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Why it is important that you take off regularly some time to recover and get new spirit
In this year’s fall I will be self-employed for 4 years. The whole journey had lots of ups and downs but was in total really great until now and hopefully there is a lot more to come. In the early beginning, there was almost no time for other things than look after my projects that they will succeed. That means I had no time off, no vacation and I rather worked 7 days a week for 12 – 15 hours (so a total of 80 – 100 hours a week). That is a huge workload and there is really no time for a lot of other things. For me personally it was and is very important that I do lot of sports for compensation and stay healthy but what is with family, friends, other hobbies or relax? Yes, this is definitely a topic, which everybody building a sustainable business would encounter. In the early beginnings I worked very often from my lounge and not a desk. That worked out for sure because I got the shit done, but I got carried away by the statement, that I will never need a desk again. How naive could one be? But sometimes you get affected by other things. During that time startups were already a very hyped and a well-known thing and I saw a lot of pictures of lounges and couches in startup offices. Everybody tried to establish a nice environment, which is of course good to have a better working atmosphere. That tempted me to come to such a statement. Of course, I am working sometimes from my lounge (and at the moment I am writing this blog post from it), but for sure I have a desk from which I am also working a lot of the time nowadays. But now when you are working that much time what happens with your mind, your inspiration, your goals? What I discovered is that you are getting heavily focused on the topic what you are doing right now. Maybe you can also think of, that it is like getting blinders and don’t see what’s left and right. Of course, it is important that you are focused that you get your tasks done and move forward. But at the same time, it could happen that you miss out great opportunities, which could be business or even life changing and you don’t see them as you are focusing so hard on your daily operations and tasks. Therefore, it may be a good starting point to take some time every week and recap. Was it the right direction you went last week? What are your plans to achieve next week? Are you running in the right direction? If no, then you will recognize and can adjust. If yes, you can just go on. Horses often get blinders, that they don’t be frightened from what happens left and right. For us it is sometimes also good to have them, but sometimes you need foresight and it is important that you also look left and right. So, it happens, that most of the time I solve complex problems not at a desk or my lounge. At those places I get the everyday, normal tasks done like fix bugs, answer E-Mails, manage employees and so on. But when I discover I need a solution for a hard decision to make or how to solve a complex programming problem, I would get inspiration and door openers while doing sports, while driving a car or while doing another activity. In my opinion new environments and things give your brain new impulses and that leads to new thoughts and ideas. So please don’t think it is necessary that you need to do new and other things all day long – as a lot of the time you must find a good mixture that works out for yourself. People are different and so maybe for you it would work out to cook, to knit, to paint, take a walk, meet some friends, play (computer) games or others to freedom your mind and get new ideas. I would suggest that you try to implement different things to widen your horizon and get rid of the blinders at the time you need it. Another important point is vacation for sure. Now in July begins the time where it could take 3 weeks until you get an answer regardless if it is a customer, a partner, a friend or someone else. This is because almost everybody goes to his summer holiday and takes a couple of days off. As a startup, when you must make progress, that could be a very difficult time, because no changes could be very bad , and actually threaten your existence. But I think you just need to be aware of different times that may impact your business in a negative or positive way and plan for it, so that it would not be a problem in the future. I think it is best when you also take off some days and travel around, lie on the beach, do activities or whatever you like to do. Than you could recover yourself and free your mind and I am convinced that you will come back with a completely other focus and mindset after 1 or 2 weeks. It's better than trying to do your job with an empty head and move your business forward by hook or by crook. This leads to more productivity in general and that you have new inspiration to master your challenges. In this sense I wish you a nice holiday and come back stronger and inspired 🏖🗺🏔. Have nice holidays and enjoy!
Does a startup need written down workflows or is it viable to do everything freestyle without any statutes?
One definition of a startup could be “the action or process of setting something in motion”. Another one could be “a startup is a company initiated by individual founders or entrepreneurs to search for a repeatable and scalable business model”. That sounds very straightforward: have an idea, develop a business model for it, if it goes well scale it, if not redefine your business model until you are able to scale. To my experience it is not that straightforward until a startup found a product or service that gets traction with paying customers and is able to scale it. The road to success looks more or less like the following: The startup curve There are lots of ups and downs especially with the through of sorrow. Most of the people don’t see the blood and sweat and tears, which is necessary that the curve goes sustainably up. Most of the people just see the success stories of big well-known names like Dropbox, Instagram, Facebook, Zalando and much more. Do you know that 9 out of 10 startups fail in the first 3 years? From those other 10% of “success” startups you probably heard nothing from most of them. So that is a number, which one should borne further in mind. But let’s talk more about the beginning of a startup. There is no clear way or definition of which step should be taken after another to develop your startup to the next unicorn. Of course, there are different approaches, which should support you to go through the different steps a startup or new company goes through. Those steps or stages a startup normally goes through could be defined by means of the funding stage, as follows: Early Stage (Pre-Seed): Here you try out your first ideas, build a MVP (minimal viable product – about which I will probably write another blog post in the near future), get useful data out of your pilot tests, do a pivot if necessary, get a bit of traction – best with the first paying customers Seed Stage: Best case would be that you have a validated MVP, know the features your product needs to satisfy your customer and you could develop that now to a market ready product or service Growth and Establishment (Series A/B): Your product or service has a market readiness, your customers are happy and best rip you the product out of your hands, you are ready to scale your business to a higher level and higher sales Maturity (Later Series): You have a very good running business with a stable organization and sales and you look for other markets or internationalization Acquisition / IPO: Another company could need your customers, technology or people you have onboard. Or you need fresh new money for your bigger plans and visions. More or less every company somehow goes through the above steps regardless if you go the way with investors or completely bootstrapped. There are different methodologies, which help you to go through the beginning of the pre-seed phase, like the Lean Startup Methodology. That will help you to get a MVP very fast and iterate so long until you should be able to start scale it. Now the question is in the very beginning of a startup: are established processes overkill or is it necessary, that you will count to the 10%, who make it through the startup curve? My personal experience is that it would be good to define certain workflows, which are important for your business. Than everybody knows how to do special things. For example, every company needs a hiring workflow or a vacation workflow. If you are a software company, how will you develop new features? If you are a consulting company, how do you assign people to the projects? If you are medical institution, how are people able to get an appointment? I think you don’t need to write down everything your company does and things will develop and grow as your business gets older. But a minimum capture of the most important workflows and steps, which are obvious for your business, will help you to keep track of them. And also, for new people it will be easier to get them onboard to your great journey of success. There are different ways to note workflows down. You could simply write them down in words and describe everything in a continuous text. Or you could use different types of charts like a flowchart or swim lane chart. The following shows an easy swim lane chart, that your employees are able to go to the beach or mountains and refuel a bit: Vacation Request Process - Source: Gravity Flow There are also different tools, which you could use to write down your workflows. You could just start e.g. with Power Point for very easy workflows. When you want it a bit more beautiful, standardized and some predefined help, you may want to look at Asana Work Management or Nintex. If you want to do even a bit more, also have your workflows supported by IT to track them and you also maybe want to develop your own actions, you could have a look at Camunda. It is an open source platform for workflow and decision automation, which should bring business users and software developers together. Summarized I would say: indeed, it is good to write down the most important workflows your business has. But don’t overdo it, so that your organization can still breathe and have room for new stuff.
If you can dream it, you can do it
The title of this month blog post "if you can dream it, you can do it" is a famous citation from Walt Disney. Personally, I am fully convinced of it. Everybody should have dreams they are seeking to achieve and everybody needs dreams to grow, to become a better version of themselves and to achieve something – regardless of what it is. When you achieve your dream than it is a great feeling. Dreams could be as normal as losing weight, finishing a (half-)marathon or travel to a special country. Or they could be “a bit more challenging” like flying to the moon or mars, improve the wealth of human beings or fix todays mobility challenges. Regardless of what you are dreaming: work for it, hunt your goals and dreams and sometime in the future you may reach it – but please never forget of what you dreamed, as when you forget it you would never recognize that you already achieved it. In my opinion dreams should guide you through your daily live. They are important to see your big picture, the big why am I doing this. Also, a very famous and appropriate citation is: “Don’t live to work, work to live”. What are most people doing when they are grown-up? Did they not work from Monday through Friday, 8 hours or more, complaining about this and that, looking all the time for Friday and is very sad when its Sunday? To be honest I know enough people whose everyday life looks like this. Sure, they work to live, but is it worth it like that? I mean with a 40hrs work week, 1hrs commute to work 5 days a week and with 8hrs sleep every night people are working 45% of the time per week they are awake. Would it not be better to have a better purpose for this time than just gain money to live? There is a very good guy out there from whom I love to watch talks and presentations. His name is Simon Sinek, already heard of him? I try to look especially one Ted Talk from him at least one time a year: "Start With Why – How Great Leaders Inspire Everyone to Take Action". Please do me a favor and watch it now when you don’t know it. It is worth the time watching it. I think it is not just for leaders to inspire everyone. But also, everybody needs his own why. Why am I doing this or that? If you start asking this yourself maybe you are totally fine with the status quo and everything is good. But maybe you need to change your job, start a new hobby or even go for new friends to be more satisfied every day. The best thing is when you are not complaining all the time anymore and when you are sad when its Sunday 😊! Why, how, what. Please watch the video above when you don’t know what this means. Of course, I also had dreams and have dreams. One of the biggest dreams throughout my childhood and teenager time until I turned 19 was to start one-time at the biggest and greatest cycling competition of the world: Le Tour de France. That dream pushed me to go over and over again my pain threshold, overcome the inner piggydog countless times and become German champion, won lots of medals at championships, travelled through Germany and Europe a lot and had a really nice 10 years journey. Unfortunately, my dream burst when I came to the elite class in 2009, because exactly there the German Pro Cycling was devasted as there were some dope stories and Gerolsteiner cancelled their engagement and the Team closed their doors by end of 2008. It took several years and nowadays the German Pro Cycling is flourish again and we have lots of great young athletes who are mostly 5 years and younger than me. Of course, I could have tried it in a foreign country as a Pro and maybe would have done it because I had a good outlook to become a good athlete but I rather decided to take another way. A nice article about my cycling career and future plans back 10 years ago can be found here (only in German available). Good old times. Since than I wanted all the time grow my own company and see how it develops. It took a few different stations and projects I started the last years. By the way I am a great advocate of “Learning by doing”, in my opinion there is no better way to learn things fast and best. Since almost 3 years I am highly involved in (text: http://binando.com text: Binando target:_blank). We are doing great stuff here and help a bit to get cleaner and better-looking and more livable cities and also save the earth a bit. That is of course not the end of the path and I am looking really forward for what to come, but for sure I am looking to get the solution we developed to establish in lots of cities and companies over the next years and then I will see what will be afterwards. I am highly convinced that I will find a new challenge and dream and purpose when it is time to take on new challenges 😊!
I want to start my own business. How can I do this best?
First, we need to talk about the responsibility what you would have when running your own business. Lots of people think it is cool to be a founder, managing director or his own boss just to do what you want. That is everything fine, but lots of people don’t understand beforehand for what you are responsible in total. After hearing some fuck-up stories from other founders lots of people decide that the second line of the business where they are is not that bad as they thought. So being an entrepreneur is truly not something that fits for everybody. I think you really need to think in the first step about if you really want to be responsible for everything (Sales / Customers, Technology / Website, Marketing, Administration / Organization, Legal, People / Employees, Partnerships, etc.) or it is maybe not better to stay employed. When you come to the decision you want to try running your own business of course there is not the single way of truth. I want to split it up into two different approaches, in particular the Sideline Enterprise and "All in or nothing". Sideline Enterprise Everyone has another risk acceptance. The one feels about a bungee jumping as normal as breathing and the other has sweat outbreaks when he just thinks about it. That is completely normal and okay, but it is relevant when thinking of what about starting a business. The one needs a fallback solution in case when the own business fails and the other is so optimistic that the business will boom heavily and if will not be the case he can think about alternatives later. A less risky approach is to start a business on the site while you are still employed with your current employer. Of course, that needs to be approved by your supvervisor, but to my knowledge that is in general not a problem as long as you will not be in direct competition with your own business to your current employer. You can than make targets based on the time you have. E.g. 40 hours for your current job, 20 hours for your side business, 5 hours for exercises / sport activities, 10 hours for family & friends per week would give you enough scope for other things. The question is what can you achieve with 20 hours per week for your own business. A great approach is the Lean Management methodology (Lean Startup) which I can propose to start with combined with the Business Model canvas. You can Google both keywords and will find enough information what to do. Afterwards you should have a clearer understanding of how your business could look like, what are the products and services you offer, how would you sell them, why should potential clients buy from you and not from your competition. And then personally I am more the maker guy, so just go and make it and don’t talk just year after year about it. Work, work, work. Get the shit done. "All in or nothing" There is just one major difference from this approach to the previous one: time. If you take the numbers from the previous one: 40 hours for your current job and 20 hours for your side business that would mean if everything else stays the same you would have 60 hours for your own business. That is 3 times more than doing it on the site. I hope you get the difference here, 3 times more is a huge number. To be honest if you really believe in what you are doing and burn for your idea you would not just invest 60 hours per week in it 😉 but that is another discussion. If you need that 3 times more also depends on the area and business you are thinking of. There are lots of ideas out there where time matters. You need the right timing and speed to build it because the competition does not sleep (e.g. a standard B2C product like you are selling the new innovative dog leash). There are for sure other ideas which are in a niche market and no one has come to that idea or time does not matter that much because if you do it this year or next year that would change nothing (e.g. consulting for special things). Depending on those factors and your own risk acceptance you should decide for yourself what fits best. My own opinion is that to become really sustainable successful you need to say at one certain step to go “all in or nothing”. That does not mean that you should not have any backup plans or alternatives. That just means that you should focus completely on your own thing because normally a business or idea really needs invested time to become successful. It is important to focus and execute stuff but also take sometimes the time to get an overview of the whole thing to assess if you are still on the correct way
How to get the right customers for your business and how to count them?
Why do most startups fail? Because of a bad technology? Because of a bad team and execution? Because of a not working marketing machine? A major point is because of missing customers who are willing to pay for what you offer. There are tons of different business models out there. B2B (Business to business) vs. B2C (Business to customer) or offline vs. online are very important differentiations. But everyone has one of the same challenges: sell your shit. Otherwise it is very, very hard to survive, you probably cannot make a living out of love. Of course, there are some other examples like Facebook, Instagram, Snapchat and so on, who offer a free service but they have a completely other business model and I would not focus on them today. There it is very simple: you as a customer are paying with your data, but I guess almost everyone got this until now. As mentioned above for me the most important differentiations are B2B, B2C and offline or online. That will also be the focus on today. B2C There are two very, very important KPIs when talking about marketing, sales and startups: CAC and CLV. I will describe them shortly and why they matter a lot: CAC means Customer acquisition costs. In concrete that means how much money does it cost me to acquire new customers? It could be calculated when you sum up the total marketing campaign costs related to acquisition and divide this up with all won customers, for example for a month. For example, if you invest 200k€ per month for customer acquisition and win 200 customers out of this than your CAC is 1.000€. CLV means Customer lifetime value. In concrete that means how much money does a customer pays you for his whole customer time. This KPI is a bit harder to calculate but we will also shortly try. It is the sum of all expected revenues less invest in a business relation divided by the minimum interest rate per period. Why are both KPIs that important? If the CLV to CAC ratio is too little (e.g. 1) your business model will probably not work because you are spending too much to win new customers. If the ratio is to high (e.g. greater than 5) you maybe miss out on new business as you are spending too little to get new customers. I would say those KPIs are very important for subscription-based business models like you maybe know it from your Mobile Provider, Netflix, Apple Music and much more. How do those businesses gain new customers? Maybe you get an idea when you rethink how you were getting attention to those businesses. There are lots of different paid and unpaid possibilities like: TV advertising, SEO (Search engine optimization), SEA (Search engine advertising), Facebook ads, flyers, other marketing campaigns and so on. But you always need to look at those KPIs CAC and CLV, because that could make the difference in the end if you make good money or not. B2B Of course, the above is also very important for B2B business, who for example have small and medium sized business as their customers and are winning their attention mainly online. But there are also B2B business models who work in a completely different way: e.g. hard and difficult to describe the own product, very big corporations as customers. That often results in very long sales cycle but when you are in the customer and won a new contract than you can often make millions with just one customer. But that also often means that you don’t have that standard product, instead you have to adjust everything a little to your exact customer needs. In general, of course also CAC and CLV count here because if the CAC is too high your company will never be profitable or maybe you will never get a single customer. But often it is very hard to track those KPIs exactly down like when you have that subscription model. So, what are in this case maybe better KPIs to look at? An important one could be the sales cycle duration. How long does it take from first customer contact until closing a deal? Every sales cycle could be tracked down into the following steps: Initiate Contact, Qualify Lead, Present offer, Overcome objections, Close deal. When you stuck too long at one step it could often be an indicator, that this is not an A customer but more a C or D customer (on which you should put less attention). With a good CRM-Tool it is very easy to track every step of the sales cycle down. And I would really put work into make guidelines for your special business model: how much effort you should put at every stage and what makes sense and then you should be able to better separate the wheat from the chaff. For that very long sales cycles with big corporations you often did not get customers like with SEA or other ads. Often it happens through direct contacts so a good network is very important here or sometimes also cold calls need to be done. And you need a very long breathing and persistence. Online I don’t want to make a marketing and sales guide out of this article, because I think if you google “How to make startup sales” or similar you find enough tools and techniques to start with. I just want to give a short overview in the following on what is available for free and what costs money to increase your startup sales activities. SEO (Search engine optimization): You can write a book about this topic to make it better. My experience is what helps very well is begin writing Blog articles and change your content from time to time. Dynamic and nice content is what nowadays really counts for Google and co. Think of which search terms your customers are typing to find you. And for every single search term you should create a blog post or other nice content. In the earlier years it was enough to create very simple backlinks (links to your homepage on other, often fake, websites) but that does not work anymore. What helps of course is when you achieve it to get a backlink on a very good ranked website, e.g. as a reference on your customer website when they are satisfied with what you offer. SEA (Search engine advertising) and Facebook ads: For some startups this is very important but could also get very expensive very soon. It highly depends on which area you are operating. In a niche you often get a click for a few cents but in a very competitive market (e.g. real estate or cars) one click is easily soon a few euros. In my opinion it helps with a small budget, like e.g. 5€ per day, to test a business model very fast if it would work or you need to change something. TV ads: That is something which is nothing for very early stage startups, rather it is something when you already have a good customer base and want to reach the early and late majority with your products. The costs are also very high but you get a huge range of new people addressed. Reviews: Nowadays reviews are very important. Lots of people look for reviews regardless if it is a restaurant to eat one-time or an online shop to buy new shoes or to find a barber in a new city. So personally, regardless of what kind of business I operate, I would put a lot of work into good reviews from my loyal customer base in the well-known platforms like Google, Facebook and other and that would help very well and is very sustainable. Offline The following is often very important if you are a local business like a Barber, Craftsmen, Restaurant or Bar. Reviews: Like above they are the basis of a well-running business. Word to mouth propaganda: Also, like the reviews, a very nice word to mouth propaganda from happy customers, who had a nice experience with your service, is the best what could happen to you. That is very well and sustainable for your business and I would put much on satisfied customers, because they are your best marketing machine. Offline Marketing activities: For example, if you are a restaurant than make some exclusive offers or sometimes a nice party, the same if you are a barber: who says that you cannot make a party with your nice customers? Today you need to contrast yourself from the normal services you offer. The people nowadays want to buy experiences and not just services. Local newspapers: Depending on the customers you have it could be also very helpful to inform local people in the local newspapers about your special activities and new services you offer. Otherwise how would the local people know what you are organize and offer? You have more ideas that need to be mentioned here? I would happy to hear your thoughts!