December marks the first full year of running New Marketing Labs, a digital marketing company. I launched it with the help of two business partners, only with enough money to cover a few months’ salary and the power bill. While we don’t share our numbers, I will say that we stayed in the black the entire year, and are already on track for a 2x growth in 2010. I want to share some ideas I picked up along the way.
You Can Start For Peanuts
What we think we need for money and resources to start a business is often not accurate. Depending on the type of business, you might need to outlay some cash early, but when it came to resources, we were able to launch without new computers (we primarily used our own personal laptops); we went without a fancy website (we put one together four or five months into the business, but we relied on my blog to drive awareness); and we went without any traditional marketing whatsoever (we used blogging, speaking gigs, and Twitter to land 100% of our business). Our costs were almost all salary since our business is consulting.
Sure, our office didn’t have an amazing view. Our chairs and desks weren’t in top condition (they worked‚ mostly). We didn’t run out and buy Macbook Pros right away. We used our personal cell phones. But they all helped us get the job done.
Takeaway: Focus on what you need to drive the business, not the “trappings” of a company.
Think Like Pirates
Our goal was simple: work with clients to help them find gold. We classified “gold” as whatever the client wanted most, and acted accordingly. Similarly, we maintained only a few key metrics to measure the health of our business: revenue and customer satisfaction. Helping the client succeed is obvious, so I won’t belabor the point. Focusing on revenue is less obvious, as some companies often come up with strange metrics to use in place of the ones I pose here.
At one point, I asked my business partner Stephen Saber, “You wouldn’t care if I stood outside and sold T-shirts to a concert, would you?” He replied, “As long as it brings in decent revenue and isn’t illegal, I don’t care.” And he meant it.
With that kind of freedom, the team at NML and I just focused on coming up with projects that our clients wanted for which they would pay. Nothing was out of bounds. We just worked hard to make our clients successful partners and were selective in defining key metrics to measure our success.
Takeaway: Keep your metrics simple, and focus on value.
Pay When You Can Afford It
Writing this piece on the OPEN blog is fun and satisfying for me because American Express not only provides credit to businesses, but they help them manage their businesses responsibly. We did the same with our growth. We didn’t hire a new employee until we could afford to pay him. This sounds so rudimentary, but some people don’t think this way with new businesses. We put off many purchases until we had the revenue in the bank to pay for it. Even if we charged something, we paid off the balance as soon as we could.
It’s amazing what you think you need on the way to success. Sometimes we had to work more hours to make up for the employees we didn’t hire. That isn’t always the smartest advice, but those extra hours saved us from worrying about whether we could pay our bills.
Takeaway: Use sweat instead of credit.
In the Coming Year…
After twelve months, I’ve hired four more people, including replacing some of what I was doing myself with two principals. Colin Bower, my guy in charge of external-facing partnerships and business, showed me our projections for 2010. They looked light until he explained how he drew them up: every single dollar in the 2010 budget was already in the December 2009 sales pipeline. Even with salaries, we were showing a profit with what we already had in the queue instead of what we would sell in 2010.
This was pragmatic. It also gave me a sense of where the “floor” of my business would be so that I could accurately dream up where our “ceiling” might be. If you don’t aim high, you hit low. On the other hand, if you aim silly, then you never hit the mark.
Because I followed the above advice, I was reasonably successful in my first year of business and finished the year well in the black, and positioned to take on 2010 in a down economy. I think you can do the same if you work within your means and stay very lean.
What’s your take on all this?
Chris Brogan is president of New Marketing Labs, a digital marketing company based in Canton, Massachusetts. He is also co-author of Trust Agents, the New York Times and Wall Street Journal bestselling book about how to use the Web to build relationships that yields results. He blogs at Chrisbrogan.com.