Category Archives: General Business 101

Do You Really Need to Spend Money to Make Money?

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I was checking out an article over at MSN’s Business on Main titled “Taking On Debt to Grow Your Business.” In the article the author explores the notion that businesses need debt to grow. I’ve been thinking a lot about this lately and reading this article, filled with ways to get capital for your business, made me wonder if a business could grow without having to take on debt.

Do You Really Need to Spend Money to Make It?

A lot of times you will hear people say, “You need to spend money to make money” or you’ll hear people talking about how the universe opens up and expands to return to you what you spend. I beg to differ. I don’t believe that, in every scenario, you need to spend money to make money nor do I think that you should frivously spend your capital and just trust that it’ll come back to you. My own business, for example, was built with zero debt and zero funding. I bootstrapped it and you can too.

Businesses that feel like they have to spend an inordinate amount of money to make money often fail. Now, I am not talking about spending money to get your brick and mortar location set up or the capital that goes out to hiring people when they are needed. However, most of the people that are in my world are online entrepreneurs who are setting up web spaces and hiring virtual teams. For these particular people, not having a tight rein on your spending will inevitably lead to the death of your business.

Spend What You Make, As You Make It

You should spend what you make, as you make it. I know for the eager beaver entrepreneurs and the perfectionists, this idea sounds ludacris. You instead might think that you have to put things on a credit card now to ensure that everything is perfect before you launch things to the world and start making money. I see the reverse as being true. Get your wares out there in a professional yet quick and dirty way, see if it’s viable and see if it will turn a profit and when it does, reinvest a portion of that revenue back into business improvements. The other portion? That’s your income!

When I started my business, I started it with an Internet connection and my computer. The only money I put out was for an Elance.com account (where I landed my first client) and for website hosting that included a domain name. It wasn’t until my business turned profits that I upgraded my website, invested in a fancy schmancy telephone service, upgraded to a fancy shopping cart and all of that fun stuff. When you are in start-up mode, you have to nickel and dime in every area of your business so that your business doesn’t start creeping into your personal life.

If Your Spending is Out of Control, Reel It In

I can’t tell you the number of entrepreneurs that I’ve personally worked with who started their businesses, put things on credit cards, maxed out all of their available credit, dipped into their children’s education funds, used their life savings, dipped into retirement funds or sold their posessions just to keep their perfect business image. If this is you, stop spending, look for ways to bring in revenue and get your business out of debt.

What tips do you have for entrepreneurs who might be struggling with business debt? Leave them in the comments below.

Looking for Funding for Your Business?

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Everyone hits the same block eventually: you have a solid business idea and know about business solutions that you can use to help start your business but you don’t have the funding to actually get it all done. Don’t worry, though: here’s a quick list of the most common options for funding your new small business.

1. Yourself
As always, you’re probably most comfortable starting off with seeing how you can leverage your own funds to get things done. There are two main options here: loaning against your 401K/IRA or debt financing. Sites like guidantfinancial.com will teach you how to get money with loans against your 401K or IRA funds. On the other hand, debt financing is just going to the bank and getting a loan that is paid back on a set schedule and at a set interest rate.

2. Friends and Family
If you’re serious about starting a business, you should be willing to look anywhere for money, and that includes friends and family. Not only are these people you already get along with, but you can trust that they’ll be giving you a heck of a better deal than a traditional loaning institution. Business, however, is always about having a plan, and here that plan should include signing a contract with whoever you get money from. It might seem ridiculous based on how close these people are to you, but you want everything in print so that you can stop arguments when it comes time to repay the money so that you’re just as close to these people afterwards as you were to begin with.

3. Angel Investors
Angel investors are basically the step above friends and family in that you’re asking for the same thing but from someone who’s probably a complete stranger. In exchange for money, an angel investor will ask for either equity or convertible debt, so be prepared to give a little control of your business up. In order to find angel investors, you can go to websites like inc.com and keiretsuforum.com.

4. Business Accelerators
Just as angel investors are a step up from friends and family, business accelerators are a step up from angel investors. A business accelerator is a company that will invest around “$25,000 for a 6 percent stake” in your new business. However, this exchange of equity will likely be deeper than that with any angel investor since an accelerator will teach you all about starting and running your business as part of the deal.

Any of these funding options will serve you well, it’s just a matter of choosing the one that’s right for you and actually getting out there and doing it!

James Kim is a writer for Choosewhat.com. ChooseWhat is a company that provides product reviews and test data for business services and products. Their goal is to help small companies make informed buying decisions on business solutions that help their business.

Why Work Doesn’t Happen at Work (@jasonfried)

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After purchasing my iPad and downloading the TED app, the first video I watched was Jason Fried’s TEDx presentation on, “Why Work Doesn’t Happen at Work.” It’s an enlightening thirteen minutes or so that everyone should watch. Very valuable stuff in here!

If the embed below doesn’t work, click here to go straight to the video.

Video on a Website – Must Have or Live Without?

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A few months ago, I received the following question on Facebook:

Here was my response to Sandra:

Video.  It’s one of my favorite online mediums for sharing and spreading a message but it’s also one of the most feared by entrepreneurs.  Video opens people up to a whole new level of transparency and sometimes, it can feel a bit uncomfortable.  How do I know this?  The topic comes up in 90% of my client calls.  The client will ask me, “So, this whole video thing… do I really need to do it?”  My response is generally the same.

When it comes to video, I think the impact it has on your prospects and website visitors is huge.  People love seeing the person behind the schtick and a video allows them to see you – the animated, talking, moving you.  Video creates an instant connection as it makes the person feel like they are really immersed in a conversation with you.  It also helps to build the know, like and trust factor up much more quickly than plain copy would.

However, that being said, if the person doing the video is uncomfortable, it will show and the video could be counter-productive.  You know those moments when you’re driving in your car and you come across a road accident and you want to look away but you can’t?  Even though you feel super uncomfortable, there’s almost an unseen force keeping your head pointed in the disaster’s direction.  That’s sort of what it’s like watching someone on video that clearly doesn’t want to be there.

So, I think adding video to your website is really important – if it’s done right.  If you’re the type who doesn’t mind being on camera, absolutely do it.  It will solidify your message, your brand, your authenticity and help to create bonds with your prospects.  If you’re not the type to be on video, consider having a video produced that doesn’t contain you in it.  It could be photos of work you’ve done, it could be text and music… whatever you can use to convey your message in a visual way will help your audience connect more with what you are doing.

Lastly, video doesn’t have to equate to big bucks.  You can easily shoot your own videos in your home or office by using a Flip camera and a tripod.  Set yourself up a nice background area and shoot a video!  You can even send that video to a virtual assistant to be edited with intro titles, music and more!

Hopefully this helps bridge the gap between doing video and not doing video.  If you have any questions, leave them as a comment!

Avoiding Overwhelm in Your Online Business

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I received a question on my Formspring account, which you can reach at www.formspring.me/erinblaskie, which asked, “As a business owner, I am starting to feel a little overwhelmed with blog posts, Twitter, work for clients and lastly, marketing my own business. Do you have any suggestions on how to not get overwhelmed and stay productive at the same time?”

This is one of the biggest points of frustration for entrepreneurs. Balancing the things you should do in your business with the time you have to do it is a really difficult process. Often times, the entrepreneur will be listening in to a lot of other people – experts, mentors, etc. – and they will start to feel like they have to do everything in order to keep up.

Fortunately, you don’t need to do absolutely everything to be successful. In fact, you can probably cut out a quarter of what you are doing and still receive the same impact. The key is to look at your business activities and to determine what is bringing you the most success. For example, if your Google Analytics account is showing you that your Twitter account sends the most traffic to your website, focus on Twitter and slow down the other marketing activities you are doing.

It is a good idea though to also keep a mix of things going. Even if Twitter turned out to be your hot spot, you don’t want to completely ignore blogging and other marketing items. The trick to everything in business is having good systems in place and being smart about how you are using your time.

The system that I personally use is this. I create a paper calendar that I can highlight and cross out and on that calendar, I list out things like blog posts, solo e-mails, teleseminar events, Tweets I need to pre-schedule, etc. I put it all to different dates so that I have a clear picture of what I need done and by when. Once I’ve done that, I sit down and create the items needed for each of those dated to-dos.

Now, you could sit in creation mode for all of eternity so you need to be smart here as well. Recycle as much content as humanly possible. Feed your blog to your social media sites so that they are populated with content and breakdown that blog post into pre-scheduled Tweets. Pre-schedule as many blog posts as you can as well so that you can sit back and ignore your blog for a little while when the client work picks up.

Once you’ve got your plan in place and you’re recycling content, the key now is to come up with a time management plan. Batch your work so that you aren’t focused on many things all at once and rotate through those batches in your day. For example, one hour spent on client A, one hour spent doing social media and a blog post, one hour spent on client B, thirty minutes spent updating your website, etc. Coming up with a rotation will allow you to touch each area of your business without being overwhelmed.

Lastly, if all else fails and you really can’t balance it all, it’s probably time to hire yourself some assistance. Outsource what isn’t generating you revenue (billable time, product creation, etc.) and focus on only the things that will bring in income.

The Great Debate on Packaged vs. Hourly Services

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I get asked this question ALL of the time: “Are packages better than billing by the hour?”

Some people say that packages are better since you can buffer in extra dollars and time.  You can also combine it with other items, such as an info-product, to really increase the perceived value of the package.

Some people say that hourly is better because then you are truly being compensated for what you are worth and the client will be more aware of the amount of changes they are making and they’ll be quicker to act.

I sit on both sides of the fence.

I love packaged services because it’s easier for me to explain what they get and it’s easy to tack on a price for the entire enchilada.  However, with packaged services, you run the risk of getting an “and this” client.  What’s an “and this” client?  It’s someone who continues to add more and more stuff to their package or someone who requests change after change because they aren’t paying for each individual time entry.  These people can wreak havoc on your packaged pricing.

I love hourly services because of the reasons mentioned previously – it gets clients to act quicker and be more resourceful on their own.  It forces them to be engaged delegators as opposed to just passively throwing everything at their team and it also helps them to get clearer on deadlines.  However, hourly rates also have a bit of a detriment.  If you are fast at providing the service, you will end up de-valuing your work.  You shouldn’t be penalized and made to charge a lower rate because you’re good at what you do and you’re fast but it happens with hourly services.

So, what does work for businesses?

I’d like to think that a combination of the two does but there is still no clear cut answer.  We have some clients who make us appreciate the packaged pricing and we have other clients who make us appreciate the hourly services.  It’s really split right down the middle for us.

Instead, I ask you.  How do you prefer to bill in your business and why?  What have you found to work successfully and what has not?