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Archives for September 2007

Future-Proof Your Business by Creating a Method from the Madness

Solutions

Nobody knows your business better than you do. And that’s the problem.

Every new successful venture is built on the back of key people with experience and know-how. But at some point, that’s just not a practical way to run a business. You can’t grow a business if you depend on key people alone.

The McDonalds Training Program

When I was a kid, everybody talked about McDonalds’ training program. It was revolutionary. They didn’t just hire people and teach them sorta-kinda how to flip a burger. They had a very specific training program for every job that needed to be done … here’s how you flip a burger. Here’s how you wash the floor. Everything.

That program is one of the things that’s often overlooked when people analyze the success of the company. The training programs they designed allowed the franchise to expand very quickly and maintain consistent service and quality at the same time.

Building Your Own Processes and Procedures

The key, is to keep it simple. And in the beginning it’s really important to keep everything flexible. That way you can build a huge amount of scalability into your business processes but still tweak them and evolve them as you learn better ways to do things.

Here’s a simple example …

Let’s say you send out dozens of packages everyday. And each of those packages needs to be wrapped up with 20 feet of string. The “experienced” person just pulls a length of string off the roll and knows instinctively that it’s the right length.

When it comes time to hire other people to do this, it’s going to take them time to get the hang of it. And some people will take quite a while before they do. You need a procedure. A simple one.

So you stretch your arms out and realize that’s about 5 feet. Pulling 4 lengths of string off the roll using the rough measurement of outstretched arms makes 20 feet. Suddenly, you have a simple process. Now you can literally teach someone in seconds how to pull 20 feet of string off the roll to wrap a package.

So The Big Question is “When”?

Eventually you WILL have to build processes and procedures to run your business effectively. And “How” is something you’ll figure out along the way. So the real question is when do you need to do it?

The answer is simple; when you have people to train. There’s no point in building your procedures until you have people to pass them on to. And you’ll get real-time feedback from the people you’re training as you design the processes as well. You’ll even get some great ideas from your trainees.

At the same time, you don’t want to wait too long. As soon as you start expanding and bringing in new people, it’s time to start designing some basic procedures for how to do whatever you do. Start with a few and add more as you need them.

And as always, keep it simple. Things have a way of getting complicated all by themselves.

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How to Hire the Superstars Your Company Needs

Crowd cheering superstar

A couple friends that used to work for me recently asked me to be a reference for jobs they’re applying to. They’re both top-notch. They’re the kind of people that are a huge asset to a team.

Which got me to thinking about how you find good people. People are a company’s most important asset. By far. You need  to choose good people … the right people, if you want to build a great company.

So here’s a tip or two to help you do that …

Checking References

I honestly never put a lot of stock in references. You need to check a person’s references, but seriously, how many people are gonna have you call up someone who has nothing good to say about them? Not too many.

In professional circles though, the more references you can get, the better. There is the odd time when you’ll run into someone who’s burned a lot of bridges and messed a lot of people over by doing shady business or shoddy work. And even the people that like them, their references, will give you the straight goods.

The best kind of reference is when you can see real examples of someone’s previous work.

Skills and Experience

The importance of skills and experience is completely dependent on what you’re hiring a person to do. And what kind of team you already have in place. Here are a couple things to consider:

  • Do you need to bring in some new expertise to tackle a certain area?
  • Do you have the expertise in house to train someone?
  • Will you need to un-train someone with experience and then train them to do things the way your company does them?

Just like with references, you don’t want to rely on someone’s skills or experience to carry your company into the future before you really know what they can do. There are career burger-flippers who can’t build a burger without making a total mess of it and there are trained surgeons who shouldn’t be allowed near a scalpel.

The Proof is in The Pudding

It takes time to build a great team. It takes time to find the right people. And it takes time to turn good people into great people. You can speed up that process by always keeping your eye on good people. But it takes working with great people on a previous venture to find a kick-butt team fast.

To do it from scratch, you’re gonna have to test-drive a few people. Maybe a lot of people. Good references are a step in the right direction. And bringing in people with strong skills and experience is a step in the right direction.

But at the end of the day, you’ll only know you hired a superstar after they give you consistent superstar performance.

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So, What’s an Internet Millionaire Do on a Friday Night? … Launch BlogRush!

BlogRush

Income.com is the flagship site of John Reese’s latest venture to help online entrepreneurs get traffic and make money on the internet. And the very first thing they’ve launched is BlogRush … a social widget to help bloggers increase their traffic and exposure.

There are a few different incarnations of these widgets that help bloggers connect with other bloggers and get exposure on the web. What I like best about BlogRush … is the source. John knows how to get traffic. He knows how to market on the internet. That’s good enough for me.

The BlogRush widget has all the hallmarks of good marketing:

  1. It’s targeted. When you sign up, you choose a category, like business or food. BlogRush uses your category to make sure your posts are seen on other blogs where the readers are most likely to be interested in what you’re writing about.
  2. It’s viral. Not only does it help bloggers and blog readers network, it rewards bloggers with a multi-tiered point system for signing up other bloggers. When someone signs up to BlogRush by clicking on your widget, you get points that give your posts more reach on the BlogRush network.
  3. It’s free. Plain and simple.

The next piece of the puzzle after BlogRush is another Income.com project that hasn’t been unveiled yet called TrafficJam.

I have no idea what TrafficJam is.

But I like it already.

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Making the Toughest Business Decisions You’ll Ever Have to Make

The Stormy Road Ahead

Tough decisions are usually pretty easy to identify. They’re those moments when your only choice is to (hopefully) choose the lesser of two evils. To choose the path that’s bad instead of the one that’s worse. To try and figure out if a risk is worth taking or not.

There’s no easy way to make a hard decision. But there is a right way and a wrong way.

The Pitfalls of Avoiding the Tough Decisions

This is the wrong way. There are two ways to avoid making tough decisions. One is bad. The other gives you a fifty-fifty chance of making the right decision.

  1. Do everything. One of the easiest ways to avoid making a tough call is to choose both. Do everything. Be all things to all people. The cost of doing everything will kill a business because every business has competition. The cost of doing everything will either drive your prices up out of your market’s reach, or they’ll whittle away your profit till there’s nothing left. Or less.
  2. Do nothing. I guess the popular way of saying this these days is “stay the course”. Not making a decision IS a decision. And you’ve got a 50% chance that it’s the right one. Of course, the very fact that a decision needs to be made in this case means that the present course is not going well at all. So giving it odds of 50% is pretty optimistic.

Seeing the Future and Making the Tough Decisions

You gotta love the human spirit. And it’s love of the here and now.

Our natural fight-or-flight instinct helps us make difficult decisions. At least, it does when there’s a crisis right here, right now. But these aren’t difficult decisions and that instinct doesn’t help us make truly difficult decisions whose consequences are often somewhere down the road.

And that’s how you make the tough choices. You have to look into the future. Look down the road. And like a master chess strategist, you have to look at all the possible outcomes of each of your choices.

If the answer still isn’t apparent, then look a little further down the road or track back and see if there’s anything you missed along the way.

Luckily, it’s not a fight-or-flight situation. So take your time.

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Bridging the Gap: Arbitrage, Online and Off

The Tower Bridge … bridging the gap

I’ve been playing around with some online arbitrage lately. It’s something that you can do online and off, and although the margins can be very tight, arbitrage is scalable and relatively low risk as long as you stay on top of it.

Online Arbitrage

Despite what you might have heard, it’s a perfectly legitimate business model, provided you’re not creating MFA or made for AdSense sites that offer no value to users. I don’t like them. I certainly don’t condone them. But good arbitrage helps bridge the gap between two different markets.

Legitimate arbitrage is tricky because your goal is to make money. That means you want to get traffic in and get it back out again as efficiently as possible. But if your site doesn’t add any value to the user experience, your quality score will go way down and it’ll be tough to turn a buck no matter how well you can turn over your traffic.

The real key to arbitrage is to add value to the user experience. Your primary goal has to be creating a quality site. You’re trading efficiency for quality, and even though the amount of traffic to your ads will go down, the cost per click will go up significantly and it’ll be much easier to turn a healthy profit.

The sites I’m working on right now are making a return of about 15%. In other words, I’m making about $15 for every hundred I spend on traffic. They should do much better, but I’ve just started developing them and the quality score is not on my side yet and won’t be until the sites are more fully developed.

On the one hand, 15% means I have to spend about $35k a month to get $40k for a profit of $5000 a month. Seems risky and capital intensive. But on the other hand, this is a monthly turnover, and simply annualizing this rate shows a return of 180%. Still about 20 times better than your average mutual fund. So it depends on how you look at it.

It is a scalable business, and the key is to start small and keep at it and keep scaling it upwards.

Offline Arbitrage

In the real world, many businesses practice arbitrage. And not just in the financial markets. Brokers that practice drop-shipping are doing a form of arbitrage. Basically they’re buying a good from the manufacturer and selling it to the customer but they don’t take possession of it themselves in between.

This means they don’t have the liability of inventory that might not sell. They don’t buy an item until the customer has bought it from them first. Relatively low risk.

Just like online arbitrage, the margins can be very slim if your service quality is lacking. Especially if you’re competing with another manufacturer who will sell directly to your customer. This is especially true in business-to-business transactions. There’s not a lot of margin there for you to be competitively priced as a middle-man and still take a profit.

But you can increase your profit with quality. By being a single-source specialist in your industry or by offering a wide array of goods that are used in a variety of industries, you can do very well. Focusing on a niche market allows you to cut volume-discount deals with manufacturers and ramp up your profits on every sale.

Arbitrage … online or offline, business is business.

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Top 10 Things Every Spammer Should Know

Canned spam

  1. 99% of the people on the planet want to kick your ass.
  2. Seriously.
  3. Learn about ROI. Sure, you hack other people’s networks to send spam and it doesn’t cost you any real cash to send emails and blog comments again and again to places where there is no return on your investment. But it costs you a lot in visibility. And that visibilty and constant annoyance is part of an illegal activity that’s the basis of all your income. So, I can understand that you may be a real risk taker, but taking risks where there is no reward is just plain stupid. Rewardless spamming is visibility you don’t need. It’s visibilty that puts your freedom and your livelihood in jeopardy. It’s a bad return on investment.
  4. There’s more you need to know. Just work on the first 3 for now.
  5. There’s more you need to know. Just work on the first 3 for now.
  6. There’s more you need to know. Just work on the first 3 for now.
  7. There’s more you need to know. Just work on the first 3 for now.
  8. There’s more you need to know. Just work on the first 3 for now.
  9. There’s more you need to know. Just work on the first 3 for now.
  10. There’s more you need to know. Just work on the first 3 for now.

And p.s. … I don’t need any Viagra.

But thanks for your concern.

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Google Referrals 2.0: You Can’t Do Business the Way Business is Not Done

The sign says turn around

Let me tell a story on a related theme first …

Listening to one entrepreneur’s business plan as an advisor a couple years ago, I really liked what I was hearing. He was a great pitchman and he had a solid skillset for developing corporate identities; websites, business cards, advertising, etc.

And then he said something that blew it all out of the water. He’d been burned a couple times and had his design work ripped off by customers without being paid. His solution was to collect a fee from potential customers … before he showed them anything.

This is not how business is done. At least, not in advertising. In advertising, you have to make a presentation first. There are other ways to protect yourself, but trying to collect a fee before a company can see if you even understand who they are or what their brand means is a tough sell for a small and new company.

Luckily, he understood what we were saying and we helped him structure a better solution.

Google Referrals 2.0 is Crashing Hard

Google has opened up an interesting door with their referrals 2.0 program. The possibilities for publishers and advertisers with this affiliate sales platform are huge. The platform is a lot like AdSense …

And that’s the problem.

When it comes to affiliate sales, this is not how business is done. And although the problems are being viewed by some as “technical issues”, they’re not. They’re systemic. The system doesn’t work the way an affiliate platform should work.

Let’s look at the main issue:

Advertisers can specify a budget. Just like in AdWords. When their budget runs out for the day, Google starts showing other ads from other referral advertisers.

Affiliate sales are all about the landing page. If you build a landing page around a deal you’re promoting and some other offer is showing up, or nothing shows up, it completely destroys the whole process for publishers and users. And it sure doesn’t help the advertisers look very good either.

The solution?

Google and the advertisers they bring into the referral program have to understand that CPA means Cost-Per-Action. And that action has to be able to support the cost of acquisition (paying the affiliate).

There can’t be a “daily budget”. When a publisher chooses an ad, that ad has to be served for as long as the advertiser is running the program and the advertisers landing page has to be built with one goal; getting the action that pays the affiliate.

Or else there won’t be any.

Innovation is important. It’s necessary for success. But you still have to do business the way business is done.

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