Archives for July 2007
Outsourcing your work is NOT about cost-cutting. If you believe it is, you have a 90% chance of getting exactly what you paid for. Garbage.
Business success starts with having the right people. And outsourcing is about finding people who can do something better than you can, (and that’s where the cost savings really come from). If you approach outsourcing as a search for talented people, you’re creating a mindset that opens up real opportunity.
It’s no longer about getting the cheapest junk at the cheapest price.
The Right People, Right Here
I like to include graphics with my posts on Zoomstart because they add a lot to a post. I can do a lousy illustration in about 10 or 20 minutes. It takes me well over an hour to do a good one. And that eats up a lot of time that’s better spent writing and networking.
So I started buying stock photos for a dollar or two. I get great stuff from a world of talented people. And the time I’m saving is worth much more than the cost.
Leveraging your own Talent Pool
There are 5 things you can get from a great talent pool. If you get 2 or 3 of them at a time, you know you’re on the right track:
- Time. Every venture has its core priorities. There are other things that are important, but they take a lot of time away from the core priorities. There are talented people that can do these things in a fraction of the time that you can do them. Find them.
- Quality. A good reason to do something yourself is to maintain the level of quality. But there’s always someone who can do something you need to do better than you can do it. Find them.
- Capital. Vertical integration (doing more yourself) can save you a ton of money. But there’s a cost to building the infrastructure you need to do more yourself. And that capital is often better used if it’s invested in your core priorities. Someone else already has the infrastructure and the expertise. Find them.
- Scalability. As you grow, you have to do more of whatever you’re doing. If you can’t build the infrastructure or bring in enough talented people fast enough, it’s easy to hit a wall. Someone out there already has the capacity to meet your growth needs. Find them.
- Reach. Networking is about who you know, and who knows you. Doing more business with other people leads to doing EVEN MORE business with other people. It helps you get known. It expands your network. There’s someone out there who needs you as much as you need them. Find them.
Outsourcing your work by tapping into outside pools of talent will help you do more. Faster.
And in the long run, yeah, you’ll still cut your costs.
Mentors are important. They can fast-track the learning curve with experience and insight that you just can’t get out of a textbook. But there’s some things they can’t teach you.
Sometimes, you need an anti-mentor.
An anti-mentor teaches you what NOT to do. They lead by example and so their lessons are very powerful. We’ve all had them, and probably didn’t realize they were teaching us something at the time. Or that what they were teaching was so valuable.
I’ve had a couple of bosses who really liked to tear a strip off people. Basically, when something went wrong, they’d be in your face screaming, berating, and carrying on like maniacs. And usually, right in front of everyone else. They’ve taught me a lot.
An Anti-Mentor Story
Years ago, when I was a supervisor, my boss and anti-mentor started tearing a strip off one of my guys in the plant. It was pretty bad, and to make matters worse, it was for something small that was completely not his fault.
Everyone was standing around watching, speechless. But I’d had enough so I got in between him and his current victim. I usually got a lot of respect from him but the challenge set him off and he started in on me.
It escalated to the point where I was about as angry as I’ve ever been. Which was unsettling, and I put a lot of thought into what had happened.
What I learned (a few times):
- Focusing on the right things is key. When you only point out the problem to someone, they focus on the problem instead of the solution. So the problem keeps coming back again and again.
- Freaking out is a time waster. It doesn’t solve the current problem. It just wastes valuable time that could be spent fixing the problem.
- Anti-mentors have a leadership ceiling. Business is about relationships, and at a certain level nobody wants to deal with someone who’s difficult to deal with. And they won’t.
Fast Forward to the Lesson Learned Well
A couple years later I became the plant / operations manager, (remember lesson #3?).
I had a good group of people. But what I needed was a great team. I never tore a strip off anybody. When we had a problem or a screw-up, I created the attitude of “Let’s fix it, learn from it, and move forward”.
Over time, everybody started focusing on solutions rather than just the problems. They became a team. They gave a damn. And that freed up my time to get into the business side of the business where I learned a lot from some really amazing mentors.
But it’s what I learned about what not to do from an anti-mentor that made it possible.
There’s a new dog in town, and even though he’s just a puppy right now, he’s got huge paws, so you know he’s gonna be big!
Freelance Folder has just launched. It’s a new blog about freelancing, entrepreneurship, and working from home. Jon from SWR has assembled a group of great writers (including himself) for FF so they’re going to have a wealth of knowledge and experience.
The Best Part
If you’ve ever been by SWR, then you know that Jon builds a genuine sense of community into his blogs. He’s a network warrior and always willing to lend a hand.
If you’re a freelancer or entrepreneur, then you know just how vital networking is to making progress in your passion.
Get in on the Ground Floor
The community vibe that you’ll find building at Freelance Folder also offers a unique opportunity. If you’ve got some expertise and some blogging craft then you can make a real connection with like-minded people by helping FF grow. Submit a guest post or engage with others in the comments sections with your own helpful hints and tips on a particlular post.
Check it out.
First, click Refresh on your browser to view the new theme correctly.
Currently I’m also reading a brilliant book suggested by a friend called Made To Stick. If you’re writing or marketing anything, this book is a must read. It’s all about how to create ideas that stick. There are a few books that I have on my bookshelf that are THE book on their subject. This is one of them.
Beating up the Little Things
Little things have a way of conspiring against us, ganging up on us, and just being a general threat and nuisance. The last few weeks they’ve thrown my schedule into a tailspin. But I’m starting to round them up … they’re gonna pay for what they’ve done.
Another few weeks and I’ll be able to declare this a “Little Things Free Zone” and get back to posting more regularly. And ironically, many of the things that are consuming so much time are behind-the-scenes things to do with Zoomstart and blogging in general.
The Key Steps to Winning the Fight
There are a number of things I’ve been doing. I’m gaining ground, and maybe these things can help you out if you’re in a similar fight to the death with the details:
- Stand back and survey the landscape. That’s right look at all the little things. Now start taking names and list them all.
- Outsource them. One of the things that takes too much time is creating pics for each blog post. So I’ve started to go out and find great stuff at sites like Morguefile, stock.xchng, and iStockphoto. The first 2 are free, the third is a great investment at $1-2 a pic. My time is worth a lot more than that.
- Utilize what you’ve got. Even though I still have a bit of a love-hate relationship with the racing stripe sidebar for this new theme … it’s what I’ve got. It’s all we need and there are much bigger fish to fry. Like writing and networking. Utilize what you’ve got and the chances are excellent that you’ll utilize the next thing you get when it’s time to get it.
- Just do them. Ahh … currently in progress.
The little things are tough. But they’re not that tough.
Sooner or later we all come to the realization that we’re human. And there’s only so much that’s humanly possible.
And when we’re stretched to the breaking point and need a break, the worst thing to do is to take one without a plan to restart the fire afterwards. All our momentum is gone. And it takes a lot of work to start from the bottom of the hill and get rolling back up it again.
No worries. All we need is …
A Firestarting Kit
And it’s got everything you need to find balance and get going again.
- A windbreak. If you try and jump right back into the hurricane, you’re gonna jump right back out again. So even though there’s a whole mess of things that are coming at you that need to be done, they’re not getting done right now. You might as well put a plan together before you start doing them.
- Tinder. Step one of the plan is to declutter. We’re surrounded by a hundred little nagging things that demand our time and energy. It’s good tinder so we’ll use them to start the fire. Start by taking care of all the little things that have been piling up that aren’t important … but are. Wash the dog, pay the bills, fix the garage door. Take a little stroll around your world and jot down every little thing that needs to get done. And then get it done.
- Spark. Step two is defining your goals and your passions. Some of the things you WERE doing are important to you. Some of them aren’t. What’s important? And even more importantly, which of your goals are you really passionate about? These are the things you want to do so much so that you need to do them.
- Timber. This is the big stuff. It’s a mix of things you really want to do, and things you have no choice but to do. The stuff you really want to do is easy. It burns hot and makes a great fire. The stuff you have to do is like wet timber. It’s tedious. It’s work. It sucks. But as long as you’ve got plenty of good burning timber in your pile, you can handle the wet stuff pretty easily.
Now where’d I put the matches?
When I was about 10, we flattened a bunch of bottle caps with a hammer. Then we trimmed them down to the size of a quarter with some heavy-duty scissors. We took a pocketful of these slugs down to the local coin-op car wash and had the waterfight of the century. For free. We gamed the system.
Picture yourself stuck in traffic on a busy stretch of highway. Someone speeds past you in the off-ramp lane. But at the last second, instead of taking the off-ramp they cut into your lane. In front of you and 30 other cars. You just got gamed.
Somewhere, somehow, for some reason we’ve all gamed some system. Gaming something is an adrenaline rush. It has elements of risk, of secret knowledge, instant riches, and the best part … a great story to tell to your friends.
The allure is huge. Every time you turn around, someone is gaming something. And even if you’re 110% against it … wouldn’t you like to game the gamers? Just once.
How to Play the Game. Any Game
I’m not going to tell you NOT to game anything. After all, I did game a car wash when I was 10. And that guy that screamed past you in the off-ramp lane? It might have been me. Probably wasn’t, but I wouldn’t put it past me.
You’re going to do it anyway. So here are some commonsense rules for gaming the systems of the world to make sure you keep your stick on the ice …
- Game the people that everyone wants to game. That’s what the MIT Blackjack Team did. They devised a way to beat the blackjack tables and pulled millions of dollars out of the casinos. Not everything stays in Vegas.
- Be humble. Save the action-packed stories for your friends. While you’re playing, someone else is paying. So, getting the word out to everyone about how you gamed someone is just asking for a slapdown.
- Game for the good guys. Kevin Mitnick, probably the most well known computer hacker in the world, now runs his own security company.
- Be the real deal. You can create a lot of success by phreaking all the rules. But it’s scattered and transient. There’s a ceiling to what you can accomplish by gaming the system because your victories are always tarnished in some way. And the truth is, successful people create success no matter what they’re doing. By being the real deal you can accomplish much bigger things.
Maybe your business is up against heavy competition. You’re not the biggest. Or the most well known. And you don’t have the cheapest prices. But you know that if people compared apples to apples, they’d see that you’re the best. And still, everywhere you look, the chips are stacked up against you. Every day you’re fighting an upstream battle.
That means you’re the underdog. And that’s a good place to be as long as you remember who you are and why everybody loves an underdog.
Here’s why everybody loves you …
- You’re scrappy. You’re always up for a little friendly competition. It’s an opportunity to learn and exercise your assets and abilities. You’ll chase the cat up a tree every chance you get. But you do it with a great sense of fair play. I mean hey, you’d never actually hurt the cat.
- You’re fun. Maybe it’s your ability to innovate. After all, who else can spend hours having the greatest of fun with a stick? Your tail is always wagging. Every day is a great day and everything is always new and exciting.
- You’re a best friend. Customer service matters. You’d never bite the hand that feeds you and you’re always willing to shake-a-paw or fetch a pair of slippers. Loyalty is something that just seems to come naturally.
- You always do your best. You’re always off and running. And no matter how futile the effort is to gain traction on a hardwood floor … you just don’t stop until you do.
The big dog is not always the best dog. But everyone loves the underdog. And underdogs that stay true to their roots do very, very well.
Go get ‘em Rover.
Every time you turn around there’s another article about how poor a revenue source Google AdSense is for most blogs and websites.
The truth is, it’s great for very large and well known sites that get a lot of competitive bidding on site targeted ads. And if you get bigger than big, you can negotiate a bigger piece of the pie the way YouTube did before Google purchased them.
Add to this the fact that there are many other very innovative advertising options emerging on the internet every day and you can see how the need to progress and innovate has to be a priority for a company like Google.
So that’s what they’ve done.
Referral Ads 2.0
They’ve expanded their referral program in AdSense to offer a whole host of different pay-per-action ads in different categories. When you sign in to your AdSense account and click on AdSense Setup > Referrals, there’s a whole list of new products and services available.
They’re all rated by performance with 5 stars being the highest. The payouts range anywhere from $0.02 to well north of $40. Pay-per-action requires a newsletter or service signup or a product purchase. Which is a bigger commitment than just a click, and it’s why the payouts are significantly higher than you’ll find with regular AdSense advertising.
At the same time, these higher paying programs often offer a lot more value than you’ll find in regular advertisements. They’re successful, which is why they can afford much larger payouts.
Check Out the Categories
You can choose the referrals you show in a specific referral unit in 3 different ways:
- By individual ads (choose up to 15 different referral ads from multiple categories)
- By keywords (choose up to 10 keywords)
- By category (choose up to 10 categories)
They’ve put together a pretty good selection of categories to match a broad range of niches:
- Google Products
- Computers & Electronics
- Finance & Insurance
- Food & Drink
- Photo & Video
Google Continues to Make it Easy
Choose all the referral products you want to show, choose an ad format, track their performance by assigning them to a channel, copy the code and paste it into your site.
All the ads you’ve chosen will rotate in the referral unit. If you check Pick best performing ads then the best performing ads in the program will show, if you uncheck this option, then only the specfic ads you’ve chosen will show.
Making it easy for people to search, and to signup for their programs has always been the secret of their success.
And as long as they continue to innovate and expand the options and offerings for advertisers and publishers the way they have with Referrals 2.0, they’ll stay ahead of the curve and a step ahead of the competition.
I went out to Hicks Lake with some friends this weekend to get some very important things done. What I noticed along the way is that our world insulates us. And that insulation has a nasty side effect …
It can make us too comfortable. Too intolerant of anything remotely uncomfortable. Too wary of taking the risks that teach us valuable lessons and lead to great successes. And great rewards.
We’re surrounded by comfort. So letting go of the most basic things that we take for granted is not always easy. Things like indoor plumbing. Electricity. Central air. Not sleeping on the ground.
There are no big lessons to be learned without taking a few risks, going through a little discomfort, and taking a few on the chin. Can you remember how you learned that fire was hot? Or figured out how big a tree branch had to be to hold your weight?
Get to Where You’re Going by Going There
Everyone has a question about how to succeed in something. What’s it take to build a million dollar company? How do you create a successful blog? When’s the right time to buy a stock? Or sell it?
The textbook answers are all around us. The smart textbook answers come from experience and yet they’re still missing something. Because they’re not YOUR experience.
Take the bumps and the bruises. Jump in. Test, try, fail. And then keep moving forward. Because, beyond the cold, hard ground that you have to sleep on, past the wall of bloodthirsty mosquitos … there’s a pristine lake.
It’s just about the most perfect place on the entire planet to go swimming.
And there’s only one way to know that.
It’s true, there’s no amount of work or investing that equals the earning potential of having your own business. But business is hard. And risky. And a lot of the worst stuff that happens will happen during the start-up.
Not might happen. Will happen.
One of the ways you can avoid all that bad stuff and the risk that comes with it is to avoid the start-up. And you do this, quite simply by buying an existing business. All the groundwork is laid, the tough lessons have been learned, and there are important assets (like customers) already in place.
Why People Buy Instead of Start
There are a few different reasons for buying a business instead of starting one:
- To get in! It’s the quickest way to get into business.
- Expansion. One of the absolute best ways to expand your current business is to buy a competitor and bring in all of their customers.
- Diversification. Buying a business that has nothing to do with your current business or investments is a good way to diversify. All markets go up and down, and while some are going down, others are going up. The reason to “buy” is to take advantage of the knowledge and experience that’s in place, since it’s most likely an industry your not familiar with.
What Kind of Business to Buy?
This is an easy decision to make because there are only 3 kinds of businesses:
- A failing business. These are great because you can often get a floundering business for a steal of a price.
- A thriving business. These are great because the business is already a solid earner.
- Somewhere in between …
They’re all great. The main thing you need to know going in no matter what kind of business you buy is what YOU can do with it. What can you bring to the table to increase sales and lower costs? How can you take it to the next level?
Think about these things:
- Do you have customers or connections that have assured you additional sales if you buy the business? Sell before you buy.
- Can you source or negotiate better pricing on the business’s purchases?
- Do you have a lot more experience than the current owners in this type of business?
What Are You Buying Exactly?
There are two main ways to buy a business. One way is to buy it all; lock, stock, and barrel. The other way is to purchase it through an asset sale.
An asset sale means you’re just buying the assets. For the most part this is “stuff”. But keep in mind that there are a number of assets that you also want such as the rights to a brand. And a client list. Those are two huge assets.
The reason to buy just the assets is that the business is failing and you don’t want to take on an ugly balance sheet and all its liabilities. On paper, you’re just buying stuff. But with branding and customer assets, and by bringing in the key people you need from the “old” business, the transition can be relatively seamless.
Doing Your Due Diligence
Or, how to make sure you’re not buying a lemon. At least, not for more than a lemon is worth. Let’s look at some of the things that you need to go over with a fine tooth comb before you sign on the dotted line:
- People. Identify the company’s key people. Are they committed to stick around? Can you bring in the right people where needed? A good idea sometimes is to lock the current owners in to help run the business for the first few months or years. What kind of agreements are in place between the company and its people? What’s the salary breakdown?
- Plan. Go over the company’s business plan. See where things went right and where they went wrong. Is the infrastructure good or a heavy burden? Old technology or the wrong technology? What are the competitors that are succeeding doing? What will they be doing a year from now?
- Sales. Talk to some of the company’s customers; especially the big ones. You want to make sure they’ll stick around and assure them of a smooth transition. Work your own network to pinpoint opportunities to bring additional sales into the company. Look at the pricing structure and the competition. Is there room in the market for growth?
- Capital. Get an itemized inventory of all capital assets including serial numbers, etc. Get a lawyer to check for liens or debts secured against the assets. What do the outstanding payables and receivables look like?
- Purchasing. Ensure that there is significant margin between the cost of goods and the sale pricing. Use your network to find more cost effective suppliers and look to see where costs can be trimmed in the current operations. Is there too much useless inventory that’s not worth purchasing?
You have to prove to the seller that you’re serious about buying the business before they’re going to hand over all the internal documents you need to do your due diligence. That means proving you have the cash. Or can get it.
And If you’re trying to buy a company and they aren’t willing to give you everything with complete transparency, something’s really wrong and it’s time to walk away from the deal.
Getting the Cash to Buy the Business
The most difficult thing about buying a business is finding a great buy. But for a small entrepreneur, coming up with the cash can be just as difficult. Buying a business might even seem completely out of your financial means.
Being an entrepreneur requires a lot of will. And where there’s a will, there’s a way. Here are some of the ways to raise the cash to buy a business:
- Have the cash! Simple and obvious. But look at it like this; what can you sell, mortgage, or reduce the cost of to raise the money if you don’t have it lying around? You want to think carefully about the risks of jumping in with both feet. Sometimes it’s the only way.
- Personal loans. Nepotism can be a good, good thing. A cheap or no interest loan from family or friends has great advantages. Low cost of capital AND generous repayment terms can get you started quickly. Personal loans can strain relationships, but if your situation is good, they can be one of the best sources of capital.
- Institutional loans. Even billionaires usually get a bank loan to buy a company. The key to getting a loan to buy a business is to show that you can repay it. They most likely want you to put in some cash of your own, or put some security on the line like your house. You need a detailed business plan that’s solid and realistic, and you need full disclosure documents from the business that you’re buying. And … you can also use the assets of the company you’re buying as security to get a loan for their appraised value.
- Angels. There are many private investors who like to invest in start-ups or other business ventures. They require some equity in the business because they’re investors not lenders. But they also have business experience, and a network of connections that can be invaluable. Most cities have angel networks that stage regular gatherings and events where you can meet and pitch to angel investors.
- Form a partnership. Sometimes your best option is to form a partnership with one or more other people. Stay away from partnerships where one person puts up all the cash and the other does all the work. These arrangements are fundamentally flawed and they frequently end badly. What you want is someone or a group of people to go in with you to buy a business you can’t afford by yourself.
Remember; the cost of buying a business is not simply the purchasing price. You have to make sure you have enough operating capital to run the business until it’s pulling in positive cash flow. Don’t buy it and worry about operating capital later. Your operating cash has to be a secured part of the plan from the beginning.
There’s a lot of experience to be gained by starting up your own business. And buying a business, large or small, is a big step. But done carefully, you can bypass most of the start-up issues, capitalize on the company’s momentum, and gain a good headstart.
And just like that, you’re in business baby.