Category Advice

How to deliver a great pitch to angel investors

caroline hughes 3 Comments

So last night,* Nick and I pitched our start-up, lifetise.com, to a group of angel investors.

Cue the montage

For those who last tuned in when we were working on Be Neighbourly, I feel that we need a montage to explain what’s happened in the past year. So here goes…

Being neighbourly didn’t work. People in London want to be neighbourly only conceptually. Not in real life. Not if that means talking to strangers. Especially strangers who know where you live.

Flash forward.

One idea to create an app for us normal people who don’t have assets, to help us figure out how to afford our lives. A retro eureka moment when we remembered the Game of Life (“be a winner with the game of life”). A decision to create a Sims-style game for your real life, that shows you how to manage your money and plan for the future.

Flash forward.

Find a games studio to build the game. Get excited that people are interested, then sad that we don’t have the cash to build. Apply for government funding (free money). Miss out by a score 2% lower than the qualifying standard. Re-apply with confidence, having totally nailed the responses to their feedback. Get rejected again because the government thinks it’s fine to get a whole different bunch of people to review the application, who give totally different scores. Fuckers. Lose the games studio to other, paying projects.

Flash forward.

Find another games studio. Try to pitch the concept to investors. Working on the assumption that raising £250k shouldn’t be too hard in London. Get investor interest but no moolah (no MVP no money).

Flash forward.

Find games industry legend who wants in and has a development partner who can build an MVP for £35k. Freak out about spending life savings on a punt. Do it anyway. Interview loads of 20 – 30 somethings about how shit their lives are. Hustle the hell out of anyone who’ll listen (and plenty who don’t) about how amazing our product is. Get on the radar of some angel investing groups. Go to more FinTech events than any one person should have to and network like a duracell bunny.

Flash forward.

Read too many blog posts on how to create the perfect pitch deck. Lose all cognitive function. Create pitch deck (many, many versions), business plan (many, many versions), grapple with a growth model and revenue forecasts, P&L and cash-flow projections for a business that does not exist and has no revenue. Do pop-quiz-style valuation calculations. Google everything to find somebody smarter who’s already thought these things through. Do that.

Flash forward.

Apply for angel pitch events. Create endless, awful, poorly-lit grainy videos introducing ourselves to the selection panel. Do 83 retakes before saying fuck-it, you can only see half my face, but that will have to do. Get through the selection process for FinTech Circle. Do celebratory chest bump. Then remember that we still don’t have a product to show on the night.

Flash forward.

Scream at developer team to please, please, please have something vaguely approaching a demo ready for the pitch event in 3 weeks’ time. Inwardly weep at the likelihood that they won’t. And you’ll be all fur-coat-no-knickers in the dragons’ den. Design a really bright pop-up banner and snazzy business cards to detract from the fact that you don’t have a demo.

Flash forward.

Finalise your pitch deck. Do a practice run to the FinTech Circle team. Get told you stand weirdly, so you need to sort that out. Practise ‘relaxed confidence boss-woman’ poses in the mirror.

…And finally, it’s pitch day. Nerves, adrenaline, focus, meditation, fixed smiles, power pose in the ladies loo. It all comes together.

So what did we learn about how to pitch to angels:

Go early in the billing:

We went first. Which we thought was brave / foolhardy of the organisers. Putting the “computer game to fix your finances” first on the bill in a room full of serious money people. I worried that we’d look lightweight compared to the blockchain and moneytransfer companies. I worried that the room was only half full so the angels who turned up late would miss our pitch. I worried about many things.

Turns out it’s better to open or go early in the list. You have people’s full attention. It was a hot room and people started to doze off in the second half. By the end I couldn’t remember half the pitches, so you have more chance of being remembered if you’re up early.

Prepare like a MoFo:

It goes without saying, but if you’re someone who’d sooner down a pint of fire ants with a chaser of rat poison than present to a room full of people, then (1) for gawd’s sake find someone else who can pitch for you, or if that’s not an option ‘cos you’ve got no friends, then (2) put in enough practice that you can forget about what you’re saying and just concentrate on not fainting.

I’m a confident little stand-up (some would replace ‘confident’ with ‘arrogant’ or ‘cocky’), but my legs still evaporate and my mouth freeze-dries when it comes to pitching. I got over it with a small glass of wine before we started and deep breathing from my belly (don’t do this if you’re holding a mic – you’ll sound like you’re giving birth).

Expect difficult AND stupid questions:

Just because you know your business inside out (you do, don’t you?), don’t expect anyone else in the room to have understood a single word of it. So when they ask questions that indicate they haven’t listened or haven’t understood, don’t look surprised. Just be grateful that it’s something you can answer.

Use it as an opportunity to add some interesting detail to particular points. We had a ‘hidden’ stack of 10 additional slides on our deck, just waiting for people to ask us the right question. It feels awesome to be able to point to stats to back up your answer. Especially if you can work the slide clicker.

Accept that there’ll always be at least one person in the room who feels it is their duty to ask a dickish question or to try to catch you out in some way. To those people, I say “thank you”. Because we’re ready for you and we’re going to use the tried and tested politician swerve.

So when the hand goes up from the twitchy-looking guy at the back who doesn’t appear to own any eyes, make sure you’re primed. Whatever he asks, you are going to answer the question you wish he’d asked. You’re going to take his mealy-mounthed question and you’re going to turn it into an answer about something you’re desperate to show-off. The positive energy from everyone else in the room will carry you through.

Hustle the hell out of it:

We missed most of the second half pitches. We were stood outside the auditorium talking to some angels. Remember why you’re there. Only one goal. Convince those with money to invest in your startup. This goes back to point 1. If you’re early in the billing, then people know who you are early. You can have many more focused conversations with investors than if they haven’t yet seen you pitch and they’re just making small-talk.

Out of all the angels in the room, we got interest from around 70%. We made sure we got their business cards, so we could make the next move. And we followed up with them the next day to set up meetings.

Giving your pitch is just the beginning. You have to be willing to network with everyone in the room. Don’t expect people to come to you. Get around everyone and find out who they are and why they’re there. We found that even those who weren’t interested in investing in Lifetise were happy to introduce us to someone who might be a better fit.

And finally, treat every pitch likes it’s THE pitch. Keep your energy and enthusiasm high – it’s the thing that investors have remarked on with our team – we are experienced (read: old) and incredibly enthusiastic. Investors want to work with people who are passionate about their business.

*Um, two months ago. I started this post the day after the pitch, but then got a bit busy with investor meetings. Sorry.

5 Top Tips for Staying Happy and Healthy this Winter

caroline hughes 1 Comment

This is the first Winter in many, many, many that I haven’t run away somewhere warm.  Truth be told, I am dreading it. I can be pretty glum at the best of times, so I can only imagine what a radiant bundle of joy I will be to work with at home when the daylight hours go below the recommended 5-a-day.

Fortunately, I have some fail-safe tactics to ward off the winter blues and keep my pecker up, so I can skip merrily into Spring.

Tip 1: Get lots of exercise  

Round 2 of neighbourhood flyering will begin in earnest next week for beneighbourly.com.  One of my best friends has bought me some insanely fluffy fingerless mittens for the task. I will wage war on those snappy, bitey, frozen letterboxes and my hands below the knuckles will be resplendently toasty in leopardprint and bunny-fluff. Apparently, exercise helps to stave off depression. It remains to be seen if it can stave off rabid anger as you repeatedly flay the skin off your fingertips, one letterbox at a time.  I’ll keep you posted.  Hahahaha.

Tip 2: Get a light box

If you are SAD (and you have to be very sad for it to reach capitals stage, not just a little bit lowercase sad), then you’re supposed to get a special light box that mimics the effects of natural sunlight. Well, in our flat, the circuitry is so bad that it’s nigh-on impossible to get more than one halogen spotlight to work at any one time. It’s like they play tag team. So you basically have to position yourself underneath the one that’s working. Which makes it tricky to put on your make-up if the only one that works is the one over the cooker.

I can’t afford a SAD light, but I do have an extra bright halogen floor-standing lamp. I plan to stare directly at this for several minutes at a time, each time I feel a bit down. I will know it’s worked when my depression is replaced by a searing pain in my retina.

Tip 3: Get lots of nutrients

You’ve got to look after your health in the cold months. Helpfully, the fact that I rarely leave the house and am seldom in the company of other folk means I’m far less likely to catch their manky germs. Social isolation and loneliness is another matter, but those relentless sniffles that plague the average commuter no longer touch me. Plus, we eat a lot of soup in our household. Nevermind my sister’s insistence that soup bears no resemblance to a proper meal. It’s cheap, filling and if you liberally sprinkle in some temazepam, it keeps The Mack nicely contained all day. Our current fave is chicken carcass and lentil. Delicious And Nutritious.

Tip 4: Have plenty to look forward to

Man this is so important. You need at least one thing a week to look forward to. And for me, it needs to involve getting dressed in something other than my house sweatpants and socialising with someone (anyone) other than The Mack. You can’t just rely on Christmas and New Year either. That sort of cheer will only really last until your New Year’s hangover wears off. So sometime around the 7th of Jan you’ll need another pick-me-up. And you basically need to fill February to the brim with fun stuff. It’s unfailingly grim. I’m sure they deliberately made it the short month because it’s intolerable.

Tip 5: Hide

If it really gets too much then just hide. Stockpile some tinned peaches (great for bellinis) and long-life milk and just don’t bother getting out from under the duvet until you’re absolutely sure it’s Spring. And even then I’d suggest waiting till May. April has a habit of throwing snowballs. Sod being stoical about the Great British weather.  If it’s shitting diagonal sleet out there, then what on earth is the ruddy point? For the sake of the three crisp, bright days you might get, I say screw it.  Hibernate. Burrow. Get a onesie if you like. I won’t judge you – whatever gets you through these dark days. If you time your reawakening right, you might just get hailed as the Messiah. Which could be a bonus.

Oh.  And whatever you do, stay away from people who are going abroad somewhere hot. They are the worst, most turgidly smugawful bores and should be avoided like the plague.  Take it from someone who was one.

Dear Empower Network – Blog Off!

caroline hughes 20 Comments

Recently, I’ve picked up a whole legion of new fans of my blog.

Now, I know that neither my writing nor my life has got any more interesting, so I was puzzled over how I’d suddenly doubled my audience. Call me cynical, but my first thought was SPAM or scam.

So I had a little peek at my new followers’ profiles. And I found that they all had something in common. Not only were they now part of my flock, but they were also followers of A.W.O.L.

AWOL stands for Another Way of Life. It is part of the Empower Network, which claims to give people the tools and insider knowledge to be able to make money from blogging.

According to the blog of one of my new follower, Anna Linnehan’s, under the heading:

How To Create An Income Online ANYWHERE!

Most people don’t realize it. But there are an abundance of opportunities to create an income online ANYWHERE. An income that can completely pay for whatever lifestyle you choose, …

That all sounds very lovely. And very “empowering”. But c’mon people.  Let’s get something straight here.

Online income vs an online business

Anyone (in theory) can create an online income.  Whack up a basic website, scrape some generic, attention-grabbing, utter dross content (Lose 5lb of belly fat in 5 minutes with Amazing New Hollywood Diet), stick on some affiliate marketing buttons and a load of Google AdSense adverts…

And hey presto.  Watch those pennies roll in.  Very slowly.  If you’re lucky, you might make a few quid a month.  That’s an online income.  Not sure what lifestyle it is that you’ll be choosing off the back of this income, but I guess your buddies at AWOL will help you figure it out.

An online business, however, requires a bit more than that.  Trust me.  I’m on it like a car bonnet, but it’s a tough one to crack.

So what’s the deal?

I did a quick Google search under “Empower Network Scam” (lucky guess) and learned that it’s run by a couple of Dave’s, who, allegedly, have taken their own advice and gone totally AWOL – living in the kind of jurisdiction that Edward Snowdon’s looking for.

Ancient Egypt has nothing on these guys.  For anyone who hasn’t sussed it yet.  This is a Ponzi.  With a capital Ponz.

It’s actually pretty clever.  You see, what they claim to be selling is access to a blogging platform and combined internet marketing clout.  Higher rankings in search engines.  Increased traffic to your blog.  Easy ways to monetize. Em-Po-Wer.

money for nothing…

What they are actually selling is nothing.  Well, nearly nothing.  For upwards of $25/month ($100/month for the “Inner Circle”), you get your very own EN affiliated blog, hosted on their platform.  It’s called empower-network-something-or-other.  The significance of this will become clearer.

What’s less clear is why anyone would pay $25/month for a blog when the rest of the world is blogging for free on WordPress or Tumblr or the like.  But each to their own.

Now here’s the clever bit.  Pay attention.  When you join Empower Network, you are let into the secret that the way to make money from the internet is by…wait for it…promoting and reselling Empower Network.  Hold the fanfare.

If you look at the content of member blogs, you’ll notice a couple of things.  Firstly, there’s very little in the way of content.  A few pages.  All with titles like “Make Money Online!”, “Flog Your Blog!” and “Just Give Me Some Money!”.

Secondly, all of the content is about A.W.O.L. and Empower Network.  All links are effectively affiliate buttons.  They take you to the EN sign-up page.  And if you, too, become Empowered, the owner of the blog that referred you gets paid a commission.

So, as a newly Empowered blogger, if you want to make money, you need to sign up as many wannabe empowerees as you can.  And the way to do that?  By visiting as many blogs as you can, “following” and “liking” and spreading the EN gospel.  So it’s an endless viral blogging go-round.  Work, work, work.  Sell, sell, sell.  Because, remember, you’re paying a minimum of $25/month for this, so you’d better be recruiting new followers to cover your subs.

This is also the “secret” behind the claims that EN can get your blog higher up the search engine rankings.  Not quite true.  What happens is that all this recycled content, the constant pingbacks to A.W.O.L. or EN, confuse the searchbots.  It means that Empower Network, the brand, ranks top in Google.  If you’re searching for “Empower Network”, that is.

But since EN is all you have to sell, ain’t it grand that it ranks so highly on Google?

There is something quite beautiful about its simplicity.  You buy into a scheme to make money online.  Turns out that the product you need to sell to make that money is the scheme itself.  You’re paying money to a company to promote their brand, which makes them a lot of money.  If you do enough promotion and make enough sales, you might make a little bit of money.  Maybe I’ve missed something, but it looks awfully to me like the only ones making real money from this are sitting high and dry atop their pyramid.

The best bit about it?  By writing about EN, I’ve probably pushed them even higher up the search rankings and helped them peddle their snake oil to some poor schmuck.

Do me a favour will you?  Don’t Google them, don’t click on any comments, follows or likes that they send you, and definitely do not fall for their scamming ways.

Just like naughty children or dogs, the best thing we can all do is just ignore them till they go away.

lifestyle tetris – downsizing and deflation

caroline hughes Leave a comment

There comes a point where it’s no longer enough to talk about the lifestyle changes you’ve made, which, when you boil them down to the bare bones, equate to little more than not working and going on slightly longer holidays.

4 weeks instead of 2 weeks in the sun.  Take that, rat-racers…

That point has well and truly arrived for me.  As I sit amongst packing boxes, trying to decide which charity shops should share in the spoils of my decluttering (bad person alert – I give my best stuff to the ones which make an effort with lighting and merchandising and my shameful tat to the dusty ones manned by myopic elderly spinsters).

The fact is, it’s been looming over me for a little while.  How it’s all very well to pretend to change your life, by only giving up the bits that you don’t like.  But at some point, you’re going to need to make a few more difficult changes.

ch-ch-changes

So for me, the main one is giving up my rented flat in North London.  When you have no income, it suddenly seems a little bit ridiculous to be spending over a grand on basic living expenses every month.  So The Mack gets me as a houseguest for a month (lucky, lucky man) and, in return, the money I’ll save on rent will pay for his ticket to come join me in Argentina.

Cos that’s the other thing.  It’s actually cheaper for me to go to Argentina and Brazil for a couple of months than it is to stay in London.  I find it strange that London has such a strong start-up community, when it’s such a cripplingly expensive city.  I can only assume that Google campus works like a soup kitchen for starving wantrepreneurs.

So, anyway, it all sounds very exciting.  Living without a plan.  Travelling to hip destinations.  Not knowing where I’ll live when I come back.  Taking risks and living in the now.

Well let me describe the realities of the now…

I hate you so much right now

The now is the sort of logistical puzzle that, in comparison, makes me feel fairly certain I could mastermind a major war and comfortably expect to win with minimal loss of life to my troops.

It involves many lists of the many items that I own.  Most of which have been happily hiding away in the loft spaces since my last move 18 months ago.  And which, when assembled fully in my bedroom, make me want to weep at the enormity of the task before me.

take it away…

It involves various google searches to find people prepared to take away my unwanted furniture and electrical goods.  (If you’re interested, British Heart Foundation is pretty good for furniture and large, working electricals and there’s a scheme called 1,2,3 Recycle For Free for collection of electrical goods, big or small).

I wouldn’t bother trying to sell your stuff.  No-one’s buying.  If you can be arsed to enter the barcodes, then apparently Music Magpie is ok for CDs, DVDs and computer games, but you’re talking about 10 – 20p per item, so you need a fair few before you make any real money back.  And if you have any old textbooks, then Fat Brain is another good one, I’m told.

store it…

If you have stuff you want to keep, then you’ll need to navigate the dizzying array of storage options.  I nearly started a spreadsheet to make sense of the different pricing offers.  Some give you a free month if you take a minimum of 2 months.  Others charge per month and not every 4 weeks.  Some give free collection.  Some free insurance.  It’s a minefield, people.

In the end I went for Henfield Storage.  They’re the cheapest I found, they offer a free collection service if you pre-pay 3 months and they have good locations.

I’m just hoping that all my stuff fits into the size of room that I’ve reserved.  I’m quite tense about this.  My spatial awareness (or rather lack of it) is legendary in my family.  I’m the girl who struggles to fasten those elasticated luggage strap things on the inside of suitcases.  I’m there for days, twisting those stupid little fastenings around and around, just praying that somehow they will magically come together.  I’ve been known to cut them out of my suitcases in a fit of pique.  Hateful little things.

So, in my mind, a sideboard, chest of drawers, trunk, 2x stag armchairs, 2 x small chairs, wine rack, 2 large mirrors, a screen, 2 old-fashioned suitcases, various boxes of crockery, DVDs, kitchen stuff, microwave, stereo, clothes, ironing board and duvets, should easily stack into a 5ft x 7ft x 10ft room…  Right??

I’m taking The Mack with me to help me unload.  This could prove to be the toughest test of our relationship.  I think he’s going to be thankful that there will be an innocent bystander there too.  And that it’s a public place.  Otherwise this could get U-G-L-Y.

The Mack thinks it’s all a game.  Silly, silly man…

Yesterday, I felt totally overwhelmed by the whole packing up process (err, you can maybe tell I don’t work anymore, if this is my idea of stress..?).  Today I feel calmer.  I have a game plan.  It is flawless.  Probably.

Step 1:  Charity Shop – I have packed 10 bags of unwanted stuff to take to the charity shop on Thursday.  This is neatly stacked on the landing outside my flat, so as to leave more room inside for more packing.

Step 2: Mother’s Pride –  I have identified the stuff that I’m going to store in my mum’s loft (the “good stuff”).  This is packed and in an easily accessible corner of my bedroom.  My mum may shed a few tears when she sees the extent of what I’m bringing home, but her maternal instincts will prevail, I’m sure.

Step 3:  Collectors’ Items – I have booked collections in a couple of weeks’ time for my unwanted furniture and electrical items (the woman on the phone said “electronicals”, but I let it go…) and my stuff to go into storage.  I will mainly be spending that week waiting for white vans to show up.  I have itemised lists so that I don’t send the wrong items with the wrong van…

Step 4:  Mack Attack – I’ve hired a van for the day after the collections, so that The Mack and I can take whatever’s left over to his house.  I had promised him that I’d only be bringing 2 suitcases (normal clothes for now and stuff for our trip) and a plant and my bike.  We’ll see…

I suspect that what will actually happen on Step 4 is that I’ll look around and realise that there’s loads more stuff left over than I expected.  I’ll then have a little cry.  The Mack will lose patience with this woe-is-me routine after about 3 minutes and tell me to pull myself together.

We’ll then have to split up the stuff into different piles.  There will be a “shit, that was meant to go into storage” pile, a “fuck it, that can just go to the dump” pile and a “please can we find a little tiny space in your flat for it?” pile.  Which means that our journey to The Mack’s in deepest South London will be via the storage facility in North West London and the nearest landfill.

We don’t celebrate Valentine’s day.  Why would we when we have all of this to look forward to as a true expression of our commitment to one another?  I’ll make sure I keep back one of my bottles of champagne to toast the occasion…

crowdfunding – money for nothing?

caroline hughes Leave a comment

In the olden days, if you wanted to start up a business or launch a new product, you either had to have lots of your own money or find an investor willing to part with theirs.  For most budding entrepreneurs, it meant having a whip-round amongst friends and family to raise seed capital.  Which, inevitably, meant that those same friends and family then felt that they had acquired the right to tell you exactly where you were going wrong with your idea…

Then came Dragons Den.  Which taught us all that the boy scout motto applies equally to investment pitches and convinced the entire nation that an idea without a patent is utterly worthless.  It also provided a valuable insight into human beings’ capacity for self-deception (remember the guy who wanted £100k for his amazing device for helping drivers drive safely abroad??  It turned out to be a single glove that you wear on your right hand when travelling abroad, to remind you which side of the road you should be on…).

All very enlightening, but, ultimately, it was hard to take the show seriously when one of the dragons clearly thought that a retail high street stationery business was a good idea.

I’m out.

crowdfunding

Now there’s a new way to get investment.  It’s very trendy and inclusive and gives people a warm, fuzzy feeling inside.

It’s called crowdfunding and it involves getting lots of people to invest a small amount of money in your business or product.

When I first heard about it, I was skeptical. I mistakenly thought that each person who invested would get a teensy piece of equity in the business, so you’d have lots of little shareholders.  I assumed that it was a bit like taking your company public, but without people being able to then buy and sell their shares.  I thought that it sounded interesting, but I wondered what would happen if you wanted to sell your company on?… hmmm.

Turns out I was right to be skeptical, but way off the mark in terms of how crowdfunding works…

kickstarter

There are a ton of crowdfunding platforms out there now, but Kickstarter is the biggest for the US and UK markets.  The Mack was looking to use it for one of his business projects and explained how it worked.  We were in a Vietnamese restaurant at the time.  I almost spat my pho out at him.  I definitely remember telling him that he was immoral and that I wouldn’t be any part of it.

Overreaction?  Maybe a tad, but I’ll let you be the judge of that.

So the premise of crowdfunding is that it allows individuals to invest small amounts in businesses or projects that they like the look of and it allows companies to raise money without having to give away any equity.  Typically, individuals can invest upwards of $5 in a project.  In return, they get some sort of reward or recognition.  Whether that’s a name-check on the art film project or an advance copy of the role-play game they’ve invested in.

So you could look at it as a platform which gives rein to the ultimate free market principles.  Power to the people.  A chance for consumers to influence the latest products and support the arts.  A way for small companies to forward-sell innovative products.

Or, like me, you could just look at it as absolutely barmy and ripe for scamming.

money for nothing?

Because it’s not even money for old rope.  It’s basically free money.  It’s the equivalent of the friends and family whip-round of old, but with 10 million mates all chipping in a couple of quid.

It flies in the face of all conventional business wisdom on bootstrapping and angel investment and careful financial husbandry.  You don’t need a business plan.  You don’t even need a company.  You don’t need to show anyone your finances.  Or tell investors how you plan to spend the money they’re investing.

All you need is a project, a snazzy marketing video and enough people who are happy to part with the cost of a latte, and bingo!  Instant success.

Because not only do you raise the money that you need, but you also get massive exposure to your target audience and, if your fundraising exceeds all expectations (the largest amount raised was $10m; over 10,000% of the target), the media will pick up on it too, so further free advertising and even more potential customers.

The most successful projects seem to be those involving funky technology products (smart watches, games consoles), computer games or arty stuff.  That would seem logical – the people who like those things tend to be early adopters anyway, so of course they’d jump at an opportunity to say that they helped make that product a reality.

The Mack and I think it’s only a matter of time before crowdfunding is taken over by organised crime.  Gullible punters willing to part with cash in return for nothing?  It’s the ultimate investor-endorsed Ponzi scheme.

Maybe because of this, Kickstarter has closed its platform to all but “creative” projects.  Don’t be put off.  It seems as though “creative” stretches a long way.  Just take a look at some of the projects that have been funded recently and you’ll get an idea of what flies and if it could work for your project.

And even if Kickstarter is a non-starter, there are many more crowdfunding platforms out there.  Country-specific platforms, sector-specific platforms, even worthy causes platforms.  If you’re looking to attract crowdfunding, then you need to think seriously about the amount of money you need to raise and which platforms get enough of the right eyeballs to make that likely.  As with all of these things, with popularity comes fragmentation and if there are too many platforms, then it becomes harder to attract enough mugs, sorry, investors, to your project.

So my advice…  Get in there now if you’ve got an idea but no cash.  In a troubled economy, it seems there is no shortage of people willing to throw money at new “stuff”.  And they expect almost nothing in return.

Jeez, I bet Madoff wishes he’d thought of this…

let’s get quizzical … how to ask the right questions in business

caroline hughes Leave a comment

According to The Mack, I am truly gifted at asking the right questions.  The questions that other people don’t even think of.  He thinks it may be because I ask soooooo many goddamn questions that a few of them end up being on the money.  Still, he did say that he thought it was my greatest single weapon in my quest for world domination, ahem, starting a business.  And so I thought I’d better write that down for posterity.  And then prove it.

Question Mark Graffiti

Question Mark Graffiti (Photo credit: Bilal Kamoon)

critical thinking

As a lawyer, you are (if you’re any good), pretty accomplished at taking a whole load of information – most of which has been babbled at you by a client whose method of expressing themselves most closely resembles a neural pinball game – and corralling that information into some semblance of order.

You then have to extract the relevant issues from the information you’ve assimilated, analyse those issues, apply the legal knowledge and expertise that you’re supposed to have to those issues, and come up with a solution for your client.

The way you do all of that?  Questions, questions and more questions.  And I’ve discovered it helps if you write the answers down.

The same rules apply when it comes to your business.  Learn to ask the right questions of the right people and the whole start up process will suddenly seem so much less daunting.

Q.  when should I ask questions and when should I pretend that I already know everything?

A.  I don’t really have a fear of asking questions (quizophobia??), nor of looking stupid (statistical probability).  I’m one of those superficially knowledgeable people.  You know, a bit like Henry’s Cat.  I know lots and lots about nothing, and not too much about that…  So I can come across as worldly and clued up, but actually I’m pretty darn ignorant.

Which means that, if I’m in a situation where I’m lucky enough to be talking to someone who actually has real, genuine, actual, honest-to-god knowledge about a topic, I will happily quiz them till I run out of questions (or they run out the door, whichever comes first).  My mantra – if you don’t ask, you don’t get.

My thinking is, most people like to share their knowledge.  It gives them the gentle glow of superiority.  Asking questions of someone demonstrates that you are interested in what they have to say.  And that is precious salve to the average human ego.  Don’t waste an opportunity to get your hands on some expertise, just because you’re worried what the “expert” will think of you.  Most times they won’t remember you anyway…

Q.  what questions should I be asking?

A.  Good question, you’re getting the hang of this!  It’s going to depend on the context.  The way I formulate questions is to break down my problem into logical segments based on what I know already, so that I can identify the gaps in my knowledge (‘cos that’s where the questions are hiding).

Let’s take the scenario where you have an idea for a product, but you need someone to help you with the design and development of that product.  You’ve found a few potential developers, but you’re unsure who to go with.  You’ve asked a few basic questions, like how much will it cost and what the initial steps would be.  But what else?

Here I adopt a Johari’s Window* style analysis (ooh, fancy).  Between you and the developer there are four possible combinations of shared knowledge:

1.  known knowns:  these are facts about the product/development process that are known to both you and the developer.  So these answers are already in the bag.  Right now, these might only be the basic description of your idea and the cost and initial steps of the development process.

2.  known unknowns:  (also called your “blind spot”) this is information that is known by the developer but which is not known by you.  This is where you should be formulating your questions.  Ask the developer what experience they have in working with people in your situation and with similar ideas to yours.  How does the development process work?  What input will they need from you and what form will this take (e.g. meetings, telephone calls, emails?).  How long will the process take?  What problems have they encountered on previous projects and what have they done to resolve them?  Do they envisage any problems here?  What do the quoted costs specifically include? Are there any hidden/extra costs?

3.  unknown knowns:  this is information that you have squirrelled away in your head, but that the developer might need in order to do the job or even accurately to quote for it.  Don’t hold back information (if you’re worried about confidentiality, get the developer to sign an NDA).  Try to give the developer as much info as you can think of.  Then ask the developer what other information they need from you now and ongoing on the project.

4.  unknown unknowns:  in this context, these will be things that neither you nor the developer have thought of.  Don’t worry about that.  I’ve never once come across a project that didn’t bring up some unknown unknowns (also called WTFs).  If you’ve asked the right questions in the earlier stages, then it shouldn’t be anything that you two can’t handle.  You’ll be fine.

Q.  who should I ask?

A.  Generally, someone with more knowledge than you on the subject.  Or Stephen Fry.  Probably.

But seriously, I’m a practical problem solver.  I don’t often go in for conceptual debates on hypothetical issues of the day.  I want straightforward, pragmatic, relevant advice.  Preferably from someone who’s been there, done that, got it right (or better, got it wrong and figured out how to get it right next time) and written the book.

That doesn’t mean that I expect other people to fix my problems and give me all the answers.  But it does mean that I seek out people with specific experience in dealing with my particular issue (and I’ll interrogate them mercilessly to pinpoint the relevance of that experience).

I’m also prepared to pay for that expertise.  Scrimping on real expertise is a massive false economy.  I’m not suggesting being overawed by their brilliance and telling them to name their price.  I am saying that if by paying for their advice it enables you to skip forward 3 steps on your business plan, then that’s money well spent.  And, in my world, it entitles you to tap them for some free follow-up advice should you need it in the future.

Q.  so I should just follow their advice to the letter, then?

A.  Err, no.  Have you been listening to a word I’ve said?  What is the topic of this post?  That’s right, questions… Keep up.

Check that the advice or proposal given actually solves your problem.  It’s a bit like exam essay writing at school.  You remember?  When the teachers drummed it into you to ANSWER THE QUESTION.  Yet it’s amazing how common it is for someone to think they’ve given you the perfect answer, but actually they’ve turned sharp left and embarked on an utterly irrelevant tangent.  On your time and money.

If you don’t feel that you’ve got your answer (and you’re paying for it), then go back and ask for clarification.  Don’t be scared that you’ll look foolish – there is nothing more foolish than paying for a service that you haven’t received.  It’s a bit trickier if you’re asking for free advice – you’ll probably be told to jog on – but you never know your luck!

A quick final word on that last point.  By all means, take full advantage of any expertise you can draw on for free amongst friends and family, but be aware that this comes at a price to them (their time and energy), so be considerate, very grateful and prepared to do something for them in return.

*Nerd note: Johari’s Window is usually used for self-awareness and character analysis.  But I think it works just fine for this purpose too.

the laws of consumer attraction … 4 steps to winning and keeping customers

caroline hughes Leave a comment

I was sad to see the other day that cop.copine had closed* on Upper Street.  It used to be one of my favourite French boutiques. Its rue Rambuteau store in Paris is definitely one of my ex’s orientation landmarks for the city. Poor boy.

But I felt partly responsible for that store closure. Because, although I loved the clothing, I never once bought anything. Not one thing. Back in the days when I lived in Paris, I was too poor to afford their clothes. Then by the time I could afford them, there were newer, more exciting brands on the market. I forgot all about their existence.  I’m such a terrible customer. I’ll worship many beautiful things, but always from afar. I rarely purchase.  I even get my books from the library…

All of which made me think about the inherent challenge in attracting and retaining customers.  Although I believe that it’s an art rather than a science, with a hefty dose of luck involved, there are some fundamentals that you should focus on when building out your business from idea to reality.

1. who’s buying?

Who is your customer?  No, really, I mean it: who is your customer?  I’ll ask you again: WHO. IS. YOUR. CUSTOMER???

Don’t give me that “universal demographic”, “oh, it can appeal to everyone” b.s.   The bottom line is that we, the consumer, have more choice than we know how to deal with.  And I speak on behalf of all of us when I say we are totally overwhelmed.

So you’d better be specific about who you’re targeting. And get to know them. Intimately. What do they buy now?  Where do they buy it? How do they transact? What’s their average spend and how often do they purchase?  What are their likes, dislikes, habits and foibles?  What are they saying about your competitors?

Sure, your product or service may have broad appeal, but in start-up nirvana biggest-bang-for-your-buck terms, your best bet is to target a niche demographic where you can pretty much guarantee take-up of your product.

If you’ve followed the Lean Startup Machine process, then you’ll already have drilled down to find your ideal customer.  If not, then I suggest that you use some of the LSM techniques to engage with your target customers and check that your product or service turns them on.

clever brand positioning: cat people are chocolate people

2. stickiness

In VC-world (and yes, I’m singing it in the style of the PC World jingle), when those capitalists look at a fledgling business to see if it’s worth investing in, one of the key things they’re looking for is evidence of customer stickiness.

How much repeat business do you generate? How loyal is your customer base?  Do you get recommendations from existing customers?  How engaged are your customers with your brand?

Their reasoning? It’s generally much harder to attract new customers than to keep those you’ve got.  This particularly applies where you’ve been first to market for a product. If you have retained customers when rivals have surfaced, that demonstrates the strength of your brand/product and makes a good case for the long-term viability of your business.

So how do you keep your customers sweet?  Think of it in relationship terms.  You have to work to keep the spark alive.  Don’t become complacent or neglectful: reward loyalty, do a little something special for those who have been with you for the longhaul.  If you do something wrong, apologise and make it up to them.  Above all, keep talking to them.  Don’t be one of those couples in a restaurant who sit there in silence praying for the food to arrive, to give them something to do.  Have a deep and meaningful conversation with them from time to time to make sure that their dreams, hopes and aspirations match yours.

3. don’t believe your own hype.  

You may be hotter than Felix Baumgartner’s space pants, but you are only there because of your customers.  By all means, be enamoured of your product or service – if you’ve created something amazing then you can rightly be proud of your achievement.  But beware of being sucked in by your own marketing spiel.  Try to stay a little bit humble.  No-one likes a boaster.

Humility and integrity are difficult traits to find nowadays.  Life seems to encourage bragging and brashness.  I think this will shift as people grow tired of all the empty shouting.  I believe that businesses that stay true to their values have more staying power.  This is not to be confused with staying static in the market – over your business lifetime, you will doubtless have to be flexible, to change your product in line with the shifting needs of its audience – but what you stand for shouldn’t change.

So before you get swept away on the tide of marketing and sales, give some thought to what your business stands for.  Think about those brands in your space that stand out for you and identify what it is that their brand captures.  Before any big decision, ask yourself “is this really us? Is this what we do?  Is this what we stand for?”

4. make your customers work for you

I feel as though social media has brought us right back around to the days where everyone lived in small villages and knew everyone else’s business.  The means of sharing, gossiping, reviewing and influencing may have moved on from over the fence, but the effect is the same:  the success of your business depends on what your customers do and say about you.

Those who see this as a modern facebook and twitter-driven phenomenon are missing the point.  It has always been this way.  The only difference now is the scale and speed at which opinion spreads.

If you’ve targeted the right customers, then they will be so excited about your product that they will spread the word for you.  Harness that collective energy and you have the most effective sales team you could hope for.  Apple may be the masters of the universe at this in modern terms, but Avon built its entire 120 year old business on the back of peer-to-peer sales.

So actively encourage your customers to talk about you.  Offer discounts or value-adds for referrals.  If they say nice things, thank them with rewards (or an old-fashioned “thank you” will do).  If they are less than complimentary, find out why, apologise and use the feedback to do better next time.  They are your people.  Put them to work for you.

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*I was wrong! It had only closed for a refurb and to change from a full range to a diffusion collection.  Interesting pivot for their business.  I still can’t afford any of their clothes though…

business planning 101

caroline hughes Leave a comment

Business plans have a bad rep these days.  I’m not sure what happened.  Maybe they let themselves go, piled on a few pounds and stopped returning calls…

I suspect that the issue lies with the idea of what a business plan should be (dense and serious) and what it should contain (lots of dry facts and figures, a liberal sprinkling of pie charts).

Whatever the reason, whenever I talk to someone about their fledgling business, nothing gets me stonewalled quicker than asking them how they put their business plan together.  Particularly in the tech or creative sectors.  Business plans are seen as old-school, flabby and a waste of time that could be spent creating an amazing viral campaign.

Well, call me old-fashioned and pour me a sherry, but I’m pretty certain that they still have their place.  I’ve yet to be in an investor meeting where the money guys have said “we’re not interested in your business plan, just show us that cool remote-controlled egg timer app again”.  (If you do know money guys like that, please send them my way.  Especially if they want to invest in egg timer apps.  I sense a real opportunity in emerging markets).

I actually think that if you were to ask most people running a business what’s the one thing they wished they’d done better at the beginning – the response would be: planning how to manage their business and make money from it.

So in the immortal words of Tag Team – Whoomp There It Is… I’m takin’ it back to the old school…’Cause I’m an old fool who’s so cool (they said it, not me)… and below are some suggested questions to help you generate your very first business plan.

BUSINESS PLAN QUESTIONNAIRE *

1.  PRODUCTS / SERVICES:

  • What products / services are you planning to offer to customers?  Describe in detail.
  • What differentiates your products / services from similar products / services in the market?
  • Who are your competitors? List categories and specific businesses.
  • What does your business stand for (e.g. value-for-money, quality, craftsmanship, innovation, philanthropy)?
  • What testing have you done to ensure that there is a market for your product / services?

2.  CUSTOMERS:

  • Who are your target customers? Describe demographic and customer characteristics.
  • What are your customers’ needs and expectations and how will you service these?
  • How will you attract new customers? (e.g. word of mouth, advertising, discount marketing – groupon, wowcher etc.)
  • How will you encourage customer retention / repeat custom? (e.g. loyalty programmes, refer-a-friend discounts, package deals)

3.  MARKETING:

  • What existing marketing tools/materials do you have? (e.g. current customers who can give testimonials)
  • What are the best marketing tools to reach your target customer audience? (e.g. website, flyers, word of mouth, social media)
  • What experience do you have in marketing and / or what budget have you allocated for marketing?

4.  CAPACITY/LOGISTICS:

  • How many hours per week can you devote to your business? If part-time, draw up a realistic schedule of available hours.
  • How / where will you provide the services/products (e.g. online, via a shop, at home, mail-order) and what type of costs are associated with your delivery method (e.g. travel, heating, lighting, electricity etc)?
  • Do you foresee any problems with your delivery method:
    • for you?
    • for your customers?
  • Do you have everything in place to begin providing the services or products?  If not, what preparation, money and time is required on your part to get you to this point?
  • What is your capacity (the maximum number of customers you can service)?  What would enable you to increase that capacity?
  • Do you need anyone else to help you deliver your product / service to your customers?  If so, how do you intend to work with that person / service provider (e.g. employee, contractor etc.)?
  • Do you have all the necessary licenses and business permits you need to operate your business?

5.  FINANCIAL:

  • What is your current monthly income?
  • How many hours do you currently work to generate that income?
  • How much of that income are you looking to replace with the income from your new business?
  • Is there any deadline for replacing some / all of that income (e.g. because your job is being made redundant, your company has cut back on your hours etc.)?
  • What is your proposed pricing schedule for your product / service? Make sure you list out any one-off fees, discounts, bulk-pricing etc.  How does this compare against your competitors’ prices?
  • What are your monthly costs of providing the services? For each cost on your list above, try to get as accurate an estimate of amounts as possible.
  • What capital expenditure (if any) will you need to spend in order to provide the services (e.g. on equipment, premises etc.) and when will you need to spend this?
  • How long will it be before you start to break even?  How long before you generate enough money to pay yourself a salary?
  • Who will manage your accounts for you?

6.  GENERAL:

  • Why do you want to start this business?  What are your drivers and goals?
  • What obstacles do you see to making this business a success?  How might you overcome these obstacles?
  • What help is available to your type of business (e.g. government grants, local enterprise schemes, mentor assistance, crowd funding)?
  • What are your current plans / timetable for expanding the business?  What capital would you need in order to achieve this?  Where will you obtain this investment?
  • If you had unlimited capital investment, what would you do with it to expand the business?

 

*DISCLAIMER: the above is not intended for you if you are pitching for capital investment.  You’re gonna need some pie charts for that…