Adam McFarland

Back when we moved into our warehouse we were shocked to find out that there was no high speed internet available in our building.  When we contacted local high speed providers, we quickly realized that adding a line to the building would cost a ton (like either $4,000 down plus $140/mo, or $300/mo with a 5 year commitment).  So our somewhat risky solution was to get a Sprint Mobile Broadband card and use it in conjunction with the Linksys WRT54G3G router below.

We didn’t know how good of cell phone reception we’d get.  We didn’t know if the router would cover the entire warehouse.  We didn’t know if the speeds would be adequate.  We could have totally fallen flat on our face with this risk…but we didn’t.   I wanted to make sure I wrote a follow-up post so that everyone knew how well this has worked for us. This solution for internet service has absolutely been one of the better decisions we’ve made.  In fact, I plan on using this same setup at home (being able to “take your connection with you” by just pulling the card out of the router and putting it in your lapper is sooo cool).

Before I get into specifics, keep in mind that we are about 30 minutes outside of Albany in an area that resembles farm land more than the inner city…meaning we don’t get the worlds best cell phone coverage.  Also keep in mind that the warehouse is a steel framed building, which certainly isn’t helping reception either.  After almost five months of use, here are my thoughts:

• Connection speeds are fast - generally within the range that the broadband card states (600 kbps - 1.4 Mbps download and average upload speeds of 350 - 500 kbps).  Now if you’re uploading movies you aren’t going to like an upload speed of 350 kbps, but for our daily activities these speeds are more than enough.  The router certainly doesn’t prohibit you from getting the maximum available connection speed.
• Connection is strong.  Everywhere in the 5,300 sq-ft warehouse you get a full five-bar connection.  It’s nice to know you can move around and not lose a signal.  Again, being in a steel framed building you just never know what you’re getting.
• Downtime is minimal.  In five months, I’d say we’ve only had one day where we lost connection for a significant amount of time.  It was about 2 hours one morning.  Otherwise, just clicking a button on the router to disconnect / reconnect always solves the problem in less than a minute.  My home internet service is down more often than this is.
• There’s no slowdown when all four of use are connected at once.  These broadband cards aren’t necessarily made for this, so I was worried that the connection would lag or we’d get kicked off if there was too much combined uploading or downloading going on.  I’ve never noticed a difference whether there were five computers using it (our lappers + the shipping desktop) or just one.

In sum:  if you have a Sprint Mobile Broadband card you’d be nuts not to pick one of these up.  For us, trimming a $300/month expense down to a $60/month expense was huge.  Every penny adds up, and that $240 is money we can use to market our sites, pay other warehouse expenses, or pay our salaries.

If this first story sounds familiar, it is - I touched upon it in my Productive Output post.  A few weeks ago the owner of a local large online retailer (approx 10x bigger than us) visited the warehouse.  George worked for him prior to starting DI, and he based much of early DI off of this particular website.  After seeing our shipping process on the back-end of our shopping cart, the owner turned George and his co-owner and said “I could fire two employees if I had that technology”.  I unfortunately was not there to hear this, but upon getting the story from my partners it made me feel about as good as a developer slash business owner can feel.

Thus far, features like the shopping cart are how we’ve gotten our competitive advantage, how we’ve gotten as far as we have as guys just out of college with no outside funding.  Anytime something takes up a lot of time we’ve either automated it or eliminated it.  However, we’re rapidly approaching the time when four people just can’t handle it all.   Today Mike, George, and I spent from 9 AM - 3PM packing our orders from the weekend.  That’s 18 man hours doing warehouse work!  Don’t get me wrong, we shipped close to 60 orders - many of which were very large - but no owner in their right mind thinks that 3/4 of their resources should be poured into $10/hr work while the high level stuff (mostly marketing) gets ignored and pushed back.

So why not just hire right now?  A couple of things add to the difficulties:

• 18 man hours is not the norm.  The norm is probably 4/day, but it’s not uncommon to have a few slow days a week that only take 2 man hours.  Mondays are always larger because you have an extra 2 days of orders being shipped.   In short, the pure warehouse work is sporadic.
• We don’t really have a lot of other work for “warehouse workers”.  Shelves need to be stocked for maybe 30 minutes to an hour a day.  Inventory needs to be updated (15 minutes a day maybe).  That’s about it unless we want to cross train them in other areas, which I personally do not think is a good business move.
• We recently instituted a new check/balance system where one person pulls orders and another packs.  Both check the invoice against the products before passing it on (either to the packer or to the outgoing packages area).  This prevents errors due to pulling the wrong item, and highly reduces errors from missing an item all together.   We’re pretty serious about it:  if you take the product off the shelves, you are absolutely not allowed to pack and ship it.  If this is the case, do we hire 2 employees?  Or do we still have an owner paired with the full-timer?
• Our salaries aren’t as high as we want them to be right now.  We are all getting by, but still underpaying ourselves.  Everyone is living tight and that is stressful.  An employee will increase revenue long-term, but we’d like to get one more raise in there for us before hiring someone.

My gut tells me that in a few months we won’t have a choice:  we’ll need to hire.  IF our threshold is where I think it is (fingers crossed), we’ll already have our raises and it’ll be a question of:  do we hire one full timer or two part timers?  I’m leaning towards two part time college age students with flexible schedules.  This eliminates the need for us to provide benefits, meets our check/balance requirement (if one isn’t working that day, one of us will chip in), and enables us to have them only come in 3-6 hrs a day.  I realize that there are downsides to these types of employees, but I think the pros outweigh the cons.  Who knows, maybe we’ll have 3 or 4 at some pt to ensure that we get 2/day.

The good news in all of this is we’re growing.  Nonetheless, every “hump” is stressful.  The “getting into a warehouse without going under” hump is passed and this is the next logical part of our growth.  The warehouse stuff was only February, so things are happening fast, even though a lot of days it feels like growth is happening at the speed of molasses.

On a somewhat related topic:  we’re considering getting an intern or hiring a virtual assistant (usually based in India) to do a lot of the more monotonous marketing and customer service tasks.  One example would be to create a list of sites for us to contact to participate in our wholesale or affiliate programs.  There are many many more, but those illustrate the point that there are long tedious tasks that us, as owners, shouldn’t be spending our time on.

On a completely unrelated topic:  this heatwave is ridiculous.   I was sweating balls all day long doing manual labor in the warehouse.  Average high temps this year:  ~70 degrees.  Beautiful weather right?  This week:  close to freaking 100 degrees with humidity that makes it feel like you’re in a steam bath all day long.  Our boxes - despite being “dry” - felt mushy when we were trying to pack orders.  The packing slips and invoices were curled up like you took them in the bathroom with you while showering.  Last time I checked I lived in Upstate NY…not the swamps of Florida.

We had what we thought was a great situation for our web hosting. One of George’s friends from college runs a small hosting company. The server we are on has only a few sites in addition to ours, is blazing fast (4 GB of RAM I believe), and extremely affordable. While the company was a one man operation, we were generally satisfied with the level of service. All in all, nothing to complain about.

Unfortunately on Friday night one of the nameservers (that he does not control) went down….it’s still down, causing Detailed Image to load sloooooow. We eventually learned that the company controlling the nameserver was recently sold and our server manager was going through hell trying to get in touch with the people who could fix it. Not his fault, but a cause for us to re-evaluate our situation.

We decided that our sites are too large now for this to be out of our control. The cost of a managed dedicated server is essentially negligible for what we’re doing in sales. Prior to this we didn’t have a compelling reason to move. Now we do, so we did. After spending quite a bit of time researching, we pulled the trigger on a managed dedicated server from Liquid Web.

The next few days I’ll be scrambling to migrate our sites. Not the way I really wanted to be doing this, but the end result will be more control in-house of something that’s critical to our business.

As for the lost sales: our business insurance covers e-commerce revenue caused by forces outside of our control, so we’re already starting the claims process to recoup some of the lost revenue. Once everything is up and running again we’ll be profusely apologizing to all of our customers and offering discounts & specials.

Should we have probably done this prior to now? I guess so. But hindsight is always twenty-twenty. The best we can do now is move forward and continue to put as many systems in place to prevent future issues.

Back in February we made the somewhat difficult decision to self-fund our move and expansion by not paying ourselves for three months.  In retrospect, this was a riskier move than I think we all realized.  It’s really, really stressful to see your bank account dwindling without anything to replenish it.  It’s also really, really stressful to work 12 hour days and see nothing in return.  That said, it was the best move we ever could have made.

Taking no pay brought us together as a team - we united around the fact that we needed to work our asses off to get paid again. It also motivated each individual.  While stressful for me, the desperation of the matter made me block out the rest of the world for a while and dial in 100% to the task at hand.

And right around the launch of Tastefully Driven, it all started to pay off:

• We no longer had to commit time to moving and expanding
• Our initial warehouse expenses were gone and replaced with manageable fixed monthly costs
• The marketing we had worked so hard on has resulted in several months in a row of record sales.  We are consistently doing 3-4X monthly revenue from the corresponding month last year, which was on the high side of our estimations.
• We found a great new accountant to replace the unsatisfactory one we fired during tax season (who by the way seems to have cost us approximately $6,000 last year that we could have avoided….good accountants are valuable, lesson learned)
• We secured a large line of credit with our local bank.  We didn’t need it, but it doesn’t cost anything and ties in with our existing bank account, so it was a no brainer to apply for and have in our back pocket for future expansion if we need it.

All of this led us to the decision to start paying ourselves again early.  So yesterday, almost a month earlier than planned, I walked into the bank and cashed my first check.  Sure, I’m making exactly what I was a few months ago but it just felt so much better to cash this check, mostly because I know we’ve weathered our storm and are able to cover all expenses, pay ourselves, and profit - something we thought might take a lot longer to achieve.  We could have paid ourselves a raise, but we decided to play it conservative and do this for a few months just in case sales unexpectedly dip.  Come mid-summer, I expect we’ll be able to give ourselves another raise, which will be significant because it’ll give us each a little breathing room financially on a personal level.

Sometimes business risks like not paying yourself can backfire.  This one could have been the start of us falling apart if warehouse costs were more than expected and sales were less than expected.  Thankfully, a lot has gone right lately and everything paid off.  Looking back a few months, this post is probably the best possible outcome to our situation.  These are the times you live for as a business owner.

It’s easy to become jaded and begin to dislike your customers for asking you the same questions over and over again. In a way, who can blame you: 99% of the interactions with customers that most businesses have are repetitive and don’t do much to make you a better business owner. Then - every once in a while - someone comes along and gives you a simple idea that’s so obvious you kick yourself and say “duh, why wasn’t that already on our to-do list?”

The other day in the comments field of a Tastefully Driven order someone said: “please include a card saying ‘Happy Birthday - Love Patty and John’”. My first thought was we don’t do that. Then we had a conversation and realized that not only should we do it, we should make it a policy to allow our customers to do it for free with any order.

See, Detailed Image’s holiday season is the summer, when people obsessively care for their cars. In the past it hasn’t really been a traditional holiday-driven e-commerce site like most. As volume has picked up we’ve become increasingly aware of holiday-specific marketing. We also quickly realized that many of the products on Tastefully Driven are great gifts and that TD needs to capitalize on holiday orders to be successful. We were planning on starting with Father’s Day next month but hadn’t really talked strategy yet.

This order sparked that discussion, and it became pretty obvious that allowing people to include a custom card at no charge was a no-brainer decision. We figure that as long as we do a good job making our customers aware of this service they will take advantage of it on holidays/birthdays. I think we’ll also probably give them the option of having it shipped without the receipt in case they don’t want the recipient to know the price.

Yesterday morning I ran to CVS and picked up 10 blank cards for ~$6. We decided that was too expensive to pay for a card if we were going to offer this for free. After looking around online at blank cards, we decided it would be far cheaper to use our wholesale printing account where we can get 1,000 custom tent cards (3.5″ X 4″ with a fold in the middle) for $54.99, or ~5 cents a card. Below are the designs that we’re having printed up. We will then hand-write the message on the inside of the card…check that, Mike will hand-write the message because the rest of us write like a five year old.

So we’ve just spent nearly six-months and thousands of dollars to make Tastefully Driven a reality. Sweet…but then comes the realization that every business owner has: “oh crap, now we actually need to start making money”. It’s a daunting task, but we went into this knowing that we know what to do (or thinking that we know what to do, I suppose).

There are five stores on Tastefully Driven. Each one is it’s own niche that could be a business in and of itself. If you do the keyword research (we did) you’ll learn that each of those niches are very popular. Therefore, before doing anything else it’s important for us to make sure all of our products are listed where people are already looking for them: essentially, the people who are already ’sold’ and are just looking to pull the trigger. Where are these people? Well, if I know what I want I usually do a Google search or check Amazon. Most people do the same or something similar. That said, our first priorities are:

• Getting all of the products listed in Google Base/Google Product search. I wrote a script to auto-generate a product feed daily and FTP it over to Google. We’re still waiting for approval for our feed (takes 24 hours), but from my experiences this usually brings in sales via Google pretty quickly…assuming your products are competitively priced.
• Researching and creating a complete Pay-Per-Click campaign. I spent almost a full week earlier this month researching keywords and writing several unique ads for every product. The campaign went live yesterday on AdWords, Y! Search Marketing, and MSN AdCenter.
• Getting all products listed on Amazon. I have yet to start this, but it’s at the top of my list.
• Get products listed on Y! Products Submit (the Y! equivalent of Google Product search, but you pay-per-click). Again, haven’t started this but I will in the next few days.

Now, this doesn’t encompass EVERYTHING, but it gives us access to a good number of the people looking for the products we are selling.

A lot of companies stop the marketing there. Long-term is where the entire Tastefully Driven site comes into play. The blog is going to be a “men’s lifestyle blog” where we will post reviews, videos, and experiments related to our products and other relevant products. Videos like the one below that George and Mike made about our plastic poker cards vs. regular cards shows the potential:

Each blog post is auto-created as a forum thread, where people can comment as opposed to commenting directly on the blog. The forum is the long-long-term investment, but consider where all of this could be 1-2 years from now:

• Every link to every article, forum post, and product in every store will be pointing to the TastefullyDriven.com domain. From a SEO standpoint, the domain becomes a mini-Wikipedia for our demographic: we have thousands of links and a ton of quality blog/forum content, meaning ANYTHING we add immediately gets ranked well.
• Now that Google has begun integrating YouTube results into searches, properly optimizing a YouTube video is a great way for people searching for information to find your video (and in turn, learn about your site). We recently purchased a high-def video camera so we have big plans for our video section.
• The community that we build will begin to influence the products we carry. More importantly, the community will begin to TRUST us when they see how great the products are (I tried the personal care stuff last night for the first time and every product was 1000 times better than anything I’ve ever picked up at the mall or the grocery store). When we get new products in, our newsletter and our forum community will help drive sales.

In theory, this is the best long term strategy. Sites that only do the first stuff are the types of businesses that hit a wall after a year or two and wonder where the rest of the sales are. Well, it’s in educating the consumer and providing high quality information. You go from getting just the people who are sold and ready to buy immediately, to now getting the sales from the people who are at the researching phase and decide to eventually buy. Since those people now trust you (they learned about a product from you, bought it, and loved it), you can now influence their future purchasing decisions…which is where you have potential for serious, serious growth and can begin to turn your community into a quasi social network.

Detailed Image / Detail University is at this point now. We know we can get there - we know all of these industries as well as detailing - it’s just a matter of time.

Let’s be clear about something: carpooling or using alternative transportation is absolutely great for the environment. That’s not what this post is about. This post is directed to everyone who says “I love carpooling, it saves me so much money.” See, most people I know carpool for just that reason: to save money. But do you really save money?

Consider the example of my three partners and I. Let’s say that all four of us carpool to our warehouse for four days each week.

It’s a ~9 mile drive to work for each of us, or an ~18 mile round trip. According to CommuteSolutions.org, the true cost of driving - including drivers expenses (like vehicle depreciation, maintenance, insurance, etc) and societal costs (like accidents, congestion cost, air pollution damage, CO2 reduction, etc) is $1.19/mile.

If I’m not driving: I wait roughly 10 minutes to be picked up, spend roughly 10 minutes in the car while other people are getting picked up, and wait another 10 minutes while everyone is being rounded up to leave. It could be less time than this, but it could also be more (we all know that person that keeps saying ‘just give me 5 more minutes to finish something’ and it ends up taking 30 minutes). Anyway, average time wasted = 30 minutes when not driving.

If I drive: I spend roughly 20 minutes picking people up, including calling them when I get there and waiting for them. I spend 15 minutes dropping them off. I still spend the 10 minutes waiting for everyone to be ready to leave. That’s also roughly 10 miles combined of additional driving. Average time wasted = 45 minutes, additional cost of mileage = 10 x $1.19/mile, or $14.28.

Also, there’s also at least 30 minutes of additional wasted time every four days when someone says “can we stop at XYZ for a few seconds because it’s on the way and I really need to blah blah blah”.

Since there’s four of us, let’s just do the math on a four day schedule.

In any four day period without carpooling, I would commute 72 miles (18 x 4), it would cost me $85.68 and have a time loss of 0 minutes.

In any four day period with carpooling, I would drive 28 miles (18 + 10), it would cost me $33.32 and have a time loss of 165 minutes ((30 x 3 )+ 45 + 30).

So here’s the million dollar question: is 165 minutes in lost time worth saving $52.36? I don’t know about you, but my time is worth a lot more than $19.04/hour. I also value the freedom to know that I can come and go whenever I want.

I’m not saying I won’t carpool on occasion if it’s convenient socially or if I’m in a particularly green mood and want to help the environment, just that on a day-to-day basis it is absolutely not a good financial move for me.

I’m going to take a step back from our pre-launch marketing for Tastefully Driven to go over our overall launch plan - from conception to where we are now to what we have left to do. I’m not saying that there aren’t different or even better ways to deploy a site, just that this process is how we do things, in large part based upon prior failures, successes, and other professional experiences (I’d be lying if I said my engineering background didn’t play a large role in the way I structure a project).

None the less, I’ve never in my life missed a due date on a project and a large part of that is my meticulous planning so hopefully this post will help other young entrepreneurs better formulate their business plan.

Conceptualization

You have that “ah ha” moment where your entire perspective on the world changes and you think to yourself  “I’ve got to do that“. This is the start of what I call the conceptualization stage. For us, after the Detailed Image shopping cart far exceeded our expectations, we naturally asked ourselves how we could repeat the DI model in another industry. That led to us considering several similar high-end niches, and eventually the light bulb moment where we could combine those stores and a community into one large site - hence Tastefully Driven.

When I’m at this stage with a project, I’m so excited that I put a self-imposed waiting period on myself before acting (similar to my 24 hour rule). During this stage you’re likely to be so certain that you have just come up with the next big thing that you’ll ignore reality and down play very real road blocks. There’s no set time period, but I’d say wait at least a week before taking any action beyond registering a domain name.

In the case of Tastefully Driven, we conceived of the idea sometime around Thanksgiving of ‘07. For the next month we discussed the pros and cons - the features we’d want and those we wouldn’t, how we would market it, how it would impact the rest of the company, and how much of our resources could be devoted to it.

Aside from preventing you from doing anything stupid, it allows you (and your team, if you have one) to refine your vision. By the end of this period for us, everyone usually shares the same vision and knows what’s going through everyone else’s head. When you finally do start the project, you start it on the same page with the same vision for success.

Making it an Official Project

By late December we had decided Tastefully Driven would be our future. At that point I consider the project an official project. During this phase we started to get more serious: would we keep client work (ultimately, no)? how would this impact Detailed Image (we would finish all DI development work for 2008 before starting TD)? when could we realistically launch with several product lines (initially, we said 8/1/2008 at the earliest).

This is where I really shine. We have a MONSTER project and we need to figure out how to start tackling it. This is also where I think a lot of people get paralysis by simply being overwhelmed with what to do next. As Theodore Roosevelt once said: “In a moment of decision the best thing you can do is the right thing. The worst thing you can do is nothing.” In this case, the right thing to do is come up with a plan.

Up to this point, we had literally written nothing down and neither should you. Don’t get caught up in the minutia when you’re conceptualizing. However, once it’s an official project there has to be extreme attention to every single detail.

We tend to convene around our company wiki, so I like to write my project plans on the wiki. Since we had agreed to finish Detailed Image development before touching TD, I focused on that first. There were around 10 additions to the cart that needed to be completed (mostly stuff for me to do). I gave each an approximate completion time and I figured it would take until the end of February or early March to complete. Somehow I caught fire and wrapped it up on 1/12, which gave us an early indication that our 8/1 launch date for TD might have been too much of a time cushion.

Once complete with that I started an in depth plan for Tastefully Driven. The site will launch with 5 or 6 e-commerce stores, a community, a blog, and full integration of accounts between the three - by far the largest project we have tackled, and therefore the most daunting to plan. I started by breaking it up in to several key categories:

• Design (mostly Mike)
• Development, which essentially involved improving and scaling the DI cart (mostly me)
• Quality testing, which could fall under Development, but I like a whole section of tests to run prior to launch
• Product selection (mostly George)
• Content creation, including writing product descriptions
• Marketing ideas

Each category had a simple bulleted list, and each task that needed to be done to launch got an approximate completion time. The latter stuff - like marketing ideas - was more of a brain dump than anything else. Even though we create a marketing plan later on, it’s important that we have a place on the wiki to jot down an idea as we come across it in the development of the site.

Setting a Launch Date

Some people like to use Microsoft Project (or similar project manager tool) to plan out due dates and choose a launch date. I was forced into using these tools in college, and to be honest I just see them as complicating the matter. I like the freeness of one large blank wiki page. I am smart enough to know that keyword research needs to be done before launching a pay-per-click campaign, so I won’t assign a due date to the PPC campaign that doesn’t allot for that. With the entire project in front of me it became pretty obvious that we could finish it by 3/1 (a far cry from 8/1). We figured with the warehouse move and a little cushion time, that 4/1 would be perfect. Any later in the year is prime Detailed Image season so if we didn’t do April we’d probably have to wait until Fall…or launch with limited contribution from George and Greg.

As I touched on a bit in previous posts, the one key thing I grossly miscalculated was how long it takes to contact vendors. I figured a month would be sufficient time to contact a vendor, get samples, place our first order, and receive it. More realistically, that stuff takes several months and I’d like at least a 3 month cushion for that alone next time. Our final order just shipped, so miraculously we will have all of our products in the warehouse for weighing and photoing by 3/14, but we cut it waaaay too close in my book.

Developing the Site

The development portion is different for everyone. Some people use open source software like WordPress or osCommerce with very little customization and this portion isn’t much more than design work to get the aesthetics right. Others hire an outside developer….which I’ve never really done so I have no clue how to integrate that into a project plan. We develop everything ourselves, so we were able to relatively accurately estimate our ~2 months of development work.

*side note - if you or your developer don’t develop with SEO in mind, this is the time to start building and structuring things properly. Do your homework - it will pay off.

When I do development work I do it with the understanding that we’re spending a few weeks solely on quality control testing at the end of the project. That means that while I’m developing I test every scenario and interaction I can think of, and once it works I move on.  I usually miss some stuff, but that’s OK. In most cases there will be other interactions created later on, some of which we won’t appropriately test - which is why having a QC testing phase is so important. I also encouraged Mike to think the same way with his design. Essentially - lay it all out and get it working most of the way and fix the nitty gritty shit at the end.

I always map out the entire site - every feature and function I can think of - before touching anything. Once that’s done, I create the database that should encapsulate every single possible scenario. This is pretty obvious: you need to be able to enter test data to see if what you’re trying is working.

All of this resulted in a more detailed list of features to develop, how long they’re going to take, and what order to do them in. By far the most challenging part of Tastefully Driven was to get our login and user information to work seamlessly between our forum (built upon bbPress), our blog (WordPress), and our custom built cart. Every project I’ve ever been a part of has those “if we can just get this to work, we’ll be fine” features and this was the one thing we were really uncertain of the difficulty going in. It’s important to identify these types of issues at the start and try to tackle them as soon as possible so you know where you stand. These are the things that will throw off a time line and screw a launch date.

Announcing the Launch Date

For the reason in the last sentence, we have an unwritten policy of not announcing a launch date until the development work is nearing completion. While internally we set 4.1.08 as the date, we always knew it could be delayed if need be. Once I announced the launch on my blog, I considered it set in stone and - short of an extreme emergency - will make sure it happens.

Every company has different pressures and a lot of times those pressures dictate premature launch dates, but if you can help it I encourage you to set a date and stick to it. A launch date really forces you to buckle down and focus on the task at hand. It forces the BS stuff out of your project plan and dictates that you work on only what is necessary. We’re in this phase now, and I’ve been knocking things off of our wiki list like crazy. Some get moved to “post launch” and others get canned because they just don’t matter.

I normally work a lot more hours prior to a launch. The past few days George and I have been doing a double shift (8 AM to 8 PM type of stuff) to ensure that we get everything done on time.

Creating a Marketing Plan

Up until this morning we just had our marketing list on the wiki. We created the splash page, the pre-launch blog, and the teaser business cards, but the plan wasn’t really formulated. Today I finally created our marketing plan. Some people like to do this sooner than now (a month before launch), but I encourage you to wait to create a marketing plan because so much changes in development that much of an earlier marketing plan would be rendered useless.

I’m not going to rehash all of my favorite web marketing tactics - my free e-book does that - but I will say that for an e-commerce site we’ve pretty much got a formula down pat that we are sticking to. The majority of our marketing will consist of:

• Content creation. Articles, forum posts, podcasts, and videos where we do product comparison, tests, and case studies. Since our site is perfectly SEO friendly and we will produce quality content, over time this will suck in a ton of targeted traffic. It will also become viral and hopefully spread through social bookmarking and social networking sites (we have a “share this” button on every product page, blog post, and forum post).
• Pay per click marketing. PPC is such a simple formula if executed properly: pay $x per click, y% of clicks turn in to purchases. As long as the number of clicks/sale is greater than your margin, you win. Split testing and refining ads can push your cost per click down and conversion rate up.
• Google product search. So many sellers don’t take advantage of this. It’s free, and in about 2 hours I automated the process so that we automatically create and submit an updated product feed daily to Google via FTP. DI gets a lot of sales this way.
• Email and RSS marketing. This is really just maximizing the sales we can get out of our existing members. I’d also include great customer service in this category - every customer service email is an opportunity to positively influence someone who could become an evangelist of your site. When you’re starting with zero members, email marketing can take a while to have an influence. We see it now with DI though: every newsletter results in a wave of sales. This is one of the reasons why the pre-launch splash page is important: the faster we can build an email list, the better.

There’s other stuff too, but these are what will drive sales. Obviously PPC and Google product search will help immediately, while the other two will take time to develop. We’ve launched so many sites that we understand that you don’t truly see the impact of great content for months and even years. With this project, we know that what we’re doing works and we’ll be as patient as we need to be to make it work correctly.

Quality Testing

Maybe it’s because I spent my engineering days as a QC engineer, but quality testing is a big deal to me.  Test every single page and every single possible function of your site.  Do it in every browser, every operating system, and under every condition you can think of.  Test your emails in every email program available.  Do REAL transactions and make sure they work.  Recruit a handful of BETA testers (i.e. friends and family) to try everything out.

You’ll never catch 100% of the errors, but the difference between 80% and 97% is huge.  I allot a minimum of one week for QC testing and it’s usually the week prior to launch.  That means that everything else should be done at least a week before launch day.

Launching

I always create a launch day checklist.  While you should pause to celebrate (for like five seconds), once you pull the trigger there’s a lot to do:  announce it on your blog (if you have one), submit your product feed to Google, submit a sitemap to Google/Yahoo/MSN,  activate your PPC campaign, email friends and family, etc.

You’ll likely start discovering some of those errors you missed in the QC testing phase as real people do stupid things to inadvertently challenge your software like it never was before.   The better job you did in QC, the more you can focus on your first order coming through and the less you have to worry about your first users getting pissed off and leaving.  When it comes to Tastefully Driven the platform is built upon Detailed Image, which we know is stable, so I’m more worried about minor integration issues than I am about all-out systems failure (which was definitely a concern of mine when we went live with DI….even if I never let my partners see it).

Bottom line:  it’s a fun day when you launch, but in reality it’s just the beginning.  Take a day to catch up on sleep and then get to the “real work” - getting people to actually pay you money.

Ongoing Development

I have a rule: other than fixing errors, don’t make any major development changes or additions for at least a month…three to be safe.  Why?  Because on the second day you’ll get an email from Aunt Betty telling you that she thinks the site would be better if it had feature xyz and you’ll think “if she thinks that, other people must be too” and then you’ll begin to hack up your code and try to rush xyz to market.  Not only could this make your site worse, it’s also a poor use of your time.  You’ll get emails like this all the time, and if you concede to all of them you won’t make much money and your site will suck.

If you have confidence in your project (and you should if you got this far), there’s a good chance that you launched with a pretty solid site.  That’s good enough for now.  Take in your customer feedback, study your analytics, and focus on sales right now:  in the grand scheme of things you’ll look back at the launch version of your site as a piece of shit but you need to let those things play out so that you’ll know what you should and shouldn’t do to improve upon it.

For Detailed Image, we waited from September to January before I started on the laundry list of features for 2008.  The result, however, was a million times better than if I kept programming in September.  Some features were deemed unimportant and scratched from the list, some were re-affirmed by our data….justifying our time expenditure, and some became simpler to program because of everyones more intricate knowledge of the cart.

One thing I think most developers look past:  just because you made the software, doesn’t mean you know it.  Often times, customers will use things vastly differently than you intended.  By letting those things play out naturally you save yourself a ton of headaches and ensure that the changes you do make are worthwhile.

Conclusion

Phew.  Can you say longest post ever?  I think I’ll get back to work now….after all, I’ve got a lot to get done to launch this site

It’s the dirty little secret of running a business. I hear about it all the time, but rarely hear it publicized. It’s glossed over by Karen Northup of Corefino in this Churchill Club Video, and it’s mentioned by store owner Dan Fox in this article: founders of seemingly successful businesses who don’t take a penny of salary for themselves.

The reasoning is quite simple: it’s expensive to run a business, and faced with the choice of paying themselves or furthering the business, most entrepreneurs will choose the latter 10 times out of 10. This past weekend we made a similar decision to not pay ourselves any salary from now until June.

Crap. I thought you guys were doing great. How are you going to live? Should you be moving in to a warehouse? Why did you get rid of clients if you need money? Aren’t you freaking out?

I’ll get to those in a second, but since I was the one who pushed for the idea, let me explain my reasoning.

Our Problem

We are thriving in our current situation. We could continue to ship from Greg’s basement, pay everyone’s salary, chip away at our revolving credit card debt, and save some money. But we’d be slowing our growth…to the point where we’d be turning down great opportunities solely because we couldn’t handle the capacity.

While cash flow is good, it’s not good enough to cover:

• The costs of moving into a warehouse. Hidden expenses are everywhere: a $700 deposit to the electrical company, oil heating (meaning we need to fill our tank in advance), the Town of Guilderland requiring a Knox Box, etc. On top of that, there are the not-so-hidden expenses like almost $10k down (first months rent, last months rent, February pro-rated, + a security deposit) and the cost of furnishing the place.
• Expanding Detailed Image. We have vendors that want to work with us, with products that we know will sell at great margins, but we don’t have the space to carry them right now. At a minimum, we’ll probably need $10k - $15k to do this right.
• Initial expenses for Tastefully Driven. On top of development and marketing, we are going to need to spend $10k + on initial inventory to do that right.

All of that adds up on top of normal operating expenses. It was causing us quite a bit of stress.

Our Options

Here are our options to pay for it all:

1. Take on more debt, something we don’t want to do. Revolving credit card debt for inventory is one thing…building up credit card debt and maxing out every line we have is another.
2. Ask for a personal loan. Banks don’t like loaning money to companies that have been incorporated for less than 3 years. We know a handful of people willing to loan us money, so this would be a definite possibility.
3. Give up equity in the company for an influx of cash. This is what most growing companies in our situation would do (I think). However, we’re not really into giving up our stock and our control.
4. Pay for it ourselves.

What would you do? #1 would put us in a bad spot for the next few years. We’d constantly be floating credit between cards and taking on new lines/cards to pay it off. #3 is something we just don’t want to do at this stage in the game. We’ve put in so much sweat equity that we want to have 100% of the company when it reaches the next level. #2 is a good idea, but it’s my belief that you should never ever ask anyone else for money until you’ve exhausted every penny that you have. How hypocritical is it to ask for $50k or $100k and then pay over half of it back to yourself in salary? Just doesn’t seem right to me.

Which leaves us at #4. Each of us has done a good job saving money, so it would seem to make the most sense to have the owners pay for the growth. We certainly have enough cash between the four of us to make it happen.

FAQ About Our Solution

Why not just take the money out of your bank, give it to the company, and keep having the company pay salary?

Every time we do payroll, we have to pay the payroll company and pay taxes (matched by the company in some instances…so it’s double). But by living off savings and taking $0 salary, we avoid those expenses and make the impact on the company’s bottom line all that much better. Plus, we will all show less income on our taxes at the end of the year, which is another tax break. Doing it this way will add an extra 30%+ to the money we’re all putting in.

How are you going to live?
As I said, we all have enough in savings to live for 3 months. We wouldn’t have done it if we didn’t. Down the road when we need another wave of funding to expand we might have to consider other options, but this solution is ideal for this instance. Sure I’ll have to be a bit more careful with how much I spend, but nothing extreme.

I thought you guys were doing great?
This is the hardest to explain to people. We are doing great. Revenue for February 2008 is over 3x what it was in February 2007, our first full month with DI as part of Pure Adapt. Sales have grown exponentially and will likely continue to do so. But there’s only so much you can do with your revolving cash flow without giving it a “boost”. We needed that “boost” to get us to the next level, and we’ll probably need another one in a few years.

Why didn’t you just keep client work for a little longer?
The cash from client work was nice, but it was offset by the impact it was having in slowing down that exponential sales growth. The time required to raise $30k - $50k in client money would wipe out so much of our time that we wouldn’t be optimizing the use of our best assets: our e-commerce platform and our warehouse space. To be blunt: I’d rather take $0 salary and work on what I believe is best for the company and what I enjoy the most. My partners all agreed.

Aren’t you freaking out?
It’s kind of the opposite. We were freaking out when we were worrying about where the money was going to come from. Now we can all focus on the task at hand. Consequently, I think we’ll all be happier and be more productive.

There’s also something to be said for sacrificing for something you believe in. Had someone swooped in and gave us $2 million I don’t think we would have had the same unity, focus, and drive as a team that we do by making a common sacrifice. We’re all giving up a lot to make sure we do it right.

——-
In the end, I feel like by doing this for 3 months we’re advancing our company by at least 9 months. It’s the quickest means to the end that we are working towards.

I *almost* didn’t write this post. I thought it might be a case of too-much-information. I thought about it for a few days, and I still wanted to write it - mostly because I felt I’d be cheating the readership of this blog by not painting an accurate picture of our company and how it impacts my life.

When it comes to matters of web development and SEO, I’d like to think that more often than not I make the right decisions. When I am wrong, I’d also like to think I learn from the experience, minimize the damage, and apply it to the future.

Of course, that’s assuming that being wrong is a bad thing.

Last summer, when we first committed to developing the Detailed Image shopping cart ourselves, we had an array of potential features that we had to pear down before launching. If we didn’t, we’d have spent six months doing what we needed to take three. The majority of the most important features made the cut, and it was easy to wait upon the rest…except for one that really sparked some discussion: packages.

My rationale was that there was no need to have pre-made packages for people if we had our dynamic upsell system. So we launched in September without packages, and eventually added them in January. I spent less than a day programming the feature (the inventory management on the back end was what made it somewhat challenging), but for the most part I did it because George and Greg wanted it done…not because I really thought it would make a difference.

I was wrong. REALLY wrong. There isn’t a day that goes by where at least two packages don’t sell. That’s a big deal - take a look at the packages available: most are over $200, and some are close to $1k.

Kudos to my partners for pushing the feature. Hey, I guess if I’ve got to be wrong, it’s good to be wrong in a way that puts more money in our pockets.