How to Build a Sustainable Business - From Idea to Execution

Welcome to Building Better Developers, the Develop and Or podcast, where we work on getting better step by step professionally and personally. Let's get started. Hello and welcome back. We are continuing our season of Building Better Businesses, but we are actually the Building Better Developers podcast, the Develop and Or podcast. I am Rob Broadhead, one of the founders of Develop and Or, also a founder of RV Consulting, where we are what they call a boutique consulting firm. We help a customer by sitting there with them, understand their problems, like a counseling session. Basically, we're hanging out, understanding the business, understanding the situation, understanding your customers, and then taking our decades of knowledge of technology and helping you find a way to take what you already have and what is out there to craft a recipe for success for your business so that your technology investment, whether it's through simplification, automation, integration, innovation, however we can do that, even just building elevation, just building out your company, find a way to make that a worthwhile investment and make sure you get a really good ROI on that. Good thing, bad thing. Oh boy, this has been a week full of bad things and good things. It's a bad thing. We had the storms come through and I had a night where the sirens started at 2 a.m. and they didn't stop until about 6 or 6.30 a.m. That was not a fun night and I was fuzzy for the next day and then some. I'm still reeling from that a little bit. Good thing, there are moments, we were talking about this before the show, there are moments in life that are watershed moments essentially or something like that where you're just like night and day differences and I have shared a little bit that I've been going through downsizing and all that kinds of stuff. Not myself physically, nope, I have not lost any weight, but I'm talking the crap, the stuff in my life. So I have a lot less things right now, but that is a very good thing. I may even someday do some blogs or write a book on simplifying because it really is, it does take you to a different plane of existence. Somebody who is also on a different plane of existence on a regular basis is Michael, but he's going to come down to our plane of existence and introduce himself. Hey everyone, my name is Michael Mollash. I'm one of the co-founders of the developer NUR, Building Better Developers. I'm also the founder of a company called the Vision QA where we help companies, big, small clinicians, doctors. We come in and we help you go through your technology, go through the software that you're using to run your business. We help you, we like, we go through the trenches with you. We help you understand what your business is and how the software is supposed to work with it. And then we help you put together a plan to either upgrade your current systems, build something new, or if you have something custom made, maybe we can come in and we can help you make changes to that software to be more efficient with your current processes. Good and bad, a similar situation to Rob, except my situation with the storms is never ending. It started Wednesday with heavy winds, trees getting knocked over, storms all night Wednesday, storms again last night, storms again Thursday night, Friday night, and it looks like we're getting it all the way into the weekend. So between heavy winds, it's the rain at this point that we're more worried about because we've had so much flooding. But thankfully we're on a hill. The downside is the hill is starting to wash away. So that's my bad. Good side of it, our grass has never been greener. All the lightning we have had, our grass is almost like that neon green. It almost looks like something out of a sci-fi movie, but it is hysterical. I walk out one day and it's like, wow, we got grass. Next day it's like, okay, the grass is like an inch taller and it's greener. And then the next day it's like, oh, where are all these flowery weeds? It's like, okay, now I need to mow and it's not going to stop raining and it's going to get to the point that the mower is going to have to be mowed on the highest setting. And I just have to pray that there's no rivets in the yard that I'm going to get stuck in from all this rain. With all that water, you might watch out for shark fins as well. It's like, yeah, that is the beauty of, at least in my experience, Bermuda. I did that years ago, had the same kind of thing. I threw it down on a partial of a yard. We had a ton of rain and then a ton of heat. And it was literally one of those moments where you could go outside and you felt like you could hear the grass growing. And it was, you could tell like where every little seed had gone because it was a gorgeous green while the rest of it was sort of like a blah kind of thing. And I was like, okay, I know where the seed landed. So that is a sidetrack. And now we're going to get back to the real thing, which is today we're going to talk about actually something that we, and in the pre-show and our pre-gaming it, I don't know that we've ever actually spent time on this. I think we did a little bit. I think it's a little bit referred to in the book, maybe in some cases like that, but really is an area we haven't touched on. And for lack of a better term, this is instead of focusing on a side hustle, we're going to focus a little bit. We're going to talk about building a business because there is a very big difference. Now you can progress from a side hustle to a business. And I think this does apply in this case because it's when you will say, turn the corner and say, I'm going to make this a business. It's essentially, for lack of a better term, when you decide your side hustle is going to become your day job. Now, what we want to talk about is scope because this is something that I think you're going to run into more often instead of personal, you creating a business, you will run into it with your customers on a regular basis. I, at least I do. I have, I've talked to several customers about starting a business. They come to me with an idea and they say, Hey, here's an idea. I want to do this thing. And usually there is a, when they talk to me, it's usually like an MVP or dipping a toe in or something like that. They're like, we don't have anything. We've got some ideas. So we sit down and we talk through them and how can we turn that into a product, a service, a company? What does that look like? And a lot of it comes down to, there is a, there's definitely a scope aspect to that, just like there is to anything else. But even with the business, because it's things like, okay, do you want to, or are you, do you have funding to go hire 10 people and have a small company? Or do you have funding that you can go hire a hundred people and have a very big company? Or do you have funding that you can't even hire yourself? It's like, there's, there's a lot of difference in what you can accomplish with that. And that's some of that goes to the vision. Now your vision may be something very simple. It may be something like there's a widget that you're going to put on a shoe that you're going to be able to sell people. You can drop shift it, it ship it. It doesn't really need much other than a website. So there may be something like that, but it could be something that is, you know, an enterprise application that's going to have to require, you know, maybe years of development and it's going to require documentation. It's going to drive card tech support of some point and training and sales and marketing and all those kinds of things that you can't do it yourself. If you can give me a call, because I would love to like pick your brain for a couple of things here and there, but usually one person isn't going to do it. Even if you can, if you had the skills, you're not going to be able to scale to that level. And this comes from something that Michael had run into where people were basically pitching ideas. And sometimes the ideas were great. They're awesome, but there's, there's not, it's not feasible in their current environment. So those are some things that we're going to, I want to throw out there because we haven't really talked about the idea of like funding options. We've talked a little bit of it. We've usually talked about bootstrapping because that is easiest because the only person, okay, there's two people you have to have to convince probably. And Michael's laughing because one of them is yourself. But before you convince yourself, you probably need to convince your spouse and make sure that they are on board and you know, maybe others, if you have children, you know, stuff like that, your family, because they're, they are on board as well. If they're not, you're going to struggle. Bootstrapping thus is easier because you, and you also know, you know what the budget is because you know what you can afford to bootstrap or you're, you're in it all along. And it's really just you making the decisions. Do I spend the money or do I not? You have things like that. Once you start bringing in now, the next step would be bringing a partner. So you can bring somebody in that's going to share that burden. And it may be, it could be multiple partners. It could be like an LLC and you have three or four partners, something like that. But these are people that are invested directly with you. They are, you know, and maybe they're just a financial silent partner, but usually they're going to have some level of interaction as well and helping you out. Maybe like the idea of a board or something like that. But then the next thing is there are things that you could do. You can do loans. You can go to, you can get business loans through you name it through banks, but even PayPal now, trust me. If you ever even breathe the idea of, I'm sorry, this is probably already going to blow up your feed for a while, but if you even breathe the idea of business loan to anything related to PayPal, you will get emails and advertisements until the cows come home. But there are, there are banks there and there are sites and there are, you know, different places you can go that they're really focused on business loans and the small business organization out of, if you're in the U S there's things like that. You can go to your, you know, some of your local area business groups. There are going to be some that will help you out. Those are some places you can look. Now there's also the idea of venture capitalists and things like that, where it's basically you're going to get some money, but they're going to have some sort of ownership. They will be, I guess, in a sense, a silent partner, but usually they're not going to be a silent partner. They're maybe not, they may even provide you with some people and some things like that, because if they're going to give you a lot of money, they're going to put some people in place to help you, you know, to ensure that you succeed. In any case, they're going to have some level of ownership. So when it succeeds, they're going to, you know, they're going to make money off of that. There are angel investors that usually are more, more likely going to be individuals, although there are groups there as well. They tend to have a little bit different approach to it. They tend to be a little more, and it varies from one to one, one to the next, but they tend to be a little less, maybe hands off. They tend to be a little more hands off, but they're also more likely to be, I guess, a true believer where they feel like, okay, I'm going to do this and they're not going to, you know, maybe not take as much. Maybe they will. Your experience may vary on all of those. And then, I can say, once you get into like venture capitalists and larger funding rounds and things like that, those may be required. And before I pass it off, I just want to say like, okay, I've talked about the funding, but I want to talk about is size that has to go with this is think through what your business idea is. Because this is definitely a part of it is like, does that need, is it something that you can do? Is it something that's very simple and you can start small and you can be effective as a business? Or is it something that you really are not going to be effective until you get to a certain point? For example, there are certain things like there's going to be certain lines of businesses and things like that where you're going to have to maybe you have to spend a lot of time investing on developing software or developing infrastructure or marketing and sales. There are so many facets that go into an organization that you need to think through it, which means your first thing is you should have a business plan, which means, and we've talked about the different areas in different ways, but basically it means in a short note, you have gone out and done some opposition research that you have an understanding of that market. You have an understanding of what you're going to charge and what it's going to cost. So what is your revenue going to be per sale or per month or something like that? And so now you have crunched the numbers and you get to take those numbers and you're going to have to do that, whether it's a bank loan or anything else. Hopefully, even if it's your mom and dad giving you a loan, you should be giving them something that says, this shows that I've spent the time and now we're talking black and white numbers. We're talking, I need $5 million to give me 12 months because that's what is going to take me to get there and I'm going to start seeing payments and 18 months out, I'll start being able to return on investment. So once you have that business plan, that is going to be, I think, the key indicator for you is can I do this on my own or do I need to look at other funding options? And so I think that set the table, hopefully enough for Michael to go wherever he wants with this. So what are your thoughts and where do you want to go with this? So you kind of covered the funding options really well and I like that you touched on the business plan. I'll circle back around to the business plan for a minute because really before you can even go to some of these funding investors, a lot of them are going to require a business plan or some type of research document that shows that you understand the target audience, whoever it is that you're going after for this particular product. The other thing is you have to have a clear understanding of what it is that you are going to deliver. Who is your customer? What value is your product going to deliver to your customer? So you got to kind of branch out that business plan and actually really think through and flush out what your business is. What is your product going to be? Now, I like kind of the roundtable discussion. Rob mentioned, you know, if you have business partners, investors, but sometimes before you even go after the funding options, it's very wise to while you're doing the business plan, go out and try to do a little more market research, either find potential customers, talk to them, figure out what it is that their business need is that your product will fill or whatever their, you know, if it's a home person, you know, what is the need that your customer has that you need to fulfill? And with that, then you go through and you figure out, okay, what's it going to take to build the product? What's it going to take to produce the product and then market and sell the product? Now, a lot of us, especially those of us going from side hustle to business, leave out a lot of the times, how much do I need to get paid? So you figure out the cost for the product, but you have not actually included you calculate the material costs. You have not actually calculated the time investment into the product yet. And so this is a good point to kind of watch for, because if that price point of your product, just to manufacture the product is already at the limit of what your customer is going to pay, you're already in trouble. Because one of two things can happen. You could come in price low, but make no money. So you're going to go out of business fairly quickly because you can't pay the overhead, or you're going to come in price too high and your customers aren't going to buy your product and you're going to lose the race there. So one of the things to do as you're looking to grow your idea into a business is look at your day job. If you have a day job or look at something along those lines of what the product is, if it's software, do a like indeed search for software developers in say like junior, mid senior, figure out what the hourly cost is in your area for those type of people. Or if it's manufacturing, go out and do some searches online for what it costs to pay people to do manufacturing. Now, as new startups go, sometimes you can get people buy in if you give them like stock options or percentage in the company. There again, though, you need to carve that out of your bottom line. Are you still going to make a profit at the end of the day if you go through this process? Once you've kind of done all that, you have this full cost of your product. What's it going to cost to manufacture it? And what are the materials I need to put into this? This can apply to software as well, because we still need to buy computers. We still need to buy monitors, printers, devices, laptops, whatever. There is always a material cost to a business. The people cost is where it gets a little tricky because yes, you're thinking, okay, I know how much I need to pay them. But the other thing you need to also then consider is what other things are going to hit me that are unseen. And these are going to be things like local taxes, income tax, Medicare tax, Social Security tax, hidden taxes that you have to still keep within your business and still pay your employees and still make sure that money gets to the government so everyone's happy. Once you add that, that now gives you a better cost perspective for what you can pay your employees, what they'll actually get, what you can actually pay yourself and what you can actually get. And then you can crunch numbers to say, okay, one person can do X amount of work. Is that enough to meet my deadline from the beginning of the product timeline to the end? If not, you need to start adding bodies, essentially time units to fill those gaps to get from A to B. However, you don't necessarily need all those time units upfront. So for instance, if this is software development, you may need to hire the project owners, the designers upfront, your architects upfront to get the system going. Then you can hire the developers once you have a little bit better idea of where it is. So you can kind of stretch that a little bit to the middle and then maybe stretch it out for the testers a little bit at the end and then maybe bring the sales guys in like a sales guy in at the beginning, maybe one at the middle and one at the end. So you can split your timeframe for when you need to put people in positions to get things accomplished. And this is the time to think through that because that can affect your funding. Because if you don't only need to hire three people at the beginning, not the 10 you think you need by the end, you can go out and get a small bit of seed money to get started. Maybe you can get a grant or something that doesn't cost you overhead. Even then you could possibly get like a small business loan and have a small interest. So you get started. You can see if this really works, get it off the ground, give it that first three months of money. And while you're doing that, you can then go off and say, okay, we're actually building this. So now I have something to physically show some of the other investors. And now you actually can kind of, it's easier to essentially market yourself to get more funding for your business. So that's kind of where I think this goes through the process. The other thing I would say that we haven't touched on at all yet is really getting that seed money, getting the investment money. That doesn't end until you have a product going out the door month after month and you have recurring revenue. So you need to plan either to continuously go after money to keep your business going till you finally make bank. Or you need to figure out where is the break point. Where do I basically cut my losses because this is not going to make it or I'm going to need a huge infusion of money. And if you need the huge infusion of money, it's a little bit harder of a sale. Not impossible, but that usually is the point of no return for most businesses. Some startups sell their companies to be gobbled up to basically break even. But those are just things you do need to consider when you go to be a business, not a site host. That's a narrow. You gave me like a whole season of ideas right there. Some of the things you brought out. So I think the first one is the it sort of combined the amount of funding you do need to think about when you do this, making sure that you go through and give yourself the runway to get it done. And if you can't, then you need to figure out what is it that you can get done with the runway you have. And by that, I mean, like if you have money to fund what you're doing and your plan for 12 months, then you need that amount of money. You know what it's going to cost you to run this thing for 12 months. Now, if it's going to take you 12 months to get done, I recommend that you ask for 15 months worth of funding or probably 18 months worth of funding. You do that usual 20% like we do for development times and that always. I don't think even more than that. I would say it's actually a little weird. I think once you get beyond about six months of a roadmap, I think actually just add six months to it. If you need six months, go for 12 because it's not, I don't see it as much as percentage as it is. There's going to be things that even if it goes sort of right, they're just going to take time. And that goes to what Michael said is that don't be very, if you're going to do this, be very intentional about when you're going to bring the players in. Now, this will actually go, I'll share a role just briefly where I didn't quite time it right, but erred on the side of not spending as much money as I would have. And Michael's laughing because he knows the story all too well. I needed for a while, a project manager, but I needed enough work to keep a project manager busy. And there's a lot of things that went into that decision. And I saw a project that I was working on and said, this is perfect to bring a project manager in. However, I also was like, hey, I can bring them in a little later. I can get a couple of these things started. So the funding is where it needs to be as soon as I bring them in. And I'm basically a little bit cutting, it's a little bit risk management. It's a little bit of like a lot of other stuff. Part of it was me just like realizing it was going to take work for me to hand this off. And I wasn't in a place to be able to do it, which was a timing issue for me. I should have prepared beforehand and did not. But had I reversed it and I had seen that, oh, I need a project manager and got the project manager before I had a project to manage. While yes, I could probably have done some stuff with them. It would have been not the most effective use of that time and that money at the time. So you're going to have to roll the dice a little bit on these, but there are areas like project management. You should probably have a project going. Development, you should probably have code to be written. Similar situation is the team got built, the development team probably got built out a little sooner than it needed to be. It made the first sprinter to a little more rough. I think than they could have been had we adjusted that. But those are some things to think about is the timing. So make sure you've got enough runway so you are not freaking out because the problem is if your runway is 12 months and your product gets done in 12 months, then as you get into that 11th and 12th month, you are going to be freaking out because you're going to be worried. Are we going to hit it? Even if you hit it, you're going to be freaking out. Are we going to hit it? Are we going to hit it? And you're adding stress that let's face it, we don't need more stress in our life. And if somebody says, I would have given you 12 months of funding, but I'm not going to give you 15 or 18 months of funding for the same thing. And maybe it's a little more money on their part, but maybe they asked for a little higher percentage or something like that, then they probably wouldn't have given it to you in the first place because they're basically then trying to low ball you or however you want to look at it, but they're basically trying to get you to roll back scope to hit their investment as opposed to accepting what your proposal is. And that's like the last thing I'm going to throw into this one and then we'll go into challenges because we could go too long on this is put your business plan together, review it and own it. Do not, I mean, if you do have an option to say like, maybe you, as part of your plan, you have an option A, B and C and say, well, we can do this or we can do this or we can do that because we can either, we can do a MVP or a version one, or we can get funded version two, or we can get funded a version three, stick to your guns. And it probably is going to be, if you give them three options, they're probably going to be the shortest, you know, best low risk for them. And that's okay. But that's just make sure that that, that MVP is something that solves a, it's a valuable problem that gets solved for your customers. And then it is within a reasonable amount of time. And then it also allows you to grow to, you know, version two or whatever phase two is that we will call that your challenge for this one is. Look at your funding, look at your business. And this is even if it's a side hustle is this again, and we have made challenges like this before, but it's because they're very important. Look at what your, your income is and your outgoing for that. Cause Michael touched on it. It's like, if you're losing money per sale, then success is going to kill you because you're going to have all of these sales and you're going to lose all of that money. So look for hidden costs. Look for things like, Hey, I have to, you know, I have to buy an extra hard drive every six months because I'm having to store some extra stuff or I've got an account on some cloud thing that I need or, you know, or I've got a hosting somewhere on the paper, all of these little things that work into it, because it's easy for us to ignore them or absorb them somewhere else. And when things grow, we get bit by it because we were, we were blind. It's sort of a blind spot for us. So take a look at that. And I think as part of that, the, the, the A plus student challenge is to write a business plan for that thing that you have moving forward. If you haven't, if you have a business plan, review it and how's that working out for you? Is there like, is it something that you like you nailed it or do you maybe need to make some adjustments and maybe adjust how you approach things? If you don't need the A plus, then just like put together, I think a one-on-one approach together, I think a one pager, just sit down and spend a little time about what do you spend? What do you make? How is this going to grow and what's that's going to look like? And do you need to hire other people? Do you need to bring in part-time workers? What, you know, is there something that you're going to need to do to grow that company? As always, we'd love to hear your feedback at info at development or.com. I think like, you don't have to give us ideas, but I think just hearing, just seeing the numbers and things like that would be really interesting. It'd be fun for us to share without anonymously, of course, but also you can reach us on X at developer, or you can reach us on our Facebook page. There's a developer Facebook page. Of course, developer.com should be your go-to site for all sorts of technology, you know, blogs and articles and content like this, because that's one of the places we live on a regular basis as well. Also, you can check out YouTube. Go out there. We have the development or channel. We've got this and the last couple of seasons worth of episodes, not to mention lots and lots of, uh, of training and stuff like that we've done over the years. And of course, I mean, we're, we heard on our way marching toward a thousand episodes. Now it's going to be a little while before we get there, but we are just cruising along as far as a podcast episode. So we can go way, way back. And, you know, if you try to go back to like season one and you can't find it, let us know. And we will go find the, uh, the digital archive or whatever it is that we can get you that. That being said, we will wrap this one up. So go out there and have yourself a great day, a great week, and we will talk to you next time. Thank you for listening to building better developers to develop a new podcast. You can subscribe on Apple podcasts, Stitcher, Amazon, anywhere that you can find podcasts. We are there. And remember just a little bit of effort every day ends up adding into great momentum and great success.