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You know the deal:

  1. Sally gets new idea.
  2. Sally gets funding.
  3. Sally spends 100% of $$ developing idea.
  4. Sally runs out of cash.
  5. Sally goes bankrupt.

Boo.

Where should you spend your startup cash?

Unless you've already built a magnificent-recurring-client base who's ready to buy from you tomorrow, do this: Focus a humongous chunk of your initial capital (and time!) into:

Sales!


At the end of the day, banks, investors, and potential prospects will bail you if you're generating heaps of customers -- but need more money to develop your products/offerings to serve those customers.

Why Sales

Here's why:

  1. Sales generates cash.
  2. Cash is your lifeblood. It gives your company working capital to live.
  3. Without cash, you'll have no business.

The biggest destroyer of new businesses is a lack of cash. Why? Entrepreneurs unfortunately get the mistaken notion that:

  1. "Marketing is easy."
  2. "Sales is a piece of cake."
  3. "That's why we look down on salespeople for a reason."

They think customers will eventually come knocking. Then, after finishing their products/storefronts/teams/etc., they can't "frickin' find customers AT ALL". So, they attribute their downfalls to "bad luck" -- instead of the bigger culprit: Their sales/marketing skills suck.

How Important is Sales?

Peep this:

  1. Great sales without great products have built billion-dollar businesses (i.e. glance at the Fortune 500).
  2. Shabby sales with great products have destroyed businesses (i.e. no one knew how great they were to begin with).

The Reality: You can have a bad product with great sales (i.e. repeatable and foreseeable customer transactions), and still establish your company for years to come. It's frickin' hard doing the vice-versa. How do you get out of that startup stage and establish your company? Hint: It's not through perfecting every inch of your product.

Sidebar: Sell First, Build Second

Sure, it's a controversial approach -- but hey, it's the best strategy we know to conserve cash for the smartest investments (i.e. spending resources of products you know for sure will give you a positive return).

So, How Much Should You Budget on Sales?

Pop-Quiz! Your sales budget should be:

  • a) 10%
  • b) 20%
  • c) >55%

What'd be the smart answer?

  • c) >55%!

Of course, every business is different, but we think budgeting at least more than half of your total budget on sales serves as a good rule of thumb. SalesForce.com, makers of CRM software, budgets about 70% of their total budget on sales. (They're pouring millions-by-@^^%-millions into their software, so imagine the magnitude of their sales budget.)

Handy Tip: How to Budget Your Sales

How do you spend your "sales" budget wisely? That's an article in itself, but here's the gist:

  1. Don't put everything into one pot.
  2. Test and experiment with different marketing channels to see what works best for your particular product(s) -- using very little cash for each to allow for more future experiments.
  3. Pour more into those that succeed, and less into those that fail.

Rinse and repeat. (Marketing channel examples: direct marketing, advertisements, AdWords, calling prospects cold, flyers, networking, PR, speaking, hiring a sales consultant, yadda, yadda, yadda)

Running shabby ROI campaigns?

Don't fret:

  1. Analyze how you can cut costs with your better-performing campaigns. (You usually can -- by a lot; eventually, you'll gradually find a way to optimize your ROIs for each channel.)
  2. Simultaneously, experiment with other marketing channels as well.

Once you generate good globs of customers knocking on your doors, you'll free yourself to perfect your products to rock the world.

Sales = Muy Importante

 

Posted on January 14

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You hire Teddy. Teddy seems like a great hire:

  1. He went to a great school.
  2. He had a stellar GPA.
  3. He made the Dean's List all 4 years.
  4. He has great references.

Teddy, you might think, would be an awesome asset to your company.

What could go wrong?

Well, what if Teddy's a real donkey's behind? What if:

  1. Teddy brings a sense of entitlement?
  2. Teddy contaminates your company's culture?
  3. Teddy drains your workers' morale?
  4. Teddy belittles every-!@^^%-thing?

Would you know?

Probably not. Teddy wouldn't tell you. He'd put up a false front to cheer his boss. But, behind your back, there's a whole soap opera performing:

  1. Politics galore.
  2. Morale destroyed by the hour.
  3. Cliques forming.
  4. Mutual trust disappearing.
  5. People severely distracted from their work.

Result: exponential productivity drainage.

When were you most passionate about your job?

  1. You got up everyday looking forward to work.
  2. Your productivity appreciably grew.
  3. Something excited you about the place.
  4. You felt you were part of something ridiculously good.

Why'd love it? Many things; probably the top one, however: The People. (You'd die for those sonsofbitches.)

Why Let Your People Make People Decisions

If you could filter the sucky people out of your workplace, how'd you feel about your work? To exponentially rock productivity, Rock Star Sally has to actively want to work with her team members before she can capitalize on her ridiculous strengths. That ensures undeterred focus on the work -- not on people politics. Letting your best team members dictate who they want helps maintain the continuity of your company's culture to rock. Any others who don't fit just serve as distractions. Let your team filter them out.

Freedom to the people.

 

Posted on January 11

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"I can't do it until I have several employees!" But, wait: You CAN! How do you practice your business skills, even if you're just a 1-person company? Start by managing: Yo-self.

Why Practice Managing Yourself

Businesses run themselves like how their head honchos run their own lives. Ask yourself:

  1. How does my desk look? How are my cabinets filed?

    If you were running a multi-million dollar business right now, your desk gives a pretty good indicator of how organized you'll run your company.
  2. How's my communication with ___________?

    Your employees will feel the same way about your communication if you were steering an established company.
  3. How am I accomplishing my goals?

    Rarely set 'em and accomplish 'em? You'd likely organize a business without any sense of direction.

How you run your life reflects how you'll run an established company. You'll suck at managing a business if you suck at managing yourself. Imagine: You = Fortune 500 Company Think: You, Inc.

  • How would you set your goals?
  • What brutal realities would you need to confront?
  • What life skills would you need to adopt?
  • What healthy habits would you need?
  • How would you learn from mistakes?
  • How would you stuff out suckiness?

Manage your life, and simultaneously develop your rock star business skills.

Rock yourself.

 

Posted on January 09

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  1. You learned Lesson XYZ about 5 years ago.
  2. You think, "Hey! I've learned that stuff already. Let's learn something else. Yay!"
  3. So, you start learning something else -- while your knowledge of Lesson XYZ slowly withers.

A year later, your behind has pretty much forgotten what you learned several years ago. Boo.

Your Brain is Like a Muscle

Peep this:

  1. You lift weights.
  2. You become buff.
  3. You stop lifting for a year.

What happens? You become the skinny/fat-a$s that you originally were. Or, what about this second scenario:

  1. You do bicep curls for a year.
  2. You get buff biceps.
  3. You then do your leg presses for a year because you want sexy legs to match your sexy biceps.
  4. You get legs like a ^^%^ stallion. High-five!

But, what happens to your biceps? They return to their scrawny/flabby originals. You're stuck with revolutionary legs on twig biceps, resembling a constipated sabertooth tiger. That's akin to learning Lesson XYZ years ago, then ignoring it for a new knowledge "muscle". Withering effect: In session. Boo.

How do you become comprehensively buff?

You brush up on every muscle group you can -- within the shortest gaps possible. Likewise, kick mutha-!@^^%-a$s in ______________ by brushing up on what you've learned -- consistently. You'll keep your knowledge refreshed, pumped, and ready for action.

Brush up. No catch-up. <--wit

Posted on January 07

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You know those people:

  • "I'm too weak."
  • "They're too big."
  • "I lack the resources."
  • "I lack the education."
  • "I haven't prepared."
  • "I'm scared."
  • Blah, blah, blah, cry, cry, cry.

Say NO! to sucky people who lack the confidence to rock the @^^% world. They'll drain your soul, and prevent you from doing what the world intended you do.

Complainers. Suck. Big. @^^%

How so? Complainers:

  • decrease employee morale
  • put needless doubts into people's heads
  • stall progress
  • consume resources
  • lack creativity
  • drain productivity

Just say NO!

  1. Say NO! to people who believe they can't change their current realities.
  2. Say NO! to people who won't seek solutions to their problems.
  3. Say NO! to people who believe the world has revolved itself around destroying just their own little individual soul -- oh pity them.

You want Self-Sufficient Folks

Business (and life for that matter) are filled with ambiguously weird problems. You need people who can make sense of those problems, seek solutions, and rock the world with those solutions. They're the greatest folks out there. Folks who:

  • See problems as awesome challenges.
  • Uncover their own faults, and correct them.
  • Have a ridiculous inner-drive to excel at whatever.

Surround yourself with a bunch of them. Be unstoppable. And, make work fun again.

Say NO! to Suckers.

 

Posted on December 17

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Boobombu thinks:

  1. I must create a comprehensive plan on how to attack the market.
  2. I must paint my target customer's profile using different demographic segments.
  3. I must illustrate the product's financial returns every quarter for the next five years.
  4. I must understand my target's buying decisions from see-to-buy.

Shimumu thinks:

  1. Someone out there needs my help. I just need to know who.
  2. And, how I can help them.
  3. And, how much they would pay me for it.
  4. I will embrace uncertainty.

Who would be more sane, psyched, and ready to rock a million times more after a year?

Shimumu would! Yay! Shimumu understands:

  1. Plans rarely come to fruition because they're based on pure speculation.
  2. Situation ABC will happen -- disrupting your plans, and you won't anticipate it.
  3. You must adapt yourself to the demands of a changing world, anyway.

When you embrace uncertainty, you ready yourself to adapt to what the world gives you. Winner = You. Yay!

Johnny Boy's Story

  1. Johnny Boy has an in-depth plan to sell his social networking product to some big behemoth in 2 years.
  2. He spends his life-savings, his mama's savings, his bank's loans, his mortgage, and his livelihood building XYZ product.
  3. The dude starts screaming: "Hey! I will build the next Facebook! I will be on the cover of Forbes for my genius product!"

Johnny thinks:

  • "Hey, everything will be the same in two years."
  • "Nothing will change."
  • "The market will still need this product."

What Johnny doesn't anticipate:

  • Jimmy's product manager moves to Oak-town in Month 4.
  • Demand for social networking dwindles dramatically in Month 8.
  • Users start becoming weary of a saturated social networking industry in a year.
  • Some genius college dropout inventor makes his product useless in 18 months.

Sha-bam! What now, Johnny? Where's your master plan now, mister? It's back to the drawing board for you.

You Can't Plan for a Moving World

The less you embrace uncertainty, the more you'll meet the unanticipated -- crippling your plans one-by-one. When you plan an idea, you plan it for right now -- not for when the plan's successfully implemented. Another way of saying it:

  1. You spend two years building Product XYZ.
  2. You've implemented an idea that was two years old. Ka-BAM!
  3. Instead of building something for January 2008, you built something for January 2006.

Taking 99805895807 hours/days/months/years to plan XYZ = horrendously unproductive. So:

Embrace Uncertainty

Let the market dictate how you spend your resources. Get something out there soon, while your plans are still fresh -- and not years old. Then, test your ideas. See what works. See what doesn't work. Revise, implement, seek feedback, re-implement, and repeat. Embrace uncertainty.

Waltz with the market.

 

Posted on December 12

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You'd think: "It's because I suck." And we'd go: "But, you don't suck! Yay! High-five!"

So, why can't you finish anything?

  • Because there's no such thing as finishing.
  • Because even if you've worked 9899875475698390 hours on Task XYZ, there will always be something else to do.
  • Because when you've think you've finished, you've settled for mediocrity.

Peep this:

  • Google's still working on its search engine.
  • Microsoft's still working on its operating system.
  • Starbucks is still working on its coffee.
  • Apple's still working on its notebooks.
  • Renee Zellweger's still working on her face.

The point:

  1. You will never finish anything.
  2. You can only "finish" what's sufficient for now.

"Then, how can I mutha-@^^%^ finish what's sufficient?!"

Say your client wants Task ABC done, and you think:

  • "Hey! I must get this done, but I can't! Help!"

Then, King Task Finisher Person would slap you and say:

  1. Finish something in 5 minutes.
  2. Now, finish something else in 5 minutes.
  3. Then, finish another thing in 5 minutes.
  4. Repeat process -- until client says: "By golly, by golly. You have impressed me, by golly."

Finishing big stuff takes completing a series of small 5-minute chunks of work.

Five-Minute Chunks = Good

So the next time you're procrastinating about "finishing" something, do this:

  1. List several 5-minute chunks of work.
  2. Complete those mofos like you're a ridiculous stallion.

Still need more work to "finish"?

  1. List several more 5-minute chunks of work.
  2. Complete those mofos too.

Repeat that process. Win.

Mini five-minute chunks of work = deliciously good.

 

Posted on December 10

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You want to release a big-bad-ridiculously-innovative new product called the Thermomastolometer. But, "I'll finish it when I feel it's perfect," you tell yourself. No sweat. Days pass, and you're still stalling. "Perfection takes time," your mantra goes. So, you build-and-build-and-build-and-build.

And, you continue building until...you die.

Kaput. Too bad, you should've known perfection doesn't exist. Even if you think you're 5 miles away, a million more miles of road will appear two miles ahead -- wasting your precious time on Earth even more. Take the quick finish line -- and worry about the other finish lines later.

It's Okay to Suck

Look at YouTube's early days. It started as a frickin' web-2.0-hip-hip-hooray dating site. What happened?

  1. They generated users who loved their online video formats.
  2. They evolved their site to meet demanding online video needs.

The lesson?

It's okay to suck because you'll evolve your product over time anyway.

What if Apple had waited until they "perfected" their iPod?

Boo. We'd have nothing -- because hey, they're still working on new iPod features as we're typing up this sha-ding right now.

Release That Bad Boy ASAP

  1. You've built XYZ features for your shiny new product.
  2. You wait until you can "perfect" that product.
  3. Time drives XYZ features to become obsolete in favor of new ones.

(ala: iPod, iPod video, iPod nano, etc.) The more time you wait, the quicker you'll make your product outdated. Remember:

  • Today's MySpace wasn't yesterday's MySpace.
  • Today's Starbucks wasn't yesterday's Starbucks.
  • Today's Whole Foods wasn't yesterday's Whole Foods.
  • Today's Google wasn't yesterday's Google.

That Sergey dude didn't think of Google AdWords until his company needed cash. Until then, he and partner Larry were just running a simple search engine without a revenue generator. So, it's okay to suck. It gives you somewhere to start. It's a requirement to succeed. Even billionaire founders started sucking.

Start sucking.

 

Posted on December 05

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Buying an MP3 Player

You're buying a cheap MP3 player. You have two options:

  • Option A: Buy one a mile away @ $40
  • Option B: Buy the same one twenty miles away @ $20

"Option B, of course! High-five!" you scream. Why?

  1. "It's 50% off!"
  2. "I'll save $20!"
  3. "I'll net $10 in extra gas!"

Good. We've established that you're a thrifty, financially-wise person. High-five-to-you.

On your way home...

As you're driving back listening to your new mp3 player, Tito and Primo start pointing and laughing at your sissy Pinto. "Mutha-!@^@!" you start crying like a little bizattchi. "But hey, that's okay. I've been eyeing that new V8 M3 anyway. Tow-dow!"

Buying a New Car

Your two options:

  • Option A: Buy it a mile away @ $50,020
  • Option B: Buy it twenty miles away @ $50,000

"Option A, of course! It's only a $20. What's the big deal?! I'd rather not drive the extra miles. Yay!" But, wait -- check that human psychological phenomenon:

  • You'd rather drive twenty miles to save $20 on Item A.
  • But, you'd rather not drive twenty miles to save $20 on Item B?

It's probably because with big ticket items, you think:

  • "Hey, I'm not saving a lot of money percentage-wise."
  • "Why worry about the 0.01% of the total price?"

But You Wait Just Right There!

Pinpoint the subtle difference for a bit:

  • Saving $20 on a $40 item.
  • Saving $20 on a $50,000 item.

Wait for it... Wait for it...

  • You're saving the same !@^^^% thing.
  • You're saving the same !@^^^% thing.
  • You're saving the same !@^^^% thing.
  • You're saving the same !@^^^% thing.
  • You're saving the same !@^^^% thing.

Tow-dow.

The Trouble with Big-Ticket Items

People buying new cars think all those "little" $20 first-aid kits, $200 trunk mats, $300 covers, and all those other little yaddas are frickin' steals. That's how people and businesses become poor:

  1. First, they buy something big.
  2. Then, that big-ticket majigga desensitizes them to "littler" $300 items here, $500 items there, $450 over there.

"Buying those little buggers won't affect me much!" Bankrupteezy.

Do a Reverse Ownage Instead

Johnny's about to sell your company $35K worth of computers. Then, he tries to upsell you some accessories. Politely tell him no -- and do this:

  • Can I get a $20 discount on the order? It's only $20.

Win. (Sure, win even more by upping the discount. Remind him it's "puny" compared to the total.)

Heed the little buggers.

 

Posted on November 29

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You want tenaciously relentless folks who seek excellence in everything they do. You don't want folks who blame others for their downfalls. You don't want folks who lack self-direction. You don't want folks who can't surprise you. You don't want folks who see external benefits as their sole ambitions. You don't want folks who settle for mediocrity.

Oh no.

You want folks who go above and beyond that next mutha-!@^^% and improve their crafts with ferocious determination. ...those who treat their work as their own masterpieces. ...those with savagely fierce work ethics. ...and, those who will revolutionize this world just because they couldn't settle for anything less.

Seek tenacity.

 

Posted on November 28

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