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.

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.

 

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.

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.

Are you being Penny Wise & Pound Foolish with your startup?

Many startup owners fall in to this trap. Recently I too have been penny wise & pound foolish and lost more than $1000. Today I want to share the story with you.

Being Penny wise and Pound foolish - Startups

[source: XKCD]

Background:

Recently, our main business website (chandoo.org) had to be migrated to a new web server, to cope-up with all the traffic we were getting. Being a geek turned in to startup owner, I thought, “whats the big deal, I can learn how to migrate the site and then do it myself”.

So I set out to migrate the site myself.

Big mistake!

What happened next?

Since I was migrating the site from a shared hosting plan to a VPS, there was quite a bit of work to do. Thankfully, I chose Knownhost, one of the best in the industry when it comes to VPS and dedicated server hosting.

I did all the steps required for migrating the site. It took me more than 4 hours to learn all the nitty-gritties of site migration and then another 4 hours to actually move it.

Once everything is done, I pointed my site to the new address. And Bam, our site promptly went down.

Since down-time is to be expected during site moves, I waited for 12 hours hoping to see the site alive again.

But it never came back up. Then I contacted the KnownHost support team. They were very helpful, but since it is pretty common for websites to go offline for about 24-72 hours during site-moves, they suggested that I wait.

I waited 12 more hours.

Since the move happened during weekdays, we were loosing a lot of sales, ad-sense revenue, affiliate commissions during this down-time.

But even after 36 hours, my site was still down. It was down from many locations around the world. This suggested that something may have gone wrong. Because, even though site migrations (DNS changes) can take up to 24-72 hours to propagate around the world, usually, the site loads in some places but not other. But in my case, it was down everywhere. (Note: I used the Internet Supervision to check this.)

The strange thing is I could access our site by going to its IP address, but if I use the name – chandoo.org, it would not load. It suggested that there is something wrong with the way I set up my site’s DNS.

After some more panicking and learning, I signed up for an alternative DNS provider and used their servers to point my site to the IP address. And with in hours my site started loading.

Then, I contacted the folks at KnownHost and explained the problem to them. They were kind enough to fix it for me by modifying the DNS settings. Finally, now, our site loads fine from everywhere.

The Damage

Direct Losses:

Total downtime- 40hours

Loss of Sales: Based on the run-rate of sales on weekdays in Jan, I estimate the loss at $1000.

(Note: not all of this is lost as some people who wanted to purchase returned to it a day later and bought)

Loss of Ad-sense Revenues: At least $300

Loss of other Revenues: $50

Total revenue lost (direct): $1350

In-direct Losses:

Not all the loss is direct. Due to the down-time, we may have turned down few dozens of prospects (new visitors who would join our news-letter or get hooked to our site).

Also, I spent 12 hours or so learning and doing the migration myself.

If I use my hourly consulting rate ($100), that is $1200 loss of time.

But, I know that my time is worth so much more. If go with Jason’s logic in Valuing your time, those 12 hours are worth more than $10,000.

So there you go.

The Gains

Not all was lost in this exercise. To begin with, I have learned some valuable tricks on how to migrate the site.

But the most important thing is, I have saved about $300 by not hiring someone to do this migration for me. Thus I became penny wise & pound foolish.

Reasoning behind $300 savings:

I can see that many web administrators & wordpress experts charge about $15 per hour on Odesk. So assuming, I hire someone and they spend 20 hours to migrate my site, I would have paid them $300.

Lesson Learned.

Are you being penny wise & pound foolish with your startup?

Many times, running a startup involves making decisions without thinking about the big-picture. Often we think, “why hire someone to do it, lets just do it ourselves.” This argument holds good if you have nothing else to do and there is no down-side to it. But, in many cases, there will be an impact on your revenues, reputation, profits or personal mood.

Do you have any examples of being penny wise and pound foolish with your startup? Please share them using comments.

Related: My thoughts on hiring thru ODesk

What are your Startup Goals in 2012?

First, I wish a very happy & prosperous New Year to all our readers.

Time to understand how we fared in last year (2011) and set our annual goals for 2012.

Goals for 2011

Lets take a look my startup goals for 2011 & see how I did.

  • Generate $200,000 in revenues: Thanks to so many loving customers, we did much better. We recorded ~ $420,000 in sales last year.
  • Keep expenses ridiculously low: This year we had a few major expenses for new trainers, affiliate commissions, paypal charges etc. That said, given the healthy revenues, our expenses continue to be less than 20%.
  • To train 1000 students: We did so much better here, thanks to repeat students, word of mouth and our luck. We have trained more than 2,500 students this year.
  • To get 2,500 customers: Again, we were blessed in 2011. We had more than 4,200 customers in last year.
  • To have 25,000 members: A lot of our regular readers spread good news about our website thru out last year. Even though we did not have any press coverage or major website features in last year, we have added 17,000 new members last year, ending with 35,000 member count (member = RSS readers or newsletter subscriber).
  • To have a million page view month: We reached this milestone in September 2011. Since then we are getting more than a million hits every month.
  • To simplify product purchase process: This year I have added 2 employees, an Indian payment gateway and automated many processes so that our customers can get what they want with least friction. It has helped in lowering refund requests, increasing customer satisfaction and freed my time for other important things.
  • To register a private limited firm: This is one goal we did not meet. We are still running our business as sole proprietorship, but it should change in next year.

Our goals for 2012

This year too, I am defining our goals around the startup metrics discussed earlier.

Financial Goals

  • Get $500,000 in revenues: This is a steep task. Although we were very lucky last year, adding extra $100k to our top line requires a lot of imagination, marketing & luck. I will share how I am planning for this with you all as we go.
  • Continue to spend less: As of now, I have no plans to hire more people or spend on advertising etc. So our expenses should continue to be low & reasonable.

Marketing Goals

  • To train 3,000 students: That means 250 new students every month. Again a very difficult task, but not impossible.
  • To get 5,000 customers: I am relying on organic website growth, new partnerships & SEO to help me get to this mark.
  • To get 50,000 members: I am planning to start a weekly newsletter, add a new sign-up gift to encourage more people to join us.
  • To have a million visitor month: We closed the year with 500,000 visitors per month. This year, I am hoping to have at least one month with million visitors.

Operational Goals

  • Simplify website for new visitors: 70% of our visitors continue to be first time visitors. I want to simplify top 5 landing pages so that they encourage new readers to become regulars.
  • Register a Pvt. Limited Firm: This year, finally we should go for this.

Life Goals

This year, I am adding a new section with life goals. While it is important to run a successful company, it is more important to do it with balance. So here goes our life goals:

  • Visit 2 new countries: Last year we visited Maldives & Singapore. This year, we are going to Thailand & one other new country.
  • Read more: Last year, I read 2 dozen or so books. Many of them gave me fresh perspectives, heightened my imagination and made me happy. This year I am hoping to continue the trend.
  • Play more: Last year we started playing badminton. We want to play more this year, may be learn new sports too. Plus, we got an xbox with kinect for the Christmas. So…,
  • Give more: Now that we are settled down with a own house, we want to give more to some of the causes we identify with. We already donate to a school. We want to share more of our fortune with those in need.
  • Spend less: Due to the new house, last year we spent a lot on one time things (new furniture, tv, stove, xbox etc.) This year, we want to consume less.

What are your goals?

One of my all time favorite quotes is, “Whatever the mind of a man can conceive, it can achieve” by Napoleon Hill, in Think and Grow Rich.

I think setting audacious, big & fun goals makes life more fulfilling. So what about you? What awesome things you are planning to achieve this year? Please share using comments.

$100,000 Revenues in a Month – Wow!!!

I know this might sound like bragging, but I want to share a good news with you. My little startup – chandoo.org, has reached another milestone in May 2011. We have recorded sales of $100,718 in May 2011 alone!

In this post, I want to share the revenue break-up and how I reached this milestone.

First some graphs:

Trend of Revenue by Product – for last 13 months:

My revenue comes from 3 components:

  1. Product Sales (60-80%)
  2. Advertising on Chandoo.org (10-25%)
  3. Affiliate Commissions (5-10%)

In May 2010, I have launched a new product – VBA Classes. We had 650+ people signing up for this, a very large number compared to what we estimated. And that is the main reason for the huge bump.

In the above graph, I did not show the VBA Class sales.

Trend of Total Revenue – for last 13 months:

There are two important things here.

1) Obviously, the huge bump in May 2011 which is explained above.
2) A change in total revenue pattern from Jan 2011. If you observe, prior to Jan 2011, My revenues are around $10k per month. But I relaunched Excel School and kept it open ever since. Now, it contributes heavily to both my top line and bottom line every month.

Number of Customers & Repeat Customers in last 13 months:

The best part about this is that, each month we are adding more customers. Also, many customers are repeating. They are coming back to Chandoo.org to purchase something else too. Very good indication that my marketing & customer service is good.

So how did the $100K month happen?

Since I started my Excel School Online Training program in Jan 2010, many customers have written to me and asked me to start a training program on VBA. But due to various reasons, I never started it. That is until May 2011. During last weeks of April, I announced that we will be starting an online VBA Training program, named VBA Classes in May.

We got some very good response for that. So I went ahead and opened the enrollments for the program on May 9th. The enrollment was open until May 21st and then we closed the doors for new students (we will be re-opening this program in September this year).

I estimated that we would get around 150 students for this. Since the course is priced at $97 per student, I assumed, we would make as much as $15k from this.

But, I was wrong!!! We made more than $80k from this course enrollments.

Why so many people joined?

  • Many of my old students have been waiting for this program. So they lapped it up immediately. A total of 112 out of 650 are previous students of Chandoo.org (either Excel School or Financial Modeling Classes).
  • We combined courses to create lucrative offers: After announcing about the VBA classes, few people emailed me and asked, “Why dont you combine Excel School with VBA Classes?”. So I did just that. I gave my customers 4 choices –
    • VBA Classes ONLINE Access – $67
    • VBA Classes DOWNLOAD Access – $97
    • Excel School + VBA Classes – $167
    • Excel School + Dashboards + VBA Classes – $247
      And our customers love it. Many of them went for either $247 or $97 option.
  • We made a very good sales video: Since this is the first time we are doing a VBA Classes, many of our customers had questions and doubts. So I made a short sales video (15 min) and put it on YouTube and linked it from our sales page. Many customers told me they liked the video and understand the potential this course has. Watch the sales video here.
  • Limited Signup Period: Because we kept the registraion window open from 9th to 21st May, we created a sense of urgency. This helped in closing more sales.
  • Many other reasons: I think the success of this (and other products) is not because any one action we do, instead this is because we follow certain values and provide awesome value to our customers.

[Related: How to launch products online?]

$100K Revenue is great, but what about expenses?

Obviously, to reach such a level in revenues, I had to spend good bit of money on various things. Other than the regular monthly expenses, we spent,

  1. $7500 on affiliate commissions
  2. $8000 on partner fees
  3. $500 on software licenses and misc.

So, about 16% of the money we earned goes for expenses that are not usual.

What next?

Obviously my revenues will not be anywhere near $100k in June as VBA Classes is no longer on sale. But I am sure our products will grow slowly and we will add customers each month.

I have plans for few other products in coming months. So they should add to our monthly revenues. We are also planning to discontinue atleast 1 product.

Also, I want to make sure that this spike in revenues does not side-track me or tempt me to spend money foolishly. We still want to be cheap while making our customers awesome. We want to stick to our core values and continue the hard work.

Key takeaways for you:

Not that I became wiser or profound after this month, but I want to share a few lessons I learned with you all.

  1. Never shy to charge more: When I thought of giving a fourth option for $247 that includes Excel School, Dashboard & VBA training, I was skeptical whether anyone would join. But I was proved wrong almost immediately as many people opted for this. So the lesson is simple. As long as you are delivering excellent value, get rid of the self-doubt and charge appropriately.
  2. Get Help: I cannot imagine launching the VBA Classes without the help of Ravindra, Vijay & Hui.
    Ravindra – My VA helps in student enrollment, invoicing, sending receipts, email customer service.
    Vijay and Hui – are our VBA faculty and together we will be teaching the classes.
    In order to scale your business, getting right kind of help is a must.
  3. Partner with others in your niche: Another big reason behind the success of this month is my affiliate partners. They helped spread the message and got me lots of new students.

That is all for now. I hope you found this helpful. I will continue to share my story with you as my little company progresses.

PS: You can sign-up for our email newsletter and get updates when we have new articles on Startup Desi. Click here.

More Resources for Startups:

2 Metrics to measure start-up performance – Million Days, Goal Days

There is no point setting goals if you are not measuring them. If you read start-up literature or blogs, it becomes clear that successful companies measure meticulously and use the metrics in everything. [related: which metrics to use for measuring start-up performance]

But most of the metrics tend to be boring. So, today, I want to introduce 2 new metrics that can pep-up your measurement process. Of course, you should continue to measure your business by traditional metrics as well.

Metric #1: Million $ Days:

Many start-ups want to reach million dollars in an year revenue level. It is a highly sought after goal. But million dollars sounds like a lot of money for a small business.

But when you break it down, a million dollar in an year becomes per day sales of $2,857 (1,000,000 divided by 350, assuming 15 holidays in an year).

If your average product price is $50, that is roughly 57 sales per day. Not so much frightening any more.

Now, I would call any day a million $ day if you make more than $2857 in sales on that day.

I am glad to inform that in 2011, I have had two million $ days so far. Both of which in the 2nd week of Jan when I re-launched my Excel School program.

Metric #2: Goal Days:

This is very simple if you understand the Million $ days concept. We just take your annual revenue target and multiply it by 1.5 and then divide that with 350 (ie we find how much you should make per day to exceed your annual revenue goal by 50%).

And then we call any day a goal day if the sales for that day are more than the above number.

Example:

As noted in my 2011 goals post, my revenue target for this year is $200,000.  That means, I my goal day value is =1.5*(200000/350) = $857.

Now, in 2011, I had 21 days so far (until Mar 17th).

What metrics do you use to track your performance?

While I prefer to sit back and do things at a slow, relaxing pace, I think setting a few goals and keeping track of the progress can take you a long way in life.

I want to know how you track your start-up performance? What metrics do you use? Please share using comments.

What are your Startup Goals in 2011?

New years are great time to set goals and make ambitious plans. As Napolean Hill notes in his beautiful book, Think and Grow Rich,

Whatever the mind of man can conceive and believe, it can achieve.

That is why it is important for us to make goals and set our sights high. Last year, I did not have a startup. So I just had a few personal goals. But this year, I want to set some clear goals for my business and work towards achieving them.

These goals derive from the startup metrics defined earlier.

Financial Goals:

  • To generate $200,000 in revenues. Last year, I made $135,000 in revenues. This year, I am setting an ambitious goal of crossing 200k mark. I have plans to make my existing products even more awesome and create new products to add extra cash-flows.
  • To keep expenses ridiculously low. The expenses are going to increase in 2011. Mainly because, I have hired one full time employee (more on this later). Nevertheless, I plan to keep my expenses very low.

Marketing Goals:

  • To train 1,000 students. Last year, I have conducted training programs for 800 students. This year, my goal is to reach 1000 students. If I make each of these 1000 really awesome in their work, I will be very very happy at the end of this year.
  • To get 2,500 customers. Last year, we had 700 customers. This year, my goal is to reach at least 2500 customers.
  • To have 25,000 members. We closed the year 2010 with 17,500 members (RSS Subscribers). This year, my aim is to breach the 25,000 mark.  The more people I can reach to and help them, the better I feel.
  • To have a Million Page View Month: Last year, the best month in page views was November with 735,000 views. This year, I am hoping to have at least one month with a million page views.

Operational Goals:

  • To simplify product purchase process: Most of my products use automated purchase process. That is, if a customer buys something, she gets it delivered automatically. But, for my training programs, I use manual process to enroll students. This is quite time consuming and error prone. I plan to make it automated this year.
  • To register a Private Limited Firm: So far, I have been running my business as a proprietorship. I plan to register a private limited company this year so that I can grow my business with ease (ie hire people, set up office etc.)

Long term goals (ie, next 3 years):

For startups, long term is not next decade. It is just a few years down the line. This year, I have decided to aim high and actually document long-term goals for my business. They are,

  • To make 1 million people awesome: This is my first goal. I want to make 1,000,000 people awesome in Excel & PowerPoint. How do I measure this. Simple, if 1 million unique people visit my website(s) in any one month before end of 2013, I consider this goal as achieved. Currently that number is at 210,000 per month.
  • To cross $1 million in profits before tax: The word million feels magical. It is my aim to reach that level in profits before tax by 2014. Getting there requires a lot of imagination, hard work and planning. And I am ready for all that.
  • To train 10,000 people in Excel & PowerPoint
  • To cross 1500 article mark: So far I have authored over 700 articles on Excel. I aim to write more in the coming years and share whatever I learn. By 2014, I want to cross the 1500 mark.
  • To conduct 10 live training workshops: I have been always fascinated by the prospect of doing face to face workshops. So far, I did only 1 workshop. But I aim to do more in this year and next few years.
  • To have a meaningful life: Not that I live a meaningless life now. But I will continue to give back a portion of my fortune to others, help people whenever I can, live frugally, consume little and make people laugh in the coming years. I will do all these even if I fail to achieve any of my other goals.

What about you?

What goals are you setting for your self  and your startup? Please share using comments. It would be fun to know each other and help.

How to Keep your Startup Website Expenses Low?

This is part 3 of my series on how to lower startup expenses.

  1. How I lower my Rental & Salary Expenses
  2. How I lower my Marketing & Sales Expenses
  3. How I lower my Website Expenses
  4. How I lower my Other Operational Expenses [Hardware, Software, Misc.]

What are various expenses associated with running a website?

I run 3 active websites (chandoo.org, excelschool.in and startupdesi.com) and 2 passive sites.  I incur a lot of expenses each month in running these sites. Below is a table of various expenses and their nature.

Expense TypeFrequencyCost
in $s
Required?Recommended Option
Website HostingMonthly10YesGoDaddy
Shopping Cart SoftwareMonthly5YesE-Junkie
CDN (Content Delivery Network for fast loading of frequently used files)Monthly10OptionalAmazon S3 / Cloud Front
Website BackupsMonthly15OptionalVaultPress
PC BackupsMonthly5OptionalMozy
Payment ProcessorsPer TransactionDependsYesPayPal, 2Checkout
Domain Name RegistrationAnnual10YesGoDaddy
Database BackupMonthly0YesWP-DB Manager Plugin
A/B Testing & Page OptimizationAs needed0YesGoogle Website Optimizer
Website AnalyticsN/A0YesGoogle Analytics
News Letter ServiceMonthly19YesAweber, Feedburner is free but offers little control
Sitemaps, NavigationN/A0YesXML Sitemaps, WP-Page Navi Plugins
Caching SolutionsN/A0Yeshttp://www.w3-edge.com/wordpress-plugins/w3-total-cache/
SEON/A0YesAll in one SEO Pack
FTP SoftwareAs needed0YesFire FTP addin for Firefox addin for Firefox
S3 Admin SoftwareAs needed0YesS3Fox, Also use CloudBerry Explorer Pro if you want more control over S3
Polls & SurveysAs needed0YesGoogle Docs
Advanced Scripts & Plugins for WordpressAs neededBetween $5 - $150OptionalUse only reliable plugins. Do not hesitate to buy something if it is valuable to you. Most scripts /plugins pay back very quickly.

As you can see, you can run a decent website with less than $45 per month. For more info read how much it costs to run a website.

How to cut down website maintenance expenses?

Here are a few ideas to help you cut-down your website maintenance expenses.

1. Host multiple sites in one hosting account: Almost all hosting providers supporting hosting multiple sites under one account. For eg. I run startupdesi and excelschool (and 2 other sites) from just one hosting account.

2. Learn some HTML & CSS: HTML is the language of web. CSS is what you use to style a web page anyway you want. These are ridiculously simple to learn. Many people try to outsource the website development work thinking they need to focus on core products. While it is a good strategy, you will find that often you feel crippled as you lack HTML  / CSS knowledge to make immediate changes to your site. In fact, I would say that unless you are running a very large company / website, it is an absolute necessity to learn the language of web to do well. Once you are big, you can always hire someone else to do it for you.

3. Use WordPress: WordPress, the premier blogging platform is what I use across my sites. It is undoubtedly one of the best ways to maintain a dynamic, constantly updating site. It works really well with Google and many people are already familiar with the way wordpress sites look. If you are starting a website today, give wordpress a serious thought.

4. Keep it simple: These days, it is too tempting to make your site look slick and vibrating with all the AJAX widgetry, CSS3, Fonts etc. But always remember the purpose of your site. It is there to provide value to your customers. So keep it simple and to the point. Add features progressively and experiment carefully. A simple site is easy to maintain, easy to navigate, easy to understand and easy to purchase from.

5. Pay for good stuff: Do not skimp when it comes website stuff. You should always get good hosting partners. Just because someone is ready to host your site for few dollars doesnt mean you should switch. Thoroughly investigate if the hosting partner can keep your website safe, available and load it fast enough. Also, pay only for good stuff. Do not throw away money for un-needed features or goodies (I did this a few times and I regret my decisions. More on this in a later post).

6. Use Amazon S3 and CloudFront CDN for frequently accessed files to speed up your sites: Amazon S3 is laughably cheap and very reliable. You can use their Cloud Front CDN to speed up your site by moving various static parts (CSS files, logo images, Java script files etc.) to them. It is a pay as you go service, so you only pay for what bandwidth you consume. [here is a tutorial explaining how to do this.]

Share your tips

What ideas and tricks you use to cutdown website maintenance expenses? Please share using comments.

What next?

In the final installment of this series, I will share with you how I cut down my operational expenses. Stay tuned.

Read the previous part – 7 tips for lowering marketing & sales expenses in start-ups.

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