2014 Annual Report and 2015 Goals

Let me start by wishing you all a very prosperous, happy, healthy and fun 2015. 

I hope this year will be the most successful year your life yet.

2014 has been the most successful, fun & interesting year since starting my business. Let me share the journey and set direction for next year in this post.

2014 performance review

At the start of 2014, I have defined these goals for my company. Let us see how we fared.

Financial Goals

  • Get $1 million revenues: We had a very prosperous and satisfying year in 2014. We made total revenues of $1,018,000. The exact figure may vary 5% once we audit our books and close accounts (financial year ends on March 31). Rough break up of revenues:
    • Templates: 24%
    • Online Courses: 59%
    • Live classes: 5%
    • Ads: 10%
    • Consulting: 1%
    • Affiliate & Partner commissions: 1%
  • Launch 2 new courses: In 2014, I could not launch a video course. On the contrary, one of the existing products (Advanced Power Pivot class) was shelved due to contract expiry. I almost launched a new course called as 50 ways to analyze data but a cyclone that passed thru my city knocked me offline for almost a month and put a dent in the course development progress. I will be launching this course in Jan 2015. It is a miracle that despite these setbacks, my business managed to beat revenue targets.
  • Launch 1 new product: I have launched Excel Dashboard Templates product in November 2014 and it immediately became one of the most popular items on our online store. By the end of year, we have more than 700 customers for it.
  • Write one new book: Although I wrote a lot of content, I did not publish a paid book in 2014. But I am happy to say that I have a new book contract on cards. I am co-authoring a book with someone else (details later) and it should be published in 2016.
  • Organic growth in website community: In 2014, I have spent less than $25 on advertising my site or products. All of this money was spent on Facebook. Every bit of traffic, growth, sales we generated were 100% organic.
  • Spend less: 2014 is by far the most expensive year in my life (business expenses hovered around usual levels). This is because at the start of year we bought a new car (Toyota Innova, SUV) and immediately got bit by travel bug. We drove more than 13,000 KM in 2014 visiting 7 different states in India. Every time we took one of these trips, we spent a lot of money for hotels, food, fuel and other incidentals. While these expenses are a small fraction of what we earn, they are significantly higher than what I spent in previous years. Now that my driving itch is more or less satiated, I expect to drive less and spend fewer $s on hotels in 2015. Apart from these expenses, as a family (and business) we spent almost nothing on other things. We bought no new gadgets, few clothes, did not buy any new major appliances, cooked most of the food at home, harvested more than 300 mangoes and ate them during summer.

Marketing Goals

  • To reach 100,000 members: Yes. As of 31 December 2013, we have 50,000 members on our RSS + newsletter list. Another 50,000 members are part of our newsletter thru Aweber.
  • To reach 10,000 fans on social media channels: partially achieved. We have 5,700 fans on Facebook, 6500 on Twitter & 11,000 on YouTube.
  • To release 2 print books: failed. I have not authored a single book this year. I realized writing books is a hard task and I do not particularly enjoy it. So I am saving books for later part of my career.
  • To release an iPhone app: Gave up. This is something that I see as zero value. So I have abandoned the iPhone app development efforts early in 2014.
  • To have a million visitor month: Failed. Our traffic remained stagnant or experienced very small growth in 2014. Our traffic went up by 5% in 2014 compared to 2013. As revenues & members continue to grow organically, I expect the traffic to plateau at this level for 2015 & 2016. This is because most of our traffic comes from search engines. Unless lots of new people start searching for Excel, it is unlikely that we will have million visitor month in near future.

Operational Goals

  • Improve website navigation: Our site continues to get positive feedback from new users and experienced Excel people. Last year (2014), I have added few more landing pages and added articles that can help people learn a concept or technique thoroughly from one page.

Life Goals

  • Visit 2 new countries: At the start of 2014 Jo & I planned to take the kids and go on a round the world tour. But we gave up that idea as we did not feel too comfortable leaving home for such long time. So we could not visit any new countries in 2014. That said, I went to US again for attending a conference.
  • Drive more & Explore India: In 2014 we drove more than 13,000 km and explored a lot of beautiful, fun & inspiring places in India.
  • Stay fit: In 2014 I took up walking & cycling as daily fitness activities. I ran 500 KM and cycled 1,300 KM in 2014. I started cycling in July and I am very happy the progress. It is part of my work out regimen and I aim to cycle more in 2015. I have also switched to a low-carb diet starting August 2014 and immediately saw amazing benefits of it. I am in the best shape of my life now.
  • Write another book: I could not allocate time to write another book. May be in 2016…?
  • Consume less: Our personal consumption levels are very low this year. As a family we spent less than 5% of what we earn this year.

Goals for 2015

Financial Goals

  • $1.25 million revenues: 2014 was a fantastic year despite no new product launches. This year I have a new course coming up in Jan / Feb. I am also planning to hike prices of various products. As of now we are offering some of our products way cheaper than they should be. So all of this should translate to higher revenues.
  • Continue to spend less: Nothing new here. Just maintain the manic obsession with keeping costs low while offering high quality products.

Marketing Goals

  • Focus on email marketing: Since 2013, I have shifted most of my marketing efforts to email marketing and seen great amount of success. This year I want to spend more time nurturing our email subscribers and converting more of them to paying customers.
  • Introduce webinars: I am planning to add webinars to my marketing arsenal. I see many companies offering training programs use webinars to enroll new customers. I want to test this strategy.
  • Advertise: This year, I want to loosen my purse strings and allocate $200-$500 per month on ads. I will be using this money to recruit new leads for our email lists, webinars & courses.
  • Podcasts + videos: This year, I want to spend more time on podcasts and videos. Specifically, I want to create 30 podcasts and 20 videos & share them with our audience in 2015.

Operational Goals

  • Change course enrollment process: So far, my course enrollment process has been like this:
    1. User clicks on link / ad for the course
    2. They go to landing page and read the details about the course
    3. They purchase

The problem with above approach is that it coverts very low % of people. For example, Excel School page converts less than 1% of visitors. This means, people are hesitant to pay for it (despite having the need to learn). As such purchasing a course is not something that can happen in 1 visit. Many people come back to the sales page few times before purchasing.

So In 2015, I want to experiment with a new process along these lines:

  1. User clicks on link / ad
  2. They go to a page that has basic explanation about the course
  3. At the end of page, they are invited to join a special email list
  4. Once they are on that list, I send them 2-3 videos in the span of 10 working days
  5. At the end of last video, I invite them to join the course and send them to another page where they can pay.
  6. Interested people pay and join
  7. Rest will be removed from the list.

During the initial stages I will do a split test so only 50% of the visitors to Excel School go through new process. Once I measure conversion rates and feel confident about new approach, I will switch everyone to go through this new process.

Life Goals

  1. Explore options to move to another country: After spending 33 years in India, Jo & I are itching to spend sometime in other countries. We are exploring options to migrate to either USA, Australia or New Zealand. As it is too early, I am unable to set a goal for this, but hopefully by end of 2015 we have clarity on this subject.
  2. Stay fit: I started 2015 with a 2 day bicycle expedition to Eastern Ghats (range of hills near my city) riding for more than 150 KM on a hilly terrain. I plan to cycle at least 2015 km in 2015 🙂
  3. Consume less: Again nothing new. The only major purchase I have on cards is switching my phone. My iPhone4 is almost 4 years old. Time for something modern that doesn’t crash often.

What are your startup goals for 2015?

One of the best things about goals is that they open imagination windows of your mind. You can think of new peaks to ascent and then plan. So what new and exciting things you are planning to do this year. How are you going to make 2014 the most awesome year in for startup? Please share using comments.

Read previous annual reports – 2013, 2012 & 2011

2013 Annual Report and 2014 Goals

For all the readers of Startupdesi and my brothers & sisters in startup community, I wish a very happy new year 2014.

I hope this year will be the most successful year your life yet.

2013 has been the busiest, most awesome year in my life. In this post, I want to share our company’s journey thru 2013 and set goals for 2014.

Why it is important to do this?

No matter how big or small your business is, it is important to take stock of events and set future course of action from time to time. This will let you appreciate things that gone well, understand where you need help and focus on your mission. That is why every year, I do this. (read 2013, 2012 and 2011 annual goals).

I am going to rely on the startup metrics & measures discussed earlier to review 2013 performance and set goals for 2014.

2013 performance review

At the start of 2013, I have defined these goals for my company. Let us see how we fared.

Financial Goals

  • Get $750k revenues: Once again, we had an awesome year, thanks to customers who love us and people who adore our work. We made total revenues of $962,500. The exact figure may vary 5% once we audit our books and close accounts (financial year ends on March 31). Rough break up of revenues:
    • Product Sales: 79%
    • Advertising & affiliate sales: 13%
    • Royalties from book sales: 1%
    • On site training programs: 7%
  • Launch 2-3 new courses: Last year, I launched 3 courses – Power Pivot Classes, Advanced Power Pivot Classes & The VLOOKUP video book. All three were received very well by our audience, with a total of 2,000 new customers between them.
  • Release an iphone app: Failed. I had to put this (again) on back-burner as I was focusing on new courses and writing a book.
  • Collaborate with other industry leaders in product launches & promos: Yes, last year I forged new friendships with Rob Collie, MrExcel Bill Jelen and few others who helped me reach to more audience and expand our brand.
  • Conduct live classes in Dubai, UK or US: Conducted live classes in USA (3 cities & 2 companies), Malaysia (in Kuala Lumpur).

    With my Advanced Excel & Dashboards Masterclass students in Kuala Lumpur
  • Continue to spend less: Last year is also the most expensive year since I started this company. As I traveled to USA & Malaysia, our expenses piled up. That said, we continue to spend less than 20% of our revenues on business related expenses. Even on personal front, we spent less than 5% of our profits as a family.

Marketing Goals

  • To train 3,000 professionals: Almost got it. We have trained 2,500 people thru online courses. Another 250 were trained thru live classes.
  • To reach 75,000 members: Yes, As of 31 December 2013, our email subscriber + RSS reader community size is 79,000+
  • To have a million visitor month: Failed. In fact, thru out 2013, our traffic remained very stagnant. We grew by 16% in overall traffic (visitors, views etc.) This either indicates Chandoo.org has reached its peak or there is competition. As I could not identify other sites gaining a lot of prominence, I am assuming that we have reached a temporary plateau in our journey. Once we break thru this, I am sure greater heights can be reached.
  • To make people awesome thru more channels: In 2013, I tried to reach more people thru our Youtube channel, Facebook page, my new book (Kindle), live classes. So yes.

Operational Goals

  • Improve website navigation: I did improve few aspects of our website navigation in 2013. I have added few more landing pages so that people looking for information can find it all in one place. We have also migrated our forum to a better, secure software platform and our members are loving it.
  • Simplify internal processes: Did that. That said, I am also sad to report that 2 of our employees choose to leave us in 2013. Sameer, our student helper could not work as his other job became too demanding. Sujatha, our customer service ninja had to go as her husband got transferred and they are starting life in a new city. I am hoping to fill these gaps in 2014.

Life Goals

  • Visit 2 new countries: Yes, I have visited USA (for 2nd time) and Malaysia. Both trips were huge fun and I made tons of new friends.
  • Become fit: I walked 720 kilometers & biked more than 300 km in 2013. Also, I switched to standing desk on Jan 1st 2013. Working while standing has been a healthy experience ever since. All in all, I am happy with how healthy and fit I feel now.
  • Write a book: Check. I wrote the vlookup book and published it thru Amazon Kindle during last week of October. It sold more than 1000 copies already. 🙂
  • Consume less: I am ok with our consumption levels this year. We drove less than 2,000 km this year (if you include our driving in USA, it would still be less than 8,000). We also cooked and ate most of our meals. We relied our garden to grow green vegetables, bottle gourd, guavas, chikoo etc. It was immensely satisfying to eat food grown in our garden. Our electricity consumption is ridiculously low too. I am happy 🙂
Nishanth with guavas from our garden
Nishanth with guavas from our garden

So what is in store for 2014?

Financial Goals

  • Get $1 million revenues: Last year certainly surprised me. So I am hoping that this year, we reach a million in revenues. But I see 2 major problems with that. (1) One of our courses (Advanced Power Pivot) will be retired in February. (2) I have not made any plans for live classes. That said, I am hoping the revenue dent due to these will be offset by,
    • Launch of 2 new courses
    • Launch of a new product
    • One more book
    • Organic growth in our community size (which slowly converts to paying customers)
  • Continue to spend less: This year we are planning to purchase a new car (an SUV so that family can travel with comfort and safely), take a long-term vacation (we are hoping to pull the kids out from school and do a round the world tour for 8 months). So naturally our expenses will raise. But I am hoping as a % of what we earn, they will remain low and our frugal ways will not change.

Marketing Goals

  • To reach 100,000 members level
  • To have a million visitor month, lets hope 2014 will be the year that happens
  • To reach 10,000 fans on our social media channels – Facebook, Twitter & Youtube. Currently 2000, 4700 and 7500 people are following us on these channels respectively.
  • To release 2 print books so that more people can enjoy Chandoo.org offline.
  • To release an iPhone app: I am now viewing our iPhone app as a way to reach more audience than revenue making mechanism. Hopefully this shift in thinking will let me focus some time on it and release the app.

Operational Goals

  • Improve website navigation: I am hoping to add a new menu bar and navigation elements to our site. I am also hoping to improve shopping experience on our site so more people can discover what we sell and buy without friction.

Life Goals

  • Visit 2 new countries: This year, we are hoping to visit 2-3 countries in Europe (Italy, France, Germany, Spain & Turkey are on cards). We may end up visiting more as we are planning to spend 6-8 months roaming the world.
  • Drive more & Explore India: India is a beautiful country and our new car should make driving and exploring far off parts of the country easy. I am eagerly waiting for our car.
  • Stay fit: I want to work out often and feel healthier this year. I am hoping to walk more than 1000 kilometers this year.
  • Write another book: I am stoked by the response I got for my first book. I am planning to write one more and release it around summer of this year.
  • Consume less: Despite new car and possible air travel, I am hoping to consume less and stay frugal.

What are your startup goals for 2014?

One of the best things about goals is that they open imagination windows of your mind. You can think of new peaks to ascent and then plan. So what new and exciting things you are planning to do this year. How are you going to make 2014 the most awesome year in for startup? Please share using comments.

Should you worry about your IP (Intellectual Property) and other silly questions

Once you decide to run an online business, you will most likely end up provide some sort of software or product to your customers. Eventually, you will ask the dreaded question,

How do I protect my IP? What if one of my customers steal our work and start re-selling or upload it somewhere for free?!?

As a startup founder, if you are spending a lot of time worrying about this, then I suggest you to slap yourself and get real.

Because, you are not supposed to worry about this as you have even bigger problems to worry. For eg.,

Worrying about IP should be least of your concerns. Right below sudden apocalypse of world, hacking of your bank account and forgetting your spouse’s birthday.

My answer to all IP problems for small startups

So what should you do about IP protection?

Simple. Just don’t over protect your IP. Read on for specific solutions for your situation.

If you have unlimited budget (VC funding etc.) and enjoy the sight of your lawyer buying a new BMW:

Then you should go all out and find the best possible solution to prevent your IP. You may spend a million dollars finding securest hashes for your code, setup tracking beacons in your software copies and create a fool proof (almost) installation setup with registration keys and what not.

While at it, you can also draft 98 pages long EULA and sue anyone and their cat when they violate your copy right.

Cost: prohibitive.

If your software requires installation

Then you are in luck. Create registration key upon successful purchase and tie to user’s email address. Upon installation, prompt for this and be done with it.

Cost: very low, can be completely automated.

If you offer a web service

You too are in luck. Just set up a login mechanism so that only paid users can get in.

Cost: very low.

If you offer ebooks, videos or music files

You have 2 options.

Option 1:

Use a platform like Amazon Kindle, Apple iTunes or Google Play to deliver your files. These platforms take care of content protection for you and ensure that piracy is minimal.

Cost: % share of revenues. Usually 30%.

Option 2:

While platforms can be very useful, they are often restrictive (for example, certain plans in Kindle Direct Publisher program require that you do not offer your ebook anywhere else etc.) and require quite some background work. The other alternative is to deliver the files yourself. You can verify a purchase and automatically delivery files using digital shopping cart applications like e-junkie. These are very good and cheap.

Cost: Fixed cost per month (usually $5-$25).

If you offer membership programs:

Use a good membership software like Wishlist member to protect your content & files. Let users access content as long as their membership is valid.

Cost: One time cost for software ($100-$300) and monthly web hosting costs.

If you offer consulting services:

Then you can almost forget about IP issues. This is because, consulting is personalized by nature. So any work you do for one client is not transferable to another easily. Also, just to be safe, mention your copyright terms to your clients before starting the assignment.

Cost: Nothing.

What to do when someone steals my IP

As a small web-based business that sells software, ebooks, videos & templates, I have faced my fair share of IP theft. I suggest the following approaches.

  • Make your copy right & licensing terms very clear: Tell your customers what their rights are. Whether they are allowed to keep copies of files on multiple computers, what to do in case they loose the files and how to order more copies. Also tell them clearly that it is illegal to share the files with others (although it is ok to share short snippets, extracts).
  • Give them option to buy bulk: Offer bulk discounts so that teams of people can all enjoy your product.
  • Track usage and warn: For membership programs & online training courses, you can easily track usage patterns and see if anyone is using multiple ip addresses to log in to your course. If so, you can warn them or automatically block them for 24 hours etc.
  • Warn the offending site: If a site is found to be hosting your files for free, then you can warn them and complain to Google, web hosting providers using DMCA route. Usually, when you mention that you are the rightful owner, the file hosting sites comply and take down.
  • Ignore: Just ignore the offenders. It is highly unlikely that people downloading pirated files would actually pay you if you take down the pirated versions. They will likely find pirated versions of some other similar software and use it. So just ignore as these are not your target customers.

And most importantly:

TRUST your customers: As a small business owner, you have more to gain by trusting your customers and genuinely helping them. Rather than subjecting them to un-necessary checks and constantly making them feel like intruders, just trust them and let them use your files as they see fit. Majority of human beings are honest, caring & straight forward. So just be normal and simple. (more discussion on why you should trust your customers)

Should you offer free version too?

Ideally no. Unless you have plans to become next Facebook, Twitter, Firefox or Google, giving away free will not work in your favor. Instead create a robust, useful & valuable product and charge reasonable amount for it. If you want, you can offer multiple variants with different prices. But stay away from free.

By giving your valuable work for free, you will only encourage people with out any real need to come and waste their time on your product. Chances are, these people will not become your paying customers.

But there is an exception:

Instead of having a free version of your product, have a separate category of product that is completely free.

For example, at Chandoo.org we sell several products (all paid with no free options). But we also have a free product. Our Excel blog. It is free for anyone to tune in and learn. We post new articles every week. These are juicy, useful, detailed and contain full length workbooks. This works very well. People join the blog (newsletter or RSS) and learn more about our business. And then when they have a pressing need (project management, financial modeling, dashboards etc.), they buy one of our products.

[Related: Read A Smar Bear’s discussion on so called freemium business models]

What should I do if a customer says she lost her files?

Simple. Offer her a link where she can re-download your software / ebook / videos. Do not subject them to additional scrutiny. If they are part of a membership program, give them good discount to re-enroll or offer them few weeks of free extension.

Again, the basic rule is – trust your customers.

So that all… Go ahead and unchain your mind from un-necessary IP issues. Instead focus on your customers and how you can serve them better. You will be rewarded better than you can imagine.

And in comments, tell me how you handle your IP, what measures are you taking.

My Startup story & lessons learned (2 video interviews for you)

I am sorry I haven’t posted here in a while. But here is a quick update.

During last few months, I have been interviewed by 2 excellent websites that inspire budding entrepreneurs like us. These are video interviews where I share my story, things I have learned and few ideas for new startups. Watch them below.

1. Running a successful business & living life on my own terms by RadicalTribe

In this interview, I share the story of Chandoo.org, its journey from 2009 to now and how we grew, what our plans are and what I learned (and what mistakes I make).

Many thanks to Faheem for featuring me.

2. On startups, frugal living & online ventures – by Real Leaders.tv

In this interview, I share the story of my upbringing (which taught me frugality, simple living), inspiration behind my work & where I struggle (keeping myself productive).

Many thanks to Dhanya & team for featuring me.

What are your Startup Goals in 2013?

Let me start by saying a very happy new year to you.

I know I have been ignoring Startupdesi for a while now, but it does not mean I am ignoring my company. Quite the opposite instead, as I was busy for most of 2012 growing Chandoo.org and taking good care of it. May be this year, I can spend some more time and at least write 30 articles here. 🙂

Why you should set goals for your startup?

As a business owner and manager, I am strictly against micr0-management and excessive tracking. I think you should keep your start-up flexible and nimble to survive. That said, a start-up with no goal is like a horse without blinders. It might win a race one day, but it will be distracted for sure.

Refer to startup goals & metrics for more.

Year in review – 2012 goals & performance

Lets see what our goals for 2012 are and how we did.

  • Get $500k revenues: Once again we had a bumper year with lots of customer support. We have earned close to $630k in revenues. I will know the exact figure after we close the year & audit our books (which is in April). A rough break-up of revenues is,
    • Product sales – 69%
    • Advertising & affiliate sales – 22%
    • Training programs – 7%
    • Consulting – 2%
  • Continue to spend less: There were no drastic changes in our expense patterns this year. We ended up hiring 2 more employees, migrated our server to KnownHost etc. but our focus on low expenses was never disturbed. Our expense ratio continues to be less than 20%. The only exception to this is when I went to Australia to conduct live training classes:
    • We ended up spending quite a bit on hotels, venues & flights. The expense ration on that trip was close to 50%.
  • To train 3,000 professionals:  As one of my product launches was killed midway, we could not reach this target. We trained close to 2,500 professionals this year.
  • To get 5,000 customers: Thanks to few new product upgrades and support from our partners, we got more than 5,400 new customers this year.
  • To reach 50,000 members level:We started 2012 with 35,000 members. And we closed it with 55,000+. Again, organic growth, word-of-mouth and free sign-up gift helped boost these numbers.
  • To have a million visitor month: Failed to reach this goal. Although our traffic grew by 90% YoY, we are yet to experience a million visitor month. The highest we got is 880k visitors per month in 2012.
  • Simplify website for new visitors: In 2012, we added many more landing pages and created a separate welcome section on our website to help new visitors understand what we do and how we can help them. This has paid off beautifully.
  • Register a Pvt. Limited Firm: Failed. I have decided to run our company as a proprietorship for one more year.
  • Visit 2 new countries: In 2012, I visited Australia & Thailand. Both experiences were really beautiful and fulfilling.
  • Read more: In 2012, I read more than a dozen books. I also spent a lot of time reading from iPad and  on my computer. New skills I picked up are Excel PowerPivot, Objective C programming (basics), VPS hosting & maintenance, advanced VBA, value investing principles.
  • Play more: During start of 2012, I learned how to play squash and thoroughly enjoyed it. But as year progressed, I developed severe knee pains and could not work out or play that often.
  • Give more: We (our family) continued to share a portion of our wealth to those who need.  We contributed to 2 schools & few other causes.
  • Spend less: As our wealth grows, it is always tempting to spend and splurge it on things we do not need. Although we had lavish time in Thailand during beginning of year, we still managed to spend less than 10% of what we earn last year.

Our goals for 2013

Financial Goals

  • Get $750k revenues: As we inch towards a million dollar company, we need lots of imagination, clarity and kickass products to grow. I am hoping to increase our revenues by 20% this year. These things should help in that,
    • Launch 2-3 new courses
    • Release an iphone app
    • Encourage more members to become customers
    • Collaborate with other industry leaders in product launches & promos
    • Conduct live classes in Dubai, UK or US
  • Continue to spend less: Nothing new to say. Just stick to what we are already doing better.

Marketing Goals

  • To train 3,000 professionals and make them awesome in Excel & their work.
  • To reach 75,000 members level
  • To have a million visitor month
  • To make people awesome thru more channels – Youtube videos, iphone app, a print book, live classes and more

Operational Goals

  • Improve website navigation: This continues to be No.1 request I hear from our visitors. So this year, I am focusing on making our site more navigable and friendly to new & repeat visitors.
  • Simplify internal processes: As we add more employees, it is important that I empower them with right tools & processes so that they feel awesome too. I will creating internal portal (only for our employees) where they can finish their day to day work easily.

Life Goals

  • Visit 2 new countries: Although I have not made any plans, this year I am hoping to visit Dubai , UK (or US).
  • Become fit: Last year due to knee problems I could not work out or play as much as I wanted. This year, I am hoping to stay fit and work out very often.
  • Write a book: I have been postponing this for a few years. But I am glad I already started my first book and finished 2 chapters. I am hoping to get it out very soon.
  • Consume less: We have not planned for any major purchases this year. I am hopeful that we stay frugal, calm & content this year too.

What are your startup goals this year?

So what is going to keep you busy and focused this year? Go ahead and tell me how you are planning to grow your startup & improve your life this year.

And once again, I wish you, your family & your company a fantastic 2013.

 

This article expires in an hour – read now!

or, the power of expiring offers in making more sales

Here is a simple secret to make more sales. Just include an expiring offer on your product. Something like 10% off ends on 30th of October. And see what happens.

I have been testing expiring offers ever since I launched my first product in 2009. And every single time when we add an expiry clause, we see a spike in sales.

Read that again – Every Single Time.

What is an expiring offer & Why it works?

An expiring offer is just what it means. A sales offer that has an expiry clause attached to it. Examples:

  • A product that will not be sold after certain date
  • A price that will go up after certain date
  • A discount code that expires on a certain date
  • A bonus element that is valid until some date

Why expiring offers work?

We are prone to avoid losses than make gains. Risk aversion remains one of the key motivators for a majority of humans ie customers. So when presented with an expiring offer, many people think like this:

Hmm, I am going to loose this offer if I do not go for it.

The same customer when presented with a normal offer (buy this instead of buy this before x) thinks:

Ok, by purchasing this I am going to get a,b,c… But I will part with $$$. Let me think and decide.

I am not saying the rational side of a customer shuts down when presented with expiring offer. Instead, when faced with an impending deadline (offer expiry), the customer will make faster decisions.

Examples of Expiring offers

Expiring offers are one of the most prominent & time-tested marketing ploys. They are everywhere. You just have to walk in to a near by mall or online store to see them.

These are popular examples:

  • Amazon.com’s shipping suggestion: When you visit a product page, Amazon indicates the a shipping date like this: “Order now to have it shipped by October 29”. Many online shopping sites do this too.
    Amazon.com - Expiring offer example - shipping date
  • SALE posters you see in malls, stores: Almost any store has a sale going on these days. Sometimes, you see “Going out of business”, “SALE” posters round the year. And yet they work.

My Own experience with Expiring Offers – case study

As mentioned earlier, I try expiring offers every now and then. Let me tell you a recent experience.

In September (2012), Daniel Ferry (one of the fellow businessmen in my industry) announced launch of his training program. Daniel is also my good friend and partner. And his program is going to expire on October 15 (that means anyone interested must enroll before that).

I called up Daniel to ask how I can support him in his launch. During the discussion, I got a crazy idea: Why not partner with him and offer one of my courses along with his course as a bundle.

We discussed it and worked out the specifics. And in no time Excel School + Excel Hero Academy Bundle was born.

I offered 3 options for our customers:

  1. My course alone
  2. Daniel’s Course alone
  3. Both courses combined (Bundle)

I promoted it to our customers and readers. Since it is an expiring offer,  I expected that on the last 2 days we will have a spike in sign-ups. And we got lots of people going for the bundle option as expected.

But here is the kicker.

On last 2 days, I got lots and lots of customers for my course too. That is right. Even though my course has no expiry, people still bought it.

How do you explain that?

Very simple. Just like you walk in to a store that advertises SALE on few items and buy something else that is not on sale, my customers went in to buying mode due to expiring offer and then evaluated the options (3 courses) and signed up for one.

But is this right thing to do?

As an entrepreneur we all face these challenges often:

  • How do we push customers make the purchase decision without being pushy?
  • How do we remain ethical, honest and valuable to our customers?

The answers need not be contradictory. You can come up with something that is ethical, valuable & win-win for you & your customers.

Here are the guidelines we follow:

  • Expire offers very few times an year. I usually do this 3-4 times every year. Often combining with product launches.
  • Never lie or provide incorrect information about our offers.
  • Give time to our customers so that they can make informed choices. For example, we advertised the bundle offer (above) 3 weeks prior to close date and reminded our prospects few times in-between.
  • Allow customers to call / email / chat with us to know more and decide which works best for them. For our bundle offer, I had many customers call me and ask if it is right for them. And in several cases, I have advised them not to go for it because it might be overkill for what they need.
  • At all times, observe our values and keep customer priorities in sight.

Remember – Expiry looses value too

It is like the proverbial golden goose. Just because we can temporarily spike sales with an expiring offer, if you over do it, your offer looses its power.

So use it wisely. Mix it with other selling techniques – reminding your customers, product launches & more to get best results.

Do you use expiring offers?

Have you tried an expiring offer? If not, go ahead and experiment with it. Tell me how it went.

Please share your experiences with us in comments.

PS: Comments on this post will be closed tonight. So hurry up 🙂

If you are not frugal, don’t bother starting a company [founder qualities]

I like to read (auto) biographies of successful people. I think it is an excellent way to learn & be inspired. And I notice something common in many business persons who made it big  – Sam Walton, Warren Buffet and many more.

They lead a frugal, simple & happy life.

If you are the kind of person who takes inspiration from books, I suggest reading Made in America by Sam Walton. Sam Walton founded Wal-Mart, the largest retail organization in world and went on to became richest in America. But do you know how they lived? A simple, happy and meaningful life with out luxuries or lavish expenditures. I bought the book in 2nd hand market few weeks ago and have been reading it few chapters every day since. Lovely read.

In fact, one of my favorite books Millionaire next door is full of such examples of small business owners, successful professionals who live a simple & happy life.

Why frugality is important for successful business?

The basic equation of business is,

Profit = Revenues – Expenses.

It does not take a genius to figure out that if your business makes $100 in sales, then you got to spend less than that to turn a profit.

How do you spend less than what you earn? By being frugal of course. It is a surprise that most startups focus obsessively on acquiring funding (ie increasing expenses thru more interest, dividends etc.) than finding ways to cut expenses.

Not only being frugal helps you turn profitable quickly, but once you run a profitable business, you can easily get funding or investors.

By being frugal, you will be able to pass on the benefit to your customers, thus making your products valuable.

And by being frugal, you consume less, thus making earth a happy place.

How to be frugal

Observe frugality in all aspects

The first principle of frugality is you cannot be lavish in your personal life and frugal in business. It does not work like that. You have to believe it, observe it in all aspects of your life.

Hire people with frugal mindset

It is not enough if the founders practice thrift. If you hire people who are used to living lavish life, then you are back to square one. Make sure you hire people who are simple, who consume less and live happy life. It might take a while to know all these aspects when you are hiring someone, but you should invest time to know your team.

Keep things simple

You will end up spending a lot of money if you have a complex process behind everything in your business. By keeping things simple, you can cut expenses drastically and make more profits. Few examples of keeping things simple:

  • Give power to your employees and trust them. Let them make decisions to keep customers happy.
  • Trust your customers. When they ask for a refund or have a service request, just do it rather than subjecting them to extra verification steps.
  • Say sorry when you mess up. And learn from your mistakes. It is much simpler than finding someone to blame or defending your position.

Think of money as means, not goal

When you consider money as a tool to achieve something else, you will respect it more.Frugality does not mean amassing wealth or being cheap. It means being extremely wise with money and using it with utmost care. The moment someone thinks of money as end result, they are lost. For a smart business person, money means:

  • Ability to create products that their customers love
  • Ability to reward their employees & partners for all hard work
  • Ability to buy time (thru outsourcing, hiring etc.) for self
  • Ability to contribute to society (a la Bill Gates, Buffet)
  • Ability to say no to poor decisions & in-correct practices

De-link Happiness from Money

Most people when asked Why they spend so much, they simply say “to be happy of course”. Contrary to what we think, our happiness is not linked to how much we spend or what we buy.

While we can all agree that a starving person need to buy a meal to be happy, we can safely say that marginal returns of additional spending always diminish.

So how to de-link happiness from money?

Simple, develop a strong understanding of yourself and what makes you laugh, cry, content & sleep tight. Most often these things are not linked to how much money we spend.

For example, my happiness stems from,

  • Laughing many times everyday
  • Spending time (a lot of it) with my wife, kids
  • Talking & sharing opinions with my friends & relatives
  • Learning new things
  • Sharing new ideas & techniques with world (thru my blog, classes etc.)
  • Providing excellent value for money to my customers and hearing from them how they became awesome using what we sell.
  • Performing random acts of kindness
  • Doing occasional DIY fixing or creating something
  • Working out
  • Reading books, widening my mental vocabulary
  • Challenging my self with a difficult problem and solving it convincingly
  • Surprising near and dear ones
  • Taking a nap
  • Having a freshly brewed coffee or tea with my wife
  • Cooking (a variety of pizzas and pastas)
  • Eating ice cream
  • Visiting new places & exploring

As you can see a majority of what gives me happiness has no linkage to money

Are you & your company frugal?

Go ahead and share with me how you run your family & business? Are you able to turn profit every month? If not, time for you to rejig the expenses and discard the items that are pulling you down.

I wish you a frugal, simple & happy life.

Book Recommendation – $100 Startup by Chris Guillebeau

I am not sure how to pronounce Chris Guillebeau’s name. So when I make a reference to his work, I always say Chris 😛

But that is not going to stop me from recommending his recent book – $100 start-up.

There are 3 reasons why I love his book:

  1. It talks about creating a small, meaningful startup in a step-by-step fashion
  2. It features my story too!
  3. I like to have 3 reasons 😉

On a more serious note,

What is $100 Startup book?

In $100 startup, Chris shares the stories of more than 50 successful entrepreneurs who started with very low capital (often less than $100) and have been able to create a meaningful company. But he laces all these stories with lots of practical tips, ideas & puts them in a framework so that you can learn how to start your own business with low capital & grow it.

The book exposes to ideas that both Chris & several others featured in it practice to win markets & customers. Just after reading the first few pages, I got some excellent ideas for new products & ways to present them to my customers. It also inspired me to focus on right things.

Who should get this?

If you run a start-up or have plans to create your own destiny, this book is for you.

Also, if you are running on the corporate tread-mill & wondering if there is any way out, this book can inspire you.

Click here to purchase the book from Amazon.

Disclaimer

A few disclaimers.

  1. Chris interviewed me for his book & featured my story too (on page 32).
  2. Chris sent me a copy of the book so that I can share my comments with him.
  3. Amazon pays me a few cents if you purchase the book from the link above.

But,

I would have bought, read & recommended this book, even if none of the above 3 happened. Because I like Chris’ work, have been reading his blog for last 4 years & have his other book too – the art of non-conformity. So go ahead and enjoy the $100 start-up, because I want you to be inspired & educated.

How to survive the first 2 years of startup?

How to survive the initial years of a startup?

It has been 2 years since I quit my job to embark on exciting journey of my own venture. It has been one heck of a journey. Look at these numbers to get an idea on the amount of change in this two years,

March 2010March 2012
Number of customers100390
Number of employees (excluding me)04
Monthly revenue
(excluding advertising, INR payments, consulting fees)
$2,735$29,768
Customers from22 countries35 countries
Average sale value$27.35$76.32
Best selling product
(by quantity)
PM Templates (83 units)PM Templates (228 units)
Best selling product
(by $s)
PM Templates ($2565)Excel School ($12,132)
Most frequent first name of customerMark (4 times)Michael (8 times)
Total visitors to our site371k1,353k
Number of customers buying multiple quantities12 in all months of 201021 in all months of 2011
Refunds by year$42 in 2010$858 in 2011
Total RSS / Newsletter subscribers~ 9,000~ 40,000
Total comments467717
Total spam3,58930,164

So how did we survive the initial years? In this post, I will summarize the ideas that worked for us.

Make Mistakes

Just like the first 2 years of a kid (often first 31 years of a kid) the key to survival is in making mistakes. I do not mean dumb, repetitive mistakes. But the kind of mistakes that you make when you explore, when you learn, when you try, when you assume. Make more of those. These mistakes helped me learn new things about my business,

  • Mistake of doing everything myself helped me realize that I should get help and partner with more to be successful & happy.
  • Mistake of saying yes for everything made me realize the value of NO and simplicity.
  • Mistake of focusing on irrelevant things helped me see the importance of our goal – to make our users awesome
  • Mistake of doing too many things helped me realize the importance of focus.

Ask

There is a saying in India, “if you do not ask, even your Mother will not feed you.” Many startups focus on asking wrong people & ask for wrong things in their infancy. This leads to a lot of stress, discouragement & financial hardship in the early years.

I am glad I have,

  • Asked my readers to become customers & pay me for my products
  • Asked for help thru oDesk & similar channels & hired people
  • Asked leaders in my niche to collaborate & recommend my products
  • Asked my readers & customers for regular feedback
  • Asked my website visitors to join my newsletter, every single time they visit us.
  • Asked the most prolific commenters on my site to join us as guest authors & help us

Do

Almost all of us have ideas as grand as next iPad, Avatar movie or ikea store. But less than 1% of us have the guts to do anything about it. Startup founders are no exception. During the initial stages of a startup, the founders have grand vision & unlimited ambition. Often, this leads to planning paralysis. Founders spend months planning, designing & mocking up things that it delays the actual purpose of the company – to sell something & make money.

Although it has been only 2 years since I started my company, I have been selling products for more than 3 years now. But even after quitting my job, I did not loose focus on the core purpose of our company – to make our users awesome & make money.

Related: It is not rocket surgery, make your first $ already

Measure

No matter how much you ask, how many mistakes you make, how much you do, it all can go for waste if you do not measure. During the first few months of your startup,

We need not be obsessive about this measurement nor too detailed. Most of the measurement is automatic thanks to tools like Google analytics, Bank statements, time trackers & email analysis applications. So use them and make a rudimentary report every month. If nothing, just write down the metrics on a white board and hang it near your workspace. Update it regularly and you will have a clear sense of where you are heading and where you are failing.

Be Patient

A handful of patience is worth more than a bushel of brains

– Dutch proverb

We, startup founders tend to be impatient & anxious. We want the change, fast paced action and movement. May be that is why we did not fit in to the corporate environment and choose our own path. But this very nature can kill our startup in early years. It is very important to give our startup the time it takes to settle down & grow. Never expect immediate results or quick fixes in early years. Instead focus on laying strong foundation, good values, good processes & building teams that work well.

  • Do not expect your new store design, web site layout to be effective overnight.
  • Do not expect your product to make a million dollars in first week.
  • Do not pressurize your employees to perform from day 1.

All this does not mean, we should set our goals very low. Instead, we need to be realistic and give time for our startup to grow. Just like you do not expect your kid to walk on first day after birth, do not expect your startup to fly from first year.

Related: Follow your passion, but manage poop too.

How did your startup survive the initial years?

Is your startup more than a few years old? How did you survive the infant years? Please share your success story using comments. I am eager to learn from your experience & ideas.

Please comment.

Wishing our startups many more years of success & growth.

Why you should not build an Instagram

By now, anyone and their grand-mother in Startup circles has heard it,

Facebook acquires Instagram for $1 Billion (on TechCrunch)

Instawhat?!?

Instagram is an iPhone (and Andriod) application and is primarily used to apply cool, retro style filters to your photos and share it with your followers everywhere. Here is a recent pic my daughter after instagramming it.

Nakshatra - instagram

Isn’t $1 Bn cool, why should we not build an Instagram?

There have been some very good articles on why instagram is worth it. But to me the purchase seemed like a rare exception than a rule for start-up founders. It is almost as if Facebook wanted to find someway to spend $1 Bn of cash & equity.

Let me explain 2 reasons why I think so.

  1. Instagram does not make any money. Nor we know of any plans to do so.
  2. No 2nd reason.

Further inspection – why you should not build an Instagram?

No matter what business you do, the basic rules do not change.

  • Cash is king.
  • If you are earning $100, you should spend less than that.
  • A paying customer is better than 100 free users.
  • Chase value, not valuation

Let us examine each of these.

1. Cash is king

Well, nobody would dispute this. If a business is like a person, cash is like blood. If blood does not circulate, the person is dead. Scary, but true. I am not sure about Instagram finances, but as far as I know they relied on venture capital funding (with latest valuation at $500 Mn) to get cash flowing in to their business.

As mentioned earlier, they had no visible plans to make revenues. If that sounds normal (because many services like Twitter, Groupon etc. bleed), it is because we are seeing one too many such services. But imagine running a physical shop where you sell socks. And all day long customers would walk in and pick up their favorite pair of socks and simply walk away. No paying, no chit-chat or no worries. Would you run such a business? If not, why build a service where your plan is to offer everything for free?

2. If you earn $100, you should spend less than that

In case of Instagram they had no revenues. But in your case, are you building a business where revenues < expenses? It is ok to have expenses > revenues for a while, especially when you are starting out. This is normal in businesses with lot of capital expenditure like a factory, hotel, shop. In such cases, even before you make a single sale, you must construct the factory, set up the restaurant, purchase inventory. But what is your excuse to spend more for a web based business? The start-up costs for website are very low. So any half-decent web business can recoup the costs and move in to green zone with in an year.

3. A paying customer is better than 100 free users

I think Hotmail started it all. They gave away a free web based email account to all. The model worked well for them and Microsoft acquired the company for lots of $s ($400 Mn I think). Very soon, everybody was building a hotmail. I am sure further examples of YouTube (free service, sold for more than a Billion), Twitter and now Instagram add fuel to this fire.

Remember, all these services had companies (or VCs) with really deep pockets and extra-ordinary vision behind them. They have ways to monetize the attention of millions of users.

But, you & I – small business folks, have no chance in hell to make money by giving away everything for free. This is because,

  • To make free model viable, you need to have billions of page views, lots of user attention (then probably someone would advertise on your site and give you $s)
    • Example – Facebook, Twitter
  • To make free model viable, you need to collect user data, profiles & offer it to people who pay for it. This works only if you billions of people using you every month
    • Example – Gmail, Google
  • To make free model viable, you need to ask your users for money
    • Example – Wikipedia collects donations from its users every year to fund the company

I am sure you are not ready or geared for any of these options. So why give away everything for free? Go ahead and serve a dozen paying customers than chasing a million free users.

4. Chase value, not valuation

Value: Something desirable and of worth, created through exchange or effort.

By chasing value and by creating it, you become worthy.

By chasing valuation, you are trying to find someone to believe that you are worth certain $s.

Take the case of Instagram again. As fellow entrepreneur & inspiration Alok Kejriwal points out in this article,

$1 Bn is roughly 5,200 crores of rupees. If you have $1Bn, you could buy Oberoi hotel group or Taj hotels.

If you are in USA, you could pick up roughly 10% stake in Hasbro, Mattel, XEROX or Garmin. Assuming you pick up 10% stake in Garmin for $1 Bn, which made $2.7 Bn revenues & $ 590Mn in profits last year, you would get $59 as your share of profit. (source: Google Finance)

Compare this with purchasing a company for $1bn that has no revenues and increasing costs (hosting, salaries, development etc.)

So when you are building a business, chase value. Create value instead of chasing valuation. Once you accumulate value (cash, assets, good people) someone will always give you fair valuation.

Are you building an Instagram?

So go ahead and tell me. Are you building an instagram like company or are you providing something of value & finding customers for it.

Please share using comments.

Note: I have no dis-respect for Instagram or their founders. I think they are wonderful individuals who put in a lot of hardwork & got fortunate. I wish them more success in future.