Make it useful

If there is one thing that defines successful software or web based businesses, it is being useful in day to day life and work.

By that, I mean that it is something we genuinely use in our day to day life and that it adds value.

For example, in the 90’s and the early 2000’s a lot of people bought digital personal organisers and put their contact details in it. As one friend summed up the experience, “I spent 3 weeks inputting the thousands of contacts I have made over the last two decades, then I went and lost the darned thing while on holidays. Never again.”

It is only now that we are starting to see a genuine automatically updated, cloud based, multi-device accessible contact list. I.e. it is so intuitive to use that you don’t think about it, you just use it.

If your business model relies on capturing data then the asking price is that you give them a tool or application that they will find useful and use often. Facebook and LinkedIn do offer functionality we appreciate and use and are good examples of customers giving up privacy in return for function.

We are all enticed by the all singing all dancing solution that answers everybody’s problems all the time. The only problem with that is that all your users will need training and a good administrator to keep you all in line.  This is the opposite of the recognised concept of usability (http://en.wikipedia.org/wiki/Usability).

If I put my investor hat on I am more likely to back someone who has a single pain to take care of, and packages it up  to be useful to the maximum number of users in their daily lives. That simpler business model is also more likely to generate new sales, as well as be bought out in the future.

And yes, I firmly lump a lot of attempts at Enterprise solutions (ERP) such as SAP and companies of that ilk in the class of trying to be all things to all people.

Knowledge management systems that add an extra 60 seconds to every email sent or document saved firmly sit in this category too – potentially invaluable but end up destroying productivity.

Your biggest nightmare as a developer is people who tell you that your product would be very useful to them then they only use it for a couple of days while still on the 30 day free trial.

Think of your own experience with Apps on your smartphone. First, there is the love affair “I have to get that”. Then you try using it, “wow, that’s amazing, I wish I had that before.”

Then you realise it doesn’t export to anywhere else, and that it’s going to add minutes to your day that you could use elsewhere, and then you never use it again.

Ways to make it useful:

• Do one or two things and do them well.
•  The layout is intuitive
•  The workflow processes are intuitive
•  Provide a couple of workflow processes – for the novice and the experienced user
•  Make it all about them, and easy access to what they need, including account details, invoices, etc.
•  Keep it as simple as practicable. This is the hard part.
•  Make it accessible as readily as possible – works on multiple browsers and different devices.
•  Make it easy to undo mistakes such as deletions or accidental purchases. We all press buttons out of frustration at the lag time of screen updates and can accidentally do the opposite of what we intended. (Amazon finally put this on book purchases so I stopped accidentally buying second copies of books I already had).
•  Consider providing an offline version – US developers should especially consider this as they often don’t realise how slow and patchy services can be elsewhere, and pretty much only the US has unlimited data plans.
•  Consider interaction with other systems and software, whether through export/import, API’s, XML, industry standards or whatever.

 My favourites for useful at the moment are Dropbox, and the Zoho suite.

Google Apps in my opinion would rank amongst the best for usability, but I don’t yet use much of their software (apps). I.e. I don’t find it very useful as a total package.

Likewise, Replicon, the online timesheet tool many of us now use, is great for entering hours worked, but provides an abysmal experience for administration and reports which have way too many options which are poorly documented and are a complete pain for even experienced users.

Ask lots of people what they want, and boil it down to what they really need and how it could replace or integrate with what they already do. Above all, make it useful.

Are you heading for bankruptcy?

I have seen too many businesses go under lately, and wanted to talk about it with you all as it is often not what you think it is.

I recently sailed close to the sun (so to speak) in the same way and given the economic situation at the moment things may be dicey for many of us for a while yet.

Technically speaking being insolvent means you don’t have enough cash at hand to pay your debtors.

Most of the time this is manageable. You whack a little on your credit card, you reduce unnecessary expenses, you juggle timing of payment, etc. Sometimes though, you have no options left and a large amount payable to debtors and suddenly you are out of the game. This is the reason many of your favourite shops or restaurants disappear overnight. 

Let’s list the main causes and the common solutions.

Tax payments  

These tend to come in large quarterly instalments covering wages (pay as you go) and value added taxes (e.g. GST).

You will no doubt be very familiar with these now and always save that and never touch it right? 

Good intentions are one thing, but sure as heck, you will tap into those savings sometimes and you will have a hard time paying.

The biggest trap for growing businesses is the taxes you pay on behalf of your staff (e.g. PAYG in Australia). When you start you business you and your co-founders will live off savings and a bit of income so this isn’t an issue. However, as soon as you start putting on staff this amount of tax payable can grow very rapidly and catch you out. Get your accountant to forecast this for you when you put new people on.

All I can say here is keep putting it aside and if you are really stuck your tax agency (ATO in Australia) may negotiate a schedule of payments. It makes sense for them to do this as it is better for them to receive tax late than not at all.

Growing too fast

Growing fast is a wonderful problem to have as it means you are on the path to success. It is also the point at which many businesses fail.

The number one question you have to ask is if it is sustainable. For example, you receive one very large order for whatever it is you do. Most people assume they have made it and that this is the benchmark for new business.

Consequently, they get new premises, fit it out, put in machinery if required, put on more people, etc. This is one heck of an increase in fixed costs for any business – especially if you were operating using cheap, written off second hand equipment – which is one of the major traps of buying an existing business.

Until you have a pipeline of repeat orders of that size you need to think about leasing or renting. That is, how can you make your organisation temporarily meet the needs of the order.

You can rent equipment, premises, short-order manufacturers and so on.

You can put on staff temporarily if required, or hire in contractors.

Be creative, there are ways to deal with it.

I should also mention that quality control issues leading to increased re-work, increased discards and increased refunds are also most common during phases of high growth. This is caused by putting on a lot of new people who haven’t fully come up to speed with work processes and quality requirements. They are trying to do their best, but not preventing quality issues is a very well trodden path to insolvency.

Sudden change in market conditions

If you are strongly exposed to one segment of the market and conditions change, you are screwed. You still have to pay all your debtors but you just lost most of your income. Something has to give.

As a fix, you need to decrease your costs immediately to stay solvent. We have seen this in major companies here in Australia over the last month with major layoffs, and expect a lot more to come in the next few months.

As a preventative measure you need to learn to diversify your customer base. Number one is to have more customers so you don’t rely on just one or two. Number two is to diversify the industry/market segments you serve, so if one takes a hit then hopefully the others are okay. This second point isn’t working quite so well at the moment.

You are unable to work

Whether it is illness, an accident, grief or divorce if you aren’t able to work in your business then everything loses momentum, decisions get left unmade and income is lost.

I know the standard answer from advisors is to work on your business and not in your business. Hey, it is great advice, but I would question how many businesses actually make that transition.

The reason I raise this is that for you to work on your business fulltime, rather than in it means that you have just become an overhead to the company.  Put it another way, your company will need to be earning a good million or more per year in revenues before you could even consider becoming an ‘overhead’.

In the meantime you may be providing the service/product, doing the marketing, doing bookkeeping, paying bills, dealing with HR issues, staying up to date on regulatory compliance, etc.

You can help yourself by hiring good people, training people, delegating responsibility and trusting their judgement. This often comes hard to many business owners as small details can often make a big difference to the business.

You can also hire contractors and consultants to fill in as needed.

Income protection insurance is available, but only goes so far when your organisation is a decent size.

---------------------

All of these issues will occur at one time or another, often when you don’t expect it. I’m not saying you have to sit down and actively plan all this every week, but keep it at the back of your mind when you face critical decisions.