Opinions expressed by Entrepreneur contributors are their own.
I bet you’re sick of being told that: “you can manifest anything your heart desires…if you just buy this twelve-step program!” There are many people out there who prey upon our common misconceptions about manifesting and the law of attraction.
It’s big business!
Life Coaching has been the second-largest growth industry in the US for twelve consecutive years and is estimated to be worth around $2 billion!
It is no wonder that people will do anything to “bottle” this information and sell it to a market. How do you know what you’re being sold is the truth, though? It’s very easy to palm off any shortfall as a result of something you did wrong.
Here, then, are three common misconceptions about manifesting and the law of attraction. By bringing these to your awareness, you’ll have a better idea of whether or not a particular practice, program or modality is right for you.
Whenever I see someone tell a tale of how they wrote themselves a check and stuck it on the fridge, only for them to receive a million dollars sometime later (Jim Carrey, I’m looking at you), it gets my back up.
Not that this isn’t possible, but it paints a picture of this being the only necessary action. Worse yet, some claim that meditation or prayer is all that is required. “Focus on what you want. Hold it in your mind’s eye, and it will appear for you!!”
No! These are all beneficial practices — please don’t misunderstand what I’m saying, but only so far as they better inform your actions.
Without taking any action — nothing is going to show up for you. Per definition: when something manifests itself, it simply makes itself known to the physical world. This could be climate change, an electoral outcome or a million dollars landing in your account.
The point is that these things already existed, and the moment they became a physical reality is what we call “manifesting.” Action is still very much required.
This is a huge reason why so many of these programs “fail” to work for the vast majority of people who buy them. It’s not that they don’t work, but they only work for the creator of the program and anyone else who just so happens to be already aligned with it.
Very few actually take the time to recognize that we are all individuals and tailor themselves accordingly.
If you come across any such program that doesn’t start by trying to get you to analyze who you are and what you’re about: don’t bother. You’ll most likely hit a brick wall and give up under the misconception that it must be your fault for “not getting it.”
3. Manifesting and the law of attraction are purely esoteric and mystical practices
This is nonsense. There is a lot of scientific data, research and theory to back up our ability to manifest or attract consciously chosen outcomes in our life.
Even anecdotally, if you cast your mind back to something you set your mind to, however mundane it may seem, you already know how it works. It could be as simple as thinking you want a cup of coffee. All the actions required to manifest that coffee in your hands are simple, but you still have to go through them.
The same is true of becoming a millionaire. The steps might be more complicated (or not), but the process is the same.
In the case of manifesting a million bucks: the problem most folks have is that they’ve never done it. You’ve made coffee before; that’s why when you get up from your desk and embark upon the ‘journey’ to barista town, none of it overwhelms you.
You’ve made coffee before — more times than you can count. So manifesting yet another flat white causes no anxiety whatsoever.
However, things get tricky when it comes to generating sums of money that are outside of the usual purview. You’ve never done it before, and you know that most haven’t either. You’re in uncharted territory, and your subconscious ‘lizard brain’ does not like it!
It’s a subject for another day, but suffice it to say: your subconscious has one job to do, keeping you safe. Though prehistoric, it doesn’t understand logic or language and operates on the assumption that change equals danger. It is this that the unscrupulous prey upon.
They know full well that you’ve never made a million dollars or found the love of your life. If you had, you wouldn’t need their course after all. They can exploit this to get themselves and their programs off the hook by essentially insinuating that you “just didn’t get it.”
Don’t be fooled.
Instead, recognize just how mundane the law of attraction is and how much of an everyday occurrence manifesting is. You can create a dream life as assuredly as making that cup of coffee.
Influencers have the power to boost online conversions and help brands spread the word about their products. But there is at least one group of people who don’t seem influenced at all by their social media mojo—New York City landlords.
According to a story in The New York Post, landlords are saying fuggedaboutit to some TikTok, Instagram, and YouTube stars who want to lease apartments, even when they make well into six figures a year.
The issue? Due to the nature of their job, gig workers such as influencers and creatives cannot show paystubs proving consistent streams of monthly income from a third-party company. Couple this with a highly desirable and expensive real estate market, and many influencers can’t compete with other renters.
Take Kelsey Kotzur, a 29-year-old TikToker with over 144,000 followers. Kotzur told The Post she makes $250,000 a year thanks to brand deals with Skims and Delta Airlines. But after her rent shot up nearly 50 percent, Kotzur had to move back to her hometown in rural upstate New York.
Kotzur said getting approved for a new New York City apartment has been a nightmare.
“It’s nearly impossible because no one really understands my income and what I do. So that’s been pretty difficult,” she told The Post.
Another TikToker, Marissa Meizz, with 471,000 followers, said she also struggled to rent an NYC apartment.
“It was just so hard to get someone to trust me,” she said. “I literally had to beg my landlord.”
Despite providing them with proof of her income and sharing every paycheck she made last year, Meizz said the landlords still wanted a guarantor.
The problems with the gig economy
The challenges affecting influencers in NYC are hitting gig workers across the country. Many landlords and lenders require proof of income from permanent rather than freelance jobs to determine eligibility to rent an apartment or lease a car.
Living in the city isn’t just a privilege for people like Kotzur. It’s part of her brand. Many of her fashion videos feature New York City as an important backdrop.
“I am missing out on a ton of opportunities while I’m away from the city,” she told The Post. “Career-wise, I’m definitely taking some losses.”
Opinions expressed by Entrepreneur contributors are their own.
Video games are one of the few mediums in which people freely collaborate regardless of race, ethnicity, gender or geography. This universal appeal stems from the ability to enable players to travel across different dimensions and build their own narrative as they unlock characters, weapons and other in-game items. The allure of creating a whole new identity in another world fosters a deeper interaction with users, far beyond that of any other form of media.
Unfortunately, as it stands today, gaming applications are built on centralized infrastructure with all in-game assets, user data, game logic, etc., stored on closed systems where complete ownership lies solely with the gaming companies. This means that these games predominately operate by perpetuating a flow of value where players invest their time and money only to increase the profits retained by game developers such as Activision, EA and Epic Games, to name a few. The gaming industry is expected to yield nearly $200B in revenue in 2022 alone, showing no signs of slowing down in the coming years.
To restructure the one-sided economic systems imposed by traditional games, a blockchain technology called NFTs can empower players to contribute to an equitable ecosystem that embodies the values of ownership, interoperability and transparency.
The famous first-person shooter game Call of Duty generated an estimated few hundred million dollars in revenue on in-game purchases in 2021 alone. Despite having paid for these digital assets, if Call of Duty experienced some downtime or were discontinued altogether, players would have no way to use their assets as they were only accessible within the confines of the game. Thus, players never actually experienced ownership over any of their assets.
In contrast, NFTs exist independently of any individual gaming ecosystem and live directly on the blockchain. As a result, regardless of what happens to a game, in-game purchases in the form of an NFT can always be bought, sold or traded on public marketplaces.
The autonomous nature of NFTs enables many use cases outside of just commerce. For instance, an NFT can be displayed outside of the game it originated. This can allow owners to include their NFT on their social profiles to build a reputation as an elite gamer, collector or degen. Gaming NFTs enable owners to expand utility far beyond entertainment and become part of a much larger effort to create a unique digital identity.
Up until the introduction of blockchain gaming, games exclusively existed on centralized servers. As a result, in-game assets could only exist within their own game-specific systems, unable to communicate with other online applications.
For example, most people will eventually get tired of a single game and move on to another. When this happens, they can not transfer any of the content they unlocked within the game, thus abandoning all of their efforts. Is it fair for all their time, money and effort to be rendered useless?
This lack of interoperability, caused by siloed ecosystems, effectively fragments the gaming world, ultimately punishing gamers. Instead, games have the opportunity to design for interoperability, thus opening their ecosystem up to network effects as players from other games can also interact with their application. For instance, two games built on the Binance Smart Chain network can logistically support the same in-game assets such as characters, weapons and vehicles. As a result, games could see an increase in customer growth, engagement and satisfaction.
Transparency
When players earn or purchase any in-game item, they cannot objectively assess its rarity, authenticity and scarcity. Therefore, there exists an implicit need for game developers to operate as honest actors.
On the other hand, NFTs will spark a new era of transparency in gaming. In-game assets, in the form of an NFT, can enable owners to freely access helpful information such as specifics around the NFT’s uniqueness, the total number in circulation and indisputable proof of the NFT’s validity. This level of transparency will drastically increase trust between buyers and sellers, likely giving birth to a vibrant secondary market. Further, NFTs can provide even more advanced data for avid gamers. For instance, NFTs contain information including the number of past owners, average hold time, previous sale prices, asset creation date, etc.
The difference between traditional gaming assets and gaming NFTs is quite significant. A quick dive into the fundamental differences between the two reveals how much more effective blockchain-based assets can be in creating a more player-driven ecosystem.
For the first time, in-game assets as NFTs will enable games to offer utility far beyond what was previously thought possible. The beauty of in-game NFTs is they bring the gaming world a little closer to the real world. And isn’t that the endgame?
Opinions expressed by Entrepreneur contributors are their own.
When you’re establishing your startup, it can be a challenge to choose the right bank and the right business checking account, particularly if you have limited business experience. You need a bank account that not only meets your current needs but will grow as your requirements evolve with your expanding business.
You might be wondering if you need a business checking account. While a personal checking account will perhaps meet your needs for your basic day-to-day business activities, you need to consider whether you need a business loan in the future or want to hold profits in a savings account.
Your new checking account can be the start of your banking relationship, so you can start to establish goodwill and trust. However, while the bank is important, the characteristics of the checking account are also vital. So, here we’ll explore how to choose a business checking account for your startup.
Think about what you need from your bank
The first thing you need to consider is what you need from your bank. Are you just looking for a checking account or do you also need a small business loan? There are lots of banks that not only offer a variety of business checking accounts but also have great business product lines such as business loans and lines of credit, business credit cards and tax counseling.
While you may be looking for a checking account to handle your checks and manage client payments, you may need a line of credit or other products in the immediate future. So, take some time to think about your immediate and potential future needs to see which banks can meet your requirements.
Once you have a short list of things you need from your bank, you can start comparing the offerings from different banks both in your area and nationally. If you are considering a couple of banks, you can speak to their customer support team and obtain product information or even schedule a meeting to discuss your requirements.
However, if your startup will only require basic account services, you could consider online banks. These tend to offer various products with minimal fees. The downside to this is that you don’t have face-to-face interaction, and depositing cash can be tricky.
Considerations for choosing a business checking account
1. Location restrictions
Even if you’re not looking at an online bank, some traditional banks put location restrictions on certain accounts. If you’re considering a business checking account that has very low fees, it is worth checking if it is online only.
Depending on your operation, you may need to speak to a bank representative in person, pay in cash or send certified checks. In these scenarios, having a business checking account that does not have branch access could be a problem.
2. Digital tools
Most modern startups benefit from digital tools such as mobile deposits, and digital bill payments. So, it is well worth assessing what digital tools are offered with the checking account.
Many banks and financial institutions have an app that allows you to manage your account on your mobile device. Make sure that you check the reviews for the accompanying app to see if there are any potential issues.
3. Fees
As with a personal checking account, the fees for your business checking account can quickly add up. For most startups and small businesses, every cent counts, so it is crucial to check the fee structure for your new checking account before you sign up. If your bank offers fee waivers for monthly maintenance charges, be sure to check the criteria to ensure that you can meet the minimum balance needed to waive it.
4. Relationship perks
Many banks offer some great perks, such as fee waivers and preferential rates if you link multiple accounts. So, it is worth checking if the bank holding your personal checking account offers relationship perks if you open a business account.
You may find that your existing bank will provide some excellent account options and since you already know and enjoy the bank, you can feel confident with your new business checking account. On the other hand, if there are no benefits to having the same bank for your personal and business accounts, don’t feel obliged to stick with them.
When you have a startup, you’ll have plenty of administration tasks that will keep you busy every day. So, it can be very handy if you can provide your trusted team members with a company debit card.
This means that you won’t need to micromanage essential purchases or deal with annoying reimbursement requests.
6. Business savings accounts
Another important consideration is whether the business checking account has an accompanying or compatible savings account. While some business checking accounts are interest-bearing, you may still have startup capital that would be better in a savings account.
A compatible savings account would allow you to keep your funds on hand for when they are needed. Some banks even facilitate automatic transfers. This will transfer funds from your savings account if the checking account balance reaches a certain threshold. This is a great feature, as you don’t need to worry about going overdrawn or having payments refused, yet you can still be earning a higher rate of interest.
7. Additional resources
Finally, it is worth checking whether your new business checking account provides access to additional resources. Many banks appreciate the challenges of operating a startup and offer help and guidance. This could be something as simple as a learning center that offers live webinars, informative guides, or access to a business banking manager.
8. Business vs. personal checking account
There are several good reasons to keep a separate checking account for your business if you own one. According to the SBA, business banking offers some personal liability protection by keeping your personal and corporate funds apart. Check writing and debit cards are features that both personal and business checking accounts can provide.
A company checking account, however, could provide benefits that a personal checking account does not. While some personal checking accounts can be opened for as little as $1, depending on the bank or credit union, a business checking account may cost $500, $1,000, or more to open. Combining your personal and commercial operations in one checking account, if you plan to do both, can make bookkeeping difficult and tax season a nightmare.
Bottom line
Once you have begun your startup, you are likely to be excited to get working on your core business, but the right checking account can be an ally or a hindrance. The right checking account will provide you with the tools and services your startup needs.
Opinions expressed by Entrepreneur contributors are their own.
None of us is immune to what’s currently happening in the economy, forcing many business owners and executives to consider ways to cut costs. I recently asked my leadership team to take a good, hard look at their expenses to determine what can and should be cut and gauge the effects those specific savings would have on the business.
Finding ways to save money in your business is not always as obvious as you think and can come from a few places that are not typically looked at. Here I outline ten money-saving ideas all business owners should consider.
Take a look at how technology can play a role in improving efficiencies. How can you utilize technology to minimize time, effort and money spent where it doesn’t need to be? Whether it’s analytical data that helps you be quicker to market or process improvements that make your supply chain run more efficiently — plus having good processes around where you spend money.
For larger projects, obtain three quotes from separate vendors before placing an order. Make sure you negotiate the best possible cost on a meaningful purchase. Be assured that what you are buying is right for your business.
I think that the mentality of being scrappy is essential. What I mean by scrappy is being pugnacious and determined not to be wasteful. Think local and establish relationships with local businesses. In our industry, for example, we buy, manufacture and print labels for our customers and brands. Fortunately, our label vendor is literally down the street, so we’re saving money on transit costs. Utilizing your local network ensures you’re getting the best price, not just in direct costs but also in time and effort.
3. Make sure you have the right employees for the right roles
This boils down to “right people, right seats.” When you look at the world today and how the labor pool has, for various reasons, contracted, having the right person in a role who’s passionately engaged is vital. They get it, they want it and they can do it. Over the long haul, that spells increased efficiency and savings. Running a business where you don’t have the right people in the right seats makes everything cumbersome and challenging.
In most businesses, marketing tends to be something companies can overspend on. That’s why it’s essential to have the right marketing person in the right seat. This person has relationships and expertise and knows when a consultant can do something and when something should be handled in-house.
Employee retention helps, too. Teams have chemistry, they understand how people operate and they play off each other’s strengths and weaknesses. When you’re constantly replacing people on the team, that’s all learning that must be done over again instead of doing the job.
4. Expand on social media and community engagement
I’ve seen brands effectively connect the organization to the consumer through social media. One thing to understand is that your content should be organic and user-generated, not scripted or overly polished. Recording content on your own versus paying an influencer or agency thousands of dollars has a cost-benefit. But there’s an even bigger reason why you want to choose this path.
Today’s consumers see right through content that’s heavily produced and edited. Instead, they follow, work with, purchase from and remain loyal to easily relatable brands that don’t take themselves too seriously and have no problem being transparent about every aspect of their business.
Sit with your marketing and finance teams to determine what percentage of the annual budget needs to be allocated toward purchasing equipment and boosting posts. Use data and analytics to determine what posts help you meet your goals (e.g., engagements, views, conversions, etc.) and place your bets accordingly.
5. Refine, then automate
When you’re talking about logistics and shipping and the operational piece of the business, the more automated you get your orders in and out the door, the more efficient you’ll be. This hopefully means you’ll have more bandwidth to spend time doing other things, right?
I also believe in minimizing clicks and pain points within your sales process. Have information readily available, so employees don’t have to click five different screens to get to what they need to get through. You want to free up the time to sell and reduce the time spent on administrative tasks. For example, you could automate invoicing or utilize a service that consolidates your accounts payable, so you don’t have to pay somebody for that.
If you can operate all aspects of your business under one roof, that’s ideal. For example, if you complete the shipping or manufacturing of your products in-house, you don’t want to be in three different buildings — you want to be in one building so you can organize things, get the best use of your staff, maximum use of the space and highest possible output.
You don’t want to sit on tons of office space because that is bleeding money. Whatever you can do to get out of those situations as soon as possible, the better off you’ll be. Looking into co-working spaces might be worthwhile in certain cases, too.
7. Look at insurance and cash flow
You need to have somebody who has the experience, knows the right questions to ask, understands your business needs, and is bound to save you money regarding insurance. For employee health benefits, make sure people have a choice and have an option that makes sense for both the business and the employee. Over and above making sure you’re not under-insured or over-insured, it’s more important that you’re insured correctly.
Avoid short-term loans, cash advances and borrowing on high interest. If you’re buying things on credit, pay it off. And don’t get smashed with interest. Make sure you’re only buying what you need. All of those things factor into good cash flow.
One of the things my CEO mentor always used to say is that there always needs to be a certain number in the bank. So, if we even got close to that number, he would send out fire alarms. It was all hands on deck evaluating things, cutting things we didn’t need and making sure that the company’s cash position was one we felt comfortable with. This way, we could sleep at night and know we were in good shape. That’s just one of those old-school mentalities that have always stuck with me.
8. Staff up or hire out?
If you don’t have the expertise, you need to be ultra-selective in ensuring you’re not just being penny-wise and pound-foolish. I always say you don’t want to step over the dollar bills to pick up pennies. If you can save money on wages and other things, that’s great, but you must set KPIs.
You have to understand (and communicate) what your expectations are from these independent contractors; otherwise, you’re just going to be spending good money without seeing any benefit from it. And that’s throwing money out the window. So, there’s a little bit of a catch-22 there. You’ll save money on the fringe but must have measurables to ensure they’re performing.
If you don’t have to travel, don’t. But when you do need to travel, travel effectively. Make sure that there’s a good travel policy about meals, hotels, flights, etc. These expenses can go through the roof if you don’t have some control. Use Zoom, Teams and other messaging applications when possible, but also be cost-effective in managing travel.
So, you’re a sales and marketing operation, and you’re struggling. Then you, all of a sudden, decide you’re going to start doing packaging, but you have no clue how to do it. This is probably a recipe for failure because you’re not focusing on the areas you’re good at, and you’re taking time and effort away to try and learn something you don’t need to. But the nice thing about the way the world is that somebody out there can do it; you need to find the right partner.
Being careful with money doesn’t mean being cheap — quite the opposite. It means honoring the value of the money entrusted to your company by customers for goods and services they care about.
Opinions expressed by Entrepreneur contributors are their own.
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Tykr
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Opinions expressed by Entrepreneur contributors are their own.
There’s no question that conversion rates are important to the success of any business. After all, a company can’t make money if its potential customers aren’t converting into actual paying customers. But what many business owners don’t realize is just how big of an impact hitting your conversion goals can have on your business’s bottom line.
Consider this: If your company has a 1% conversion rate and you’re bringing in $1 million in revenue each month, increasing your conversion rate by just two percentage points — to 3% — means you’ll be bringing in an additional $2 million each month. That’s an extra $24 million per year!
Of course, increasing your conversion rate is easier said than done. But it’s certainly not impossible. Here are a few tips to help you boost those numbers and reach your full revenue potential:
Funnels can be really simple (ad, sales page, delivery email) or incredibly complex (several ads leading to segmented landing pages leading to a sales call leading to … well, you get the picture). At any stage in the process, your funnel either loses people or moves them forward to the next stage.
If you’re not regularly performing a funnel analysis, usually called an audit, you could be missing out on revenue that could be a game-changer for your business. Let’s look at a simple evergreen webinar funnel with a “buy now” option for a $1,500 offer as an example. We’re going to keep it super simple and assume you’re sending just one email to your existing list to drive them to the webinar registration page. Your funnel looks like this:
Email: converting at 50%
Registration page: 15%
Webinar: 20% watch rate
Order conversions: 0.67%
With the conversion rates above, you’ll bring in $1,500 or one sale.
Your email is converting really well, so we don’t need to do anything with that, but the registration page? Not doing so hot. We want that number to be 25% or higher, so we’re going to optimize the registration page.
This might mean changing up the copy, design, images — even the offer itself — until we hit our goal of a 25% conversion rate on the registration page. With all other things being equal, that increase in conversion rate on the registration page alone nets you another sale, bringing your revenue for this funnel up to $3,000.
By working through each step in your funnel this way, you could go from bringing in $1,500 to $28,500 — just by hitting the minimum conversion rate at each funnel stage!
2. Make sure your website is optimized for conversions
Your website is often the first point of contact between you and a potential customer, so it’s important to make sure it’s up to snuff. Is your site easy to navigate? Do the pages load quickly? Is the copy clear and concise? Is there a strong call to action on each page?
If you answered “no” to any of these questions, it’s time to do some website soul-searching. Making even small changes — like adding testimonials or enhancing your calls to action — can make a big difference in terms of conversion rates.
When it comes to email marketing, quality is more important than quantity. Sending out a generic message to your entire list is likely to result in few conversions because not every recipient will be interested in what you have to say. Segmenting your list enables you to send more targeted, relevant messages that are more likely to lead to conversions.
Not sure how to segment your list? Start by dividing it into smaller groups based on factors like geography, age, gender, interests, etc. Then craft different messages for each group.
4. Personalize the user experience
In today’s competitive market, simply having a website isn’t enough — you need to go above and beyond to stand out from the crowd. One way to do that is by personalizing the user experience for each visitor to your site.
Thanks to advancements in technology, this is easier than ever before. There are now numerous tools available that allow you to collect data about each user and then use that information to display content that’s tailored specifically for them.
Reaching — and exceeding — your desired conversion rate can have huge implications for your business revenue. If you’re not happy with your current numbers, take heart; there are plenty of things you can do to improve them. By following these four tips, you can start making progress toward reaching those all-important conversion goals.
Opinions expressed by Entrepreneur contributors are their own.
“Zombie franchises” are out there. What is a zombie franchise? It’s one that has stalled out but still markets its franchise opportunity as if nothing is wrong. The brand is typically shrinking in both relevance and the number of open units. Previously loyal customers are being siphoned away by more innovative concepts. Underlying demographics may have shifted. Market trends may be working against the brand, but management hasn’t created a new path. Unit-level economics are weakening. Management inertia or denial may compound the brand’s problems.
Zombie franchise systems are usually filled with franchisees who would gladly exit if only they could! Poor unit-level economics and an undercurrent of franchisee discontent scare away buyers, so resale volumes are low. Expansion-minded franchisees look outside the brand.
New franchisees who miss the signals eventually realize their mistake. They may feel disclosures were inadequate or misleading. They often look back on conversations with franchisees and wonder how they didn’t hear the negative feedback. They may remember sunny conversations with consultants/brokers and the corporate team and feel duped. Or perhaps corporate is truly out of touch and doesn’t even realize there is a problem! All of this destroys franchisee trust and usually the relationship.
Franchisees in a zombie system are typically shackled to the business with personal guarantees, a site lease, equipment or vehicle leases, a Small Business Administration (SBA) loan, a loan against their home, a loan against their investments or 401(k) or loans to family and friends. The long-suffering franchisee can’t hire enough help because they can’t afford it, can’t sell the business and can’t close it down. They are essentially indentured servants.
Often these brands spend significant money on branding and advertising to try to convince potential franchisees that they are still worthy of investment. They try to reinvigorate franchise unit sales, but not the underlying business.
You’re too smart to get pulled into a weak franchise concept. Here is an easy checklist to keep your due diligence on track and avoid zombie franchises. If you’re a founder hoping to sell to private equity, PE will screen out brands with these attributes unless they are dedicated turnaround investors, so fixing these issues becomes your to-do list:
Lack of unit growth, especially via existing franchisees. Talk to as many franchisees as possible. If they don’t want to expand even though the territory is available, I advise moving on.
Weak unit-level profitability
Unfulfilled development agreements. Franchisees would rather lose their deposits than follow through and open promised units. Item 20 in the Franchise Disclosure Document lists franchisees and holders of development agreements. Connect with those franchises.
Corporate parent overly dependent on selling franchises. Look at how much revenue is related to franchise fees compared to recurring royalty revenues.
Corporate parent putting more attention on supply chain and rebates to drive revenue, again usually a signal of falling recurring royalties. Murky disclosures about rebates and supply chain costs to franchisees should also encourage you to move on to other concepts.
Bloated sold not open (SNO) funnel or SNO numbers that are quietly adjusted from year to year due to weak unit openings. Google prior year press releases and industry articles. Was management bragging about “400 units sold” five years ago but only 50 units are open, and the rest are still sitting in the Item 20 sold not open list? Red flag.
An increasing number of poorly performing franchises. Again, it is worth the time to track down old disclosures so you can compare several years of unit-level performance. How resilient is the concept? Are trends positive?
The franchise stops publishing Item 19 earnings representations when Item 19s were routinely included in prior disclosures.
Increased franchisee litigation
Franchisees who want to sell before the expiration of their first license agreement.
Prospective franchisees drop out after considering resale options.
Franchisee discontent spills onto internet sites dedicated to publishing stories from unhappy franchisees.
During validation, you discover that franchisees aren’t following the system. They have developed “hacks” to improve profitability.
Corporate team turnover, especially among field support (they are the staffers working most closely with potentially unhappy franchisees). Do franchisees provide positive grades on management team performance?
Do you see danger signs but management seems to be in denial? Complacent? Blaming franchisees? Has anyone from the corporate team ever left to become a franchisee themselves? Why not?
Is there evidence of ongoing investment in innovation to keep the brand relevant? Do franchisees say this is a problem area?
Relatively high Small Business Administration (SBA) loan-charge offs. These are lagging indicators due to time but certainly a troubling signal.
Is working through the above list work? You bet! You owe it to yourself to conduct thorough due diligence. The above list will save you time, money and headaches. If you see weak signals, don’t waste your time. Just move on. There are many strong, healthy, proven franchise options out there. Be picky and protective of your time and money. Only the worthiest concepts deserve your attention and commitment.
What if you’re a franchisor and you recognize troubling signals of your own brand in this list? Start with improving unit-level economics and rebuilding trust and strong communication with your franchisees. Those are the two highest impact areas in any franchise.
Are you interested in eventually selling your franchise business to private equity? Preventing problems in the first place is key. Any whiff of trouble can have a big impact on your deal terms, business valuation and even which investors will take a serious interest in your brand. Once you’ve stalled out, the bar is raised to prove you’re back on track. Remember that most PE investors in franchising want a growth story, not a turnaround project. Are you building a valuable reputation?
Opinions expressed by Entrepreneur contributors are their own.
Whether your business is a new kid on the block or has been around for a decade, you know you need consistent marketing to reach and resonate with your target customers. Without marketing, you cannot hope to hit optimal sales figures or grow as a brand.
But how much should you ideally spend on it? And how do you set a budget for marketing based on your current revenue run rate?
Opinions expressed by Entrepreneur contributors are their own.
You’ve likely pursued traditional business insurance. But when it comes to protecting your business from a myriad of outside threats in today’s complex and ever-changing environment, is traditional insurance enough — or even the right fit?
With the hardening of the insurance market and costly premiums, it’s a timely question, especially as more and more businesses are looking to alternative risk transfer. And an increasingly trending option is captive insurance as worldwide more than 100 captives formed last year as reported by Business Insider.
Traditional insurance has built up a portfolio of coverage offerings and options for businesses. Some components of traditional insurance include risk distribution, tax deductibles on premiums and many blanket insurance coverages such as general liability insurance, business income insurance and worker compensation insurance.
Captive insurance is a wholly owned subsidiary that exists to protect your business from unique threats and provide the dynamic and unique plan your business needs. Captive insurance may be right for your business if it can’t receive the insurance coverage it needs from the traditional insurance market.
For instance, business interruption insurance is a coverage that insulates your business from disasters such as floods and earthquakes. This coverage does not, however, protect businesses from fires or tornadoes — and to activate this insurance, there must be an event that “triggers” your policy.
Businesses that shut down during the pandemic lost money while they were closed, and they needed to be fully shut down to trigger their business interruption policies. With captive insurance, however, businesses can access their stored cash reserves and cover losses during instances of extended partial shutdowns that are not covered in a traditional insurance policy. Unlike this policy language with its many coverage exclusions, captive policy language is geared to protect the business owner.
Captive insurance also doesn’t penalize for other firms’ bad behavior and the cost you pay for insurance isn’t based on other similar businesses filing claims. Other considerations for possibly leaving traditional insurance are in the hardening of premiums, and companies looking to have less expensive coverage.
Keeping that in mind, companies seeking more control over their current coverages and insurance programs can craft a bespoke insurance plan built around their business’s unique risk profile with their captive plan.
High premiums with traditional insurance providers can handcuff your business to hardening monthly rates and can leave your business feeling the impact of those high expenses. With captive insurance, however, your business can retain profits when claims aren’t paid.
These retained profits see deferment of taxes on loss reserves as well, allowing for the accumulation of a larger pool of funds for investment or unforeseen financially impactful situations such as litigation. These funds can also be utilized to insulate your business from losses during economic downturns or similarly fiscally challenging situations.
For a small business, this can help with scalability as expensive premiums paid with traditional providers can mean less money spent on expanding your business. Additionally, as your business scales in size and needs, so do the coverages required for your business to be adequately protected. Comparatively, Kiplinger pointed out that captive insurance can provide these necessary adaptive coverages as the need for them comes up along the way.
If your business faces potential cyberattacks, medical malpractice suits and many other costly risks, the deductibles associated with these protections are growing with traditional providers. Premiums for cyber insurance have increased by as much as 50% and 100%.
Relating back to the earlier example, flexibility in captive insurance policy language would help. As evidenced by the civil unrest of 2020, whereby areas of the country experienced protests, riots and sit-ins that destroyed neighborhoods. If the area around a business was damaged and inaccessible, but the business itself was not, again, the traditional insurance policy would not be triggered, meaning your business can be left paying out of pocket.
So how much time does it take to create a new policy?
With constant changes in what businesses need in their insurance protections, traditional insurance providers can often be behind the curve. Where new threats form, it also means new policies need to be made to cover vulnerable parts of your business.
According to Deloitte, traditional insurance takes 12 to 18 months to create and release new insurance products. With the rate at which threats arise and can potentially harm your business, that is not an acceptable timeframe.
Additionally, when buying traditional insurance coverage, startup costs are limited to the premium. Starting a captive insurance company, however, requires start-up costs and capitalization requirements with formation fees including legal costs. This is because a captive insurance company is a legally formed corporation. Additionally, with captive insurance, you are building upon your risk mitigation strategies to accrue funds for potential losses.
While forming a captive may be daunting to a non-insurance professional, there are many captive management companies that will serve as a business owner’s insurance front office, that help companies form and manage their own wholly owned captives.
Captive insurance can be a viable option for businesses large and small. Businesses best served by implementing captive insurance are those with complex, evolving, difficult or costly risks to insure through traditional plans and those who would benefit from increased cash flow, liquidity and profitability. Traditional insurance and captive insurance both have distinct features and one isn’t necessarily a better fit than the other. Regardless of what you choose, protecting your business with the right insurance plan is a necessity.
Opinions expressed by Entrepreneur contributors are their own.
There’s no denying that art inspires us and brings us joy. It bridges the gap between cultures and validates our experiences. Art is also part of a healthy community — and a healthy mind, body and soul. Science validates this. And yet, as entrepreneurs and business owners, we tend to think of art as “nice to have,” as something that’s not as important to the world as the other businesses we create. But the truth is, we need art and the artists who create art more than ever, especially in this economy. Here’s why.
Art makes us feel seen
Art validates the human experience. Through art, artists communicate their thoughts, ideas and emotions. They put those feelings out into the world with the hope that even one other person will be able to connect with them.
When we open our minds and connect through art, we’re exchanging knowledge and thought on an intensely personal level, possibly with people who we never thought we’d connect with. Artists allow the door to open between cultural backgrounds; what they create can break down cultural barriers. Art can heal.
Art bridges the gap between communities, creates empathy in situations where communications are strained and helps to remind us that, at the end of the day, we are all human beings with similar experiences, no matter what community we belong to or language we speak.
Art also preserves history. Think of everything one piece of art represents:
The time period in which it was made
The reason the artist created it
The medium and tools used
The public’s response to the piece
All of these details (and more) paint a picture of a moment in time. Not only has art survived through time and traversed all around the world, but it also doesn’t discriminate amongst age, gender, race or status. Art explores every culture, every class and all spectrums of the human experience from childhood to old age.
Culture can be studied through art and not just the famed artists that history favors, like your Da Vincis and van Goghs. Artists in every corner of the world, even the most unexplored or unthought-of places, can guide us through the culture their work represents.
As if art doesn’t do enough good for our health and our local communities, it also strengthens the economy. Really. Creative industries provide jobs, encourage tourism and boost revenue to local businesses. Labor studies also show that the value added by arts and culture to the U.S. economy is five times greater than the value from the agricultural sector.
Fashion, film, television, performing arts, publishing, music — all of these creative industries and many more directly benefit our local and overall economies. These sectors even grew during the pandemic, while many industries struggled.
Now that the point for supporting artists has been made, let’s talk about the how. Here are a few tips on how to support artists:
Buy from the artist directly
How can you support artists who have contributed to the world and made an impact on your life? The first and most obvious way, of course, is to buy art. More specifically, buy work directly from the artist rather than a distributor. Buying art directly without the middleman ensures that every penny you spend will support the artist directly.
Keep in mind that the price of a piece of art not only reflects value, but time, effort and resources as well. If you’d spend a certain amount of money on a print of a famous artist’s work — one who might not even be living anymore — expect to pay a similar amount, if not more, for work from a living, breathing artist who is producing equally great work.
You can’t catapult an already famous artist like Monet into much more success. Your purchase typically goes toward an estate or fund, which doesn’t impact Monet as a person. When you buy from a current artist, you’re directly investing in the artist’s future and career. You’re encouraging them to keep producing art.
Another way to support artists is to vote. Vote to keep nonprofits and programs that value the arts, fund them and keep them alive. Despite all their benefits, the arts are often first to go when budgets are limited in schools and other facilities.
Vote with your dollars, too. Voting with your dollars means to mindfully spend, invest or donate your money to causes you care about. Find people and organizations in the arts that you can support. Charity Navigator and GuideStar are great tools that can help you find nonprofits involved in the arts. Or look for a local business to buy from rather than a big box store or corporation that doesn’t need your money.
Art is vital to our survival and well-being as a species. Despite everything that art provides, artists often don’t get the appreciation or support that they need. So, invest in creativity by becoming an art advocate, not just for your favorite artist, but for the future of artists. Let’s hope we never have to know what life would be like without art.
Opinions expressed by Entrepreneur contributors are their own.
It’s no secret that the world of work is changing. With the advent of new technologies, such as virtual reality and the metaverse, many traditional jobs are disappearing and being replaced by new ones. In this article, we’ll explore five professions anyone can enter in the metaverse without any prior experience.
It’s likely that your kids already spend time in the metaverse, and by taking on one or more of these five lesser-known metaverse jobs, there’s a good chance that their wealth could grow tremendously. Below I’ll discuss what these jobs entail and how money can be made with each one:
With metaverse property sales topping more than $500 million in 2021, it’s no surprise that becoming a real estate agent is one of the best ways to make money in the metaverse. If you want to make it big in metaverse real estate, you’ll want to find virtual spaces that are in demand that you can eventually sell to clients who have extra cash on hand.
For example, the Sandbox Metaverse may be a great starting point for beginners. Celebrities such as Paris Hilton and Snoop Dogg have already purchased property here, which has attracted a lot of attention from the media and fans who are willing to pay thousands to live near someone famous.
As a real estate agent, you’ll be responsible for finding good properties and presenting them to potential investors. You can find clients on Discord servers or crypto-related subreddits, and you can pitch and sell your properties using public presentations or direct messages. With the right approach, you can earn a high income by selling metaverse real estate.
As a connector, you will be responsible for seeking out the best potential game projects on the Roblox forum and connecting these creators with investors willing to invest money into them in exchange for a share in the project. You can find these investors on websites like Kickstarter and Indiegogo or by networking with people in the metaverse community who have extra cash to spend. Once you’ve sealed the deal, you’ll earn a commission for making the connection.
3. 3D modeler
The metaverse is a digital universe that is growing exponentially. And as it grows, the demand for 3D assets also increases. This presents a unique opportunity for those with the skills to create 3D models. With the right tools and a little practice, anyone can become a 3D modeler and start earning money by selling their creations. You can make hundreds of dollars from selling one model.
A great way to begin your journey if you’ve never created a 3D model is to practice in the Shapeyard app. This simple tool will allow you to create 3D models that can be exported and sold in the metaverse. Once you’ve mastered the basics of 3D modeling, you can begin selling your creations on marketplaces such as ArtStation, Turbosquid, and Sketchfab. With tons of potential buyers in the metaverse space, from Roblox game developers to property owners in the Decentraland platform, the opportunities are endless for 3D modelers.
While the hype around NFTs has drastically declined, the market for trading 3D gaming assets is still growing exponentially. You may be wondering if a virtual weapon could even be worth anything. The answer is a resounding yes! In fact, a CSGO knife costs more than $1.5 million.
However, you’ve got to be a visionary if you want to make money in this space. You need to be able to identify which 3D assets will increase in value over time and purchase them at a low price so you can sell them for a profit later.
To get started, find a concrete meta space, spend time there, and really take the time to understand and integrate into the community to find truly valuable objects. Then, when you’re ready to buy and sell 3D models, you can use in-systems marketplaces like Roblox Items. If you want to trade in many gaming metaverses at once, try trading platforms such as DMarket or Traderie.
5. Metfluencer
In the metaverse, becoming a rich and famous influencer isn’t hard if you have talent. In fact, one of the most influential people in Roblox, Albert Spencer Aretz, otherwise known as Flamingo, is said to be making more than $20 million annually. So, how does he do it? Simply by making funny Youtube videos where he plays Roblox, earning him both ad revenue and donations from his fans.
Do you want your success story to be similar? To get started, you’ll want to identify a metaspace that isn’t overcrowded, explore it, and begin writing scripts to create your own gameplay videos. As the audience of that metaverse grows, you’ll become one of the early influencers in this space. However, you will need to be patient and shoot consistent videos until you go viral. Once you do, you could be on your way to earning tens of thousands of dollars.
As you can see, there are many ways to make money in the metaverse. Whether you’re a 3D modeler, trader or metfluencer, there’s ample opportunity to earn a good living by creating and selling virtual assets. By following the tips in this article, your kids could be on their way to becoming metaverse millionaires.
Opinions expressed by Entrepreneur contributors are their own.
When I left my job as a consultant in October 2021, I had never made more than $5,000 per month from my business.
Courtesy of Clo Bare Money Coach
In fact, when I made a plan to leave my 9 to 5, I had an honest conversation with myself about whether or not I was okay with the possibility of only making $60,000 per year as a money coach — less than half what I was paid at my consulting gig.
And my answer? Absolutely.
As a 31-year-old millennial who graduated college with around $80,000 of debt for a degree in English and Spanish, I never would’ve dreamed I’d be able to someday consider taking a pay cut to quit my job and go full-time with my business. In fact, prior to 2018, I was still living paycheck to paycheck, knew nothing about investing and assumed I’d work the rest of my life.
You see, I grew up believing I was just “bad with money,” like it was some character flaw you were either born with or without. I’d seen my parents struggle with credit card debt, furloughs during the Great Recession and the unending stress of living paycheck to paycheck while raising five kids. I thought struggle was normal, especially when it came to money.
I started working at the age of nine to have a little spending money and hoped I’d someday do better, but money always burned a hole in my pocket, no matter what I did.
I kept telling myself if I just had more of it, things would be fine.
Spoiler alert: No matter how much money I made, it never fixed the problem of my overspending.
It wasn’t until 2018, after spending most of my 20s without an emergency fund, overspending, not investing and thinking I’d die with student loan debt, that I decided it was time for a change.
I started learning about the debt-free community, which led me to the FIRE (financial independence, retire early) community, and eventually I thought, Why not me?Why not at least try?
Well, I’m glad I did.
Not only do I now know the peace of financial flexibility and a retirement savings that I’ve already invested enough in to have millions by the time I retire even if I don’t invest another dollar, but it also led me to something I never expected.
I started writing about budgeting and investing online, which led me to creating content on Instagram and TikTok, which led me to become who I am now: a multi-six-figure business owner.
But this time last year?
I was just excited to even be able to consider quitting my job to pursue my passion of teaching people about money full-time.
So, with a year’s emergency fund saved and a solid $5,000 from one-on-one coaching filtering into my bank account each month, I went off into full-time entrepreneurship land.
Last month was my one year anniversary, and I did not make $60,000.
The gross revenue I made from my first year as a full-time business owner was $305,000 with about $45,000 of expenses.
How did I do it?
By recognizing I had to scale, bringing in an expert and focusing on one funnel and one product.
Recognizing I needed to scale
When I quit my job, almost 100% of my income came from one-on-one coaching. In fact, during my first month of full-time business ownership, I had 60 coaching calls, with more than half of the calls lasting two hours.
By the end of the first week, after 17 coaching sessions, I was already losing my voice, and feeling drained and discouraged.
I knew I couldn’t keep up with that kind of grueling schedule, so I increased my prices in October and again in December, thinking it would lighten the load without really impacting my income.
I was wrong.
By the end of the year, I charged $499 for a two-hour session and $299 for a one-hour session — but no matter how many times I increased my prices, I still sold out within 24 hours of announcing openings in my coaching calendar.
The coaching clients kept rolling in, and I had a hard time saying no to the emails requesting help as soon as possible or clients who needed another follow-up call. So, despite trying to manage my client load, I’d always end up with more than I could handle. Between October and December that year, I ended up coaching nearly 150 people.
I was exhausted and already burned out, just two months into full-time entrepreneurship.
Then, one day while lying on the couch to close my eyes for three minutes before the next coaching call, it hit me: I needed to scale. At the rate I was going, I’d be back in corporate in three months. I was capped, and despite wanting to help more people, my system at the time was unsustainable.
I needed to find a way to move beyond selling my time. But I had no idea where to begin. That’s why I decided to bring in an expert.
Scaling beyond coaching was new territory for me, and although I’d seen other creators create courses and digital products, I wanted to make sure I was doing what was best for my business.
When I started shopping for a business coach, I was nervous because there are so many problematic business coaches who teach people how to run a business despite never having run a business before. I wanted someone I could trust, and who I knew had worked with people in a similar niche, with similar goals.
After doing my research, I decided to hire a well-regarded coach who had helped the giants in the space scale to multi-six-figure — and even seven-figure — businesses. She’d be the person who would teach me how to launch a course and build a funnel.
By working with my coach, I was able to go full-speed ahead and avoid a bunch of mistakes I would’ve made trying to do it all myself — mistakes that would’ve cost me time and money.
Investing $2,000 into my business resulted in my first product launch bringing in $35,000 — but I would’ve never gotten these kinds of results if I hadn’t hired my coach and implemented a funnel.
I did not know what a funnel was when I quit my job, but my funnel was the single most important investment I made in my business.
A funnel allowed me to make sales without doing anything — no posting, no DMing people, no going live to push the sale.
Instead, I was able to get people into my funnel and let the funnel do its automated magic.
Here’s how my funnel worked:
Instagram or TikTok followers would sign up for a free guide.
The free guide would invite them to my free class.
The free class would have a small pitch for my course, and all registrants would be put into a sales funnel of emails for the next 2-5 days.
Keep in mind: At each stage, I was providing more value.
My funnel made me sales even while I slept. No posting. No exhausting my followers on all my accounts to get in on the sale. My emails were set up to do it all for me so I could spend my time doing other things to build my business.
The emails people received after signing up for the free class addressed their concerns, answered most frequently asked questions, shared testimonials and painted the appealing picture of what their life would look like after they completed the course.
So many content creators create a course or digital product and push it out to their audience without a funnel. They just put it on sale and hope people from their Instagram or TikTok will buy it because it exists. If you build it, they will come, right?
Not exactly.
We have to nurture the relationship, and an Instagram follower is at a much different stage than an email subscriber or someone who has downloaded your free guide and attended your workshop.
We have to provide consistent value that builds trust with our ideal audiences. Going straight for the killshot of “Hey, buy my product” would be like asking for a job without having ever applied or submitted a resume. You need to date your leads and nurture them by providing value.
Focusing on perfecting my funnel has allowed me to zone in on what is and isn’t working, understand my audience better and not get distracted by the shiny-object syndrome that so many new entrepreneurs face.
First, it allowed me to streamline my messaging to my audience to make sure they were never confused about what I have to offer. I wanted to guarantee people went to my page and saw immediately what I specialized in: lazy investing. Not a little bit of lazy investing with some debt pay off, credit repair and budgeting sprinkled in. I want my audience to come to my page and understand exactly how I can help them.
Think about the last time you were shopping for a service: for example, a person to clean your home.
If you came across someone who had a list of services that included lawn care, car detailing, oil changes, handyman services — and oh yeah, they’d also clean your home for you — you likely wouldn’t choose that person over someone who made it clear that cleaning your home was the only thing their business did.
Focusing on one product also helped me master the product, which only made my confidence in the product stronger and, in turn, allowed me to sell with ease.
When we know without a shadow of a doubt that our products solve the problem we say they do, selling becomes simply highlighting the problem and explaining how our product is the solution.
I don’t think I could’ve made as strong of a course had I not focused on only that course in the last year. Every month I added to it, tweaked, surveyed my members and found new ways to improve it. And the result is more than 500 happy customers who are now out there building wealth on their own.
We all know how overwhelming and stressful it can be to manage a million different things: coaching, courses, digital products, group coaching and the list goes on. The mental space and clarity that come with focusing on one thing is something I’ll continue to prioritize as I build out more products in the future.
Now that I’ve worked on The Lazy Investor’s Course and its funnel for a year, you might be wondering if I’m moving on to something new.
But in 2023, I plan to continue to perfect the funnel and my offer. Because even though I’ve made more than $300,000 from my business so far, I know I can still make improvements. So I’ll continue to refine this one offer I have until I’m confident I’ve squeezed everything out of it that I can.
And then — and only then — will I move on to the next thing.
As my friend Allison Baggerly said in her keynote at Fincon this year: simple scales.
And for me?
Simple allows me to maintain a level of sanity and make sure I don’t burn out.
Opinions expressed by Entrepreneur contributors are their own.
As I entered my 20s at the beginning of 2021, I decided to move out of my parents’ house. I wanted to start fresh socially and move somewhere far away from home. Fast-forward six months, and I’ve successfully moved from Atlanta, Georgia to Provo, Utah. When I arrived in Provo, I had no friends. Even though there are two significant universities down the street, I realized that I had to put myself out there and meet new people.
To do this, I set a goal to meet two new people a day. Not only did this allow me to make new friends, but I naturally crossed paths with people I was compatible with. Some of these people, I asked out on dates.
Keep in mind, while I was growing up, I never went on any dates — so I had no dating experience. But after meeting two new people a day, not only did I start going on dates, but as a byproduct, I ended up improving my sales skills by accident. Here are three important things I learned from my experience:
One of the first lessons I learned from going on three dates a week is that everything comes down to timing. Not just timing as in being ready for a relationship or marriage but also when it comes juggling the timing between school, work, family, travel and so many other factors.
This is why I am obsessed with email marketing. Email marketing sounds lame and old, but it takes advantage of one key thing: catching people at the right time. This is why weekly email blasts are so powerful.
Someone who is not interested today could be ready to buy six months down the road. You just have to be consistent and catch them at the right time. Because of this insight, I’ve spent a lot of time learning how I can maximize email marketing within my business. Once I have email marketing mastered, I’ll next start looking into other advanced retargeting methods.
2. Not everyone is interested
Within the last year, I’ve been able to individually meet over 3,000 people (both guys and girls) because of my goal of meeting two new people each day. This includes learning their name and speaking with them for at least 2-3 minutes.
After interacting with this many people around my age range, I quickly learned that not everyone is going to like me. When it comes to finding people you are compatible with, you have to play the numbers game until you find someone who likes you.
I noticed that everything becomes easier when you find people who truly like you for who you are. This is not only true with dating but for just about everything else, including sales. All of my best customers came from people who were truly interested in what I had to offer. Some of them did require a push on the back to help them make the leap, but they were interested.
One thing dating has taught me is how to ask great questions. Icebreaker questions are nice, but after going on 100+ dates within the past year, you start wanting deeper and more meaningful interactions.
You want to understand people’s pasts and how it shaped them into the person they are today. You want to understand their thought process, how they handle conflict, etc. You slowly start appreciating the internal more than the external.
To uncover the internal attributes, you must learn to ask great questions and become a good listener. All of my first dates are meaningful coffee shop dates where we get to learn about each other’s life stories. Some of the questions I love asking are:
Why did your last relationship end, what did you learn from it? How has it shaped you into the person you are today?
What are red/green flags you look for when dating?
What is your relationship like with your family?
What is your defining moment?
What are your dealbreakers?
How do you handle conflict?
Learning to take time to understand someone and ask the right kinds of questions truly has helped me improve my sales skills exponentially. It allowed me to understand the customer’s pain point and provide them with the best solution that will fix their problem.
As someone who had never dated previously, going on three dates a week for the past year has taught me so much. Not only did I build a lot of relationship-building skills, but I was also able to greatly improve my social and sales skills as a bonus.
I don’t recommend going on three dates a week, though. It is exhausting emotionally and financially, but thankfully, I was able to learn a lot from it. What you should do is make an attempt to meet new people as often as you can. Doing so will teach you the importance of timing, help you understand and accept that not everyone is interested, and allow you to ask better questions as your sales skills improve.
Opinions expressed by Entrepreneur contributors are their own.
As business owners, many of us like to create a clear boundary between our personal and professional affairs. And with good reason! It’s not healthy to intertwine the two in a lot of ways. However, it’s also unhealthy to consider them to be oil and water.
Whether you like it or not, your business is an extension of you. Your personal beliefs about money could hold your business back without you even knowing it.
“Waste not, want not”
“Look after the pennies and the pounds will look after themselves”
We’re drip-fed these lines over our formative years, usually with good intent. It’s hard to see at the moment how these words of ‘wisdom’ could do any harm…but their cumulative effect can have a tremendous stunting effect on your growth as an entrepreneur.
Remember that these beliefs take root in your subconscious long before you set foot on the professional stage. When you start with nothing to lose and everything to gain, these messages of prudence and conservation don’t have much of a foothold.
After all: what is there to conserve?
But as you grow and succeed, you’ll find yourself placing more and more restrictions on what you do with your capital — setting the thresholds for investing ever further ahead, convinced that you’ll finally be ready to take that leap by the next one.
But you never do.
So here are four beliefs about money that you might hold and could be holding your business back.
It’s very easy to be convinced of the need to conserve your capital reserves because it could all be gone tomorrow, and you’ll need the liquidity.
That’s fair and by no means unreasonable, especially given the current geopolitical situation. As a responsible business owner, you want to ensure you’ve covered your bases should the worst come to the worst. You have employees with mouths to feed, after all.
However, you can convince yourself of this being the case at any time, and it’s a false economy. Think about it for a moment. You’re a smart person; you know how money works. If you leave your cash in an account, it will be eroded by inflation and taxes. It needs to be put to work to grow.
The responsible thing to do is to find diverse avenues of investment to grow that money.
2. I can’t increase my prices, or I’ll lose my clients
This is one that an awful lot of business advisors speak on, but yet somehow, it just doesn’t get through. All of the logic and intellectualizing in the world can’t convince us that it’s the right course of action. But it is!
I’m not saying to hike your prices every week. But you change your mindset about regular price rises, even just to keep pace with inflation!
You also need to do it to optimize your client base. You’ve doubtlessly heard of the Pareto or “80/20” principle. This applies to your clients in a big way. I guarantee you that, within a small margin of error, 80% of your turnover comes from 20% of your clients, which means that you are spending 80% of your resources on 20% of them!
Here’s the thing, though: it’s not a clear dividing line.
When you put your prices up, it’s not like you’ll lose 80% of your client base, just like that! Many of them will be brought into the top 20%. Those that will, will be more than you think and certainly will negate any revenue lost, or resources expended on, those that represent the bottom half. Double the number of clients in that 20% bracket; you’ll have 160% of the revenue for less than half the work!
Risk is a four-letter word. The thing is… without risk; you will not achieve your business goals. You have to embrace it as a factor in what you’re doing. But risk in and of itself isn’t necessarily a good thing.
We’re not talking about throwing yourself to the wolves needlessly. But you need to find that mindset where you’re comfortable “taking a punt” (as we Brits say).
Calculated risk is good, but don’t get too wound up in the minutia. With any new venture or endeavor; there comes a jumping-off point. It’s a time to let go of the theorizing, stop trying to convince yourself of the certainty of the outcome and take the leap of faith.
If you’re getting yourself bound up with risk assessments and market fluctuations, just remember that not taking action is a risk in itself.
4. Debt is the last resort
This is probably the best example of a personal belief that, when carried from your personal life to your professional one, can really impede growth.
Consumer debt (i.e., buying consumables using debt) is to be avoided because this is servicing debt on an asset that is losing value — a car, for example, or a washing machine.
But, when leveraged strategically, debt is one of the greatest tools in your arsenal and can increase your value. That’s how rich people get richer! What…did you think that they invested their own money?
Of course not!
They use their wealth and capital to leverage debt and invest that. As long as the return is greater than the interest on the debt: you’re winning and experiencing abundance!
Don’t be afraid of debt in your business. Don’t let it suffocate the happiness and pride in your business. It is most definitely your friend. Awareness is the first step in any problem-solving.
I hope that by bringing these four beliefs about money that could hold your business back to your awareness, you can start to see your role in all this. That alone could be all the change you need to start opening doors to new opportunities for growth.
Getting to the next round of funding as quickly as possible
Increasing valuation
Maintaining their reality distortion field
Attracting and retaining employees who are motivated by potential future value rather than the current mission
Notice that there isn’t anything on that list focused on what it takes to build a great business. Focusing on short-term outcomes and motivations can lead your startup down a dangerous path. Here’s how to avoid these pitfalls.
1. Don’t set an arbitrary deadline for your next fundraise
When you raised your last round of funding, you probably expected that you would be ready for your next fundraise in 18-24 months. As that timeframe approaches, you might feel pressure to raise again from your board and current investors who are worried that you’re not making enough progress. If you succumb to this pressure before your startup is ready, you’re likely to increase spending to chase vanity metrics and top-line growth, even as your core metrics suffer and cash burn accelerates. You’ll quickly lose sight of product-market fit and pull precious resources away from potentially higher-value initiatives that need more time to play out.
Set key milestones that will support another round of funding. React to data that suggests your original assumptions were off, and give yourself time to find a better growth path. Leave room for the possibility that your startup won’t reach venture scale, recognizing that it could still be personally and financially rewarding. Don’t treat getting to your next round of funding as a Hail Mary pass. The concept of “go big or go home” sucks if you’re the one going home.
2. Avoid over-emphasizing valuation
Founders often over-emphasize the importance of valuation, particularly in the early rounds of funding. Focusing on maintaining or increasing valuation when your business hasn’t achieved the proper milestones leads to longer fundraise cycles, putting your startup at risk. You might save yourself from some dilution only to end up with worse economics and less control in the future. Higher liquidation preferences, ratchets and valuation hurdles can limit future options if you need to raise or sell. And you’ll be more likely to attract mercenaries focused on maximizing their economic outcome rather than missionaries who believe in you and your vision.
What’s more important than maintaining or raising your valuation? Adding high-quality investors who can best support you through the ups and downs of building your startup. Manage your cap table to protect the future economic outcome for you and your team and keep as many options open as possible.
When it comes to startups in distress, valuation gets the headlines, and liquidation preferences and other investor-friendly terms get the cash. A flat or even a down round isn’t the end of the world if it keeps you and your team in the game and your future options open. Play the long game when it comes to valuation.
3. Don’t get trapped by the reality distortion field
Founders have to believe in opportunities that others often can’t see. It’s the fuel that powers you through obstacles and allows you to leap into the unknown. But that power to believe can also be a trap when your best-laid plans run awry and your startup isn’t hitting your milestones.
Too many founders believe that they must put on a brave face for their employees, their board and the press, regardless of their startup’s struggles. They worry that any crack in the perception of inevitability would lead to the downfall of their startup. That’s the trap.
You can truly believe in the future opportunity ahead of you while being honest about the roadblocks and challenges on the path to getting there. If you don’t open up to your employees about where your startup is falling short, you’re no longer aligned, and they won’t solve the right problems or exploit the most important opportunities. If you hide challenges from your board, they can’t help you along the way, and they will pull back when you surprise them with bad news.
4. Hire missionaries, not mercenaries
Sixty-five percent of VC-backed startups fail to return 1x of capital. When you hire employees, if you overemphasize the potential value of stock options in their compensation package, you risk attracting mercenaries that are more motivated by the potential of future riches than in helping you realize your vision.
Even for the most successful startups, the path to creating real value in your equity is never straight up and to the right. Mercenaries will jump ship at the first sign of trouble, in search of the next startup that might be on a stronger path to the mythic unicorn status.
Hire people who, first and foremost, believe in your vision and are excited about the challenges you’re trying to solve. It’s easier to step outside your reality distortion field when you have a team ready to grab an oar and row in the same direction. You will face this moment. Who will be in the trench with you? Who will be the first to jump out and run away?
When you jump on the venture capital flywheel, you instantly feel the pressure to shorten your time horizon, thinking only of the next fundraise and the sprint to get there. Short-term execution is critical, but don’t optimize your decisions around the fundraise cycle — or you’ll miss the long-term goals that help you build something great.
Opinions expressed by Entrepreneur contributors are their own.
This year has seen economic slowdown, inflation and war combine into a cocktail that’s now fueling fears of a recession across business sectors, driving uncertainty in everyone from business leaders to investors to employees. Such uncertainty is forcing business leaders to reprioritize and scale back their once-ambitious growth plans. And now, as interest rates go up and valuations go down, more and more businesses are returning to prioritize what was once the only way to ensure a business’s success — positive free cash flow.
All of this is a very strong reminder for all businesses, but particularly startups and small businesses, that it’s vital to build a company to make money — in both good times and bad. Prioritizing free cash flow is the only way to manage against forces outside of your direct control.
Many entrepreneurs, especially as they start their businesses, begin at a deficit. While this is expected (“You’ve got to spend money to make money,” as the saying goes), too many businesses, especially in the last decade or so, have spent too long in the unprofitable growth stage. Many notable companies in tech are now faced with hard decisions with real consequential and disruptive effects, including dramatically curtailing investments and layoffs.
This recent and too-common strategy of sacrificing profitability for growth’s sake can and has worked for some companies. Private and public capital markets faced with a low-interest rate environment have been heavily anchored on the high growth segments of the economy to deploy their capital. This capital glut has distorted long-term value drivers of business, i.e., the relationship between revenue growth rate and free cash flow margins. Given the valuation rewards, too many have solely built their businesses for high growth at all costs.
For most companies, prioritizing profitability and free cash flow should be seen as the norm. Many business leaders might be surprised that doing so doesn’t materially impact revenue growth.
Speaking frankly, if you’re running a $100+ million organization that is just burning cash, it is a hobby. That doesn’t mean leaders shouldn’t invest in the business, it’s simply a question of prioritizing investment with the goal of also generating positive free cash flow.
Businesses are meant to turn a profit. While Wall Street has recently been exceptionally forgiving to growing but unprofitable companies, this historically has not been the case. With extremely low interest rates since the financial crisis of 2007-08, there have been little to no penalties for taking risks on fast-growing but heavily cash-burning companies. The phrase TINA — there is no alternative — came about as a result of the extremely low interest rates providing a significant incentive for investors to chase growth without considering risk, as they had few opportunities to realize returns with lower risk. With interest rates normalizing, however, there are very real investment alternatives to high growth, and valuations for growth are down substantially as a result.
Now that we’re trending towards a “normal” economy as interest rates return to something approaching long-term historical levels, it’s time for business leaders to return to managing their business operations for these “normal” times. Capital access is going to be tougher now, and investors will demand more balance between growth and free cash flow after the initial phases of product-market fit are established.
For small business owners and startup founders who have been less concerned with generating free cash flow and are looking to bolster their balance sheet, there are a few things you can and should do immediately.
First, you must determine the math that will allow you to control your burn. You and your team need to find a realistic revenue trajectory and break-even point. Without realistic expectations for your near and long-term revenue and fixed expenses, you and your team can never plan for responsible, realistic and profitable growth.
Once you have your revenue and break-even point, you should be able to figure out what you can plan to spend. Armed with that spend number, it’s time for leadership at all levels to take a look at how their activities connect to revenue. This is where you need complete buy-in from your team and likely a significant change in mindset.
People get sloppy in good times, which we’ve all been fortunate to enjoy for the last decade. There’s more room for experimentation when horizons are far out, but now as horizons shorten, pies shrink and forecasting becomes less sunny, business leaders must get ruthless about prioritizing projects that are driving revenue — everything else must be seen as a luxury. Projects outside revenue drivers will likely need to either operate off a slimmed-down budget and with more creativity or put on the shelf until sunnier days come.
Being honest is going to be important here. Be honest with yourself as the business leader about your growth and spending trajectories, with your team about what can and will be prioritized and with investors about what you’re doing to generate cash flow. Setting these expectations will be key to keeping your employees motivated and engaged during what can be a stressful time.
As I’ve seen various economic cycles come and go, there are always two terms that seem to come back with a vengeance at every downturn — efficiency and productivity. While there is nothing wrong with having an efficient operation, it seems to me that many companies and leaders only prioritize efficiency when times get tough.
Instead, I wish leaders focused more on productivity. For many, it will be a return to early startup days when teams were lean and scrappy. It’s incredible what teams can do when focused on making the highest impact on the highest priority work. Get your teams focused and aligned on the right things, and cut out the low-priority items. You’ll be amazed at what can be accomplished.
There is nothing wrong with making operations more efficient, but this can’t and shouldn’t be a short-term fix that goes out the window the second things look brighter, and neither should a focus on productivity. If and when we climb out of inflationary and recessionary periods, and your team goes right back to prioritizing growth over cash flow, you will likely find yourself in a similar situation the next time the markets begin to dip.
It is easier to burn cash than to generate positive free cash flow. That is to say, it’s easier to defer hard decisions instead of making them now. If the last few years have taught us anything, it’s that the future is unpredictable, and businesses — especially SMBs and startups — would be wise to shore up a safety net built on a foundation of profitability. Be realistic with your revenue and spending expectations, and prioritize projects that represent the best opportunities to drive growth and efficiency. This will enable long-term sustainability in good and bad times.
Opinions expressed by Entrepreneur contributors are their own.
So, you’ve done it. Your lifelong dream of being a business owner is now a reality. You’re running a successful company. But have you considered what happens when you’re ready to retire? Or even worse, what happens if there is a premature death or disability of an owner? While it may seem like a far-off reality, legacy planning for the business you’ve worked hard to build is an essential ingredient in running a successful business for the long haul. And that’s where a buy-sell agreement comes in.
A buy-sell agreement is, in its barest definition, a contract between business owners to provide for ownership succession. It is a foundational tool that helps ensure the business can keep thriving as the organization and its owners grow and change.
Below are some of the key questions to consider when creating your buy-sell agreement.
Often, we see that the exiting of an owner can cause the organization to produce a large amount of capital for the owner’s buyout, which has the potential to create financial stress on the company. This can often be mitigated through stipulations in the buy-sell agreement.
There are several ways to fund owner exits, including lump-sum payments, installment payments and gradual stock transfers. Transfer of this risk to an insurance company can also mitigate the capital needed from the business or other owners. Working with a wealth advisor and an attorney can be useful to figure out a good financing option for your organization.
2. How should you structure any insurance policies held to fund a buy-sell agreement?
While this may seem unlikely, protecting your business in the event of an owner’s death or disability is important. The two most common forms of funded buy-sell agreements are cross-purchase and entity purchase arrangements.
Usually implemented in businesses with fewer owners, in a cross-purchase arrangement, each owner purchases an insurance policy on the other. This allows the surviving owner to fund a buyout using the insurance proceeds and increases the tax basis of the survivor. This can also help reduce any subsequent taxes due on a future sale of the business. In an entity purchase arrangement, the business owns the insurance policies on all owners and uses the proceeds to repurchase the shares, which are then retired.
Typically, when owners start exiting, the business is still going. Therefore, it’s important that the buy-sell agreement lays out the terms of owner transition.
For example, who is replacing this owner? What guardrails are in place for the person replacing this exiting owner? How will knowledge transfer work? All of these items should be outlined in your buy-sell agreement to help ensure the business is not negatively impacted by an owner’s exit.
4. How do you prepare for the unthinkable?
Despite the efforts many business owners put into planning for the inevitable, you can’t predict the future. The unprecedented Covid-19 pandemic resulted in significant business slowdowns and caused many business owners to revisit their buy-sell agreements. Some took advantage of the temporarily decreased value of their businesses and moved them into trusts at a significantly lower valuation. Others temporarily adjusted valuation calculations and owner stipulations to keep the business safe while it “weathered the storm.”
Let’s say an employee wanted to buy into their business during the pandemic. Based on the existing valuation formula, the transaction would have occurred at a significantly undervalued price for the owner. A review of the business owner’s buy-sell provision in the operating agreement resulted in adding a section to allow for the normalization of earnings in times of temporary stress. We are seeing more and more agreements include these types of “failsafe” clauses to protect a business during unforeseen, usually temporary events.
5. How will you valuate your business?
Your buy-sell agreement should outline how you value the business. There are a few ways one can value their business for legacy ownership or sale. Earnings Before Interest, Taxes, Depreciation and Amortization (EBIDTA) multiples are one way but are not the only way.
From book value to enterprise value, it’s vital to use the right formula for your industry and organization. It is also fairly common to include a failsafe provision that allows an independent valuation expert to appraise the business. And even more importantly, as the company grows, it’s essential to reassess your valuation formula. Of course, it’s not wise to constantly change your valuation formula. However, if your company grows from 20 employees to 200, it may be time to revisit your valuation method.
6. How will you create a business prepared for your exit?
Once you’re ready to retire and fully enjoy the fruits of your labor, it’s important that the transition set you — and the organization you’ve worked hard to build up for success. Will you remain on the board? Will you be passing the organization to family or key employees? Will you be selling the business? These are key questions to consider as you build the legacy terms in your buy-sell agreement.
Whether you’re a business owner who hopes to sell soon or one who wants to build the company for many more years, an effective succession begins before the exit happens. Developing a high-quality buy-sell agreement is an important part of legacy planning. Answering these questions can help protect the integrity of the business you’ve worked hard to establish.
Opinions expressed by Entrepreneur contributors are their own.
In July, world leaders agreed to impose extra import tariffs on Russia during the G7 Summit, but the impact has been felt in other countries, including the U.S., with trade reduced by an estimated 62%, according to an analysis of the economic consequences of war. Russia’s war with Ukraine, and the subsequent trade sanctions placed on Russia, have impacted many businesses that rely on overseas trade. Now, businesses with overseas suppliers need to prepare for the uncertainty of trade tensions, tariffs and even the potential for embargos as the war escalates.
Just look at Shell. When they ceased operation and use of any Russian properties or partnerships for their oil production, they certainly felt the impact. Shell, like many other energy companies, had to fill the void left after they their relationship ended with Russian energy. Ultimately, this led to a rise in oil and gas prices across the world. This isn’t something felt only by big business, though, as everyone deals with the impact of tariffs either directly or indirectly.
If your business is facing tariffs, trade sanctions or the effects of war, here are some strategies to plan against the potential threat it could pose to your business internationally.
Up until June of this year, the U.S.’s whiskey industry experienced lean times while exporting to the U.K. and EU, as Trump-era disputes over steel and aluminum trade resulted in steep tariffs on American whiskey. The whiskey companies had to monitor their profit margins and the number of tariffs their profits could take.
For international businesses experiencing periods of higher tariffs, it requires analyzing what costs can be absorbed and covered, and what sorts of belt-tightening and cost-cutting could help mitigate the impact of tariffs and to offset their cost on your business. While cutting costs can help improve profit margins, the negative effects of the tariff still exist, but at least consumers won’t see a drastic increase in price of your product. It’s all a matter of how much your business can stand to lose in profit margin and remain profitable domestically and abroad or if it can at all.
Pass the cost onto the consumer
On the other hand, a business always has the option to raise its prices to offset the tariffs’ impact on its bottom line. With that, however, comes the risk that customers may no longer want to buy your product.
Harvard Business Review emphasized that risk can be offset, though, if your business has an honest approach to explaining why it’s raising its prices. Communication is key. Leveling with your customers and being honest regarding the realistic implications of a trade war go a long way.
Transferring the risk by insuring against it is another option. Risks from tariffs can, in many cases, be included in Business Interruption Due to Legislative insurance. However, the trade-related risk is ever-evolving and complex, which can make it difficult and costly to insure in the third-party commercial insurance market. This is where captive insurance can be an option.
Captive policies often have fewer policy exclusions than commercial insurance policies. Captive insurance also negates the perceived sunk cost of paying insurance for a risk that doesn’t materialize.
For example, insuring against tariff risk for 10 years without any losses to tariffs occurring over the course of those 10 years would equate to money out the door. Outside of the comfort of knowing you’re insured, the business really has nothing to show for the premiums paid over that decade.
With captive insurance, however, your business can retain profits when claims aren’t paid. Thus, allowing for a build-up of cash reserves and benefiting the balance sheet of your business. This makes captive insurance a very effective tool especially in times like now where many businesses have been left scrambling after the sweeping sanctions against Russia and high inflation.
Decide whether to exit a market or category completely or find a supplier not subject to tariffs
Tariffs cut both ways, even though they exist to operate as barriers to prevent competing foreign products and businesses from damaging domestic industries. Just look to the specific industry of washing machines as tariffs introduced by the U.S. during the Trump presidency resulted in washer prices rising by almost 12%, according to economists at the University of Chicago and Federal Reserve.
This resulted in domestic business owners being left having to pay their own domestic government tariffs for buying the products instead of the country they imported them from. As you can imagine, this has implications for international business owners as well, especially in industries like agriculture where the World Trade Organization cites 100% of products as having a tariff.
For the businesses and consumers that needed those washers, they were left paying the increased price for them instead of China or other countries targeted by U.S. tariffs. According to UCLA Anderson Review, additional studies have also concluded that the trade war hurt U.S. consumers and companies more than it did China.
The example illustrates why having an international supplier that isn’t affected by the sanctions or tariffs faced by your company or products from your country is very important. This option is, however, mostly reserved for businesses that can afford to move major portions of their supply chain to other countries — making this option limited to few businesses. Partnering with a business in a country without the same tariffs or sanctions is also an option, but again, has many logistical complexities few businesses are prepared for.
Although there are immediate implications concerning the sanctions against Russia that can potentially decimate a supply chain, it’s crucial for businesses to keep in mind that the impact will also be felt long-term. Trade wars typically slow economic growth. Thus, it behooves businesses to start now and conduct a risk assessment in relation to both the sanctions and the potential for an economic slowdown. Even if your business isn’t impacted now, it could be in the future.
Opinions expressed by Entrepreneur contributors are their own.
If this is your first market downturn, you may be especially confused by the conflicting advice arising from such an event. To some, the sky is falling, and you should quickly change your model. To others, the pastures are green, and you should take advantage of the weakened landscape. Which one you are depends on what the data tells you about your business.
The valuation decline has been the steepest for companies not focused on their data, specifically their unit economics. In those unit economics, you’ll discover whether you should bear down to weather the storm or attack the market to expand your dominance. Either way, the decisions you make now should be strongly rooted in your unit economics.
We all benefited from larger funds and higher valuations. A rising tide raises all ships; unfortunately, that includes the leaky ones. The glut of available capital meant companies performing at mediocre and poor levels from an efficiency perspective could still grow quickly. In some cases, investors were pushing companies to take more chances and bet on future growth, sacrificing efficiency and certainly profitability.
Those days of “growth at all costs” seem behind us. As markets sank and capital tightened, funders scrutinized their deals harder. They now seek companies demonstrating the fundamentals of running a scalable SaaS company, with efficiency and a strong path to profitability as hallmarks.
The metrics that matter
To be clear, SaaS companies cannot survive without growth — dominating your space requires it. But growth can no longer come at all costs, and companies must display certain fundamental metrics to support faster growth. SaaS companies should track dozens of metrics, but to attract investment in the current market, companies must address their efficiency metrics, especially:
Achieving these efficiency metrics will help companies maintain or exceed their valuations. If you’re already achieving these metrics, then you’ve earned the right to discuss deploying more capital in exchange for growth. If you aren’t, consider slowing growth and redirecting your strategy, especially if capital is tight.
The higher cost of capital may prove incredibly expensive for companies buying time to achieve efficient growth. Beyond tightened funding requirements and depressed valuations, investors are placing more funder-friendly structures into deals with less fundamentally sound companies, including liquidation preferences, voting rights and even board control to reduce their downside risk. In fact, overly flawed later-stage companies may struggle to find funding on acceptable terms and may have to explore an exit or consolidation. But those wanting to tough it out and buy time to see better metrics have options.
What can leaders do now?
Start by scrutinizing your business fundamentals and assessing the efficiency of your core operating teams, then adjust to reduce inefficient spending.
Sales: Review metrics like pipeline-to-bookings ratio (with a goal of 4-5x+) and average seller’s quota attainment (with a goal of 65%+). This information will focus your efforts and help you find needle-moving improvements before simply growing your sales teams without correcting underlying issues.
Marketing: Focus on efficiency metrics like your cost per opportunity across every channel and over-invest in high-performing channels.
Product teams: Consider tracking efficiency based on a product productivity benchmark and monitor user-to-issues ratios. You might invest more in customer features and platform stability over new builds to increase retention and enable higher converting upsells.
Customer success:Examine retention rates across various customer segmentations to understand your customer base’s strengths and weaknesses. Optimize your book of business-to-customer rep ratios, and heed customer Net Promoter Scores and other sentiment metrics.
As you adjust, you may need to shrink your teams and rightsize your operation. It’s an unpleasant reality, but you should fill any cracks in your ship before renewing your push for growth. This can help control your burn rate and buy the time needed to convince an investor you’re on the path to efficiency.
Valuations likely won’t reach 2021 numbers, but companies with strong fundamentals will find funding. Companies correcting their fundamentals and needing to buy time with capital will find tougher markets. So, where else can you go?
Start with your current investor base. They have as much to lose as you do, and in the case of venture capitalists, they often have allocated “dry powder” for situations like these. They may also behave more moderately as bad valuations and more structure can often hurt their previous positions. Another way to avoid a down round in the short term is by raising via convertible notes.
If equity is not an option, climbing interest rates have made debt providers more active, creating an opportunity to explore debt financing. If it’s available to you and makes sense financially, leveraging debt lets you raise non-dilutive capital that buys you time to achieve better efficiency metrics. Timing matters, however, as the debt market can ebb fast should monetary policies change further.
The funding silver lining
Companies that rightsize their operations and control their burn for the next year might find a funding pool at the end of the proverbial rainbow. Funds with charters to invest in private tech companies are riding out the troubled market on the sidelines. As the market improves, funds will further open their checkbooks to companies with healthy efficiency metrics.
Valuations may not have completely rebounded by then, but companies will keep raising at good multiples if they demonstrate solid fundamentals and maintain healthy efficiency metrics alongside growth rates. These companies are best prepared to ride out the falling wave and catch the rising tide again.
