The Business Startup Commandments

shutterstock-226427182“The first five years are hell.” When I started my company, I can’t tell you how many times I heard that line from other business owners. Back in 2004, my first reaction was, “That won’t be the case for me. I have too much experience, too much knowledge, too much know-how.”

I was wrong. The first five years were hell. Startup and turnaround are the two most difficult things to do in business. It’s not the work, it’s not the hours, it’s not the challenges or the problems — it’s the stress. It’s the fact that you have leveraged your entire life’s career on one opportunity. If it fails, you have nothing and have to start all over.

Therefore, here’s a list of commandments other starting entrepreneurs can use to help take at least some of the stress out of a new business.

1. Over budget: Take whatever you think you will need and triple it. No first-time entrepreneur ever budgets enough money to market his or her product or service. You will need at least three times what you think.

2. Manage cash everyday: Profit is not important in a startup — cash is. Overall, profit will become important once you cross the cash barrier (cash positive on a week-to-week basis). Conserve on everything but marketing.

3. Know your accounts receivable/accounts payable: Create cash by getting customers to pay you earlier and stretch out suppliers as long as possible. Typically, 45 to 60 days is a good rule of thumb before suppliers will start to complain. Pay them and thank them for their patience. This is a “no interest” loan.

4. Spend on marketing: Don’t blow your marketing budget too quickly. It will take time before customers realize what and who you are. Don’t expect to be cash positive for three to five years.

5. Don’t expect a salary: Don’t expect a salary for three to five years. You will need to make arrangements to keep yourself and your family afloat before you are actually drawing a salary.

6. Execute correct banking: Don’t lie to the bank. Tell them everything. The more they know, the more they will trust you. They have seen businesses succeed and fail. They know startup is tough. When you lie to the bank, things can get ugly fast.

7. Focus on the customer: Customers will pay a premium for good customer service. Even when cash is tight and stress is high, you have to find a way to take care of the customer better than any one of your competitors.

8. Reduce stress: Exercise, walks, short weekends away, talks with other business people — do what you need to do to get sleep and keep your health. I chose exercise and I still lost sleep for over 18 months.

9. Foster partnerships: Create alliances in your industry even if they are your competitors. You will find out things that you never knew.

10. Be good to your employees: Your employees create value for your customers. I threw pizza parties for every 100 units that we shipped and brought donuts on random days. Think up different ways to make your employees enjoy coming to work. Remember, pay increases are actually dis-satisfiers. They are like food, it does not matter how much you ate yesterday — you are still hungry today.

These aren’t the only rules, just the most important ones. As I started my business up, I kept these in mind and also kept telling myself: “Everyday that I am alive as a business, I grow stronger.” Surprisingly, that was the only thing that kept me going on the tough days.


Bob Palka is the owner of Jacobs Ladder, LLC, the creator of the Jacobs Ladder and Stairway climbers. For more information, email or visit

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