Successful Startup 101 Magazine - Issue 10 Read online

  * This article originally appeared on Entrepreneur.

  Want to Give Your Startup a Tactical Edge? Go Paperless from the Start

  By Ingrid von Stein

  In an age dominated by technology, why are we still seeing businesses – and startups especially –  printing, copying, faxing, scanning and then filing trillions of pieces of paper? Did you know that globally businesses continues to use paper printouts to archive 62% of all their important documents?

  So why is it so difficult for businesses to make the switch from printed paper to digital archiving and storage?

  Three simple words – fear, uncertainty and doubt (or FUD for short).

  I have spent countless hours in consultation with business heads, both locally and globally, and there seems to be the same pattern when it comes to going paperless. “My accounts or legal departments must have hard copies of everything and then keep them for five years”.

  An interesting fact is that all these documents/contracts/invoices/statements/credit notes, etc. all started out as a document on a computer, were saved as a digital file, were printed out and posted to the client, and then were put in the filing trays to be filed.

  This then takes admin staff to manage, sort out, file and organize stuff for deep storage; at a substantial monthly cost to your business. But for the moment, let’s go back to the issue of “We need the paper copies for legal purposes” and unpack that further:

  Is digital legal and compliant?

  Digital image copies of information that have been converted from paper and microfilm are the legal equivalent of their paper counterparts and may be considered as admissible in evidence as the original paper record in any legal or administrative proceeding.

  But we have to keep the original!

  Digital image copies and all other types of copies are acceptable in any legal or administrative proceeding regardless of whether the original is in existence or not.

  Let’s look at a few other factors that you may need to review before you make the leap to paperless.

  Take a look at your business as it is right now. If you glance around your desk or over to the desk next to you, what do you see: paper; files; notebook and probably a pad of post-it-notes.

  Now pick up your cellphone and go into your gallery and take a look at all the pictures you have in there. You trust your phone’s technology enough to take and store your precious memories – so why would you not apply the same thinking to your business?

  Everything can be stored digitally. Everything can be filed in the place that you want it.  Did you know that more than 20% of all your paper files either go missing or are misfiled – taking up precious man hours to search for them!

  Going the paperless route…

  Improves productivity — no getting up to the filing cabinet or retrieve a box from deep storage. You just click a button and go to the place where it is filed on your server or in the cloud.

  Risk reduction — about 80% of all business “paperwork” is still retained and stored on paper. What happens if there is a flood or fire? Your documents are gone for good. What then happens to your business and all the information that you have on your clients or suppliers, agreements, sales records, etc.

  Cost savings — on the cost of admin staff / cost of filing cabinets / cost of storage off site. At least 15% of your business revenue is spent on creating, managing and distributing documents and at least 60% of your employees’ time is spend working and managing documents.

  It’s time to think tactically

  Don’t rush into the process of going paperless; take a few simple steps first:

  A printer, copier and scanner that save to pdf are NOT a business workflow solution — it is a product that copies, scans and prints.

  Do some research and find a company that will come in and assess your business needs, instead of just trying to sell you a solution. How can they if they do not know how your business works and what your business goals are.

  Select a company that has a solid reputation in the market place and has the latest software technology and top-of-the-range equipment – some of these products are: Avision / Inotec / Iris / Zuetschel / paperfreeweb.

  You have invested time and money into your business in terms of human resources, technology, marketing and getting new business; you have a state-of-the-art website; you are linked to Twitter, Facebook, etc. – from a technology front-end point of view your “shop” is looking good, BUT you won’t survive with elegant digital front-end and paper-clogged processes on the back-end.

  Make your business life easier – call in a paperless expert to help you grow your business into the future.

  About the Author

  Ingrid von Stein is the Founder and CEO, Indigo Zebra Communications and www.ebizradio.com

  She has spent the last 25 years a communications strategist, conversational capitalist and industry innovator and has worked side-by-side with some of the largest brands globally to ensure that their communications work in tandem with their business goals. Known for her tenacity and true entrepreneurial spirit is was a natural progression of her communications business to evolve and launch a unique African business platform that covered the world of business and the business of the world – www.ebizradio.com  is currently the only entity of its kind on the African continent and brings together global thought leaders and industry innovators in the world of marketing, media, advertising, branding, communications and business who are willing to share their industry insights with the world and especially those wanting to grow their knowledge and business skills on the African continent.

  Managing the Numbers of a Seasonal Startup: When to Spend and How Much

  By Greg Coleman

  This post is produced by Nexercise and is Part II in the series, “The Myth of continuous up and to the right: The challenges of a seasonal startup.”

  In Part I of this three-part series we provided some insight into seasonal startups — specifically giving some key indicators to help founders determine if they have a seasonal startup on their hands. In Part II, we’ll share some tips from founders on managing seasonal startups, with a particular emphasis on managing cashflow and growth during the seasonality.

  When our company first launched, we went to market with our Nexercise app, which is now called Challenges by Nexercise. We simultaneously encountered both the expected January user growth in a fitness company as well as the unexpected drop in Q1 advertising spending from big brands – which we now understand to be completely normal.

  As we dug deeper into this, we saw that in January of that year, our download, active user, and session counts were all at 12-month highs — while our revenue was at a 4-month low due to low advertising campaign volume. So what was our key takeaway? The next year we needed to make sure we had campaigns from brands that shared our seasonality cycles, specifically, brands targeting fitness. So by working with our advertising partners, we were able to get a few fitness-specific advertising campaigns to go live the following January and we ended up seeing a 2.6x increase in January revenue.

  Pay attention to LTV and CAC

  However, there was still more learning to take place. In hindsight, we spent a little more than we should have on advertising our own. Our company is fortunate to be in a position where not only does the Lifetime Value of a user (LTV) exceed our Customer Acquisition Cost (CAC), we also have a standard payback period that is relatively short. But having said that, that following year, we REALLY opened the floodgates in order to make sure we didn’t leave any advertising revenue on the table. You’re probably thinking this isn’t a problem as long as LTV > CAC. However, this dialed-up ad spending inflated the average CAC during that period to the point where the payback period almost tripled. This is non-trivial when you’re paying attention to your working capital. So while not fate-changing, it did illuminate another important consideration.

  So what do we do now? We pay attention to the following four items when it comes to
seasonality:

  Cash in from advertising or other app sales

  Cash out from advertising spending

  Ensure cash on hand (working capital)

  Build app store rankings, which drive organic growth and overall growth rates

  We also decided to offer another product. We now have a product that can take full advantage of the upside of fitness seasonality without exposure to the advertising downside. The paid version of our Sworkit app gives us the ability to directly monetize the seasonal growth of fitness app usage. (We’ll let you know how January of 2015 works out.)

  Remember, you’re not alone

  Our story is just one of many in startup seasonality. Simply understanding your primary customer’s behavior and motivations provides amazing insight. Consider this example from Weiting Liu of Codementor, a live 1:1 help marketplace for developers that connects developers with experts for on-demand support & training via screen sharing, video, and chat. Liu completely expects that their 2014 month-over-month growth streak of 30% will come to an end in December due to Christmas and the holidays. Liu states, “Codementor is all about productivity — and people generally don’t work that much during the holidays.  We’ve already been seeing down time toward the end of November.” As a result, his company is proactively adjusting instead of reacting.

  DropShipHYPERLINK "https://www.dropship.com/#welcome-1" Commerce CEO Jeremy Hanks, however, is right in the middle of his sweet spot but realizes that he has to grab as much as he can now because things will dramatically change in January. His company, which is an enterprise SaaS platform for retailers to automate shipping, is subject to both the broader seasonality of retail sales AND the timing of IT buying decisions for companies they support. When it comes to managing the seasonality of both the service and the sales cycle, Jeremy states, “This means our KPIs like Orders and Accts who Order explode in Q4 but then our marketing/sales pipeline and then finances/revenues fall off a cliff.”

  Key takeaways from SpotHero

  So what should you be considering in your company? Having collected nearly four years of seasonality data across 10 cities, SpotHero, an on-demand parking company, has figured out what to focus on.

  Before joining SpotHero as its Director of Marketing, Elan Mosbacher led marketing for two other VC-backed companies facing seasonality. As you think about spending money on anything from advertising to PR to operations, Elan recommends that you consider the following:

  When to spend depends on your growth plans, unit economics, and business type.

  In terms of growth plans, let’s give an example. If you’re building a marketplace business, you may need to over-invest initially regardless of seasonality. Instead, marketing spend should be in lock step with the supply side of the business.

  In terms of unit economics, you don’t want to accelerate spend until lifetime value, customer acquisition cost, and payback are in line. If LTV:CAC is > 4 and payback is 6-12 months, you’ll want to spend regardless of seasonality. If your business is dependent on users over revenue, make sure retention and referral are really high.

  In terms of business type, strategies also vary. For SaaS, focus on moving month-to-month customers to long-term contracts. For ecommerce companies, try to sell subscriptions during busy months so you can make money during slower months. For lead generation businesses, you often want every transaction to be profitable.

  Early on, your budget should be small enough and growth should be fast enough that seasonality won’t impact you all that much.

  You’ll want to allocate more spend just before and during busy season than just after busy season.

  Spend on demand capture tactics before demand generation tactics, because the former is generally higher ROI.

  As you can see, leading a seasonal business is not rocket science. However, it’s also not something you can put on autopilot either. It’s just as much art as it is science, especially early in the life of your business. However, following some key principles should help you navigate it through the first couple cycles.

  In Part III, we’ll look at how fundraising works in a seasonal startup and how to position your company for investment when growth is not always up and to the right.