Bluyah Development Blog

I spent last Friday, and the better part of this evening fine-tuning the financial model for Bluyah.  I’ve been over the sales projections provided by Adam (our Director of Sales) three times now, have added new expenditures that we had previously not budgeted, and have tweaked the spreadsheet model six ways from Sunday trying to find it’s breaking point(s). 

We have a few — and by Monday evening they will all have been addressed.  They will have to be.  Our future depends upon it.

I can’t tell you the number of entrepreneurs I’ve spoken with who are “winging it.”  They have (admittedly) a great idea.  They have the skills to transform that idea into tangible form.  But they lack any type of dedication to the business of managing their business.   I don’t know if it’s due to the 5 years I’ve spent running DiMax, or if I’m just ultra-paranoid about having to go out and find a real job if this venture tanks, but I obsess over what I call the “5 C’s” of our business:

1.  Cost: I can’t stress this one enough.  If we don’t know this we will never make money at our business.  Sure, we may earn revenues, but we will never make money.  There’s a huge difference between the two — and if you are like I was five years ago and don’t understand that subtle but very important difference I’d suggest turning off the computer immediately and reading any one of the countless books on the subject.  We absolutely must know our costs: per unit, incidental, recurring vs. non-recurring, etc.  It is fundamental to making money and therefore has to be fundamental to our business.  As was famously pointed out via the dot.com meltdown nearly 10 years ago, you can not turn a per-unit loss into a profit through volume no matter how hard you try.
2. Capitalize:  This is the other size of the cost coin.  Actually, it is the coin.  We have to be able to capitalize on our vision.  Which, put bluntly, means we have to have a product and we have to sell it.  Which means we have to offer that product at a price-point that our customers will be willing to pay (what the business books call “value for value”).  David Hansson made a great speech about charging for your product.  I’ll paraphrase:  If you don’t have a price for your product, making money is difficult.  And if you can’t make money, staying in business is even harder.  
3. Consistent:  This really means nothing more than “we’ll do what we say we will, when we say we will do it.”  We’re like Mutual of Omaha:  we’ll be there when you need us, we won’t change direction on you mid-stream, and if you need someone to lasso that grizzly bear, we can accommodate. 
4. Containment:  This really could be called “Scope” — but I wanted to use a “C” word.  And “containment” is more precise.  What it means is that we need to have a deep understanding of our product and be willing to fight each and every day preserve it’s nature.  We must resist the urge to be “everything to everyone” because if we do in the end we will be “nothing to no one.”
5. Cushion: Finally, we need to give ourselves enough leeway to learn from our mistakes.  We have to provide enough cushion in the sales projections so that we’re not completely out of cash if we miss one month’s goals.  We need enough cushion in the test cycle so that if we discover that the app behaves differently on the cloud than it did on the dev box we have time to identify and correct the issue.  When we don’t use the cushion we’ve alloted, we’re that much further ahead.  And if we do use it …. well, we’re in-step with our goals, not behind them.

This may seem like a lot to obsess over, but like I said: our future depends upon it.  

The more precise we are with our written financial goals, the less room we have for ambiguity.   And the less room for ambiguity there is, the greater the chance we’ll hit our targets.  Because we actually know what we’re aiming for.

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There is a never-ending stream of information on the Net about how to start your new company, or things to watch out for when talking with investors, or even how to properly shake hands if you’re an entrepreneur.  But there doesn’t seem to be a lot of day-to-day insight from the trenches.   With that in mind, I thought I’d start sharing some of the more mundane things we’ve been doing.  Maybe it will resonate with an entrepreneur out there.  At the very least, it will help me keep better track of our new company’s history and day-to-day operations.

Monday Morning Huddle

We do it every Morning at 9:30.  Don’t bother calling at this time - we won’t answer the phones.  It’s an “All Hands” meeting and the agenda is dead-simple.  Each person in the company talks about what they did last week, what they are planning on doing this week, and any roadblocks to success they may face.  We order it by Department as follows:

1. Sales and Marketing.
2. Development and Production Support.
3. Financial and Executive

The goal is to keep the meeting to under 30 minutes.  With only 5 people currently, we’re usually able to keep it under fifteen.

Running the meeting this way accomplishes several key goals:

1. Every member of the company knows at a high-level what is going on with every other group in the company. 
2. There is no ambiguity about what we as a company are working on, or what our priorities are for the coming week.
3. Everyone is aware of any roadblocks other individuals may be encountering and can provide insight or assistance.

Like I said, we do this every Monday.  So, the obvious question becomes: what did you all discuss today?  Here are the highlights.  Just a warning: I won’t name companies we’re talking with here for all of the obvious reasons.

Today’s Meeting Notes:

Sales Stats: Adam had several meetings last week with potential clients, one with a potential strategic partner.  DEV needs to provide an estimate on integrating with potential partner’s product before we can move forward on licensing negotiations.  3 sit-down meetings planned this week.  Needs to make more phone calls and emails to “fill the hopper.”   Sees a trend emerging in discussions: companies want to see more analytical capabilities in the tool.

Development Stats:  Dev just finished up code for client release (we do custom development for various companies to fund our product development).  Currently prioritizing development activities for Bluyah.  It was to be: Sharing, Online Invoices and XML Post processing - but given feedback from Sales, release 1.1.1 will now be:

1. Connector and View/Spreadsheet Sharing
2. Online Invoices
3. Pre and Post Filtering, sorting, basic analytics (to include much improved charting capabilities)

Financial Stats: It looks like an SBA loan is out of the question - we have no tangible assets to put up as collateral, and even if I put my house up, the loan amount we could get is well below the financing we need to execute on Phase I of our business plan.  CFO has a talk with a major local bank this week to talk about other loan options.   Additionally, we’re assembling a list of Angel Investors to whom we have referrals.  We need to finalize the Go-To-Market plan before we can call this group, however.  Which means we need to know a whole hell of a lot more about our pricing model margins and associated costs when under stress.  Follow-up meeting scheduled later in the week to work through break-points in the revenue model.  Lastly - as much as we hate to do so - we simply can not financially afford to execute on the excellent marketing plan that was presented to us by a colleague last week.  It’s up to me to figure out how we can get them to deliver the Marketing materials in “phases” that can coincide with when we hope to see the first round of financing.   I always get the fun jobs.

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