If you’re like me, you have a burning desire to be awesome at Photoshop. It seems so easy, so within reach. Maybe you’ve learned a few tricks like making gradient backgrounds for website titles. Ooooh, it looks 3D! Look out Pixar!

But then you come to some bitter realizations:

• I’m spending way too much time on this.
• None of this is making my website truly awesome.
• Design doesn’t come from Photoshop filters; there’s color palette, page layout, consistency, compatibility with messaging, not to mention fonts other than Myriad Pro.

Making your website or blog or software gorgeous means finding a great designer. And since you probably don’t have enough work to hire an in-house designer, you need to find a freelancer.

Well, you’re in luck. Here’s how to get freelance design work and how to make sure you don’t spend more money than necessary.

1.  Bid out small jobs on-line

The first rule of hiring a consultant is: Maybe you don’t need to hire one!

If you’re in the market for small jobs, your best bet is a marketing auction site like 99designs or CrowdSpring, or a professional database like GraphicRiver, or a site with both like DesignBay.

To describe how it works, let’s assume you want a logo.  You start by describing the project: “Design a logo for Xyz.”  (That was easy.)

Next you give parameters and conditions.  Specify your company’s color scheme (two or three colors; if you suck at colors just steal borrow a nice set from Adobe’s on-line archive.  Logos need to look good both large (for T-shirts, posters, and tradeshow banners) and small (for business cards and corners of websites), even if that means having different but very similar logos for different sizes.  It’s often a good idea to require that the logo makes sense in black-and-white, or that it’s still legible even if the viewer is red-green color blind.

Finally you specify the amount of money you’re willing to spend. Often $150 for a logo is enough.  Why so low? Because a lot of designers are just getting started and need to win jobs to build a portfolio. Also because designers do this on the side for a little extra income, or are willing to take cheap jobs to get through the recession. Or because the designer lives in a country with a lower cost of living.

I know several people who have had great logos designed in three days for under $150. If you’re looking to develop your personal or corporate image, surely that investment of time and money is worth it!

But many jobs are too complex or too important for a one-off cheapo solution. Besides, there’s a good argument to be made that these design-on-spec sites are morally gray.

In that case you need to hire an expert.

2.  How to look for freelance designer

You couldn’t have picked a better time to hire a freelancer! The recession has created a buyer’s market for any sort of consultant. Take advantage of this time to find a terrific person at a bargain.

Start with your network (friends, Facebook, LinkedIn); recommendations are almost always better than nothing.

Be careful though — if the recommendation is for “a friend” or anyone with a familial relationship (”Oh yeah, my brother-in-law is looking for work), be very very cautious! First, this implies the recommendation is a favor rather than a vote of confidence for the work. Second, and more importantly, it will be hard to have a professional relationship. If you have to put your foot down or even fire them, suddenly it’s personal. Not worth it!

Your alternatives include Craig’s List, general Internet searches in your area, or web sites like Elance that connect you with freelancers; all these methods can create an avalanche of candidates you’ll have to sift through. That means you’ll have to be rigorous with your vetting process, described next.

3.  How to choose which designer to hire

So now you’ve amassed a few candidates.  (Yes “a few,” you’re not going to consider just one!)  How do you choose?

The most important qualification is whether you like their prior work. I cannot stress this enough: Designers don’t morph their style to match yours; they don’t deviate from their own style.

If they make slick, glossy, mocha-latte-modern-glassy stuff, you’d better like that. If they make crunchy, green, friendly, round-rectangle stuff, you’d better like that. Scan their portfolio and make sure you like what you see, as-is. If you run across something and think, “Ooh, this would be perrrrfect if they just copied this exactly for me,” that’s a great sign. If you go through fifteen pages of their portfolio and nothing makes your heart leap, it’s a “pass.”

I know, many designers will tell you otherwise, and I’m sure there’ll be thirty comments calmly and artfully ripping me a new one over this. (And please do! Our dear readers need to hear the other side of the story.) But in my experience a style mismatch is a non-starter.

The next thing you do is call their references. But don’t get excited when their references are positive. Of course they are — otherwise they wouldn’t be listed as references!

Instead, you’re looking for glowing, over-the-top recommendations. You’re looking for things like “Yeah we hired her once and we’ve been coming back for years.” Or “I actually hate to tell you how awesome she is because it might mean we get less time.”

A key question you should ask is: “Did the designer deliver on time and on budget?” These constraints are important and separates the artists from the artists-who-treat-this-as-a-business. You need the latter.  (Thanks to Kathy from Virtual Impax for this suggestion!)

A trick is to request a reference for a particular portfolio piece that you like. Don’t ask for the references they want to give — surprise them.  Expect that they need to ask permission before giving out contact information.

4.  What to ask for in the contract

You have to get a few things in writing so there’s no mistake when it comes time to trade final product for a check.

• You are the sole owner of all works made for hire. The consultant retains no copyright. You need this to ensure uniqueness — that the designer cannot just duplicate work done for you and use it elsewhere. You also need it for control; when I sold my company we had to get special releases from all our freelance designers explicitly stating that we owned the intellectual property.

  It is appropriate (and recommended) to allow the designer to use all materials in their own portfolio; just make it clear that this isn’t joint copyright, but rather a free license you grant them for the purpose of promoting themselves.

• You get the electronic source files of all works, both finals and drafts. This is essential so that you can make small changes yourself or switch to a different designer.
• Expenses besides the hourly rate must be approved first. I’ve been bitten by designers who run off and order products we don’t need or make expensive color glossy print-outs of things we’d rather see on a computer screen.

A final note on contracts, though — don’t sweat all the little details. Contracts only matter if there’s a dispute so severe and irresolvable that it comes down to lawyers. In that case it will be far cheaper to just walk away from the situation, even if that means paying the full amount.

5.  How to approach and structure the new relationship

So you’ve selected a designer and you’re ready to start. You don’t know each other yet, so neither one of you knows how to work together.

You’re going to want things like estimates and clear statements of work but the designer doesn’t know how many times you’re going to change your mind, how many iterations it will take, or whether you’re going to blow up her cell-phone at 9pm on a Saturday night.

The designer will want things like a clear direction and approvals for color palettes and design concepts, but you’ll be unsure of yourself, unsure how much to trust the designer’s instinct when it conflicts with your own, and unable to find the words to express your muddy vision.

Addressing these unknowns is easy — just be honest about them from the start and make it clear that you appreciate the designer’s dilemma as well. Talk! Notice when you’re hitting a barrier that might be your own fault.

Take a “baby-steps” approach to the design work. Instead of making a grand plan for redesigning everything, start with the basics. For example, try just the color scheme and logo as described above. This gives both of you a chance to learn how to work together.

Besides, getting the basics totally finished and approved makes it much easier to see how the rest falls into place. Once your colors, attitude, and style are embodied in something as iconic as a logo, the path to websites, white papers, blogs, and tradeshow banners becomes an extension of an idea rather than a new project.

Finally, “baby-steps” means you can spend just as much as you want. If you end up not liking each other or it’s too expensive, you can stop and still have something to show for it. And since you have originals, maybe you can take a crack at the rest yourself.

6.  It’s worth it

Yes, it really is worth all the effort. Your image matters. First impressions matter. Colors and layout and fonts set the tone before a person reads a single word.

In this ever more cluttered Internet, it’s even more important to stand out.

Plus, looking good just feels good. Now I know how Brad Pitt feels. (Yeah right!)

Jason Cohen wrote this post and allowed us to syndicate it. He is the founder of Smart Bear Software, maker of Code Collaborator, the world’s most popular tool for peer code review and recent winner of the Jolt Award.

Great results never come easy, right?  Losing weight, running a marathon, building a successful business, having a great family life.  It takes hard work, perserverance, resiliency, focus, and a rock solid attitude.  As I’m working long hours on executing our ‘09 strategy, I always try to keep in mind that it is a marathon that we are running and not a sprint.  Building long-term value isn’t easy and it requires hard work.  I’d like to share five myths about startups that I’ve learned only after hard blood, sweat, and tears.

Myth #1: Starting a business is hard, Exiting is easy. Nothing could be further from the truth.  Starting a business is very easy.  Once you’ve started it, getting to profitability and your first $1M/year in revenue is very difficult.  I’d consider that you’ve “exited” the business if you’re capable of building a profitable business primarily because you have options - people will want to buy you, you can expand organically, and your options for raising financing is much easier.  Expect that the road is tough, give yourself at least 2 years, be realistic and give it 110%.

Myth #2: People care about your business. Sorry, folks - people couldn’t care less about your new business.  You need to earn that attention.  I’ve learned a tough lesson with this the first time I launched my web business, we may have had 6 visitors on our first day - and those were our employees and families.  The next day, everyone forgot about us.  People don’t care.  There are very few businesses that can launch with a launch party and call it a day.  You need to give them a great reason to care.  Make sure you go in with a good plan.

Myth #3: Being threatened is a bad thing. This is similar to myth #2.  If you don’t have anyone who feels threatened by your business or if you haven’t ever faced a lawsuit - I’m sorry but you don’t have the influence that people care about.  I don’t wish it on anyone, but if you haven’t ever faced a lawsuit or been threatened with a lawsuit, you probably don’t matter.  You need to keep growing and consider that your company has grown to the next level when you are threatened - you should celebrate when it first happens, it’s like riding a bike for the first time

Myth #4: Assuming you are the boss. I don’t care if you are a sole proprietor or a CEO that runs a Fortune 50 company, you are not the boss.  And, if you assume you are and act accordingly, you will not be successful.  Your boss should be your customers, your employees, your investors, your family, and your board.  I’m a big believer in servant-leadership, are you enabling your employees to succeed in their position?  Are you delighting your customers (your boss)?  Since you have the title of leader, are you running the company as the enabler/servant?  You will be much happier you did and your results will far surpass the contrary.

Myth #5: Startups are dependent on your passion. I’ve heard this advice so many times and it’s tiring.  Be passionate about what you do.  It sounds great, but I’d argue it takes much more than your passion to succeed - it takes commitment.  Rugged, almost stubborn, commitment!  Personally, I’m passionate about music and especially playing the keyboard.  At one point, I wanted to do music full-time, but I never had the commitment it took to succeed.  I was part of a rock band that kept searching for a label deal that never came.  I gave up.  It wasn’t for lack of passion, I still play these days, but I’m just not committed.  Not only do you need to be committed, you need to hire people who are committed.  It takes a committed team to build a successful business.  Like I mentioned at the beginning of this post - the startup road is very hard - if you aren’t committed, you’ll never make it.

There’s a reason a lot of folks are just dreamers and not entrepreneurs, it’s just plain hard and risky.  I think that’s what makes entrepreneurs special and why the journey is so fun.  It’s a truly unique and very rewarding experience (even if not monetarily).  Live it up!

This post was written by Andy Liu, a serial entrepreneur and angel investor. Andy currently runs BuddyTV, sits on several boards, and blogs at InspiredStartup about staring and growing successful businesses.

Most ideas are great ideas until proven otherwise.  In my experience, good ideas tend to fall into one of several categories:

Mayflies - like the insect, these ideas live for less than a day.  Once you have a good idea, your mission is to kill it.  Brutally analyze the idea for fatal weaknesses then quickly jettison those that fail.  For me, 95% of good ideas die here.  And that’s a good thing.  We all know entrepreneurs who cost themselves years of anguish and their investors large sums of money because the idea was fatally flawed but they refused to admit it.  Kill it fast and move on.  Many of these actually are good ideas, just with a critical success component missing.

Fireflies -  live brilliantly for up to two or three months.  Usually, these ideas look very good through the initial due diligence phase.  They continue to attract and enchant the entrepreneur.  Friends and colleagues endorse and validate the idea.  And often, because of our innate confirmation bias, we proceed to execute on the idea even though it too has one or more fatal flaws.  Typically, the discovery of the fatal flaw first enters your awareness as a nagging suspicion finally blossoming into the realization of it’s terminal nature.  Success can be achieved with some of these ideas, but the moon and the stars must align perfectly.  There are too many factors out of your control, Kill it.   For me, about 4% of good ideas are fireflies.

Praying Mantis - The entrepreneurs worst enemy.  With a life span of about one year, these ideas consume lots of intellectual and financial resources, not to mention psychic energy, before showing themselves as failed ideas.  The death knell is likely to be barriers to customer acceptance not known during the due diligence.  The entrepreneur most prone to this failed idea is one who skimps on customer validation.  The flaw could have been discovered early, but the team was too focused on building on the vision to dig deeply enough with customers.  Some of these ideas can actually be saved, usually by completely morphing the concept to fit the newly discovered customer realities.  Often though, this is discovered at a point when the entrepreneur has too few resources to make the required course correction.  To avoid this fate, (please, please, please) read  Bay Area’s veteran entrepreneur’s, “Four Steps to the Epiphany.”  About 1/2% of ideas fall into this category.

Queen Ants - they live up to 28 years (honestly.)  And they control all the food supply.  Enough said.  These represent the final 1/2% of ideas.

Good ideas come from truly understanding the pain of the customer,  having a broad knowledge of the tools at your disposal and being audacious enough to think you are the one to do it.  From the percentages above, the odds of success would appear to be overwhelming against you.  The trick is to incubate and kill off as many mayflies, fireflies and praying mantises as quickly as you can.  The queen ants are in there somewhere.

Now, your idea may be a Queen Ant and still fail.  Success means hitting the trifecta of the right idea executed brilliantly for a market primed for your solution. And that’s the tough part.

Hoyt Prisock, the author of this post, is a Seattle serial entrepreneur and NWEN Board member.  He is praying that his latest idea is not a mantis.  He blogs at http://bigshoebox.com

Who is more likely to produce long-term shareholder value — the entrepreneur who raises too much investment capital, or the entrepreneur who funds growth through profits alone?

First time entrepreneurs often have skewed visions of “how it all works”. Their perceptions are often shaped by the numerous successes that get touted about the media, rather than by the 1000-fold number of failures. It makes the “accidental success” of YouTube appear reachable, or at least “just as likely” as any other startup.

One of the things that entrepreneurs usually believe is that once they have an idea, they need investment — that’s just how it works, right? Once they start to talk to investors though, as well as advisors and other folks in the startup community, the questions usually come up … is this a lifestyle business or a “swing for the fences” big market opportunity? A “lifestyle business” is one which you intend to keep running for a decade or two — like my Dad’s optometry practice, for instance, or my brother’s event audio/visual recording business — typically an owner-managed business in which the profits are used solely to support the ongoing lifestyle of the proprietor.

Then there are the “swing for the fences” big market opportunities. These are the startups with big goals, where the entrepreneurs focus on a market opportunity >$100M. To get there, most companies on this track sell ownership in their company at some stage of their business to raise the capital necessary to build their company. Some companies even raise huge amounts of venture capital, at a hefty dilution mind you, before they even arguably HAVE a business. (Twitter comes to mind …) Investors are compelled by visions of a healthy return on their investment, and in the latter case also by extremely savvy entrepreneurs.

For whatever reason, I’m NOT a “lifestyle business” kinda guy. I’m only interested in building a company with a compelling market value and resulting shareholder ROI, but as a founder I’m ALSO uninterested in immediate dilution down to single digit % ownership. I want as much equity in the company as possible.

I learned long ago that the best way to build personal wealth and shareholder value is through “bootstrapping”. Bootstrapping is the art of building companies with very little outside capital/investment. I’m proud of my bootstrapping skills actually, which I’ve developed over four startups now, yet I’ve also realized that outside capital is also essential to developing/realizing a substantial market opportunity.

The reality is that there is a middle ground. Bootstrapping your way 100% to IPO, while honorable, is very difficult and uncommon. If the market opportunity is truly there, being under-capitalized will usually result in missing the market window of opportunity. Conversely, raising too much capital too early rarely results in long-term shareholder value. In other words, given a large market opportunity — a startup that raises too much investment capital is just as likely to fail (to generate shareholder value) as a startup that doesn’t take any investment capital.

I’ve been building Others Online based on what I thought to be an appropriate balance of equity financing and bootstrapping (”sweat equity” financing). Unfortunately we’re still not profitable and thus reliant on investment capital at a time when the market opportunity is large and we’re landing large customers, but market conditions are unstable and investment capital has dried up. And the other day I was talking to one of my investors, who literally wrote the book on bootstrapping, about our status as a company. He insisted that there “has to be a way” to generate more cash from our pipeline immediately. The only way I can see to do that is to shift our business model in the short-term, and I worry that doing so may negatively impact our ability to achieve the “big market opportunity”.

I keep thinking about this. Is it possible to “swing for the fences” (big market opportunity) at the same time as focusing on 1st base (getting to cash flow breakeven)? Or are the two incompatible? I suppose it depends on the market opportunity, but I’d argue most high-value windows of opportunity in the market are open for a limited period of time. Rarely do you not have competition eyeballing the same opportunity, and sufficient funding is generally a prerequisite to nailing these windows of opportunity.

Market leadership positions are always attained as a result of execution. Financing is not execution. However, financing provides the means to develop the necessary components to execution: team, timing, marketing, and product development. Since paths to success are rarely a straight line, financing also helps recovery from bad decisions (on any of the above). Under-capitalized companies are therefore at greater risk. That said, bootstrapping is also essential. It teaches you to make your mistakes quickly and therefore least costly. Bootstrapping is good execution.

2009 is going to be a difficult time for companies who are “swinging for the fences” but aren’t financed for the next 12-18 months.  If you’re one of them, like we are, it seems you can only either change your game plan and just focus on 1st base, or merge your team with a team in a far better position to hit the home run.

Jordan Mitchell, the author of this post, blogs regularly and is the CEO/Founder of Others Online (his 4th Internet startup), which provides ad networks with behavioral profiling and targeting solutions.

After a fun-filled, beer-fueled, internet-disabled afternoon topped off with thai food and a test-drive of Danielle’s techkaraoke concept, I put together the following Stephen Colbert-style takeaways from Seattle Startup Weekend part Deux. Hats off to the event organizers for gathering such a committed and talented group of people for a marathon of a weekend.  Noting my own personal disappointment that Raising John Stamos was 86′ed, that I don’t have an iPhone, and that evidently twitter is the ringtone of 2009 when it comes to spawning startups, I enjoyed my 6-hour drive-by of the 54-hour event.

• Tip of the hat: Eating your own dogfood. When it comes to creating value in the marketplace, you have to ask yourself if “the dog will eat the dogfood.”  The most compelling elevator pitches I heard Saturday afternoon were delivered by passionate team members who represented their own target market– or who could clearly articulate the company’s benefits from the perspective of their customers. Internal consistency is also a good thing– walking the walk of your value proposition. If you’re starting a green company and drive away in a Humvee, or represent a branding company with a lackluster presentation, your street cred is shot.

• Tip: Show vs. tell. If you can capture your audience’s attention and imagination with an engaging before-and-after scenario, that tends to be much more effective than delivering a lecture on features and benefits.  Slight cautionary tale (not a wag-worthy offense):  one brand marketing company put together a text-heavy presentation explaining their value proposition, but what was truly compelling was the imagery of a client’s website before they engaged the firm, and the subsequent reimagining of the site afterwards (also see: dogfood discussion above).

• Tip: Be flexible. One common element of a nonprofit organization and a startup is that the vision and mission gets you out of bed every morning and keeps you up at night. It is absolutely critical to your success that you passionately believe in your mission, but you cannot become so obsessed by your own vision that you ignore what the market wants.  One of the greatest attributes of a startup is the ability to be nimble and turn on a dime; some of the best commentary I heard from the Startup marathoners was how much their ideas evolved over the course of the weekend. The 150+ participants were the microcosm of the marketplace, and the savvy companies listened to this proxy for the market.

• Wag of the finger: The chicken-egg dilemma. I spoke with more than a handful of Startuppers whose companies were predicated on user-generated content. One of the challenges they face is that to get content, they need users, but to keep users, they need content (no site visitor in their right mind would likely return should they seek content and find nothing).  This need not be the death-knell of the startup; founders need to think creatively about how to seed their site with content before they’re ready for prime time user acquisition.  Some combination of partnerships and licensing data can help create customer stickiness.  Check out CultureMob for just one example– this site is designed to to help users “discover, share and promote events.”  As the CultureMob team goes to market in each new geography, they launch with pre-populated data from publications and venues, and the experience is further enriched with user-generated content.

• Wag: The fumpany. A term coined by my former colleague Kevin Kirn, this describes the age-old “it’s a feature not a company” concern.  You just may be a fumpany if you’re constantly getting asked “why doesn’t facebook/ twitter/ sharepoint/ insert-company-name-here just add that enhancement themselves?”

Thanks again to John Smilgin, Nathan Kaiser and the gang for inviting me to crash the party.  Already looking forward to Seattle Startup the Third.

Full disclosure: Rebecca Lovell, Executive Director of NWEN, has a deep and abiding love for John Stamos.  For those nonbelievers, check out the actor’s star turn on General Hospital as Blackie Parrish.  No one puts Blackie in the corner.

A fascinating new study posted today indicates that successful serial entrepreneurs have a 50% greater chance of success in subsequent start-ups than either first time entrepreneurs or those whose first venture failed. These individuals were also more readily able to raise venture capital funding and did so under less onerous terms than first-timers.

While on the face of it, Professors Paul Gompers and Josh Lerner are delivering sobering news to first time entrepreneurs, there is a silver lining. The pair outline strategies for newly minted ventures to increase their chances of success by partnering with previously successful founders. Successful entrepreneurs demonstrated particular skill in the areas of market timing and effective positioning of the start-up as a “sure thing.”

Read about this new study in an HBS article on “The Success of Persistent Entrepreneurs.”

A great way for first time entrepreneurs to gain some of the advantages of prior success is through participation in NWEN’s new Mentor program which matches early stage founders with experienced entrepreneurs in an unstructured venue for advice and coaching.

This article was posted by Seattle serial entrepreneur and NWEN Board Member Hoyt Prisock. He is currently incubating two new businesses in the tech sector and blogs at Bigshoebox.com.

A while back, when I was working on a business plan for a potential startup, I met up with someone who was also working on a business plan. He was a marketing guy, with limited technology knowledge, so it seemed that we could help each other. His business plan was gorgeous and read well, and it had all the right revenue projections and graphs. Now I’m no slouch as a writer, but mine was dreadful. My plan had accurate descriptions and diagrams of the architecture of the system that I planned to build, and I had a working prototype to go with it. And his plan? He also had some architecture diagrams, but they were basically fiction. I pointed that out to him, but he said it didn’t matter — they were just placeholders and investors wouldn’t care. Guess which company got funding?

I’m not saying that technology people like myself are dismissed entirely, but it’s certainly a much easier road for people with a business background.

So, I was really pleased to hear about the details of the Northwest Entrepreneurs’ Network’s First Look Forum (FLF) earlier this week. The FLF replaces the annual Early Stage Investment Forum (ESIF) that NWEN used to run, with some big differences, the biggest one being that it’s not an investment forum. NWEN properly recognized that there are already plenty of investment forums in the area, but there was very little for the stage before that. And they recognized that early stage entrepreneurs need more than money — they need help. The forum is designed to:

• Recognize early stage companies that show promise and could benefit from the process.
• Help the companies to take their idea and make it presentable, through intensive, personal coaching.
• Provide presenting companies an audience of qualified angel investors that they can present to and network with.
• Provide those angel investors with interesting opportunities that they probably haven’t heard about before.

• What’s the Market and Opportunity?
• What differentiates the concept from others?
• How can the business scale?
• What traction do you have so far?
• Who are you? What’s your experience?

Roy Leban is a serial entrepreneur who is currently CTO of Groupthink. He blogs about his startup experiences at thisDev, where this post is syndicated from, and about user experience at thisUser.

This is the 1st post in series written by Jason Cohen on the topic: Joy of Honesty in Business.

It’s always been popular to work on new projects while still employed, but the current global recession makes this idea even more attractive.  There’s plenty of good advice out there about how to do this, but the lists I’ve seen have left out something critical:

Tell your employer what you’re doing.

You might think security by obscurity is wise, but in my experience being proactively honest is not only easier, it even opens doors.

My first extra-curricular project was FastScheduler, a website for students to schedule classes at the University of Texas. Students would input their needed classes with day/time preferences (important for students who work). FastScheduler would provide a workable schedule based on available class openings.

The best part was that FastScheduler knew which classes were already full and which were available, so the schedules were not only tuned to your preferences but also were possible to get. This was a vast improvement over the maddening telephone-based encumbent system.

FastScheduler was popular — at its acme over 15,000 students per semester used the tool to schedule their classes. But none of this would have been possible if it weren’t for my employer, Paul Schmidt, the founder of Photodex.

Paul liked the idea and volunteered Photodex’s servers. Without being honest with Paul, FastScheduler would never have made it past my own computer. This was 1996 when Internet servers and bandwidth were expensive; I could never have afforded to host this project myself.

(Now if only Paul had noticed that I misspelled “Wendsday.”)

A friend of mine has had even more impressive results with an interesting company called OtherInbox. Josh Baer had already become independently wealthy after selling his company SKYLIST (like Constant Contact before Constant Contact) to Datran Media. After two years as their Chief Technology Officer, Josh decided to pursue a new idea — a system that automatically organizes your e-commerce and newsletter email and scuttles it out of the way — in an “other inbox” — leaving your regular inbox clear for important, timely mail.

Josh could have gone off on his own, possibly in secret. Instead, he approached Datran with a plan: Datran incubates OtherInbox in exchange for stock and for Josh remaining phyiscally in Datran’s offices so they can bother him on occasion even after his official employment contract is over. And it worked — OtherInbox is a hit and the next round of funding is underway.

Employers won’t always be this solicitous, but honesty is still the best policy. Take my current company Smart Bear. My first product was a piece of shareware called Code Historian — nothing more than a curious side-project, certainly not a money-maker.

I conceived of Code Historian just as I was starting work at DataCert. I could have kept Smart Bear a secret, tap-dancing around employment agreement statements like “Employee will expend all efforts in the interest of DataCert and in DataCert’s currently conceived products, designs, marketing efforts, customers, know-how, concepts, improvements, trade secrets, and business plans, as well as any contemplated future products, designs, marketing efforts, customers, know-how, concepts, improvements, trade secrets, and business plans.” (Whatever that means.)

Instead, in a single stroke I removed all worry and interpretation: I simply added an addendum to my employment contract explaining what I was doing with Code Historian, making it clear that it was non-competitive and done on personal time, and including a sentence stating that this was not contrary to any provision in the employment agreement.

Then I got DataCert’s lawyer (not some Director of Whatever) to sign the addendum. I still have the original.

In this case the employer didn’t help me — and usually they won’t — but I can sleep easy knowing that I wasn’t doing anything wrong, and they agreed.

In fact, many other articles on this topic describe how to skirt employment contracts and how to “break the news” as you quit so as not to stir up trouble. But if you’re candid and get it in writing, all that goes away.

Sure it’s possible they say “no,” but in this case it was a bad idea to overlap anyway. I’ve seen friends be sued over such things. Getting sued can ruin your life even if you’re right, even if you’re exonerated. During the lawsuit you’ll be crippled with legal fees and worry. If you lose, you could lose all your savings and plenty of future earnings. Even if you win you don’t get your legal fees back! And you don’t get the time back either.

Doing a startup is enough work and stress without also worrying about being sued by your ex-employer. Better to know up front and avoid that mess. “Not getting sued” trumps “fun new startup.”

So do yourself a favor: Just be honest.

Jason Cohen wrote this post and allowed us to syndicate it. He is the founder of Smart Bear Software, maker of Code Collaborator, the world’s most popular tool for peer code review and recent winner of the Jolt Award.

Saw this at BizLaunch.ca and WOW did it resonate! Here are 15 signs that you’re probably an entrepreneur:

1. You business is your life and hobby
2. You often do and then think
3. You don’t like being told what to do
4. You often have dreams about your business
5. You constantly find ways to innovate everything
6. You hate small talk
7. You don’t REALLY read long contracts even though you say you did and recommend people should
8. You’re very impatient
9. You hate standing in lines to buy something
10. You hate meetings
11. You look forward to Mondays
12. You have a short attention span
13. You don’t read long emails
14. You send out short emails and sometimes people think you’re rude
15. You hate being told you’re wrong

I am an entrepreneur (by anyone’s definition) and only two of these aren’t applicable to me (#11 and #15). But I’m curious, are there any people out there who don’t consider themselves to be entrepreneurs and yet for whom most of these signs apply?

Jordan Mitchell, the author of this post, blogs regularly and is the CEO/Founder of Others Online (his 4th Internet startup), which provides ad networks with behavioral profiling and targeting solutions.

Are you sick and tired of losing money in the market and figuring out if you are going to keep your job?

Excuses

I met an executive of a mid-sized company today that is awfully miserable in his position and has been dreaming about starting a company that he is passionate about. Get this - he’s been working on his business plan for 5 years. I asked him why he hasn’t started yet, this is what he said in bulletpoint form:

- I don’t even know how to get started

- I have no funding

- I don’t know if I can give up my salary

- It’s too risky, what if I fail

- If I had a nice retirement nest egg I’d start it now

Are you making excuses as well? Well, the answer to starting a successful company is really easy, you’ve got to get in the game and START. It may seem obvious, but it’s not - in order to win, you’ve got to start. There are too many dreamers and not enough executers, are you one of them? Often times, the biggest barrier to entry is YOU!

I’d always encourage people to jump with both feet in, sometimes it’s just not practical so building a company and getting started in the evenings when you’re not working is a great way to get started.

Here are some specifics that I’d encourage you to think about as you get serious about starting your business:

1) Be very passionate about the business. You will go through tough times, so give yourself ample time to get the model right. I’d recommend that you get comfortable with 2 years. You’ll probably want to quit at 3 months if you don’t see traction, that’s why you’ve got to be passionate enough to get through those times to make it successful.

2) Build a focus plan - 30, 60, 90 days out. Small wins lead to a big victory. Set out exactly what you plan to do much like a coach of football team often will plan out the first 20 offensive plays. Then, get ready to pivot as you see opportunity.

3) Be creative. These days you don’t need much money to startup and everything, I mean everything, is negotiable. Phone systems, Internet access (negotiate with your neighbor), rent, even computers (I negotiate with Dell on the phone). You can find help just about anywhere.

4) Network. Get your name out there, let everyone know you started a business, take meetings, go to social networking events, brand yourself! Set a goal to go out to lunch once a week with someone new in your industry. Don’t be an island.

5) Learn to sell. This is not something you learn from business school or academia. You’ve got to sell workers, customers, investors, buyers, vendors, etc. Find your selling formula, soft sells, hard sells, sales funnels, etc. One of my favorite lines from the movie “Boiler Room” is ABC - Always Be Closing! Practice selling today. I’m often asked is it a good time to start a company right now in this environment. I always say, it’s always the best time to start a business right now for some obvious reasons and for some not so obvious reasons. If you don’t get off your butt and get started now, you’ll be sorry. Here’s why:

1) People are hunkering down. Most folks just want to stay at their comfortable jobs and not start businesses. Thus, if you start a business, there’s less competition and less noise in the marketplace. It’s much easier to get your name out there.

2) Costs are coming down. Like I mentioned above, everything is negotiable. The cost of doing business - hiring, rent, utilities, legal, etc are all getting cheaper. If you are very resourceful, you can even get some of them for free by exchanging equity or service or even being a reference client. You’d be amazed what you can get these days. You can build a product in less time for less money than during the boom times.

3) It’s easier to sell. Think about it, if you’re selling to businesses, there are less companies calling on companies, decision makers can take your calls now. If you focus your pitch on how you can help other companies or individuals save money, you’ve really hit on something people are looking for right now.

4) You’ve got an out. In these hard economic times, if you’re laid off, it’s increasingly difficult to find another job. In fact, it really sucks out there. If you have a startup already in the works, no big deal, you’ve already got something cooking where most people don’t. Remember, companies have no loyalty, in order to survive they also need to make hard decisions and that decision may not include you. So, build your out now!

5) You will kick-ass when the economy turns around. People will start building businesses again when the economy turns, but it will be too late. You will have already built a product, grabbed market share, and will be much better positioned to win and potentially even exit (since you’ll be the only one standing) when the economy turns. No better time to be building during the down times such that in the boom times you are the recognized leader. Make it happen!

So - forget about the stock market, if you’re like me, you like to play but you just get hurt everytime you try to play the market. Create your own market and get in the game today! Tell me in the notes if you think I’m smoking crack about starting companies in this crazy time or if you agree.

This post was written by Andy Liu, a serial entrepreneur and angel investor. Andy currently runs BuddyTV, sits on several boards, and blogs at InspiredStartup about staring and growing successful businesses.