VC behavior sometimes looks insane, but generally it's just sound economics. It's crazy but true: if you know how a VC gets paid, you can pretty much read their mind.

Don't be shy to have a proper "launch" a year later when the product kicks ass, though. Having millions of users doesn't mean you can't launch!

On the other hand, getting some attention from very-early-adopters like the HN crowd when your product is still very basic can indeed help tremendously. There are some ideas which you may want to keep under wrap until they're ready, but the vast majority of web startup ideas are not in that category. If you think your idea needs to stay hidden until it's ready, and you're not a startup veteran with at least three successful startups under your belt, you're probably wrong.

The point seems fair, but a distinction should be made between "launching" and "going public". Launches are formalities, PR events that are contrived to build up attention and draw traffic. In that context, "launching" before you're ready can be catastrophic.

Because I launched Housefed before it was ready, I addressed the problems I didn't know about. Had I launched when meal booking was fully finished, I would have been adding bugs ontop of bugs. Many of your initial assumptions are wrong. You won't know which ones until you get real users on your site. So my advice -

Of course, on the reverse of this coin, some startups are just flawed and need to be shut down. When these startups finally perish, the people behind them are free to move to new endeavours. This is not good for the startups that perish, but it is good for the entrepreneurs that get, perhaps, a better shot at the next idea, and it is good for everyone else, since these people will often move on to another extraordinary product.

People tend to view startups these days as overnight successes. Nothing could be further from the truth. Most successful startups had a long gestation period during which an impatient person would have concluded that they were going nowhere.

In conclusion: if you can make your app charge via IAPs (but that's not always possible or advisable ), do so, because it will make a significant difference to your revenues. In particular, as Tony suggests, try to ensure that if a customer turns up who, for whatever reason, feels like blowing $500 on your app, give them a way to do so.

This shouldn't be a huge surprise. After all, there's a good reason why SaaS is such a popular business model: a low monthly price tends to generate more revenue than a higher up-front price (for most types of products). IAP's throw in the advantages of an app-store like model where people can keep buying more without entering their credit card details.

How is this possible? Virtual goods elegantly fill up the demand curve for an offering. In other words, they accommodate customers who can happily spend hundreds or thousands of dollars ("Whales", in Vegas parlance) without having to give up mainstream users (who can still be valuable as evangelists beyond the fact that they give the whales someone to play with).

So why are free apps outperforming paid apps? That deserves its own post. In brief, it comes down to ARPU (average revenue per user). Farmville-style games can pull in an ARPU $5 or more per month. In fact, there are reports of $13 ARPUs. Per month! Per user! Average!

Mapping the sales process is a starting point. It doesn't have to exactly map every sale. As I said, every client is different. But if it applies to 80% or 90% of your sales, that's enough.

If you never make the effort to map this process, it continues to feel chaotic. As a result, your salespeople (whether you have one or many) will feel more and more stressed as the volume of sales increases, because they feel responsible for everything, from the lead generation down to the closing.

However, over time, a process emerges - documented or not. Every client is unique, but there are some steps, some activities, which are common with most clients. "Set up an initial meeting/phone call", for example, or "send a contract", or even "do some preliminary research".

At the beginning, selling is a highly chaotic activity. That's only natural: you don't really know what you're selling, what your key selling points are, what typical objections are, what the bottlenecks are, etc.

Here are some principles and tips that can help you make this activity more reliably successful. I'll be publishing a new one each day until I run out of things to add. Why not publish them all at once? Because no one will read the 2-3000 word article that would result. Also, because I'm clearly evil and want you to come back regularly to check for more, bwahaha.

Sales is a critical activity for B2B startups. It's also a bit of a black art, that many entrepreneurs learn on the job, whether or not they come from a sales background. Entrepreneurial sales is a tough job.

You don't get extraordinary commitment from people without offering them extraordinary commitment on your side. If you tell someone they're second place, don't be surprised to find yourself also at second place (and therefore not worth all the hassle).

Please don't do that. That is execrable advice, guaranteed to torpedo a relationship that you deeply depend on. On the contrary, respectfully start by making it clear to your significant other that they're always first in line, even though in practice it may not seem so at times.

Dating someone or married: warn them that they're not first in line, that you have this vocation, that your duty is to your company. It has to be that fanatical.

This seems like very good advice, and is to be contrasted with the exceptionally terrible advice coming from a respected figure like Ron Conway, who stated :

To make this relationship work in the long term, however, I believe founders need to be fully aware of the (often quiet) sacrifices these hidden co-founders are making and work to balance the effects of these contributions.

All of this strain takes its toll. You will extract time and energy from some other part of your life and that probably means your family. Having someone else who can change their schedule at the drop of a hat, keep the trains running at home and go that step further to provide unconditional support, understanding and advice (after all, who better than your life partner or spouse?) is key in allowing you to perform at your best.

I've found that "hidden co-founders" - husbands, wives, girlfriends, boyfriends and even parents - are often a crucial factor in the success of a startup. Why? Because being a founder and entrepreneur is not like a regular job. Startups are under-funded, under-connected and under-resourced compared to their competition. The way you beat these odds often requires super-human effort and commitment. This places you under strain, and the primary nature of this strain is physical. You have to travel, with no notice and at inconvenient times, often around the world. You have to focus entirely on the company and its mission, often pulling all-nighters and usually working through weekends.

Every Saturday, I'll try to post an article that covers some practical aspect of starting a business which is essential, and necessarily all that complicated, but which many people shy away from simply because they don't know the steps involved. This is not a "how to run a successful business" - the whole of swombat.com is not enough to explain that wholly. The idea is to take away a lot of the uncertainty from specific aspects of starting and running a business that might be putting people off not because they're difficult, but simply because they don't know.

As I argued last year, step 1 in starting a business is, quite simply, to register your business. However, there are also a number of responsibilities that you need to be aware of if you want to do this safely, and not end up being deemed irresponsible and fined by Companies House, HMRC, and other friendly government bodies.

1. Registering the business

Contrary to some people's opinions, registering a business in the UK is straightforward and cheap. There are many sites that automate the process of interacting with Companies House. I've used two of them, the last one being Companies Made Simple, specifically this subpage.

2. A Limited Company

If you're trying to create a business, rather than just create a legal outlet for your freelancing, you will need a Limited Company. The only reason to create any other type of trading entity (Sole Trader, Partnership, Limited Liability Partnership, PLC) is because your accountant advises you to. But even if they do, typically it is possible to transition your business affairs to whatever more complicated setup they propose - and often that setup will involve at least one Limited Company anyway, so there's no good reason not to registed a Limited Company, or Ltd for short.

But before you can do that, you need to figure out which package you want. The crucial factor is that in order to open a bank account, you will need a printed Certificate of Incorporation. God only knows why that is, but it seems to be the standard amongst most banks. This means you need the Bronze Plus package at a highly affordable Â£29.99.

Update: It seems that banks no longer require a printed certificate.

Why not get one of the other packages? Because the only thing of value there is, maybe, the registered address - but that is mostly useless unless you also get the mail forwarding, so just go with Bronze Plus.

Finally, I haven't tried it myself, but you can also register directly with Companies House here. That costs Â£18, so it's even cheaper, and is probably just as straightforward. If someone can try it out and let me know, I'll update this post.

Update: it seems that CompaniesHouse is indeed more straightforward, but if you use the bank account offers from a place like CompaniesMadeSimple, it works out in your favour financially.

3. What's in a name?

Before you can buy the package, you need to choose a company name. This can be anything you like, but shouldn't be rude, or you might be forced to change it. You should name your company something generic enough that it will cover what you plan to do with it, but specific enough that it conveys what you plan to do with it. So, unless you're creating a joke company or operating in a dynamic, youthful market like Ruby on Rails consultancies, avoid exotic names like "Rapid Lobstersnake Ltd".

What's a good name? It's related to your intended trade, it's pronounceable, it doesn't bring to mind something stupid or negative, even when pronounced rapidly (a very early idea of a name for GrantTree was WeClaim... which, on the phone, comes across as WeakLame; no good); it should convey the right impression when spoken on the phone, so that you actually get through to people you want to speak to. If you're struggling to find a great name, don't worry about it. Not only you can change the name later (it's only a minor hassle), but you can also trade under a different name than your company name. So, for example, Irrelevant Ltd could have a website relevant.co.uk and sell a product called iAmRelevant.

One final note about names: they can't duplicate someone else's company name, and there are some words (like UK) which don't count as a difference, so that, for example, Example Ltd and Example UK Ltd are the same company name, as is Example UK Limited.

4. Shares, shareholders, directors

As part of the company registration process, you might be tempted to come up with a lofty valuation for your shares. Don't. You'll only cause yourself hassle. Create 100 shares of Â£1 each and assign 1 share to each equal cofounder. You can change those numbers to reflect however you decided to set up the company. If you want to implement vesting, close this web page and get in touch with a solicitor.

Directors - anyone who should be able to speak for the company legally should be a director. You need at least one Director, and since a few years back you no longer need a Company Secretary (that was previously required). Contrary to what you may think, being a Director of a company is not all that glamorous. It just means you can be fined or put in jail for fraud if you really screw up badly. So, before you name half your family Directors to make them feel good, consider that they could end up in jail because of it. Scary? It should be. Whoever is a Director is responsible for making sure the company doesn't screw up its legal obligations to the government. It's worth adding that making someone a legal Director of the company and printing "Director" on their business card are two completely different and independent matters.

5. Registered address?

Contrary to what some people will tell you, you can have your business registered at your home address. You can do so even if your tenancy agreement doesn't allow it (obviously, don't actually go out of your way to tell your landlord about it). I don't know anyone who has gotten in trouble because of this (though I'm sure you can find some rare examples if you try).

In theory, you're supposed to display the company name somewhere in the entrance of the building, or outside your flat. In practice, nobody cares and they're unlikely to ever check that unless you've screwed up something else really badly (like not fulfilling the obligations described in the next section). So, basically, you can use your home address. That's the easiest thing to do, and recommended unless you have a reason to do otherwise.

What's a good reason to do otherwise? Well, if you're planning to deal with other businesses, being registered at "123 Nowhere Grove, Holington, SE31 TLD" doesn't quite carry the same prestige as being registered at "123 St James Street, London W3 456" or the like. The latter will be more convincing, so if you need it for your public image, you may wish to set up a registered office at a different address - but this can be done separately.

There should not be any other difficult questions in the registration process. Just complete it, and the company should be created within a few working days. You'll get the Certificate of Incorporation soon after. Don't frame it yet - you'll need it to open a bank account.

6. Well done, you now have legal obligations

The main effect of going through these steps is to end up legally liable for an entity other than yourself. You know how buying a car means that suddenly you need to sort out insurance, MOTs, tax discs and all that? The same is true for a business (but it's a hell of a lot cheaper than a car!).

The main obligations that you've taken on are to file what's called an Annual Return, to file your accounts, and to file a Corporation Tax Return (affectionately known as CT600).

If your company isn't trading, you may get away with not filing some of those, but you should probably keep it active anyway since it doesn't cost much and looks better if, 3 years down the line, you decide that having a 3-year old company is useful to your credibility.

The Annual Return is basically a form where you confirm to Companies House that the directors/shareholders/registered address/etc details of your company are still correct. It's a quick formality, takes a few minutes a year, and costs, if I recall correctly, about Â£14 to file.

The Accounts need to be prepared twice: once abbreviated, and once full. You need abbreviated accounts, because otherwise Companies House will publish your full accounts (including turnover figures, etc). Abbreviated accounts give away a lot less about your company. Full accounts give away more, and are lengthier to prepare. If you have a decent accounting system in place, preparing your accounts should be straighforward, and contrary to common belief, you don't actually need an accountant to do it for you (though it can help if you want to do complicated stuff).

Finally, the CT600 can also be generated automatically by any decent online accounting system, such as FreeAgent (includes referral link). We'll cover getting the accounting set up in a later article (in the next few weeks).

All those things can be filed either via CompaniesMadeSimple, or via HMRC's and Companies House's own online systems. I recommend signing up for Companies House and HMRC directly. Be aware that it take a few weeks for them to send you the various authentication tokens, so register there as soon as you can. The pages to register are: HMRC, Companies House.

That's enough for today. Congratulations, presumably, on setting up your first company! It wasn't that hard, was it?

The series so far:

1. How to register a company in the UK

2. How to: deal with your Corporation Tax (UK)

3. How to: track your expenses (UK)

If you read this far, you should follow me on twitter here.