One of the hardest things for first time entrepreneurs, especially those going in full-time, is getting used to the lifestyle.

While working for yourself is one of the most rewarding things you will ever do, it’s quite different from working for someone else.  Fundamentally, new entrepreneurs know this, but they tend to focus on the positive aspects of being self-employed.

I’ve often heard how life-giving it is to have the privilege to set your own working hours and decide what you want to do each day.  If you are working from a home office, you don’t have to worry too much about a dress code or the neatness of your office.  Your dog doesn’t care if you shaved or brushed your teeth and if you’re not meeting a client, who cares, right?

Of course, the best part about working for yourself is the money.  It won’t be long until your rolling in the dough from your new endeavor.  Won’t it be great to have all that extra money around to take those vacations and do the things you’ve always wanted to do in life?  Yes.  Yes, it will.

I have some news for you.  It doesn’t work quite like this; at least not in the beginning.

When you start a business for the first time, you are going to work your tail off.  It’s not as easy as it sounds or looks, and everything the books and most websites tell you about starting your own business is wrong.  As a veteran of start-ups—some with funding, most without—let me set the record straight on a few of those first-time entrepreneur misconceptions.

• You do not need a formal business plan or marketing plan. As a small startup, all you need is the idea and the drive to make it happen.  To convince one or two clients you’re the cat’s meow and you deserve their business.  Once the business is going, if you need to borrow money or take on partners, then you need a business plan.  A business plan is different from flushing out your goals, objectives, and business model on a napkin or a few sheets of legal paper.  I’m all for the napkin-based business plan. It’s like the Twitter of business plans—focused and concise.

• You can waste no time generating business. You’ve got to get the cash flowing.  The first day you wake up as a self-employed person, you need to figure out how your going to pay your bills in 30, 60 and 90 days.  This means you should not waste precious time (See number 1).  If you’re providing a service to others, day one should be devoted to making a list of people who can use that service.  Day 2 should be devoted to calling to set appointments to visit.  Keep this in mind: It takes longer to close business than you think, and while your friends will support you, most of them won’t do business with you.  Trust me on this.

• You do not need to spend money unnecessarily. Until the clients come in, you need to conserve cash to eat, pay the mortgage and the car payment.  Don’t waste money on business cards, stationary or brochures.  Get those appointments, and then go sell yourself and your capabilities.  The business card doesn’t do squat for you in that process.  If you must have one, buy the micro-perf, matte,  ink -jet cards, and print your cards in high quality.  It’s hard to tell those cards are not off-set printing, when done right.  That’s all you need until you have clients flowing. You should invest in a simple website though, but make it look professional—just don’t spend a fortune on it.

• You do not get to set your own hours.  Your clients set your hours.  You have to work when they work.  You must be available when they need you.  For most clients, it’s going to be 8-5, Monday – Friday.  Others have higher expectations and may need you on the weekends or in the evenings. You need to be ready for it all.  Sure, they’ll cut you a little slack at first, but if you’re repeatedly not available when needed, you will not keep your clients for long.  Not being response is the one thing that makes you look unprofessional.

• You cannot forget who pays your bills. It’s the client. They are your lifeline to keeping personally solvent. If you’re lucky enough to land that first client, you service that client like there’s no tomorrow.  Make sure that you deliver on time and that you’re highly responsive to the client’s requests (usually within 24 hours is acceptable, unless the client has an urgent issue.) At the very beginning, nothing is more important than your clients. At least not until you have at least a year of living expenses in the bank.

• You do not get to delegate any work.  If you are a one-person operation, you do it all.  You sell the work and you have to do the work.  You also have to handle your own billings and collections and empty the trash.  It sounds fun, but it can get grueling after a while.  Yet, if you don’t do it, it isn’t done. Plan for long days.

• You will not get to take many vacations. At least not until you have a solid client base.  If you’re a one-person operation, when you are not working there’s no money coming into the coffers.  Depending on the type of work you do, sometimes you can work remotely so working vacations are a great thing.  If you have lawn care company for example, you’re pretty much stuck until you have a team that you trust to do the work when you are away.

There’s more.  Much, much, more.  Yet, this should be enough to give you a little wake-up call.

I am not trying to scare you; I am trying to help you make sure that self-employment is for you.

You don’t want to make the mistake of discovering too late that you are not cut out to be your own boss. Doing so could make for days of hunger, the repossession of a car, or worse still, the loss of your home. So, if you are not willing to make these sacrifices and take these risks, you might be better off working for someone else.  There’s no shame in working for others, though.  We are all wired a little differently.

If you do decide entrepreneurship is for you, then the best piece of advice I can give you is this:

Find a mentor

You need someone who’s been through this and preferably more than once. Find someone who’s failed, as well as succeeded.  The failures are a better teacher.

It’s also better to find someone locally, if you can. If you can’t, I’ll try to help as much as I can.

Just ask. No charge. It’s a pay it forward thing.

—–

My questions to you: What do you think?  Are you up to the challenge?

As I prepared to launch startupcoach.org, I decided to do a Facebook advertisement to alert the target audience to my Facebook fan page as well as the coming website.  I thought I would share my approach and results with you so that you might better understand how to design and measure your own campaign.

Establishing the goals

Before I started the campaign, I established my goals.  By experience I believe that an audience of 250 interested people is respectable for start-up website. I had budgeted $500 to promote the website between now and the end of the year.

This first campaign would be a “test,” so I could establish a benchmark for other Facebook advertising campaigns for this website. Since this was a test campaign I decided I would limit my budget because I wasn’t sure how well the it would perform, and  I wanted to make sure I had budget dollars available to conduct other campaigns should I need to do so to reach my fan goal.

So, my goal was to achieve 250 fans on Facebook with a budget of $150, or about 1/3 of my annual advertising spend.  This would leave additional dollars for future campaigns, although I had decided that I didn’t want to spend more than $1 per person to acquire a new fan.

Set up the advertisement

Facebook‘s tools give the option of promoting a Facebook page or an external website.  I chose to promote the Facebook page because I wanted to first build the Facebook community so that I could determine  interest in the service offering before launching the full startupcoach.org website.

Determine the audience

With the Facebook advertising targeting feature, one can select by location, age, gender, birthday, education, language, workplace, relationship status, and keywords.  For this campaign, I chose individuals 18+, in the United States, any education level, any gender, and with the following keywords in their profile: Being Unemployed, Entrepreneur, Small Business, Startup, Startups.  I also limited the advertisement to those who had not already become a fan of the Startup Coach on Facebook so I would not be paying for the advertising impressions of current fans.

As the keywords are added, the number of individuals in the total audience will appear at the bottom of the page.  With the targeting limitations, my total audience on Facebook appeared to be about 27,000 individuals.

I know from experience that most online campaigns, even targeted ones, generally only pull about 1% response or Click Through Rate (CTR).  If I could get a 1% CTR, that would only generate 272 responses for the campaign.  Of those 272 responses, experience also tells me only about 10% of those would actual “convert,” or in this case become a Fan of the page.  With those numbers, I was immediately skeptical that I had enough money budgeted to reach the goal of 250 Fans.  You see, 272 responses with a 10% conversion rate would only gain 27 fans.  I needed about 10 times this number; however,  I decided to launch the campaign anyway knowing that I could kill the campaign at any time.

Knowing budget was going to be a limiting factor, I decided to create a Pay per Impression (CPM – Cost per Thousand Impression) campaign, rather than a Pay for Click (CPC – Cost per Click) campaign.  Because I know that some people will click on an ad out of curiosity, I could not take the chance of burning through my limited budget paying for each click.  I decided I would rather pay to expose the target audience to the advertisement multiple times for this campaign, believing that this would be more effective given my limited budget and the small size of the target audience.  I set my daily budget cap at $10, and planned to advertise for about 15 days.  I planned to pay no more than $.33 per 1,000 impressions.

Launch the Campaign

I ran the campaign from August 16 – September 2, pausing it for two days, August 21 and again on August 26, to evaluate performance.  Prior to those pauses, I had noticed a downward trend in conversions; I paused the campaign to evaluate it more closely before spending additional dollars.  Both times, I resumed the campaign and realized a spike in conversion numbers on re-launch; however, the overall trend in conversion continued to decline.  September 2, I had 235 fans and had spent $144 of my budget.  I stopped the campaign for more thorough analysis, since I was close enough to my target goals.

Analysis and Results

Using Facebook‘s reporting tools, I pulled the data from the campaign into a spreadsheet for further analysis.

Because I was measuring conversion based on the number of subscribers or Fans to the Facebook page, I needed to also pull the new subscribers by day from the Insights Page for my analysis.  I chose not to factor in the six unsubscribed fans because I thought the number as insignificant.

Once I pulled all of the numbers into the spreadsheet, I learned:

1. The total campaign response rate against the target audience was 309 (unique clicks) or 1.14%
2. Of those 309, I converted 189 or 61% of the responses
3. My cost per conversion or acquisition was just $.76
4. The average number of impressions it took to gain a response was 4.4

I also noted that I had 46 new fans that were not attributed directly to a click-through conversion.  I believe these individuals resulted from the “social” aspect of social media.  In other words, they saw that friends “became a fan of Startup Coach,” investigated, and became a fan themselves.

It would seem that those extra 46 fans resulted in a 20% bump in acquisition as a direct result of the social media environment.  While they were not directly attributable to a click-through, they are a result of the campaign; therefore, reduced the cost per conversion to $.61 on September 2, 2009.  As I write this post, the total fan base is now 243 or up 54 extra fans, bringing the cost of conversion down to $.59 each.  Overall, I am very pleased with campaign.  I came pretty close to my target conversion/acquisition goals, while maintaining my budget.

I’m convinced that the successful conversion is due largely to targeting and content.  Immediately after the launch of the Fan page, several people asked questions and gave me the opportunity to create relevant content.  This content seems to have value for others as they clicked through to the page and resulted in new fans.  I also think the fact that the nature of the website and the campaign—no sales pitch—has contributed to the higher conversion rate.

I took a calculated risk by not having content on the Fan page when I launched.  Had I not had relevant content on the page, or had I asked people to buy something, I’m certain that the conversion rate would have been much lower.

As you can see from this campaign, Facebook advertising can be one of the best ways to build an audience for your business.  Because Facebook provides tools that allow your ads to targeted, you have a much better chance of reaching your intended audience with a limited number of advertising dollars.  Best of all, you can grow your audience through the social connections of your fans, without spending additional dollars to do so.  Just remember, you must have valuable and relevant content for your targeted audience, or you run the risk that you campaign will fail.

Today marks the launch of startupcoach.org!

The idea for this website came to me almost 30 years ago.  I had many questions about starting and running a business, but there were few places to turn for information.  Often it meant scouring magazines, newspapers and books at the library.  Of course, there were a few successful executives who would sometimes share their knowledge, but generally, “young upstarts” were on their own.  I thought then, that it would be wonderful to have a single source where anyone could go and just ask a question or two about business and get a reliable answer, without cost.  Perhaps more importantly, it had to be an answer that could be easily understand–with no “business-speak” (which pretty much ruled out the government agencies that were providing such services at that time.)

I never really found that single “source” I was seeking.

So here I am, launching a free website based on a 30-year-old idea.  I hope startupcoach.org will become that single source where aspiring entrepreneurs can learn from the actual successes and failures of others.  I would like to see it become a place where simple questions can be asked, and reliably answered, without cost.

Wow!  Sometimes, ideas have to germinate a long time.  Of course, it has taken me this long to prepare.

I did not get here on my own, though.  I did meet a few mentors along the way who took a personal interest in helping me succeed and allowing me to fail.  I am very fortunate to have had those mentors, but I worked extraordinarily hard to get their attention.  Let’s just say, the word “no” is not one I really understand.  Yet, not everyone has this kind of support.  This adds another dimension of the website for me–an opportunity to “pay it forward” on a bigger scale.

So, I launch this website today with the idea that I will write about things that are important to you using my life experiences (see the About page and the post, Origins of a start up coach).  On Facebook (http://www.facebook.com/startupcoach) we will build a community of mutual sharing, with the goal of individual success.

A few words of caution if you join me in this experiment:

1. I will not have all the answers to your questions; however, I think I can help find the best resource when my knowledge falls short.
2. I think faster than I type and I cannot seem proofread my own spelling well; I often see what I thought I was writing and not what I actually wrote.  Forgive me in advance.
3. Along the lines of #2, I did not major in English.  I make grammatical errors.  I trust you will see value in the intent and forgive the delivery in the times when I fall short of your expectations.
4. The written word can sometimes come across more terse than intended.  I apologize in advance for the times when this might occur.  Call me out if you think I have over stepped the bounds of common courtesy.
5. You have the responsibility, as Jerry McGuire would say, “Help me, help you.”  Share with me what you need to know and where you want to go.  This is the only way this little project will be mutually satisfying.

Are you with me?  Off we go…

-Dave

This is a long story.  Bear with me and you will understand it all at the end.

I started my first business by chance in 1979, while in high school.  I had a morning paper route and earned enough money to buy a 35mm camera, which I to used photograph football games and other school events for the yearbook staff.  I had a talent for photography, but I was surprised to learn that I could make money with that talent while still in high school.  It wasn’t long before parents of my friends were asking me to shoot portraits, and buying reprints of game photos.  By my junior year, I had business cards printed, and was making some serious money for a high school student.  My senior year, I was getting paid to teach a couple of beginner classes in photography for the adult community education program and earned steady money all summer shooting swim team and baseball photographs.  I really hustled for the jobs, but it paid off.

My love of photography took me to a part-time position with a Public TV station while in college and after college I started my own commercial photography business, complete with an industrial/commercial photo lab.  The business did well, but about five years into it, one-hour photo processing came on the scene.  I could not compete, shut the business down and took a job managing a restored vaudeville theater for a group of business investors.  I had a blast for three years, booking concerts and managing the house for events like, Mountain Stage, which used the theater hall I managed when it launched.  There were tough times, too.  We never had enough money. I was constantly juggling utilities, payroll and working events to keep the money flowing.  Eventually, and through a series of unpleasant events, the investors worked to turn the facility over to a non-profit organization.

Those same investors took me to another property, a ski resort, as the marketing director.  I spent a year marketing the resort throughout the Southeast.  From managing direct marketing programs, to creating and placing radio commercials, to sign placements, I helped increase resort and ski revenue over the previous year.  However, living on the mountain was a bit isolating, so I returned to the city in the spring of 1988 and took a job with a startup-advertising agency as the copywriter/account executive.

I spent three years with the ad agency; aside from the two months I was laid off in a slow economy–it’s tough sometimes being the last guy hired.  I was the Media Director when I left, and was responsible for planning and placing print and broadcast media for our clients.  I also helped bring in the agency’s first regional Subway account, and grew the Subway business to include three other markets before my departure.  During the time with the agency, my family and I purchased a floral and gift business, which consumed most of my spare time.

I left the agency with the idea that I would start my own media-buying agency.  There seemed to be a market for it.  My plan was to use demographic and attitudinal research to identify the best media outlets for my clients.  I spent negotiated a monthly deal on a $50,000 annual license and secured data and software mapping tools from Claritas. I landed one client, a large car dealer.  No one else was interested–it seemed I was ahead of my time with research-driven media.  So, I switched gears a bit and began selling secondary market research consulting services using data from this major technology investment I needed to pay for each month.

In three years, I grew the company to four employees and about $1mm in gross billings doing site selection work for banks and national restaurant franchises.  Aside from our demographic and media systems, which ran on the PC, we were one of the first firms in the area to run completely on Apple’s Macintosh computers.  Our computer savvy allowed us to fill in slow times by taking on outsourced creative work from many area ad agencies who quickly found we could produce low margin work for them quickly and in a manner that allowed us both to make money.  We also continued to place media when needed.  Unfortunately, a string of events–two large client business failures and the loss of our one media client– killed cash flow for us and forced me to put the business into bankruptcy hit us.  It was one of the most painful experiences of my life.

After that, I needed a breather from self-employment.  We sold the flower shop and I went looking for a job.  Within a couple of months, I was fortunate enough to find a new opportunity.  I spent the next four years in the insurance industry, first developing and managing direct marketing campaigns for Medicare Supplements and Medicare HMOs , then a brief stint in doing product and market expansion, and finally about two years leading a corporate project for what would now be called an enterprise-wide CRM initiative.

I was lured from insurance into a start-up consulting firm specializing in CRM/Database Marketing at the infancy of CRM and during the rise of the dot-com boom.  I spent 18 months in consulting before jumping ship to become the CMO of a 20-year-old software engineering firm that had the distinction of being what industry analysts recognized as the first Application Service Provider (ASP) application for the use on Internet.  I loved that for about six-months, and then the dot-com bust took hold and I found myself out of a job after six more, miserable, months.

With a family to support, I started a marketing consulting firm, eventually taking in a partner for a while. We had a good run helping large and small clients improve their marketing operations–especially for two guys, albeit connected guys, working from home offices.  Yet, after a couple of years folks kept asking us to become more involved in the execution of our strategies and without more staff we couldn’t do it.  We did not really want to hire a staff.  We had to decide whether we wanted to continue to be a two-man practice or become a full-fledged business.  We decided to retain the practice approach and began shopping ourselves around to firms who were good at executing.  After a while, we found one that was a decent match for us, we dissolved our partnership, and I ultimately joined the new company to lead its strategic business and marketing efforts.

If you’re still with me, let me wrap this up for you now.

The point is, I’ve spent my entire career either starting businesses or working for start ups.  In fact, in the past twenty-plus years, I have experienced more businesses successes and failures than most people experience in a lifetime.  The successes were great for the bank account and the ego, but the failures are where I really learned.  I know the thrill of landing the first client or hiring the first employee.  I know what it’s like struggle through the week and pray for the weekend, just to get a break from the calls from vendors demanding to be paid.  I have also learned the hard way how expensive (think 100% penalty) it is to borrow from the IRS to pay the utilities and payroll.  I can honestly say, “Been there, done that,” to just about any aspect of business, you can throw my way.

Nevertheless, what sticks with me the most is the number of people I have crossed paths with in those twenty years who have been willing to help me succeed and rescue me from both professional and personal failure.  To those people, I owe my sanity and my career.

This website, startupcoach.org, is my way of paying it forward, if you will.  I hope you’ll join me in this adventure. I may not have all of the answers, but I can help you find the answers you may need to be successful and avoid the common pitfalls of small business.

If you’d like to ask questions about a specific problem you may be having, feel free to visit http://www.facebook.com/startupcoach where I answer direct questions.