Young Entrepreneurs – Great new ideas

Have a great idea?
Have a great idea?

So you have a great idea do you? How do you know if you’re right?

Many people have great ideas and don’t know where to go with them and others think they have a great idea but are not correct. Very few have a good idea, know they are right and go after it with the drive and passion to see it through. How to know if your idea is worth pursuing? Here is how I go about it.

Assumptions: With any idea, it helps to start with some assumptions to highlight the type of industry, business, technology, marketplace and potential customer base. Most of the ideas I explore and evaluate are high tech, web enabled, business to business services, ecommerce or the like.

The idea: For sake of this example, here is the idea, a web based service that monitors our ecommerce competitors for pricing and content changes, new products, discontinued products as well as to create awareness to any new competitor as they sprout up quite often. It is also used for intraday evaluation to highlight marketing trends and activities and find the soft underbelly. We have a version of this we use in-house but have not made it customer facing nor publicly available to other customers. Maybe we should… let’s see.

First and foremost, if this idea is great AND you can get it up and running AND it is successful, where do you want to end up with it? While the answer is always subject to change, what is your exit plan should all of the stars line up?

Exit plan: In our case, because the volume of ideas is constant and large, our exit plan with a software as a service (SaaS) like this is to prove its worth, build up revenue and an initial customer base and make the platform an attractive target for acquisition. The monies received by selling this service fuel the incubation and acceleration of multiple pending projects that have also run through our “Idea Scorecard” and passed with a high rating. Hypothetically speaking.

The Idea Scorecard:

Now that we have established what the idea is and what we want to do with it, we can now evaluate it and determine if it is worth proceeding with project management and personnel/financial resources. There are a lot of variables to look at, some financial and some subjective. The subjective questions all carry a different weight as a fraction of 100% as do the financial questions and answers. The end result is a score for each idea, ranging from 0-100. Anything over 90 is worth looking at and when evaluating multiple ideas, usually the highest overall will get first priority with some exceptions. Keep in mind that this is NOT a business plan and not intended to take a significant amount of time to complete. Many of the subjective questions are to immediately negate the idea and save your the time and expense of completing not only this scorecard but any business plan development beyond this basic analysis.

Subjective Components:

There are a lot of questions you can ask of an idea to highlight potential hurdles within your existing business infrastructure, financial resources, personnel resources and the existing marketplace. Here are a few that we run through that have been successful in helping us allocate resources to a worthy project as well as prevent us from pursuing projects that look and sound great in concept but have one or more flaws that will ultimately doom it from the very beginning. I’m not going to expand on any of these or apply their unique weights, but you’ll get the idea.

  1. How much software development time is required?
  2. What is the competition like? Are there any/many out there?
  3. Is this a new concept overall or does the idea already exist?
  4. How strong or weak is the existing competition?
  5. How large is the potential customer base?
  6. Is the revenue one-time or recurring?
  7. Is the product/service managed or self-serve?
  8. How simple is the concept as a whole? Can it be explained in 30 seconds without visual aid?
  9. Does it produce a tangible good or is the product itself tangible?
  10. Is the product returnable or disputable?
  11. Can the service / product(s) be marketed to our existing customer base of 75,000+?
  12. Is this a consumer or business product/service?
  13. Is it a broad marketplace or niche market?
  14. Is the idea dependent on continued content creation?
  15. Is it likely that this service will be found through search marketing or only through push marketing?
  16. Will the customer recognize the need and value without education?
  17. At or prior to launch, do we need to hire more than three additional people to support live services?
  18. Would the idea cause any credibility issues within our existing customer base, marketplace or partner relationships?
  19. Are there any significant barriers to entry into this marketplace?
  20. Is the advertising and marketing online, offline or both?
  21. How extensive of a marketing program is necessary?
  22. Can the engineering and marketing departments work in parallel successfully?
  23. What factors outside of our control could derail the development and customer acquisition?
  24. Is this valuable enough to be deemed a necessity or merely a luxury?
  25. Does this require a proactive tele-sales team or reactive customer service department?
  26. Once launched, how quickly could a significant competitor arise?
  27. Can you self-fund the R&D or does it require external financing?
  28. If the service requires local personnel, is the talent pool deep enough?
  29. Can any manual components be outsourced or completed by remote workers?
  30. Who are your potential business/idea acquisition targets and do you have report with them?

Financial Components:

Rather than spend a significant amount of time on an extensive business plan that you might present to an investor or business partner, we have built a mini-plan of sorts to gather some general financial figures and help guide the decision making process without expending resources unnecessarily. Many of these figures tie in with the subjective questions and are altered by their answers. My feeling on this is that it is best to answer the subjective first and build the financial mini-plan using the answers therein.

  1. Initial R&D Expense (multiple of S1)
  2. Post launch monthly expense and personnel headcount per customer
  3. Conservative monthly revenue per customer
  4. Length of sales cycle
  5. Break even projections and analysis
  6. Twelve month division/company valuation
  7. Twenty four month projections (post R&D)
  8. Acquisition cost per customer
  9. CapEx and OpEx (pre and post launch)
  10. Target valuation

Summary:

While there are many other factors to look at and significantly different factors to include for varying industries and technologies, the idea of basic idea template and scoring system for those with a steady stream of “next great things” is key. Constantly evaluating this scoring tool and automating the tool to make the processes more efficient and more accessible to others is equally important. Expanding the number of subjective questions can further isolate the good ideas as can additional financial analysis. The point is to take time to evaluate and have a method of doing so prior to investing your time and money in an idea that ultimately isn’t going to be the winner you think it is. This tool, for me anyway, is to highlight the losers more so than the winners.

Is the idea a winner?

Sure it is. High margin, recurring revenue with a large enough potential customer base and an obvious value proposition with limited competition and barriers to entry. Were the resources available, expanding on this internal application and making it customer facing would be worthwhile in my opinion. In the interim, we’ll use it and refine it for future project based expansion. Should someone else take the idea and run with it, great, let me know when you launch and we can compare notes.

Young Entrepreneurs – Outsourcing

Amazon Web Services
Amazon Web Services

Outsourcing… I’m not talking about sending your customer service calls overseas either.

Things have changed a lot since I started building businesses and that really wasn’t that long ago. When it comes to building a company that is technology related or is leveraging the internet to build and drive business, it is a lot easier and a lot less expensive than it used to be. Instant access to anyone and anything, the drive of the American consumer and entrepreneur and the constant re-doubling of computing speed and power has really opened it up for anyone with a great idea and the passion to see it to its end. Outsourcing used to be a bad term and generally referred to companies using foreign workers to answer their telephones and provide 24/7 customer service for less than they were paying to have business hours coverage.

It isn’t a bad thing and here is just one example covering a lot of small business needs; Amazon Web Services (AWS)

With minimal time and effort, using AWS you can build hosted applications (like Twitter), obtain remote storage, setup billing and payment services, provide content, leverage hosted keyword and optimization tools and even push manual labor tasks out as projects for jobs that cannot be automated and require substantial short term headcount. Below are some of these various services and brief descriptions of what they do. This is a great place to build a prototype, test it, optimize it and even push it live before needing to get any financing, hire any employees, lease any office space or even setup a legal business entity. I truly wish this was around and its benefits explained back in ’95 when I got going with my own companies. The service is free to set going. Any ‘go-live’ fees are minimal and usage based.

  • Amazon Elastic Compute Cloud (Amazon EC2) is a web service that provides resizable compute capacity in the cloud. It is designed to make web-scale computing easier for developers. In more simple terms: You can setup your own application server, create your application, take it live and watch it grow without buying any hardware, no network integration, no expensive commercial grade broadband and reactionary scaling where your servers capacity grows automatically as external demand requires. In terms of a web application, like Twitter, the servers that hosts the application, the connectivity to the internet, the storage of information and scalability of it as more and more people use that application grows.
  • Amazon Simple Storage Service (Amazon S3) provides a simple web services interface that can be used to store and retrieve any amount of data, at any time, from anywhere on the web. It gives any developer access to the same highly scalable, reliable, fast, inexpensive data storage infrastructure that Amazon uses to run its own global network of web sites. The service aims to maximize benefits of scale and to pass those benefits on to developers. No simplification needed here: S3 is low cost data storage with high availability to anyone around the globe.
  • Amazon DevPay is a simple-to-use online billing and account management service that makes it easy for businesses to sell applications that are built in, or run on top of, Amazon Web Services. It is designed to make running applications in the cloud and on demand easier for developers. Simplified: DevPay is used to sign up and bill customers using your applications and collect their payments. This billing can be subscription/recurring based or based on usage of the application. This takes a lot of pain away from new business owners and even established ones stepping up to AWS.
  • Amazon Mechanical Turk is a marketplace for work that requires human intelligence. The Mechanical Turk web service enables companies to programmatically access this marketplace and a diverse, on-demand workforce. Developers can leverage this service to build human intelligence directly into their applications. While computing technology continues to improve, there are still many things that human beings can do much more effectively than computers, such as identifying objects in a photo or video, performing data de-duplication, transcribing audio recordings or researching data details. Traditionally, tasks like this have been accomplished by hiring a large temporary workforce (which is time consuming, expensive and difficult to scale) or have gone undone. A simple example use: We need UPC codes for all of the products listed in our online store – (VoIP Supply). With my current staff busy handling day to day work and unable to dedicate the days needed to track down UPC codes for 2,000+ products, this task is always going to sit on the back burner. With Amazon Mechanical Turks and access to thousands of people able to work together on this project, we can get this project completed in less than a day for a fraction of the cost, without disrupting my staff and their work.
  • Amazon CloudFront works by distributing your web content (i.e. images, video, etc) using a network of edge locations around the world. Your content is then served from the edge location that is geographically closest to the user who requests it. This is best explained visually (HERE) but basically permits distribution of your content globally with the less latency and greater reliability by finding the closest point of storage/access for the person or system requesting your data.

This is a very remarkable bundle of services for anyone looking to take their idea from a napkin to the Inc. 500 without many of the traditional hurdles and roadblocks that have plagued past entrepreneurs.

Young Entrepreneurs – Mind your focus

Focus
Focus

I hope to write a series of these for those getting started with a new venture of their own or those thinking about getting into business for themselves. All ‘Young Entrepreneur’ topics shall be general lessons learned and mistakes made that compensate for my lack of tuition and college education expense. This is the first one and one of the most important; Mind your Focus.

Sure, you have great ideas. You’re smart, young, driven, fresh out of school with your MBA and about to change the way everyone does everything. Me too, except that MBA thing!

This is one chunk of advice that I have read all about, was mentored on and frankly knew it was true from the get go, yet rarely chose to make it part of my mindset.

Too many great ideas, not enough focus.

I’ve long been terrible at this (or awesome at it, depending on how you look at it) as are most people with ambition and creativity combined. Putting all of your effort towards one project at a time and enduring the good and bad until completed will always yield better and more profitable results than spreading your focus over many great ideas, completing none and exhausting yourself in the process. If you have ever worked with me, you are probably laughing hysterically right now since you would know how counter this logic is to my historical patterns. Hindsight is 20/20 and I can only change the future by learning from the past.

One major initiative at a time.

I remind myself of this all of the time and currently believe that I and we are doing very well at this within the company. While we have plenty of minor initiatives going on at the same time, our only focus is on our core business of online retail. We sell high tech emerging market hardware, including VoIP, IP Surveillance and Network related products. It isn’t the sexiest work, but we do it very well and it generates the profits needed by the company. I have a lot of service ideas that can easily be built, launched and they will generate higher margin revenue, but during times like these it is more important to care for what I have, my customers, my employees and the business as a whole. There is always time for the next great thing.

If you have the courage to start something on your own, have the sense to focus on one thing and do it better than anyone else.

Note: If you fail at this and spread yourself too thin or try working too many angles, remember to learn from it and move on. Get back up and try again, at least you tried and no one ever gets anywhere without that. Less than 1% of the population starts and runs a business, the fact that you tried makes you special.

Speaking Up

VoIP Supply
VoIP Supply

The executives and managers at VoIP Supply all have and advertise an open door policy to our employees. Remarkably many staff do not take advantage of this opportunity, even though it is encouraged and the outcome is nearly always better than expected.

Regardless of the reason for making the initial visit, the outcome and direction of the conversation generally goes somewhere completely different, with greater-than-expected results. Typical open door uses are when there is an issue or opportunity outside of the authorization level for the individual employee to approve. Certainly an excellent reason to walk in and engage your manager, but managers and directors should seize that opportunity to address that issue and pry into more detail with that specific employee.

Rather than extinguish the fire, dive in and find out more details so you can address it at that time, and prevent it from reoccurring in the future for that employee or customer or others.

With the rapid pace of growth and change within our organization, it is easy to lose touch with the philosophy and overall direction of the company. It is also simple enough to change old habits or intra- department myths and beliefs. It is just as easy to uncover when someone, who has been using their best judgment to address a process or problem in a particular manner, is not using an ideal or practical approach for the best interests of the customer and the company.

With as many rules, processes, and procedures as we and most companies have, it requires interaction with your employees to review the best practices, while working with them to improve their environment and efficiency. This is also done while working towards the common goal of providing the best possible customer experience.

Everyone is busy these days, myself included, but that does not mean that it makes sense to ignore the time needed by my staff, or that my needs are more important than theirs. Taking time to hear staff concerns and to ask questions about their day, their needs, and their wish lists always opens the door to improving the customer experience, company efficiency and workplace attitude.

In that respect, I highly encourage my staff to take time from their day as often as possible and come to see me, talk about something, and dig into ways to improve. I also encourage my management staff to adopt the same attitude when it comes to what many could consider an interruption to their day or a staff member not doing what they should be.

Speak up.

Re-posted from the VoIP Insiders (4/28/2008)

Hmm, Lying (or dementia) vs. Torture – Which is worse?

Ok, I’ve heard enough, how about you? Is it even worth the time and effort to speak trying to stir up drama and controversy with this whole Nancy Pelosi vs. CIA issue? Is it worth my time typing this post? Probably not. I’m Canadian and can’t vote, don’t care for or dislike Nancy Pelosi and this has nothing to do with politics. Just the media. Find something worth talking about or go back to 30 minutes a day, please.

Here is my rant – keep reading though, there are much more important topics to follow…

I find it astonishing that there are people in this world who truly think that outing Pelosi for either lying or simply not having the capacity to remember all things spoken to her is more important than the topic at hand. The US has been torturing people, makes no bones about it yet feels justified in condemning the UAE for their use of torture, stating that they “cannot trust those who employ torturous methods”.  Here in this great country, those same people would prefer to spend time cranking up the media engine to turn your attention to a lie rather than the real crime of torturing people. Apparently we shouldn’t trust ourselves either.

She lied, fine, kick her from her post, just make sure you do it after you get rid of those who were involved in torturing people and lying about that. It’s all about priorities.

My preference would be to hear positive news daily instead of the crap that is on all day everyday. In lieu of that, can we please focus and prioritize the topics based on actual relevance and severity?

Lying is bad, torturing is worse. It is truly that simple.

If you’ve got a comment that is in disagreement with that, please post it and make sure to include your name so I can put it on the “special” list.

More important topics (inho):

  • Habitat for Humanity: Habitat has built more than 300,000 houses around the world, providing more than 1.5 million people in more than 3,000 communities with safe, decent, affordable shelter.
  • Camp Good Days and Special Times: This past summer, over 1500 children, including children with cancer from several foreign countries, participated and experienced the magic of Camp Good Days firsthand at our own beautiful Recreational Facility, located on the shores of Keuka Lake.
  • Buffalo City Mission: Buffalo City Mission offers long-term recovery programs, counseling, work and life-skills training, education assistance and health-care services for homeless men, women and families committed to turning their lives around. We offer outreach programs to prevent homelessness for individuals and families in the low-income community.
  • Durham Cares: Founded by two friends of mine, Henry and David. DurhamCares was founded to help Durham residents love their neighbors; not just the people next door, but across town and even across the world. Our vision is to see our city engaged in serving each other, building relationships across cultural boundaries, and transforming our community through committed involvement.