The big & sticky

Sometimes when you are in the weeds of trying to accomplish your weekly goals or reaching out to make industry contacts, you find yourself glued to a computer screen or on the phone for two, three, fours hours of the day. Coffee becomes your best friend. For me, after those long nights I try and revisit and test my current answers to some of the higher-level questions that are critical to the success of the overall business.

In a recent article on women run businesses from Entrepreneur magazine there were some good ideas on what some of these higher level questions are.

1. Is your idea scalable?- a product/service that rides a trend that blooms in 3 - 5 years. Most importantly, an expandable distribution system, manufacturing relationships that can sustain higher volume levels, a plan for increasing the sales force and a plan for scaling up advertising.

2. Is it a commercially viable business model? - this is a kind way of saying do you have a solid understanding of the costs of the business / industry you're thinking of entering. For instance, how do advertising expenses affect your break into the black.

3. Viable exit strategy - not fun stuff, but necessary.

4. Clear pitch - It can be easy to "know" your business but not be able to explain it well. I've run into this stuttering phenomenon more than once. Practice is really critical. This is also a great area to get feedback from your advisory board on. Their role is not only to help with understanding the dynamics of new industries / setting up relationships, but also to ask you the tough questions to crystallize your thoughts.

Naketano

These guys are on to something special. I've always loved strong colors in almost anything, but especially in clothing (just ask anyone who knows me). Naketano has added strong cuts to a no reservations attitude towards neon. It just clicks, I love it.

http://www.naketano.de/

The answer

1. What can I give people? What do they want?
Access
Free stuff

2. What can you learn if you tried to start a business with the simple idea mentioned above. I want advertising dollars. I want traffic. I want eyeballs. Its a good scoping tool.
A. Advertise on the website where you get it (youtube. Go to this website and fill out information, and take a look at these ads for other free stuff.)
B. Whoever distributes this to the most people gets a free mercedez
C. Provide your information to ... and you get a free mercedez. (use it as a tool to gather personal information for another company. People provide their personal information so valuemail can send you advertisements for other products.)
E. Sign up for ... and you could get a free mercedez (Three points 1. The information you provide can be used for advertising. 2. Funnel you into purchasing another product. 3. You send the e-mail to other people.) How about an easy function where you can automatically send it to everyone in your e-mail account.
D. Give me a dollar.
E. Hold an event where people pay to get in. Give me x % of all ticket sales (charity auction).

How big is the advertising $ on the internet?

Bigger than I had originally thought. Huge. I just wanted to remind myself to discuss. NYTimes dropped their paid subscriptin business today due to greater revenue opportunities in advertising dollars available from consumers who would read their articles online if it were free.

Two questions to consider:

1. What can I give people? What do they want?

2. What can you learn if you tried to start a business with the simple idea mentioned above. I want advertising dollars. I want traffic. I want eyeballs. Its a good scoping tool.

The important stuff

Hard work and dedication are critical to execution. Remaining who you are at your core however, prevents you from committing some awful mistakes ... for the line between genius and insanity is thin.

Consider an example. Steve Jobs delivers revolutionary creations better than almost anyone. Imagine Steve without a moral compass. It becomes clear that he could accomplish some pretty terrible stuff without guidance and in a different environment/society/country. What should we take away? Make sure your porpoise. Get your head above the water and ask your-self which destination you want to head towards. Don't be afraid to have those vulnerable 'college' conversations about life ...

One thing that I have learned the hard way over these past two years is that once you've affirmed your destination make sure you tilt heavily in your dedication. Hard work accelerates learning exponentially. Don't be afraid to stop hoping and start believing.

So now I've argued both sides of the coin. One last tid-bit. Write thank you notes by hand. Its personal and it matters.

WSJ Article - Self Funded Entrepreneurs

Fascinating article from the WSJ on "bootstrappers" or self-funded entrepreneurs from my buddy Conall. Below is my e-mail to him and a copy of the article. Thanks Con!


Conall -

Solid, solid article. Thanks for sharing. A few takeaways ...

1.Small, if for no other reason than to learn & and to keep a full stomach. A couple things came to mind:
- Design competitions. Link small businesses with creative designers to tackle a specific design problem. The twist is that you provide the business challenge to multiple designers and hold a pot of gold at the end for the winner. (This one has been on the mind for a few months)
- Beer vendor for college students. Need beer? We'll bring it to your dorm/apartment door any night of the week.
- Massages on college campuses at the library. Engage the University to pay for it.
- Consulting 101, the real thing. You know all those guys/girls at top Universities who want nothing more than to work at a consulting firm. Teach them, charge them.
- Timely and cost effective transportation for the night shift community. The middle and lower class are frequently overlooked, but they are huge (7.6 M HH) and growing (Hispanics accounted for 49% of population growth from 2000 to 2004).

2. Government loans. I like it. Tell me where and how, I'm there.

3. Buy small companies and make them lean. How many businesses do we walk into and recognize that they are focusing large amounts of resources in the wrong areas? Kinkos, sandwich shop down the street. Set up people with what they want to buy! Also, this is a great way to take another perspective on your own business plan. If I wanted to buy the business I am trying to start, what would I do differently on the first day? Small time private equity ...

4. Start with what is free. Who has a vested interest in providing you with low cost/free stuff.? Companies based on advertising ... facebook and whateverlife.com come to mind. For me, how can I engage a philanthropy early on to assist in purchasing the first round of product?

The overall message of the article is really powerful - easy and cheap. Its a great way to bring the challenging proposition of starting a business down to size ... and making it executable. Test, learn and keep moving ... keep getting better. Its exciting.


Best,
JP

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The Benefits of Using
Your Own Bootstraps

By KELLY K. SPORS
June 10, 2007

When Seth Riney started a hybrid-auto taxi service in Boston in 2003, the 33-year-old aerospace engineer didn't pursue private investors. Instead, he found a more compatible financier: himself.

Mr. Riney traded in his 2002 Dodge Dakota pickup truck for a Toyota Prius. He kept a day job and worked early mornings and evenings ferrying around friends and family willing to pay for a lift. After a few months, he squirreled away enough money to hire his first employee and put a down payment on a second Prius. He kept adding more hybrids and more drivers as his cash stash grew.

Today, Mr. Riney's business, PlanetTran, has grown to a fleet of 35 hybrids and about 75 employees. He recently expanded his taxi service to San Francisco with the help of some investors. The company had $1.5 million in revenue in 2006, and Mr. Riney expects it will reach $4 million this year. "It was the kind of business that could grow organically without spending a lot of money in the early stages," he says.

Less Can Be Better

Would-be entrepreneurs often think starting a successful business requires a large cash infusion to pay for an office, employees and professional marketing to make a cannonball splash in the market. But many are discovering the advantages of "bootstrapping" -- or using little or no external capital and conserving as much cash as possible to grow the business. It's about finding effective ways to build a business yourself without running thin on cash.

There are many compelling reasons to do it. For one, the fewer outside investors you take on, the less equity and control you forfeit to people who often have vastly different priorities than yours. Outside investors may want the business to grow as rapidly as possible so they can see quick returns on their money, even when slow growth is the better business model. "When you bring on other investors, you're instantly conflicted because what's in the best interest of shareholders may not always be in the best interest of you as the CEO of the company," says Bill Payne, an expert on private investing for the Kauffman Foundation, a Kansas City, Mo., center for entrepreneurs. What's more, keeping a tight lid on spending during the start-up phase means the mistakes you make will be far less expensive than if you'd spent a lot, he adds.

Keep the Day Job

There are many methods that bootstrappers use to self-finance and save on cash. For starters, many tap into their own bank accounts, credit cards, and home-equity lines of credit. Of course, this is risky if the business fails. So like Mr. Riney, one way to make sure you don't go broke early on is to keep a day job until the business is profitable enough to stand on its own.

There are also business-plan competitions and government grants available to some start-ups, as an alternative to outside investors. And sometimes businesses can strike deals with their suppliers and other business associates to delay bills and get paid early -- at least until the business is profitable enough to stand on its own.

Wendy Fergerson, president of Integrated Printing Solutions, an Overland Park, Kan., corporate- fulfillment service, bought her business for $170,000 in 2004, while the company was $1.2 million in debt. She spent the following months calling the company's vendors and suppliers to explain the situation and renegotiate terms, including scoring a $400 discount on monthly rent from her landlord. She also devised a strategy for maximizing her use of personal credit cards. She kept moving around $60,000 worth of credit-card debt among about 15 cards and paying off the balance in the grace period before interest kicked in. She also made use of 0% interest introductory offers as much as possible.

Today, the company is in the black and had $1.7 million in sales last year. "I used personal resources and personal skills to save this company," she says.

Other bootstrappers do as much as possible to keep their costs low, whether it's buying used office equipment on eBay, using interns and freelancers instead of hired help or seeking out free advice.

Home Base

Mark Roberge last summer launched a social-networking site, PawSpot.com, for pet owners looking to swap pet-sitting duties, arrange play dates and share information on local pet-services vendors. Starting the business as a Massachusetts Institute of Technology graduate student, he pulled together $500,000 from outside investors to help fund his start-up needs. Although there were opportunities to raise more, he didn't want to forfeit more control of the company.

So, instead of buying or leasing office space, Mr. Roberge worked from home for several months and held meetings in cafes. He paid four graduate students about $1,000 a month for 10 hours a week of freelance help with marketing and technology analysis. And, he used several open-source software programs -- software often available free or at low cost online to the general public -- to test out potential site features before investing money to create them internally.

He also signed up for affiliate-marketing programs and Google's AdSense program to make some extra cash from the site when visitors clicked on ads or purchased goods from the advertisers.

Pro Bono Help

There are numerous resources for start-ups looking to minimize costs, says Candida Brush, an entrepreneurship professor at Babson College in Wellesley, Mass. Many colleges and universities offer free and low-cost help to local entrepreneurs, such as legal or intellectual-property counseling by law students.

Joining local business networking groups or a small-business development center can also give entrepreneurs the opportunity to get advice from other entrepreneurs and perhaps even barter for necessary services such as accounting help, instead of paying cash.

Some recently launched Web-only businesses now offer traditional services -- such as legal help with incorporating a business, public relations and creating spot TV ads -- for a fraction of what they traditionally cost. So entrepreneurs who shop around for services, Ms. Brush says, can find numerous ways to keep their costs low.

"Cash is king," Ms. Brush adds. "If you manage your cash well, you're probably going to do a better job of making the business work."

Design is about how you see the future

What could be? How will it be different? How will this make me look better ... sexier, happier, more caring? Shapes, particularly the contour of a line speak loudly to our eyes about how things will look in the future. Products must strive to be held, strive to be touched, strive to show depth about what will change for the better.

I was struck by this insight last night after I reaching a milestone in my business plan following many, many, many hours spent plugging away at coffe shops & bookstores. I went out to celebrate and took to a "thinking" walk. (Ya know, the "life is great, it has so much to offer" ... kind of walk. Not the "where is it all going" walk.) I found myself close to a large grocery store near my hoouse (Giant Eagle) and went in to buy some tasty food and drink to celebrate.

As I walked through the front doors and past the produce I was in free flow mode. Usually I walk into the grocery store with a mission, a mental checklist (80% pancakes and bacon products), and a brisk walk. However this time it was definately different, I was just coasting, almost subconsciously floating through the store.

I was thinking, "What would be good? What would be good to celebrate? What's an indulgence that would make me feel good?" Then I saw it, Fiji water ... and I felt oh yeah, relaxing and luxurious, I've accomplished something ... I may even be rich. Now I don't even buy Fiji water. I admire their branding and the company's story but its not a water I search for. But at that moment, as I rode the high from my new business idea and thought about the future I wanted to bring Fiji water with me, I wanted it to be my ambassador. I wanted to feel something and I needed my fix. I had a problem and Fiji fixed it. Its thats simple.

So I'd like to take a look at 5 products that mean something to me and explore some of the reasons why. The magic lays in their design so lets focus on the visual.

1. Fiji Water - Its the indentation from the top into the middle and the subtle angles of the box. Its the absence of anything but the word Fiji and the picture. Great example of another design principal I like: take one design component (preferrably the most important one) and leverage it at the expense of the others.

2. Gushers - Fruit gummies that explode with juice in your mouth. Does anything else scream fun like that? So clear and simple a two year old could have come up with the name ...

3. I-phone - Look at it. Its the most complex phone ever made for the mass market and what else is it ... this simplest looking phone ever made for the mass market!!! Its also really pretty.

4. The McDonald's Arch - Its a smiley face, upside-down. And its yellow. (Guess what else is, WalMart anyone? People just want simple and happy) I'm convinced that large corporate America just tries to sell happiness. Think about it, British Petrolium ... yep, happy little people with a sun, driving through magical greenness. Is it a mistake the sun turns into their logo? Nope. Everytime you see it, thats what they're making you think. Happiness and clean. Coke, happiness. Pepsi, happiness & fun.

5. The bug - every been suprised by the amount of people driving bugs that you never thought would be? And how many of them keep that stupid flower on their dashboard? Its really an environment more than a car. An accessory. Cars frequently represent what people want to be if they really had what they wanted, if they just had the time, the freedom. Instead, they just get a little dose of the ideal everytime they walk to driveway in the morning. The secret? Its an animal.

What do you want to bring with you into the future?

Nuggets from Ben Franklin

I'm currently reading H.W. Brands book on Benjamin Franklin, "The First American" and have found many of Franklin's business methods noteworthy. Below are a few of the best nuggets:

1. With people, the direct approach is frequently the ineffective approach.

2. Your written word is another voice.

3. Bad things happen, continue to determine your future.

4. Preparation, not strength, sets the odds for any battle.

5. Read, read, read.