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One Door at a Time

Our friends at Basecamp recently wrote an article called “One Door At A Time” about not worrying too much about scaling, and just focusing on what is in front of you.

One door at a time

Entrepreneurs are told to go big or go home. Stop obsessing over scale, and perfect the basics instead.

Last year, I met a first-time entrepreneur who was opening a tea shop. We’ll call him John.

At the time, he had a pop-up shop in my neighborhood. I really liked him, his vision, and the quality and presentation of his tea, so we kept in touch. When he decided to go from pop-up to permanent shop, he asked for my advice.

While we were talking about this permanent shop, which he still hadn’t opened, his attention would often drift to his next shop. And the one after that. And after that. And then building an app to make online ordering easy. And then, becoming the next Starbucks.

Whoa. Hold on, man, I told him. I get it, scaling the business seems sexy. But, I said, that is the entirely wrong thing to think about now. I wouldn’t spend even a second on it. You have a serious challenge in front of you: opening your first real store and getting your first customer (that isn’t a friend or family) in the door.

In getting just one store right, everything is against you. You have to design and build out the physical structure. You have to hire good people to run the shop when you aren’t there. You have to train those people. You have to get the menu right. You have to get the pricing right. You have to get the presentation right. You have to get customer service right. You have to get customers in the door. And then you need to get them to come back.

So much to get right in the here and now. Not down the road, but today.

I’ve noticed that John isn’t alone in his desire to go big. Something’s changed in what’s expected of the entrepreneur. Ten years ago, people were excited to just start a business, to create their own thing so they didn’t have to go work for someone else. They wanted to make a good living, buy a house, and be able to pay for their kids’ college.

But now, entrepreneurship seems like a sport. And the score depends on scale. How big can you get? How fast can you get big? How much power can you amass in the shortest possible time?

There are lots of forces pushing this scale-it-up, go-big-or-go-home mirage. Business schools are guilty of pumping pipe dreams into students’ heads: If you follow this framework, you can become the next Howard Schultz or Mark Zuckerberg or Elon Musk. Media worship of super-fast-growing companies — many of which are actually terrible, money-losing companies — fuels the fire. Reality TV and social media make it look like everyone can afford a $5,000-a-month studio apartment in San Francisco.

This narrative is out of whack. Your teenager may enjoy doing school plays, but you’d be irresponsible to urge her to move to Hollywood and try to become a movie star overnight.

If she is serious about acting, you might encourage her to audition for local roles (or head to a slightly larger city where there’s more opportunity), and build a reel and a reputation, which, hopefully, over time, would allow her to replace tips from waiting tables with paychecks from acting jobs.

Yet many entrepreneurs believe they can rush right to the top. Skip the fundamental work, and just scale, baby! One store is for losers; if you want to make it, you need 100 stores. This kind of thinking is poisonous. It sets entrepreneurs up to fail from day one. It’s like telling aspiring basketball players that all they need to practice are flashy dunks. Free throws? Dribbling with your left hand? Passing? Playing defense? Ha! Whatever! We know how that advice would turn out.

So, back to John. His ambition is good. And it’s good that he has a vision. But he would be much better off focusing all that energy on store number one, pouring everything into making it a destination people can’t ignore. Only then, once there is a line out the door, is it time to think about doing it again. One door at a time.

Well said, Jason.

The Cost of Independence

For our U.S.-based users, today we celebrate Independence Day. We couldn’t be bigger fans of Seth Godin and felt it pertinent to share his blog from this morning. We hope this encourages you, and happy 4th!

The cost of independence by Seth Godin

Freedom comes with choice and choice comes with responsibility.

Why do people willingly give up their freedom to a boss, a method or or even a despot?

Why prefer a restaurant with a limited menu, or stock your freezer with one brand of instant dinner?

Why do successful entrepreneurs who start a new company take on investors even when they don’t need the cash?

Why do so many choose to go into debt when they might be able to avoid it?

Sometimes, we willingly sacrifice our freedom because it creates an other, someone to blame. It gives us hard boundaries and eliminates potential choices. And mostly, it lets us off the hook, because someone else is driving the bus.

Trying to drive from the back of the bus might feel less risky, but it rarely leads to much agency, influence or control as to where the bus actually goes.

Careful what you do with the keys.

Getting Your Ideas to Spread

Hey all,

I know, it’s been a while. We’ve been behind the scenes making Blinksale better and better, but in the meantime we want to share this video that means a lot to us and constantly has us in motion about spreading ideas.

If you haven’t seen this talk from Seth Godin before, you’re in for a treat:

Enjoy, and stay tuned for more from us.

4 Things New Business Owners Need to Know About Cash Flow

If you’re like most people starting a new business, you’re short on cash and long on advice. And most of the advice probably has to do with the cash. Particularly, be careful with it. Cash flow is such a hot topic among entrepreneurs there are entire categories devoted to it on sites such as Open Forum and Entrepreneur. But for all the jabbering, most small business owners I talk to are still pretty vague on what cash flow actually is and, more important, why it matters. Don’t worry; it’s not complicated. But it will probably make the difference between your business staying afloat or going under.

Here’s what you need to know.

  1. Cash Flow Is Not Profit

Your company can be hauling in profit by the bucketload and bleeding out cash at the same time. Keeping your company afloat comes down to more than just profits and losses; it’s also about timing. And that is where cash flow comes in. Cash flow is the amount of actual cash you have on hand during a given period of time. The official definition is: “The difference between available cash at the beginning of an accounting period and that at the end of the period.”

Let’s say you buy a piece of inventory for $10. Profit/loss-wise, you haven’t gained or lost anything. Cash flow-wise, you’re out $10.

Later, when you sell that piece of inventory for $15, your profit is +$5, but your cash flow is +$15.

But let’s take it a little further. Say your customer bought the item on credit or that you’re going to invoice them later. Now your profits are still $15, but your cash flow is -$10. At least until they pay up. And that’s how you can be profitable and broke at the exact same time.

Profits are about big picture net income. Cash flow is about what’s in your account right the heck now.

  1. Cash Flow Is Super Super Super Important

It’s not enough to have a profitable company. You need to be cash flow positive if your company is going to stick around long enough to impress your dad. A lot of profitable businesses die simply because they couldn’t manage their cash flow. It’s so common the Global Banking Institution put it on its official list of things for entrepreneurs to keep in mind: “Many businesses fail due to lack of cash, not lack of profits.” Don’t give banks the satisfaction of being right about something for once.

  1. You Can Be Cash Flow Negative for a Minute Without Having a Panic Attack

Hey, look. It happens. And it’s honestly pretty common early on when a lot of your money is going out and not enough time has passed for money to start coming back in. This is especially true for companies that rely on invoicing. There can be a long gap between items sold or services rendered, and a check received (especially if the person you’re invoicing is cash flow savvy … more on that below). So if you’re just getting started or you hit a bumpy month or two, don’t panic. The cash flows both ways. If your checks are clearing, you’re in the clear. Just make sure you have enough cushion in the bank to get you through (more on that below too.)

  1. Managing Cash Flow Isn’t That Hard

For all the fear-mongering, managing cash flow really isn’t that complicated. Here are some things you can do to stay on top of yours:

Stay organized: Keep consistent records of the cash (not the profits) that is coming in and the cash (not the losses) that’s going out. You can also use this calculator from the good folks over at Entrepreneur magazine. It’s not pretty, but it’ll get the job done.

Invoice fast, pay slowly: Here’s one of the oldest cash flow tricks in the book. Invoice quickly (and encourage your clients to pay quickly through early payment discounts and short payment terms), and then take your time paying the invoices people send to you. In other words: Do not do unto your neighbor as you would have them do unto you. Smart business owners know that keeping their cash for as long as possible is one of the most important things they can do to stay cash flow positive much more important than paying invoices in a timely manner.

Keep enough cash on hand: The rule of thumb for a good night’s sleep is to have at least enough cash on hand to cover operating expenses for three months. Six months if you’re a worrier.

Open a line of credit: Nothing can prepare you for every circumstance. Bad seasons come. Major clients don’t pay. But hey, that’s what lines of credit are for. It’s pretty easy to open one with your bank after you’ve been in business for 24 months. And most banks will give you a line of credit equal to 10% of your gross yearly revenue at a relatively low interest rate, which should be plenty to get you through even the worst months. As soon as this becomes an option, take it. It’s free peace of mind.

The one thing guaranteed to kill your cash flow is putting off sending invoices, which a lot of small businesses do because 1) they’re busy and 2) invoicing is tedious. We can’t solve all your cash flow problems, but fixing your invoicing is right up our alley. Our app makes invoicing fast and easy; keeps track of what’s coming in and going out; and with our Stripe integration, your customers can pay with a credit card (aka: instant cash). Try it out for free and see what you think.

The Power of the Follow-Up Thank-You

When I started working at Blinksale as a social media manager, I honestly didn’t know what an invoice was. I’d never sent one and never received one. I knew it had something to do with getting paid, but what exactly? Now, six years later, I am president of Blinksale (cue the theme song to The Jeffersons), and I think about invoicing every day. I think about ways to make it easier for freelancers and small businesses to send invoices and for customers to pay them. A great invoice excites me in ways I never thought a financial document could. But for all the innovations I’ve seen, learned, and developed along the way, there’s one that stands out above the rest — and you don’t need fancy software or financial know-how to do it.

Just say thank you.

Considering how simple it is, I’m amazed how many people forget to do it — or don’t think of doing it at all. People have relegated invoicing to the realm of “nitty-gritty” business practice. Like lines of code being passed back and forth between computers, rather than a document being sent and received by real people. While an invoice is a down-to-business document, invoicing is something much more: It’s customer service. Make this switch in your mind, and saying thank you will feel a lot more natural. Which is good, because saying thank you pays off.

You’ve probably heard that just writing the words “thank you” on the bottom of your invoice can increase your chances of getting paid by as much as 5 percent. But that’s old news, and most invoicing templates automatically include such language. What I’m talking about is taking your thank-youing to the next level: Sending a thank-you note after the invoice has been paid — and including some token of appreciation. A gift. A gift card. A trinket. Something that lets your client know you actually are thankful.

Sending a thank-you card after you receive payment greatly increases your chances of getting repeat business, which makes it the most cost-effective work a freelancer or small business can do. And I’ve seen it work from both sides: as someone who sends invoices and someone who gets them. When I follow up with a thank-you note and an Amazon gift card, I get repeat business. When a vendor I’ve hired follows up with a thank-you note, I’m pretty darn likely to give them my business again. I practically have to.

Why It Works

In Robert B. Cialdini’s super important (and kind of unnerving) book Influence: The Psychology of Persuasion, he tells a story about a professor who tried a simple experiment with Christmas cards:

A few years ago, a university professor tried a little experiment. He sent Christmas cards to a sample of perfect strangers. Although he expected some reaction, the response he received was amazing — holiday cards addressed to him came pouring back from the people who had never met nor heard of him.

What’s going on here? The professor’s little experiment revealed something very deep about the way our minds work — and how so many of our emotions and behaviors are mechanistic. We are hardly aware of them, and yet they influence almost every decision we make — whether it be about to whom we should send Christmas cards or to whom we should send business. “By virtue of the reciprocity rule, then, we are obligated to the future repayment of favors, gifts, invitations, and the like,” Cialdini writes. “So typical is it for indebtedness to accompany the receipt of such things that a term like ‘much obliged’ has become a synonym for ‘thank you’….”

By thanking your customers with a note and a gift, you are obliging them to future business. Like I said, it’s a little unnerving, but that’s only because of how true it is and how often it works.

Tactics

Your follow-up thank-you notes can be the simplest things in the world. It doesn’t take much to surprise and delight your client when they aren’t expecting anything in the first place. Still, if thinking of cool gifts for your clients shuts down your brain (it shuts down mine sometimes too), here are some things that have worked well for me in the past.

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In San Diego there’s this company called Cookies Tonight that delivers warm cookies and cold milk. When they walk into our office, everyone’s eyes get huge. Because people love cookies. But more importantly, they love people who send them cookies. The great thing about sending cookies is that for a few seconds, everyone in the office — not just your contact — will be talking about you.

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Guaranteed not to disappoint and it doesn’t require postage. Plus, you’re helping Amazon grow even larger, which will be looked upon favorably when they inevitably rule the free world. I’ve seen a lot of people recommend sending your client a “thoughtful book,” but I’d suggest sticking to a gift card unless you’re 100 percent sure it’s a book she wants to read. Sending a book feels more like homework than a gift. It’s more like taking 10 hours from someone instead of giving $10. Let your client pick her own book.

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Toys. Deep down, every client secretly wants a mini drone. Just make sure they’re the type of client who is willing to admit it.

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Honestly, there’s nothing wrong with a simple note of thanks sans gift. Handwritten, if possible. And it’s fine to be as direct as possible: “Thank you for your business! Hope to work with you again soon!” Boom. That’s done at least 90 percent of the work that a mini drone would do. Because, when it comes to follow-up thank-yous, it really is all about the gesture.

The power of reciprocity is strong. And so is the power of a follow-up thank-you. Try incorporating this one invoicing trick and see if your clients don’t come back again and again.

P.S. In addition to Influence: The Psychology of Persuasion, check out Gary Vaynerchuk’s The Thank You Economy. Both books are well worth your time.