lean start-up business tactics - start-up infrastructure on a budget

Guerilla StartupsMarc Sedam

Executive Director, [email protected]

© 2014 University of New Hampshire | innovation.unh.edu

© 2014 University of New Hampshire | innovation.unh.edu 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

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Caveat/ Call to Action

• These are my experiences• If you have something more recent

and better, jump up and tell the tale


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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…


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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


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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


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Currently $19.74 on Amazon


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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


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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


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So, it’s a go! Let’s incorporate

• Do it yourself– http://www.sos.nh.gov/corporate/PDF/Form_1

1_V-1.0.pdf

– $100

• Many of the coming suggestions will require an EIN and therefore incorporation– http://www.irs.gov/Businesses/Small-Business

es-&-Self-Employed/Employer-ID-Numbers-EINs

• No you don’t have to


http://www.sos.nh.gov/corporate/PDF/Form_11_V-1.0.pdf



http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Employer-ID-Numbers-EINs



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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


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Productivity Software

• OpenOffice– Free desktop productivity software– Compatible with MS Office

• Google Docs• Apple– Free with devices


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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


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CRM-Keeping track of Customers

• Salesforce.com– $30-50/month– Integrated very well with MS Office–Mobile app is awesome

• SugarCRM• ZohoCRM– Google compatible


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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!


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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


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They’re all the same company

• These services can make you look like a large company (auto attendants, call forwarding, etc) without the cost


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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


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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


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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


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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


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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


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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


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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


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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


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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


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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


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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


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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


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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


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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!


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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/Reporting

Yes Yes Yes Yes

Email Scheduling Yes Yes Yes Yes


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Additional Features to Consider


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

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• 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


Scalability: 10,000 subscribers and unlimited emails/mo. = $75/mo.

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• 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)


Scalability: 10,000 subscribers and 70,000 emails/mo. = $40/mo.

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• 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



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• 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)



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Other Email Services

• Other free options– Mad Mimi– Active Campaign

• Paid services– iContact– Aweber– Steam Send (unlimited subscribers, pay by

emails/mo.)– Benchmark– VerticalResponse


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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


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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


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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


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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


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Inexpensive Event Management

1. Create an event webpagea. No coding necessary, easy to useb. Webpage has registration and payment

forms

2. Promote the eventa. Push webpage link out on Twitter,

Facebook, email (Integrates with MailChimp)


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Inexpensive Event Management

3. Manage the eventa. See registrantsb. Print name tagsc. Capture/export attendee listsd. Analytics (Page views, traffic sources,

Google Analytic integration)e. Mobile apps for checking people in and

paying at the door


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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


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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


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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


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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


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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


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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


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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


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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


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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


lean start-up business tactics - start-up infrastructure on a budget

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