Business Development

On June 28, 1994 I removed my U.S. Navy uniform for the last time and donned a business suit. Overnight, I went from steady-paycheck-sailor to self-employed life insurance agent (although I preferred the term “financial planner”). The number 1 rule you learn as a new life insurance agent is this:

You’re either in front of a client making your pitch or you’re trying to get in front of a client to make your pitch.

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So here’s the scenario. You have some capital to invest in 5 very small, early stage businesses. The only problem is you have 20 applications from businesses who are competing to get that capital. How do you assess which ones should get the money? What are the top 5-10 specific questions you’d ask (not just “what’s your business plan”) the business owner?

Keep in mind, this is an investment and not charity, so you’re assessing which businesses have the greatest potential to generate the most value for the most people. That includes you (the investor), the business itself, the surrounding community and the potential customer base for the business. By the way, this is based on a real situation.

Here are my top 10:

1. Why are you passionate about this business?

2. Who is your immediate market? Extended market?

3. What will they find remarkable about your product, product line or service?

4. What are your revenue targets for each of the next 3 years?

5. How will you reach those targets?

6. What are the top 3 obstacles to achieving your targets, and how will you overcome them?

7. What unforseen threats could prevent you from reaching your targets?

8. How will you invest this capital, and what sort of return do you project, and when?

9. Where might you go for additional capital if the need arises?

10. What will you do if you don’t receive this capital?

I did a podcast interview with Bob Walsh, who just released a new book called MicroISV: From Vision to Reality (you can download the audio here if you haven’t already). I also used the interview to test out a new service called CastingWords.

CastingWords will take any audio file you provide and transcribe it for you at a rate of just $0.42 per minute of audio. To transcribe the 45 minute interview with Bob, I paid $18.90, and the turnaround time was about 36 hours. They provide you with three file format: html, text and RTF. I simply copied their transcript, pasted it into MS Word, then converted it to a PDF file. It’s pretty long, so I’m not posting the full transcript on this blog. If you want to read it, get the PDF file here.

As for CastingWords, I couldn’t be happier with it. You simply provide a link to the audio file, tell them how long the audio runs, then pay the fee. Very simple. Very easy. The only way it could be better is if it was free and faster, but 36 hours is pretty damn good in my book, and from what I’ve seen, their rates are below most of the transcription services out there. I’ve not yet checked the transcript thoroughly for typos, but it did pass a spell-check with flying colors. If you need some audio transcribed, definitely give it a look.

You’ve probably heard about The Million Dollar Home Page. If not, it’s a project that was launched by a 21 year-old college student named Alex Tew of Wiltshire, England. The idea was ridiculously and embarassingly simple: make a million dollars by selling advertising space at $1 per pixel on The Million Dollar Homepage. Ridiculous right? Think again. As of today, Alex has only sold 999,000 pixels. For you mathophobes out there, that’s $999,000 earned in less than 5 months. The last 1000 pixels will go to the highest bidder on ebay (current bid: 153,100).

It doesn’t end there, however. Alex’s embarrassingly simple idea has been copied more than a few times by other folks hoping to milk the MDHP cash cow for all it’s worth. The latest copycat is Teresa Luquette, who created The Million Dollar Womens Homepage this past November. Her earnings from the copycat effort so far: $133,300. Not bad for a couple of months and a knockoff idea.

All copycat scorn aside, the moral of the story is this. Originality is a beautiful, but often over-rated ideal. The smart money invests in an idea that’s been proven to work.

(via Denise Wakeman)

Jack Welch:

“Some people say I’m afraid to compete. I think one of the jobs of a businessperson is to get away from slugfests and into niches where you can prevail. The fundamental goal is to get rid of weakness, to find a sheltered womb where no one can hurt you. There’s no virtue in looking for a fight. If you’re in a fight, your job is to win. But if you can’t win, you’ve got to find a way out.”

As quoted by Noel M. Tichy and Stratford Sherman in Control Your Destiny or Someone Else Will.