The most important thing about an early stage business plan is not how close you are to your projections, its how you build the plan itself:
1. Your assumptions on what will drive both sales and expenses- they show a prospective investor if you understand how to build a business.
2. Build from the bottom up- regardless of how big your market can be you can only sell a small percentage of how many sales people your team can contact.
3. Everyone builds conservative plans, but no one meets them, so try to build a realistic plan.
4. Determine your goal in writing the plan- is to get a meeting? close an investment? waste time? show the world a plan can be written?
5. Don't use jargon or acronyms- no one wants to feel stupid if they don't know what they mean.
6. Write 1, 3, 5 and 10 page versions. If you can't communicate the key elements of the plan in each version, then you probably need to do some thinking about the plan itself.
7. Write it yoiurself first. You may use someone else to edit, polish or rewrite it completely, but if you can't write it down, there's probably not a good business there yet- not because you can't write, but because you haven't thought it through yet.
8. Don't write it if you don't need to- if you're not raising money in the near future and are focusing on operating the business everything's going to change anyway- don't waste precious time.
Remember, the plan is going to be wrong, but the thought and effort put into it are what's valuable for the entrepreneur.
What's in the Pipe? That's a critical question in every business and it's what the VC's are going to ask when you're talking about your sales prospects- Manage for the answer.
Pipeline Management is important in any sales environment, but it’s more critical when you have a small sales force and a need to make some noise with your new product. Setting up the right system to track the pipeline at the beginning of the company will make you more efficient as well as make your transition to a larger sales team a lot easier. This may seem like really basic stuff, but it’s critical.
Some thoughts on how to make it work in your organization:
1. Pipeline Milestones: Set up a strawman of each stage in the sales process and begin tracking each customer obsessively. Possible stages are prospected, qualified, contact out, response, call, meeting, larger meeting, tech meeting, proposal, business negotiation, contract negotiation and close.
2. Change the milestones based on your first few sales cycles and then stick to them.
3. Make the system work so that only a potential customer’s action can trigger a move to the next stage.
4. Create a percentage closed metric for getting to each stage and use it to drive your sales forecasts.
5. Set goals for the length of each sales cycle and adjust them every year based on your experiences.
6. Manage your pipeline every day. Every Day. Who’s moving along, who’s stalling, who’s no longer a prospect.
Creating and managing your pipeline correctly will make your business plans easier to write, your forecasts easier to meet and your staffing needs easier to project. It’s the most important part of sales.
The idea of my Friday product reviews is save start-ups some tiem on choosing the basic business systems they need to function efficiently. I’ll look at finance packages, project management, contact management phone systems, and anything else I can think to take a look at that might be useful.
My first review is of Basecamp- an online project management tool. I used it for a week and interviewed a few small companies who are using it to manage projects.
Pricing: A monthly fee based on how many projects you are currently tracking in the system. It starts at free for 1 project and goes up to $100 a month for over 35 projects a month (unlimited). It’s a great model- they don’t charge by people, so you can connect any number of employees, partners and assorted fold to any one project without additional cost.
Interface- Good to very good. Basecamp does a great job utilizing Ajax to make the display and entering of information very easy. It also allows you to add your color scheme and logo into the system- definitely a great professional touch for a start-up.
The System- It’s divided into the following categories:
Dashboard- A bit clunky, this is essentially a big list of all the things you have going on- all the projects and all of the to-do’s contained there-in. It also lists all the to-do’s regardless of project.
Messages- For sending and receiving all of the messages related to the project- very slick and easy to use.
To-Do- a detailed to-do entry and assignment tab- it allows you to break up the to-do’s by specific tasks necessary to complete the overall project. This is a great interface. It allows you to drag and drop items to change their priority and/or assignment.
Milestones- This is the calendar system that’s the heart and soul of basecamp- I found it best to drive everything out of here for the best results overall. This does not replace a calendar function as it has no time element- that would be a great addition in the future.
Writeboards- This allows for collaborative white-boarding- I found it the least useful category- formatting is clunky and if you make minor changes and update it creates an entirely new document unless you check a box- it also doesn’t have the tabbed navigation that the other tabs have. The ease of use of the other sections make the lack of utility here sort of baffling.
People- all the people assigned to a project with their contact information.
-Easy to get up and running
-allows easy control of outsourced/client resources and deliverables
in a mostly dead-simple.
-Good overall project control.
-RSS subscriptions for each project available
-Great overall company or department control
-some URL control- your site will be named yourcompany.updatelog.com (there are other choices)
-allows for comments to be added to each item
-No Outlook integration
-No time elements in the milestone calendar
-Could use better control of internal company viewing- forbidding some team members to see some material
-some formatting issues
It’s easy to see that the pros far outweigh the cons in Basecamp. Highly recommended for small companies.
I was going to spend today’s entry talking about some basic business planning ideas, but after witnessing an awful presentation at last night’s tech meetup (my post below), I have to spend some time on presentation basics.
The presenter missed the most basic rule of presenting: KNOW YOUR AUDIENCE. It’s so basic, but too many presenters forget the basics, so here’s my list of basic presentation keys:
1. Know your audience- the size, shape and demographics. If possible, ask them in advance what they want to talk about. Know who’s going to be bored and figure out a way to involve them. If there are people in the audience who aren’t in your target audience, don’t ignore them- if they like the presentation, they’ll reinforce the thoughts of others.
2. Set a goal- what’s the one thing you want the audience to walk away with- it might be a sense of your company, it might be a warm and fuzzy feeling towards you- whatever, set it and meet it.
3. Get there early- familiarize yourself with the setup and get comfortable with it.
4. Introduce yourself- even when you’ve already been introduced- it makes you more human and sets you up in the crowd.
5. Create a time expectation. Beat it. Never have the audience wondering how long the presentation will be and remember: an audience’s favorite words are, “well, I’ll be finished a bit early.”
6. If you’re using PowerPoint, don’t read the slides. Please. Don’t read them.
WE CAN READ!
7. Make it a conversation, not a monologue. Easier said than done, but crafting ways to involve the audience without asking them to raise their hands if they’ve ever heard of Google makes all the difference. Ask specific audience members in advance if you can ask them a question during the presentation. Ask the audience for questions before you start. Throw something from the stage (a soft gift).
8. Practice, practice, practice- the presentation itself should be at least the 20th time you’ve said the words, or variations thereof. Get your timing down, think about potential questions, make the presentation shorter and lessen your anxiety.
9. Don’t rush away at the end and make it crustal clear where they can reach you for follow-up questions.
Most people don’t remember what was said during a presentation, but they do come away with a distinct opinion of the presenter- set yourself up to leave a positive impression and follow-up with critical information.
Attened the NYC tech meetup last night at NYU- terrific event-
The best piece of technology on display was the real-time translation tool offered by Loto, which allows for chatting across languages and also provides a wiki-like apparatus for updating translations.
Homethinking presented a very interesting idea for finding a real estate broker- essentially a tool that aggregates broker sales data and allows the consumer to see sales histories for brokers.
My philosophy on selling is driven in a large part by the cost of supporting customers. Successful and happy customers are cheap to support. Unsuccessful and unhappy customers cost a lot, especially if you end up losing them.
How do you sell to lessen your costs and still maximize growth?
1. Hire salespeople that are experts in the vertical you’re addressing. Your salespeople need to understand the challenges your product is going to address and they need to be credible in front of the customer.
2. Narrow the prospect list with intense research- if the prospect is a stretch; your product is a stretch in the organization.
3. Take an open source approach to the sales process- work with the prospect to determine how your product will help them. Tell them no if it can’t help them. Give them value in return for information prior to making the sale.
4. Don’t sell features that haven’t been developed yet. I’ve called the CTO driving back from too many meetings saying, “uh, we need to move the Blue Oyster feature to the top of the list so we can sign a deal with Anacon.” Nope- Anacon just found a way to say no- there’s no guarantee that they’ll sign a deal even if the product is included.
5. Do provide a vision of where the product and the company is likely to go- you need to inspire confidence that your young company has a clear view of the future.
6. Sell to the roadblock. If your initial contact loves the product find out who’s going to say no and get them in the process right away.
7. Make collections a trigger for commission payment. This puts the salesperson on notice that if they over-promise during the sales process it lessens the chance that they get paid quickly, or at all.
Successful and happy customers are those who receive more than they think they bought. They’re happy to be references and will be champions for you in the marketplace.
This is a critical HR philosophy for any organization, especially start-ups. Hiring at the early stage of a company can be the difference between building a real company with your idea or floundering for a long time. The right person hired over a two month timeframe is way better than the wrong one hired in a week- that mistake will take you six months to overcome.
Hence the philosophy of hire slow and fire fast.
Easier said than done but here are some thoughts:
Hire Slow- What steps should you take to insure you're hiring the right candidate?:
(other thoughts here in a previous post as well)
1. Widen the interviewer pool- if you’re under 5-6 people, there’s no reason not to have the interviewee talk to the entire company. Prep your current employees, but culture is a huge factor in any company and this is the best way to get a sense of how a candidate will fare. Also consider using a board member as an interviewer.
2. Check every reference and ask for a negative reference. Too often reference checks are done after a decision has been made. Push this part up in the process and use the answers in interview sessions. The negative reference question is a great one to see how a candidate reacts under stress- a much better determinant than actually asking about a candidate’s weaknesses (My weakness is that I’m a workaholic).
3. Negotiate before the offer letter. The offer letter should be a confirmation of a series of conversations clarifying everything about the job. This will give a a better idea of the candidate’s demands and also save time if the conversations stall
4. Network- use linked-in, soflow, etc. as well as your own network to build your own reference base.
5. Offer letter- This should merely be a confirmation of previous conversations, but it’s still an important step. Make the letter extremely clear in terms of having a probationary period as well as a well-defined job description. I’d also include at-will employment, hours of work and attendance, holidays, vacations, sick leave if any, payroll deductions, and paydays as topics in the offer letter. Once your company is over five people it makes sense to have an employee manual that sets out all of your employment policies and procedures.
Once that’s complete, put the new employee on a 90-day probationary period (delaying any benefits and with any options not starting to vest until that period is up) to ensure that both you and the employee are happy with the arrangement. The goal is not to have to go to the next step:
Fire Fast- If you start having problems, start documenting immediately. Don’t make the mistake of keeping someone around because you need someone doing the work- if the rest of the team is good, a weak link is at best annoying them and at worst, creating extra work. Too many times in my career I’ve had employees ask “What took you so long?” after terminating a problem employee. The care taken upfront with the offer letter and long hiring process will save you a lot on the litigation front as well.
Two good things to read over the weekend:
Bill Simmons interviews Malcolm Gladwell
(Gladwell) The (short) answer is that it's really risky to work hard, because then if you fail you can no longer say that you failed because you didn't work hard.
And Bruce Cole's 2005 Annenburg study.
Have a great weekend.
The goal of this blog is for me to provide practical, concrete advice and information to startup companies. With that in mind it makes sense to create a schedule for topics and how they relate to the startup world. Here's how I'm going to start out:
Mon- HR issues
Tue- Sales Management
Wed- Business planning, presentation
Thu- Raising Capital
Fri- Practical product evaluations (I'll start that next week with Basecamp)
S/S's- news recaps
We'll see how that works out- I think it will make my objectives for this blog easier to reach.