ELEVEN ESSENTIALSTO FISCAL EXCELLENCEFOR ENTREPRENEURS

Stephen King@stephdokin

© 2014 Stephdokin Inc. All rights reserved. Duplication or distribution is encouraged, with proper attribution.

I am not THAT Stephen King

I’m this one

30 years of “Shipping Bits” and great teamsComputer Scientist + Marketing + Creative + Entrepreneur

Co-Founder FounderEntrepreneur-in-Residence

Established 2008 Established 2012

Or a guitar hero?

Do you want to be a guitar

player?

A business without revenue is just a hobby.Money is the reason we get to continue to do what we do.

1Essential

Change creates challenge. Without challenge, there is no opportunity for success.

Where does change come from?Industry. Technology. Economic. Political. Biological. Government. Cultural. Geographical.

What change occurred? How does it impact your customer? How do you take advantage of it?

Adapt to Embrace change.

My Samsung S5 is 2,500,000% faster than

my old Atari 400

2Essential

Know who you do it for

“Are you talking to me?” Who is your customer?Understand your customer personas, organizational roles and what drives their buying and usage behaviour.

B2C? B2B? Both?

What was your customer doing before you? What alternatives are there?Why should they choose you?

3Essential

Only two types of businesses. Which are you?

1) Vitamin:Create opportunity for your customers

2) Pain pill:Reduce time or expenses for your customers

Know what you do

Value Selling*Price is important. Value is more important.

* “Solution selling is dead. Long live value selling.” Stephdokin’s ½ day Value Selling Workshop for your sales & marketing teams.

Know what you do

• Feature statement: “Our spinach is full of iron.”• Benefit statement: “Spinach makes you stronger.”• Value statement: “Spinach lets you kick Bluto’s ass,

makes you a hero and gets you the girl.”

Feature statements are about “us.” Primary brand messaging should have customer Benefit and Value statements that are about “you.”Thanks to: http://www.disruptiveadvertising.com/conversion-rate-optimization/features-vs-benefits-a-cartoon-case-study/

Value MessagingAligning your Brand Message to the Value you provide

$0.50 CoffeeFrom:

Feature statements about “What we offer”

$5 CoffeeTo:

Customer Value and Benefit statements, supported by our Feature statements.

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$1.50 Salt

$30 Salt

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$0.50 Coffee

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$5 Coffee

4 How much can you charge for it?

THE MOST IMPORTANT QUESTION TO ANSWER

What cash transaction will occur so that your company

can make revenue?

Essential

5Essential

How BIG is the revenue opportunity?

How many potential customers?What % can you REALLY address?

What is you realistic market share %?

You can’t control revenue, you CAN control expenses.Your formula for success? Income – Expenses = Profitability

6Essential

Do you really need to hire that person?

There are 2 major decisions we make that can quickly escalate staff costs:

the products we launch and the marketing channels we manage.

7Essential

The importance of sales and marketing

“It will take twice as long to make half as much revenue.” #haha

Digital marketing is a product unto itself; it must be designed and developed.

And measured. Use an operational dashboard!

8Essential

( $$$ per Transaction X # of Customers ) - ( Salaries + Marketing + Operating Costs )

ExpensesIncome -

We need money to RUN the business, to WORK ON the business to make it better, to SAVE for a rainy day and deliver an ROI for shareholders.

Cash Flow is King

9Essential

How much funding do you need?

9Essential

How much funding do you need?*

( $$$ per Transaction X # of Customers ) - ( Salaries + Marketing + Operating Costs )

ExpensesIncome -

* Those who fail to plan, plan to fail. Build and maintain a financial forecast.

A $1.55M investment for 40% of this company could be worth $15.7M in year 6 (A 10x return on investment based on a valuation of 8x multiple of $4.9M Cash Flow in 2020)

CAGR (Compound Annual Growth Rate) = 47.09%

9Essential

Is 47.09% good?

Expenses-

From: River Cities Capital Funds RCCF2011 SaaS Operating Metrics & Valuation Benchmarking Studyhttp://rccf.com/wp-content/uploads/2012/12/2011-SaaS-Operating-Metrics-Valuation-Benchmarking-Study1.pdf

Compare to these 4 year CAGRsand Risk Profile (Year 0 of investment shows the companies had already established revenue when getting funding from RCCF)

9Essential

What does it take to become fundable?*

Better ROI (Return on Investment) than alternatives available to the investor.

The lowest RISK imaginable.

* The best source of funding? Revenue from customers!

Avoid these “Gotchyas”10

Essential

• If you’re raising money, raise more than you need.

• Don’t let your share cap table become updated or in dispute.

• Don’t let your accounting slide; get it set up and faithfully attend to it monthly.

• Don’t mix personal and business expenses. Separate bank accounts and credit cards.

• Don’t fool around with Government compliance!(GST, Federal and provincial corporate tax. Employee EI and CPP payroll remittances. Personal tax.) File on time. Pay on time. Pay in full.

Essential

smarter

Be lucky

“I am a great believer in luck, and I find the harder I work the more I have of it.” ~ Thomas Jefferson

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Stephen KingPresident, Stephdokin.com CEO, TCELab.com EIR, AcceleratorYYC.ca @stephdokin @TCELabstephen@stephdokin.com

Thanks!Questions?Thoughts?

What will you create?

Enjoy these “Eleven Essentials” at slideshare.com/stebankag