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. 

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.