Okay, I'm going to try my best to write a somewhat informative blog on how to start your own business. It's going to be semi-vague because of course, I can't tell you individually how to craft each unique business model. I know I'm not some guru in starting multi-million dollar businesses, but I've done a few successfully, and know how to at least get off the ground running, and raise capital!
I'm going to explain how I would start a business my friend came up with, which I actually though was a great idea, and he came to me for advice. So how do we turn an entrepreneurs dream into reality, and seriously get off the ground, because that's the toughest part right? We all read books, and need motivation, and every book says, "just get started, get motivated," and that's really it!
So I'll outline some steps I would do in order to make a business which would seem impossible to start. Of course I can't tell you his idea, but let me list out the tough points he has to figure out:
- It's a big idea, big niche, and big market to attack
- It needs to be on every mobile device
- It needs to have a website that communicates with thousands of companies
- He needs to convince "big companies" to partner with him
- It needs to be simple and work across all communication platforms (sms, email, website, phone, mobile apps, mobile browser)
- It may be somewhat expensive to start, he hasn't done his research yet, so it's hard to say how much capital he needs. Let's just assume 100k.
[heading type="h1" ]There are a few ways to approach a new business:[/heading]
1. If you cannot do it yourself, build the website, build the software, do all the marketing, invest all the capital, this simply means you need to:
[break] a) Pay for it (raise capital or use your own money) b) Get a developer/team to work for free in exchange for equity (percentage of your company) [break]
Let's get something straight, everyone always has told me from the get-go to never give up more than 50% of your company. That would be nice in a perfect world, but that's complete fucking bullshit. Good luck finding an investor with that much faith in someone with absolutely no background of making money on the internet, and nothing under their belt at all except maybe "college," wow. Let alone, it's a STARTUP company. You might have to sacrifice 51%-70% of your company. Might being the keyword, not always. If you're greedy and not willing to do that, well then you have to keep looking and looking for an investor, or pay for everything yourself, or convince a development team to do it for less than 51% of the company and no payment.
Remember, it's hard to find a good developer to take this offer because it's A LOT of their time to sit and develop websites and mobile applications for no pay, they have bills too. Especially if they're developing full time for pay, and have to take your job on the side. This has never worked out for me, every project I have tried to convince a developer to work for equity only, NEVER WORKED OUT.
See in the beginning for me, it was easy, I could build all of my websites, and I made all of them on my own time. But I'm at the point most of you are probably at now, I quit programming in 2005-2006. I'm five years rusty, so I hire people.
I'm about to get sidetracked to teach you a lesson real quick. Let's talk about finding a team.
Now it was easier for me to raise money, because I have a background in the internet, I understand marketing very clearly, how it works, how to make money online, how to monetize, how to organize a team, etc... Now hell no I am not perfect, I hired a lot of people, and failed fucking many times, even on BEMODEL I failed! I hired a company who royally mislead me, and ruined my vision! So I lost 75k on that entire team, and started over! Yes I started over! Guess what, I got the new BEMODEL website built for? Promise not to laugh?
Design was done by me = FREE
CSS'ing the design 1st time = $400
CSS'ing 2nd time = $250
CSS 3rd time = $350
Development of entire website = $4,000 (of course more development cost will continue to add on, because you will always need a developer to fix/add features and problems)
Total = Roughly $5,000.
[break] Fucking sickening right? Lesson I learned which you MUST be careful of, don't trust companies, specifically web development companies. They contracted me 300 hours and $45k initially. Plus $5k later for another 50 hours. If you do the math, a total of 350 hours for $50k, comes down too $142.00 per hour. Wow, fucking incredible right? Now let's all point our fingers and laugh at Andrew Mother Fucking Fashion, well fuck you is all I have to say. They're not even the most expensive web team in the world. 2Advanced Studios is. They built a website I never even used for me! It cost me $120,000 USD, yup, in cash. Another mistake. I've hired two supposedly badass companies, failed me every time. [break]
How did I make this mistake?
[break] The company is a fucking fraud, and mislead me in the contract that they would "get everything" done, no matter what. I even in the meeting in front of the attorney asked, "okay but if we exceed the hours and everything isn't done, you'll get it done right? Taylor?" Taylor replied "Yes Andrew!" Whatever anyways, it's done and over, and I'm not about to drop 15k in court costs to go to Civil Court with an attorney, and yes it's that expensive if you're suing for over $10,000 in the State of Colorado. Oh, the company is Refresh Digital, LLC, and if you guys are on my side, please send them hate mail, or tweet about how fucking shitty they are. [break] Never, ever, ever pay a development team that much per hour. Don't hire developers who charge $140/hour or less than $25/hour. My current developer is $32.40 an hour, and one of the best damn developers I've ever had. This single developer built BEMODEL from scratch in so far 108 hours, do the math. $3499.2. I said $5,000 because I know I will need him after the launch! That's right, how so fucking cheap? Because he built his own framework, his own system, uses Smarty and a very sophisticated ORM. His framework allows him to build tables, models, controllers in the click of a button, he's built up and ready to go. And he knows what he's doing. So I how did I log him doing 108 hours if he's in Serbia, you ask? [break] There's a website called elance.com, yes that's right, I used E-lance, commonly known as outsourcing (And yes this a referral link, and you better signup under my referral link so I get credit for helping you out). Everyone should outsource. I know what you're thinking, but Andrew, what about stimulating our economy. Fuck it, you're in this business to help you, and then help everyone once we're done :). It was a gamble, because I've had bad experiences before, but I was using the "Fixed Price" option on E-lance. Which means companies will give you a fixed price based on the project you are trying to hire for. You will get bids from Europeans and Asians (specifically India) mostly. I don't recommend the "Indians" if that's the correct way to describe their ethnicity, because they are "Asian." Not because I'm racist, because they are the hardest to communicate with, but the europeans may be a little more expensive, but speak perfect English! [break] Make sure to post projects and choose to pay them hourly, now I know you're asking, how do we track their hours and if they're lying to us, because they're all the way across the world! E-lance specifically built monitoring software, and it's amazing. It takes random screenshots of their desktop and let's you watch them practically LIVE. [break] Signup, get your account ready, but don't post a project till you know what the fuck you even need done. [break] http://www.elance.com/?rid=1BSE0 [break] And if you don't think I've spent money on E-lance, I've spent $25,000 so far, haha. Damn! I've gone through some lessons, so be careful. There are some extremely talented foreigners on there, so don't be quick to judge you racist bitch. [break] But let's get something clear real quick. [break]
[break] You know how many times I've heard my friends come up with retarded ideas (no offense, they just don't use the internet), because they don't understand the internet, now I might be quick to judge, but if you have an idea, you have to think with common sense, and research the market. You can't just come up with an idea and say "let's sell mustard on the internet! Everyone will love it, and it can make millions! OMG!" No you idiot, write your ideas down and make sure there is a need for it, and even a market for it! Niches are hard to attack! There is a common rule in business I've read in multiple books, and it's the truth. It's something like this: [break] "Find a pain in the market, and build a solution for it" [break] Don't quote me exactly, I didn't feel like Googling it. There's also another rule: [break] "Sometimes you have to build a solution people don't realize they needed or could use" [break] Finding a pain in the market is much easier for the non-creative. Because we all can think of something that sucks, that we want to fix! Right? [break] For example, in laymen's terms, my competitor sucks, and there needs to be something better. I know, okay, I'll break it down so you don't think I'm stupid. My competitor is always down, slow, inefficient, too many restrictions, horrible looking, and very unprofessional for networking, and impossible to ever make a brand. BEMODEL will solve all of those problems by being "fast, efficient, no restrictions, professional looking, and easy to network with, and very brandable!" [break] I made a few bullet points above: [break] - It's a big idea, big niche, and big market to attack - It needs to have a website that communicates with thousands of companies - He needs to convince "big companies" to partner with him [break] Market research. We need to hit a huge market, how do we do this? For example with my friends idea. We need to hit a huge market, how do we advertise to the masses without millions of dollars to run ads all over the internet, run commercials, or ads in magazines? Let's think out of the box for a second. What's new on the internet that wasn't possible before... I think the term has been coined as "going viral," with all of the social media outlets we have available to us, we've seen it time and time again, one hit wonders on the internet are discovered, followed, and even signed (Justin Bieber, Sean Kingston, Tila Tequila, Forbidden). Justin Bieber made it from YouTube, Sean Kingston, Tila Tequila and Forbidden made it from MySpace! What about all of the videos on YouTube that have gone viral, or keywords on Twitter? You need to do something that will get attention, I mean, in terms of going viral for a second to at least gain some exposure for free. [break]
So what if we had an idea where we need acceptance from other companies? Bigger companies? Our idea won't work if we can't partner with so and so, which is my friends problem right now, he has an idea, but needs approval from the big dogs. I told him, get your idea firm and solid, run it through so you know it will work, write the entire framework/process on paper. After that's done, get the concept drawn up on a professional wire framing system, such as Axure Pro, probably one of the best wire framing softwares I have seen. You have to have your vision clear, so you can describe everything about it, the potential, where the revenue will come from, how everything from A-Z will work. How you will market it, etc... Marketing is tough, if you're not a marketing creative, find someone to stem ideas off of.
Now business plans are bullshit, I'm sorry, you don't need it unless you're trying to raise over 1 million, I raised 150k without a business plan from a real investor because of my sales pitch and demonstration. But of course you will need to get some very important documents written. Here's what I wrote up:
- Summary about me, experiences, skills, education.
- Projections (I used excel)
- Executive summary of entire idea (1-2 pages)
- I also drafted up a page of why we'll rock our competitor, it was a comparison table.
The rest was my sales pitch and just talking to him showing them the current BEMODEL, and projections excel file. The projections took me the most work, and will probably be the hardest part for you too, but it is the most important file. Email me if you want to see my projections file, I'll dig it up for people who request it. You need to figure out where you'll make your money from, and project how many customers you could potentially reach. For example, my buddy needs to get ahold of these companies, pitch his idea to the VP/Director of Marketing most likely, and talk to a few of them, and see if they like the idea or not. Then ask how much volume of customers they're seeing, so he can use those numbers to work with. I have to be somewhat vague, because I don't want to give his idea away, and all business models are different.
Oh, I'm not a writer, I hired a professional editor to review and edit everything so it sounded like a 50 year old wrote it up for a multi-million dollars deal :) You should do the same.
Use common sense, who at the company do we need to speak with to pitch our idea? Obviously we can't get a hold of the president of a multi-million dollar business, so we have to ask for the Marketing guy, speak with him/her, but have your shit together, and ready to explain clearly.
"Hello, this is Andrew Thompson with BEMODEL, and wanted to talk to you about a business opportunity, that would boost your business tenfold."
They reply "Go on."
You're in the door, that's as far as you can get, now it's all up to your sales pitch, and if the idea works or not. Here's the funny part, most of my friends with their ideas are to scared to even pursue anything because they bitch and whine about "having their idea stolen." Shut the fuck up, and get out there. If you don't have money for trademarks/patents/copyrights and attorneys, well too bad, you're going to have to take a risk and shoot for the stars. Also, there is such thing as an NDA/CNC, make sure you print those out, make it look legit, and make sure you register your business name, jesus christ.
Always register your domain, and your business name AT LEAST. I filed all of my businesses online for only $25. And get an EIN number from IRS.gov. You can't be a legitimate business if you don't register your business AND GET AN EIN number. Setup the domain and website and at least put a coming soon page, get some business cards. Your own business email firstname.lastname@example.org and forward it to your gmail. And for crying out loud stop using hotmail/yahoo. You want to look like a little kid, then keep using those services.
1. Get your vision straight.
2. Market research.
3. Wireframe your business model.
4. Register your company name (LLC,C/S-Corp-- If you want a blog on this, ask me, as I know the most important things to consider)
5. Prepare all documents (bio, exec summary, projections, etc... And then get it edited professionally, yes pay for it, I don't care if you're majoring creative writing in College, you don't have 20+ years of experience yet dipshit)
6. Order the essentials, business cards, website/hosting, business email, EIN number.
7. Setup a bank account for your company, and get company checks (VERY IMPORTANT) -- Law of attraction, if you prepare the company to make money... It will make money.
[break] Doing all of this could easily take you 3 months, try to expedite it, so you can revise it and make sure it's ready, don't be a pussy and take forever. Get your shit done, because this should be the easy part, the hard part is turning this all into reality. [break]
[break] So now we need money? Fuck, the hard part right? We've all been broke, are broke, and need money to fund our new venture. Since B (Get a team to work in exchange for equity is out of the question for me) is out of the question, let's talk about option A (raise capital or use your own money). Specifically raising money. [break] Okay let's be brutally honest real quick, it's better if you can fund it, you don't have to deal with stress on delivering on your promises, and letting people down. You know what the Amazon guy did right, and a lot of business owners. Maxed out their credit cards and went into debt until it worked. The Amazon guy said it took him 7 years before he profited, now look at him, building Kindles and shit. Haha. The biggest store in the world. If you can raise money by taking a loan, friends, family, or working your ass of yourself, do it, because developers can be paid as you go, and marketing can be free if you do it right, and be creative. If you need big money, let's get to it than. [break] You're most likely building a startup company with no profit, not even a penny coming in as of now, right? Startup companies are ten times harder to raise money for, which means you need to find someone who can take the risk, and you more specifically need an Angel investor. Grow some balls and ask everyone, ask your friends if they know rich people, ask your parents if they know rich people, just keep asking, until someone sets you up your first meeting, you're seeking an investor, you're not begging for money, so grow some fucking balls, and start with the most simple possibility, MUTUTAL CONNECTIONS. You have good connections with certain people, they might "know" of some people, and they can say "My buddy has a business proposition and was to curious if you we're an investor, and if so, maybe give him a 15 minute coffee meeting." Seems simple, but that's how I did it, mutual connections. And of course, my blog got me another one of my investments. Two of my investments were from mutual connections, and the last was through my blog. Man it really comes down to connections and networking, if you have no luck finding someone with money, you better get creative. Start attending conferences, networking events, and even attend seminars, seminars can at least get you in, I've been too two Rich Dad seminars, and they were amazing. A lot of those mother fuckers had 800k equity in their houses, they could easily pull a second mortgage from. It's just an idea :) If you have fucking fire in your eyes, everyone wants in, even the guys with the money. I don't want to give you the passion blog right now, but you have got to be fucking passionate and you must sound like you know your business in and out, so they think to themselves "Wow this mother fucker knows their shit." [break] Let's say you raised the money, or at least can fund some of this yourself. If daddy gave you an expensive car, use that bitch to it's potential, pull a loan against it, haha. Show your parents you know what's up. I'm not really sure if this is as easy as it was for me 3-4 years ago when I did this, but they let me pull up to 75% of my cars current value. Or shit, try getting a business loan, I was able to get a business loan easily, with decent credit. You could even shoot for a government grant, if you have a economy stimulating idea, and some good persuasive writing skills, it's worth a shot. You can at least submit your grant, and be prepping for everything else while waiting on a response. If you're not familiar with a grant, it's a way to have the government give you money, yes even with our trillion dollar deficit, haha. [break] Remember, is building your business worth the risk of ruining your "credit score." Is your "credit score" really the determining factor? I mean shit, yes it's stressful if your business fails and you go 30k into CC/Busines loan debt. Fuck, I was half a million in debt. Who the fuck cares? It's debt, LOL. If you can't fix it, you can erase it with Bankruptcy. Just keep going more into debt, until something fucking works. I know I'm going ultra hardcore now, Bankruptcy... But seriously, who the fuck cares, you can still live and get credit cards and loans with bankruptcy. Fuck I bought a used 2010 Camaro with no credit, they didn't even check my credit. They only wanted 30% down ($7,200), no credit checks, no proof of income, there are business out there, if you do your fucking homework! [break] If this doesn't work, start looking on the internet for resources or websites, because that's all I'm going to give you for now. There are two motivators in life. [break] Inspiration [break] AND [break] Desperation [break] I was desperate to raise money, because I was at the fucking bottom of the food chain at one point, I raised $125k in the nick of time. Through mutual connections and one of my blogs. [break]
[break] I told you how to save on development, I told you exactly what to do to get your business ready, and even how to get the essentials in place for investors. Don't make this more complicated than it is. Do what I said. I will post blogs on marketing, passion, etc... later. [break] Let's talk about getting started. After steps 1 - 7 are done, you don't necessarily need money to at least start your business, you can start building/designing your business with what monies you can throw into your business. Get on e-lance and post a job, and find your developer. Work out with them how often can they work per week, what you can afford at least for now, etc... Get your vision started, you have got to at least start. Think about this, if you sold $1,000 of toys (xbox, ps3, tv, couch), my developer would have 30 hours into my new project. 108 hours he did my entire website. 30 / 108 = 27% of BEMODEL would be done, with the awesome developer I found. I know it's extreme, but at one point in my house, I sold everything, EVERYTHING just for cash, to survive. I stopped paying my mortgage for 12 fucking months just to work on BEMODEL, because I couldn't spend my investors money on anything personal. If I would of lost my house, I could of cared less, I'm sick of that house anyways. [break] Do you know how much money every entrepreneur has lost and made. Arrogant Mr. Trump was born into 500 million dollars, and he lost it all. Guess how he made it back, raised it from the guys he originally lost it from. Think he would of cared if he would of lost his house? Think Robert Kiyosaki cared he was living in his car with his future Wife? Now he's worth 55 million in a down economy, and so is Steve Jobs, and Donald Trump. Passionate money hungry people make money no matter what. Steve Jobs is selling $600-$1000 fucking tablet iPads, and $1000-$3500 MacBook Pros in a down market! WTF. [break] Get your foundation set, your vision straight, and steps 1 - 7 completed, and you're 50% done. That's how you get your business started. Good luck. [break] Give me your feedback, I didn't proofread, there might be A LOT of grammatical errors, I wrote this on whim just now, with no plans of even writing this article. If someone wants to take the liberty to format and proofread this for me, feel free too :) [break] Remember, entrepreneurs are the definition of broke individuals with a dream and passion, you need to go from an entrepreneur to a business owner [break]
And for all you mother fuckers, I need feedback on what you want me to add/fill-in, because I'm going to turn this into a free ebook download at double the length.
[break] -- All the best