Up and Running Blog

November 2009

The Blog Week in Review — 11/5/09

by Jay Snider on November 5, 2009

Why I’ll Never Retire — Tim Berry talks about how liking what you do can make it more attractive to keep working, rather than retire.

How I Tweet — Guy Kawasaki shares his work flow for using Twitter as a marketing tool

5 Ways to Improve Your Email Replies — Auto replies can really turn off your customers. These tips can help you make your messages more useful and less annoying.

How to Get Lucky With Content Marketing – Everyone who writes a blog wants people to read it. What can you do to get more eyeballs?

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The Gift of Not Getting Funded

by Tim Berry on November 5, 2009

There was a good reminder placed on The Funded yesterday. It’s a note from an entrepreneur entitled The Gift of Not Getting Funded (Early). I really like this quote:

What our lack of funding made us do is go back to basics. We know we had the seed of a good idea but struggled to come up with a sustainable model. Along with lots of hard work we talked with potential customers and came up with a solid way to generate revenue. Our potential customers are now signing letters of support saying they like our product and find it beneficial for their business and are willing to be contacted by investors. We have never had this in previous attempts to raise money and now feel confident in our plan.

The author, who has a screen name but not any additional details, makes this excellent conclusion:

Don’t despair if you haven’t gotten funded yet. It could be a gift in disguise.

Good point. And good example.

Which reminds me: If you’re an entrepreneur looking to get funded, go to thefunded.com and angelsoft.net. Both of those are excellent sites, very valuable for entrepreneurs, free and very useful. Oh, and by the way, if you’re an Oregon entrepreneur and looking to get funded, go to Willamette Angel Conference. Please.

(Photo credit: William Attard McCarthy/Shutterstock)

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Understanding the Healthy Company Money Trap

by Tim Berry on November 4, 2009

This may surprise you. From an investor’s point of view, self-sufficiency in a startup or emerging company isn’t always a good thing. In many cases, it’s an investor’s nightmare.

Here’s a hypothetical example. Suppose you just invested $250,000 in Acme LLC, a promising startup. Let’s say you got 25 percent ownership for your money. Years go by, and Acme grows in sales, profits and cash flow. In fact, it’s so good that it becomes cash-flow independent, meaning it’s generating enough cash, month by month, to pay salaries and fund growth.

As a successful high-tech company, Acme doesn’t make high profits. Instead, it pours as much money as it can into more growth through better marketing and better products. It buys ad words and search terms. It grows. Let’s say it reaches $1 million sales in three years, and $2 million in five years. And it keeps a healthy balance sheet, just enough cash to feel safe and no real debt.

In theory, and on paper, your investment value in Acme grows too, along with the company. Let’s say that by the time Acme’s running at $2 million annual sales, it’s worth $4 million, twice sales. So your 25 percent is worth about $500,000, twice what you invested.

Sounds like a great story, right? It is for the founders. They’ve been employed all along, and let’s assume they’re taking fair salaries and working on their own company, and their own dreams. Now they have 75 percent ownership in a good company. As long as they keep minding the business and watching the cash flow, they’ve made it. They can brag on their blogs, join the speaking circuit and send their kids to really good schools.

But it’s not necessarily great for the investor. Because that theoretical valuation of $500K is just that: theory. You, the investor, don’t get paid unless you can turn that value into cash. Acme, without an exit, also known as a liquidity event, is an investor’s nightmare. You end up having spent big money to build a business that may last forever without giving you any money back.

If you ever wonder why investors want majority shares, or why they tend to invest in groups with other investors, this example might help. It’s not that they don’t trust your  motivation, but they know that things change; sometimes entrepreneurs who started a company with an exit strategy end up changing their minds. They want to keep it forever. And where does that leave investors?

(Photo credit: FuzzNails/Shutterstock)

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The 5th “P” of Marketing

by Cidnee Stephen on November 3, 2009

If you have ever read any books on marketing you are no doubt familiar with the 4 – “P’s” of Marketing – Product, Price, Place and Promotion.  When combined correctly, these 4 elements can have a tremendous impact on your bottom line, but NONE of them are anywhere near as effective as the never mentioned 5th “P”.  Every company struggles with it, and most would confess it is what holds them back from achieving success in their marketing.  What is this elusive 5th “P”?

Productivity

It’s all well and good to have a sound plan or system on paper, but it is another to put those plans into action and then to maintain those activities on a consistent basis.

Because so many business owners remain the key rainmaker for their organization and still carry out a ton of the work, non-time-sensitive activities, like marketing tend to fall to the wayside.

Let me ask you this.  If you were meeting with a new prospective customer to work on a sizable proposal, would you miss the meeting because the printer needs fixing or you have a ton of emails in your inbox?  Of course not!

It’s time to consider marketing your biggest client.  It does, after all, bring in more money than any other one activity, yet we constantly put it aside for less important issues. Want to make a big difference in your business?  Then start keeping your appointments with your marketing.  Here’s how you can harness the 5th “P”

  1. Make Appointments With Your Marketing – In your calendar, set aside consistent meetings with Mr. Marketing.  Try 1 hour a day at least 3 days a week for a start.  Now don’t break these appointments.
  2. Minimize Distractions – Turn Notifications off on your Email, put your phone on Do Not Disturb, close the door to your office and remain productive for one hour.  After all if you were in a meeting with a client, you wouldn’t be answering emails, phone calls or questions from staff or family members!
  3. Make a Priority List – I like to create a list in Excel and then next to each item I rank it first by priority (1 is high and 3 is low), and then by the amount of time it takes (.1hrs, 3 hours or 40 hours).  Now multiply these two columns and sort your task from those with the lowest to the highest.  For big tasks, you might want to break them down to smaller tasks so they get started and don’t remain too far down your list, especially if they are a high priority.
  4. Create a Weekly Task List – of everything you want to accomplish that week so that when you sit down you know what it is you’re working on.
  5. Too much on your plate? Then ask yourself, can you outsource this to someone else, and is it really that important right now.  Remove those items that others can do or that can be delayed with little detriment, to a later date.
  6. Be Held Accountable – who do you have to hold you accountable on your marketing?  Face it – we all work best to hard deadlines.  Choose an accountability partner, or of course you can always enroll in one of our courses!

ducttapemarketingbadgeCidnee Stephen is the owner of Strategies for Success – a marketing company that focuses on the needs of budget-minded small businesses and professional services. She has helped hundreds of small businesses get out of their peak and valley ruts to finally achieve that next vital level of success. Cidnee is also a sought-after speaker, writer and blogger on marketing topics that affect small businesses and B2B service based operations.

If you would like to build a system to reach those goals quicker, check out Cindee’s Speak for Leads & Expertise Program.

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You Will Make Mistakes. Deal With It

by Tim Berry on November 3, 2009

I’m not a baseball fan, and I don’t particularly like sports metaphors. But there’s a lot of baseball in prime time these days, and one of the fundamentals of baseball that applies beautifully to entrepreneurship is about making mistakes.

In baseball, pitchers don’t always throw strikes (good pitches). They get up to three bad pitches per batter. And batters don’t always hit the ball. Players who get successful hits more then 30 percent of their times at bat are really good. In the major leagues, fewer than 10 have ever gotten 40 percent for a season. And the scoring includes errors.

In business, we make mistakes. And you’re going to make them. And when you do, you should acknowledge, file it away so you can use it as experience sometime later, and go on with your day.

If you can’t make mistakes and live with them, don’t start a business. Don’t run a business. Keep your day job.

(Photo credit: deepspacedave/Shutterstock)

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5 Things Missing From Most Entrepreneur Pitches

by Tim Berry on November 2, 2009

I found this list in a very good post from Charlie O’Donnell on his blog This is going to be BIG. I don’t know him, and I didn’t know his site, but on digging I discover he has done time with Union Square Ventures, teaches entrepreneurship and practices what he preaches with a couple of startups that he runs.

But what really matters is that this is a very good list. It matches my dealings with startups and investors, on both sides of the table.

1) Strong sense of the key milestones–Entrepreneurs often ask what metrics they need to get to in order to get an investment. I often turn that question around and get them to tell me what the important milestones are.

In a nutshell: Metrics. Trackability. He adds: “Milestones are a waterfall–and having them as goals should inform product, marketing, financing, etc.” Agreed.

2) Implementation of a product strategy–More so than any other aspect of the business, the thing I see early entrepreneurs tend to drop the ball on most–myself included–is product strategy.  I’m not saying you have to know all the answers, but you should at least know what your landing pages are trying to accomplish, where they’re going wrong and what steps you’re taking to identify the solution. I like to know that, even if you haven’t figured everything out, you have a process around product–so this way I can bet that you have the tools to figure it out.

The product road map included, and this gets even more powerful when you add on the milestones in the first point. In the post he adds the practical question, “How do I know you’re not going to spend the whole financing moving the search box around when it turned out that being on mobile was more critical to your success?”

3)  A theory on customer acquisition–You may not even have your product out yet, but having a reasonable sense on how people are going to discover it–past the buzz around your launch–is necessary. Just tell me how the first 10,000 users who aren’t your friends find it–and if it’s viral, tell me why people pass it on other than “because there’s an invite friends link.”

And, within that, this very real note about what doesn’t work:

If your strategy is to reach out to all the bloggers in your industry and get them to write about you, that’s pretty much what every other startup is going to do–and anyone who has done it will tell you the results will likely be underwhelming.

So make it real, and also realistic. Don’t just do what everybody else has done.

4) A financing strategy that gets you *somewhere*–When I say *somewhere,* I really mean one of three outcomes: getting critical mass (whatever that is for you) or at a product milestone that makes your venture fundable, starting to get revenues or cash-flow positive. When someone asks you, “What does this money get you?” they really want to know that it gets you to some amount of users, coverage of certain platforms, first enterprise customers, whatever it is. Just something more mission critical than “18 months.”

Notice that it’s not necessarily all the way to the exit strategy. I find this very refreshing, looking at some real next step, and going back to the foundation of metrics and milestones, trackability.

5) Specific value creation –The easiest way to show value creation is to say that each customer is worth X dollars in revenue. Pair that with the cost of customer acquisition and net worth; there’s your business. I don’t care if these are wild-ass guesses–at least make some attempt at showing that at customer N, your business is worth X.

That’s a very nice summary of “value creation.” Units times price.

What I like about this post is that it gets away from the standards I find myself listing too often: exit strategy, differentiation, growth potential, defensibility, management team and so on. This different way of looking at it seems very useful to me.

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