doctor and then they tell you something hurts them and expect a free diagnosis and prescription write up. As a VC you might suffer through people with “hey, I have this business looking funding” or “I have a really great idea, would you fund it?” crap. Just tell them you sell insurance and they will stay away from you.

You get stuck in board meeting hell

As a VC you will sit on boards to meet with the company on a regular basis to see if they are meeting their milestones and vote on critical issues (i.e. stock options, new key hires). The only problem is that this most of your interaction with a company and as a former entrepreneur you will have a tendency to want to be more involved. You can’t. You must keep the deal flow coming through for the firm to make the investments that will create good exits for great payoff to the fund’s limited partners. Yeah, I think that kinda sucks too.

You only really work day-to-day with a startup when it is having trouble

As I mentioned above, you are really only working with them in a board capacity when things are going well. When things start to go bad you have to spend more time and usually have to be the bad guy. You might have to kick out the founder, recommend budget cutting strategies, etc. Yep, that sucks too.

You have to read the most insane business plans

The average VC firm sees about 2000, that’s right 2000 business plans a year. Do the math. If you are an associate you have read around 50-100 per week depending on the size of your firm as an associate. You have to filter the crap from the interesting and then further find the fundable in the interesting ones. Many people blindly send plans that don’t fit the investment size or focus of the firm so they are immediately tossed. Still, you have to find the ones that are good and then have a phone conversation with them. If the chat goes well, they will come and pitch you so can report to the partners about the ones that they should really sit in on. If they end up sucking it reflects badly on you.

Do you like Excel?

When you join a firm as an associate you are analyzing deals from every perspective tearing apart an entrepreneur’s business model to see if it is actually not full of shit. You are also looking at it from various bad-to-great scenarios to understand the risk exposure the firm would be taking in the deal. I hate excel and the thought of living in it just makes me shudder.

You have to work insane hours to close a deal

You work insane hours as an entrepreneur but there is a long term payoff that can be huge. To get a deal done especially if it is syndicated or there is competition from other firms means you have to work insane hours to get it closed. If you don’t you risk losing the opportunity and looking like a lazy idiot to the partners. What is the upside? Maybe a bonus when the fund exits? Maybe. At least as an entrepreneur you can have a little more control over getting a big pay day.

Limited Partners are worse than investors

Investors in a startup expect risk and are betting on you to succeed. They hedge their bets and usually 7 out of 10 deals funded crash and burn. The remaining 2 get a good exit and the remaining one you hope will be the next google. Limited Partners have a long term outlook (7-10 years) for a fund to complete. But boy do they expect results. You might return a solid 20-30% return which is fantastic for any other investments but they might just bitch. Especially if the previous fund had better returns. Yeah…I would love to have that to deal with.

Are there any VC’s in the house?

Many people read the blog and hopefully there are some who are VC’s and could comment. It would be especially great if there are a few out there that have been in the business and left it.

I have been to a lot of networking events in my life and I am sure you have as well. The one common element of going to these things is swapping business cards and collecting them for entry into the address book and then the trash…maybe you just skip to throwing them into the trash which is why I felt compelled to write this post.

When you work at a big company you are kind of trapped with the corporate standard they push upon you. As an entrepreneur, your business card is your brand, your elevator pitch and your first impression. So WHY OH WHY do people not take enough time or invest a little money in creating good ones.

Sure, some people think they have great business cards because they are more about creating memorable impact and not communicating any information but they have it all wrong. There are certain things you MUST HAVE on a business card and certain things you MUST NEVER HAVE. So here we go…

Have an Industry Relevant Design

Now I work in the tech industry and there are a broad spectrum of business card styles in just one sector. The design firms have more funky, fun designs because they have to communicate they are hip and creative. The startup firms are generally all over the board because some people spend money and others don’t which is just stupid since many people don’t know who you are. The big government contractors are boring cards but that is to be expected. Law firms and financial services companies should like clean and professional to show that they somewhat conservative and will treat you well. So the lesson here is keep within the expectations of what your competitors are doing but do it with a little flair if you want, just not overboard.

Branded/Corporate E-mail Address

Nothing says “amateur” than using a Yahoo/Hotmail/AOL/Gmail e-mail address as your main address. I mean come on, a domain name costs only $10 these days and usually a hosted e-mail account is $1.99 more. The biggest perpetrators are usually those trying to be “consultants” but have a day job and this is their side thing or they are just starting out and haven’t talked to one person about marketing.

What does your company do again?

Business cards are supposed to have the usually information - name, address, e-mail, title, phone, company name. To make some real impact, you should use the space on the front of the card to have a single statement below your company name that is your main marketing message. For example “Next Generation in Sales Software” let’s me know you are innovative, provide sales software and are a tech company. Simple.

You can also use the back of the card for this too but don’t jam it full of sentences or a big paragraph. 2-3 sentences at most and it should build on the marketing message you have on the front. You can also use the back for the marketing message itself to change it up a bit.

No Tiny Print

This links to “what do you do” section above. People try and put alot of information on a business card but for the love of something good and sweet, don’t try and think more is better by using a small font. We need to read it from first glance and not grab a magnifying glass. 11 point font at a minimum, 12 and 13 is better.

No Folded Cards

Yeah, they look neat but they are a bitch to scan. I find myself ripping that half off to get it through the scanner. If you need to say something else, use the back of the card.

No “Captain Obvious” Statements

As I stated above, we want a good marketing message to remember you and know what you do. That doesn’t mean putting stupid statements like some of my favorites - “I love leads” or “We sell real estate”. Really? I love leads too and if you have to tell me you are begging me and I won’t give them to you. Really, you sell real estate? I couldn’t gather that from your company name “XYZ Realtors” so you must think I am stupid. Into the trash you go.

No “Do-It-Yourself” Business Cards

Next to the AOL/Yahoo/MSN e-mail is doing the business card yourself on the laser printer or worse, the ink jet printer. Using those perforated cards that come in a sheet just look horrendous and screams “I DON’T CARE ABOUT MY IMAGE, BUT PLEASE HIRE ME ANYWAY”. Not. The worst offenders I have seen are the startup government contractor/outsourcing firms sucking off the GSA contracts as a sub of a sub of a sub.

No weird or stupid titles

I know, I know titles are boring and don’t matter much in the scheme of things when you are an entrepreneur. You are doing everything. Do you have to jam it my face that you are the founder? CEO is fine and enough. Chairman? Chairman of what? Your 1 person company? I am so impressed. Not.

Then there are the “I am so creative that no titles out there fit me”. I have seen “Code Ninja”, “Code Poet”, “Fearless Leader”, “Marketing Overlord”, “Marketing Evangelist”, and my favorite “Voice of Reason” — see Technosailor for that one. And don’t even get me started on the cards from people that work at Yahoo!

Get some focus dude…

Don’t jam three businesses into one card. We want to know what you do in VERY BRIEF statement or two for that specific company. If you have multiple ventures you should have multiple card. ‘Nuff said on this one.

I Can’t Write on Glossy or Weird Hippie Cards

When I meet you I am usually trying to understand what you do and how you might become a client, a partner or a vendor. After I finish talking with you I usually write a note on the back of the card so I can keep the e-mail to you in context and have something to discuss. The glossy cards, and I have been guilty of this one, don’t work for writing on and they usually cost you more anyway. The other side of the spectrum are what I call “the hippie cards” and are made of some weird “save the planet” material that is impossible to write on as well. Stick with normal paper, it will serve you well.

But you really want a wicked cool and weird card…

If you have an urge to create a funky business card, make it your second one to have impact or be gimmicky but have the main one as the one people will scan or save to contact you. They might save both but at least they have the one that they will scan and save for later.

So what are your “bad business card” experiences?

Since there are so many bad business cards out there I couldn’t capture the sum of things that you my reader have probably seen. Please use the comments as your place to be funny, trash bad business cards and most of all call people out on their bad business card protocol.

We have reached the end of our Business Plan series with this final entry on “Appendicies”. Our next series will dive into the marketing plan for your business so be on the lookout for that next week.

So what exactly is in the appendix section of the business plan?

In short, it is the kitchen sink of things that are relevant to your business plan that add value for the reader. Here is a short list:

• Photographs of products, equipment, facilities, etc.
• Patent/Copyright/Trademark Documents
• Legal Agreements
• Marketing Materials
• Research and/or studies
• Operation Schedules
• Organization Charts
• Job Descriptions
• Resumes of Key Personnel
• Additional Financial Documentation

Photographs of products, equipment, facilities, etc

Here you want to include scanned photos of your physical products (if you have them), equipment you have that is important to the function of the business and the facilities you have your company. Facilities include production plants, corporate headquarters and any branch offices.

Patent/Copyright/Trademark Documents

In your business plan you discuss the value of your IP and this is where you include supporting documentation including patent applications and any copyright/trademark filings that support your statements in the business plan.

Legal Agreements

There are many legal documents you have for the business, but the most important would be your operating agreements, shareholder agreements, stock option plans and critical contracts that you mention in the business plan.

Marketing Materials

This is essentially your collateral materials that you use to sell your products/services. It should also include screenshots of your web site.

Research and/or studies

Here you can include any white papers you have written to cover research you have conducted, grant studies you have completed and any additional marketing research you have completed to support the case for your business.

Operation Schedules

Whatever you are creating there must be a schedule behind it to complete the product and/or roadmap it out. If you are building hard goods there are facilities operation schedules to meet production forecasts. If you are building software products you will have development schedules to bring the product from prototype to beta to production. That will be critical to match the forecasts in your business plan that you have projected for launch and subsequent customers coming online with the system.

Organization Charts

You might have put a small chart in the management section of the plan but this is where you can expand on the entire corporate structure including identification of key hires throughout your business plan’s timeline.

Job Descriptions

Linking to your organization chart, you will need to write job descriptions for all of the staff, current and future, in your company. This will help you identify any overlap that might be there but it will also show the reader that you have thoroughly thought out who needs to be working for the company and what they will be doing for your business.

Resumes of Key Personnel

Since you put smaller bios of your management team in the management section, this is the place to put the full resumes of the team to back up their bios and allow readers to get the full background of the team to feel confident in their inclusion in the business.

Additional Financial Documentation

Beyond the standard documents in the financial section (cash flow, balance sheet, income statement) you might want to include tax returns for the business for the last three years (if you have them). This should also include key elements in your financial model like the revenue sheet to show how you will met the projections you set out. You should also include expenses and salary costs so that readers know you are market competitive but not going crazy (as in too high or too low) to support the numbers you have projected.

Starting our next series - The Marketing Plan

Our next series will dive into a good supporting document for your business plan but it is much more internal. This is a critical document that will guide your sales and marketing function to create the right materials and identify the best campaigns for maximum customer acquisition. We will also discuss setting up your sales processes and sales organization to be the most effective.
If any of you out there have written a marketing plan I would love your thoughts, opinions and war stories to help our readers looking for advice and guidance in this area. Please e-mail me at steven_fisher at yahoo dot com.

I have seen my share of networking events. Back during the dotcom era it was full of open bars and crazy companies with the latest software to change your life in some way. Then it was all about buying stuff on the web or a portal for something or another.

After the bubble burst most people were just trying to hold on and all that you had a choice between in the DC area were NVTC (Northern VA Tech Council) and Potomac Officer Club events. NVTC was very government focused and who mostly showed up were service providers (I have the 100’s of insurance and lawyer business cards to prove it). POC events were big events with well known people but not alot of good networking.

One good networking event I liked was the Tech Prayer breakfast but that was only once a year. What most of us were left with was going to conferences, usually not here, to get our networking on and find fellow entrepreneurs and real innovative thinkers.

Lately, there has been a change in the winds here in the DC area. With events like PodCampDC and Social Media Club’s events we are starting to see our cutting edge tech scene finally re-emerge. Last Thursday night it was totally confirmed with the TECH Cocktail DC event. It was held at MCCXXIII (1223) in DC. A swanky place that is over-priced for my usual weekend partying but this event had cheap drinks (thank you drink tickets) and about 300 people.

Below is a picture of the scene at the height of the evening.

While there have been many events that have drawn 400 people, this was different. Almost everyone was doing something startup related that was really cutting edge. There were social media people there (Technosailor and me included), innovative startups and actual investors looking to network.

There were also a great group of sponsors with great products to demo. Here is a great list from Jimmy over at EastCoastBlogging:

AwayFind - a product aimed at helping combat the email problem by letting your contacts get in touch with you via an online form.

iGala - a digital photo frame with a touchscreen interface that connects directly to Flickr and Gmail to stream photos to the frame like a slideshow.

Loladex - offers local recommendations from your trusted network of Facebook friends.

Odeo - launched a new beta verision which offers both search and personalized content (audio and video) recommendations.

Voxant - a free licensed content offering for publishers which offers a pageview based revenue share to anyone that embeds the content on a their site.

WhyGoSolo - a new social networking site aimed at helping you to create spontaneous new connections so, as its name implies, you won’t go solo any longer.

A huge amount of thanks go out to Frank Gruber and Eric Olson who do the TECH Cocktails around the country and they need to do it more than once a year here.

The vibe around this region is changing and since we will never will be Silicon Valley and never want to be, it is fantastic to see that there is a refreshed ecosystem of entrepreneurship here in the region.

Photo courtesy of jgarber

Editor’s Note: Some comments don’t seem to apply to this post as viewers of a show I was on were instructed to leave comments on this blog to get an invite to BrightKite. These comments will be approved but do not necessarily go with this post. Sorry!