The Million Dollar Tattoo

Learning how to turn ideas into action

Be Specific with Your Outsourced Developers

This is something I’ve been learning about as I go. I’ve outsourced my design, my website development and even admin tasks to various individuals and companies around the world, including the U.S.A., Philippines and India, and the number one lesson I’ve learned is that in order to minimize back-and-forth time you have to spell things out very clearly, in detail and accounting for misinterpretation. It’s been a great learning experience but there are definitely hours that I could have saved and frustration avoided recently if I had made certain that my instructions were written to avoid ambivalence. I would recommend that anyone  who is considering outsourcing ensures that they take the time to communicate with clear instructions in plain English – it’s worth it in the long run…

Finding Advertisers for your Website

I’m currently in the process of compiling a list of potential advertisers for my website launch. With this project I’ve decided to manage all of the advertising in-house as I want complete control over the look-and-feel of the site. I’m doing this because I’m positioning my site as a premium option and nothing screams budget like irrelevant advertising or low-quality text-link ads. Of course, this means that there is a greater workload but it also means that advertising revenue doesn’t have to be split (it’s a workload / quality / revenue based equation, and there is no definitive answer for in-house vs 3rd party advertising models). Now, I’ve mentioned in the past that advertising is not a safe business model, and it isn’t, but that being said if you don’t maximize your ability to derive revenue from your business then you’re doing yourself an injustice.

While building up a list of potential advertisers I’ve come across a few great ways to find the best candidates:

  • Look at the advertising on your competitors sites. Ignore the generic ads if your competitors are a mid-to-low level offering, but keep an eye out for advertising from highly relevant brands. These are businesses that are looking to build awareness / click-through in your domain.
  • Google / Search engine results. Look at the sponsored links – these are businesses that are targeting keywords relevant to your domain. Some of these will be loosely related or geographically irrelevant, but keep an eye out for local companies or satellite industry advertisements.
  • Industry / Trade publications. Companies that advertise in print may already online or just dipping their toes into the online advertising world. Be the first to offer them a low-risk trial of online advertising with your site.
  • Research websites that have a target market overlap with your demographic. If you provide an online golf-training service for 55y.o.+ male retirees then look at insurance aggregation websites, retiree holiday websites, golf club manufacturers, etc. These sites will contain advertisements from brands that will likely be interested in reaching your audience.

As you build up your list of candidates you should be preparing an ‘advertise with us’ page on your website alongside a rate-card and advertising brochure (this does not have to be physical, .pdf will do). Compile the contact details of the candidates and then call or email with an offer. Marketers will want demographics, Google search ranks and traffic data, so make sure you have these numbers online. If you haven’t launched yet then you will most likely have to offer a discount or low-cost trial (look at offering a minimum of a month for this).

Remember – you have nothing to lose by approaching advertisers. If you don’t ask, you don’t get. If you absolutely can’t handle approaching advertisers yourself, then maybe 3rd-party is the way to go, just remember that you are giving up some control over your websites’ look and feel and will also reduce your potential advertising revenue.

The Man in the Arena

“…It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat…”

– US president Theodore Roosevelt at the Sorbonne in Paris, France on April 23, 1910

Why a Homeless Man Makes More than You

As I was walking home late last night I passed a homeless man sitting next to a McDonalds, looking disheveled and waving a soiled hat in the air. He said nothing, and wasn’t even looking up from the pavement in front of him yet, when I passed by, I still dropped 50 cents into his hat.

This made me realize that on this day a homeless man had made more money from a single customer than most internet businesses make from thousands (not including advertising).  Why?

The man’s whole spiel was holding a well-worn hat in the air at passers-by. Nothing special about that. He didn’t do any marketing prior to me randomly walking by. Matter of fact, there was only one reason that he got any money at all.

Not pity. Not empathy.

It was because he was asking for money. Admittedly it was possibly the least energetic sales pitch possible, but he had a clear objective and was acting upon it. For whatever reason he felt that he deserved money, and he decided to ask.

Looking at the thousands of websites popping up every day (you might even be launching one of these services yourself) you will notice a big difference: None of them are asking for money. They have nothing to sell, to anyone. They are practically begging, but merely for attention, not for the surest metric of all: cold, hard cash. And when you don’t ask, you don’t get.

And that’s why, if you’re one of those thousands of businesses, a homeless man will continue to make more money than you do.

Please note:

*Free + Advertising is not a business model, it’s a tactic. It’s a side-effect revenue stream that might bless you once you’ve  built a valuable, content-rich and popular website, but if it is your only envisaged revenue stream then you are in big trouble.

*Giving the man a coin out of my pocket was practically friction-free. If you can work out the digital equivalent of flipping a coin into a hat then you are going to win – BIG.

*You are gambling with your money if you don’t have a product/service to sell to somebody. If you just want to write a blog or make a cool little entertainment site, then that’s fine – but it’s a hobby, not a business. If you aspire to create a business then you better have a business model, especially if you plan on taking outside funding.

The Genie and the Master – Avoid becoming Reliant on your Genius

The word genius comes from the Latin ‘genii’, and literally means the  ‘guiding spirit’ of a person or place. It can also be traced to the Islamic word ‘Jinn’. Translated in English ‘Jinn’ is known as ‘Genie’.

The prototypical genius in the western world is Einstein, other widely-known examples including Newton and Hawking. This perception of genius may be accurate, yet is also limited by its specificity. Genius, in the true sense of the word, is the spirit of creativity – the seemingly otherworldly gift of being able to create something of originality and value.

If you are an entrepreneur, bona fide or in-the-making, then you surely have the spark of genius. Entrepreneurship is about discovering, manipulating and creating value with available resources, scarce or plentiful as they may be. Unfortunately, this genius may be used for both positive and negative purposes.  This is a very fine line to tread.

When you are lucky enough to have a genie at your beck-and-call, you may be tempted to become reliant on it. As the master, you may use the genie as a crutch – becoming too reliant on complex creativity and clever tricks. Techniques like automation, systems-creation and outsourcing may be used for the sake of being able to summon them, regardless of necessity. Entrepreneurs in-the-making may also use the genie to come up with a million brilliant reasons to not work harder, or ship the product, or get out of the building and begin the customer-development process.

Use your genius when it can most benefit you and your future as an entrepreneur, not just because you can rub the bottle at any time. Ask yourself: Are you bidding your genie to do something because you really need it, or just because you can. Sometimes there is no substitute for honest, hard-work. Sometimes simple business ideas can be the most profitable.

Sometimes the genie should be left in the bottle.

Learning How to Set Subscription Prices and Advertising Rates

Setting prices is a make or break decision for a start-up. Set the prices too high and you’ll go out of business in no time at all. Too-expensive? No thanks, you have a 100 competitors that do the same thing for less money. Set the prices too-low? Just as bad, except this time you’ll find yourself locked in a slow death-spiral as you and your competitors under-bid each other to get the customer, shaving percentages off your margin until the cost-of-goods-sold and customer acquisition render your business inoperable.

So how do you set prices accurately from the word go? This is something that I’m learning as I go – I have to, as I’m about to start selling to real customers.  You can’t go to a customer and ask them what they’d like to pay – the answer will be zero. You can do some market research and ask them to put a value on similar services, although in the times that I’ve done this the number has fluctuated greatly. I’ve done a lot of research on the net about this as well as combing numerous business books and blogs, and the best approach I have at the moment is this:

Research your competitors. (Don’t tell me you don’t have any competitors). This means going beyond just visiting their site. If you want to know how much your competitors are charging for advertising the best trick is to pose as a potential customer and actually ask them directly. I’ve done this numerous times and often you’ll receive in-depth brochures that give you valuable insight into standard pricing / service balance as well as learning how to write convincing sales copy (and sometimes you’ll learn what to avoid).

Look at the average pricing for products and services in your market. This will allow you to make an educated guess on positioning. Remember, in every market you’ll find budget, ‘vanilla’ and premium options. Often you’ll find two products / services that provide the same function yet charge vastly different prices. This is a result of product-positioning. Do you want your brand to represent the cheapest available option? The absolute best option? What do you do differently and how do you feel that affects the value of your product? These questions will help you to understand how you want to position your brand in the mind’s of consumers. A cheap Chinese car and a Bentley will both move you from A to B – but one costs 100 times more than the other. Yes, materials, cost of goods / manufacturing do play into this, but there is also the value of the brand itself. Are you the Bentley or the Great Wall of your market?

Are you managing Advertising in-house or via 3rd-party? There are benefits to both options yet they will have a large affect on the potential profit. Managing in-house provides far greater control but also requires more hands-on attention. Maybe you are happy to receive a smaller percentage in return for not having to worry about this area. Research the average CPM and CPC for the top 20 competitors in your market and price accordingly. (Of course for online business your traffic data will affect what you can actually charge).

Finally, when setting service subscription prices it’s important to understand how you present the total price to a customer. I could sell you a subscription for $520 per year, $43.50 per month or just $10 per week…

Notice that the same overall cost of the service appears to represent higher or lower value depending on how it’s presented. The absolute masters of price setting have to be restaurants and supermarkets. They’ve studied the science behind consumer behaviour and perception and boiled pricing down to some simple techniques. Here are a couple of great articles to get you going:

Tricks of the Trade

Menu Psychology

Researching your Startup’s Market

via The Founder’s Institute