There is no concrete formula in creating something out of nothing. Without a robust framework, it is challenging to acquire a skill in executing an idea. It takes a lot of failures and experience to achieve something from inspiration to implementation. Here are the four stages of The Invention Cycle, from Creativity Rules by Tina Seelig.
1 – Imagination. It is envisioning something that does not exist. Our product development started with the idea of consolidating business transactions with multiple branches in real-time. At that time, that product does not exist in the market.
2 – Creativity. It is applying imagination to address the challenge. Imagine a process where the head office of a multiple outlet store sees its sales and profitability in real-time on every sale they make.
3 – Innovation. It is applying creativity to come up with a unique solution. The Internet was just starting at that time, and most of the business applications in the market were desktop-based client-server applications. With the model that we were envisioning, we thought of developing a full web and browser-based product for the market. Though they said we were too early, we were the first.
4 – Entrepreneurship. It is applying innovation to scale ideas. Entrepreneurship is a much broader topic, but the innovation it is talking about here is a consistent trial-and-error, testing-and-tweaking of approaches in all aspects of a business from sales, marketing, operations, HR and product development.
The BIG question is, should you raise and take investor money? It’s been the default for young entrepreneurs and that has been their indicator of startup success.
When I first started, I didn’t regard intently to build and sell a business. I just thought of the idea of loving the process until I met someone about five years ago. He was introduced to me by a common friend and had a very good impression of him. For privacy, I’ll never say his name and details, but he is a foreign national and is one of the most respectable men I have ever met. He was my angel.
He boosted my perspective in the company and opened how big the potential of the market here in the Philippines. But naivety took over. Long story short, I took his money for equity with the intention of getting big. I thought I know it all. I thought my knowledge and experience from the (micro) scale of my business for my first 10 years was just enough when you scale up.
Yes, we eventually quadrupled the business in revenue/profits, projects and team in just a year but was it sustainable or can it further scale? That’s where I lost it. Here are four major differences when you run your startup in bootstrap mode vs. with investor money.
Cashflow stress vs. Investor stress. When you run the company by yourself, then you have to keep your organization lean so you can be ready when sales and collection are delayed. You are in defensive mode. Your day-to-day is sales and collection because your stress will come from vendors and employees you couldn’t pay if you fail.
If you have a board or investors, then be ready to explain yourself to them if you don’t meet your company objectives.
Managers vs. junior employees management. My biggest mistake was hiring the wrong managers. I only considered their technical experience when I took them on board but didn’t really screen their personalities, attitude and soft skills. It was difficult to assess those traits in general, but my major mistake was tolerating them and not terminating early. If your organization is lean, then you can groom your employees to adapt to your core values and the culture that you like to implement.
Sprint vs. Marathon. When you take the investor money, then you are expected to run it in sprint compared to when you have the entrepreneurial freedom to run it at the pace you want.
100% control vs. Less Control. Be ready to give up your free Starbucks coffee, or your complete freedom to pay your meals in the restaurant for representation because investors or even your CFO may question that especially if you are not meeting your goals. If you run your business for a long time without anyone questioning you on minor expenses, then be ready to set aside your ego because new company policies may not tolerate those perks especially if have yet to meet your goals.
In summary, here is my take on why you should take or not take investor money:
Define your measure of success. If you see success as being able to provide for your personal and family goals with enough company revenue and profits, then you won’t need to raise any fund. Otherwise, if you feel pride in valuing the company at P400M or P1B, and selling it, then investor money is for you because it is very difficult to grow at that level from current business profits.
Your Market Share is Big Enough. If you feel you only have a tiny percentage of the market share and room for growth is huge, then you may consider it. In any case, investors will never invest if the market is not big enough.
You Can Give Up Control. If you can be professional enough to submit to new company policies and give up some control and ego, then go ahead.
You are Self-Aware and Strong Enough to Face Adversities. Do you really think your startup has the potential to be a unicorn with that one big idea? To me, it is like buying a lottery ticket and expecting to win. In any case, be ready for criticisms, customer feedback, employee feedback, investor feedback and legal issues because the bigger you get, the more fire you have to fight and problems to troubleshoot.
Final words. Do not rush to get investors or VCs. Build traction first, test and iterate and savor your entrepreneurial freedom. Consider income from other sources if needed.
But in case you meet the criteria above in favor of raising funds from investors, then consider their added value and efforts, and not solely on cash they will provide.
On my end, I am now very engaged and committed to streamlining our delivery process on a self-sustaining model. I want to keep it lean and make our growth a marathon. I am now in the process of making sure our customers will use and be happy with our products, which were difficult to monitor and control if you have a bigger organization.
While my friend was the one investor who got away, I am very grateful to him and praying that I give back that favor in the future. I won’t be able to write this if it is not for him and that experience.
Starting a business is a very daunting task. However, with this week’s tips, you can start by validating first your business idea before you even go full blast with your business. Here are some tips from the book The Lean Startup by Eric Ries:
Draft the User Experience Vision. It is crucial to develop the journey of the user. If possible, draft it with functional specifications and UI/UX wireframe. It will serve as a high-level plan, so you will be able to consider all aspects that you can offer to your target market. The photo below is the actual brainstorming notes for our Snap Accounting project at Hilsoft.
Identify Critical Assumptions. With Snap Accounting, we assume that small businesses, who want to make their back-end transaction processing efficient, are not tech-savvy enough to setup existing self-service accounting platform. So our critical assumption is that they will need a platform where they can start to record their invoices or checks in a snap.
Build an Early Version to Validate a Critical Assumption (Concierge MVP, Smoke Screen MVP). In 2016, we started by forking the accounting module from our existing ERP suite. We quickly replaced the UI/UX but launched it without the self-service option yet. We offered it to accounting firms but did the customer onboarding manually. That is the concierge Minimum Viable Product (MVP) approach. The smokescreen MVP is where you develop marketing campaigns without a finished product yet. It is like a pre-selling or pre-order style of MVP.
Release and Measure. After reaching 100 active users in the Concierge MVP of Snap, that’s the time we developed the self-service option (hilsoftsnap.com). We are now in the process of posting online ads and measuring the feedback of the market. At the moment, we get about 5-7 new registrations per week, with about 1-2 accounts that remain active.
Pivot or Persevere. This stage is where you do iterations in your product and tweaks your marketing efforts. I recommended that you continue to do that cycle until you reach your ultimate goal of either your revenue goals or investment for growth. Perseverance is the key.
I want to welcome back Net! He was lost for a couple of months until I found him hibernating inside the car compartment. Net is here to bring you creative and innovative tips or tricks on Tuesdays.
Morning breakfasts don’t have to be the same fried thing every day. Today’s tip is a list of breakfast options that are not only healthy but also delicious though you have to invest in some unique ingredients. In any case, it is worth it.
Here are the common ingredients on every menu:
Protein Powder / Whey
Fresh or frozen Strawberries or Blueberries
Goat or Feta Cheese
Preparation is so easy. You’ll need a blender and baking oven in some of the menu.
Menu sample 1: Veggie Egg White Omelette
4 egg whites
Heat a medium-sized pan with cooking oil and saute the bell peppers and spinach. Pour egg whites, flip, mix and fold.
Menu sample 2: Baked Eggs
1 sweet potato
Preheat oven to 400 degrees F. In a pan over medium heat, add 1 teaspoon of coconut oil and add your chopped bacon. Cook bacon for about 3 minutes then set aside.
In the same pan, add your sweet potato and cook for 4 minutes over medium heat.
In a small oven-safe dish, layer your sweet potato on the bottom of the bowl, then chopped bacon and crack eggs on top with some salt and paper.
Bake for 15-20 minutes.
Menu sample 3: Protein Shakes
1 scoop of protein shake
1 tbsp chia seeds
2 cups of milk
1 handful of spinach
1/4 cup of strawberries or blueberries
Place all ingredients into the blender and blend for 1-2 minutes.
You can experiment with different types of shakes from strawberries to peanut butter, avocado, dark chocolate, flaxseeds, etc. Or mix and match eggs with greens, avocados, pancake, banana, etc. There’s a lot of options or even menu on the Internet. You just need to stock the common ingredients and tools above.
Productivity is on the decline when we are disengaged from our work. We tend to procrastinate, at times, or become lazy with a big chunk of tasks on hand. It is the reason why I am obsessing the idea of making my work more anxiety-free and be more productive.
It’s a good thing that there are many productivity mobile apps available to make our work life more comfortable. I’ve tried a lot of tools, and here is what I use for now.
Trello – I fell in love with Trello after trying several project management tools. I tried Assembla, Jira, Asana, Remember The Milk, but Trello somehow fit in with my work and lifestyle because of it’s built-in support for agile. I also have met Michael Pryor, co-founder and CEO of Trello and mentored us in Lisbon Web Summit last 2016.
Alarmed – it is a very flexible reminder app that can nag you, or give you the option to snooze, add more hours or minutes on the fly. We all know that our day doesn’t really happen as planned, and with this app, I can easily adjust accordingly.
Viber, WhatsApp, Messenger, WeChat and Telegram – I use all of these tools because of the different preferences of my contacts. If I have a choice, then I would prefer to have a single app for all. I tried researching for one, but there’s no available in the market yet. Hopefully, someone invents this soon.
Spark – I just tried this email client app to solve my problem in delegating an email to someone without forwarding it to the person. I still use the Gmail app in sorting out my email, but I use Spark when I need to delegate some messages in my inbox.
Forest – I use this app when I want to focus on a particular task, and if I don’t want to be disturbed. It is an app where a user can set some minutes to work on a job (Pomodoro style). Trees grow virtually as a virtual reminder that you are growing and productive until you finish the time set.
These are just tools, but in the end, it is all about how your approach in using them. You can use this and still be stressful. The key is organizing your time properly, time-blocking, and being mindful of urgent-important matters vs. non-urgent-non-important ones.
Maybe you would want to stop and gather your thoughts before engaging. I use Evernote in journaling and mind mapping when things are a little bit all over the place.
In our culture, legal support is often viewed as a luxury, than a necessity. We don’t typically subscribe to a legal retainer with a law firm during the early stage of our business. Why? Because we tend to focus on selling, marketing, and survival than the legal aspect. But in my experience, I would recommend that we establish our legal structure early on to avoid mishaps in the future.
As a startup or a small business, here are some guidelines on how to protect ourselves legally without necessarily hiring a legal retainer.
Company Registration. Register as a corporation as this limits the liability of the owner or shareholders. You won’t be personally liable to the debt of the corporation. Gone are the days that we need to find dummy shareholders in the Philippines because of our support for a one-person corporation. I won’t mention details of others like, BIR, City Hall, SSS, PHIC, HDMF, etc., as these are all mandatory and straightforward.
Employee Onboarding. Make sure you secure signatures of the following when you signup a new employee:
Company Policies, Employee Manual and Code of Conduct
Employee Management and Firing.
Document all incident reports, issue Notice To Explain on every incident and implement disciplinary actions according to your code of conduct.
If you want to fire an employee, schedule an admin hearing to let him/her state their case, and then execute fairly.
Set a quarterly reminder to allow employees to evaluate themselves, then followed by the supervisor’s evaluation and then score them 1-10. For probationary employees, make sure to have a performance evaluation every 3rd and 5th of the month.
Sales Contracts. This is basic, but we tend to disregard once we signup a deal with a customer. Make sure all your projects or sales are well documented with details like project period, the scope of work, and payment terms. Be also mindful of the termination clause. Some customers see a weak termination clause as an opportunity to terminate and ask for a refund, but in reality, they just changed their minds or have no budget at all.
Service Delivery. Document, document, document. Make sure to document all services rendered by securing a service delivery acceptance form. If you deliver goods, a delivery receipt is a must. Record every minute of the meetings and file them up properly for easy retrieval during a legal mess. If the customer issues a demand letter, make sure to respond.
Tax Management. This is a broad topic, but the most basic is proper filing to BIR of sales and expenses regardless if you have transactions or not. Consult with an accountant and get a copy of tax filing schedules and deadlines.
Dealing with legal issues are inevitable when your business grows. Thus if you set your legal structure early, then it will significantly help you in the future. Hiring legal will obviously protect you later on as I still recommend this when your budget permits.
Telecommuting, remote work, home-based jobs are terms that we use in working virtually. This virtual team structure is growing in popularity in organizations. To some extent, we are already practicing working with people who are not in our visual proximity although we are in the same building or premises.
We utilize instant messaging, emails, video conference tools to collaborate with our team.
Many organizations who are flexible and adaptable have already explored a virtual office environment as one means of achieving goals and project objectives.
BPOs in the Philippines are virtual teams of their corresponding HQs in the US or Europe and not only dispersed geographically but also in timezones.
Here are some advantages of virtual teams:
Reduced time and costs in travel
Higher productivity, more time, and fewer distractions.
A higher degree of employee engagement and freedom from office policies
For companies to leverage talent across geographic boundaries.
Lesser overhead cost of office space for organizations.
Quicker decision making, less face to face meetings.
Improve detail due to documented instructions and notes
Some people work well with physical interaction.
Employee behavior diversity in virtual teams leads to cultural issues.
Employees who need training, encouragement, and motivation.
Weaker control and some employees don’t have a conducive workspace.
I am writing this because I am not sure of the answer. Maybe it depends on the industry, culture, nature of products/service, or ethnicity. This post is also to officially announce that Hilsoft, being an advocate of change adaptation and innovation is going virtual. This move is also in line with our recent initiative to go complete SAAS by the end of 2020.
Since last month, I started experimenting being virtual by living in a nearby province and less face-to-face meetings with the team at HQ. We already have initiated a survey internally with the employees who are willing to work at home, which 50% responded yes and the 25% others responded either option would do. The rest, which is new employees, wanted to work in the office, which makes sense.
This coming week, I am about to finalize remote work policies, control procedures, and performance measurement. There’s so much more to consider, from hiring, face-to-face team meeting schedules, training, sales calls, client visits, etc.
I will document and publish the progress, hoping to provide value with entrepreneurs who are considering this strategy.