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Blog: Fresh Tilled Ideas

False Assumptions About Running Your Own Business

Posted On: July 24th 2008
By: Richard Banfield

I really think Paul Graham is smart and I love his writings but I think he is wrong about what owning a business means to the owners. Of course there are some people that will sell their business the first chance they get but it's strange to suggest that's an optimal situation. Here's what he says in a recent article...

One disadvantage of living off the revenues of your company is that you have to keep running it. And as anyone who runs their own business can tell you, that requires your complete attention. You can't just start a business and check out once things are going well, or they stop going well surprisingly fast.

The main economic motives of startup founders seem to be freedom and security. They want enough money that (a) they don't have to worry about running out of money and (b) they can spend their time how they want. Running your own business offers neither. You certainly don't have freedom: no boss is so demanding. Nor do you have security, because if you stop paying attention to the company, its revenues go away, and with them your income.

Both his primary assumptions are clouded by his personal idea of success.

Maybe Mr. Graham is only referring to small businesses only but not every business stops when the owner misses a day of work. If you run out of money you probably don't really own a business, you own a job. You might not work for someone else but if you have to be there to make things happen you are tethered to the day to day like any other job. Single shingle businesses are typically those that suffer from highs and lows that are well explored in the E-Myth.

Running out of money is only a problem if the machine you create money with is broken. By machine, I mean the business and the mentality behind the business. A well designed business can manage the ups and downs of the market. A good business person knows how to make money, in good times and bad. A crap business or business person will not. If a business stops making money the moment you stop paying attention to it then it's not really a business, it's a hobby that happens to pay you from time to time. A truly well constructed and run business must run without the owner's attention.

The other assumption that business owners cannot spend time on the things the want is incorrect. The idea that a business owner would much rather be doing something else is a generalized and subjective opinion. Paul may dislike his business so much he'd rather do something else but I know dozens of entrepreneurs that thrive in their businesses. They love what they do and they don't want to be sitting on a beach wasting daylight when they could be growing a business. I love a vacation as much as the next guy but I'm a business person and that's what I do with my life. I'm really proud of our business and it provides me with a lot more spiritual reward than just making money. Just like a doctor practices medicine business people practice the art of business. Regardless, I still get to travel, surf, play with my kids and hang out with my friends.

I agree that a business is a burden if you don't balance it with the other aspects of life. I also think the term lifestyle business is a crude explanation for why you wouldn't sell for a big payout. It might just be that owning and running a business can be a much more lucrative payout.

I've been through both the 'investment-driven-build-to-sell' situation and the 'slow-growth-highly-profitable' situation. In the slow growth business my aggregate earnings start much slower but can conceivably continue uninterrupted for 20 years. I also own a much bugger share of the business so I didn't need to sacrifice equity for growth to make my company more attractive to an outsider. I'm really not interested in choosing a stranger's interests in my business over my partner's and employee's interests. That's bad for business.

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Applying Agile Methodology to Web Prototyping

Posted On: July 24th 2008
By: Richard Banfield

I can't imagine what the end product would look like if I tried to bake a cake with my eyes closed. But that's exactly what you're doing when you build a web application or website without a prototype. There is no way to know what the end product will look like, and thus be experienced by the end user, when you build from a tech spec only. Given the obvious drawbacks of baking with your eyes closed, imagine for a second having to do all the parts of the cake at once. Instead of measuring out each ingredient and following an iterative process, you just throw all the ingredients together and see what happens when it comes out of the oven. That's how my 5 year-old bakes. That's not how adults should bake or build websites but we see this behavior every day. Time to grow up people.

That's why Agile makes sense. Agile methodology largely means breaking a project into Iterations. An Iteration is an increment of time, usually one to four weeks. The total project is constructed within a series of progressive Iterations. At the beginning of each Iteration a short term objective is set so it's easy to keep everyone focused. Then at the end of each Iteration, we evaluate what has been achieved. Because the Agile process requires regular evaluation of progress bugs or potential problems can be corrected quickly. This also helps get to the next round of objectives without losing focus on the priorities.

Let's see how it works. Consider the task of building a medium sized website project. The overall project is split into multiple Iterations that deliver working UI pages at the end of each one. So for example, the first round might be the home page template and the second round would be the secondary page templates. Keep in mind that it's essential that the design team works with the client team members during the first round of iterations to determine User Stories and mock-up the screens. For the second part of Iteration 0, we'll work with your technical people to fill in the blanks on specific technical solutions. Starting with the first iteration, the whole team meets for an hour or two, setting the development priorities for the Iteration.

The Agile process is not for everyone, but it should be. There are so few legitimate excuses not to use these techniques. Why wouldn't you use a process that leads to continued client happiness? The client is always happier when they can see rapid, continuous delivery of the project. Not that we promote this but, late changes in requirements are not only possible but also considerably easier to manage. Continual course correction prevents big surprises at the end of the project.

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The real client briefing process

Posted On: July 23rd 2008
By: Richard Banfield

Ever wonder what would happen if a corporate committee was left in charge of designing a STOP sign? This might be funnier if it wasn't so true.

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Designing in Code

Posted On: July 22nd 2008
By: Richard Banfield

I came across this article in A List Apart that really sums up the positives of working with web prototypes. David Verba keeps the prototype design on center stage where it belongs. Here's a taste of what he has to say...

Prototypes keep us focused on our actual goal. I’ve seen countless hours spent generating thousands of pages of documentation that were never used. This in itself wouldn’t be so undesirable if we had infinite developer resources. Unfortunately, this is rarely the case, and I’ve often seen features cut from a product launch in favor of generating “better” documentation. With prototypes, the focus is always on the application and making it better, and it’s much easier to stay focused on value to the end user.

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To Prototype or Not To Prototype?

Posted On: July 17th 2008
By: Richard Banfield

I'm sure everyone reading this blog would agree that the user interface is one of the most important parts of any application. Without doubt the UI affects the customer experience more than any other element because it determines how easily you can get what you want from the website. As over a decade of living with the web has taught us, a web application with a poorly designed user interface has little value.

We've always preached that when creating a new web app starting with the user interface makes more sense than beginning with the data model. On one hand as traditional MVC (Model-View-Controller) frameworks have evolved there is more emphasis on the role of the UI (or View) elements. Unfortunately there is an entire generation of data experts and architects that don't like this idea. We still here of businesses that decline to do any web prototyping before building their applications. I'm a little disappointed that there is still resistance to a UI or prototyping first approach. The advantages are enormous, especially for startups and new internal projects.

As we have noted before in previous posts about the advantages of web prototyping, prototyping can improve the quality of requirements and specifications provided to developers. User testing the prototype gets the potential bugs out the way so much sooner. The web prototype being tested by the user prevents many misunderstandings and miscommunications that might occur between the designers and developer. Changes to the data and application layers cost exponentially more to implement as they are detected later in development, the early determination of what the user really wants always results in faster and less expensive web apps. Because web prototyping requires user involvement and allows them to see and interact with a prototype allowing them to provide better and more complete feedback and specifications.

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Land of opportunity

Posted On: July 16th 2008
By: Richard Banfield

Today is my first day as a bona fide US citizen. The oath ceremony was this morning and apart from being punctuated with crying babies and long wait times it was a moving experience. During the ceremony the official overseeing the event told the story of many immigrants that have come to the US and created great businesses along their way. He remined us that this is probably the only country in the world that allows an immigrant to rise to any position except President (and Vice President). I'm sure there are some that would disagree but there really is a lot of great opportunities in the US. The only really big obstacle to success is hard work and sticking to your dreams. As mushy as that sounds I think it's true. We've always hired people for their work ethics not for their specific skills. Knowledge and skills can be taught but it's very difficult to nuture a powerful responsible work ethic in adults.

When I came to the US eight years ago I had a small amount in savings and absolutley no connections. Since then I have created three startups that have collectively employed dozens of people and generated millions of dollars in revenue. With one or two exceptions there are very few places in the world where you can arrive empty handed, start a new business and create millions in revenues in just a few short years. We have also invested in several of our clients businesses, one of which is Bobby's Best, and have recently launched a new business called Fresh Services (which is operating as Best Student Help this summer). Investing and growing businesses in the US is much easier than anywhere else. I wonder how many entrepreneurs here know how luck they are?

What a great place to be an entrepreneur.

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You won't learn this at business school

Posted On: July 14th 2008
By: Richard Banfield

Over the span of my last few companies I have learnt that managing for success cannot always be learnt from a book. This might seem obvious to some but we all fall back on text book strategies when things get tough. Here are some of the things they don't teach you at business school:

Forgive your enemies: Not every client, employee or vendor is going to love you. Sometimes business relationships don't work out. There is a tendency to carry anger and bitterness about these relationships. My experience is that letting them go and moving on makes more sense.
Let go of clients that drain you: In the same vein, there are some clients that are just so much work you find yourself physically and mentally drained every time you talk to them. In almost all cases it's best to let them go so you can give your best to the clients that really matter.
Focus most of your energy on existing clients: There is a lot of business mythology around the 'new business sale'. Existing clients are generally much more profitable and easier to grow. Don't be distracted by aggressive sales strategies that target strangers. Focus on your existing clients and the referrals will follow very soon.
Build long term plans with your clients: Your clients actually like it when you plan ahead with them. It gives them the confidence that this is a long term partnership. Take a calendar to your meetings and discuss what seasonal work you can do for them throughout the year.
Create learning opportunities for clients: Your clients employ you because you are the expert. Invest time in teaching them what you know and they'll respect you even more. I've heard it said by many a consultant that keeping your clients in the dark is the best way to have them dependent on you. I couldn't disagree more. Sharing knowledge with your clients raises the quality of the relationship and makes it stronger.

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Will SEO services slowly come to an end?

Posted On: July 11th 2008
By: Richard Banfield

It's definitely not the end, and could possibly be the beginning for a whole new line of SEO services and products. Consider how Google works; it needs information to make determinations about what's relevant and what's not. Humans also need information about what's happening with their SEM campaigns so analytics is here to stay. Even with a futuristic flawless search engine you still need an SEO expert to do all the on-site work (e.g. title tags, blog set-up, etc.) and you need them to analyze the results (e.g. analytics, reporting, optimizing, etc.).

Many people are asking this question in the context of social networks and will social networking become more important than paid for SEO? This is where the internet has been going. The idea behind the Internet is to give power to the people as citizen journalists. This democratic ubiquity forces companies to improve their offerings because the customer reviews and referrels influence conversions and loyalty. Getting brands to interact with consumers is positive trend and companies should embrace it but not at the expense of getting the basics right.

In reality not much changes. The difference is that the predominant links come from blog posts and profiles instead of long lists of sites we used to dump into site. Google has always used the voting power of the web to drive its algorithm. As long as people are searching for and recommending sites this formula will work. And as long as the formula works we'll need SEO experts to direct marketing efforts down this path. The ability to personalize content and direct popularity perceptions just increases the importance that marketers place on SEO to reach the audiences building and reading these pages. SEO experts have a huge role in making these pages relevant to the appropriate audiences.

What's clear in the shifting of SEO practices is that a contextual search environment is emerging. In some ways this means companies like ours are going to have to work harder and longer to achieve results for our clients. Link blasting has given way to highly specific contextual linking and the reality is that it takes a little longer.

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Asking the right questions for growth

Posted On: July 11th 2008
By: Richard Banfield

If you're trying to grow your business you'll have moments when you don't know all the answers. Obviously it's asking the right questions that makes it easier to find the answers. Here area few questions we have been asking ourselves as we grow to the next level.

which of our products and/or services offers the most value and differentiation?
what are the features of our products and/or services that we can itemize and promote?
is our location good for business? (even as a web business this still has bearing on who our customers are and how we interact with them)
is the image of our business what it should be?
do we have the right mix of people to become a $10million business?
are our fees well considered?
where do we stand with our marketing? what more can we be doing?

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What Obama is teaching us about internet marketing

Posted On: July 8th 2008
By: Richard Banfield

Regardless of what political party you support there is something undeniably brilliant about the Obama campaign. At face value the idea that millions of strangers will give you $10, $25, or $200 seems odd. Yet that is exactly what successful web businesses are trying to do every day. Extracting the monthly subscription from the customer has been the holy grail of businesses. So what can we learn from the Obama campaign? Firstly, the campaign marketers understood that the world is a very different place. The internet has changed everything and many of the other candidates relied too heavily on the same techniques that have always worked. Let\'s break it down a little more.

The internet is transparent: Everything you say will be checked and distributed instantly and without filtering. This means you need to be honest about who shot at you in a foreign country or what your taxes look like.
The internet is democratic: Your vote really does count online. The little guy gets a chance to make a difference by combining their vote with other little guys. Special interest doesn\'t rule online. In fact, special interest is a fringe interest that can easily get squashed.
The internet is wealthy: Who would have imagined that you could raise more than$200 million in a few months just by asking the web generation? The web-class may not have individual wealth, like the big-wigs at the fund raises, but collectively their $25 donations are a Tsunami of wealth.

Take a look at this great graphic by Xplane founder David Gray. From David\'s Flickr account: "Barack Obama is the first major candidate to decline participation in the public financing system for presidential campaigns. He’s found a more effective way to raise money – by leveraging the power of the American people through online Social Networks. Get the pdf version here."

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