Archive for April, 2009

To BP or not to BP

April 29th, 2009  |  Published in guest post

I’ve got a guest post here from a friend of mine  – Richard Greenane of www.backmeup.ie.  Good stuff….

At BackMeUp We have been thinking about different businesses lately such as new ideas, variations on themes and so on.

When we create our ideas, we usually look at the different requirements of the idea first. This might be business planning, bank/investor pitching, budgeting and such like.

Previously our first place to start might have been the traditional BP (Business Plan).

However with so much of our business now being transacted over the inter-web these days, we have started to develop the initial website as the best place to start the business planning process?

Traditional websites usually come at the end of a web business startup lifecycle. For example, you have an idea, you write a plan, you raise the money, you develop the site, and you launch the site.

He are my thoughts on why the website might be the better starting point you are planning a business:

1. Grounding of thoughts

I have always said about a business plan that it is the best way to think about everything associated with your business. “If you can write it down”, I say, then you have thought about it in some detail and thus you have been able to work through at least some of the business problems or “gotchas”. Business plans are generally fluid documents that never get finished 100% and seldom get followed to the letter because a pitfall or unexpected success got in the way.

A website can do the same thing in this regard. You have to lay out the proposition in lay man’s terms and clear English. Everything has to be clear, concise and descriptive.

2. Testing the waters

With the use of website AB testing (James describes this in some detail in another post) and such, you can test your sales theories a bit before it really matters, mess around with the look of the site, see what works and so on.

It’s also a method for testing services with your customers. You can always claim a particular service in BETA.

A business plan does not allow you to do this to the same degree.

3. Starting the SEO early

In any web business most of us will know that it is very important that the website is as close as possible to top of the search rankings as possible.

There are many factors which push a site to the top of the rankings. An important one of these factors is the sites age. The more crawls that the site gets, the better your site will be ranked, provided you have added content on a regular basis and also made sure that your site has been constantly optimised. It is well thought that Google holds site age in particular high regards for its ranking system (at quote). Starting the website as the first thing that you do towards the business is quick, easy and relatively cheap to accomplish.

4. A framework for documentation, customer knowledge bases/open questions etc

When the website is written, you create all of the content that will appeal to the main ‘players’ in your business.

The players might be from a collection of different backgrounds and be involved with different parts of your business. For instance, you might have direct customers, channel partners and reseller, affiliates, and non-direct customers. All of these people need to have content that is written specifically for them. Each piece of content needs to be written in the business language of the person reading it and so by generating the content early, you are developing a complete set of documents that can be passed to the different players as standalone documents, brochures or marketing material.

Furthermore these documents require feedback from partners and customers. It is my experience that the first partners and customers of a business can be considered ‘friendly’ and that these people can be relied upon to provide good feedback on these documents through the website.

Lastly, if the website is developed on the back of a content management system, such as Wordpress, you are developing a complete documentation framework for your business at the same time as enhancing the website.

5. Discovery of customers

A business plan is generally a static document. You don’t show it to many people and you certainly don’t try and show it to your current customers. Therefore it’s very rare to get any really good constructive criticism from the production of the business plan unless you are paying consultants to look at it for you.
The production of a website puts all of your thoughts in one place. The public looks at it. Your target market might look at it (with careful adwords set up) too. Comments, popularity and statistics will all come to you from the start, rather than at the end of the project.

Final thoughts:

It doesn’t matter that the website is a bit rough around the edges so long as the content is good. I never like to see an under construction banner on websites, it says “I really can’t be bothered to finish this site”. Instead write content about the sites ongoing development and how excited your are that the site is going to end up great and well loved. This sounds much better.

I have found that writing the website can be more rewarding that writing the business plan in terms of business transacted.

Business plans take a lot of work and you are forced to make too many assumptions about your market and the types of customers that you will gain. Of course, if you are a renowned expert in your chosen industry then maybe you already have access to this sort of information, but any major assumptions that you make creates a business plan that will go out of date very quickly.

The plan becomes a lot easier to write when you eventually have to (I.E. to see the bank or an investor) because you can pull content from the site and also give references to it and show how much work that you’ve already put in to the idea.

Richard Greenane is founder and MD of BackMeUp, pro-active online backup service providers who are veterans of the SME IT support industry and understand the exact needs of backup within a small business environment. Richard prefers prevention over cure but says, “Cures often pays more!”

Pricing: You don’t get to decide

April 13th, 2009  |  Published in Uncategorized, tip

Pop down to your local Spar.  Look at the wine on offer.  The majority of it is betwee €8 and €12.  There might be one or two for €5 and a couple for €16, but the majority lies somewhere in the middle range.  Have you ever wondered how wine which has come from so far and near, from France to South Africa to Australia, should all settle down to this narrow band?  I have.  I blows my mind that even though the South African Pinotage had to be shipped from another hemisphere it still costs roughly the same as the French Cab Sav.  Is it a massive co-incidence?  

No.  The reason is – the customer gets to chose what price to pay.  Its true for wines and it is true for web-apps and websites.  The value of one wine over another is purely subjective and it is up to whoever has the moula in their pocket at the time to decide how much of it is worth handing over.  As merchants, we don’t really have any control over that.  All we have control over is the amount of value we chose to offer.  So when it comes to pricing, here are the things I always try to implement.

  1. 9 buck starting price: Offer a few bucks for something basic.  For consumers this should be around the €9 /month range.  It is a table wine for every day consumption.  For business’s that should be more like €25 a month.  No matter what the product, these are the psychological pressure points for consumers / business consumers.  The latest example of this style of pricing I have come across was for EasyTweets.
  2. Up-sell by adding value: Above the basic plan, offer more value in return for a higher spend.  You can’t control how much your customers think your service is worth but you can control  how much value you can add at each price point.  On level up from the basic plan will be the €19 a month for consumers and €49 for ‘business consumers’.   
  3. Look for ways to build in some kind of obsolescence:  Blinksale, BackMeUp and Basecamp all use this model.  After you start using more than x number of invoices/megabytes/projects a month you need to upgrade to the next price point.
  4. Always have a plan you don’t think anyone would buy:  Because you don’t know how much value your customer will place on your service, always have a top plan or price you don’t really expect anyone to buy.   In any restaurant, the most popular bottle of wine will be the second least expensive.  This is because guys don’t want their dates to think they are cheap – so they don’t want to buy the cheapest bottle on offer.  At the same time, they normally are cheap, so they buy the next one up.  In a similar way, some people don’t want to appear flash – and will feel it more ‘reasonable’ to buy your middle plan as long as there is something above it.  Of course there will be others out there (about 5%) who have to have the best plan available.  Don’t forget to come up with a way to take their money and deliver a suitable level of value. 

On the Piehole project we added a top plan for almost €2,000 a year  - not really expecting anyone to buy it.  When we did add the plan however – two things happened.  

  1. Sales of our middle plan went up.
  2. Two people actually bloody bought the top one.

We are delighted that we were able to deliver enough value that someone would consider giving us that much of their hard earned cash.  As it turns out – they both made their money back in the space of a couple of weeks.  

A lesson in MLM from twitter

April 3rd, 2009  |  Published in Uncategorized

I’ve been spending too much time fricking around with twitter.  I’m almost hooked and almost ready to jack it all in.   I digress.  I checked out a list of the most popular twitter users and CNN in particular.  You can check out a graph of the rise in the number of users.  I was a little suprised to see that these graphs (all the ones I checked anyway) were a straight line.  I thought there might be a exponential rise in twitter friends.

striaght as an arrow

I was thinking along the lines of the MLM pitches I’ve sat through.  In brief, the pitch is, “you get five customers, they each get five and so on” until you have thousands in your ‘downline’ all paying a commission.  Of course, out of your first five, probably none will go on to find other customers and you end up trying to sign up a hell of a lot more in search of the guy/gal who will take it to the next level.  Hence the straight line.