The Entrepreneur's Wife

Friday, June 23, 2006

What's their motivation?

One question to ask your entrepreneur is, "What's your motivation for starting this company?" Ideally, ask it before they've actually started it.

What you don't want to hear is, "To make us rich- RICH!" Why? Because there are a heck of a lot of easier ways to get rich. And statistically, starting a business isn't one of the best. If what they want is a big pile of money to sit on (or play in, like Scrooge McDuck) during your early retirement, then tell them to stick at their current job, or get a higher paying job, and start saving for that rainy, but loot-filled day.

Hopefully, your entrepreneur wants to start their business because it's something that they're really going to love doing. This is because for a whole lot of the time, entrepreneurship isn't that much fun. So if they're not getting joy out of the basic day-to-day that they'll be going through, then they might get discouraged and give up. If nothing's at stake, then let them go ahead, but if they're quitting their job and mortgaging your house to the hilt to finance their venture, then there needs to be more motivation for them to be doing this than a pot of gold at the end of the rainbow, otherwise, they'll never get there.

Worse reasons, of course, can be weeded out (to keep up with some kind of friends or family who are starting businesses, to avoid looking for a real job working for someone else, for some kind of prestige they think being a business owner will bring, simply to avoid working for someone else).

Ask the question. Because you might be the only person who can talk sense to them, if they need it.

Wednesday, June 14, 2006


Some wannabe entrepreneurs get startup-itis. It's a disease that strikes people who think they're entrepreneurs, and might be doing a few things so that they can claim this title, but actually are doing a number of things to prevent themselves from actually launching the business.

If the business your entrepreneur wants to start isn't off the ground, and a fair amount of time has passed (for example, friends who first heard about it, are saying things like, "It's still not going yet?!"), ask yourself if you're starting to hear things like this from your entrepreneur:

"I'd be able to launch it, except I'm still waiting for some government red tape to clear."

"I don't have all the information I need yet, and no one will tell me, so I can't move forward."

"Some potential customers I talked to are asking for a track record, so I'm waiting to contact more until I get a track record together."

"The product's not ready, so everything's on hold."

Are you sensing a theme here?

Too many people create their own obstacles to moving forward with their business ideas. Why not- it's easy! And by blaming some external force in what's holding you back, the entrepreneur doesn't have to feel responsible themselves.

If the symptoms persist, you, the StartUp Spouse might have to step in and have a quiet talk with them. Keep pressing them for details as to why they are stuck. Once you get down to the real, key problems, have the entrepreneur devise a specific plan to overcome them. It might be as simple as "go down to the local licensing office to fill out some forms", or as complicated as "research pricing of competitors and determine a price for what the entrepreneur's offering". Whatever it is, the extra push from you might be what they need to get out of a temporary rut.

Monday, June 12, 2006

Should you help?

A lot of entrepreneurs are lucky enough to have talented and skilled spouses. Maybe you're an accountant, or lawyer, or web designer. Whatever your skills, you can probably lend a hand to your entrepreneur. Here are a few things to consider before you do:

Can You Do What They're Asking?

Can actually do what your entrepreneur wants you to do? Maybe they're setting up a pet store and want you to feed all the pets once a day, or put them in cages together. Do you know what parakeets eat? Which snakes can be mixed together? Do you even want to get near a snake? More subtle problems may occur if you are a lawyer, but you do criminal law, and your partner needs a copyright lawyer. You might think that 'law is law' but you could be doing your partner harm by not quite knowing everything you need to know to help them. Use your own judgement to know if you can really do the job as well as an outside professional.

To Charge or Not to Charge

It may seem strange to charge your husband or wife for something, but bear in mind that the company is not just your husband or wife- it's a business like any other, albeit a fledgling business. Think about the following before you jump in:

i) How much of your time will it take? Does your entrepreneur want one-off help? Setting something up, or creating a company logo, for example? If so, you can probably consider helping them for free, especially if it's easy for you to do. If there are costs involved, perhaps charge them just for your materials. If the task will take you a while and you're rather be compensated for your work, say so. If your entrepreneur has set up the company formally, and funded it with external funds, then act like any other professional would: Invoice the company, so that the entrepreneur can have a record of this, and enter you into their accounts, and pay you along with other suppliers and vendors.

If performing the task means that you have to use things provided by your employer, be sure to get the OK from your employer first! They'll probably be OK with a few sheets of missing paper, or you using the computer at your desk, but don't start swiping lumber from the company's lumber yard to build your hubby's home office, or hijack the company printing press to print your wife's fliers if you work at a newspaper.

ii) Can the company pay you now, or ever? It might be the case that your entrepreneur's company has no money to pay you now, but they expect that it will be able to pay you in 6 months' time. There's nothing wrong with billing an amount that you both agree, and then waiting for it to be paid once the money starts flowing. You're not exactly a creditor who's going to call in Dog the Bounty Hunter if they don't pay on time. On the flipside, bear in mind whether your entrepreneur is planning to try to get external funding before they start selling anything. It won't be easy for them to do this, if the company looks like it owes you tens of thousands of dollars. By the same token, if you do plan to bill, bill as you do the work. I once fell into the trap of working for months for my entrepreneur without a record of being due anything, so when the company finally found external funding, they couldn't pay me anything- it really stank! So decide up front what's best for both of you and the company. If you want to really do things properly, write a contract, purchase order or employment agreement between you and the company. It will be good practice for when your entrepreneur needs to use one when they start hiring other people.

Can You Work With Your Spouse (And Can They Work With You)?

Lastly, consider whether you can work well with your spouse. It might be that you're great together as a couple, but fight like cats and dogs when trying to work together. Or find yourselves still talking business in bed. If this is the case, it's probably better overall if you just have your entrepreneur hire someone else to do the work they're asking of you. It's not worth risking your marriage to do whatever tasks they're asking.

If you've got other tips or questions for people considering this situation, post them in the comments.

Sunday, June 04, 2006

Where's the money coming from?

There are many ways your entrepreneur might raise money to fund their venture. Here are a few of the most popular, and what each one might mean for you:


Many businesses are funded entirely by the entrepreneur (which could mean you too, if your money is mixed together). If this is the case, be sure that the entrepreneur creates a separate bank account for the company money. If they leave your personal money mixed up with the company money it will be that much harder to keep track of what's being spent where. What you don't want is for money to be mysteriously disappearing from your personal account, never to be seen again. Hopefully, your entrepreneur has written out a business plan, so they know how much money to transfer to their business account. They'll, of course, also have a clearer idea of when it's running low.

If it turns out that they need additional funding, then you can know for sure how much additional money you're able and comfortable transferring across to the business. In a more formal business set-up, additional funding could be given for an additional percentage share of the company. It might be that you and your entrepreneur each own different percentages of the company-- maybe they've invested more, or you did. Be sure you're both happy with how this is arranged. And if extra investment is needed, be sure that that is done fairly too. I strongly recommend you actually issue shares, or at least have a contract outlining who owns how much. This can save a lot of headache down the road in case of unexpected death, divorce or other unforeseen events.

Friends & Family

This is a common kind of fundraising, especially at the beginning of a business's life. If your entrepreneur decides to pass the hat around your circle of pals and relatives, bear in mind a few changes that this will mean for you.

  • The friends and family who invest may come to you asking how the business is going. It is best that you don't give them a blow-by-blow of every niggly detail. People can get spooked easily, and typically remember the bad things longer than the good. So if you describe 3 disasters your entrepreneur is facing and one good thing, your friend of relative will remember those 3 disasters longer than the good thing. And if there are 3 good things and one disaster, they'll probably still remember the one disaster. I'd recommend that you be vague but positive about how things are going, and if they press for details, tell them to ask the entrepreneur directly.
  • Another problem with friend and family investors for you, is what happens if the company goes belly-up. Before any investment is made, discuss with your entrepreneur what the reactions might be from each potential investor. If losing your uncle's money means that he can't retire comfortably, or that you'll never be invited to Thanksgiving dinner ever again, think a lot about these additional risks.
  • Surprisingly, also consider what might happen if the business is a success. Sometimes, this can bring the worst out of the people who you'd least expect. Greed takes over and people want a bigger slice of what's on the table. Having a formal company set-up can help reduce this problem, as well as a shareholder's agreement that each investor would sign, outlining how much you might sell the company for, and other key details.

Bank Loans

Bank loans are not a bad source of funding, if you are extremely sure that you'll be able to pay it back. Also, beware of situations where the bank asks you to secure the loan against a key asset you have, like your house. Do you really want to risk losing your house if the business takes longer to generate sales? Or worse, if it never gets off the ground?

Before going this route, look into Small Business loan programs- most governments offer some form of these, and often the interest rate is better, as well as the other terms. At the very least, go to a small business center with your entrepreneur to learn about bank loans and the risks involved.

Venture Capital & Other External Investment

This is a topic that I'll discuss more in the next article, as it's important as the Start-up Spouse to know what's involved in securing this, what's asking too much, and how to avoid some pitfalls.