Do you have any ideas or thoughts on how to better run a business? This is the place for these blogs.

What To Think About in Running a Start-up

What To Think About in Running a Start-up

I’ve founded a lot of different businesses over the years and there is one thing for sure, running a start-up is very different to running an established business. So what’s a few key things that I’ve learned?

The biggest mistake that many entrepreneurs make is they believe their cashflows and assume that success is only moments away. A cashflow is the result of modelling the business in Excel and often bears little resemblance to reality. There are a lot of assumptions that you are able to identify that are built into any cashflow and then there are a lot of other assumptions that never make it to your analysis because you never thought of them.

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For example, today I was looking at a cashflow for a new business unit I’m working on and one of the major assumptions is the price of the new offering. When I put the cashflow projection together I really thought about the pricing and made sure that it at least looked sensible. Despite this, now that we are market testing the service I’m going to be looking at what real customers tell me more than my guestimates.

Many entrepreneurs also make the mistake of trying to make the perfect product/service prior to taking it to market. Don’t do this! You could end up spending a huge amount of time and money on something that no one will actually pay for.

My advice is to get something together as quickly as possible and get it in front of real potential buyers. Then, do a lot of listening. You’ll soon learn what they value and what they don’t. Don’t be surprised that this may be a LOT different from what you initially thought they’d want.

So here’s a good saying that we constantly say at ParkLogic, “Build the rusty mini-bike before the shiny Harley Davison.” In other words, cobble your product/service together before you automate everything and make it all perfect.

Where is your first dollar of revenue going to come from? This is the number one question that entrepreneurs should really be able to answer. It encompasses what you are selling, what value you bring and more importantly, who’s going to pay for it.

Really understanding the value you bring to your market is critical to the success of any new venture. Are you solving a complex problem? Making a task easier?  Or saving your potential clients money? Once you understand the value proposition then you can work on ways to build barriers to potential competitors.

One of the things that I really like doing is solving really complex problems. A lot of people shy away from tough problem solving but I must admit that I really enjoy it. I know that if I can crack the tough nuts then I’ll have loyal clients and large barrier to entry for any potential competitors. By their very nature, tough problems are also often the ones that get paid to be solved.

The next thing I look for is how to productise solutions that I developed for one client and run it across many. This will provide the scalability and impetus to really accelerate the growth of the business.

For example, when I’m looking at buying or selling domains I like establishing standardised relationships. I may lose a few percentage points by adopting this strategy but it allows me to scale my business by selling many domains very quickly. A lot of the hidden costs in buy and selling is setting up the relationships with either party. If you can give away a little bit of margin for a large volume of transactions then it’s a no brainer.

So there’s a few things that I look for in start-ups...most of them hinge around speed of execution, scaling and really understanding your customer. Let me know your own thoughts on what you like me discuss in future business related articles.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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How To Get Business Investment

How To Get Business Investment

There never seems to be a shortage of people wanting you to invest in their brilliant idea that is going to take the world by storm. So what do I look for in an investment opportunity?

Just to be clear, I’m not going to invest in a business where the money goes to paying off loans, scooped of the table by founders or pays off some other obligation. The purpose of investment money is to GROW the business so that it is successful…..not clean up messes.

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When I invest in a venture, I’m actually investing in a person so I really listen to not just the content of the pitch but whether the person giving it really understands the value proposition. If they can’t articulate the value proposition in about 1 minute, then I become completely disinterested. I’m not deliberately being rude; I just don’t have the time for someone that hasn’t clearly thought about it themselves. It may be a good idea but a potential founder who hasn’t thought about why it is of benefit to customers is not investable.

The second thing I look for is the background of the founder and how they came up with the awesome idea. I’m wanting to hear passion in the voice and why they are going to put everything on the line to get the business up and going. Entrepreneurs tend to have a succeed at any cost mentality that allows them to push through or around any obstacles in their path. If that attitude isn’t there, then you’ve lost me.

Assuming I’m still interested I’ll request a deck. The deck needs to synthesize the entire business in about seven slides. Any more than that and you’ve lost me again…. The slides tend to be:

1.      Summary page – (eg. Including how much you are seeking for what valuation)

2.      What is the problem being solved?

3.      How is the problem going to be solved by the new business?

4.      Market size and how it is going to be reached.

5.      Potential competitors

6.      Financials / Investment

7.      The team

 

I want to be absolutely convinced that you’ve thought about all of the issues for the new venture. Trust me when I say that breaking the business down into a very short deck will help you really think about all of the issues. Behind each slide there should be a lot of research that you can provide me at a moment’s notice. It’s all a part of the business plan that you will execute once you’ve received the investment capital.

Whatever you do, please be realistic on the investment and valuation. I had a startup business come across my desk the other day that had an insane valuation. They had no revenue or product and were giving up 5% of the business on a $13m valuation. They were essentially value an idea and it really wasn’t that great anyway….

If the business is a going concern then whatever you do, have your financials up to date. I am never going to invest in a business where the founders have a cavalier attitude towards the books. If you are a completely new start-up, then put together a cashflow and make sure you really understand all of the assumptions underpinning the “hockey stick” retained cashflow of the business.

BTW – I’m yet to see a business plan that doesn’t have somewhere in it that it’s a sure thing and going to make millions. I can guarantee you that despite all of the care you’ve taken with the business plan you have still underestimated how much time it will take to get started.

In the cashflow I’m going to get really focused on how big a hole is being dug and also what are the assumptions that drive the cash burn. If I’m still really interested, I’ll probably dig around to see if the cashflow can be adjusted to minimise the level cash burn. From here I’ll calculate the “go/no go” point.

When someone invests in a business there are basically one of three decisions that need to be made at some point in the ventures early stages. If the business is going gangbusters then everyone is happy and congratulations are all around. If the business is going out the backdoor then the decision is simple, close it down.

The third one is a bit harder, if the business is “struggling but may make it” then it requires a LOT more thought…..and this is where businesses typically end up somewhere in the first twelve months. The business is neither thriving or dying but just limping along. These businesses tend to soak up time and sadly, it’s often better to just kill them.

If you are really after a particular investor for their skills and what else they bring to the table, you may want to offer some equity just for them being involved. I’ve done this a number of times over my business career. I’ve dramatically reduced the valuation (to almost nothing) just to get particular individuals into the business. I’ve never regretted having a smaller percentage of a large pie over a big percentage of a small one.

Please let me know any of your thoughts on this topic and if you would like further articles on how to get business investment.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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Upcoming News

Upcoming News

In this video I will be chatting with Sarah about what’s to come for WhizbangsBlog. We discuss how she has been going with her most recent blogs and the overwhelming amount of positive feedback she has received.

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We also touch on the upcoming webinars that will be happening in the future. We would love for you to leave a comment on this blog about any questions or topics you may want us to discuss.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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Generation Y: Update With Sarah

Generation Y: Update With Sarah

Today I had the pleasure to make a video with my daughter Sarah. Since it has been so long since she has last featured in one of my videos, we thought we would do an update of the last one! If you haven’t already watched the video you can view it here. The video is about ‘Generation Y’ and if things have changed in how they use the Internet over the past few years.

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Have a watch of the video and let us know what you think! Sarah has now registered for an account with Whizzbangs blog and would be more than happy to answer any questions or comments you may have!

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

Recent Comments
impulse
Good video. I am 47, so it is interesting to hear how younger people are using the internet. I use my iPhone much of the day for s... Read More
03 March 2016
sarahgilmour
I find that there are still many websites that aren't phone friendly! But apps aren't always up to scratch either. I find myself s... Read More
08 March 2016
vanclute
Get all their news from Facebook... that's more than a little scary! Then again, this is coming from a guy who blocks ALL "news" ... Read More
06 March 2016
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Busy With Domain Opportunities!

Busy With Domain Opportunities!

One of the biggest problems for many of us in the domain industry is there is way too many opportunities and sadly, not enough time. One of the great things about domain names is they’re so incredibly flexible with all of the different businesses that you can drive off them.

This past week I’ve found myself in a state of “thrashing”. For those of you that have never heard of this term it derives itself from the computer industry where a hard drive gets so fragmented that the hard disk head has to jump all over the place to piece together a file. In the old days, you could actually hear the head on the hard disk chirping like a little mouse as it was swung across the disk platter.

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For a business, thrashing is when you have a huge number of projects on the go and never get enough time to complete any of them. You end up pushing each one forward just a little bit before jumping onto the next. Like a hard disk head, you find yourself just wanting someone to defragment your life so that you can focus on a project and bring it to conclusion.

In the lead-up to Christmas I found myself frustrated, completely unsatisfied and driven crazy by the number of opportunities surrounding me. I just can't help coming up with new ideas that need to be carefully suppressed and it's all because domains are just so darn intriguing.

For instance, I just built a little “skunk works” project that is now processing over a million pieces of traffic per day and the data coming through is incredible. I can see that off the back of this data is another dozen or so opportunities.

I’ve just been working through a new sales process for 3 and 4 character domains and my previous post (read here) covers a number of new concepts to better sell domains. It’s a real sale of really good domains and so far it’s been an outstanding success. So I’m scratching my head and thinking…..hey, I think I’m onto something here….!

Then there’s ParkLogic Next….this is a BIG one. We’ve completely redeveloped the entire ParkLogic platform so that it’s immensely flexible in how we can work with partners, route traffic and then mobilise the data for clients. It’s been a huge effort but we are already seeing an increase in payouts for domain investors with traffic domains.

There’s then the little project of routing traffic to tier two providers that Google was paying only tiny amounts for. This project provided an uplift of around 30% for the sample set of domains. Not bad when you consider the results of this "skunk works".

Then there’s the other small thing that I’m working on that involves working more closely with direct advertisers in distinct market verticals. How do you solve the problem where a revenue event may occur three months after the traffic was sent to an advertiser’s websit?. The problem is solvable and the dividends look like they will be huge…..but they could also be really low if the correct algorithm isn’t nutted out.

So this is a few of the things on my plate…..and trust me when I say there are a lot more! Some of them will provide incremental improvements for clients (all good) while others are quite revolutionary concepts that are still being proved out.

If you would like to see something pretty amazing then come to our table at NamesCon on the Sunday afternoon. You’ll get a glimpse at ParkLogic Next and we hope that you like what you see.

So back to my thrashing problem…..I’ve allocated a few hours this afternoon to break the back of one of my big programming problems. And doing something like this is really the key to solving this type of issue. When you find yourself jumping from one project to another take a look at your list and ruthlessly prioritise it. It’s the only way that you’ll get the biggest bang for your time. So in a few hours’ time I’ll have an issue off my plate and I’ll secure the benefits for the business.

This does bring up another point….if you would like to propose a business concept to me then make sure that you have the one page summary that is backed up with a solid plan. I’ve had people try and talk me through an idea and this can be a lot of fun over drinks but if you’re really serious then give me something in writing that I can get stuck into.

I would also like to finish with the axiom, “If you want something done then give it to a busy person.” People that aren’t busy tend to push things off until tomorrow…..busy people, prioritise and get things done or they tell you they just don’t have the time.

I hope this helped you with managing your own challenging list. Domains are wonderful things that just keep on creating unusual and exciting opportunities!

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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