People are very time poor, or maybe just a little impatient. Regardless of which it is we have to be able to tell our story quickly.
Vanguard Investments do it in 2 seconds. Click here to see how they do it. (Watch the animation)
Even this chart below tells the story on long term ‘index’ investing. Of which Vanguard are the founding forefathers.
The recent downturn is a best a ‘blip’.
How long does your startup story take to tell? Here’s a tip – we’ve got a few seconds at most.
While dropping into Startup Camp in Melbourne last week I started chatting with Jonathon from Melbourne Angel Investors. I asked him just one question:
What is more important in their investments, the team or the concept / product?
His reply was a simple one and here it is:
We’d invest in an A Grade team with a B Grade product, but we wouldn’t invest in an A Grade product with a B Grade team.
Startup blog agrees. Though I did here that he was pretty ‘anti-tech’ as far as their investments go…
But the first piece of advice is worth adhearing to. Above all things build an A Grade team, be an A Grade entrepreneur.
And so again we hear that the people in your startup are way more important than the secret sauce. It is without irony that A Grade teams more often than not find A Grade ideas too.
“…I would have, but I’m not very good at maths”. How many times have we heard that? I love quadratic equations and differential calculus as much as the next guy…
Good news bulletin: Simple Maths rules the business world.
If you’re familiar with the following symbols you’ve got all the number skills you need.
+ - x / % < >
You only need grade school math. But, you’ve got to be quick with your numbers, know which ones matter, understand industry averages and which ratio’s to look for – top of mind. The most important of all these symbols is %.
Everything that matters is represented as a percentage:
Rates of interest
Return on investment
Price earnings ratios
Debt to equity
Get to know your key financial indicators. Simple tools used on the share market are your best friend even for a small start up. Fundamental analysis is always based on ratio analysis.
Your company will only ever be what it earns and remember these two things that entrepreneurs often forget:
- Revenue must exceed expenditure
- The crocodile always gets the biggest piece!
I once said that “investors only ever get married with divorce in mind”. In fact, it’s often the most popular question at most start up events. “What’s your exit strategy?”
What Simon wants to do is build a profitable business which grows beyond him. One which can operate without him. Simon gets it.
Here’s some advice all young entrepreneurs should heed. Because when you can achieve the above you don’t need an ‘exit’, you have ‘options’.
Here’s a list of things which actually do matter:
Our diction and vernacular
Our personal presentation & dress code (Doesn’t mean a suit, but to wear what we wear well, have a sense of style)
The way we engage people and treat them
Our smile and attitude
How neat and organized our workspace is
Being on time
Knowing our next steps every day
Making sure our technology is in working order
All these things and others, matter all the time. Not just the day you have to do it right, have the big VC presentation or the day you’re meeting your biggest customer.
And here’s why – they’ll become habit. Good habits. And when things are habit, they’re performed much the same way – time and time again.
If we do them well when it doesn’t matter, we’ll do them well when it does.
Two people went to work on their startup business.
Joseph got up early started at 8am and worked until midnight, he finished all the tasks on his to do list.
Mary slept in, was tired, got up mid morning flicked through the newspaper, had a few good solid hours in the afternoon and goofed off after 5.30pm. She did not complete all the tasks on her to do list.
Question: Which entrepreneur achieved the most in said day?
C) Cannot tell.
As entrepreneurs the most crucial mistake we can make is confusing activity with progress. The entrepreneur who achieved most is the one who made the most progress towards their end goal.
We should not confuse time spent with value created.
For those of us not raising Angle or Venture Capital, our business plans should be directly proportional to the size of our business.
No revenue = no plan.
(ok – a small mud map that focuses on the very basic business model which will lead to revenue.)
<$1 million revenue = 1 page.
The law of diminishing returns sets in at around about 10 pages, regardless of the size of the business.
I’ve just read the following book. 50 great e-Businesses and the minds behind them. By Emily Ross and Angus Holland. It includes all our favourites over the past 10 years. Put simply it’s insightful.
I really think you should read it, but if you’re time poor like most entrepreneurs here’s my bullet point summary for you:
More than 80% of these businesses were founded and run by non-technical people (web designers / coders etc)
Only a handful actually went viral and had overnight success
‘Fun parks’ build traffic & members quicker than ‘real commercial sites’ (see next blog entry)
The majority did not have VC funding, fancy offices, or even staff. They bootstrapped.
Most took much longer than 2 years to build
The most unexpected and common thing that drove success was cold calling & collaboration
The entrepreneurs behind them we’re driven by the idea, belief and excitement – not only the potential for big money.
Worth a read.
Start up blog mantra:
Bring forward investments
Know the difference between the two. If unsure, ask.
There’s been a lot of talk lately about an ensuing second internet boom. With the billion dollar sales of many web 2.0 companies it’s easy to see why:
To give a little perspective the Nasdaq composite index peaked in the year 2000 at 5132 points. Yesterday it closed at 2320, just under 8 years later.
If you invested $10,000 at the peak, today it would be worth $4521. Still a very bearish 55% capital loss.
Sure we’d have to question some of the valuations, but the market hasn’t started to value ‘ideas’ at over a billion – yet.
Start up lesson – your company is worth what someone is prepared to pay for it.