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Blog Business Growth & Capital Managing Your Business

Startup Founders Are Often the Reason for Failure

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Many people think that most startups fail because of a shortage of funds, and for some, this is true. But often there is a more complicated problem: the founder. In this article, we will address common startup issues that arise because of faulty leadership. 

1. Dictatorial Leader Doesn’t Listen to the Team

Startup founders tend to be charismatic, ambitious and driven by their vision — all qualities needed to motivate people to buy in to their new business idea. Very often, it is the founder’s drive to make their idea a reality that makes a startup successful. But what happens when those qualities get taken to the extreme? Startup leaders who become dictatorial will set arbitrary goals and ignore team input, realistic time frames, technical challenges and costs to the detriment of the long-term success of the company. 

2. Advisors are Chosen for Reasons Other Than Experience or Expertise 

Many founders of startups surround themselves with friends rather than people who have expertise and experience in the field. They naturally gravitate toward similar personalities to their own and choose business partners who will not disagree with the direction they want to take the company. This means that when things start to go pear-shaped with the company, there is no one around to speak up and recommend a new direction. 

3. Planning Isn’t a Priority for the Founder 

Founders are often “idea” people. They get 50 ideas a day and are tempted to try at least 49 of them. This type of creative personality is excellent at coming up with ideas but, unfortunately, not great at making the ideas a reality. Why? Because developing an idea takes a great deal of planning and patience — and to make one idea work, the founder must give up the other 50 ideas they had that day. Startups that succeed usually have a creative ideas person who is backed by a highly organized team of people who excel at planning, making priorities and staying on course. 

4. Weekly Staff Meetings or Crisis Sessions?

Ideally, weekly staff meetings are a time to update the team on project statuses and plan for the next quarter. Instead, a dictatorial founder turns each meeting into a crisis session: What is going wrong? What could move faster? Why isn’t the project making more money? What should be an informative, calm meeting becomes an emotional deluge from the founder, which overwhelms the entire team.

5. The Founder Talks More Than They Listen

Successful startups have leaders who listen. A founder who always talks and gives their own opinion is a leader who is not learning from their team. These team members quickly become disgruntled because they feel unappreciated and undervalued.

6. The Leader Becomes Frustrated and Paranoid Over Time

When problems in the startup become too obvious to ignore, the founder may become more personal in their criticisms of staff members and advisors. Someone must be blamed, and since the leader won’t accept responsibility, then liability is passed to the staff. When this happens, staff commitment disintegrates, and people leave the company. Most who stay are only interested in collecting their paychecks. When this happens, the startup is destined for failure. 

Most founders begin their business with visions of being a great leader, but pressure, poor planning and limited resources can take its toll. If you’re reading this and recognize some of these traits in yourself, consider yourself lucky! Understanding your own strengths and weaknesses is a crucial first step to becoming a great leader.

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Blog Building & Managing Credit Business

7 Tips to Improve Your Credit Score

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Would you like to improve your credit score but don’t know where to begin? We’ve got seven tips to get you started. 

Know Your Score 

The first step to improving your credit score is to know your credit score. Did you know that you can get a free copy of your credit report every year? Just go to Annual Credit Report and request your report. Once you have your report, read it carefully and make sure everything is correct. 

Rent and Build Credit 

VantageScore’s scoring model now weighs rent and utility payment records when calculating credit scores. 

Keep Balances Low On Credit Cards 

Try to limit your charges to 30% or less of your card’s limit to improve your score. 

Set Up Automatic Bill Pay

It’s a fact: If you consistently pay your bills on time, the better your score. Why? Payment history makes up 35% of your FICO credit score and 32% of your VantageScore score. Take the guesswork out of paying bills on time and set up automatic bill pay.

Keep Old Accounts Open

Strange as it may seem, closing old accounts doesn’t help your credit score. In fact, it can damage it. So go ahead and pay everything off but keep the accounts open. 

Open New Credit Accounts Sparingly 

You’re at the checkout counter, and a retailer says you can save 25% on your purchase if you open a credit card with them. Sounds like a great deal, right? Sometimes it is, but most times it isn’t. When opening a new credit account, you should compare rates and fees from various lenders. Get the best deal possible — not the one presented to you at checkout. 

Talk to a Credit Counselor

If your credit score is lower than you would like or if you need helpful advice, a nonprofit credit counseling service can be beneficial. These services can teach you to manage your debt and plan for your future — and getting help won’t hurt your credit score. Contact the National Foundation for Consumer Creditfor more information on debt management and improving your credit score. 

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Blog Business Managing Your Business

How to Improve Your Emotional Intelligence at Work 

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When ranking the qualities of a good leader in the modern workplace, emotional intelligence is an attribute that has begun to gain attention. Emotional intelligence at work has a myriad of benefits, including a happier work environment, better collaboration among employees, and fewer office squabbles. 

 So, what is emotional intelligence? Put very simply, it is the ability to manage, express, and understand your emotions in positive ways. It is also the ability to have empathy for others so that you pick up on social cues, communicate effectively and have healthy relationships. 

Since we are not robots at work, emotional intelligence in the workplace is extremely important. Those with high emotional intelligence work better in stressful situations and can manage teams with less conflict. 

But what if emotional intelligence isn’t your strong point?The following are some ways that you can improve your emotional intelligence at work, and even in your personal life. 

Identify Emotional Triggers 

Does a coworker often lose their temper during meetings? Are you on edge or the brink of tears when dealing with a particular task at work? Stop for a moment and map out the events that have led to this emotional outcome. Is the task alone stressing you out, or is it part of a chain of events? Is your coworker’s temper because of the meeting, or does something else trigger this response? Looking at emotional responses this way can help you understand and proactively identify and prevent future adverse incidents. 

Pause. Take a Breath. Then Proceed. 

A highly charged emotional moment can be made more manageable by pausing, taking a breath or two, and then proceeding. For instance, if your boss is angry with you for a mistake, an immediate angry response isn’t going to help matters. If you pause, take a breath or two to gather yourself, and then express yourself calmly, you are more likely to be heard. 

Pausing is also good for listening. When you take a few deep breaths while your boss is yelling, you can listen and better understand why they are so upset. Perhaps it’s not the mistake that has made them so upset. Instead, it’s the potentially jeopardized relationship with the customer that they are actually angry about. Then, when you reply, you can address the relationship with the customer first. 

Look at Facial Cues and Body Language 

Another benefit of pausing to listen and collect your thoughts is that it gives you time to look at the facial cues and body language of the person speaking to you. Make a practice of studying the facial expressions and body language of those you work with and over time, their nonverbal cues will tell you a lot. Then, by simply reading someone’s facial and body signals, you will have an idea of what kind of mood they are in, if they are stressed, or if it’s a good day to approach them with a new idea. 

Practice Mindfulness 

Being mindful means being in the present and eliminating thoughts of the past or future. Many, if not most, thoughts of the past and future are anxious or worried thoughts. But present thoughts generally deal with what is going on right now. It’s easier to deal with thoughts about the present than the future or past because you can have an immediate effect on the present.

Journal 

Try journaling every day. Write about what you were feeling and thinking and take note of the events that changed your mental state. Did you feel better? Worse? Challenged? This process forces you to broaden your emotional vocabulary and better understand your feelings and the feelings of others. 

Practice Makes Proficient 

Just like anything unfamiliar or challenging, gaining a higher level of emotional intelligence takes time. So be sure to keep up your efforts and practice! Practice the above strategies until they become habits. Over time, you will have a deeper understanding of other’s emotions as well as your own.

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Blog Business Managing Your Business

Following Up With a New Contact

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You’ve collected a business card or email. Or, maybe you’ve made a valuable new connection at a business function. Now what? Here are some quick and effective ways to follow up with a new contact.

  1. Send a ‘thinking of you’ message via email. Mention something that you spoke about, or something that you think may be of interest to your new contact. To take any pressure off of them, you may want to include a ‘no need to respond’ in the message.
  2. Change the channel! Always interact with your new contacts via social media? Try email, send a card in the mail, send a text, or even pick up the phone for a quick call.
  3. Create a community experience. Does your new contact enjoy wine? Invite them to a wine tasting with a few other friends who want to learn more about wine. Voila! You’ve created a community experience with you at the center.

When reaching out to new people, it’s important to remember that you are investing in a relationship. Be yourself while always offering something meaningful, authentic, and of value to the other person.

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Business Cash Management Growth & Capital

Finding a Healthy Burn Rate

Did you know that 29% of startups fail because they run out of money? That’s why it is critical to understand what your company’s burn rate is, why it is what it is, and how spending levels will inevitably change as your company grows.

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Let’s start with the basics from Investopedia: Burn rate is typically used to describe the rate at which a new company is spending its venture capital to finance overhead before generating positive cash flow from operations; it is a measure of negative cash flow. Burn rate is usually quoted in terms of cash spent per month.

Startups typically find themselves in trouble because they plan for the next funding round rather than planning based on the funding they currently have. The fact is, you may not raise enough, or any, money in the next funding round. By managing your burn rate, you give yourself options.

But how do you find a balance between being too cautious and burning through too much money? After all, successful startups do take chances and spend a lot of cash along the way.

Understanding Burn Rate: Key Questions

What type of company do you want to build?

Do you want to build a massive company? Or a smaller company that you hope will be acquired within a few years? The capital needs for these two endeavors are very different. The truth for all startups, big and small, is that the more you need to spend, the higher your burn rate will be. Which means you will need to raise more money.

How can you contain monthly expenses?

Containing monthly expenses is crucial for all startups. That means looking for free and inexpensive services. Can you and your team work remotely or from a free workspace? What cloud services can you use to manage your business? Where else can you cut corners? Strategic burn to win customers and gain market share is different from operational spending. Generally, a healthy startup is a lean startup when it comes to expenses.

Cost of Growth and Unit Economics

The two main variables that will determine your burn rate are the cost of growth and unit economics.

The main expense for most startups is employee pay. Payroll frequently exceeds 60% of a startup’s costs. Many first-time startup founders don’t accurately factor salaries and benefits into their calculations of future cash burn, and even when they do, they usually underestimate the number of staff members they will need.

Lifetime value of a customer – the Cost to Acquire the New Customer = Unit Economics

Basically, unit economics is the amount you earn on every item sold.

Once you understand your cost of growth and unit economics, you can make an informed decision on how much you will need to raise to cover the burn rate long enough to reach your goals. Generally, startups should raise enough cash to cover 12–18 months.

 

Burn rate can rise, but shouldn’t fall.

 

If your startup is beating its financial goals, and you are generating lots of profits, then it’s wise to spend more money and increase the burn rate. This will delay profitability in the short-term, but for fast-growing companies, it’s worth it. A higher burn rate means a stronger market position that will lead to higher profits from more customers than would have been possible at a lower burn rate.

 

Lowering your burn rate is rarely a good idea and should be seen as a measure of last resort. Most new startups have difficulty recovering from significant cuts in spending, especially if the cuts involve layoffs.

 

Surprisingly, investors don’t appreciate a falling burn rate, either. Venture capital firms gave you money to spend for a reason: they want you to spend it, be successful, and make them money. They are focused on the wealth they can gain from a standout startup and are less concerned with losing their initial investment from the startups who don’t do as well. In fact, venture capitalists will usually encourage startups to move faster, spend more, and increase the burn rate.

 

But what about if the startup is hemorrhaging money? Shouldn’t you adjust according to reality? Yes, but only if circumstances are dire. If your unit economics are depressing and you have fewer than 12 months of money, then it’s time to take action. It typically takes 5 months or more to raise money, so you’ll need to bring down the burn rate quickly. This will require difficult decisions, such as where to cut spending.

 

The Takeaway: Find Your Healthy Burn Rate

 

Startups are governed by different rules than other businesses. You have to spend or ‘burn’ through money to be successful. So, you must find a healthy burn rate that allows you to grow your company without going bust.

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Blog Home Buying & Refinancing Personal Saving & Budgeting

6 Tips for Saving for Your Down Payment

You’ve decided you want to buy a home – congratulations! You will need between 5-20% of the home’s value as a down payment. Here are our tips to help you save up for a down payment on your dream home.

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Set up a separate savings account

Open a separate savings account exclusively for your down payment and have your monthly contributions deposited automatically. This money will be ‘out of sight, out of mind,’ meaning you’ll be less likely to spend it.

Develop a timeline and budget 

First, figure out how much you will need for a down payment on a new home. Then you can create a budget and decide how much you can save each month. Be realistic about your goal! You want to set a goal that is challenging, but not overly aggressive.

Keep an eye on your spending

With online banking, monitoring your spending is easy. Track your income and expenses to identify areas where you can spend less. Then, you can put that money into your separate savings account.

Shop around

Did you know that you can reduce your major monthly expenses by shopping around? Bills like car and renter’s insurance, your cell phone and internet plan, and health insurance might be less expensive somewhere else. You may be able to save hundreds of dollars just by looking into other payment options!

Celebrate small milestones

Saving money can be discouraging, especially when the purchase of a new home seems so far away. To resist giving up entirely, break your large goal up into smaller goals. When you reach a small goal, treat yourself to something nice that doesn’t break the bank such as a meal out. It’s better to spend a little and stay motivated than to give up.

Learn more about local and state home-buying programs

Many local, county and state governments run programs for first-time homebuyers. Some of these programs offer housing discounts, while others provide down payment grants or loans.

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Blog Business Cash Management Personal Saving & Budgeting

Inner Financial Peace

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Many people see money as something to be stressed over. But is it actually possible to gain inner financial peace? Yes! How? Read on.

Tip #1: Define a financial goal

Tracking goals and linking them to a larger purpose increases the likelihood of success and motivation. For instance, you are much more likely to save money, if you are saving a specific amount to go on vacation, rather than picking an arbitrary amount for no particular reason.

When setting a financial goal, ask yourself these three questions:

  1. How much?
  2. When will you reach this goal?
  3. What actions will you take?

Example:

  • How much: I am going to pay off $8,000 in credit card debt.
  • When: By July of 2020
  • What actions: I am going to set a budget and stick to it. I will restrict eating out with friends to once a week and reduce impulse spending. I will make a monthly payment plan that will lead me to success.

It’s helpful to know why it’s important for you to reach your goal. Refrain from berating yourself if you slip and overspend now and then. No one is perfect! If you spent too much money on a frivolous purchase last week, make a note of it, and resolve to do better.

Tip #2: Remove shame

You spent a lot of money in the past that you didn’t have. You racked up quite a bit of credit card bills. You made careless financial decisions. Now, you want to be proactive about making your financial situation better. Do you think feeling shame around your past mistakes is helpful or hurtful to your new financial goals?

Hint: Shame is terrible if you want to achieve a goal.

So, how do you get rid of shame, or at the very least, lessen its hold on you? Write down how you feel about your finances. Do you feel scared? Ashamed? Overwhelmed? Writing down your feelings can help to dissolve the strength of the emotion, which in this case is shame. If your feelings of shame and guilt do not dissipate, then you may want to talk to a trusted friend.

Tip #3: Visualize the end result.

Visualize how you will feel when you reach your goal while being realistic about the obstacles you will face. For example, if your goal is to pay off debt, but you have to buy Christmas presents for your nieces and nephews, then it will be helpful to brainstorm ways you can spend less.

Tip #4: Create a positive environment

We all have both negative and positive people in our lives. Do yourself a big favor and only talk to your more positive friends about your financial goals. Saving money and paying off debt can be challenging – don’t add to that challenge by talking to someone who you know will be all doom and gloom about your goals. Talk to your self-deprecating, sarcastic, ‘negative’ friends about other things.

Tip #5: Make a weekly date with your money

Hey, money. Do you come here often? What in the world is a ‘date’ with your money? It’s simply this: go somewhere you love, such as a bookstore or your favorite café for one hour a week. Pull up your bank account and have a look at your current money situation. Ask questions such as:

“What has been surprisingly easy about saving money?”

“How much did I spend this month on buying groceries instead of eating out in restaurants?”

“What’s a recurring charge I could put on hold for a few months?”

Checking in once a week will allow you to see little wins, and make course corrections before a colossal mistake is made. You may even begin to enjoy hanging out with your money!

Tip #6: Don’t give up!

Persistence is key to achieving long-term financial goals! Hold yourself accountable and own mistakes, but don’t give up. Take note of why you slipped up, ask for support if you need it, and make sure you are keeping your weekly money dates. Write down your financial accomplishments and celebrate your wins!

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Blog Home Buying & Refinancing Personal

To Rent, or to Buy?

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Should you rent or buy a home? It’s not an easy question with one right answer for everyone. That’s why we’ve created the following pros and cons lists for you so that you can weigh your options.

The Pros of Renting

  • Flexibility and mobility: Leases generally last for a year or less, which is a definite pro if you need to relocate for work or other reasons.
  • Maintenance free: The air conditioner is out? Call the maintenance person! When you rent, someone else mows your lawn, cleans your gutters, and fixes your clogged toilet. That is a BIG positive!
  • Short-term savings: Buying a home means lots of upfront costs, property taxes, etc. It can be easier to save in the short-term when you rent.

The Cons of Renting

  • No equity: When you rent, you aren’t working toward ownership, or building equity to borrow against in the future. Once your monthly payment is made, that money is gone forever, and it isn’t working for you in any way.
  • Asking permission: Love pets and want to get a puppy? You have to ask your landlord first. Want to repaint, or remove a hideous light fixture? Again, you have to ask. (and often, the answer is no)
  • Rent increases: When your lease runs out, your rent can be increased to an amount that isn’t in line with your budget.

The Pros of Home Ownership

  • Financial security and stability: If you have a fixed-rate mortgage, your principal and interest rate will remain the same for the life of the loan. No surprises!
  • You’re in charge: Homeowners can customize their homes just the way they want it. When you own a house or apartment, you can truly make it a home.
  • Building equity: Homes typically increase in value. Unlike renting, when you pay your mortgage every month, you are building equity that you can use for your future. And, of course, you can sell your home and make a profit.
  • Tax benefits: Did you know that there are many tax benefits for homeowners?  It’s a great benefit of buying a house vs. renting.

The Cons of Home Ownership

  • Less flexibility: When you’re a homeowner, you’re responsible for the mortgage even if you have to relocate for work. You must keep paying the mortgage until you can sell it to someone else.
  • Higher upfront costs: When you first buy a home there are all kinds of expenses, such as closing costs, a down payment, fees, and title insurance
  • You are in charge of maintenance: When your home needs repairs or renovations, you’re responsible for it, and you have to pay for it.

Now that you’ve looked at the pros and cons, is it obvious which is best for you? If not, take a step back and ask yourself: What feels right? And remember that you don’t have to decide on your own. We are happy to sit down with you anytime to discuss the pros and cons as they relate to your current financial situation. And we can help you to make a plan for your future.

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Blog Business Fraud & Security Personal Safety & Security

Are You a Target for Identity Theft?

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Did you know that your social media habits could put you at risk for identity theft? It’s essential to understand how to protect yourself and how to avoid catching a thief’s attention.

Weak Passwords

Is your password ‘password,’ your name, or something equally easy to guess? It’s time to change it up! Your passwords should be reasonably complicated with a mix of numbers, upper and lowercase letters, and special characters.

Do you have one password or a few passwords that you use for everything? Danger! Using the same password across multiple channels makes your account easy to hack. If you have trouble remembering lots of passwords, then consider getting a password manager.

Clicking on Unfamiliar Links

Here’s a good rule to follow: don’t click on links that are fishy in email, text, or on social media. But how to decide if something is questionable or not?

In email, text, and on social media:

  • Verify the sender as someone you know and/or are expecting a message from, such as a business
  • Verify the security token by checking to see if the URL begins with “https.”
  • Are there lots of grammatical errors or misspelled words? Don’t trust it!
  • Move your cursor over the link. Does the URL and displayed name match?

Finally, when in doubt, don’t click! No link is worth your identity being stolen.

Sharing too much

Some things are better kept private online. Don’t publicly share your home address, phone number, email, etc. With this basic information, an identity thief can dig up enough information on you to set up a fraudulent credit card account.   

It’s also wise to turn off geolocation tags on social media. It’s fine to tag a photo as being in a particular city, but some tags will actually show your home address! Check your social accounts, and be sure your location data is turned off.

Birthday celebration – for identity thieves

It’s so much fun to get birthday wishes online, but it can be an invitation for identity thieves to ‘party’ with your information. Want to get the well-wishes without the risk? Make sure you aren’t using your birthday in any of your passwords. You can also place a partial birthday – day and month only, leaving the year of your birth out – on most social media platforms.

Checking in too often

Checking in at the places and businesses you frequent the most gives identity thieves too much information into your personal life. Identity thieves are talented at taking lots of seemingly useless information and putting it all together to steal your money. Don’t make it easy for them by telling the world where you bank, shop, etc.

Know your friends

It’s fun to have lots of friends online, but it’s best to know who they really are. Identity thieves set up fake accounts which are then used for fraud attempts or scams. When you get a friend request from someone you don’t know, it’s best to decline.

The above tips will help you to keep your information safe from identity thieves. By being proactive now, you can save yourself from a lot of grief later.

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Blog Business Managing Your Business

Top 5 Tips to Improve Work Efficiency

Time is a precious resource for small business owners. Most business owners find it challenging to find a good work/life balance; so using time efficiently is essential. The good news is that you can learn better time-management skills, which will lead to improved business productivity and more free time to spend with family and friends.

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Here are our Top 5 Tips to Improve Work Efficiency:

Get Organized!

Before you begin your workday, make a plan. Some people choose to do this the night before, while others find it easier to make this the first task of their day. Regardless, spend 5–10 minutes going through your calendar, looking at your notes, and scanning your email. Identify the most critical tasks and write them down. Keeping a list of to-do items will help you to stay focused and limit the effects of distractions like email, phone calls, etc. And speaking of distractions …

Keep a Distraction List

Distractions are inevitable. You’re deep into a project, and you think, “I’ve got to remember to buy bread!” Instead of letting that thought pop up repeatedly, flip to your distraction list and jot down ‘buy bread.’ When work is finished, you can flip to your distraction list and knock it out.

Empower Your Employees

You hired them for a reason! Your employees can be an incredible time-saving resource. Identify the strengths of an employee and give them work that both fits their abilities and takes things off of your list.

Don’t Multitask

Research shows that people aren’t very good at concentrating on multiple tasks at once. Let us clarify: Vacuuming the living room while listening to a podcast is not multitasking because these two tasks use different mental resources. But trying to write an email while listening to a podcast does use the same resources.

Multitasking should be called multi-focusing because, when you multitask, you are rapidly switching focus between two or more things, which is inefficient and tiring to the brain.

Easy ways to prevent yourself from slipping into multitasking include:

  • Muting text, social media, and calendar notifications
  • Installing an app on your computer that blocks all notifications
  • Only checking your email and voicemail twice a day during designated times

Invest in Time-saving Tools

High-speed internet connections, smartphones, and laptops can save you time. Finding apps that complement your business can also be a huge timesaver. And, of course, you should always take advantage of Pinnacle Bank’s services such as business checking which includes free online banking and bill pay. (LINK)

Smart time management means efficiency at work and fewer hours on the job, freeing up precious hours to spend with loved ones, on a hobby, or even taking a nap!