Why you shouldn’t waste money on Google AdWords

I know this will sound crazy … but for most new entrepreneurs, I don’t think you should waste your precious time & money on developing a Google AdWords campaign. Here’s why:

Think about what people did before the internet… I mean, aside from not walking into inanimate objects because you’re staring down at some little screen. Somehow before the internet, businesses managed to grow & survive. Somehow entrepreneurs were able to unearth companies buried in the darkness of their ideas.

What strikes me about the modern startup “process” is how narrow it has become. Every path seems to lead to the same place: Paid content … advertisements … traffic metrics… conversion rates.

The problem is, it’s too easy, as an entrepreneur looking to validate your business idea, to fall into the trap of these metrics without first proving doing the sometimes uncomfortable work of developing a concept with a small group of potential customers, and then selling one or two on the idea before jumping feet-first into a full-blown paid content campaign.

The fact is, if you want to see if someone is interested in your product, you really need to go talk to people first. If the idea has merit, you should be able to find a paying customer through your existing networks. And a paying customer might not mean they are paying you the final asking price for your product. But you should be able to find someone who is willing to part with their money for the promise you are offering.

Most of us are not natural sales people. In fact, I would guess that most people don’t like selling at all. It’s why Google AdWords & Landing Pages are so attractive. They offer a way to feel like you’re selling something, without having to undertake the essential interaction at the root of every venture: talking to a potential customer.

To do this well means developing a good sales pitch, rehearsing it, failing at it, revising it … all the embarassing steps along the way toward crafting a solid message.

So, before you start spending tens or even hundreds of dollars on driving paid content to your site for a validation, you may want to consider picking up the phone, sharing your idea with people, and then asking them “Would you like to try it for $XX”

That is the first step.

If you don’t feel comfortable having these kinds of interactions, Venture Verify can help you… from building a landing page to lead generation and outbound sales. It’s what we do.

Lean Startup Essentials: Have a Hypothesis

If you are going to A/B test your landing page .. with VentureVerify or not … it’s important to know where to start. With all the tools available for an entrepreneur these days, it is easy to begin testing a website without giving much thought to what a successful test looks like.

The goal of testing is to learn … but learning requires comparing an expected outcome to the actual results. Without that expected outcome, it can be easy to fall into the trap of vanity metrics. Just because numbers go up after posting some content, it doesn’t mean much unless you keep track of what works & what doesn’t.

That is, measure & verify … and to measure you need a hypothesis.

Though it doesn’t provide as much sense of accomplishment as sending a live URL to a friend showing your landing page; spending the time to think-through how you plan on measuring success will do more for your business in the long-term.

It’s a key investment of your time. It’s where you apply your differentiation.

So what do you do?

If possible, try to put things in terms of numbers. And when you first launch a website, it can be hard to articulate what conversion rates you should be getting, or how you should improve. But the best thing to do in this case is just make an educated guess.

In that case I’d ask myself, “How many conversions do I realistically expect given the people who are going to be conducting the test?  How many conversions would be amazing? What is the bare minimum I should expect if we were just average?

These kinds of questions can be answered with a numeric guess. Like, “I think I can get 2% conversion, and would be amazed if we got 10%.”

So then what is the actual measurement you want to take?

For this new landing page, you want to have something replicable. So try to put things in terms like “Repeatable average” number of conversions. So, I’d say I want “between 2% and 10% repeatable average conversions per channel, in order to determine which one is best.”

Now you have a hypothesis you can measure.

A better test is then to estimate how much you would spend per channel, so your test budget can be most useful. More on that later.

The problem with The Lean StartUp

Let me begin by saying I really like the Lean StartUp method described by Eric Ries. It’s a great blueprint for entrepreneurs who have been thinking about launching their new business idea. It speaks to one of the big challenge for any small business: how to lower the chance of spending money on a bad idea.

There are a ton of great resources available for people who want to work from home or A/B test a landing page to see if people will buy your product or service.

The problem is: organizing all these resources and making the most of them is not easy.

I have several friends who own or manage a startup business, and even with a team working for them, trying to organize all the accounts effectively is a full time job. Every idea requires setting up several accounts and then tying them together, just to test one concept.

For example, even a simple MVP often requires setting up a dedicated email, buying a domain name, tying that domain name to your A/B test platform, identifying market trends using Google AdWords, generating content to drive traffic, and then providing some mechanism to accept payment.

Each one of these steps can take a few hours, depending on your level of familiarity.

To learn it all from scratch is the big challenge. For most people, it takes a year or more of trial & error to become proficient in the use of some of the more advanced tools, like Google Analytics, AdWords, Twitter, HootSuite, GoDaddy, MailChimp, and WordPress.

The important component of all of these being: How do I interpret the results?

The critical measure of success is whether an average person can interpret what they have developed effectively. And to do this, it takes more than just using The Lean StartUp book as a guide.

And what isn’t included in the book is what to do with your idea once you’ve validated it. Things like how to get a Small Business Loan, how to find a good Software Developer to build what you’ve validated, and where to pitch your idea to an Angel Investor.

Again, I think The Lean StartUp is great. But I think it most entrepreneurs who want to test and build their good idea need more than just a guide. They need a team to help them build these tools, measure the results, and then provide support to find the right resources if the idea looks like a winner. 

Is Your Idea Worth a Million Dollars?

If you’re like most people, you’ve wanted to start your own business and work from home. Entrepreneurs are everywhere, but many people don’t know where to start. To make money online takes more than just having a million dollar business idea. It means knowing how to develop a business plan and testing your new business idea.

One really simple method has been described by Eric Ries in his book “The Lean Startup.” Most entrepreneurs have heard about or read this book. But there is a big difference between understanding the method and actually applying it.

Do you feel confident that you can test your Million Dollar Business idea well enough to make a decision to invest in it?
Here are some resources that I have found are very helpful. If you need more help, click the link at the bottom of the post.

 

Where to begin

The first thing you’ll want to do is create accounts for your business idea. Before even worrying about a small business loan or figuring out what equity is, you need to establish your online presence in a way that potential customers can easily find you. The first place I recommend going is gmail.

You can use your gmail account to setup all your other accounts, like Facebook, Linkedin, Twitter, StumbleUpon, etc. Gmail is the Lord of the Rings account… one to rule them all.

Once you set up these accounts, you’ll want to get some enabling tools like HootSuite or Qwaya  that allow you to manage your communications from one dashboard.

 

I have my accounts … now what?

Now you need to set up a test for your idea. Specifically, you need to measure the acceptance of your idea amongst your target customers.

There are three challenges associated with this:

  1. Identifying your target customers and finding the best way to communicate with them
  2. Creating a message they will respond to
  3. Measuring these responses in a way that will allow you to make a decision about the value of your idea

You don’t need an MBA from Harvard to do this, but the process does take time and practice. In essence, this is marketing 101, and it’s an art. People spend a lot of money trying to figure out how to reach their customers with a message they will respond to, so doing it in this test environment takes iteration.

Sometimes just sending out a survey is enough. If you do that, use services like ConstantContact or GetResponse since they will provide a lot of data on your response rates. You’ll need to find a relevant email list… which is no small thing.

If you want to build and test a landing page, then measuring content becomes more challenging. Most customer expect a certain level of design for websites. The nice thing is that services like UnBounce and LeadPages make it easy to build pretty good-looking websites at only around $50 per month for a subscription. You can also use WordPress.

The main point is: all of these allow you to measure the content you post. By reviewing the number of visitors, bounce rates, demographics, etc … you will be able to adjust your messaging to refine how you target your customers. If the number of potential customers looks big enough, then you can assume you idea is validated.

 

I’ve identified potential customers … now what?

Now comes the fun part. A business, by definition, is something that collects money for a product or service. You’re going to have to engage with these potential customers and sell them on your service. There are several ways to accept payment, but the most common is PayPal. Setup a PayPal account, tie it to your website or email marketing campaign, and away you go.

Some other aspects you may need to consider are deciding equity amongst partners, setting up a small business loan or small business bank account, and getting legal assistance to write up contracts.

 

Does this sound complicated?

It can be.

Thankfully, there are services that help you set-up and manage all these accounts. If you want to test your million dollar idea as a business, you can use VentureVerify to help you through this whole process. They do everything from establishing all your accounts to connecting you with software developers, if the idea is something you want to grow.

I hope this helps all the entrepreneurs out there. 

Sneaking away from your day job to answer calls for your Start-up? Try this instead.

We’ve all been there. You spent all night working on your website, debating feature requirements with your partners, and finally it’s all up and running. The one thing you forgot: What to do when a customer actually calls.

Like most entrepreneurs with day jobs, you find yourself sneaking away to a stairwell … or an empty office … or to your car … to take the call. Instead of sounding confident & excited on the phone with your potential new customer, you speak in a hurried whisper as you run to the nearest empty room with a door.

This is one of the parts of bringing a new business to life that is hard to balance. With any new idea, you need to test it first to see if it’s worth putting any time into. There’s a reason you have the day job in the first place: It’s paying the bills. But how do you get your idea big enough to leave the day job, while also showing up for work? Often, the timezone of your job & your new business are the same.

Instead of answering the phone yourself, you might consider using a service like http://www.AllUptime.com. It is an outsourced phone service geared toward helping start-ups start & grow their business. For about as much as you spend on designing your first website, you can add on a scalable phone service that will help with both inbound & outbound calls. They offer Pay-per-call solutions if you’re really just trying to test an idea. And from there you can scale into monthly service agreements with a limited number of calls, all the way up to full-service call center operations as you grow toward your IPO.

No more sneaky calls in cars or scheduling every customer call for lunchtime.

Try http://www.AllUpTime.com as an alternative. Speak with confidence to your customers.

Before you IPO… you need to BPO

Your idea is working… Customers have embraced it… Investors are taking interest & you’re sustaining your differentiation.

But before you set your sights on your IPO, you’ll want to consider something that impacts both your valuation & the margins you can collect while you work toward it: Your BPO.

What’s BPO mean?

Business Process Outsourcing.

I know what you’re thinking. Common responses to BPO are “We will lose control of our brand” or “Our people is what makes us different.” These are both valid concerns, but with any business that wants to scale & succeed, the important question to ask is: What does my business do? If something you are building is not part of your core competency, then you’re likely investing in overhead that is impacting your margins. Or worse, you are building organizational structures that will not scale when you try to apply your first injection of investment dollars.

Most start-ups recognize the value of best practices related to administrative or operational functions. They know what they should be doing to help them scale, but they don’t have the resources to invest in enterprise systems, or the people the manage them successfully if they were to implement them.

BPO companies help you by applying their scaled resources to your growing business. You capitalize on their investment in enterprise systems & specialization, so your money can go to R&D & brand development.

There are a lot of services that provide this, and one of the main factors you should consider is: how can I try these services out without incurring a lot of switching costs? Many BPO providers (Accenture, IBM, offshore call centers, etc) require significant upfront costs. Some new entrants, such as http://www.AllUptime.com provide these services in scalable monthly costs similar to what you would pay for a home-built website. With monthly subscription services & scaled customized plans as you grow, you can experiment with a BPO that operate alongside your existing capabilities.

So, before you IPO, consider investing in your BPO.

 

Startup advice: Sell before you’re ready

When developing a start-up business, you should always be pushing yourself to sell your service before you’re ready. If you feel like you’re ready… then it means you probably spent too much or waited too long. When selling a start-up idea, you need your customers to believe in the outcome of your service before they have to believe in your ability to deliver on it. If the outcome has value, then how you deliver it can change & iterate while you seek the best ROI.

Thankfully, there are several low risk tools for entrepreneurs to use as they test various concepts. Generally, these all allow people to build a test of the concept before investing further. The three legs of the MVP (http://en.wikipedia.org/wiki/Minimum_viable_product) start-up business are: Website, Payment, and Customer Service. If you have these three, you can bring a customer through to a sale.

Website design sites & payments sites are commonplace. Using SquareSpace.com or UnBounce.com you can easily build a platform to test ideas. And setting up a PayPal account is very simple for any transactions you may encounter.

But what about Customer Service? How do you MVP a customer service experience?

Many entrepreneurs can’t take time away from their day jobs to answer customer requests, and cold calling takes a tremendous amount of endurance. One option is to use inbound or outbound call services that provide a resource to answer or place calls for you (www.AllUptime.com). This solution helps you scale an idea without committing to the effort of hiring someone from craigslist or convincing family members to answer the phone in a certain way.

Think about what you could do with a website, a payment service, and someone to be ready to answer a customer call. With that, you can be ready to sell a complete idea for less than $50.

Startups always make this simple mistake. Don’t make it too

Not every start-up idea is a simple technology solution. In fact, most are improvements on an existing service. One of the ways service companies grow fast is by hiring sales & account managers to get the word out. A common mistake most start-ups don’t consider is the difficulty of scaling these types of organizations. Whether you are building a phone-interview service (like, sayhired.com) or launching a scaled server offering (like, OneHub.com)… the problems are the same: You need people to sell the service & review content. Robot armies may help in the future, but for now, you need people.

But people aren’t cheap. Good talent requires training, and you can get away with hiring telemarketing talent off Craigslist to get your business off the ground. But what if you’re successful? Managing those people is much different than building your technology or service.

Most Start-up CTOs have a background in Software Development or Website Design. However, to effectively scale a inside sales organization (“inside sales” are essentially activities conducted remotely from the customer … compared to “outside sales” which are face-to-face), an entirely different skill-set is needed. It means understanding how to set up call center infrastructure, workforce planning for peak demand, and a myriad of other challenges. The bigger it gets, the problems become more complex.

As with any marketing or sales organization you manage, the most important criteria becomes ROI per opportunity, and the associated metrics to drive down costs & improve productivity. This means the investment in enterprise management tools to handle large or irregular call volumes, and more supervisory personnel to quality control every customer experience.

This mistake in how you organize your business can remain hidden until you find success. More time & money will be spent managing your quickly growing call center operation, which would more appropriately be spent on your core competency.

Some new services (like, http://www.AllUptime.com) help bridge the gap between start-up idea & scaled inside sales processes. It’s worth considering before you start building your business. Think of it as a scaled elastic server farm, but for sales. Using these kinds of services helps you test ideas without starting down the road of building a back office you don’t need.