Mediapreneur http://mediapreneur.posterous.com Most recent posts at Mediapreneur posterous.com Mon, 27 Jun 2011 14:12:00 -0700 Delegate or die: the self-employed trap - Derek Sivers http://mediapreneur.posterous.com/delegate-or-die-the-self-employed-trap-derek http://mediapreneur.posterous.com/delegate-or-die-the-self-employed-trap-derek

Most self-employed people get caught in the delegation trap.

You're so busy, doing everything yourself. You know you need help, but to find and train someone would take more time than you have! So you keep working harder, until you break.

Here's my little tale of how I broke into the delegation mindset:

In 2001, CD Baby was three years old. I had eight employees but I was still doing “everything else” myself. Working 7am to 10pm, seven days a week, everything still went through me.

Every five minutes, my employees had a question for me:

  • “Derek, some guy wants to change the album art after it's already live on the site. What do I tell him?”
  • “Derek, can we accept wire transfer as a form of payment?”
  • “Derek, someone placed two orders today, and wants to know if we can ship them together as one, but refund him the shipping cost savings?”

It was hard to get anything done while answering questions all day. I felt like I might as well just show up to work and sit on a chair in the hallway, just answering employees' questions, full-time.

I hit my breaking point. I stopped going to the office and shut off my phone. Then I realized I was running from my problems instead of solving them. I had to fix this, or I'd be ruined.

After a long introspective night of thinking and writing, I got myself into the delegation mindset.

I had to make myself un-necessary to the running of my company.

The next day, as soon as I walked in the door, someone asked, “Derek, someone whose CDs we received yesterday has now changed his mind and wants his CDs shipped back. We've already done the work, but he's asking if we can refund his set-up fee since he was never live on the site.”

This time, instead of just answering the question, I called everyone together for a minute.

I repeated the situation and the question for everyone.

I answered the question, but more importantly, I explained the thought process and philosophy behind my answer.

“Yes refund his money in full. We'll take a little loss. It's important to always do whatever would make the customer happiest, as long as it's not outrageous. A little gesture like this goes a long way to him telling his friends we're a great company. Everyone always remember that helping musicians is our first goal, and profit is second. You have my full permission to use that guideline to make these decisions yourself in the future. Do what makes them happiest. Make sure everyone who deals with us leaves with a smile.”

I asked around to make sure everyone understood the answer.

I asked one person to start a manual, and write down the answer to this one situation, and write down the philosophy behind it.

Then everyone went back to work.

Ten minutes later, new question. Same process:

  1. Gather everybody around.
  2. Answer the question, and explain the philosophy.
  3. Make sure everyone understands the thought process.
  4. Ask one person to write it in the manual.
  5. Let them know they can decide this without me next time.

After two months of this, there were no more questions.

Then I showed someone how to do the last of the stuff that was still my job. As part of learning it, they had to document it in the manual, and show it to someone else, too. (Learn by teaching.)

Now I was totally un-necessary.

I started working at home - not going into the office at all.

I had even taught them my thought-process and philosophy about hiring new people. So our two newest employees were entirely found, interviewed, hired, and trained by them. They used that manual to make sure every new employee understood the philosophy and history, and knew how to make decisions for themselves.

I'd call in once a week to make sure everything was OK. It was. They didn't even have any questions for me.

Because my team was running the business, I was free to actually improve the business!

I moved to California, just to make it clear that the running of things was up to them.

I was still working 12-hour days, but now I was spending all my time on improvements, optimizations and innovations. To me, this was the fun stuff. This was play, not work.

While I was away, my company grew from $1M to $20M in four years.

There's a big difference between being self-employed and being a business owner.

Being self-employed feels like freedom until you realize that if you take time off, your business crumbles.

To be a true business owner, make sure you could leave for a year, and when you came back, your business would be doing better than when you left.

(If you're interested in this stuff, read a book called “E-Myth Revisited” by Michael Gerber.)

© 2011 Derek Sivers

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Thu, 23 Jun 2011 16:36:00 -0700 7 Tips for Bootstrapping Your Startup - Mashable http://mediapreneur.posterous.com/7-tips-for-bootstrapping-your-startup-mashabl http://mediapreneur.posterous.com/7-tips-for-bootstrapping-your-startup-mashabl

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Bill Clark is the CEO of Microventures, a securities broker/dealer that uses crowdfunding to allow investors to invest between $1,000 and $10,000 in startups online. You can follow him on Twitter @austinbillc.

Most entrepreneurs dream of taking an idea and turning it into a successful company, but that takes time and capital investment. Most startups don’t get funded by venture capital or angel investors; the money often comes from your savings, credit cards or friends. Because initial cash flow may be tight, you need to keep your budget realistic in order to stretch every dollar. That’s where bootstrapping comes in.

Bootstrapping means starting a company with little or no money, but utilizing the resources readily available to you. This means keeping your budget low, not taking a salary, working with your team to develop your product for sweat equity or outsourcing some functions altogether. It may take you longer to get your product to market because you are relying on yourself for everything, and often learning as you go. It is, however, a way to keep developing your startup concept.

There are plenty of startups that have been successful without taking outside capital. 37Signals has profiles on a few of them. Campaign Monitor was able to bootstrap because the founders had the background necessary to build and design the product. They also used the profits from their consulting business to fund the project. When Admoda started, they set out to bootstrap from the start, avoid the need for investment, make a lot of money and have fun. The founders put up the original investment and then reinvested the profits to avoid taking outside capital.

How can you learn from those examples and get your bootstrapped startup on the right path? These strategies can get you started.

1. Test the Market

Before you spend money on anything, you should talk to potential customers about their level of interest in your product. Ask them how they would use it, what features they might like to see and how much they would consider paying for it.

This will help validate your model and justify spending the time and money to build your company. It will also help determine which functionality you need immediately, versus what can wait until you gain more traction.

2. Efficiency

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To bootstrap, you need to be as efficient as possible. That could mean doing small, inexpensive marketing tests until you find the best results. When designing your website, first add the most important functionality in order to get a product to market, but to minimize your later work, make sure to consider additional features.

3. Keep the Team Small

A large team could drain your cash more quickly than any other expense in your budget. Until you have a positive cash flow, only hire people you absolutely need. If necessary, give current team members multiple job functions, and offer stock option incentives instead of cash.

4. Interns

Using interns at your startup is a win/win for both parties. The intern gains valuable experience working at a startup and you get support at little to no cost. Since the team is small, the intern might have more influence than they would at a larger company, becoming involved in many aspects of the business.

For your startup, interns provide free or inexpensive labor that leads to quicker profitability.

5. Marketing

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Hiring a PR firm can be very expensive, and there is no guarantee that they are going to get you featured in a magazine or blog. Try outsourcing your press releases, but contact reporters on your own. Find stories and outlets that are related to your project and come up with a simple pitch for a story idea.

Use the free service MediaSync to get a reporter’s email address and contact him or her directly. Reporters are interested in hearing from the CEO of a company, and if you have a good story idea, they will respond. Help a Reporter is another site worth mentioning — reporters search for experts like you to quote in their stories. It never hurts to make yourself available.

6. Outsourcing

If you don’t have the capital to hire an employee on a short-term project, consider outsourcing the work. You can easily outsource your web design and programming, but you will need to weigh the pros and cons of not having that person on-site.

Some websites that can help in your search for off-site talent include Elance and Freelancer. On these sites you can either post your project and have people bid on it, or you can search through the talent and contact potential candidates directly.

7. Social Networks

Use Facebook and Twitter to connect with your customers. Both are free networks that you can use to promote your business to a broad audience. Become the expert in your field and blog on your website or other sites related to your industry. This will keep customers coming back often, meaning higher potential for sales.

Bootstrapping your company can be a rewarding and beneficial experience. It demonstrates how you can accomplish a lot with a small amount of capital. Once you have proven your product in the market, you may need to take on outside capital to help with the growth period. But continue to manage your growing budget as if you’re still bootstrapping; it will help you keep costs down and stretch your money toward success.

Images courtesy of Flickr, jules:g, iStockphoto, BrianAJackson, pressureUA.

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