What You Can and Can’t Learn from Watching

When in university, I worked in a biology laboratory that followed a basic system of instructing members of the team in various techniques. One person would show another how to perform the technique, the student would perform the technique themselves under supervision, and then instruct the next student in line.

In business, this is no different. One can learn by reading books and watching other businesses operate. However, while these lessons can provide valuable insight into the operations of a business, they are limited in that they have not been experienced by the reader.

The business owner can apply what they’ve learned, and by doing this, internalize those lessons. Abstract concepts described in textbooks now have practical ramifications, the reasons for some more subtle concepts suddenly become clear, while other lessons are discovered to contain fallacies which don’t hold up to real-life experience.

However, it is not until the business owner tries to teach someone else how to run a business that they truly understand how their business works. It’s not until the lessons need to be explained that they realize just how complicated some of those lessons are.

Perhaps that’s the real value of events such as Freelance Camp TO which bring together people in business who want to learn with those who are able to teach. The benefit might seem to be mostly for the attendees of the various presentations and seminars, but really, the presenters, themselves business owners, are completing their own course of study by attempting to teach and instruct the next generation of business owners in the lessons they’ve already learned.

Why I Use QuickBooks

A little while ago, I wrote an article extolling the virtues of the QuickBooks sales staff and customer relationship management processes. The end of the story, though, is that I ended up with a copy of QuickBooks for managing my business’ finances.

When I posted that fact on Twitter, I was asked by various people why I chose QuickBooks over a much more cost-effective solution such as Freshbooks. A fair question, considering that as an advocate of start-ups and their projects, I would normally choose to support their efforts, especially if it would save me money. QuickBooks, at least the version I purchased, cost me almost $200, while Freshbooks starts at free for limited use, and would take me quite a while to get to $200 in fees.

Additionally, I’ve used Freshbooks before, when a vendor sent me an invoice using their system, and a client requested online payments, which I chose to run through their interface. As such, I do have some familiarity with the product, while my exposure to QuickBooks at the time was extremely limited.

However, I still chose to go with the commercial product for a few reasons:

  1. The product is complete in terms of managing my business’ finances. From quoting to billing to managing accounts payable, the software can handle it. If I choose to expand, I can add a module to handle payroll. Taxes are automatically computed, and I can file those returns directly from the program.
  2. My accounting firm integrates fully with QuickBooks. They have me email them a file on a quarterly basis, they make sure there are no major corrections to be done, they import it into their system, and they can cut the amount of time needed to handle my file. For any company which makes use of an accountant for managing their finances, using proper programs which integrate well becomes important.

That’s not to say that I wouldn’t advocate Freshbooks. I believe that the product is well designed and constantly improving. Perhaps eventually it will be a full-fledged accounting system that would integrate with other programs properly. Perhaps your company doesn’t require any of the other features of a program like QuickBooks. If such is the case, I definitely recommend at least taking a look at Freshbooks.

As for me, I’ll stick to QuickBooks for as long as it serves my needs well. Should it fail to do so at some point in the future, my first fall-back will be to take another look at Freshbooks.

Brokering Investments and Referral Fees

For a growing start-up, a major event in its early development as a company will be the acquisition of capital, whether in the form of a loan, a gift, or an investment. Founders who seed the company from their personal funds can consider their company as the recipient of a gift. When the money comes from outside, it will either be a loan, which can be quite difficult to acquire unless the arrangement is being made privately, or as an investment, in which case equity is being given in exchange for cash.

Rules differ between countries, but there are a few basics which seem to be fairly common which govern the acquisition of investment capital.

First, there is often a limit on the number of investors you can approach before you will be required to file a formal prospectus with the appropriate regulatory body. As such, it is important that you limit your discussions regarding investments to the smallest number of prospects as possible, and only those you realistically believe will actually personally invest in your business.

Second, before your investment can be completed, you will need to have a formal entity for your business – that is, some form of corporation which can issue shares – along with associated banking and financial accounting in place for accountability.

Because of these restrictions, finding a potential investor, at the early stages of development of a company, can be difficult. If a corporate structure does not yet exist, there is nothing to invest in. If you cannot broadcast your interest in acquiring capital, potential investors won’t know about you.

This is where your network can come into play. You may have a family member or friend who does know investors, and can make an introduction. The value of such introductions can be quite high, but that should not be taken to mean that the price is also expensive. Be wary when making use of such a referral in regard to payment – in some places, payment can only be made to a registered broker, while in other places, no such restriction exists, at least from a regulatory perspective.

However, investors will not be pleased to see their investment dollars going to a third party who has done little to no work in growing the company. An introduction, while invaluable in terms of opening doors that might otherwise not exist, is only a drop in the bucket in terms of the effort that will be needed to close the deal.

The investor will question the founders and their team intensively to determine the potential value of the deal – the broker will have little to do here. Lawyers will be hired to document the terms and finalize the arrangements. Accountants will be needed to perform due diligence on the finances of the company to determine, as closely as possible, the actual value of the company.

That’s not to say that the broker should not be rewarded. However, the reward should either be handled privately, in the case of a private introduction with no risk, or perhaps outside the terms of the deal. For example, if the broker runs a company which performs a service that your company is in need of, consider giving the broker rights to exclusive bids on projects, which will survive an audit of your company’s actions.

If the broker is asking for equity, beware. Even if it is allowed by the regulatory bodies for such a transaction to take place, there is going to be a conflict of interest, and the broker is likely being overpaid for their work. There are plenty of ways to reward the broker without giving up a piece of the company.

Looking for a Business Mentor

One of the best resources that a business owner can get is a mentor. I am not referring to a coach per se, but a mentor, and the distinction is important. A mentor can help a new business owner gain experience without the pain of making mistakes (or at least, reducing the pain and frequency of those mistakes).

Why do I not include a coach in this category? Simple – there’s a conflict of interest.

While I do not accuse any particular coach of the following, it is something to be aware of when recruiting ac coach for your business. A coach is in the business of coaching. They earn their fees by spending time with you, by providing you with material, by getting you to continue to be their client, and to refer other clients to them. As such, while a coach does want you to succeed (thereby garnering additional clients through your referrals), they also want that success to be slow, not fast, so that you will continue to be a client for a long time.

A rapid success would mean that you’ve learned the lessons. Even were that not to be true, because of the success you’ve seen, there would an inclination to remove the expense of retaining your coach. Slow success would show you why the coach is worth the fees, and would keep you paying them for as long as it took to fully succeed.

What I would look for in a mentor, therefore, is an altruistic reason for coaching that cannot be explained by the fees I pay. This could be a successful businessman who sees the mentoring as a way of giving to the next generation of business owners some of their experience. It could be someone who simply wishes to donate their time and expertise, or charge a minimal amount relative to what they could be earning.

The altruism means that this mentor would be happy to see you succeed rapidly as well as slowly. Since the financial gain is almost irrelevant, the conflict of interest is likewise removed, or at least reduced.

This is not to say that I’m looking for a handout. I’m strongly of the belief that if someone does work, they should be compensated fairly for it. As such, even a mentor could expect to be compensated for their time. But the compensation should not be the reason that the person is coaching me (or you, or anyone). Rather, it should extend from some other altruistic cause, with the financial reward being for the value of what they deliver.

Make Money While You Sleep

There are many courses online and in print which advocate methods by which you can make money while you sleep, or vacation in the resort of your dreams. The courses advocate the concept of easy money, in which you expend minimal risk to set yourself up for long-term success. The risks are described as minimal, while the returns are shown to be exceptional.

The concept the courses operate on, however, is not necessarily a false premise. It is possible, and it is certainly done at many points in time by many individuals, in which financial returns are garnered while the proprietors sleep. However, the path taken is often not described, or deliberately misconstrued so as to demonstrate higher than normal yields with lower than normal elements of risk.

If you are in business for yourself, however, and are looking for ultimate financial success (note that this is not the only form of success, nor do I advocate this form of success over any other), then you should be looking for such a system.

The basics of the system are to invest your time, money, and effort into an endeavor today which will continue to pay off years down the line without further expenditure. As an example, a songwriter may spend years writing a hit song – however, for decades after the first rendition of that song, the songwriter will be paid every time that song is played without any further investment of time.

If you are in a product-based business, then you should be looking to create a product which may involve significant effort to generate the first version, but to create many versions of the product will require minimal additional work. If you are in a service-based business, then you should be looking to create a system for providing that service via other people, and taking a commission for their work. This is akin to running a franchise – while you put in the effort to create a unified brand that is recognized, you do not expend effort in running the day-to-day business.

Do you really want to be doing the same thing every day, where earning each dollar requires as much effort now as it did when you first founded the business? Or would you rather create a strategy that will change the nature of your work into the parts you enjoy, and leave the financial returns to a system that has been set up properly for success, that will pay for itself over the year?

Best Kind of Advertising

There are two kinds of advertising, one of which has significantly more value than the other.

First, of course, is the kind you pay for – taking ads out in print media, buying radio spots, paying for television spots. You can get online and by ad space on various sites, or run an AdWords campaign. A graphic artist can generate some sleek content, a media company can extend the quality of the various ads.

At the end of the day, people viewing the ads know that you paid for them, and everything in those ads is heavily biased to show a particular point of view.

The other kind of advertising is endorsement from other people. Looking at many sites, you will see feedback posted from former or current clients trying to show how other people approve of the product. Look at the back of books, and you will see excerpts from reviews by well-known newspapers or magazines.

All this, however, is merely a biased selection of endorsements from other people which the author or owner of the business or product has chosed to display. Naturally, they will not choose to print the negative feedback.

However, when reviews are coming from other people, even when the quality of writing or visual impact is not as high as something your own team of graphic artists and writers could have produced, the impact to the audience is so much greater.

What does this mean to you?

Good advertising is earned, not bought. In order to get this recognition, there are two things you can do:

  1. You can make sure the quality of what you have to present is high, such that when the right person finds your product, they will be suitably impressed;
  2. You can make yourself easy to find by promoting yourself (without becoming obnoxious) in the right places.

Twitter Brings Business – and Loses Business

Various people have written about how Twitter can benefit a business, myself included. As small business owners, we hear about reaching out to prospective clients, listening to feedback, and in general being aware of conversations about our business.

What worse than no policy on how Twitter can integrate with your business, though, is having a bad policy on how to integrate the micro-blogging site with your business plan.

A few weeks ago, I was trying to look into a particular business, and posted a comment on Twitter:

Anyone know the company “Anonymous” based out of Smith Falls?

Moments later, I got a response from someone indicating knowledge of the company, and I quickly responded asking if he worked for the company, or if he was outside the company. His response was:

@ekochman Not at all – They are our ‘competitor’ – DM me and we can talk ‘off air’

Great! I have someone whom I can ask about the company, and perhaps, if the original company doesn’t work out, his company will. I sent him my phone number and email address, and asked him to send me a message so that we could start a discussion.

Several days later, I still hadn’t heard back from him. While I was able to verify that he was online and using his Twitter account, I was not getting any contact from him. As I had to send out a Request for Quote that day, I scratched his company from the list, and eliminated his company from bidding on the project.

His company lost out on a project because he started communicating with me, but failed to follow through!

It was not a small project, and it had the potential for more projects afterward. We didn’t even get that far, though, because a representative of the company started talking to me, and then ignored me.

What does this mean to you?

If you’re planning on reaching out to your community of customers and prospects by interacting with them on Twitter, Facebook, or anywhere other than your home turf, make sure you have a policy for those platforms. Make sure that employees know that if they talk to customers on those sites, they are expected to act professionally, to treat the customers well.

Don’t leave it to chance, or you too may have opportunities slip through your grasp.

Great Customer Service

At the suggestion of my accountant, I went onto the Intuit website to purchase a copy of QuickBooks. I had been told that by mentioning my accounting firm, I would be eligible for a 10% discount. However, when it came time to place the order, I could not find a way to inform Intuit of the referral.

For $20, I might have just bought the program in any case, and forgo the discount. However, a box appeared on the screen asking if I wanted to talk to Customer Service. I figured it couldn’t hurt, and 30 seconds later I was talking to a sale representative.

After explaining what I was trying to do (namely, get a discount on the software), I was told that this could not be done through the website, but that a representative could call me who could handle the discount. He asked for a number at which I could be reached, as well as a convenient time (to which I responded I was available all afternoon).

A few minutes later, my phone rang. It was a sales representative who took my information, placed the order, applied a 20% discount when I gave him the accounting firm’s phone number, and emailed me a receipt.

I thought the process was over, but a couple minutes later, I got a second email, this one asking if I would be willing to complete a survey about my experience. Happy to oblige, I opened the survey to discover a total of 4 questions: language of preference, then the nature of the service call (in my case, to make a purchase), and two ranking questions. There was also a box to fill in comments if I so chose. The entire survey was done in under a minute.

There were many things about this experience that struck me as well handled.

First, someone was there to answer questions as soon as I needed the help. While he couldn’t deal with my issue, he was able to collect enough information to pass me over to someone who could.

Second, I was called at a convenient time, which the representative knew was convenient because I had already confirmed my availability.

Third, I ended up with a bigger discount than I expected because of my patience. When in doubt, they assumed that the amount of my discount was the maximum they give out, rather than asking me to clarify.

Fourth, the follow-up email came right away, and didn’t take me long to fill out. It got straight to the point, let me put in as much or as little information as I had time to deal with, and was over.