The Professional Development Plan is your “career roadmap” detailing your short-terms and long-term goals, requirements for success, resources required, and a timeline for completion. Fun fact: Studies show that people who set goals outperform those who don’t…even when the non-goal setters are trying to do their best! Oct 9, 2012 Update– Decided to share the first draft of my presentation with my team members and incorporated their feedback.
Creating a product that solves a real customer need (and convincing customers to pay for it). Making sure your users and customers have an extremely positive emotional experience with your product. Yes, you’re also in charge of incorporating, finding a place to work, creating the foundations of your culture, hiring your first employees, setting up a bank account, creating a web site, finding early stage funding, and taking out the trash. But these activities matter little if you can’t figure out how to create something of value and convince others to pay for it in an exchange that benefits both parties. When you first start your business you’ll need to determine who gets what percentage of the company.
There are some key factors to take into consideration when deciding who should get what at the formation of a company. If there are multiple parties involved, it’s important to vest ownership over a period of years to make sure they don’t walk away with the full amount if they quit after six months. If you’re partnering with an experienced entrepreneur or engineer who has had multiple successes and lots of contacts and who will be putting in hundreds of thousands of dollars of their own money and working full-time on the venture together with you, expect to have to give up a lot more than if you’re partnering with a first time entrepreneur or engineer with little business experience who will only be working on the venture 20 hours per week. You are taken more seriously by prospects, vendors, potential employees, and potential investors. If there is a key skill-set you need to be able to produce and sell your product that you don’t have (say, programming or sales), instead of looking for an employee who you have to pay, look for a business partner who will take equity in the company, vesting over time, and who will be willing to take only a very minimal salary and defer it for a couple years. When Aaron and I started working on iContact in 2002, we deferred our salaries for three years until we got to $1 million in annual revenue in 2005.
If you are an experienced entrepreneur and have sold a company for more than $25 million in the past, raising funding for your new venture won’t be difficult. Growing up in Florida, I didn’t really know much about entrepreneurship and business, but as I began working in companies around the age of 16 and 17, and started my company, iContact, at 18, I discovered that there’s an entirely different world out there.
When I hear first-time entrepreneurs say, “All I need is $250,000 to start my business and as soon as I raise this money I’ll be able to get started,” I get concerned for them. Figure out how to convince people to work for you for next to nothing (in exchange for equity and deferred salary).
Once you get to $15,000 per month in sales, then go look for seed funding to improve your product scale up your model if needed!
The act of “creating something from nothing” cannot be modeled in a Goldman Sachs spreadsheet.
Once you get to, say, $15,000 per month in recurring revenue, it will be so much easier to raise equity funding. By focusing on building a real company (with happy paying customers and growing revenue) rather than an app with no clear revenue model, you’ll have a higher chance of creating a sustainable business in which revenues are greater than expenses. Here is a summary Gantt chart for the common activities you’ll need to pursue in your first year. Once you have employees, you transition from being the Chief Everything Officer to the Chief Energy Officer. Hire people who have a positive attitude, have a strong work-ethic, and can communicate effectively. Hire people who are motivated intrinsically by the mission the company is focused on achieving (make sure you define what change your company is focused on making in the world extremely clearly on your web site, in recruiting, and to all candidates. Your first few hires will absolutely be critical in the long term success of your business. Lois decided that she would give up too much of her profit if she hired someone, so continued to do the customer service and product fulfillment herself.
So at 14, I learned the key lesson that as soon as you can afford to, hire your first employee, even if you have to use every single dollar of net profit you have to do it. When I started working at iContact in the Summer of 2003, I would sleep in the office on a futon. Once we hired our first employee, Josh Carlton, in September 2003, suddenly I had to think about having more “normal” working hours. We hired Josh as an intern to help us with picking up the phone when customers would call needing help with iContact. One of Josh’s first responsibilities was to send out a press release to the local news about the company.
David was a 56-year-old from Brooklyn who had significant business experience as an accountant and a truffles salesman.
Our next two hires came in February 2004 when we brought on David Rasch as our lead developer and May 2004 when we brought on Brad Gurley to be our Director of Support once Josh left for grad school. Surrounding yourself with individuals much more experienced than yourself, who have already achieved what you want to achieve, is critical to your ability to quickly learn what you need to learn in order to succeed in building your business. Take these potential mentors out to lunch and tell them briefly what you do and then ask them questions.
The mistake most people make in building an advisory board is asking people to join something formal with a defined commitment after one hour of talking. Now that it’s more than just you, it’s worth sharing some of the characteristics of a good Chief Executive Officer. Once you have a few employees, it may be time to find some space for people to work out of.
I learned later that the only way to scale yourself is to hire individuals who can do their job much better than you could do their job—and to set goals with them and hold them accountable to their goals—but not to tell them how to do their job.
Make sure you hire a bookkeeper to keep track of and categorize your revenues and expenses (and if you can’t afford one, learn how to do it yourself). Most common accounting packages like QuickBooks and Peachtree or (or online accounting tools like Xero, Kashoo, or Legerble) can produce both cash basis and accrual basis reports.
Unless you’re purposely masochistic, there’s just no reason to attempt to do your payroll yourself.
With two to five employees, you don’t need to worry yet about communication or processes, especially if you’re all working within a few feet of each other. There are certain things you have to do in order to make sure your status as a corporation is protected. The second thing you need to do is to hold a meeting of your Board of Directors at least annually and take and capture minutes from the meeting. One of the most valuable things we ever did at iContact was put in place real time, visible dashboards. At the very least, you should have a dashboard that is displayed on a flat screen TV somewhere in your office that shows basic information like how many customers you have, your monthly sales, and how many new customers you added that month. I’ve found there to be a correlation between companies that have real-time or near real-time visible metrics displayed in their office and companies that are wildly successful and reach lists like INC 500 and can raise outside investment capital. While your company is small, set up your system of dashboards now so that you can manage the business effectively as you grow. Here is a summary Gantt chart for the common activities you’ll need to pursue in your second year in business or when you have between two and five team members.
Instead of starting out by naming every early employee a VP like we did, I would recommend avoiding the VP title for the first couple years of your business. As you move beyond working in a single room, creating a basic meeting structure will be helpful. When we had 6-25 employees at iContact, we simply had a weekly staff meeting with everyone in the company—back when we could actually fit everyone in one room! Every week, we reviewed the company’s weekly results (sales, trials, conversions), tracked progress against each of our quarterly priorities, and reviewed the status of each of our company-wide projects. We would also hold a company-wide offsite every six months called iContact Day at which we talked about strategy and the future of the business. At 300 employees, we had a more complex meeting rhythm that consisted of a weekly Senior Leadership Team (SLT) Meeting, a weekly Operating Committee Meeting, monthly company-wide meetings, quarterly company-wide kickoffs, and quarterly SLT offsites on team health, operations, and strategy. By this stage, our weekly meeting consisted of the eight-member Senior Leadership Team (CEO, CTO, CFO, CMO, SVP Sales, SVP Support, SVP HR) and another eight members of what we call the Operating Committee. On a Thursday in December 2009 in Chapel Hill, our Senior Leadership Team met for a two-day offsite to create our first ever One Page Strategic Plan (OPSP) following a format that comes from the book The Rockefeller Habits.
Our facilitator, Patrick Thean, started out by asking us to write down the five words that we felt most described our company culture. Finally, we needed to create an acronym that would make it easy for everyone in the company to remember the values. To help the values spread, we implemented a WOWME Awards program in which employees would nominate other employees for either wowing the customer, operating with urgency, working without mediocrity, making a positive wake, or engaging as an owner. Gather your Management Team (or whole company depending on size) together for a full-day offsite. Start by asking the group to each write down five values that most describe your culture and make your firm particularly unique. Have each team member vote for the top three values they feel most represent your company, what it stands for, and what makes it unique. Work to turn your five final values into a memorable acronym by rearranging them and changing the wording but not the meaning of each value. Roll-out your values and values acronym to your whole company and integrate your values into everything you do.
As you grow beyond 25 employees, you’ll find consistent employee communicating is one of the most important roles of the CEO. At iContact we would hold an annual three-day retreat (usually in the NC Mountains) with our eight person Senior Leadership Team to set our objectives and plan for the year and then a quarterly 1 day off-site to set our targets for the upcoming quarter.


You can download the blank template we used for the one page strategy plan and a blank template of the original from a company called Gazelles. Creating a single digital or printed manual that employees can refer to when they have questions about things like stock option plans, paid time off policies, and health benefits can be really helpful and save you and your fledgling HR department a lot of time. Services that perform these tasks range from outsourced payroll providers like Paychex and ADP to web-based tools like SuccessFactors and Taleo. Can you provide an example when you feel the team member did an especially good job in the past six months?
What specifically do you view to be the items that the individual should work on in the next six months?
As you get past a handful of team members and your sales volume can support additional investments in your team, consider setting up a 401(k) retirement program and beginning to provide health coverage to your employees. To set up a health care plan, go online and find a couple health care providers in your state. PPO (Preferred Provider Organization) – Uses a large network of health providers that your employees can access. HMO (Health Maintenance Organization) – Reduces costs by insuring visits at only in-network health care providers. HSA (Health Savings Account) – Enables employees to create a savings account that they can draw from tax free to cover high deductible health care plans. There are many reasons why people are motivated to work—for money, to be part of a team on a common mission, to feel challenged, to make a positive difference, and to have their talents appreciated. Compensation has a few different components to it, including base salary, incentive compensation (also known as bonus compensation), the ability to participate in the upside of a company via stock options or restricted stock units, and your benefits package. For the first few employees, you will likely have to use every ounce of your persuasive abilities to convince great people to work for you for free or next to nothing. Once you get to a multi-layered company in which everyone no longer reports to you (this tends to happen around the 5-8 employees mark), it becomes important to define in writing how your employees will be compensated. The base salary component is generally established at the time of hiring and adjusted annually or at the time of promotions. Incentive compensation is known by various names, including incentive comp, performance-based pay, variable pay, and bonus. You can either create an employee profit-sharing pool or have a bonus for each employee as a percentage of their pay that is paid out quarterly, twice per year, or annually. Sales executives usually have the most amount of their compensation in the form of variable pay, as they are the individuals who are most driven by monetary incentives and want their compensation to be representative of their performance. For SVPs and VPs outside of sales, 30% is a normal percentage for variable pay, going down the scale to 10% at the staff-level, who often want the large majority of their pay to be guaranteed.
The measures that the incentive comp are based on can be set quarterly, semi-annually, or annually. The employee should be able to overperform on their incentive compensation if they and the company do really well.
The incentive compensation component should be based on both how the company performs and how the individual performs. All variable compensation (except where noted above) will be calculated and paid on a quarterly basis.
Once you have your incentive compensation plan for each team member, it is time to set up your options plan. The right size option pool for your company will depend on how much you want to use stock options as part of your compensation mix as well as how much you can pay in cash.
Let’s assume you’re a normal high-growth start up and you can only pay salaries that are 50% of what is normal.
Technology is always changing and we have to grow and develop in order to remain competitive in the field.
The duration of your plan can vary based on your needs…3 months, 6 months, 1 year or 5 years…the choice is yours!. A Harvard University study found that only 3% of a graduating class had clear written goals, while the other 97% did not write these goals down. Feel free to ask any questions you have in the comments at the bottom and I’ll reply to them. The most common vesting timeframe is four years with a one year cliff, which means that they get nothing if they leave in the first 364 days, 25% from day 365-730, 50% from day 730-1095, and so on.
It’s generally a good thing for the speed of decision-making for one person to have more than 50% of the shares (and thus the vote).
As an individual, you effectively pay taxes on your total income (with a few allowed deductions). If you incorporate in a State other than the one in which your business operates, you will need to pay another $150 or so per year for what’s called a Registered Agent. My strong recommendation is to raise as little money as possible but enough to get the first iteration of your product or service to market. We survived by keeping company and personal costs extremely low and by doing consulting work on the side.
But beware that sometimes having funding is more of a curse than a benefit because it removes the pressure to get customers to pay for your product, which is generally a good pressure to have. You can take an annual salary, you can take profit distributions (dividends), and you can sell stock in the company that you own (later on, when it has revenues and profits) either in private markets through firms like Second Market or in public markets via an IPO. A successful entrepreneur who builds a strong team and brings immense value to a large customer base can earn tens or sometimes hundreds of millions of dollars for changing an industry. Unless they have a wealthy family member who is willing to take a big bet, I worry they are going to spend the next nine months of their lives trying to raise this money, only to find it is not available or not available at terms they can live with. Don’t wait until you are there to start building relationships with investors—but do wait until your business has existing revenue before you actually ask for their money. I am saying that in most cases, as a first time entrepreneur, investment funding pre-revenue will simply not be available without a herculean effort that may end up diluting you so much that you wish you had found a way to fund initial expenses with sales or personal funds. Never keep underperformers around for more than 30 days as they will drag the whole team down and lower the bar for the existing team as well as all future hires. Hiring this person will enable you to focus on growing the business well beyond its current level. I got an apartment a few miles away and would come in at the very early hour of 11am, way earlier than my internal clock would have told me.
He joined our team as our VP of Business Development and took a salary of just $30,000 per year and negotiated 15% of the company. We found these initial hires from sites like LinkedIn, Craigslist, Monster, and CareerBuilder.
I strongly recommend spending some time identifying people who have already done what you want to do and reaching out to them.
At the end of the this second lunch or coffee with your prospective mentor, you will have done what only 5% of the people who have ever asked them for help have every done. Most busy people don’t have time for another formal commitment, except to individuals they’ve known for years. You can probably keep working out of your house or garage until your team numbers around five people, but once you get there it may be time to sign a lease. I would give unclear directions and then come back the next day and suggest minute changes, like adjusting the font size on something. Aaron and I learned early that a business can only scale its revenues as fast as the quality of the people it hires. The most important figure is the amount of cash you have in the bank, with the second most important figure being the amount of outstanding checks you have. Just survive and get a product to market that you can sell over and over and constantly improve. The most important thing is to make sure you have a separate bank account for your business and to make sure you don’t run personal expenses through the business bank account. Your law firm can provide forms to help you capture the minutes. Over time, you’ll build a professional Board of Directors who can serve as mentors and guides as the business grows into new levels of complexity. If you don’t know how many customers you have and how many customers you added per month to date, you should start tracking this most basic data. So once you get to eight employees including yourself, you’ll have to create your first layer of management.
We eventually came up with Key Performance Indicators and quantitative measures of success and started marking each KPI as red, yellow, green, or supergreen based on how we were performing. The OPSP has a very visible section on the left side within which you are supposed to put your values. There was a tie between five and six and so we debated for about an hour over which one was truly more important and more descriptive. You can use the words underneath later in writing a couple sentence description of each value. Post them everywhere, include them in your performance review forms, and insert them into everyday language at the company. When we were finished, we have a meeting with the next-level down in the organization (which we called the Leadership Team) to gather feedback and then would distribute the document to all employees at the beginning of each quarter and hold a kickoff all-hands meetings to talk about the quarter or year’s goals. Try to document all the key policies and procedures you have and publish them annually in an Employee Handbook. This form can be used for managers to get feedback from their peers and their staff members.
We later moved on to an automated online solution, but a Word document can work just fine until you have 100+ employees, in my opinion. A PPO plan is generally considered more employee-friendly than an HMO or HSA plan but has the highest costs. Getting your non-monetary compensation system right is just as important as getting your monetary compensation system right. In the beginning, you pay what you can in cash or deferred salary and the rest in an ownership stake in your business.


This allows the management to tie compensation directly to quantitative company, team, and individual performance. I prefer to set the company and departmental KPIs to which the incentive compensation system is tied twice per year. Your Board of Directors should approve a pool of shares in your company that you can use for your key team members.
When you plan, you can achieve more and make progress towards your goals – and it is safe to say many of you share the goal of career advancement. Review the example below and then access the Professional Development Plan Template, and create your own! If there is no one else involved then you’ll simply own all the outstanding shares and 100% of the corporation.
Personally, I find it is better for employees and the company to do a shorter cliff (3 months) and extend vesting to 6 years so that you can give a bit more equity up front at the lower current fair market value rather than wait 4 years and have to make a second grant at a higher price. I’d recommend consulting an attorney to decide whether to form an LLC, S Corp, or C Corp and to determine in which State it is best for you to incorporate your business. Be as creative as you can, offering ownership in your company in exchange for early employees’ work or for critical services like legal and accounting, or requesting deferred payment so that you can pay when you are able to. I kept my monthly personal expenses under $1000 by living in the office that first summer and eating lots of Ramen Noodles.
If you are a first time entrepreneur, raising outside funding will be very difficult until you can prove that you can sell something to somebody.
An entrepreneur is often someone who is quite creative, has the ability to learn quickly, and perseveres through nearly anything. Investors know that investing in someone who has figured out how to create something from nothing (creating a solution to a need that people will pay to have solved) provides a much higher chance of generating a return than investing in someone who just has an idea and “needs” your money to even get started. This is, definitionally, what entrepreneurs do–bring together the resources of land, labor, capital, and entrepreneurial ability to create something of value that is greater than the cost of the sum of inputs and sell it to the marketplace.
Now, you get things done based on the quality of the team around you and your ability to clearly communicate and guide the team toward a shared outcome. The most important thing is that you hire someone to begin taking over the basic operational tasks. We got listed in the major search engines, which at the time were Yahoo, Lycos, Dogpile, and Northern Lights. By month nine the business was up to about $7,000 per month in sales and $2,000 per month in profit.
I’d work until 7am, go have “dinner” at McDonald’s, then go to sleep and put the schedule on repeat most nights.
David brought a lot to the company by way of the respect we gained from having an actual adult and experienced business person on our team. If your business isn’t making money while you’re sleeping, you have a job and not a business. At the end of the first meeting, tell them you really enjoyed meeting with them and ask if you could meet again in 2-3 months once you’ve made some further progress. You can work with a commercial real estate broker for free (the builder owner usually pays their fee) so it is worth reaching out to one to get their assistance in finding the right space for your business. Even in a brick-and-mortar business like a florist shop or a restaurant, you should know how many new and repeat customers you get in a month. Most early-stage CEOs are either really good at sales, marketing, and product vision or really good at technology and R&D. Most often this is done by functional area, with all the support reps reporting to the Director of Support, the developers reporting to the CTO, the sales reps reporting to the Director of Sales, etc.
We were as objective as possible about results, and did our best to leave subjectivity out of the assessments.
We printed them up on big cardstock boards and had everyone sign the back at each iContact Day. I once tried to recall the values without looking at the sheet and got to four before my memory failed me. He found the commonalities amongst similar words and got us down to eight words that defined our culture. We eventually settled on incorporating number five, “Have Fun and Be Wacky,” into the descriptive language underneath another value. We put an annual amount of $40,000 into the awards pot and split the winnings between the employees who received at least three approved nominations for all five letters. It’s your job to make sure the direction the company is going in is clear and that all employees understand what it is your company is working on becoming the best in the world at.
To encourage employees to save, when you can afford to you may wish to match a percentage of employee contributions. Every quarter is too often and once per year doesn’t provide enough flexibility to adjust incentives as the business changes. If there are other individuals involved then you’ll need to negotiate what is a fair percentage for them to receive and for you to receive.
If needed, you can ask your lawyer to divy up the shareholder vote differently than the economic interests by creating separate class of stock with extra voting rights. Keep your costs down, as low as possible, until your monthly revenues grow and enable you to increase your expenses. Debt funding won’t be available either until your business is turning a monthly profit, unless you have personal or corporate assets you can secure the loan against. But first, you have to be aware that it exists and you have to work hard to create value for others. An entrepreneur can delay gratification and has a drive to achieve and the abilities to plan, build a team, inspire and lead, and prioritize.
Firms like Instagram that sell for hundreds of millions of dollars without generating revenue are extraordinarily rare and unfortunately have the side effect of inspiring lots of companies to get started and invest time in a product that has no way of generating revenue. Your life forever changes as a CEO when it’s no longer just you and a partner or two to worry about. Six months in, her company was up to about $5000 per month in sales and about $1500 per month in net profit.
But after going through some family issues, Lois decided to shut down the business because the $2000 per month she was making wasn’t worth the hassle to her. We were a motley crew—four kids in their early 20s and David at 56—rocking it all hours of the day and night.
And if you can’t take two months off and come back to find your business doing better than when you left, you have a job and not a business. Almost everyone will say yes to this request if made in person, simply because they know that so few people actually follow up in these cases. As they get to know you and your business and see you actually doing what you say you’re going to do (something 98% of people do not, for some reason!), they will be more and more willing to help you.
In the early stages, keep your monthly costs as low as possible and your length of commitment as short as possible. You have revenues approaching $25,000 per month (you’d better, or else what are you doing with all those employees?!). This title structure will help you reduce the chances of having to later demote early VPs to Director roles as the organization scales. By making it clear in advance which metrics individuals were responsible for and would be compensated on, we had an easier time assessing performance later.
We rolled out WOWME a few weeks later on January 9th, 2010, and immediately integrated our values into everything we did, from our training to employee recognition system to our performance reviews. The ranges are in place based on the amount of experience the individual brings to the table. If you needed motivation to start creating your Professional Development Plan just think about that!
There are millions of people with great business ideas, but only a select few, perhaps 2-3%, can take their idea and execute by turning them into something that people will pay for, over and over. You must begin the process of scaling yourself by hiring others who can free up your time to focus on growing the business instead of working in the business. She began bringing back freshwater pearl necklaces, pendants, rings, and earrings to sell to her friends. Lois no doubt lost out on a multi-million dollar opportunity by choosing to shut the business  down rather than taking a leap of faith and hiring her first employee and beginning to scale the organization. For those first few months, Aaron and I, with occasional help from a couple of friends of ours, were the only ones working on iContact.
Hiring your first team members is the first step in this process of removing yourself from the day to day operations so you can work on the business instead of in the business. You can double this success ratio by getting an introduction from someone you know who also knows them.
If you want, you can also ask if you can list them as a member of your informal advisory board on your website or in your investor deck. Decide on target dates for each activity, then, don’t forget to go back and update your Professional Development Plan whenever you make strides on the activities or if a deadline is approaching. Should she continue to do everything herself or hire her first employee to take over customer service and product fulfillment? Now, you’ve got them, and as long as you curate the relationship carefully over time, they will always be available to you as a mentor and guide. Because they get the benefit of giving back and perhaps being able to brag to their friends that they were part of something that became successful at the very early stages.



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