Running a business
Selling a business
Sell for 2-4x trailing-twelve-months revenue minus expenses
Use a broker to sell the business:
- weeds out flakes
- build a prospectus
- escrow, delivery
Avoid cross-contamination with other businesses
What buyers look for
- Established business (6+ years)
- Recurring revenue
- Low technical risk (rails app vs lisp monster)
- Low market risk (will remain valuable over the coming years)
- Good documentation (solid bookkeeping, guide to running the business)
- “no money down”
- anonymous sales
- people who aren’t capable of running the business
- people who negotiate for weeks then demand a discount right before contract signing
Take a 10-15% cut (generally worth it - much lower risk, higher negotiated price)
Rework by 37signals (book)
p 10 “Starting a business on the side while keeping your day job can provide all the cash flow you need.”
Ignore the ‘real world’
p 14 “The real world isn’t a place, it’s an excuse. It’s a justification for not trying. It has nothing to do with you.”
Failure is not a rite of passage
p 16 “Other people’s failures are just that: other people’s failures.”
p 16 “Another common misconception: You need to learn from your mistakes. What do you really learn from mistakes? You might learn what not to do again, but how valuable is that? You still don’t know what you should do next. Contrast that with learning from your successes. Success gives you real ammunition. When something succeeds, you know what worked - and you can do it again. And the next time, you’ll probably do it even better.”
p 17 “Evolution doesn’t linger on past failures, it’s always building upon what worked. So should you.”
p 22 “Don’t make assumptions about how big you should be ahead of time. Grow slow and see what feels right - premature hiring is the death of many companies.”
p 23 “Don’t be insecure about aiming to be a small business. Anyone who runs a business that’s sustainable and profitable, whether it’s big or small, should be proud.”
Don’t be a workaholic. It ain’t worth it in the long run.
p 32 “If you’re going to do something, do something that matters.”
Scratch your own itch.
‘No time’ is no excuse
Have a ‘commitment strategy’, not an exit strategy
p 67 ‘…get creative and you’ll be amazed at what you can make with just a little.’
p 69 “You’re better off with a kick-ass half than a half-assed whole.”
p 72 “…figure out your epicenter. Which part of your equation can’t be removed? If you can continue to get by without this or that thing, then those things aren’t the epicenter. When you find it, you’ll know. Then focus all your energy on making it the best it can be. Everything else you do depends on that foundation.”
Ignore the details until after you’ve got the main parts figured out.
p 77 “Commit to making decisions. Don’t wait for the perfect solution. Decide and move forward.”
p 78 “You don’t have to live with a decision forever. If you make a mistake, you can correct it later.”
78 “It doesn’t matter how much you plan, you’ll still get some stuff wrong anyway.”
Be a curator
Throw less at a problem
Focus on what won’t change
p 85 “The core of your business should be built around things that won’t change.”
85 “Japanese automakers also focus on core principles that don’t change: reliability, affordability, and practicality. People wanted those things thirty years ago, they want them today, and they’ll want them thirty years from now.”
85 “Remember, fashion fades away. When you focus on permanent features, you’re in bed with things that never go out of style.”
87 “People use equipment as a crutch. They don’t want to put in the hours on the driving range so they spend a ton in the pro shop. They’re looking for a shortcut. But you just don’t need the best gear in the world to be good. And you definitely don’t need it to get started.”
Sell your by-products
90 “When you make something, you always make something else. You can’t make just one thing. Everything has a by-product. Observant and creative business minds spot these by-products and see opportunities.”
93 “Once your product does what it needs to do, get it out there.”
93 “Just because you’ve still got a list of things to doesn’t mean it’s not done. Don’t hold everything else up because of a few leftovers. You can do them later. And doing them later may mean doing them better, too.”
94 “Stop imagining what’s going to work. Find out for real.”
97 “If you need to explain something, try getting real with it. Instead of describing what something looks like, draw it. Instead of explaining what something sounds like, try humming it. Do everything you can to remove layers of abstraction. The problems with abstractions (like reports and documents) is that they create illusions of agreement. A hundred people can read the same words, but in their heads, they’re imagining a hundred different things.”
Questions to ask yourself: Why are you doing this? What problem are you solving? Is this actually useful? Are you adding value? Will this change behaviour? (will it have an impact?) Is there an easier way? What could you be doing instead? Is it really worth it? (determine the real value of what you are doing before jumping into it)
Interruption is the enemy of productivity
104 “Those taps on the shoulder and little impromptu get-togethers may seem harmless, but they’re actually corrosive to productivity. Interruption is not collaboration, it’s just interruption. And when you’re interrupted, you’re not getting work done.”
Meetings are toxic
112 “Find a judo solution, one that delivers maximum efficiency with minimum effort. Judo solutions are all about getting the most out of doing the least. Whenever you face an obstacle, look for a way to judo it.”
112 “Problems can usually be solved with simple, mundane solutions. That means there’s no glamorous work. You don’t get to show off your amazing skills. You just build something that gets the job done and then move on. This approach may not earn you oohs and aahs, but it lets you get on with it.”
113 “When good enough gets the job done, go for it. It’s way better than wasting resources or, even worse, doing nothing because you can’t afford the complex situation. And remember, you can usually turn good enough into great later.”
115 “The way you build momentum is by getting something done and then moving on to the next thing. No one likes to be stuck on an endless project with no finish line in sight.”
118 “A lot of times it’s better to be a quitter than a hero.”
119 “People automatically associate quitting with failure, but sometimes that’s exactly what you should do. If you already spent too much time on something that wasn’t worth it, walk away. You can’t get that time back. The worst thing you can do now is waste even more time.”
Get plenty of sleep. It’s good for you, and you need it to think clearly.
Break big tasks into sub-tasks - it’ll be easier to estimate the time and money needed.
135 “So much of the work an original creator puts into something is invisible. It’s buried beneath the surface. The copycat doesn’t really know why something looks the way it looks or feels the way it feels or reads the way it reads. The copy is a faux finish. It delivers no substance, no understanding, and nothing to base future decisions on.”
De-commoditize your product
Don’t be afraid to take a stand and pick a fight with a competitor
Don’t feel you have to out-do your opponents. Under-do and get the easy wins, leaving the nastiness to competitors
148 “In the end, it’s not worth paying much attention to the competition anyway. Why not? Because worrying about the competition quickly turns into an obsession.”
Don’t dilute your vision trying to keep up with the competition.
153 “Start getting into the habit of saying no - even to many of your best ideas. Use the power of no to get your priorities straight. You rarely regret saying no. But you often wind up regretting saying yes.”
153-154 “Don’t believe that”customer is always right” stuff, either. … Making a few vocal customers happy isn’t worth it if it ruins the product for everyone else.”
154 “Don’t be a jerk about saying no, though. Just be honest. If you’re not willing to yield to a customer request, be polite and ask why. People are surprisingly understanding when you take the time to explain your point of view. You may even win them over to your way of thinking. If not, recommend a competitor if you think there’s a better solution out there. It’s better to have people be happy using someone else’s product than disgruntled using yours. Your goal is to make sure your product stays right for you. You’re the one who has to believe in it most. That way, you can say,”I think you’ll love it because I love it.””
157 “When you let customers outgrow you, you’ll most likely wind up with a product that’s basic - and that’s fine. Small, simple, basic needs are constant. There’s an endless supply of customers who need exactly that.”
Don’t confuse enthusiasm with priority
162 - “You can’t paint over a bad experience with good advertising or marketing.”
164 - “If there’s a request that you keep forgetting, that’s a sign that it isn’t very important. The really important stuff doesn’t go away.”
It’s alright to be obscure - this is the time to make mistakes and tweak. Test market, and determine if it is worth it.
Build an audience of people who want to hear what you have to say.
Out-teach your competition
If you’ve got a fantastic product, you don’t have to worry about giving a small taste for free. They’ll keep on coming, cash in hand.
Every customer interaction is marketing.
193-194 “Marketing isn’t just a few individual events. It’s the sum total of everything you do.”
196 “Trade the dream of overnight success for slow, measured growth. It’s hard, but you have to be patient. You have to grind it out. You have to do it for a long time before the right people notice.”
201 “Never hire anyone to do a job until you’ve tried to do it yourself first. That way, you’ll understand the nature of the work. You’ll know what a job well done looks like. You’ll know how to write a realistic job description and which questions to ask in an interview. You’ll know whether to hire someone full-time or part-time, outsource it, or keep doing it yourself (the last is preferable, if possible).”
204 “Don’t hire for pleasure; hire to kill pain. Always ask yourself: What if we don’t hire anyone? Is that extra work that’s burdening us really necessary? Can we solve the problem with a slice of software or a change of practice instead? What if we just don’t do it? Similarly, if you lose someone, don’t replace him immediately. See how long you can get by without that person and that position. You’ll often discover you don’t need as many people as you think.”
206 - “Pass on hiring people you don’t need, even if you think that person’s a great catch. You’ll be doing your company more harm than good if you bring in talented people who have nothing important to do.”
Cover letters are a better test than resumes.
Delegators are dead weight.
222 “If you are trying to decide among a few people to fill a position, hire the best writer. It doesn’t matter if that person is a marketer, salesperson, designer, programmer, or whatever; their writing skill will pay off. That’s because being a good writer is about more than writing. Clear writing is a sign of clear thinking. Great writers know how to communicate. They make things easy to understand. They can put themselves in someone else’s shoes. They know what to omit. And those are qualities you want in any candidate.”
Own up to bad news. Then, you don’t need to worry about misinformation or hearsay to make the situation worse.
Answer support queries quickly. Good customer service can disarm a customer.
242 “No one should be shielded from direct criticism.” Everyone should deal with customers at some point to keep them in tune.
- Acquisition - users come from various sites
- Activation - users enjoy 1st visit, “happy” user experience
- Retention - users come back, visit site multiple times
- Referral - users like product enough to refer others
- Revenue - users conduct some monetization behaviour
Customers want benefits, not features. Users do not have a “software” problem
- Have one conversion goal, and only one goal
- Point out why you’re unique
- Use testimonial language
- Use simple language
- Paint a picture of the customer’s pain
- Clear benefits
- Let customers know when to expect when they engage
- Set up analytics and event tracking - and actually use it