5 Lessons About Building a Business from a Disneyland Trip

I spent the last week at Disneyland with my family. I tried to unplug from work as much as possible, but I couldn’t help but notice aspects of my experience that I could apply to the businesses I am helping to build. Disney gets a lot of attention from business writers for good reason. At the risk of tackling a cliche topic, here are five lessons I learned about building a business from my Disneyland experience:

1. Stand out from the competition Traditionally, my wife and daughters spend five days in Disneyland, and my son and I take one of those days to do something else. Last time we went to Legoland, and this time we went to Universal Studios.

Those would be incredible parks when experienced on their own, but they don’t measure up when experienced during the same week as Disneyland. Even though we had fun, we wondered if we would have preferred an extra day at Disneyland.

Businesses have to stand out from their competition in a significant way to attract loyal customers.

2. Be present with people Disney characters are masters at being fully present with the one child at a time. Meeting their favorite characters creates much of the Disney magic that kids experience, and the characters make sure each interaction is memorable.

Meeting Elsa and Anna from Frozen is one of the most popular attractions. It requires waiting in line to get an assigned time to wait in line again later in the day. Only one family at a time is allowed in the small room with Elsa and Anna. The interaction only lasts for a few minutes, but the characters are fully present. They make kids feel like they are the only people in the world at that moment.

3. Enforce the rules In most cases, Disney “cast members” are extremely friendly, kind, and accommodating. However, they are not afraid to enforce the rules when a guest’s behavior infringes on the experience of others. We watched as someone cut to the front of the Disneyland Railroad line and jumped on the train. The conductor loudly called him out as a line cutter and ordered him off the train. The one man was probably offended, but it enhanced the experience for the many people watching.

To build a high-performance business, some rules need to be strictly enforced. Of course, unethical or illegal behavior can’t be tolerated. Lackluster performance by one member can also bring down an entire team. It’s often better to deal firmly and swiftly with one person that let an entire team suffer.

4. Bend the rules On the flip side, rules should be bent when they don’t infringe on others experience.

At the Haunted Mansion a person appeared to be cutting in line before approaching the nearest cast member. At the first the cast member good-naturedly called her a line cutter, but he let her through as she explained that she had been separated from her family who were now further ahead in line.

5. Get out of the comfortable routine This last point is not directly related to Disney, but it’s something I learned on the trip.

My family’s default is to find a hotel when we travel. There are many options, we know what to expect with the brand we choose, and it’s easy to book and cancel as needed.

We had a hotel booked for this trip, but someone mentioned they found a vacation rental through VRBO for their last Disneyland trip. My wife and I settled on a townhouse that is over 50% bigger and 60% cheaper than the hotel we had booked. It was immaculately clean and nicely decorated with Disneyland themes.

I also tried Uber for the first time. Our townhouse was about 1.5 miles from the Disneyland gates. I would drop them off every morning and pick them up every evening, which added 3 miles to my daily walking distance.

After one particularly tiring day, I wasn’t looking forward to walking back. I could have tried to figure out the bus routes or paid for an expensive taxi. Instead, I decided to try Uber. The app showed a few drivers in the area, so I requested a pickup. Within a few seconds a driver called me from across the street. I was back to our townhouse within 5 minutes, and the app automatically charged me $4 so I didn’t have to worry about payment or tip.

We often get stuck in our comfortable routine. There are many ways to rethink conventional wisdom. Consider virtual assistants instead of full-time employees for some roles. Build a virtual team to save on office space and find the best talent regardless of location. Use VRBO or Airbnb instead of a hotel. Take Uber or Lyft instead of a taxi or bus.

Conclusion 

It’s important to take time off and unplug from work. During these times our minds can be freed from the usual distractions, making us more open to lessons we can apply to our careers and other areas of our lives.

3 Ways to Transition from Freelancer to Business Owner

Robert Kiyosaki is the author of Rich Dad, Poor Dad, and his CASHFLOW Quadrant has shaped my way of thinking about how to make money. As shown in the image below, he describes four ways to make money: Employee, Self Employed, Business Owner, and Investor. He argues that those on the left side of the quadrant can never build true wealth in part because they are trading a finite resource, their time, for money.

I wrote a series of posts a while ago about freelancing, which is in the Self Employed quadrant. Compared to being a traditional employee, freelancing can have advantages like accelerated career development, increased income, diversification, and autonomy.

However, freelancing is still trading time for money. The benefits of freelancing are amplified for those who successfully transition to Business Owner on the right side of the quadrant. As a business owner you can multiply your income without increasing the amount of time you spend earning it.

Here are 3 ways to transition from freelancer to business owner:

1. Dedicate a portion of your time to work for yourself

Hire yourself as one of your freelance clients, and give yourself the responsibility of building a business.

I recently heard Gary Vaynerchuck give the following the advice (paraphrased): live on as little as possible and spend the rest of your money investing in yourself.

This is a variation on that theme. Trade the minimal amount of time for the money you need to live on, and then spend the rest of your time building your business until it can replace your freelancing income.

At first your time might be spent on figuring out what kind of business to build. As you begin building a business, you might need to do a little more freelancing to finance the business.

Grow slowly. Don’t take on debt to grow your business! This works for some people, but debt creates risk and kills many of the advantages of being a business owner. Instead of additional freedom and income, you will become a slave to your business, your creditors, and interest payments.

2. Look for ways to automate your expertise

When Dave Ramsey began his mission to educate the world about personal finance, he did one-on-one financial counseling. It didn’t take him long to realize that he couldn’t build a successful business this way. Growth was limited to the amount of time he had for clients, and the very people who needed help the most weren’t able to pay enough to make the business viable.

Instead, he wrote a book to automate his expertise. The only limit to the number of people he could help is how many were willing to spend $10-20 on his book. He started a radio show where he could share his expertise with many listeners at the same time. He wrote more books and developed training courses. Now he is the multimillionaire owner of a 450-employee business that helps millions of people around the world.

Many freelancing skills can be automated in a similar way. Freelance writers can write books or syndicated columns. Freelance programmers can write online software that people are willing to pay a subscription to use.

3. Hire people to leverage your time

A freelancer working alone must do everything from high-value client presentations to low-value expense report preparation. Freelancers can leverage their time by hiring help for lower-value tasks. The booming virtual assistant industry makes this cheaper and easier than ever before.

Some of the companies I work with don’t have enough transaction volume to justify hiring a bookkeeper, but they also don’t want to pay me to do bookkeeping. Instead, I turned to Elance. I found an accounting firm based in India that charges $6-8/hour, depending on the task. They handle all data entry and month-end procedures. I simply spend a minimal amount of time reviewing the financials for accuracy, and then I’m free to perform high-value tasks such as presenting to the management team insights gleaned from the financials.

It helps to look at everything you spend your time on and ask if there’s someone else than can do this almost as good as me for much cheaper. If you are paid $75/hr as a freelancer, why not spend $5-20/hr for virtual assistants to take tasks off your plate? Good candidates include travel arrangements, preparing expense reports, gathering content for social media posts, doing market research, preparing PowerPoint presentations, etc.

As you grow, you can even hire good people for the high-value tasks. As the business owner, you can earn money while you sleep or vacation.

Conclusion 

Moving from Employee to a Self Employed freelancer is a step in the right direction. However, I encourage you to see if you can use these 3 methods to make the leap to Business Owner on the right side of the CASHFLOW Quadrant. Then you can enjoy the benefits of multiplying your income without multiplying the time you spend working.

Question: What are other ways to move from freelancer to business owner? 

4 Reasons Story-Telling is so Powerful

Over the past two weeks I have binge-listened to books that tell the story of startups and turnarounds. Using the the Audible app on 3x speed and my Bose Bluetooth earpiece, I have listened to Hatching Twitter by Nick Bilton, The Facebook Effect by David Kirkpatrick, American Icon by Bryce Hoffman (the Ford turnaround), and King of Capital by John Morris and David Carey (story of Blackstone Capital). (See the end of the post for similar books I've read recently.)

Each of the authors are intimately acquainted with the businesses they wrote about due to spending time with the company for many hours over many years. It’s amazing that we can take advantage of such extensive work for such a minimal cost.

I was drawn into these stories so deeply that I listened at every available opportunity. I listen while getting ready in the morning, driving, mountain biking, cleaning out the garage, searching for items on my list in Costco, and relaxing before going to sleep. Obviously, I thoroughly enjoyed these books.

As I listened I thought about why I enjoyed these books so much more than other books I have read recently. I realized it is the power of story-telling.  It is much more enjoyable and effective to learn principles from stories rather than lists of principles themselves.

Sometimes we get impatient and try to cut out the fat and get right to the meat. But it’s the fat that gives the meat flavor and substance. Here are 4 reasons why story-telling is so powerful.

1. Enjoyment A good story is enjoyable to listen to. We are more engaged and attentive when we are enjoying ourselves. We’re also more likely to spend time doing things we enjoy. There’s no way I would listen to four dry books in two weeks. I wouldn’t be motivated to listen at every opportunity.

I tend to start many more books than I finish. Even if the content is valuable, I have a hard time continuing if I’m not enjoying the content at the same time. There are so many valuable AND enjoyable books out there, so why would I waste my time?!

2. Motivation  Stories are motivating because they take the mystery out of an incredible result. They tell us how characters get from A to B, and in most cases, the characters are just normal people.

Of course, the stories that get published are the sensational ones. If we’re not careful, we can become discouraged and demotivated by our mundane lives and meager accomplishments. Many stories are written about those who start billion-dollar companies, but only a tiny percentage of companies reach this milestone.

The rest of us struggle along with our more normal lives, but we can be motivated by these stories to reach our potential by making the most of our circumstances and opportunities.

3. Learn from others mistakes Even stories with the most sensational results include missteps along the way. We can learn to avoid the same mistakes as we create our own story.

The Twitter team worked together on a failing podcasting company before pivoting to create Twitter. The company was terribly mismanaged all along the way, but they managed to hold it together and build a multi-billion dollar company that has changed the world. The book details the mistakes that could have destroyed the company.

4. Learn what worked in real situations We can learn from mistakes, but perhaps more importantly we can also learn what led to the sensational results.

We need to be careful not to assume that whatever worked in the story will also work in our situation. But if we listen to enough stories, we can build up a bank of experience in our heads that will help us make better decisions in our own lives.

Conclusion 

Stories are a powerful way to teach and learn. Of course, reading a story is not a perfect substitute for actually being there. However, being there takes time, opportunity, and luck. For $44 and two weeks while doing things I had to do anyway, I experienced 50 years of building or turning around 4 multi-billion-dollar companies.

Question: What startup or turnaround stories do you recommend?

* Other similar books I have read or listened to over the last few months include:

• Creativity Inc by Ed Catmull (Pixar)
• The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone,
• In The Plex: How Google Thinks, Works, and Shapes Our Lives by Steven Levy
• eBoys: The First Inside Account of Venture Capitalists at Work by Randall Stross
• The Snowball: Warren Buffett and the Business of Life by Alice Schroeder

3 Principles for Scaling Companies

I am taking a class from the Stanford Graduate School of Business right now. But no, I haven’t had to travel to Palo Alto or pay thousands of dollars in tuition. Thanks to the MOOC concept (massive online open course), I am able to take the class for free from the comfort of my own home. The class is Scaling Up Your Venture Without Screwing Up taught by well-known professors Huggy Rao and Robert Sutton. The class follows the book written by the professors, Scaling Up Excellence, and is supplemented by short video lectures, video interviews with entrepreneurs who have successfully scaled companies (such as Ben Horowitz), and individual and team assignments.

I am taking this course because of my involvement with a venture capital fund and venture-backed companies. The goal of any venture-backed company is to scale as quickly as possible.

The class material has caused me to reflect on my own experiences in trying to scale startups over the last few years. I’ll share 3 lessons I’ve learned from my experience:

1. Interpret data correctly It is impossible to gather enough information for making a perfect decision in any business, and startups are especially uncertain. We have to make the best decisions possible given the data available. Due to the difficulty of gathering data, it is extremely important to interpret the available data correctly.

I learned this lesson the hard way a few years ago with a company that manufactured product in the US and sold in both US and Canada. With the downturn in 2007, sales in the US dropped by 90% while Canada sales continued to grow. The US dollar also weakened significantly and became worth less than the Canadian dollar, which helped margins in Canada.

We started to put our focus on Canadian sales while waiting for the US to recover. However, in late 2008 and through 2009, the Canadian dollar reversed course and weakened 20-25% against the US dollar. This significantly cut into our margins. I looked at the data and found that even after the drop in US prices with the downturn, our percent margin was now higher in the US.

As a result, we turned our focus to the US. We hired a sales team and even opened a retail store. Unfortunately, our efforts didn’t lead to the boost in sales we hoped. Even more unfortunately, I realized later that even though our percent margin was higher in the US, our dollar margin was still higher in Canada due to higher prices.

Of course, we couldn’t have predicted exchange rates, but by late 2009 the US and Canadian dollars returned to about par. Due to my misinterpretation of the data, we wasted a lot of money trying to boost US sales while losing a year during which we could have doubled down on the stronger Canadian market.

2. Hire only to alleviate pain, not for pleasure I learned this lesson from experience and found it articulated well by 37Signals (now Basecamp) co-founder Jason Fried. "First, we hire late. We hire after it hurts. We hire to alleviate pain, not for pleasure. Who hires for pleasure? Any company that hires people before it needs them is hiring for pleasure. It's an indulgence we've never allowed ourselves.”

I’ve been involved in decisions several times where someone was hired too early, too fast, or just because they’re a good person who we didn’t want to lose.

3. Give ground grudgingly  This is another lesson I’ve learned from experience but found articulated brilliantly by someone else. Ben Horowitz wrote a blog post called Taking the Mystery out of Scaling a Company. In it, he compares scaling a company to an offensive lineman in American Football. While in pass protection, the offensive lineman can’t protect the the quarterback by standing his ground or moving forward, or the defensive lineman will get around him. His goal is to back up as slowly as possible, hoping to give the quarterback enough time to throw the ball.

As a team grows, it becomes necessary to put in place processes and procedures that facilitate communication, knowledge transfer, and decision making. This is necessary to run the company smoothly, but it also creates bureaucracy and complexity in the organization. The principle is to give ground grudgingly. Only add processes and procedures as they become necessary.

I joined a very small team a few years ago. I had some experience in a big company, and I thought the small company would be successful if it acted like a big company. I worked with the CEO to define the organizational structure and associated roles. We put written procedures in place for all business processes. We even started annual performance reviews. All of this was for a company with less than 10 employees.

Our intent was good. We were trying to follow the E-Myth principle by working on the business and preparing for growth. But we spent unnecessary time creating unnecessary complexity. We should have waited until growth made this steps necessary.

Conclusion 

Scaling a company is messy. Often the answers can only be found through trial and error. But some errors can be avoided by following general principles learned from others experiences.

4 Ways to Run a Startup Like a Navy SEAL Team

I recently read the book Lone Survivor. It is the story of a 4-member Navy SEAL team sent on a mission in Afghanistan. 3 of the 4 were killed during the operation, and 16 more were killed trying to rescue them, making it the worst special operations catastrophe in history. The author, Marcus Luttrell, is the lone surviver. He tells the story not only of the operation and his survival, but also how he became a SEAL. As I learned how the military selects and trains SEALs, I realized that the startup companies I’m involved in would be more successful if I, and those I work with, operated more like Navy SEALs.

Here are 4 ways that startup teams can operate more like Navy SEALs.

1. Only work with “A” players

Startups can’t be successful with dead weight. It may feel heartless to get rid of a “B” player, but it’s worse to allow them to drag down the rest of the team. “A" players want to work with other “A” players, and you won’t be able to retain or recruit “A” players if you keep the “B” players.

The Navy SEAL qualification program is designed to weed out all but the top “A” players. Anything less than the best can threaten lives during a mission.

After eight weeks of Navy boot camp, aspiring SEALs go through several weeks of training in part designed to weed out all but the best. Luttrell’s group started with 164. It was down to 111 after 2 weeks and 54 by the start of the infamous Hell Week. Only 32 survived 6 days of constant training and only a few hours of total sleep.

I’m not suggesting that you put your team through something like Hell Week, but you can recognize those who don’t step up to the pressures of building a startup. You can recognize those who don’t bring top performance every day.

2. Train diligently 

Navy SEALs go through months of qualification and training before embarking on their first mission. Between missions they are constantly trained on all aspects of their duties, including fitness, weapons, hand-to-hand combat, etc.

Startups can’t afford to send their employees to months of training before putting them to work. However, they choose team members who have been well trained through education and past experience. They can also make training a part of their day-to-day activities for minimal time and cost.

One startup I work with has an “Education Plan.” All employees are authorized and strongly encouraged to spend a half hour per day, at work, studying educational material related to their job, such as books, trade magazines, etc. Education meetings are usually held monthly where one team member will spend up to an hour training the rest of the team on a relevant topic, such as by reviewing a book they have read.

Every Monday morning the entire team joins a conference call to report on progress from the past week and discuss plans for the upcoming week. Often they will hold “PK” (product knowledge) sessions at the end of these meetings. One team member will train the rest of the team on one of the company’s products so everyone will become familiar with all products.

3. Tackle the toughest challenges

Navy SEALs are brought in for the toughest missions because they are so carefully selected and well-trained. They face these challenges with confidence and courage because they know they are prepared and no one else can handle it.

To be successful and make a difference in the world, startup teams should be willing to tackle the toughest challenges. The low-hanging fruit in business was plucked long ago.

Elon Musk is a courageous entrepreneur. He was part of the Paypal startup team that disrupted the lucrative payments industry. Now he is tackling three incredibly difficult challenges (and succeeding) - commercial space travel, electric automobiles, and high-speed trains.

4. Never give up because it’s too hard

I added “because it’s too hard” because saying “never give up” without qualification can be dangerous. There are times when it’s good and necessary to change direction. It’s not wise to throw good time and money into a hopeless venture.

However, in many cases startups simply need to weather the tough times with confidence and courage. The history of any successful company that I’m aware of includes many ups and downs and even near-death experiences.

Most of us know the basics of Apple’s history. Michael Dell famously said in 1997, when asked what he would do to fix the struggling company, that he would shut it down and give the money back to shareholders.

In its early years, Google executives bet the company on an ad deal with AOL. If the deal had gone wrong, the company could have gone down with it. Instead, the deal became the foundation of its core business: search advertising.

Conclusion

Most startups don’t have the resources or time to replicate the Navy SEAL experience for their teams. However, startups can learn and apply principles from the Navy SEAL program. They can become an elite team that has the respect of competitors, customers, vendors, and shareholders.

Question: What other lessons can we learn from Navy SEALs?

4 Dangers of Raising Money

Every startup needs some money to get going. Often founders start with their own funds and then turn to outside sources when they need more. Outside sources may include banks and credit cards, friends and family, angel investors, and venture capital firms. Entrepreneurs are often so enthusiastic about and confident in their startup that they believe money will solve all their problems. However, they should beware of these 4 dangers of raising money.

1. Dilution

Dilution means the founders own less of the company. For example, two founders may own 50% each until an angel investor takes 10% in return for an investment. Now the founders only own 45%. This may not seem like a big deal, but most companies need additional rounds of investment. Each round will reduce the founders’ ownership.

A venture capital firm might take 20% of the company for the next round, which means the founders own 36% each, and the angel investor owns 8%. Founders can be left with a tiny percentage of the company after several investment rounds.

Dilution isn’t necessarily a bad thing. A small piece of a huge pie may be better than a big piece of a tiny pie. The trick is to make sure the investment grows the pie and doesn’t continue to divide the small pie.

2. Loss of Control

Loss of control is related to dilution. In theory, each owner has influence over the company in proportion to their ownership stake. In practice, owners elect a board of directors to represent their interests. When founders start a company, they have complete control. Each new investment gives someone else input into company decisions.

Some investors will require more control than their ownership stake would normally allow. For example, venture capital funds that own a minority share in the company might have a guaranteed seat on the board of directors and veto power over certain decisions.

As with dilution, lack of control isn’t always a bad thing. Investors can (and should) use their influence, experience, and contacts to help the company succeed. The trick is to find “smart money,” or money from investors who can actually help the company succeed.

3. False sense of security

Some teams believe that money will solve all their problems. They celebrate the closing of an investment round as if they have made it.

The truth is that money doesn’t solve problems. An associate of mine often says, “if money will solve the problem, it’s not a real problem.”  It might simply give the team more time and resources to throw at the problem, but it doesn’t solve the problem.

Instead, teams should celebrate the revenue and profit growth enabled by the investment.

4. Acceleration in the wrong direction

Investment is to companies what rocket fuel is to spaceships. Engineers and astronauts spend months or even years preparing for a visit to space. They make sure all their plans are solid, and then adding fuel is one of the last steps in the process. The fuel enables the acceleration to the destination that they have prepared for.

What if the engineers don’t know what their destination is? Or what if they know where they want to go, but they don’t know the route to get there? The rocket fuel still has the same amount of power, but it won’t send them to where they want to go.

Entrepreneurs should know what direction they want to go before taking outside money.

The Antidote - Lean Thinking

One of the antidotes to the dangers of fundraising is lean thinking, which I wrote about here. Eric Ries also writes about lean principles in his book, The Lean Startup. Companies should start small, evaluate and test as they go, make continuous improvements, and build slowly.

Outside money should come into the picture only after entrepreneurs prove their ideas and discover the tactics that work. Following lean thinking principles will prevent the founders from being diluted by outside money that is used to discover a strategy. It will prevent founders from losing control of their company before they can figure out what direction they’re going. It will prevent teams from having a false sense of security and from accelerating in the wrong direction.

Question: What are other dangers of raising money? 

4 Reasons Startups Need a CFO

Fred Wilson, a prominent venture capitalist and blogger, said, "the CFO is largely about 'what is going to happen and how do we get there?’"(1). How can a CFO fill this role in a startup? This is an important question not only for CFOs but also for the founder, CEO, and board who hire them.

Some startup teams underestimate the value of having a CFO involved from the beginning. They are focused on building and selling a product and think they can get by with a bookkeeper until they get a lot bigger.

Some founders may recognize the need for CFO insight, but they don’t think they can afford one. As I’ve written before, a CFO doesn’t need to be full time. A startup can engage a part-time CFO for very little cost, and often that part-time CFO can get more involved as the company grows.

Here are a some ways a CFO can help a startup from the beginning know what is going to happen and how to get there:

1. Create reasonable financial projections. Notice the word “reasonable.” Founders are often blinded by optimism. This is usually a good thing because it gives them the courage to move forward with their idea. But often they need a CFO to ground them in reality.

Sometimes startups take off like a rocket with crazy margins and never look back. The reality is that most startups take several years to be profitable, if they get there at all. An experienced CFO will build a financial model with several scenarios. To humor the founder, they can show the rocket ship scenario, but they will also show the normal and worst-case scenarios so the team can plan accordingly.

2. Provide credibility for investors. Investors want to know that their investment will be carefully watched over. They will have to buy into the founder’s vision, but they will also want to know the founder has competent advisors to help carry out the vision.

They will also want to know that they will get reliable financial information on a regular basis. They will be more likely to invest and continue investing if they know an experienced and trustworthy CFO is providing this information.

3. Track and interpret data. Any bookkeeper can categorize transactions and prepare the standard financial reports. An experienced CFO can identify key metrics, create systems for tracking and reporting these metrics, and help other leaders interpret and act on the data.

4. Create scalable processes. Startups are chaotic, and to some extent this is good and necessary. A startup should rapidly experiment and adapt to lessons learned. It would be a waste of time and energy to create too many formal processes. However, as the business starts getting traction, it needs to be prepared for rapid growth. An experienced CFO can help create business processes that are efficient and scalable.

My experience 

I’ve had several experiences where I was brought in after the startup phase, and the founders have kicked themselves for not involving a CFO earlier.

I joined one company about two years after startup. Revenue grew rapidly, but they couldn’t figure out why they were struggling with cash flow. They knew what their manufacturing costs should be, but they had no system for tracking actual costs per unit produced. It took some digging into past data to find that their labor cost was double what they expected.

I put a simple system in place for tracking labor cost per unit. We cut labor cost in half after a couple of months of using that data to refine the manufacturing process. To this day we use the same tracking system, which allows us to quickly make adjustments if labor costs start to creep up again.

The CEO had said many times that they could have avoided many costly mistakes if I would have been involved from the beginning. It’s not that I’m anything special; they simply needed insight from a CFO.

Startup founders: don’t overlook the importance of involving a CFO from the beginning. You will minimize mistakes and increase your chances for success. In most situations a part-time CFO can help you get started with minimal time and cost, and often that person can grow with you until you’re ready for a full-time CFO.

Question: How has a CFO helped you in the startup stage?

(1) http://avc.com/2011/10/vp-finance-vs-cfo/

Beginner's Guide to an Online Business Presence

A small business owner recently asked me how to set up an online presence for his business. He has built a great reputation in his community over many years, and he’s always generated more work than he can handle through word of mouth. However, he recognizes that an online presence can allow him to serve his customers better and expand his influence beyond the local community.

As I wrote an email explaining some of his options, I thought that the information I was sharing might be helpful to other business owners. I’m not an expert in web development and online marketing. However, I have learned some things, first while working as a web programmer during university, and then over the last few years while working with startup companies.

There are many options for an online presence that vary widely in cost and complexity. I will review some options using the broad categories of Social Media and Websites.

Social Media

Setting up a social media site for your business is quick, easy, and free. You have many options to choose from based on your goals and audience, including the following:

Facebook: Businesses can set up a Facebook page and post information, including relevant pictures. You can invite people to like your page, which puts your posts on their news feed. Most of the world is on Facebook, making a great way to reach your audience. However, only a small percentage of your followers will see any given post unless you pay to get more reach. 

LinkedIn: You can set up your personal profile, and you can also set up a profile for your business. The business profile is similar to a Facebook page. 

Pinterest: This is a great platform if you have any kind of visual element to your product and women make the buying decisions. Users can pin your product pictures to their boards and share them with their friends. 

Instagram: Also image-focused with a large audience. 

Google+: Similar to Facebook but with far fewer users. However, a strong Google+ presence can help you rank higher on Google search results. 

Other social media sites, some with a specialized focus, include Houzz, Flickr, and Smugmug. 

The key with social media is to add value with your content and not just promote your business. You can build recognition and trust by serving your audience before asking for something in return. Your audience will quickly tune out if all you do is promote. Gary Vaynerchuk wrote a great social media book called Jab, Jab, Jab, Right Hook. A very brief summary is that you need to jab (provide value) a few times at your audience before throwing the right hook (ask for something in return). 

Some business may find that social media is a sufficient online presence. However, the down side is that you lack what Michael Hyatt calls a “home base” that you own and control. Social media sites can dictate how you interact with your audience, and they frequently change the rules. Some may fall out of favor over time (remember MySpace?). That brings me to the next option for an online presence - a website. 

Website

Having your own website provides a home base that you own and control. If you’re reading this, you know what a website is. For those not familiar with how they work, here is a brief description of the three main components. 

1. Hosting server: All websites are stored on a computer, or server, somewhere in the world. Almost any computer with an Internet connection can host a website, but most people don't do this anymore. There are many hosting services that allow you to rent space on a server. Bluehost is the best one I know of, and it's $4/month with an affiliate link. 

2. Domain name: The domain name, or web address, tells a web browser what server your website is hosted on. Many sites sell domain names, and godaddy.com is probably the most popular. Most names are $10-15/year. 

3. Site content: A website is basically a number of files stored on the server. The files are formatted in a way that can be displayed by a browser. The domain name tells the browser what file on the server to display first, and then other files are accessed using navigation links. You can build your own website by writing files in text editors from scratch using HTML and other code that browsers understand. Fortunately, many tools are available that allow a non-technical person to build websites without using any code.  

There are many options out there for simple and free websites with hosting, domain name, and content built in. Wordpress.com is a popular one. Design options and extra features are limited, and you can't use your own domain name, but it’s a good way to get started. 

You can gain more control over the domain name, design, and other features if you’re willing to spend some time and money on a self-hosted site.  Wordpress.org is one way to do this. You set up hosting with a service like Bluehost, and then you install Wordpress.org on your server. You can use a control panel to build the underlying files that make up the site. You can install themes that provide the design, and you can install add-ins for various features, such as photo galleries and shopping cart. 

Wordpress.org is free, but some of the best themes and add-ins have a cost. Micheal Hyatt provides a great tutorial for setting up Wordpress.org with Bluehost in about 20 minutes. http://michaelhyatt.com/ez-wordpress-setup.html

With a website you can describe your product and services, provide testimonials, and write blog posts with helpful information related to your business. As with social media, the more value you provide, the more your audience will trust you and be willing to spend their hard-earned dollars on you. 

A website and social media can complement each other. You can use social media to drive people to your website, and your website to get people to connect with you on social media. 

Hopefully this helps you get started with an online presence for your business!

Question: How have you connected with your small business customers online?  

3 Lessons for Crisis Management

I just finished reading Stress Test: Reflections on a Financial Crisis by Tim Geithner. The book is a fascinating inside look at the financial crisis that started in 2007. The intriguing history alone makes it worth the read. However, I enjoyed the book for more than its entertainment value. I learned lessons about crisis management that I can apply to my role as a CFO and business leader.

The book starts with a brief autobiography from Geithner’s birth to his 2003 appointment as President of the Federal Reserve Bank of New York. This history gives the reader context around the events that prepared him for his central role in the crisis. He lived overseas for most of his childhood before attending college in the US and beginning his life-long career as a civil servant. He was intimately involved with many financial crises around the world in the 90’s and 2000’s, which taught him first hand the effectiveness of various crisis responses.

From there the books slows down and provides a detailed account of the events leading up to, during, and following the crisis. As I read, the following crisis management lessons stood out to me:

1. Accept complexity and uncertainty. By definition, the outcome of a crisis is unknown. Sometimes your actions determine that outcome, and sometimes you’ll find there’s nothing you can do. In these situations I find it helpful to consider the worst case scenario.

During the financial crisis, Geithner and his colleagues needed to identify which banks needed capital and how much. They came up with the idea of a stress test, but they were afraid the tests would reveal a hopeless situation, creating financial panic and meltdown. They realized that the worst case scenario would only confirm what the public already believed, and better results would create confidence.

They were correct; the banks weren’t as bad off as everyone feared, and information gained from the tests allowed them to take the first informed steps toward recovery.

2. Ignore your critics. It’s important to gather as much information as possible given the circumstances, which may include giving critics a chance to speak their mind. However, ignore your critics after determining what you and your supporters believe is the best way forward.

Every crisis is unique, but Geithner's experience with previous crises gave him confidence in the midst of severe criticism from less informed critics. The TARP program was hugely unpopular, but taxpayers ended up with large gains on the investments made in banks at the time.

It may help to examine the reasons behind criticism. When Geithner was nominated by President Obama to be Treasury Secretary, he faced intense opposition from Republicans. During the confirmation process some Republicans privately said they supported him and would vote for him if they needed to. In public they criticized him and withheld their vote because they didn’t want to be seen as supporting the newly elected President Obama.

3. Don’t neglect presentation. In the midst of a crisis, optimistic and confident communication can be as important as a quality solution. Stakeholders’ confidence, or lack of, can become a self-fulfilling prophecy.

In February 2009 Geithner gave his first speech as Treasury Secretary. It was supposed to outline the roll-out of the Obama administration’s solution to the crisis. Geithner severely botched the speech, causing the stock market to drop 5% and sparking severe criticism of the administration and him personally. The plan, including TARP as mentioned above, was ultimately successful, but better presentation could have reduced pain the meantime.

Experience is the best teacher. If we can learn from others experiences, we will be more prepared to face the crises that we will inevitably face as leaders.

Question: What lessons have you learned from managing crises?

5 Ways to Level the Roller Coaster

Building a company is a roller coaster ride. It’s not unusual for those responsible to frequently go from exhilaration to sheer terror and back again, possibly several times a day.

Regular ups and down have become normal for me as I’ve worked with new ventures. We close a large order (this is fun!), we lose a large customer (we’re doomed!), we close a round of financing (we’re invincible!), financing gets delayed (how are we going to make payroll?!), a customer provides a glowing review (everybody loves us!), a customer publicly criticizes us (everybody hates us!).

The past couple of months have been particularly volatile, which has led me to reflect on the strategies I use in an attempt smooth out those ups and downs.

1. Recognize human emotions. I try to remember that life is never as bad as I feel during down moments and never as good as I feel during high moments. Our emotions are coded for survival. The fight or flight response is meant to keep us alive in life or death moments. In our day we rarely face such moments, but our ingrained emotional response can make tough situations feel like life and death. This is a good thing if it motivates us to do all we can to get out of the situation, but we shouldn’t let fear become debilitating.

I don’t know why we tend to be overoptimistic in the good moments. Maybe a psychologist can explain that for us. Understanding the why isn’t as important as recognizing our emotions for what they are - just emotions. I try to acknowledge my emotions and then step back and view the situation for what it really is.

2. Accept the price of success. If building a successful company was easy, everyone would do it. Recognize that success has to be challenging or, by definition, it wouldn’t be success. The history of any successful company that I’m aware of includes many ups and downs and even near-death experiences.

Most of us know the basics of Apple’s history. Michael Dell famously said in 1997, when asked what he would do to fix the struggling company, that he would shut it down and give the money back to shareholders.

In its early years, Google executives bet the company on an ad deal with AOL. If the deal had gone wrong, the company could have gone down with it. Instead, the deal became the foundation of its core business: search advertising.

3. Appreciate the Load. I recently heard a story about a guy who took his new 4x4 truck into the mountains to gather firewood. Despite his confidence in the new truck, he got stuck in the snow near the firewood. When he realized he couldn’t get out, he thought he may as well cut and load the wood while figuring out what to do. With a full load of firewood in the back, he tried again to get out of the snow. Sure enough, he was now able to get out. The heavy load gave him the traction he needed. (https://www.lds.org/general-conference/2014/04/bear-up-their-burdens-with-ease?lang=eng)

We can appreciate the loads we carry because they give us traction in our lives and in our business.

4. Box up challenges. An entrepreneur I work with taught me a valuable lesson. When he has a challenge that he can’t deal with at the moment, he mentally puts it in a box, closes the box, puts it on a shelf, and forgets about it. Only when he’s ready to address the challenge does he intentionally take down the box and open it.

5. Know thyself. It is important to understand our unique emotional thresholds. Not all of us have Amazon founder Jeff Bezo’s nerves of steel. But not all of us can handle the monotony of a factory assembly line. Most of us are somewhere in between. We should take into account our emotional threshold and the other priorities we have in life as we decide where to take our companies and careers.

I’m still on a roller coaster, but these strategies help level it out. Business is not nearly as terrifying or as exhilarating as it used to be, which I think is a good thing.

Question: What strategies do you use to level out your roller coaster?

3 Lean Thinking Principles

How many of us have had an idea we absolutely knew would change our life or business for the better? How many of our lives or businesses are not any better after pursuing the idea? Judging by the number of ads for lightly used exercise equipment on Craigslist, many of us have had this experience.

Several years ago some colleagues and I found a product overseas that we absolutely knew would transform our business. We borrowed short-term money from our investors and ordered several containers of product. It was a happy day a few years later when we finally sold, at a loss, the rest of that first and only shipment.

I’m not saying we should never pursue ideas just because they might not work. However, the following lean thinking principles can save us from wasted time and money:

1. Start Small

Never be afraid to start. But start small. Don’t go all in before testing the idea. Do you want to expand your business? Rent equipment for a while before purchasing. Do you want to start exercising at home? Go to the gym for a while to see what works for you, and most importantly, if you’ll stick to it, before spending hundreds or thousands of dollars on home equipment.

I enjoy mountain biking, and I’d like to start going with my 10-year-old son. We’d love new bikes with all the best components. However, I don’t know if it’s going to catch on. I recently bought used, basic bikes so we could try it out. If we end going often and progressing to more challenging terrain, we will consider upgrading.

2. Evaluate and Test

After you start, evaluate the results and test improvements. Talk to customers and make changes based on their feedback.

As of this writing, my son and I have gone mountain biking once. It was a beautiful clear day in Corner Canyon high above Draper, Utah. We had a blast, but my son was terrified of the narrow trails on the steep mountainside. Also, we haven’t been gone for 3 weeks due to weather and other commitments. So far it looks like we won’t go often, and we won’t be tackling highly technical terrain any time soon.

3. Build Slowly

As you get evidence that your idea is working, continue the cycle of slowly building and evaluating. Often your idea will take a completely different shape than what you originally imagined.

The cases of Webvan and Amazon Fresh illustrate the benefits of lean thinking. Developing profitable grocery delivery services has long been a vexing problem.

Webvan thought they solved this problem in the late 1990’s. They raised hundreds of millions of dollars and were in the process of building 26 different $30 million warehouses around the United States. All of this was before they proved the concept in 1 city. As a result, an untested idea ended in a 2001 bankruptcy as one of the most spectacular failures of the dot-com era.

In contrast, AmazonFresh has been providing grocery delivery services in the Seattle area since 2007. Only after 6 years of testing and refining their concept have they expanded into only two more cities: Los Angeles and San Francisco.

In summary, don’t be afraid to start, but think lean by starting small and building slowly while evaluating carefully as you go.

For more information about getting started, see The Power of Starting Something Stupid by my friend and colleague Richie Norton, and Start by Jon Acuff.

For more information about lean thinking, I recommend The Lean Startup by Eric Ries.

Question: How do you apply lean thinking principles in your life and business?