McSmartypants Software

McSmartypants Software We help build small businesses from the ground up.

11/10/2021

Want to start a business on the side? We've seen successful businesses start on as little as 5 hours per week.

Here's what you need though:

1) Something that excites you. What could you talk about nonstop? You'll need to do some form of marketing and likely need to produce content weekly- what do you envision doing that around?

2) Something that excites customers. If other people don't value it or aren't curious, they'll never buy. Then, you won't have a business. You'll have a hobby.

3) Something with good margins. Usually you can charge more by combining things in unique ways. This keeps you from being compared easily to other companies, and makes it easier to be top in your marketplace.

So, if you can think of something that you can charge a good amount of money for, that you could get excited about constantly, that customers get excited about, the only remaining ingredient is:

PERSISTENCE!

It'll take time for people to get to know and trust you and your brand. And, no matter the initial feedback, unless you have tons of money, it'll take time to grow and expand. Plan on doing something for years. That's just how long it takes for something with modest growth to actually hit decent numbers.

Is there anything else you think is necessary?

Post in the comments!

10/28/2021

A great product or service will tremendously reduce friction in its users' lives.

But, how can you try and measure this reduction in friction?

To keep it simple, just look at two things:

1) Time saved

2) Real (or perceived) effort on the part of the user

The ideal product or service would require little to no time or effort on the part of the user.

If the user could snap their fingers and get what they wanted, then that is about as friction-less as it gets. The closer you get to that ideal, the more potential there is to make money as well.

If you can be heads and shoulders above the competition on this front, and prove it, then you're very likely to succeed and sales will flow a lot more easily.

On the other side though, if the competition is already super quick and works automagically, your prospects aren't likely to care about your new offer because it's not a deep enough problem for them.

10/19/2021

If you've got a business and you're wanting growth, there are 4 main scenarios to consider.

These 4 quadrants can be created by asking yourself these two questions:

Are you going after a new customer base, or your current customer base?
And, are you using a current product/service, or creating a new one?

1) Current customer base with current offer makes sense if you're not well known and the economics of everything works out

2) New offer with current customer base means you should interview and really know your customers so that you know upfront what will make money

3) Current offer with new customer bases might mean new geographies or demographics, etc. Be sure to understand that your offer fulfills this new customer's needs and that any necessary changes to the fulfillment of your offer are considered

4) New products and new customers take a lot more work but can be great for diversification and for disruption if done well

10/15/2021

We all hear about the power of compound interest, but when it comes to side businesses, people sometimes stop if it doesn't look like they'll make a quick million.

Let's start off with the end in mind, and show what even humble beginnings can achieve:

In this hypothetical situation, you start a side business that only takes 5-10 hours of work per week.

You use your great sales skills to ensure an unexciting yet "easy" 36% continuous growth.

First, let's start with what the end looks like: earning $20 million in 20 years, by selling a $10 million revenue business.

Sounds pretty awesome, right?

But, this business starts off doing only $10k in revenue the first year.

And, it's only doing $40k in year 4.

The way continuous compound growth works at 36% is that you'd double every two years.

So, $80k at year 6
$160k year 8
$320k year 10
$640k year 12
$1.28 million year 14
~$2.5 million year 16
~$5 million year 18
~$10 million in year 20. And then you sell it for $20 million.

This means you'd have effectively earned $1 million per year for all of that work... you just didn't get to reap any of the benefits until year 20.

But, how many people would've quit somewhere around month 3? Or year 3? Or, even year 10 for that matter?

And, this is assuming steady growth.

The more likely situation for folks with sales skills is that they quickly jump to that $100k mark and then pause for a bit while they keep learning other skills and strengthening their business.

Another likely situation is that you'll have a down year or two or four due to the economy or your industry somewhere mixed in there.

But, if you KNEW you could make $20 million by year 20, and you were prepared for this in advance, wouldn't you still keep at it?

That's the difference between looking for a quick solution and never getting there, and actually having all of your dreams come true within 20 years.

Be in it for the long haul and keep growing yourself and your capabilities alongside the business.

10/14/2021

Joint ventures are where two companies engage in some activity together that benefits them both.

Whom should you look for to form a joint venture?

First, consider who has your target prospect as their current customers but aren't competitive with your offering?

Second, consider companies that might have extra resources they aren't fully utilizing or that you could bring more value to.

Third, consider whom you could provide huge benefits to with your customer base.

Then, reach out and see if you can find a mutually beneficial way to move forward.

An ideal joint venture won't take much time on the part of either of you, but helps you both gain access to the customers of the other in a valuable way (aim for the win:win:win of course).

And, try this out with multiple people. They won't all work out, but when you find one that is solid for you both, you can really build something big and more profitable together.

10/13/2021

Launching a new product or service? Focus on something high-ticket with a defined end period instead of a recurring payments model.

This has several benefits, both for your business and the customer:

Clients are willing to pay more for not being "locked in" and the higher price point allows you to deliver more value.

Also, the cash flow could forever change your business. Most businesses sink in a lot of cash upfront to acquire a customer and then take months to make that money back.

That means you could go bankrupt by getting too many customers at once.

Isn't that insane?

Instead, with a higher upfront cost, you immediately receive all of the cash. That cash covers all of your deliverables and should be high enough to acquire more customers.

No bottleneck in your business this way.

10/12/2021

The path of a founder in a successful business varies, but tends to look something like this:

1) Sole-proprietor who has something to sell and spends most of their time selling and fulfilling

2) Then, a sole-proprietor who brings on some help to ease the load of sales and/or fulfillment

3) Then, a true manager who hires people to do some aspect of what they were doing well before and gets those new hires to do well. Operations starts to emerge as a need

4) An executive who has a corporate structure that includes needing to add in things like HR, accounting, finance, legal (etc) to what they do. A good executive manages multiple levels across multiple departments with a clear and repeatable playbook.

5) A leader who inspires others and has leaders in corporate roles that are better and more experienced than them in those aspects. The leader isn't as involved in the day to day and is more about general direction and making a smaller amount of more important decisions.

6) An investor. They are completely out of the business and have delegated everything out. After ~2 years in this role, they can potentially sell the company for its maximum value, if they choose to.

Now, not everyone has to go down this path. And some people try to skip steps, or prefer to hang out at one spot over another. That's all fine.

But, if you think about it like this, it might be easier to wrap your head around how best to grow things.

10/12/2021

How do you know if your company is growing at a solid rate?

In 2015 Brad Feld introduced the "Rule of 40" to the world.

For small businesses, this is a great guide because many people might get discouraged when they don't knock it out of the park immediately.

The rule is essentially that every year the % of revenue growth + the % of EBITDA should equal 40%.

This means you could have 40% revenue growth and no profitability, and that's fine. Or you keep revenues the same but profits grew 40%.

Or it's 20+20, 60-20, etc etc

For small businesses this is a great guide because many people might get discouraged when they don't knock it out of the park immediately.

10/11/2021

Many sales guys see higher priced things as "extra commission" while others feel badly about charging more.

For salespeople turning into business owners, both thoughts are a recipe for disaster.

Salespeople, take note that you need a higher price to have a proper margin. AND, this margin shouldn't go all into your pocket.

You need to account for your business and its future growth.

More money in your pocket = less money to grow the business.
..Which ironically = less money in your pocket in the long run.

For those struggling to charge higher prices, think of it like this:

If you don't have lots of cash coming in on each sale, you can't treat the customer as well as you could.

You also cannot expand and pay other people to help take care of customers to an even higher degree.

You also cannot attract new customers at the highest levels because you won't have an appropriately sized sales and marketing budget.

And, the fewer customers you have, the less you are able to help them because you really don't know them that well.

Getting lots of customers is a prerequisite to being an expert in your niche.

Think of the margin as what is actually helping you run and grow the business while also delivering better results to people.

So, what are good margins?

Well, this really depends on the industry.

But, that being said, here are some rules of thumb:

60% is the bare minimum if you're ever looking to get beyond a one-man show.

80-95% is where growth companies are.

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