Wednesday, March 6, 2013

What To Do When Your Business Plans Do Not Go To Plan

This is a million dollar question - "What To Do When Your Business Plans Do not Go To Plan"; every business will have a different approach; however you can learn from Josh Kohlbach's personal experience.

When Your Business Plans Don’t Go To Plan

Recently I was launching (actually re-launching) a website with a membership area to it.

The site was originally a free eCourse on learning how to create websites with WordPress, something that was proving to be quite popular. It had a few thousand people go through it over 3 years so I’d built up a list of people that were interested in the topic of building websites.

What I surmised was that I could launch a membership side to the site where people could sign up to view tutorials.

I surveyed my audience and found that there was some interest there. People wanted to see video tutorials, many of them were using self-hosted WordPress and I thought that was enough to then create some tutorials and see how it went.

I launched the site with about 25 high quality (albeit a bit introductory) video tutorials, sorted out video hosting with Amazon S3 and setup my membership site with a WordPress plugin called WP-Member.

I conducted a launch, contacts all my past members, and then… no one came.

There was interest in the landing page for the premium part of the course, but no takers.

What To Do When Your Business Plan Do Not Go To Plan by Josh Kohlbach

So what do you do when you work hard to provide a service or a product and then it fails?

Well the first thing I did was to analyse my findings, obviously something was off in my assumptions that people wanted this and also wanted to part with money each month to have it.

I didn't really confirm that last part about the money. All I was asking in my surveys was do you want something like this to wish people said "sure". (Free tutorials? Yes please!)

So that was mistake #1 – confirm people will buy before you go and do all the work.

Second thing I found was that I over-estimated the activeness of my audience.

Just because I had a couple thousand on my list didn't mean that I had a couple thousand active people interested in my service.

I was hoping that I'd get a few sign ups and then I could get those people to help me spread the word.

Not getting any signups from my list kind of threw a spanner in the works.

Having a big list doesn't mean squat if you aren't constantly keeping in touch with them. It's this keeping in touch that is important and if you don't then you may as well just have a list of 0 people.

Mistake #2 – don’t assume that your list will respond to an offer if you haven’t been in touch for a while

So what am I doing now?

Well, it's hard for me to give up on an idea that I'm passionate about. I still think there is a need for this information, but perhaps it's not in the correct form at the moment.

What I'm working towards at the moment is create a viral coefficient of  >1.

For the uninitiated, a viral coefficient refers to how many people 1 visitor brings to your website. If it's over 1, that means the site grows with every visitor that comes. If it's less than 1, you're not growing.

The next step for the site is to do a pivot. I'm now releasing the video tutorials for free, I'm listing them publicly on YouTube instead of my own private video hosting and I'm doing everything I can to get people to the site and sharing the videos.

My plan is to build up the traffic over the next 2 months then implement an advertising program to assist with growing the site.

I know "advertising" is a dirty word for website owners because it means I haven't full discovered what my business model is for the site.

That's completely true.

But in order to make this a worthwhile activity the site needs to pay for itself and advertising is a quick way to do that, without it I would have to abandon the endeavour entirely.
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Final thoughts

Ok, so my final thoughts to round this post out are:

When your business plans do not go to plan (and really, when do they ever go along with the actual plan?) you need to be willing enough to stop what you're doing and analyse the problems.

There is obviously some key assumptions that were made that aren't true because otherwise the plan would be working.

Secondly, I need to spend more time validating these business ideas before charging headlong into them.

If I had spent more time at the outset validating and testing some of these assumptions I wouldn't have wasted so much energy going in the wrong direction.

Lastly, I'd like to remind people never to give up.

Just because your idea didn't work in it's current form doesn't mean you should give up and waste all that time you put into something.

Sometimes all you need to do is come at it from a different angle and try to make it work that way.

Eventually, if the core idea is good enough, you will find a way that works and you'll be happy you stuck with it.
Note:
This post was originally post at Josh's Blog,

Josh Kohlbach is a web developer and entrepreneur from Brisbane, Australia.
Director at Rymera Web Co

Friday, February 22, 2013

What are the characteristics of an entrepreneur?

Here is an interesting question about the characteristics of an entrepreneur, the answers are from well know and successful entrepreneur. This is "informal talk".

Entrepreneurship, Characteristics that are essential to the character of an entrepreneur, Characteristics of an entrepreneur.

Characteristics that are essential to the character of an entrepreneur


The first answers is from Matt Cohler

I think the details are actually a very little bit by market; but to abstract out from that to what some of we all have been talking about; I think that the most important thing is that it's something that comes from passion, for whatever it is that you are doing, whatever it is you are building, whatever it is you are making, whatever problem it is you are solving, whatever new thing it is you are bringing into the world.

There are a few people out there for whom that passion is actually the act of entrepreneurship, and those are people who I think generally are called serial entrepreneurs. For those people it really is like entrepreneurship itself, is the thing that they are passionate about. On the other hand, a lot of people who are great entrepreneurs and don't even necessarily sort of self-identify as entrepreneurs, they just self-identify as: "Yeah I am doing this thing, - I don't even want to do this, - This is just what I do or I have to do this".

So I do think the details are very little bit by market, the best abstraction or the best example template that I can think of is Martin Luther. That's the sort of template that I always hold off for somebody who is a great entrepreneur.

The reason that I say Martin Luther in particular is, you need to sort of be just a little bit crazy, have conviction that your idea and your way is the way the world needs to go; but not to the point of irrationality and self-destruction.

Next answers is from Gurbaksh Chahal

I think one characteristic you got to swallow really-really hard is, you got to embrace rejection, and sometimes it is the hardest thing to do as a human being. But if you can swallow it, understand and deal with it, you are going to probably solve 80% of your problems.

If you just look at my career path, nobody wanted to fund me. I was doing millions of dollars of revenue and millions of dollars of profit but nobody wanted to fund me because I wasn't part of the dotcom Euphoria in the way things looked at least back in the heyday.

Then with BlueLithium I had three different venture capitalists that pool away from doing a deal with me at the last minute. So imagine celebrating with your employees and realizing oh we are going to get millions of dollars in for the company and then getting it pulled. I even had one very famous venture firm in the valley told me that I was going to miserably fail at BlueLithium and that I should listen to them and you know divert my attention to something that's actually going to work.

But you know if you look at that, and then just kind of look at even other industries you will find founders of companies that have tried over 50 times before and investor said yes.

For example if you look at J K Rowling - now a well-respected author and billionaire, she got rejected seven times from her first book. So all that comes down to the human nature of realizing what your pain tolerance is for embracing rejection and so long as you can grow a fixed skin, and focus on that objective, you will prevail.

P.S.
There is more to mention, make sure to come back soon for more characteristics of an entrepreneur.

Thursday, February 7, 2013

Proper Techniques to Business Plan Writing

Proper techniques to business plan writing with Dr.Steven Gedeon - PhD, MBA, PEng, Venture Capitalist and Entrepreneur.

Business Plan Writing - Question and Answers

Is a business plan useful just for the entrepreneur?

Steve: business plans play a variety of roles. Certainly a number of business I have started up, we never had a business plan. I have seen a lot of well written documents and I said don't waste your time writing a business plan.

Certainly for some businesses you shouldn't waste your time, just get out there and just do it, do it,do it,do it and why bother write it down on a piece of paper. But business plan certainly play a very key role for certain reasons, for example: If you're trying to raise financing or to promote yourself as a credible intelligent entrepreneur. You should keep it short, I would say very few people will read more than twenty, twenty five pages. A lot of people won't go beyond the executive summary before they make a decision on it. So, there are a lot more of different reasons to write a business plan.

What are some strategies to get what is in my head right on the paper? Do I have to think about an outline before everything or should I start writing right away?

Steve: Writing the business plan itself is not nearly as important, as the process by which you think through what is a successful business. If you think through and write through what makes a successful business then the business plan will write itself.

So, when I teach the course for example, what I start with is saying: Just write down what your idea is? Clearly and succinctly what is your idea?

Surprisingly that's hard for a lot of people. It seems clear in their own mind, but when they try to put it down on a piece of paper, the idea get's buried under too many words. You've got to be able to convey what your idea is in a sentence, maybe two. If you can't clearly articulated it in a paragraph, then it's not clear in your own mind. That's the first phase: What is it?.

Then second phase, I usually go through is: I say tell me in detail who your customer is and why they care?

Very often what'll happen is as people think about who their customer is and why they care, then they have to go back and change what the original idea was. So, the idea of being able to really focus on who that customer is, is so important and most entrepreneurs don't get this. What they do is; they say I'm selling to women, well the problem is you can't sell to women.

The thing I like to say to students sometimes is: imagine you started a company, there's a telephone start making phone calls. You are selling to women! - what are you going to do? Just pick up the phone and call the first person: Hi, are you a woman ? let me sell at you or stand on the street corner in a chicken outfit, hey women buy my thing !. All this is wrong.
You have to have in mind a particular woman, doing a particular thing. What is it about that particular individual that makes them pay attention to your idea, love your idea and buy from you. The more you can focus on, the better you can articulate who that target demographic is.
Get to know their psycho-graphics what they read?, where they hang out? - The more you know, the better you can place your message in a place where they'll see it
Just to make clear; by doing the above analysis we are still working through, think through the right business. That wasn't executive summary writing.
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The business planning process itself - Dr.Steven Gedeon

Most business planning books seem to say: you start at the beginning and you write through the end. But that's not what you think through business. The way you think through business is: you start, you start thinking through a little bit, then you realize you got to go back to the beginning and start over again. Then you think a little bit more and go back to the beginning  So you have this cycling process to go through before you finally figured out how to make it all hang together. Now you can start writing a business plan.

So the first thing you do is: to say in general terms what is the business; then say who I am selling to, remember this is in detail not just: women or people between the ages of twenty five and thirty five; people are different you got to honor that when you're trying to sell your product to them. As example, Figuring out who your customer is, it will tell what the price point need to be.

Then obviously you need to look at who your competitors are. Then comes kind of the core business concept of strategy, - How are you different from your competitors in a way that's important to your customer. Which means you got to know who the competitors are, who the customers are, and you got to know how are you different. Now that you figure that out, you probably have to go back and rewrite what your business is all about.

At any time in this process should you be taking breaks to talk to any potential customers?

Steve: The market will tell you anything you need if you ask it. But so many people write these business plans that are castles in the sky, dreams based on: You know it's a billion dollar market, and I'm gonna just get a fraction of it, and they act like that means anything. That's not the way businesses are build, businesses are built one customer at the time, once sale at the time.

As a venture capitalist I am sure you looked through hundreds of business plans, what was the most important component or what did you first look at to determinate if you should keep on reading a business plan?

Steve: I can speak with the authority on this matter, everybody agrees on this point. First thing you look at is the executive summary; but the first thing you really look at is the management team. People will bet on the jockey before they bet on the horse  People will bet on an "A" team with a "B" plan over an "A" plan with a "B" team. So they look at the management, the overall business idea and then right to the financials.

This is it for now, feel free to leave your thoughts and do not forget to share.