It takes me a lot to journey across the Pacific Ocean and even more when it’s in the middle of my summer in Australia. It just so happens that Namescon ticks both of those boxes but I’m still making the journey….so why would I do that?

The first Namescon really took advantage of a gap between TRAFFIC in October and an overly delayed DomainFest. This opportunity, combined with a fantastic team of industry luminaries has powered Namescon from strength to strength.

To date there are over 800 registrants from all over the world attending this year’s conference. The sessions topics look incredible with speakers who are real experts in their fields sharing their incite and knowledge.

I was kindly invited to speak on a session which will involve building an online business from concept through to a 12 month cashflow and final implementation within 60 minutes! I’ll be inviting a person from the audience to share their business idea and then we’ll build the domain out in front of everyone. It’s going to be fast, furious and a LOT of fun!

What I’m really looking forward at Namescon is the fact that the who’s who of the industry will be in attendance. I’ve already found my diary filling up with appointments with people from all over the world. I’ve found that there’s just nothing like sitting across the table from someone to get business really happening.

So despite the beautiful Australian summer I couldn’t resist jumping on another 24 hour plane journey to attend Namescon. Feel free to reach out to me if you want to catch up for a few drinks :-)

Most people know that the finances of a business are a critical in understanding the performance and sustainability of the enterprise. The problem with reports like the profit and loss and balance sheet is that they are all historical. In order to really understand how a business will perform you need to be able to develop a future projecting cashflow.

A number of years ago I was approached to invest in an online business. I was interested enough to show up to the meeting and hear the founders talk about what the business had been doing. I then asked to view the financial projections moving forward….they looked back at me blankly and asked, “What’s that?”

Developing a cashflows in Excel is a great way to help you really come to grips with what is really driving your business forward. Surprisingly, I’ve found that many business owners don’t actually appreciate the underlying metrics which underpin their businesses performance.

For example, I was looking into a business that after doing some quick analysis I concluded that the more it sold the greater the losses! This was obviously not a good situation! The margins were all wrong, the costs out of control and the business was being funded by client prepayments with no thought of delivery. This business was doomed unless drastic action was taken…..sadly, like 80% of start-ups it eventually failed.

So you have your domain name and you’re wanting to develop it into a business. After pondering about the concept for a while I typically send a “flag up the pole” with a few people. In other words, I share the idea of the service and gauge the reaction.

I’m not just interested in what the response is, I’m also interested in the emotional reaction. Is it, “I’ve seen this idea before” or “That is brilliant!”

I then test out a number of different pricing strategies. Should I have a joining fee, cost plus, subscription, advertising etc. Everyone will want something for free but is that sustainable? In some cases it is, because the revenue comes from other sources but most of the time a business has real costs that it needs revenue to offset.

In these discussions I’m constantly gathering information and trying to ascertain whether the business will be sustainable or not. I’m also trying to work out whether the venture is worth my time….more on this in another article.

At some point in the process I begin to develop the first cut at the cashflow. So what does this look like? Seeing that a cashflow is typically forward looking, each column represents a month and the far left column are the items. This then allows me to add a revenue number for each month plus the associated costs.

I personally build a spreadsheet with four different areas:

Assumptions
These are all of the numbers that you are typically making a good educated guess. There will always be assumptions but a good entrepreneur will recognise what the assumptions are and then assess the risk to the business if they are wrong.

For instance, one assumption that I find myself quite often making is the exchange rate. The last time I checked the relationship between the US and Australian dollar was quite dynamic but in my financial model I need to pick a number. In my sensitivity analysis I can then alter the exchange rate to view the impact on the bottom line. In my experience, it’s very easy to think that you are in one type of business only to discover that you’re actually a sophisticated foreign exchange dealer!

Drivers
Drivers are things such as how many subscriptions you are going to sell each month, the total number of subscribers, drop-off rates, marketing channels for new business etc. All of these are non-dollar values and directly impact the monthly revenue and expense lines

Revenue
There can be multiple revenue sources for a business.  For example, you could have multiple types of subscriptions, advertising and content licensing for a quality content based website. All of these figures directly influenced by the drivers.

Expenses
There are two main categories of expenses, those that are directly related to selling (commonly called cost of goods sold) and fixed overheads (offices, hosting etc.). I like to separate these two types of expenses out in my cashflow so that I can then quickly calculate my gross and net margins.

As a general rule, be really careful of fixed overheads. These are often business killing and need to be eliminated everywhere possible. For instance, prior to signing a lease ask yourself the question, “Do I need that office?” You’ll be surprised at how often the answer is actually “no”.

In the next article I will build a cashflow for the sale of my book, “Battleframe”.

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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. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.

Christmas means many things to different people. For some it's a time of presents, family and holidays while for many others it a time of really feeling the loss of a loved one.

For me, Christmas means many things but tradition would have to be right up there. My family begins the festive season with the getting of the Christmas tree which is celebrated with an American BBQ ribs dinner.....it reminds us all of the great times that our family has spent in the USA.

We attend our churches Carols by Candlelight and normally have an after-party with a lot of our friends. The kids also invite their friends around so the house is normally filled with people.

We typically build a ginger bread house on the 23rd. When the kids were younger, more candy went in their mouths than on the house but not that our eldest is 21 things aren't really that different.

For the last 30 years we've attended the practice of the Carols by Candlelight at the Myer Music Bowl in Melbourne. About 10,000 people attend the practice and it's a great time with friends as we munch on some great food and enjoy each others company.

Lunchtime on the 24th heads us off to my parents house where we have a traditional Canadian Christmas dinner with all the trimmings. I grew up in northern Ontario so the dinner is a bit of a celebration of our time in that great country.

The evening of the 24th my own family sit around the coffee table with bits of nibbles to eat (we're normally stuffed from lunch) and we just talk about the year. I normally read the story of Christmas from the Bible to remind us all what Christmas is all about. After dinner, we rush around getting the house ready for the next day as we listen to the actual performance of the Carols by Candlelight broadcast on national television.

The next day I wake up at 7am (as I'm a big kid I'm always the first up ) and put on a Frank Sinatra Christmas album. We only listen to this album on Christmas day so it's a signal to everyone that Christmas present opening is about to begin!

For lunch we have Roselyn's parents and brother around for Christmas lunch.....which is a BIG turkey dinner. I love it! We normally then head off to my parents for Christmas day dinner but they're not home this year so we'll be home.....most likely topple into bed!

The next day is a day of rest.....plus seeing a movie. This year the whole family is heading off to see "The Hobbit - part 3". I love those movies.

That's a rough run through of my Christmas.....lots of friends, family, fun and of course eating! What I'd love to hear about is what you do for Christmas? Feel free to share it with everyone here in the comments.

In the meantime, I would like to wish everyone a very Merry Christmas and a safe and Happy New Year!

Cheers!

Michael

For those you that don’t know I’m actually from Melbourne, Australia. If you have no idea where that is (and downunder doesn’t count) then find China and go a long way south. If you can’t find China, then look for South America and head west. If you can’t find South America then I give up….!

One of the peculiar aspects of our lovely planet is that it’s tilted at 23.5 degrees and this is what gives us our four seasons. This is very unlike Uranus which is slanted at 97.77 degrees, which means the planet basically has two seasons.

So why am I giving you both an astronomy and geography lesson? It’s really simple, when the northern hemisphere is in the midst of winter, Australia is experiencing summer. In fact, it’s not uncommon for us to be having 40 degree days (that’s Celsius). For those of you that have no idea what’s Celsius, Google provides a cool little converter that will allow you to quickly work out that 40 degrees Celsius is 104 Fahrenheit (click here for the calculator). Why anyone would want to use Fahrenheit is still a mystery to me…..but I digress.

Strangely, we still sing “Dashing through the snow in a one horse open sleigh” even though there isn’t any of the white stuff around. Many Australians have actually never seen snow and presume that it’s just a myth. For heaven’s sake, frozen ice falling from the sky in summer! The first thing we would do is scoop it up and chill some beer.

As a bit of an aside, the kings in the carol “We three Kings” were most likely from Iran not China. It just so happens that “We Three Kings of Iran We Are” just doesn’t have the same ring to it.....and it would probably be a bit politically incorrect for the wisemen from a modern Muslim nation to bow down to the founder of Christianity (yes, I know that Islam wasn't around at the birth of Christ so let's just agree to not go there.....)

So back to my Australian Christmas. After we’re all sung out with carols, we then proceed to dig into a nice hot turkey and ham for Christmas dinner. I only have one thing to say about a hot dinner on a hot day……thank goodness for air conditioners.

I remember fondly the day when we bought our air conditioner. The salesman told us we needed a unit of a certain size….I immediately bought the one that was three times his recommendation. So when I say that we don’t have snow in Australia during our summer my living room could possibly be the one exception.

And then there’s the family Christmas party. For many people just reading that last sentence sends a chill down their spine (not due to my AC). The family Christmas party is where you are forced to catch up with relatives you haven’t seen in the last twelve months. There is a really good reason why you haven’t seen them in that long……it’s because most of them are a bit strange.

The party is the place where aunties plant slobbering kisses on your cheek, little nephews terrorise the dog, grandparents smell kind of funny and you’re introduced to a sibling’s new partner. In Australia we’ve solved the dilemma of how to escape this travesty of injustice…..it’s called the BBQ.

The “men” seize a cold beverage, retire to cooking the meat and talk about the cricket (this can take a long time). Cricket bores me to tears but it’s better than the option inside. The problem with you northern hemisphere sufferers is that you don’t have a BBQ to escape to when the hordes descend. You’re stuck inside with all and sundry with no place to go as you’re surrounded by all that white stuff. BTW, I don’t count going to the bathroom multiple times for twenty minutes each a serious “Great Escape” attempt.

At the end of the day when some well-meaning relative offers you yet another serve of Christmas pudding you let out a little groan and casually slip a notch out in your belt. It’s at this time that the little ones end up behaving more like an orc pack from the movie “The Lord of the Rings”. You see, it’s present time and the darlings are salivating for their preciouses (said with a Golumn like voice).

Paper goes flying every which way and then you end up unwrapping your gift. It’s quite disturbing when you have the thought, “please may it be socks” run through your mind. I’ve had friends receive a very special spice rack from the same person three years in a row and another present with someone else’s name on the bottom of it (got to love regifting). The best one I heard about was a gift of wire coat hangers…..haven’t you always wanted wire coat hangers?

I’m pretty easy to please, I’d be happy with almost anything edible but I think that it will be my lot in life to receive something like a book that the giver has always wanted. Before the wrapping paper has hit the floor they’ve got their clutches on the present and promise to return it one day. I’m still waiting.

When I look around the room, despite all of the painfulness of the day there is a sense of reckless joy. Let’s face it, my auntie’s kisses weren’t really that bad and I’ll ending up smelling like my grandparents one day so I’d better get used to it. The talk about the cricket was inane but also kind of pleasant.

I’ve come to a really big conclusion. If you want a really good Christmas then my advice is to come to my house in Australia…..remember that it’s just to the left of South America. It’s got to be a lot more fun than shivering half to death in all that white stuff.

Merry Christmas!

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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. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.
Click here to arrange time with Michael
Click here to advertising on whizzbangsblog.com

I have a really simple question to ask you, “Do you really understand your numbers?” For years now many of us have been staring at traffic statistics produced by different parking companies but do we actually understand what they’re telling us?

In this article I’m going to take you through a high level view of an account on ParkLogic (please view this article as a case study) and some of the analysis that we conducted to understand what was going on with the portfolio. Any client identifiable information has been removed.

The portfolio has over 48,897 domains and has a baseline revenue of $303.33/day over a 30 day period. ParkLogic was producing a revenue line of $287.09/day for the last 7 days or $16.24 less than the baseline. Most people would immediately suggest that we have failed to improve the results……and they would be wrong.

This is where we need to get under the numbers…..

What we discovered was that the vast majority of the domains weren’t receiving the same levels of traffic to them. In fact, of the 48,897 in the test only 11,223 had the same level of traffic or greater compared to the baseline. The results can then be summarised in the following chart.

The values on the left are the daily earnings for the portfolio for both the baseline and the test period for each level of traffic. In other words, you can find out the performance of domains that had greater than 0% - 100% of the baseline traffic etc.

For example, at the 40% traffic level the baseline domains earned $230/day and ParkLogic $257 producing an uplift of $27/day. For those domains where ParkLogic received at least the same level of traffic as the baseline then the performance is $192 for ParkLogic versus $125 for the baseline. This is an uplift of $67/day, which isn’t a bad performance at all.

So let’s take a look at the second graph and begin to interpret what it is telling us. The blue line is the ParkLogic revenue less the baseline for the particular domains that are part of the traffic sample set. The red line is the percentage increase in revenue for each traffic level.

For example, for domains that had at least 60% of the traffic that the baseline received, ParkLogic provided an increase of $47/day in revenue or a 24% uplift. Where we received at least the same level of traffic as the baseline ParkLogic provided an additional $67 in revenue per day which equates to a 53% increase in overall revenue! Now, that’s what I call smashing the ball out of the ball park!

If we had left the analysis at the macro-level and just compared the portfolio numbers then the massive amount of gold wouldn’t have been discovered. This is why getting underneath your domain traffic statistics is so important. I see so many domain owners make bad decisions on their numbers simply because they don’t actually know what they are telling them.

This is sometimes due to a lack of analytical skills but more often than not it’s a lack of time to do the analysis. I would recommend that you put your Excel skills to work. Remember that each and every day that goes by you’re leaving money on the table that could just as easily be in your bank account.

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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. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.
Click here to arrange time with Michael
Click here to advertising on whizzbangsblog.com