Strategies for Startup, Growth, and Change

Crowdfunding? Beware!

Sites like Kickstarter, Indiegogo, and GoFundMe have given entrepreneurs exciting options for funding the development and creation of a business or product. But not every experience with crowdfunding is a good one. There are some important pitfalls to keep in mind!

Lessons from failure: The Coolest

One of my favorite crowdfunded products is The Coolest. Before watching the video above, I didn’t know how much I wanted something like this! The inventor of the Coolest, Ryan Grepper, raised more than $13 million to bring his dream to life! Unfortunately, this entrepreneur’s dream turned into a nightmare.

Raising a lot of money to develop a product seems like a good idea. But it only works if you’ve calculated your pricing correctly before you start raising! Grepper’s mistake was pricing his Kickstarter rewards too low: he lost money with every unit promised. Part of this was because of production problems and supplier issues. Many of the assumptions he made when calculating his pricing didn’t bear out.

The solution: a change in thinking

Instead of thinking about crowdfunding as a way to gain startup capital, it’s more useful to think about crowdfunding as a mechanism for pre-selling products. Only the margin above your costs should be thought of as startup capital. For Grepper, increasing his margins when setting his pricing would have given him the financial latitude to overcome his production problems.

Doing it right: Peak Design

Peak Design’s Travel Tripod is their 12th Kickstarter project. They don’t use Kickstarter for startup funding; they use it as a sales channel. Can you use a sales channel for startup funding? Yes, and this is a strongly encouraged practice! But only plan on being able to use the portion of your sales that you would otherwise call profit to cover your startup costs.

Avoid mistakes: pricing it right!

For more help with pricing, see our Pricing Magic Course or Pricing Magic eBook! And if you want some more personal attention, you can hire Andrew as an entrepreneurial coach.

Social Enterprise Academy Day 4

Randy White shared the characteristics of a social entrepreneur. He made an analogy from Proverbs 31, often titled The Wife of Noble Character. Randy pointed out that the characteristics of a Noble Wife can also be the characteristics of a social entrepreneur. The text lists these characteristics as including:

  • Initiative
  • Risk-taking
  • Confidence
  • Hard work
  • Generosity
  • Taking care of herself

AP Armour shared some principals about hiring from the gospel of Matthew. He pointed out the fact that Jesus went through many experiences before he started making an impact. He was obedient to his calling

  • Remember when you hire someone that you are taking their lives and the lives of their families into your hands.
  • When hiring, consider both current AND future needs.
  • You have to hire and build your model around your ability to employ and sustain yourself. Prove the business model including the ability to pay yourself. Design your model to be able to employ
  • When you start a business, you wear a lot of hats. As you grow, you start taking those hats off and handing them off to other people. To do this you need to know your strengths and weaknesses – both your personal and company strengths. What are the things I’m not good at, that I can hire someone to do?
  • Find the things that are key to making your business work, then put key people into positions that are responsible for those.
  • What are your business’s biggest needs? What are your skilled positions and what are your labor positions? When you hire people, hire the cream of the crop into skilled positions. People in labor positions come and go. It’s okay to have high turnover, but mostly in your labor positions. Where are your directorial positions?
  • Who to hire: This is a cultural decision. Success depends on creating a clear, concise, culture. AP shared that his company’s culture is important, and you need to hire people who will fit in with that culture. His company’s culture is defined by the mission statement: “We operate businesses that reveal the value in people so that they could be positive contributors to their communities and homes.”

  • How to fire people: Firing is a harsher world for transitioning someone out. When you fire someone, sometimes letting them go is part of doing the very best for them. If they’re not a fit, moving them on is the best thing you can do for them, even though it’s very hard. Sometimes, firing someone can be one of the most powerful moments of their life.
  • When you fire people, you need to have infrastructure that supports clean firing. Having a process and being transparent is a blessing for employees. AP has been heavily influenced by the book Discipline Without Punishment. It’s helped him create a management style that empowers employees and helps them to take responsibility for their own work.
  • They assess employees in three dimensions: attendance, performance, and conduct. Create quantifiable metrics that help assess performance.  Communicate those expectations so employees know how to manage themselves and their own work.

How to Make a Web Site for Your Startup

Your business needs a website. It’s not hard to make a site, but it is important! I always tell entrepreneurs that you can pay for a website one of two ways: with money or with time. Having a website legitimizes your business, and it can even be a factor that funders look at when they consider your investment worthiness.

Paying With Time

If you have a lot of time, some experience with making websites, and a big store of patience, you can roll your own site. Here are a few of the more popular tools for doing that:

WordPress

I’m a fan of WordPress and have been using it since 2004. It was originally created as a blogging platform, but it can just as easily be used to manage a website. It’s highly customizable, with a huge community of developers making solutions (in the form of plugins) for almost any problem you want to solve. There’s a good reason WordPress is used by as much as 30% of the web. One of my favorite add-ons for WordPress is WooCommerce, a great set of plugins for selling stuff with WordPress.

Squarespace

Squarespace touts themselves as an easy solution for making sites, and simple drag-and-drop templates. Their web sites are nice-looking, but their popularity is fueled by a pretty aggressive marketing campaign. They have an interesting offer for a website paired with Google G Suite integration here.

Shopify

Shopify is more than a website builder – it’s an eCommerce platform. You can set up eCommerce with any of these solutions, but Shopify was built with this in mind. Credit card processing and other features are built right in.

Wix

Wix is a popular solution, known for their free sites. There are a lot of ugly Wix sites out there, but some nice ones, as well.

Paying With Money

If you want to get started more quickly, focus on your core competencies, and have someone build you a great-looking site, you have plenty of options! One of my favorites is Bet Hannon Business Websites. Bet and her team are great to work with – real people who will work with you to meet your web needs.

I already have a site

Good for you! If you want a free 2-3 minute video review of your website, Bet Hannon is offering a free assessment of websites for entrepreneurs. She and her team will tell you what’s working and what you can improve. It takes about 30 seconds to sign up for this, and it’s totally free.

Reading for Entrepreneurs: The $100 Startup

You guys really responded to my previous post, Reading for Entrepreneurs: The Lean Startup! It’s become one of the most-viewed pages on this site. We continue today with a review of Chris Guillebeau’s great book, The $100 Startup.

I tried to read this book twice. The first time, it pissed me off. All the talk of easy money and simple steps clashed pretty strongly with my experience, which told me that starting a successful business take a lot of strain and effort. I returned a few years later to finish the book and found it delightful on my second read.

The thing that convinced me that Chris Guillebeau isn’t out of touch is that he talked with 1500 different entrepreneurs, and their stories are liberally sprinkled throughout the book. It also draws from his own experience. This points to the deep truth that different people can engage in the entrepreneurial process in different ways, with different end results. The way you think about what you do matters.

“The way you think about what you do matters.”

The real value of The $100 Startup is that it removes the myth that you need to invest a lot of money to start a business. See, for example, the story of Ben and Jerry’s ice cream. They started with $8,000. For some tactics, you can also see the slides from the talk I gave at the #SOENT17 Social Enterprise Conference about How to Get Started with Hardly Any Money. (Also, if you’re interested, there’s a video of the talk here.)

The $100 Startup moves the emphasis from investing money toward providing value for customers. Guillebeau also emphasizes action over planning, which dovetails nicely with the Lean Startup methodology discussed over here.

But my favorite part of The $100 Startup is the stories of successful entrepreneurs who started with very little money. Like most humans, I love learning through stories, and inspiration is at least an important as content in learning entrepreneurship.

Have you read The $100 Startup? Did you like it? Hate it? Leave a comment and let me know.

Enjoy the reading!

Social Enterprise Academy Day 3

At the beginning of Day 3, Randy White shared about soul care for the social entrepreneur.

After getting an update from each entrepreneur, Andrew Shinn taught business modeling – how to plan and project for success. Participants learned about pricing, cost of goods sold, monthly fixed costs, break-even point, and how to project forward-looking income statements. Andrew shared the example of the Coolest, and how to properly model and plan your business.

For today’s field trip, we visited Tree of Life Cafe. Steve and Carolyn Ocheltree shared their entrepreneurial journey with us and fed us some delicious tomato basil soup and bierocks. Steve also mentioned Quickbooks Online as a great tool for startup accounting.

Social Enterprise Academy participants share lunch at the Tree of Life Café.

Randy White interviews Steve Ocheltree at Tree of Life Café.

Steve Ocheltree speaks at Tree of Life Café.

After lunch, Alex Hussain-Leon shared some excellent tech and productivity tips. Some of the tools he shared include:

  • Google Drive (and all the associated tools)
  • Asana – A project management tool
  • Hubspot – A great free Hubspot
  • Canva – A great free graphic design tool

Jeremy Hofer from Access Plus Capital shares about startup funding for social entrepreneurs.

Jeremy Hofer from Access Plus Capital explained sources of startup funding for entrepreneurs, shared some financial management tools, and made social entrepreneurs ready to interact with lenders (if that becomes necessary).

Jeremy shared this business startup costs worksheet

And this cashflow projections template

And this financial projections spreadsheet

Some of the participants in the Social Enterprise Academy include:

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Pricing Magic Video Course now available!

Over the past few years, I’ve used Pricing Magic to help hundreds of entrepreneurs start their businesses profitably. Today I’m excited to announce that the kit is also available as a video course! For those of us who learn visually (which is almost all of us), you can now work through the steps to pricing with a live (pausable, re-watchable) guide.

Do you have a story to share about pricing your products or services? Leave it in the comment or use the contact page to get in touch with us.

I have some other new products on the horizon, so stay tuned!

Click here to get the course.

Here’s a preview:

Lessons in Entrepreneurship from Ben and Jerry’s

Jerry Greenfield and Ben Cohen, founders of Ben and Jerry's

I’ve been really enjoying Guy Raz’s excellent How I Built This podcast on NPR. When I was listening to an episode with Ben Cohen and Jerry Greenfield of Ben and Jerry’s ice cream fame, I noticed a few lessons that today’s entrepreneurs could learn.

  1. When Ben and Jerry were picking the site for their first ice cream shop, they stood out on street corners with handheld Tally Counters to count foot traffic. This is an excellent Lean Startup-style experiment, and one that only requires hustle and work (and a tally counter). They were making cheap, practical, data-driven decisions, even at a very early stage in their company.
  2. They started with only $8,000 of invested startup capital. And they taught themselves about making ice cream via a correspondence course.
  3. When Ben and Jerry wrote their first business plan for funding, they didn’t know what they were doing. They used a business plan from a pizza restaurant to guide them. When they were finished running their projections, they realized that they would have to set higher sales targets to stay in business. So they set higher sales targets and did what it took to reach them. This is an EXCELLENT example of the value to be gained from planning and projections. This is exactly the kind of insights that you should surface while you’re doing planning and business modeling.

If you want to read more about the Ben and Jerry’s story, you can check out the classic, “Ben & Jerry’s: The Inside Scoop: How Two Real Guys Built a Business with a Social Conscience and a Sense of Humor“:

Social Enterprise Academy – Resources from Day 2

For day 2, we heard from Brice Yocum, Rex B, and Miles Sebesta.

Brice Yocum talks with social entrepreneurs about iterating on ideas

Stuff Brice shared:

  • Change by Design by Tim Brown
  • Design thinking: Empathize, Define, Ideate, Prototype, Test
  • Fairness is overrated. Don’t serve everyone: serve one group with excellence.
  • You can’t swing at every pitch!

Rex B drops some sales knowledge.

Stuff Rex shared:

  • You are all salespeople!
  • Nobody cares about your product. They care about themselves and their problems.
  • Create templates for
    • Cold-calling
    • E-mail
    • Social media selling
  • The Top Inbox: a Gmail add-on that supercharges e-mail
  • Calendly: tool for scheduling meetings
  • Concord: platform for managing and signing contracts
  • Square: Free-to-start, easy credit-card-processing
  • Workable: platform for recruiting and hiring
  • Hubspot: Customer Relationship Management (CRM) and InBound Marketing
  • Mailchimp: Free e-mail marketing
  • Rex’s book, Outbound Sales, No Fluff

Miles Sebesta talk marketing hypothesis and testing.

Stuff Miles shared:

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Social Enterprise Academy

Here’s a gallery version of these photos.

Today marked the first day of the Social Enterprise Academy run by the Center for Community Transformation at Fresno Pacific University. I’ve been privileged to get to work on this project as a writer, an entrepreneurship advisor, mentor, and instructor. Here are a few photos from the first day, along with some of the resources we used.

Worksheets

These worksheets are created and copyrighted by Strategyzer.com and Strategyzer AG, and used by permission. These are the same team who produced the wonderful Business Model Generation book.

Here are my slides from today’s presentation:

Thanks to everyone who joined us today! Please let me know if there are questions I can answer or additional resources I can add. I look forward to 3 more good sessions!

Businesses my students are launching

I’m privileged to teach business and entrepreneurship at Fresno Pacific University. This semester, my students in Seminar in Strategic Management are launching businesses. Here are a few of the projects they’re working on:

For Freedom Flags

These patriotic decor pieces are great gifts for veterans, police officers, firefighter, and other heroes and patriots.

Altered Marketing

This dynamic duo is offering social media marketing consulting for small businesses. Any business that needs more traffic or wants to sell more should look them up!

Wisdom Watchers

These caring helpers take care of the daily household needs of older people. They help people living on their own to stay independent for longer, and they provide peace of mind for anyone responsible for an older relative.

Cell Now

These recycle-preneurs take used or broken electronics and give them a new life before selling them overseas to people who don’t have access to the latest gadgets.

T.H.E. Detail Kings

These hard-working guys help to protect the investment you’ve made in your car. They make your used car feel like a new car for only a fraction of the price!

The.Design.Dude

These guys make unique stickers, delivered with a unique experience!

Renegade Shirts

These guys deliver custom, classy t-shirts for military members and firearms enthusiasts. They also offer military unit t-shirts at a good price and right when they’re needed.

String It On

This team makes custom string art wall art (backed by good stories) for home stagers and moms with kids.

Which project is your favorite? Which one(s) do you want more information about?