Archive for August, 2008

The Timeline and Business Plan

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After the rigorous rounds of investment pitches and meetings, you’ll be quite releaved when the investment is finally secured. So, when the money is in the bank, you can proceed with locking down all of the other components of the launch that you need confirmed before you can define a time line upon which everything else you do will depend.

Your timeline to launch should have all of the different aspects of development, marketing and sales planned out. You can build separate timelines and schedules for these different components if you want. These timelines will then have to be set in stone and followed as stringently as possible for you to be able to launch in time and on schedule. This usually requires an iron-will and exceptionally good management skills - so you should start sharpening both of these elements of your personality.

Have a marketing timeline showing what mediums will used when. Usually its good to build credibility and trust in the consumers first - so you can plan the initial schedule for building those. When you’re closer to launch, you can go through hype cycles and excitement peaks and then post-launch relaunches. All of these need to be marked on a calendar or pointed out in a timeline.

The most important thing, without which you can not launch, is your product. So, make sure that you plan out the product development schedule properly after going over the specs and modules with your technical team and architects.

Our Events Listed product is already in the testing phase right now - so we’re in a good position to finalize the launch details. I like to fix dates for prelaunch campaign starts and for a massive launch phase that will hopefully last more than 2 weeks of heavy promotion. Everything will revolve around these launch dates.

At the end of this phase you should have a business plan that includes marketing plan as as well as development schedules. All of this information and strategies can be plotted on mindmaps and time lines and be accessible for the team to see. You have to make sure that everyone is on the same page at all times. Our Internal Business plan was written in text first, then the content was plotted into mindmaps and a timeline.

The initial written plan touched on the following aspects of our plans;

* a detailed description about the product Events Listed and how it could benefit customers.

* a list of product features and the elements that make it unique

* a detailed strategy behind the idea conception and product dynamics

* a description of the market size based on our initial research and findings

* our marketing and outreach plans, and how we will utilize social media networks for promotions

* our product launch strategy and overall timelines

* legal considerations - to show that we have all grounds covered.

* our revenue expectations from the venture

* our overall business and revenue distribution model.

* the organizational structure of our team to showcase our strengths

* a list of our targeted milestones and dates based on the timelines that we had earlier built

* our exit strategy

We take the information generated within this plan and and use it to draw up time lines & we mind map an overview of the big picture with different sub-sections and divisions for detailed information. Mindmaps are a great way of organizing complex plans in an easy to read manner. We usually put up our plans online in password protected web services so that my team can access the info form anywhere.

Its worth mentioning here some truths about business. Inevitably things change, and as they do we change our mindmaps and our timelines along with it, so that they are uptodate. The process of writing the business plan is the most important element of the plan because it forces us to do due diligence on every aspect of the opportunity.

Once we transport this content into our online mediums that are easy changed and followed the initial written source is archived for the records. Its always a good exercise to pull it out each year down the track to see how much we variate off the initial plan.

Presenting information while pitching to investors

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For Events Listed I found an equity partner through my Linked In connections. I found a graphic designer based in the UK, who after I pitched the concept to him, was willing to invest close to $150,000 worth of design and marketing services into the opportunity in return for shares.

If I was raising cash for a website venture or an event I would not kick off the project until the investment is confirmed and paid. Thats because getting a ‘yes’ from investors is just the first part - if you have them interested in hearing more, then you need to have a thoroughly sketched out plan to present to them. Every little detail or decision needs to have a business-case behind it.

You will probably need an Information memorandum that outlines everything you must disclose about the investment opportunity. Basically its just a way of bundling information together in a way that can easily be read by investors. This information is vital for sealing the deals, so its a good idea to spend a good amount of time figuring this part out. Its more or else the same for all kinds of businesses.

You can decide the flow and structure of the information, but be sure to add an executive summary at the front. When pitching, a lot of fresh startups forget to add sections for outlining their goals and objectives. Investors need to know about your plans regarding these aspects as much as you do, so do add them.

Its a good idea to formulate the company structure before deciding your equity and share distributing strategies. Based on this you will be in a better position when pitching and discussing the investment opportunity with prospective stakeholders.

Next, your corporate governance strategy also tells a lot about how well and deep you have digged the opportunity. It also demonstrates your openness to sharing your venture with different people in order to come out successful. Businesses are hardly a one-man show and need complementary skillsets and mindsets to make it successful.

Your initial team of key personal and human assets deserve a mention in this information kit as well. Its a way of showing your strengths as well as an idea on how the investment will be spent to finish the product. Startups require a lot of selfless dedication from the initial team, so make sure you get the right one on-board. Everyone should ideally have unique qualities that they bring to the table.

In Events Listed case, I have already spent a good amount of time researching this opportunity. So, its relatively simple for me to estimate the investment opportunity and market size. The latest websites and trends in social media make it easier for internet-based businesses to calculate and gauge the market. There are also different tools like Google Alerts and Analytics that can help you in your research process.

Most of my marketing strategies involve ways of leveraging social media to do community based promotions. If you follow my social media strategies blog, you’ll know how I’m always exploring new tools and seeing how they can benefit people market their events or products better. Having a social marketing strategy doesn’t mean that you can’t put it down on paper - infact these strategies need to be just as intricately planned as anything else. Surely, your investors will want to look at how you are planning on reaching out to prospects. After all, your marketing and sales strategies will directly effect your bottom-line figures and to the investor’s piece of the pie.

Making high-level goals is one thing, planning out an operational and tactical level strategy for achieving those goals is another. Your operational structure will show how well you have distributed the resources to ensure a constant flow in the right direction. The better the structure, the better your tasks, objectives and consequently goals will be met.

Sometimes, entrepreneurs who are desperate for investment, make themselves vulnerable and weak. If you have a good product idea and a sound business plan, then there is no need for you to feel like you have to give away a lot to get going. Make sure you dont sell yourself short. Also, make sure that you carefully describe your terms and conditions of the share offers in this info kit. A good strategy is to make it a win-win for all parties involved.

I’ve noticed how investors are a little hesitant when dealing with newbies who have no financial sense. If you don’t have the skills or background to work out detailed financial forecasts, then you get someone to do it for you before you approach investors. Your financial plan needs to be planned to the nth degree and should be validated before you set it in stone. Your financial plans will show exactly how you are planning on utilizing the investment funds to make money - and how soon you are expecting to get there. Nobody expects magic, but they do need to see sound reasoning.

Once you have discussed your plans, you can summarize your capital requirements. You can write briefly about the current ownership of the entity and what it will look like after securing the investment.

If possible, get legal advice, add disclaimers; make sure you have everything covered. Oh, and don’t forget to add any other material contract associated with the opportunity that the investors will need to look at.

I’ve done my part - its not as difficult as it seems.

Raising Capital

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OK when it comes to raising capital for a business opportunity, I look at it like this.

Investors won’t offer fair prices until the risk is diminished to a point that the opportunity is about to take off. You have an application or product that has a competitive advantage, huge growth potential, some big and very happy early clients & most importantly you have proven the concept, you have proven the revenue projections through consistent sales and your competition cannot touch you because they are years behind.

In short that’s when you don’t need money so desperately. Before that you’d ask an angel investor to invest their money in your vision. All the bells and whistles aside here, no matter how the deal is pitched an angel investor will want a fair slice of the pie for taking the risk in doing so. Perhaps seasoned entrepreneurs with a few big wins on their plate might not have that much trouble securing funds – but then people who are serious and who believe in themselves unreservedly for the same reason an angel investor would (because they have done it before) would want to fund the early phases themselves anyway, to retain as much of the pie as possible.

Now, if such a person did not have access to the capital required to achieve this then I would be asking why, why don’t they have capital to invest in their own vision and ability, why should anyone else if they cant show past successes has placed them in a position where they can invest in themselves.

So raising capital is complicated, a good association to join is Tiecon.com is a good association to join and their annual conferences are amazing. I’ve been a member for a few years now and have made some great contacts amongst VC’s, angel investors and other great technical entrepreneurs through it.

My rule of the thumb: I don’t attempt to raise capital until I get the startup through phase 1 myself – minimizing the risks and putting myself in a better position to negotiate.

If looking for a network of angel investors go here.

My 10 rules for pitching for private or venture capital;

1. Keep the pitch as a high-level overview and get to the core of each point

2. Present one aspect of the plan at a time and ensure it’s understood – no need to overwhelm others with information or technical jargons. Keep it simple – the goal is to create a clear picture in their minds.

3. If using slides - use no more than 5 slides with BIG font and a few words per slide.

4. Talk to the audience not the slide show, look them in the eye and engage them. Know your stuff, if there are any questions.

5. Outline what the competition is doing and announce your opportunities strengths, threats and weaknesses against your number one competitor.

6. Be honest. You will earn more respect as a potential partner to these investors by knowing your opportunities weaknesses & what stands in the way of you succeeding than you will by promoting the blue sky.

7. Show them you know your challenges and indicate how you intend to overcome them.

8. Introduce the key people responsible for delivering success or failure (on Paper).

9. Tell them how much money you want from them and very briefly how you will utilize the funds.

10. Remember these people have been pitched to a few times a week for ten years. They don’t want to see financial models at this stage, they don’t want you to tell them how you plan to exit, they will tell you how you will exit if they are interested. It’s what they do. This pitch is to convince investors they want to take a closer look at you, its not to outlined the entire business structure.

If after slide 5 they haven’t asked you any questions and are showing you the door then don’t wait by the phone for a call. Don’t be surprised if they tell you to scrap the presentation mid way through slide 2 and start asking you questions from the get go.

Remember these guys do this for a living, they are sharp and have seen it all. Be ready to match them toe to toe, you must convince them your the expert in your field. If you cant show them something they don’t already know then your wasting their time.

They will know of a lot of weaknesses in your opportunity once you pitch it. If they think you have something to offer quite often they will attack the opportunity with the hardest hitting devil’s advocate play you have ever had come at you just to see how you handle it. If you’re still standing after the first few rounds you can get down to nuts and bolts.

If you’re not sure about the whole journey but think you have a great opportunity that deserves funding then you can also talk to mentor partners such as http://www.mentorcapitalpartners.com/

They get on board to help you navigate the path, for a fee of course.

Feedback

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OK now I have my opportunity sketched out in my mind – backed up with research that confirms I will be able to attract a huge volume of traffic at varying degrees of cost. It’s time to see what the market thinks about the idea before I commit to executing it.

So I’ll search for forums, communities and groups based on my listed keywords. I will also engage people directly in different social networking sites – like Google groups, Twitter & Facebook groups. These platforms are the real world equivalent of a group of people all standing in a huddle on a street corner whom you know are all potential customers. Not just any customer, they are targeted customers who have joined a community of other likeminded folks who all have an interest in what you have to offer. Event planners and promoters.

Just like in real life, you wouldn’t walk into a private group of people with a big banner ad and fliers, spamming people in social networking sites is no different. Engage them in conversation and ask them their interests before asking them if they would mind taking time out to give you some feedback on your new website opportunity. Offering to remunerate them for their time is even better etiquettes, some say. I work my way across the networks until I find 100 or more people who are perfect candidates for my survey.

I have only spent a thousand dollars or two on paid ads to date so paying 100 people $10 each for answering a quick survey of 10 questions is only going to cost me another $1000. This is cheap insurance before forking out tens of thousands or asking an investor to fork out hundreds of thousands of dollars to launch a site that until you ask 100 people you have no idea how it will be received anyway. You are going to need an online survey, I use survey monkey it only costs around $100 for a year to use their paid service, which is very effective.

I will always write a brief outline of the opportunity and post it in the intro of any survey– an example of which you will see at www.EventsListed.com/EventLine

I then add 10 multiple choice questions that give me the surety on questions you must be asking yourself at this stage about what exactly may or may not be needed in a site like the one I am assuming the market wants.

If done right these survey results will hold all your answers and as stated, for a cost of no more than $2000 you have everything you need to confidently decide to spend a lot more money executing the opportunity or at worse you have invested $2000 and some time to save you waisting a lot more time and money on an venture that would most certainly not have paid off.

Product Costing & Feasibility

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OK by now I have come up with a list of pages that represent solutions to problems searched by our target market. I have a fair idea of how much traffic I can bring into the site and I am aware of the sort of money it’s going to cost me to get them there. I have deleted pages that host solutions to problems tied to keyword phrases that are going to be just way to expensive to attract visitors.

In the Events Listed case I could see that the business opportunity called for us targeting a huge volume of traffic in the generic events space using an exponential number of key word phrases to attract free traffic easily and sell this traffic off our pages through adsense, ticketing or any other affiliate related products.

My research had confirmed it was this or we were going to have to narrow our focus down into a tight niche within the event industry, target a smaller volume of highly concentrated traffic to targeted audience and sell a hand full of high end items that earned us big margins.

I could have spent weeks tightening the screws chasing words into certain niches like “event planners” or “night club” promoters and drilling down to a specific kind of event planner or promoter and even focusing on regions or cities that registered any kind of volume for a niche in keyword results.

Through my early research however, I identified that ticketing of public events online was huge online with a steady uptrend, likewise it was extremely competitive. Tens of thousands of websites selling tickets to sporting, charity, theater & concert events throughout the world yet all these sites were resellers or affiliate sites selling tickets on behalf of the huge ticketing networks.

These reseller sights, when I traced them all back to the source, lead to just a handful of wholesale or ticket Intermediaries who distributed tickets on behalf of the ticket brokers, venue owners and promoters. Now I also discovered that the volume of traffic generated by all the main events was huge in comparison to the smaller events. Thousands of ticketing sites were competing for the not so competitive phrases representing the less known events whilst a handful of 5 to 10 sites dominated the top pages of search engine results for all the main events that attracted hug traffic volume. I noticed trends in my key word research that indicated large spikes in key word searches for specific events were in line with the amount of media coverage these events were receiving so there was a clear strategy of watching the events calendar for coming events with a view to dominating key word phrases that don’t exist before specific events (that have unique words in the phrases) are announced, to get pages into top ranking positions before the event hit the press at which point everyone is searching the internet for the event.

You could never pay per click for traffic and make a margin on selling tickets to these larger public events. Though if you could fine a way of getting cheap traffic the opportunity was a good one.There was huge volume, no physical product, no customer support & the item was a consumable so the same customers would buy time and again after you invested in securing them as a first time customer, this is if you built in a loyalty program to retain their business.

I got excited and started following this ticketing site trail it got even better because I realized there was a whole world of event organizers and promoters who sell tickets to anything from school plays to local night clubs & weekend tennis tournaments who didn’t have access to this global ticketing networks because their volume and ticketing sales was not enough to warrant the expense of using them. My Analysis led me into more research and this entire process led me to coming up with a broad outline of what I felt was a great opportunity online, at a global level.

Now the more detailed version of this opportunity took four months to work out, function by function, and turn into a full developer’s specification which will be covered later – for an overview you can visit: www.EventsListed.com/eventline

Key Word Research, Site plan & Costing

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Everyone celebrates events; all people of all markets, locations, cultures celebrate events of some kind or the other. Events are a part of life. Everything big or small is an event and when we die those who attend our wake to remember us do so by reflecting on, in the most parts big events in our lives so the generic form of this topic reaches as wide an audience as we could want. Events need attendees, entertainers, planners, caterers, guests, invitations, RSVP management, ticketing and the list goes on - this means I could target any one of these doorways for long-tail keywords representing commercial intent and I would find myself with pages in front of thousands of people who are likely candidates for the right event related product and ready to spend money every single day.

Now that I have a clear understanding of what the opportunity is I need to determine just what the product is going to be. I will usually take 4 keyword phrases from my list and dig off of these words using my work research tool and build more targeted lists of words and phrases geared around my newly defined events based business opportunity that i am now looking to define. I then sort this list into categories and string the most searched phrases into a list under each category heading. My categories in this instance Invitations, Marketing, Entertainment, Catering etc.

Next to each keyword phrase in my lists I add a column, in this column I list proposed content or a particular product or service that I feel would solve the searchers problems. Now, at this stage I have just built myself a list of content based on key word phrases people are currently searching, likely product types and services that are going to satisfy these peoples needs and or wants within a specific niche market that I know has high internet usage volume with an increasing trend of people turning to the internet for solutions and its a niche I am interested in. Phew.

This list is gold, my friends, and it is all you need to design a website’s content pages, products and services to succeed online. Building it and driving traffic to it is another story altogether.

Now, the Event Listed application’s functionality and blogging content has been derived from this exact process, which makes it easy for me because I know I am not going to have to struggle to find traffic blindly after I have invested in the site / product. You can be confident that if you know how to build a good website & how to drive traffic to it, then you can spend the right money on it. If raising capital, you can imagine how much easier it is going to be if you want to show investors the process you have followed in determining the opportunity.

How Much Money will it take?

The first thing I do when calculating costs for a site is sketch out all of the pages I think I am going to require for the site. I do this from the list and I add the keywords as the title of each page.

I take my list of pages and categories then map out my site structure into tables starting with my index page at the top, branching down to the first level of major category pages off the index onto the 2nd and third level of pages. Now we do have a lot of SEO considerations here that i will go into more detail on in another post. Once I have my tree layout done I list my pages under each of the major pages and I branch off each page listings as much functionality I think each page requires at this early stage.

I use mind mapping software to draw the site layout tree. I then sketch out a rough power point presentation that articulates the page layout I want for each of my sites pages, I highlight the links to all of the functionality within my pages onto each page layout. My naming convention for each page is key word phrase specific so starting with my index page I can work through the power point slides and follow the pages I am looking at in my site overview layout tree on my mind map so that I can see where each page sits within the site.

The way I cost a site at such an early stage is to go into sites like Rent a Coder, Freelance.com, Elance.com and search their database by sellers. I find the most popular sellers and I look through their past work to find sites that are similar to the site that I believe we are going to require.

I will even go so far as to contact site owners or webmasters to ask them what they paid for the site to be developed and if they did it themselves how many man hours it took. My view is that the good developers are always busy through existing clients. By posting your jobs on these kind of trade sites you are asking to become swamped by developers who are bidding because they need work. These providers need work for a reason and these reasons are more than likely not to ones that should fill buyers with confidence.

I always shop for providers in these sites and will always approach the best. I never post jobs to the mercy of the masses and hope a good developer bids and that I choose the right bid. The odds of getting this right are long odds & getting it wrong means wasted time and money which can lead to the end of an opportunity before it begins.

With an estimate on the site design costs, I need to forecast the cost of marketing the site to get it in front of my market using the internet as my delivery platform. I start with a rough outline of the blogs & articles I want to be posting daily to ensure the domain hosts recent and relevant content each day by the search engines. I search Elance, Feelance.com and craigslist.com at absolutely zero cost to find a data base of talent from all over the world. I approach the contractors my research has confirmed deliver the best quality work and I send them a brief asking for quotes.

With my site costs estimated in and the cost of writers quoted, it’s now a matter of calculating the cost of traffic. The quickest traffic you can get to a site is pay per click (PPC) advertising and the daddy of them all in this space is Google. So again, this isn’t rocket science; I set up a Google Adwords campaign and add all of my list categories with variations and let them run. I will run $1000 or more though Adwords sending people to other people’s sites in my target niche with the sole aim of collecting live market data.

Now some might determine that paying out $1000 in pay per click advertising to send people to competitors web pages is a sure fire way not to succeed. Like a lot of things in life its a simple case of changing your own outlook to see riches that have always sat before you.

At the end of this process that will have cost me some time and $1000 I will have, 1- my list of keyword phrases my target market are searching for, 2- the problems the market have that represent these searches, 3- the solutions I need to offer to solve their problems , 4- the number of estimated searches each phrase is being searched per day, 5- the maximum cost per visitor it is going to cost me to get traffic to my site, if I only apply PPC; and 6- a confirmed number of times in a day that ads targeting these keyword phrases are being pressed into web pages and shown to the people searching them. I even know what kind of click through rate I can expect for each phrase.

Now these results are by no means a dead accurate forecast on what the business is going to cost you to market but you show me a market research company who will do your diligence on any new business opportunity and deliver this kind of information for $1000. I add these estimates in cost per visitor against the keyword phrases I already have listed in my spreadsheet. As I start picking and choosing the web pages that I feel the site is going to need to make money I am fully aware of the maximum cost per visitor to each page as I am choosing them for the site.

What we now have is factual data on the simplest & most immediate technique, as well as the volume of visitors we can expect to a page daily by executing the most immediate, least cost effective strategy for driving traffic, in a way that any newbie can do. We use good old fashion excel to do our forecasting. With this kind of data now at our fingertips it’s simply a matter of estimating the site design, the products or services we will be selling off our pages then forecasting the sites traffic conversions and sales conversions to forecast revenue over time.

In our profit and loss sheet we include entries for revenue then deduct the cost of traffic through our page impressions, click through rates and costs per click. It’s not hard to do, anyone with excel skills can do it - I usually break these forecasts down to the lowest common denominator so that I have the income and cost variables per key word phrase in my lists which enables me to play with my variables and keyword combinations to see what the most profitable combination of pages and products are going to bring relevant to traffic and volume.

What this shows me is an estimate on the margins I can expect to earn versus the volume of sales we are going to require in order to be profitable if paying an absolute premium per visitor to the site. Knowing I can cut the cost of traffic per visitor by hundreds of percentage points from the cost of paying Google per click I have enough data to work with to complete the design of my new website knowing how I am going to monetize it, with good estimates on gross margins and my most expensive cost base per sale. The aim is to introduce dynamics into your research that will drive you into choosing a profitable niche & designing a profitable website based on information that is available to you, information that represents what is currently happening and will continue to grow in volume.

Events Listed - The Idea

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Keywords are the foundation of any internet business model. Keywords depict consumer behavior; search engine modeling & bookmarking sites are all driven by keywords. Building a business online is all about getting your product or service in front of new consumers when all you know about them is what words they have entered into a search engine or bookmarking site. I use wordtracker.com for my initial keyword research. I tend to use my generic keywords from my ideas list as a starting point. What I do is that I create a spreadsheet with different types of keyword terms – those with commercial intent, researching purpose or simple navigations.

Now 80% of search volume online comes from the head of all search phrases, by this I mean general terms like “Events”, “Parties” & “Conferences” & 20% of the words in these phrases will be associated terms. We’ll target those 20% specific terms.

Getting to the long tail through keywords:

If we target the long tail we don’t have nearly as much search volume but we have 80% of all the words searched to work with. Likewise, the longer the tail on a keyword phrase the more targeted the search. People tend to, by nature search the shortest most generic terms first, if the results do not represent the solution they are looking for they add words, they keep adding words to refine their search until they finally land on a page that solves their needs.

We want to find a business opportunity that will provide an opportunity for us to be able to build as many of these pages as we like of targeted searches

Identifying commercial and information based searches through filtering:

Now you will find throughout your research that close to 1/3rd of all searches are performed by people looking to navigate to a particular page or site using search engines because they cannot remember a URL. We have no Interest in these words. We work through our list until we have 500 - 1000 word phrases in our commercial intent and information search lists together.

Once we have our lists ready, we filter them by their search frequency and remove words with less than 20 searches a day.

Looking out for keyword trends:

Once I sorted my lists I could see a pattern emerging straight away with words like DJ, parties, invitations etc showing up multiple times. I am not going to give away my keyword list but I knew at this point that I was looking down the barrel of an event related business opportunity on the web.

You should have a list of 40 phrases, half of them representing commercial intent and the rest representing a need for information - and all estimated to be searched more than 30 times a day or more.

Next I search each phrase in Google and bookmark the top results into my Google reader. Using my reader as my information store I punch these sites & the topics they represent into Google trends and I study the trends of internet users over time on these particular sites to get a feel for the market. Google trends is a bit like the stock market charts that shows you patterns of growth or decreases in search volume over time for different sectors and more recently different websites.

I add my notes against each site to my Google Reader & I can even share the links & notes through an RSS feed into my Friend feed account or my Google shared links page by clicking the “Share this” button in my reader notes tab. By doing this I have somewhere on the web to send people who can take a look at my research results to get opinions. I’ll touch more on this topic in another post sometime later.

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