Lean Start-up Business Tactics - Start-up Infrastructure on a Budget

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Everyone talks about starting a company. Some focus on the idea, others focus on finding customers, and still others on how the world will change when their idea hits the market. But what happens when you start operating your company and need to do everything but don’t have the money? March's Seminar was given by our own Marc Sedam, Executive Director of UNHInnovation and former biotech start-up COO. Marc reviewed his most popular and practical tips for keeping costs low without negatively affecting productivity.

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Lean Start-up Business Tactics - Start-up Infrastructure on a Budget

  1. 1. Guerilla Startups Marc Sedam Executive Director, UNHInnovation marc.sedam@unh.edu © 2014 University of New Hampshire | innovation.unh.edu
  2. 2. Today’s Goal • Walk through the inspiration of your idea through the operation of your company spending as little money as possible • Assumes you want to scale your company beyond a few people © 2014 University of New Hampshire | innovation.unh.edu2
  3. 3. Caveat/ Call to Action • These are my experiences • If you have something more recent and better, jump up and tell the tale © 2014 University of New Hampshire | innovation.unh.edu3
  4. 4. Ohmygodohmygodohmygod … I have an idea! • Do I call a lawyer? – No. • But it’s an excellent idea! – No. • You don’t like me, do you? – Just trying to save you some heartache. • Fine. – We can still be friends… © 2014 University of New Hampshire | innovation.unh.edu4
  5. 5. Friends suggest friends use Google • Search for your idea • Search again • Ask a friend to search for you too • Write down all of the places your idea has applications and search them • If you haven’t searched on your idea for at least 8 hours, do so © 2014 University of New Hampshire | innovation.unh.edu5
  6. 6. No search hits. I’m a millionaire! • Maybe • Next stop. Find some customers. • Buy the book Business Model Generation and figure out your business model canvas © 2014 University of New Hampshire | innovation.unh.edu6
  7. 7. Currently $19.74 on Amazon © 2014 University of New Hampshire | innovation.unh.edu7
  8. 8. Why? • Excellent overview of defining your idea in terms of value, customers, channels, costs, and opportunity • Requires talking with customers (I recommend at least 100) to ensure you have it right • I would have saved over $3MM using this book in my last startup © 2014 University of New Hampshire | innovation.unh.edu8
  9. 9. Actually, I can’t even build it • Elance.com – Freelancers from around the world – Access to talent base – You post price you can pay and freelancers bid for the work © 2014 University of New Hampshire | innovation.unh.edu9
  10. 10. So, it’s a go! Let’s incorporate • Do it yourself – http://www.sos.nh.gov/corporate/PDF/Form_11_V -1.0.pdf – $100 • Many of the coming suggestions will require an EIN and therefore incorporation – http://www.irs.gov/Businesses/Small-Businesses- &-Self-Employed/Employer-ID-Numbers-EINs • No you don’t have to © 2014 University of New Hampshire | innovation.unh.edu10
  11. 11. Where do I work? • Have you considered the new, refreshed, improved, and growing abiHUB? • Co-working spaces are a great value – Free internet – Professional business help – Possible customers (don’t be tacky) – $50-$150/month depending on needs © 2014 University of New Hampshire | innovation.unh.edu11
  12. 12. Productivity Software • OpenOffice – Free desktop productivity software – Compatible with MS Office • Google Docs • Apple – Free with devices © 2014 University of New Hampshire | innovation.unh.edu12
  13. 13. And then there’s Microsoft Office • As cheap as $70/yr • Still has 85% of the market (Forrester) • If you’re sharing docs, proposals, contracts, you pretty much need to use MS Office – Track changes feature alone saves hours © 2014 University of New Hampshire | innovation.unh.edu13
  14. 14. CRM-Keeping track of Customers • Salesforce.com – $30-50/month – Integrated very well with MS Office – Mobile app is awesome • SugarCRM • ZohoCRM – Google compatible © 2014 University of New Hampshire | innovation.unh.edu14
  15. 15. CRMs • Allows you to save and collate – Contacts – Opportunities – Communications – Leads • You can’t afford not to have one • If web-based, make sure you port the data to your desktop at least monthly – If you don’t pay, you don’t get your data! © 2014 University of New Hampshire | innovation.unh.edu15
  16. 16. Back-office • Surprising savings can be found on telecommunications services – Broadband.com: competitive shopping for broadband services – Phonebooth.com: provides scaleable land- lines and virtual PBX – Bandwidth.com: coordinates broadband and telco services, including mobile phones © 2014 University of New Hampshire | innovation.unh.edu16
  17. 17. They’re all the same company • These services can make you look like a large company (auto attendants, call forwarding, etc) without the cost © 2014 University of New Hampshire | innovation.unh.edu17
  18. 18. Back-office: Storage • Google Drive • Microsoft SkyDrive • Amazon AWS • TB-level storage is now dirt cheap • Services like Box, DropBox, and Drive give nearly unlimited storage for a few bucks/month © 2014 University of New Hampshire | innovation.unh.edu18
  19. 19. Accounting Software • Quickbooks – Starts at $250/yr – Most common software and most bookkeepers are already trained • Peachtree • Many other small ones • Make sure you can invoice, do POs, and 1099s out of your accounting software otherwise it’s useless © 2014 University of New Hampshire | innovation.unh.edu19
  20. 20. Why do you need accounting software? • To play vendor roulette • Get multiple vendors early (at least 3) • Rotate from whom you order – Pay everyone on time for the first three months – Then switch everyone to Net 90-120 – Vendors float your operating costs while you use the money to acquire customers © 2014 University of New Hampshire | innovation.unh.edu20
  21. 21. Office Equipment • Believe it or not, it’s cheaper to purchase things than rent them – Copiers – Coffee makers – Computers • Buy them when you can • Shop BJs or Costco to get consumables © 2014 University of New Hampshire | innovation.unh.edu21
  22. 22. Professional Services • Many service firms will staff your company on a part-time basis as-needed – Accounting – HR – Insurance needs • Frequently years before companies need FT people in these roles • You don’t need an audit in the early stages – Solid bookkeeper is fine – Audits can be $25k © 2014 University of New Hampshire | innovation.unh.edu22
  23. 23. Let’s Talk Lawyers • Most corporate lawyers understand that you don’t have money – But don’t lead every conversation with “You’re not billing me for this, are you?” • Give a budget and have reasonable expectations of them • It’s not their job to afford you as a customer, it’s your job to afford their counsel © 2014 University of New Hampshire | innovation.unh.edu23
  24. 24. Patent Lawyers • Tip! Patent lawyers don’t like it when you share your idea and have nothing else to say • The expense comes from you putting the burden on them to describe the idea © 2014 University of New Hampshire | innovation.unh.edu24
  25. 25. A patent application is like your high school laboratory report • Abstract • Background • Materials and Methods • Results • Conclusion – In patent-speak these are the claims – Let your attorney do these © 2014 University of New Hampshire | innovation.unh.edu25
  26. 26. If you do your part • Can file a solid patent application for between $2,000-$4,000 • You want the attorney to spend at least 5 hours reviewing and “patentizing” your work • Pay them for their expertise, not to be your “invention whisperer” • Sorry if you’re a lawyer and I just cost you some dough © 2014 University of New Hampshire | innovation.unh.edu26
  27. 27. Healthcare • Whether you like it or not, Obamacare has done a lot of the work for you • Give your employees (including you) healthcare coverage, it makes them loyal • You can manage healthcare costs with your outsourced HC rep © 2014 University of New Hampshire | innovation.unh.edu27
  28. 28. 2007-2011 • Annual average HC cost increase: 24% • Our HC cost increase: 3% total • Every year we looked at all coverage – Adjusted premiums up and down – Negotiated around the demographics of the company • 5’s and 0’s – Frequently traded expenses across coverage types with employee permission © 2014 University of New Hampshire | innovation.unh.edu28
  29. 29. Spending Money • Never ever use your personal credit card • Get a bank card that has a rewards system you can use to buy stuff – Use the points to reward staff, the office, or yourself, and buy things you wouldn’t otherwise – Thank you gift cards © 2014 University of New Hampshire | innovation.unh.edu29
  30. 30. Taking in Money • Square – Changed retail commerce – Low monthly fee – Low per swipe fee – Hooks up to smartphone/tablet – Get your money today – Coordinates with most accounting software and some CRMs © 2014 University of New Hampshire | innovation.unh.edu30
  31. 31. Why Should you Use an Email Service? • Looks professional • If you use your own account you risk being flagged as a spammer • Automated – Unsubscribe options auto-remove uninterested contacts – List segmentation (Send to all contacts who didn’t open that last email) • Analytics – Know exactly who opened and clicked each email • Custom design emails to appeal to your target audience • Integrations with other services (EventBrite, Salesforce, etc…) • It’s doesn’t have to be expensive! © 2014 University of New Hampshire | innovation.unh.edu31
  32. 32. Low Cost Email Marketing Options Features in lowest cost option MailChimp ReachMail.net Contant Contact GetResponse Lowest cost option Free Free $20/mo. $15/mo. Contacts 2000 5000 500 1000 Emails/month 12,000 15,000 Unlimited Unlimited Remove their logo from your footer No (must have paid account) No (must have paid account Yes Yes Tracking/Analytics/Rep orting Yes Yes Yes Yes Email Scheduling Yes Yes Yes Yes © 2014 University of New Hampshire | innovation.unh.edu32
  33. 33. Additional Features to Consider © 2014 University of New Hampshire | innovation.unh.edu33 Features in lowest cost option MailChimp ReachMail.net Constant Contact GetResponse Autoresponder – Auto email new subscribers, etc… Not available for free Yes Yes, but limited to one campaign per account Yes. Unlimited campaigns Responsive email design templates Yes Not great Yes Yes Delivery by time-zone No No Yes Yes Templates Yes Yes Yes Yes Event Management No, but free EventBrite integration No Extra $ for this feature No Surveys Simple polls or SurveyMonkey Integration Yes No. Extra $ for this feature Yes Responsive email design Yes No Yes Yes
  34. 34. • Pros – Free-for-life option has almost any feature you would want – Customizable emails with no coding experience necessary (no access to full html though which can be annoying) – Image hosting with free version – A/B split testing • Cons – Need a paid version for unlimited emails/month – Only offers email customer support – Free version requires their logo in your footers © 2014 University of New Hampshire | innovation.unh.edu34 Scalability: 10,000 subscribers and unlimited emails/mo. = $75/mo.
  35. 35. • Pros – Most generous free-for-life option – Full featured free version • Free version offers autoresponders which MailChimp does not – A/B split testing – Full HTML is editable – Image hosting with free version • Cons – Email designer is not as intuitive and user friendly – Less well known (this often means there are less integration options being developed) – Not great responsive design (for mobile) © 2014 University of New Hampshire | innovation.unh.edu35 Scalability: 10,000 subscribers and 70,000 emails/mo. = $40/mo.
  36. 36. • Pros – 60 day free trail – Most well known email marketing service – Good customer support • Cons – Must purchase the additional advanced features on top of the more expensive plan – Only 1 signup form per account – No free-for-life options – The military blacklists Constant Contact emails – Very limited image hosting (you can’t even buy more…even the other free services offer that) – No A/B split testing © 2014 University of New Hampshire | innovation.unh.edu36 Scalability: 10,000 subscribers and unlimited emails/mo. = $110/mo.
  37. 37. • Pros – Emails are very customizable – Easy to use – Responsive design – Lots of integrations to other services – Inbox preview – All features available in all paid versions – Image hosting – Full HTML is editable • Cons – No free-for-life version – Some delay in importing large lists (they have to approve the list) © 2014 University of New Hampshire | innovation.unh.edu37 Scalability: 10,000 subscribers and unlimited emails/mo. = $65/mo.
  38. 38. Other Email Services • Other free options – Mad Mimi – Active Campaign • Paid services – iContact – Aweber – Steam Send (unlimited subscribers, pay by emails/mo.) – Benchmark – VerticalResponse © 2014 University of New Hampshire | innovation.unh.edu38
  39. 39. Inexpensive Ways to Build your Email List • Post “Join Our Email List” links (all email services have this integration) on your website • Ask attendees to preregister for events (try EventBrite, it’s free!) and require an email • Sign-up sheets at your events © 2014 University of New Hampshire | innovation.unh.edu39
  40. 40. Inexpensive Ways to Build your Email List • Collect email addresses at tradeshows/events • Include “Share with a Friend” links on your emails and make sure your emails have a “Subscribe” link too • Promote free content (should be useful to your audience) on social media and require an email for download – Pre-recorded webinars – Slide decks – E-books © 2014 University of New Hampshire | innovation.unh.edu40
  41. 41. Let’s talk about events! • Hosting an event is a spectacular way to find your target audience – Like, say, the UNHInnovation Catalyst Seminar? – Inexpensive customer acquisition • It’s like a reverse tradeshow – All about you – People who come self-select © 2014 University of New Hampshire | innovation.unh.edu41
  42. 42. How inexpensive? • Host a good event • Invite guest speakers to share and make you look smarter, for free • Free food and drinks • Door prizes are popular – $299 iPad mini gets people in the door • If the cost of hosting the event is below the cost of finding one good customer it’s worth it © 2014 University of New Hampshire | innovation.unh.edu42
  43. 43. Inexpensive Event Management 1. Create an event webpage a. No coding necessary, easy to use b. Webpage has registration and payment forms 2. Promote the event a. Push webpage link out on Twitter, Facebook, email (Integrates with MailChimp) © 2014 University of New Hampshire | innovation.unh.edu43
  44. 44. Inexpensive Event Management 3. Manage the event a. See registrants b. Print name tags c. Capture/export attendee lists d. Analytics (Page views, traffic sources, Google Analytic integration) e. Mobile apps for checking people in and paying at the door © 2014 University of New Hampshire | innovation.unh.edu44
  45. 45. EventBrite Pricing • Free to sign up and maintain an account • Organizing a free event? – All free! – Registration is a great way to capture new emails • Collecting money for your event? – They take 2.5% of ticket value + $.99/ticket sold – For credit card processing – add additional 3% of ticket value – Alternatively use Pay-Pal for payment © 2014 University of New Hampshire | innovation.unh.edu45
  46. 46. Since we’re here, let’s talk about tradeshows • Do a tradeshow if: – All your customers go – You have something specific to say – You bring tchotchkes! • Don’t do a tradeshow if: – You’re guessing about the market – You think you “have to” – To be seen – You don’t have the money to look impressive © 2014 University of New Hampshire | innovation.unh.edu46
  47. 47. Secret of tradeshow “gifts” • Always sift through the business cards to select the winner from customers you want to acquire – Then “randomly” pick • Corollary: don’t waste your card on someone from whom you won’t buy stuff © 2014 University of New Hampshire | innovation.unh.edu47
  48. 48. Travel • Good travel apps – TripIt: email travel specifics and it auto- generates an itinerary; $50 Pro version lets you share itineraries with whole company – Uber: because calling a taxi is now awesome – MetrO: public transport maps/directions for most major cities © 2014 University of New Hampshire | innovation.unh.edu48
  49. 49. Airlines • Stick to one airline to rack up miles – Many airlines have separate “corporate” programs that are separate rewards – Two rewards for one trip • Searching for airfare – Kayak: great search engine; better than your airline’s because it will identify cheapest flights – Hipmunk: more graphics friendly UI • “Pain” is a search choice – SeatGuru gives you the quality of every seat on every airline © 2014 University of New Hampshire | innovation.unh.edu49
  50. 50. Hotwire.com • Save 40-70% on hotels and cars – Don’t know vendor, just price – For hotels you know general location • When you use enough you get invited to “hotwire express” which lets you change itineraries © 2014 University of New Hampshire | innovation.unh.edu50
  51. 51. Other good lodging apps • Hotel Tonight – Only book after noon in local timezone • Airbnb – Great savings in big cities – Generally staying in someone’s house or apartment © 2014 University of New Hampshire | innovation.unh.edu51
  52. 52. Couple of final suggestions • Decide what “ecosystem” you plan to use and stick with it – Apple – Microsoft – Google – Hodgepodge • Pick all of your other solutions in this presentation around which ecosystem saves you the most time or money long-term © 2014 University of New Hampshire | innovation.unh.edu52
  53. 53. Final, final suggestion • Spend the money like it’s yours, even when it’s someone else’s • Outsource everything until you can afford to bring it in-house • Look for non-dilutive cash (grants) any time you need to build something bigger than $20,000 © 2014 University of New Hampshire | innovation.unh.edu53
  54. 54. Live Cheap or Die © 2014 University of New Hampshire | innovation.unh.edu 54

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