This is for all the fans, we’ve taken your comments and Frank will answer your questions this episode #AskFrank #Bootstrap #Startup
Mr. Matthew Ley: Welcome back to Boot Strap: Insights for the Self-Funded Entrepreneur with Frank Cianciulli. My name is Matthew Ley, and as always, I am going to be your host. These episodes are my favorite. It’s where we take the comments and the questions that you submit, and we ask Frank.
All right, Frank, our first question comes from an early episode on funding, and they ask, you mentioned friends and family, and that’s where a lot of people get money when they start a business. Do you have any recommendations for how to go to friends and family and ask because it could be awkward, right?
Mr. Frank Cianciulli: Oh, it’s definitely awkward. Well, I think the key is to treat it, treat them like they’re bankers or investors. I mean these people, as much as they love you and they want to support you, you don’t want to go with that angle. You want to show them a return on their investment. So what I always recommend to people, and one thing that’s always a bit of a red flag for me when entrepreneurs are pitching their ideas, is they only seem to show the good side of an investment, or almost like it’s a done deal, there’s no way it could fail. I like the guys that tell me proactively, without me having to ask, as part of their presentation hey, what can go wrong. These are the — this is what can —
Mr. Matthew Ley: The risks.
Mr. Frank Cianciulli: This is the risk involved. And I think that gives — it actually gives the investors confidence that you’re treating it seriously, you know that there is some exposure, and maybe how you would handle that risk. And you know, you’ve got to show them an ROI. You know, I don’t think you go to friends and family trying to, you know, oh, you never support me, or bringing emotion into it. You know, you’ve got to treat them — because I think that will get you a lot more success because, you know, hey listen, at the end of the day they — in that position, when you pitch, when you ask them for money, that’s a business transaction. You’ve got to treat it as such, I think.
Mr. Matthew Ley: So it’s an informal situation maybe in that you’re with friends, family, loved ones, and you are saying treat it like it’s a professional pitch. Does that mean — like I’ve never pitched a bank myself, you know — does that mean like a PowerPoint, a pro forma, like go that — ?
Mr. Frank Cianciulli: Yeah, we did. Yeah, we put together — I mean sometimes you see these very elaborate business plans with the booklets. I’m not a big fan of that personally, although I know a lot of investors like to see that. And if that’s the case that’s fine, and I would leave that with them. But I would do a 5- to 10-deck presentation to a friend and family like I was walking into a boardroom pitching a bank. In fact, I wouldn’t even — I don’t know that I would do it one-on-one. I think I would try and do it in a group setting as well. I would send a professional invitation. Email is fine. But I would send a professional invitation talking about a business opportunity and have them all come. If, you know, if it’s not a board room then it’s your living room, your den, or your basement, and I would treat it as professionally as possible.
Mr. Matthew Ley: Okay. This next one is about the — when we were talking about hiring the maybe young talent or people outside of the industry. This person writes, you’ve been doing this for 15+ years we’ve heard Matt say. Clearly there’s a certain amount of gut that goes into what you do in hiring someone without experience. Do you have any go-to questions when you’re not sure or that help you vet out if this person is going to be right?
Mr. Frank Cianciulli: I do. And they’re the two, you know, kind of classic questions. And I think they are — they’re the staples. They’re there for a reason, because they work. But it’s important not to just ask them for the sake of asking them. You’ve got to really assess the answer. One of them is basically just the classic, you know, if I were to call your boss right now that you currently work for, you know, what would they say about you, you know, about your results, about your work ethic, about your values?
Mr. Matthew Ley: And what would you look for in an answer?
Mr. Frank Cianciulli: Well, I want to hear honesty there. You know, and I want to hear, you know, not these staged answers where they’re — even when they pick, you know, something that’s a negative or something they can improve upon and how they leverage that to be a positive. I don’t like that. I want to hear some honesty here. The other one is the classic, you know, where do you see yourself in the next 3 to 5 years?
Mr. Matthew Ley: Okay, and what’s the answer to that that you want to hear?
Mr. Frank Cianciulli: Well, I don’t want a cheeky, oh, in your seat, or I want to be the president. You know —
Mr. Matthew Ley: Well especially we’re talking about an entry-level position.
Mr. Frank Cianciulli: Exactly, exactly, just because they’ve read somewhere where that’s important. In fact, lately, as much as I love to see ambition and like to hear someone talk about management, I don’t even like that. I don’t’ even — I’m not even into the whole, you know, if you’re 22, 23 years old and I’m hearing oh, you know, I’d like to become a manager in 3 to 5 years. Even if they do, I’m not so sure I want to hear that. I mean I like more, like I really want to master my craft. I really want to get, you know, good at sales before I can teach others because you and I both know in 3 to 5 years if you know nothing about sales or you’re very junior in sales, how on earth are you really going to get beyond building a book of business and having enough experience to then teach others? So that’s a bit of a concern because that might tell me that, you know, they’re going to be impatient.
Mr. Matthew Ley: Right. And that is one of the issues that I think, when I asked the question, that the concern out there is that impatience and that pensity [sp] to find greener grass and to somewhat jump around. Okay. This one comes from building the financial organization, and it asks a pretty straight-up question. When you’re in a bootstrap and you make a decision to make a move to hiring a finance person, do you hire a CA, a CGA, or go straight — I guess go straight to the CFO? What do you do?
Mr. Frank Cianciulli: Yeah, again, I think it depends at what stage you’re at there. I mean I think the first hire, I mean depending unless you’re just experiencing rocket growth and the business is complex, I would think at that point you don’t even really even need a designated person necessarily. You know, once someone actually acquires their CPA or CGA then you’re paying a premium for that person. So I like someone intermediate. I like someone who is working towards that. That way they can grow into potentially your senior financial person in the future and then start hiring underneath them. But oftentimes even just a, you know, even just someone to come in and do your books once or twice a week might suffice. You know, but I would not advise going someone very senior early. It’s another mistake I see companies make, and it’s very expensive without the upside. No different than getting way too much office than you need before you need it.
Mr. Matthew Ley: Right. So what did you do in your first business? Did you go straight to a full time? How did you work it?
Mr. Frank Cianciulli: We actually did, but we found a non-designation, essentially a bookkeeper who can do all the accounting functions. She was excellent at booking all the payables and making all the payables. She was good at billing. She was good at collecting.
Mr. Matthew Ley: Mechanics of it all.
Mr. Frank Cianciulli: The mechanics of it all. She did — was she exceptional at any one or two things? No, but she was good at everything. And that served us really well actually. It was hard for me to let go of some things. You know, I still collected the checks and picked up the mail every day, but — and that’s another thing. You know, a business owner, if you’re doing all that stuff as we discussed yourself, letting go might be difficult.
Mr. Matthew Ley: Right, but important.
Mr. Frank Cianciulli: That’s another episode.
Mr. Matthew Ley: Yeah, letting go versus not letting go and all of that. So all of these questions came from the comment section below the video, so please send those questions in. There’s also an email that’s been shown on the screen that you can email your questions to. And we will aspire to get answers for you in the very next, “Ask Frank” episode.
So the last question that we have before we move on — this is my question because we often debate, you and me, often about in the office or outside of the office. You seem unsure about it. In the new space that you’re moving to in Mississauga, are we going to have that option to work from home? I’m just kidding. I’m not going to make you say that on camera. That’s it, guys. Keep it lean. Tune in next time. Share with your friends and family, and we’ll see you on the next episode of Boot Strap.