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Blogs » Archive for October 3rd, 2005
Quick case study: To give up equity or not
A colleague of mine contacted me to ask if he should give up a 30% equity stake in his company in exchange for about $10,000 services in kind (e.g. office meeting space, other support). (Numbers disguised to protect the innocent).
How do you think about an offer like this?
1. NEVER give up equity unless you have the opportunity to SIGNIFICANTLY increase the value of your company to your new partner. This means: major management or board talent, new technology, significant funding for ongoing operations. It rarely means a normal operating expense like meeting space.
2. If you do consider giving up equity, know the math:
a. What will be the value of the company in 3-5 years?
b. What is that value in today’s dollars at some appropriate rate of return. In this case, say that at a 15% discount rate over 3-5 years, the company is worth $100,000 in today’s dollars. The discount rate and expected value of your company are all determined via negotiation, so you should have a good sense of valuation (which I can get into later if anyone wants, or you can discover by getting a basic finance/valuation book).
c. Divide the value of the investment or contribution into …
Marketing questions to ask your prospects
A recent blog post by a Sitepoint reader wondered what kinds of marketing questions web designers should ask prospects, in order to help them see you as a marketing solutions provider. Here are some suggestions:
1. What are your sales goals?
2. How do you get clients now?
3. What problem do you solve for your customers?
4. What is your target market? What are their most pressing issues and concerns?
5. What is unique about your company and its solution? What sets you apart? Why are you better?
6. What proof can you provide that you are better (e.g. testimonials, case studies)?
7. What are the benefits of your solution?
8. How can you educate prospects and customers with executive briefs, articles, newsletters, etc?
9. Did you know that the web can let you follow up automatically with prospects, so you continue communicating to them automatically?
10. What’s your sales cycle like? How do prospects decide to buy.
Add your questions…..
Value
In the last blog post, a great discussion ensued about how to define value. The responses were great, and I have only one thing to add. It’s a visual way of picturing value, and at least two books (Sandler’s You Can’t Teach a Kid to Rid a Bike at a Seminar and Rackham’s SPIN Selling) use it.
Think of value as a scale, one of those old-fashioned balancing scales, like the scale of liberty.
One one side are your fees. Imaging that the scale starts off with your fees weighing down the left side of the scale. Nothing is on the right.
The right side of the scale can be one of two things. First, it can be the cost of the problem (or the pain) to your prospect. Your job is to ask great questions so that the prospect comes to the conclusion that their problem is costing them way more than your fees. What’s it costing them to not have a website, or to have a sub-optimal website? As you ask questions or (sparingly) present facts/figures, gradually the balance of the scale shifts, until it is clear that the cost of the prospect’s problem exceeds your fees to solve the problem. …
Web Essentials 2005: The Day After
With a much-needed weekend of relaxation and sleep between me and Web Essentials 2005 (WE05), I can now look at the experience in hindsight and see what I took away.
The main benefit I got from the conference was exposure to some of the most brilliant and influential thinkers working on making the Web better. People like Tantek Çelik, Molly Holzschlag, Jeffrey Veen, Eric Meyer and Douglas Bowman all proved to be quite accessible and good-natured, playing the part of punters as much as presenters. Getting glimpses of the problems they’re working on, and what they take for granted, set a powerful benchmark for me to strive for in my own work.
Since I spend my days staying on top of the Web, I already had a pretty strong grasp on most of the technical topics that were covered. I had hoped for a little more in the way of cutting-edge, experimental work, but the level presented was closer “state of the art”, or “best practice”. As a result, there weren’t many purely educational opportunities for me at the conference; but for those who showed up with little or no knowledge of things like AJAX and …
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