Archive for March, 2010

How To Find an Investor For Your Web site Project

Last week’s post talked about why its necessary to find a separate investors and Web site developers. It talked about why the best Web site developers don’t take projects in exchange for “equity” and why it is a bad thing for Business owners too. Today we address how to find an investor.

Finding an investor for any business is hard. You have two jobs to do. First, convince a potential investor that you have a great idea that can be successful. Then, convince them that you are the right person to shepherd this great idea and make it successful.

It is helpful to put yourself in the shoes of a potential investor — would you help fund this project? Keep in mind that at least 1/2 of all businesses fail within 4 years. A popular outcome would be losing 100% of the investment. Would you like this to happen to you? What attributes would you look for in funding an enterprise?

One easy way to make your job much easier is to start your search for an investor with friends and family. No one likes to do this, but it is the easiest way to raise money for a project. It is much easier because you don’t have to convince your Aunt, father or friend that you are the right person to shepherd the idea. All you need to do is to convince them that the idea is good. Half of your job is done! Even though your investors are friends or family, you still need to document the loan or investment and treat them fairly.

Contrast this with Angel investors and Venture Capital companies which are the other directions you can go — convincing one of those to invest money with your firm will be much harder and they will ask for more say in how your business runs.

What ways have you received investment in your business?


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Web site Developer for Equity: Does it Work?

I often get phone calls from potential clients who are looking to find a Web site developer to work on a project in exchange for a share of the revenues. This is one of my most frustrating phone calls because my advice is almost never acted on. Maybe some commenters below can add some weight (or alternative approaches) which might make this advice more effective. Let’s delve in:

Let’s say you have an idea to build a site that sells a product. The product is the best product ever and you know that if you get it in front of the right people, they will buy it. The only major expense you have is making a Web site. You have little money to invest in this project but you know you want to do it and you know it will be successful. The best idea you can think of would be to find someone to make the Web site for you without charging you for time and expenses, and instead, they will share in any profits that you make. You know that when your product is successful, you will have to pay them more money than you would have if you paid at the beginning, but it is the price to pay to get your project off the ground. Sounds like a Win-Win, right?

In fact, it is not a win-win. It is almost always a lose-lose, unfortunately. The flaw is your business actually needs two separate things: an investor and someone to make the Web site you need. The skill sets for each person is different:

Investor Web site developer
Has money to spend Is a great Web site developer
Trusts you and is willing to let you run the business your way Is willing to follow your directions, but has a lot of experience to share with you
Believes in your idea Understands your idea

The chances of finding one person who is all of those things is very small. In fact, almost all great Web site developers won’t be willing to take the risk that your business won’t be successful.  Your best bet is to divide and conquer: find a great investor (more on this coming in my next post) and then find a great Web site developer.

What do you think of this advice?

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Social Media Gone Wrong

My wife and I have a young child and we are always on the prowl for advice. I recently was reading online about a popular source of advice (Dr. Sears) and ended up at his Facebook page. That’s where I found this thread:

http://www.facebook.com/askdrsears/posts/366941752240

I’m hoping it stays up and isn’t deleted by the forum manager, as it is a must read for anyone engaging in social media of any type. Just in case it disappears, the link has a seemingly innocuous announcement about some changes coming to the Facebook page for Dr. Sears. In response, about 30 people echoed a complaint that one person wrote: “It seems like this page has become more about the products/selling stuff than answering the mamas”

This is a classic piece of trying to blend old methods (aggressive selling and promotion) with new methods (social media) and failing miserably. The old way involved blasting a bunch of marketing materials out to potential customers, in the way that Bed Bath & Beyond does with its coupons. The new way involves having a conversation with your customers. Trying aggressive marketing and having a conversation at the same time and you will get complaints. With social media, the complaints are shared with others instantly. That is much worse than not engaging in social media at all, because the complaints can travel faster than you can!

What’s the lesson? Make sure that if you engage in social media, you are reading and not just writing. Make sure to listen to what your customers are saying. It will make them better customers and your product or service better as well.

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What I’m Reading

In an effort to become better as a business owner and Web site developer, I’ve taken to reading other blogs. Here are some posts that have caught my eye recently:

You Rock — Seth Godin’s blog is popular and a great inspiration. His post about how we all rock for 5 minutes a day is inspiring me to blog more. :)

It is Make a Referral Week — Duct Tape Marketing is running a week long theme where they talk about referring business to others.

Interesting Web Books – About.com Web design blog has a lot of useful information about my field, including this post on some new books that are helpful.

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How 11th Grade Math Helped A Web site Development Project

Most people graduate high school and/or college wondering when they will ever use all of the knowledge they have accumulate during school days.  After all, the War of 1812 doesn’t come up much in everyday conversation. But every so often, there’s a nugget of something obscure from school that helps in an everyday problem. This week, I had one of those experiences.

This is an example of a Pie Chart we were trying to make.

We’re working on a project that called for laying out a bunch of names in the correct or a Pie Chart. For example, the pie chart might have 6 wedges and we need to put name #1 in wedge #2, and name #2 in wedge #3. Of course, that’s easy — but it is much harder to place lots of names in the right part of the pie chart in an automated manner. We needed an easy, mathematical way to put the names in the right places.

I’ll spare the average reader the details, but the solution involved those trigonometric functions cosine and sine. Using these functions, we were able to come up with a way to plot the names in the right locations (for those interested: cosine of the angle on the circle yields the x coordinate, sine of the angle on the circle yields the y coordinate). We added another fun math function modulus and some random numbers and we found a solution that works for our project.

I admit it. I didn’t like 11th Grade Math much. Our teacher’s “Happy Parabolas” and “Sad Parabolas” only brought me sadness. But today, Pre-Calculus class was very useful in solving a Web site development problem.

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5 Things to Look for in a Web host

I’ve had a number of conversations with potential clients about Web hosting recently. There are thousands of Web hosting companies, how do you choose the one that is for you? Here are 5 questions to ask your Web host:

- What is your Technical Support like? Even though you are paying a fee for a service called Web hosting, the majority of the fee you pay goes towards technical support. That’s why the same amount of space with similar features can have a wide cost difference between companies. Good companies have knowledgeable support staff and have short hold times. Less expensive companies have technical support staff that are in foreign countries, are only accessible via email and/or less experienced staff. Try contacting support before you purchase and see what it is like.

- Is my server shared with others? Sites with high availability needs need to be on a server not shared with others. Other sites may be on a shared server to save on costs. It is important to know which one you are buying and which one you need. Also, dedicated servers often have service level guarantees. Do you have one?

- What sort of disaster planning does you firm do? Disaster planning is a very important part of offering Web hosting. We’re dealing with a Web hosting company this week that has had multiple servers down for 10 days because of a fire suppression system test that went horribly wrong. Their help desk system doesn’t work, their staff is overwhelmed and it appears they lost at least some data. It isn’t that having a plan can prevent a disaster, it is just a way of preventing a disaster from spinning out of control.

- How much space, bandwidth and mailboxes are included? This is the question everyone always asks, but it is the least important question of the ones on this list. Almost all plans have enough space for a typical Web site.

What questions do you ask before choosing a Web hosting company?

Disclosure: my firm provides Web hosting services to our Web site development clients.

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