What I would do if I started today... And Why...

[ApeRunner]

My experience is that if you even have the faintest thought that the individual needs to go, trust your gut. Start making provisions to replace them. I say this because every time I have been there, I didn’t, and I was caught with a hole in my organization because I fired them hard for something else soon thereafter.

Gold. If you can't thrust 100%.

Also, over the years, when someone has given me a 2 week notice, I cut them a check and show them the door right then and there. I send them off with my sincere best wishes. If they no longer want to be there, I don't want to prolong the pain of them leaving. It's kinder to them and to me. Life goes on with or without them...

Can be difficult in some situations, but it's a good principle.

 

[ZF Lee]

What's the plan in "just gonna try selling some stuff on Amazon"? There probably isn't one. There's gotta be a clear path to something more. "Getting experience" or "getting feet wet" isn't really a justification for the existence of a business.

It hit me that way too!

I've wondered in the past whether such a thought was merely action-fake or not.

A business is too complex, too valuable and too large for such starter reasons. Sure, getting experience and feet wet are important.

But I wonder if they are the de-facto requirements of a roaring business. Or some kind of frankenphrase.

As I read this i think there is a big assumption. When you ask someone what would they do differently you are asking them based on their current experience. So you assume they retained all their knowledge and Experience.

But what if future bio from 2018 comes back in time to present day 2012 bio and says go big, trust me? I would probably believe my future self and do what he says. But i can you that the confidence wouldn’t be there.

For example, when i started my first import order was $5500. Knowing what i know now and having experience and confidence if I started over i would be placing a $50000 order.

But going back in time, my experience at that time dictated a $5500 investment.

Likewise, if I knew TFLF existed in my high school time, I would have went to look for it earlier! And start the biz earlier too....

Is there a way to push past the confidence issue? In this case, we might not get the privilege of having our future selves come to us, but we may have an upcoming demand to take bigger and bold steps.

 

[MrG]

Hi Kak, thanks for posting this.

I have a business figured out thanks to experience in the industry I work in. It would be an educational/consulting service that can be packaged as a product too.

I am planning to build the foundation (website, brand, awareness, first 1k email subscribers, first 100 visitors/day etc.) within a year while working a full-time job.

Once I start producing the set of products I can easily make ~150k the first year on my own.

The scenario above would probably cost me less than 5k and a lot of time.

If I put in more capital, I could do much better:

A proper content team of 2 for marketing, a developer and one assistant would easily yield ~500k in a year after the first 6 months of starting up.

That first year and a half would cost me ~100k in people resources.

So, here's the question: how much share and how much money should I be asking for?! I understand investors won't invest if the owner is not investing in his own business, I would be ok to put 30k of my own savings up-front.

30k is how much risk I can tolerate in exchange of great returns (~500k vs ~150k) that first year.

I am looking at realistic 1M - 3M turnover (a lot of it "profit", because the cost of selling information is very low) in 2-3 years.

What would then be the contribution to ask of my investor partner? For how much share?

PS: Maybe this helps you craft a better answer, I am 25yo, I have a good paying job and almost 100k in savings (30% would be ok to pursue fastlane business). I want to spend 1 more year in the industry because with my new job I get more credibility once I start this planned business.

 

[Jade.backer]

It's an awesome thread. I wanted to know different people's option. glad I'm here

 

[jpmartin]

So if I were to start today... I would think bigger. I would come up with a damn good plan. I would use that plan to raise a ton of money. I would use that money to buy every damn resource I always wished I could afford. I would take a stranglehold of the bottom line and make my investors as well as myself rich.

It’s not one size fits all, it’s not the only way, it’s just how I would do it.

Welcome to the club!

 

[hungryhippocampi]

Thanks for sharing this information Kak -- it is invaluable to have a "been-there done-that" person share wisdom!

Do you think when putting together an investor package it is critical to have conducted and included quantified results of your market validation if you have not gone-to-market yet?

I actually think I can bootstrap the development of my app and have a decent, workable prototype once I'm done with my market validation. So I'm wondering, which comes first the chicken (see if the market likes my secret recipe) or the egg (get the funding after validation but prior to development)?

 

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[Real Deal Denver]

OK Kak - here is your anything that I'm going to ask.

It is extremely important. More important than a product - or marketing. It's cash flow.

I am going to be launching several products. Let me outline two scenarios. I would like you to analyze the how to part of getting the second process going. The examples below will speak for themselves...

1) I produce a product. It is well received and sells well. I have customary net 30 billing to my customers. After 30 days, my cash is replenished, and I continue on - growing at 10 to 20 percent a month in gross sales.

2) Same situation - except no net terms. None. I'm like a supplier in China, or Amazon. You order the product, pay for it, and then receive it. Now my turn time goes from 30 days to, um, well, one. My cash replenishes within 24 hours, instead of, say 24 dayyyyys. Huge improvement. I can now grow my business AT LEAST 30 times faster. And reduce losses from bad accounts - and save time chasing money. I love it.

So, why doesn't everyone use method two? Cause they're chicken sheets, I guess. Cause none of their customers would "stand for it" perhaps. Who knows? Chinese suppliers do it this way and it seems to be accepted - even expected.

That is the super steroid plan that will shoot my business into orbit. Overnight.

This is such a revolutionary concept, I can't imagine NOT doing it. Sure, my business clients won't like it - but I'll simply explain that I can't tie up my capital for 30 days by being a bank for my entire customer list. They, on the other hand, only have to deal with me - ONE supplier. They should be able to stomach that, instead of ME financing 200 customer accounts.

What do you think the acceptance rate for these terms might be?

Rip it apart. Tell me why it's so bad or why it won't work. I want to hear it now rather than later.

Thanks ~

 

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[ZF Lee]

My products are unique. Nobody else offers what I do, so in a sense I have no competitors. But, then again, my product is one of many, so it is not necessary. Think of offering apple pie in a restaurant. They can get by without my product, even if I'm the only source for it. But having my product would definitely be beneficial for them.

Yes, everyone in this business offers net 30. It used to be that the distributor of the product - me - would also get net 30 terms. But I don't, because the market dynamics have changed so much. I don't like the fact that the dynamics change on my end for me, but not for anyone else. Isn't that the way it always goes, though.

I am reinventing the way I do business. Nothing personal, it's just business. I'm stacking the odds in my favor, for a change. I've done things the old fashioned way. I don't want to keep track of accts receivable. There's no need to - that's not my job. I'm not a lender. The way I see it is, if they want my product, get a business loan and buy my product. That's what I do with my suppliers.

I know some will balk at this idea and be insulted. Balk away. I am, instead, approaching this from a radically different perspective. If I can get only 200 customers, buying 50 products a month, then all will be well and good. Is that better than 500 customers buying 20 a month? Maybe not. But I'll go with the sure thing - and be guaranteed that I'm going to be spending my time in a profitable way - not chasing money or billing.

This is a radically new age we're in. The internet can showcase my product - I can instantly communicate with thousands of customers through a web site - funds can be instantly received. Wow. Talk about a hot bed incubator for business to grow!

AND, the speed of packs of dogs chasing me to steal my product also greatly increases, as well. Everything is increased by a factor of ten or more - wait, except my inventory turns - because I'm waiting weeks to be paid? If at all? Been there, done that. Too many times.

No, I'm taking control. I have superior products that will be very profitable for everyone involved. I want a superior business model that will grow 30 times FASTER than the old way of doing things.

I really can't see me doing this any other way. I'm totally gaa gaa and in love with this business venture. When the dogs do catch my scent and are on my trail, I will be 60 TIMES ahead of them. That means the sixty days I have invested in growing my business will actually be equivalent to 60 MONTHS of growing my business under conventional rules of engagement. That's five YEARS of growth in two MONTHS, because my sale ratio cycle will be one DAY instead of 30 days. Rinse and repeat. Let em catch me and fight over the scraps. I'll be cruising at 5,000 feet by that time. Then, by the time they do catch my scent, I will have SCALE that they won't be able to come close to.

Oooops - I've said too much. If MJ sees this, I've given him the outline for his next book. Fair enough, I guess. I got my outline from his first book...

That must be some progress thread.

I'm hearing that his next book in the UNSCRIPTED series will be a fiction one though. UNSCRIPTED in story form.

 

[GetRichODT]

Yes I would. A well capitalized product launch is better than a lean one.

Your primary objective when seeking investment is to explain what you are going to do with the money and why using it that way will make everyone involved more money.

Keep it simple... Why do VC investors exist? To make money with money. Help them with the vision. Prove the concept to them.

Well capitalized you can go right to distributors, get in front of buyers and accept orders that would otherwise smoke your cash flows.

How do you go about finding VC? Living in the dallas area I'm a far cry from Silicon Valley. I've redid about series 1 etc but never actually done it.

What are the basics?