Rules Of Thumbs

Direct Sales Force Justification

Nov 27

adminBusiness, Startup ASP, Average Selling Price, business model, Rule of Thumb, sales force, Start-up No Comments

A product or service needs to have an Average Selling Price (ASP) of at least $200,000 to justify a direct sales force.  Anything less than $200k needs to be sold via partners, channels, or inside sales.   This should be helpful in developing business models for start-up companies, particularly in the enterprise software space.

Incorporating a New Venture

Nov 04

adminLegal, Startup, Venture Capital Legal, New Venture, Rule of Thumb, schedule, Shares, Start-up, Startup, Venture Capital, vesting No Comments

• When incorporating a new venture, a good rule of thumb is to authorize (or issue) 10 million shares @ 1/10 of cent. 50% of these shares should be issued to the founders (with a vesting schedule). 10% should be set aside for future employees. The remaining 40% will go to future investors.

• Also, ALWAYS elect to “pay” taxes on any shares immediately, even if they will vest over time. This way you will not have to pay any income tax on the difference of the value of the shares at time of receipt and their market value at that time.