Detailed Notes
In this insightful episode of Building Better Developers, hosts Rob Broadhead and Michael Meloche tackle a key theme for entrepreneurs: transitioning from a flexible side hustle to building a sustainable business. The conversation is rooted in experience, realism, and the kind of long-term thinking that separates temporary income from lasting impact.
Read more: https://develpreneur.com/how-to-build-a-sustainable-business-from-idea-to-execution/
*â Challenge of the Week: Make Your Business Sustainable on Paper First*
Itâs time to move from theory to practice.
This weekâs challenge is all about clarifying the numbers behind building a sustainable businessâwhether youâre just starting out or already in motion.
*đ Step 1: Audit Your Current or Planned Business* * List all recurring expenses: software, subscriptions, hosting, equipment, office space, etc. * Donât forget hidden costs: taxes, payment processing fees, domain renewals, cloud storage, etc. * Estimate your salary (yes, pay yourselfâeven in projections). * Factor in the cost of contractors, freelancers, or employees if/when applicable.
*đ Step 2: Compare Revenue vs. Expenses* * Whatâs your current or expected monthly revenue? * Are you profitable after expenses or just breaking even? * If you sell a product or service, whatâs the margin per sale? * Calculate your break-even pointâhow much do you need to earn monthly to stay afloat?
đŹ âIf youâre losing money per sale, scaling only multiplies the problem.â
*đŚ Step 3: Determine Your Runway* * How many months can you operate with your current funding or savings? * Do you need to adjust pricing, reduce costs, or seek funding to stay sustainable? * Consider building a âminimum viable budgetââthe leanest version of your business that still gets results.
*đ§ A+ Bonus: Create a One-Page Business Plan* * Target market: Who are your customers? * Value proposition: What problem do you solve? * Revenue model: How do you make money? * Marketing plan: How will people find you? * Growth timeline: Whatâs your 3-, 6-, and 12-month vision?
By the end of this exercise, you should have a clearer picture of whether youâre building a sustainable business or need to make some key adjustments before going all-in.
đ Goal: Turn your vision into a working plan backed by real numbers. Sustainability starts on paperâbefore it happens in the real world.
*Additional Resources*
* Business Finance Management: Building Better Businesses for Success (https://develpreneur.com/business-finance-management-building-better-businesses-for-success/) * Business Growth Strategies: When and How to Scale Successfully (https://develpreneur.com/business-growth-strategies-when-and-how-to-scale-successfully/) * Business Continuity: Keeping Your Business Running When Life Happens (https://develpreneur.com/business-continuity-keeping-your-business-running-when-life-happens/) * Business Automation and Templates: How to Streamline Your Workflow (https://develpreneur.com/business-automation-and-templates-how-to-streamline-your-workflow/)
*Follow-us on:*
* https://develpreneur.com/ * https://www.youtube.com/channel/UCZOuFN_LhczvGyT2KSItH_g/featured * https://facebook.com/Develpreneur * https://twitter.com/develpreneur * http://linkedin.com/develpreneur
Transcript Text
[Music] recording in progress. Everybody's favorite phrase because we are live. Um, yes, we're still alive. We have survived the storms. We are both in the uh Tennessee tornado Alley trying to think of something that tornado alley. I was trying to get like another tea, but throughway I guess we'll say we have we have survived even though we are a lot wetter than we used to be. I don't know if that's a good thing or a bad thing. We're going to find out. So, we'll have to add some dry humor to like figure this out. Anyways, uh so it has been a week. It's been a while. Let's talk about what do we want to talk about today. I think you had some ideas, so you want to throw a couple out? So, yesterday I was over at Union University. they were doing some uh hackathon uh thing for uh uh I think it was the energy department Jackson energy was doing a hackathon with some of the students there and they invited local small business to come in and they were pitching their ideas and it's interesting to hear a perspective from a student trying to like brainstorm this like these big business ideas uh you know how to make it work using fiber and One of the things I I I struggled with with talking to the students, and this might be something good for our discussion, is uh how big or lofty should your initial idea for your business be? Cuz some of these guys had really great ideas, but they were so lofty. It's like, oh, you probably need to peel off one of those pieces, focus on that first, and then grow into the other sectors, or you might be overwhelmed. You might run out of money, you might run out of time. Um, it's one of those it's like, how ambitious should you be out of the gate? You know what I mean? That's a [Music] um and it was hard telling them no on some of that or could because their deadline basically they had to come up with this big idea and and like how do they sell it? How do they pitch it? And it's like well I don't want to get into too much but one of them encompassed like government regulations and securities. Well, that's a whole boatload of topics. And how are you going to handle and tackle all of that to kind of be like the central go-to place for that? It's a really interesting idea because of um it gets into it does get into like how do you because you can't bootstrap some of those. I mean, maybe you can, but like if you want to and this is something we sort of we I don't know we've ever actually touched on this is the I we've talked about people that say, "Hey, I want to build eBay on, you know, a $500 budget or I want an Amazon. It's Amazon but not Amazon thousand budget." You know, stuff like that. It's like, look, they've been doing this for years and spent trillions of dollars effectively. So, no, your budget is totally off. But I don't think we've ever talked about and part of it's because it's not something this does get a little bit out of our wheelhouse. So just to be honest everybody there in the the Yahoo world or the Yahoo world, the YouTube world. I'm sorry. I was like I just I just moved decades right there. I was warping time and space. Um is that is when it it does get all to like well how do you do that? Because you can't bootstrap it. So what how do you try to match your business vision and your plan against things like okay what if we go out and we get a loan or we find venture capital or we you know we go through funding rounds and stuff like that or do we go you know pitch it to investors and what does that look like and some of those things that we really haven't talked about and I think it's more because now we're talking which is I think it's a it's a cool thing to discuss because now we're really talking business. We're not talking side hustle at this point. We're talking all right. Now, what if you want to make a business? What? Because you're not going to side hustle. Nobody's going to give you $10 million round seed round and say, "Oh, yeah, you're side hustling and you can give us whatever you give us after your day job." Like, no, you better be they're not going to give you bags of money unless you are fully committed to that. So that is a that is a really neat topic. Uh like angel investors uh like crowdfunding things like that too. Yeah. I mean it is it's all of those pieces. And it's it's this is definitely a just like scratch the surface of where where you can go. But I think it's an interesting one to at least put out there because this is going to be more of a I see it more of a like here's some things you should consider. Here's some things you can look at. How do you approach it? But I don't think we we're going to be able to get too much in the details. Um so that's really cool. What what but what you mentioned the situation um gave me an idea would be like a um I'm just making this crap up as I go. I don't know if it exists, but sort of like a pitch party is how do you get customers to talk to you in a way that allows you to maybe make them a pitch? Now, we, you know, there's always the one-on-one elevator conversation kind of thing or elevator pitch, but there's also the like, can you set stuff up? And that what I'm thinking would be things like one of the things that is recommended to uh consulting companies is that you have like for example like a podcast or a blog where you talk to potential customers and walk through like what their problem is. Like this is, you know, some people it's like free consultation or stuff like that. Some of it's where you say, "Okay, well, we're gonna have something." It's just like uh what's his name? Uh Dave Ramsey like you know he's got a radio show and he talks to people about min like money and financial problems and getting out of debt but that's also the product that he sell is you know is procedures and books and all this stuff to get out of debt. So, it's the same kind of thing as having a a content channel that allows people to see you working. And actually for developers, it's even where you could have like there are developers out there. They record themselves writing code. And that would be something you see, oh, I can see how this person thinks. I can see how they're solving this problem. Um, but it's basically like how to find ways uh we'll call it like, you know, different ways to to spend time, you know, connecting with customers, things like that. I mean, these are a little bit he's a little meta, but that might be a good follow up to the first one cuz that's what I'm thinking. So, that being said, because we've never had a bad episode ever, we'll start with um I'm just calling I've got like notes as I don't know where to call. We'll figure out we'll come up with a a better way to describe, but basically I've got the notes of how big is like, you know, okay, if your company's not if it's probably more like launching a company versus a side hustle. So, and as always, we will improv our way through it and see how it goes. And hopefully we will come to an ending that makes sense. Now, ch I'll have to figure out challenges as we go through this. This will be a fun one. Um, actually, the challenges could be related to the funding. It could be. It may just be do research. Okay, everybody listening at home, don't tell the audio people. Don't spoil All right, we're going in our famous three, a two, one. Well, hello and welcome back. We are continuing our season of building better businesses, but we are actually the building better developers podcast, the developer podcast. I am Rob Broadhead, one of the founders of developer, also a founder of RB 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. So, bad thing, we had the storms come through and I had a night where the siren started at 2:00 a.m. and they didn't stop until about 6 or 6:30 a.m. It was 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 not 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 the crap, the stuff in my life. Um, so I have a lot less things right now, but that is a very good thing. I may even someday do some blogs or, you know, write a book on simplifying because it really is does take you to a different plane of existence. Somebody who is also on a different plane of existence on a regular 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 Malash. I'm one of the co-founders of developer 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 Rob 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 custommade, 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. 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. Um, because we've had so much flooding. Uh, but thankfully, we're on a hill. The downside is the hill is starting to wash away. So that's my uh 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. Uh 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's I'm going to get stuck in from all this rain." With all that water, you might watch out for shark fins as well. You know, it like Yeah, that is that is the beauty of uh at least in my experience, Bermuda. I 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 pregaming it, I don't know that we've ever actually spent time on this. Um 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 is this does apply in this case because it's when you we'll 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 look 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 uh when they talk to me it's usually like an 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, 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 uh go hire 10 people and have a small company or do you have funding that you can go hire a 100 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 ship 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 uh you know an enterprise application that's going to have to require u you know maybe years of development and it's going to require documentation. It's going to require 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 about we've usually talked about bootstrapping because that is easiest because the only person Well, 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. And 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 know, things like that. Once you start bringing in, now the the next step would be bring in 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. So, these are 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 like you could do you can do loans. You can go to you can get business loans through you name it um 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 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 till the cows come home. Um, but there are there are banks, there are and there are sites and there are uh, you know, different places you can go that they're really focused on business loans and the the small business organization uh, out of um, if you're in the US, there's things like that that you can go to your, you know, some of your local uh, 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, you know, 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. Uh, 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 uh more likely going to be individuals, although there are groups there as well. They tend to have a little bit different approach to it. Um they tend to be a little more and it varies from one to one to the next, but they tend to be a little less maybe hands off. uh they tend to be a little more handsoff, but they also are more likely to be a I guess a true believer where they feel like, okay, I'm going to do this and they're not gonna, you know, maybe not take as much, maybe they will, you know, your your experience may vary on all of those. And then I said once you get into like venture capitalists and and larger uh 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 in 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 you have an under 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 you know 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 is this shows that I've spent the time and now we're talking black and white numbers. we're talking I need, you know, $5 million to give me 12 months because that's what it's going to take me to get there and I'm going to start seeing payments in, you know, 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 under fun 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 are 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 liked uh kind of the roundt discussion. Uh Rob mentioned, you know, if you get 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 figured out the cost for the product, but you have not actually included you you've calculated the material cost. 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 willing 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 project 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, you know, 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, uh, 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 they 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 the numbers to say, okay, one person can do X amount of work. Is that enough to meet my deadline from the beginning of the project 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 up front. So for instance, if this is software development, you may need to hire the project owners, the uh designers up front, your architects up front to get the system going, then you can hire the developers once you have a little bit better idea where it is. So you can kind of stretch that out 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 time frame 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 cuz if you'd 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, you know, cost you overhead. Even it then you could possibly get like a small business loan and have 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 that's kind of where I think this goes through the process. Uh the other thing I would say um that we haven't touched on at all yet is really getting that seed money, getting that 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. Uh, 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 side hustle. Thoughts on that, Rob? 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 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. Um, 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 you, and by that I mean like if it's 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, you know, 15 months worth of funding or probably, you know, 18 months worth of funding. You you do that usual 20% like we do for development times and that always tech%. I would think even more than that. I would say it's actually a little bit I think once you get beyond about six months of a of a road map. 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 that are 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 real just briefly where I didn't quite time it right. um but aired 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 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, I am 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, it's 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. Um, we similar situation is the team got built, the development team probably got built out a little sooner than it needed to be. Um, it made the first sprint or two 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. Um, so make sure you've got enough runways 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? And you're you're adding stress that, let's face it, we don't need more stress in our life. And if somebody says, you know, 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, you know, and maybe it's a little bit, you know, it's a little more money on their part, but, you know, 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, you know, lowball you or however you want to refute 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 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 uh low risk for them and that's okay. But that's just make sure that that that MVP is something that solves 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. Because Michael, you know, 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 I'm pay for. 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+ student challenge is to write a business plan for that thing that you have moving forward if you haven't. Uh 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 you know maybe adjust how you approach things? Uh if you don't need the A+ then just like put together like a one pager just sit down and spend a little time about like what do you spend what do you make how is this going to grow and what's that going to look like and do you need to you hire other people do you need to bring in part-time workers what you know is there something you're going to need to do to grow that company as always would love to hear your feedback at info developer.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. be fun for us to you know share without anonymously of course uh but also you can reach us on x at developreneur you can reach us on our Facebook page there's a developer Facebook page of course developer.com should be your goto 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 developer channel we've got this and the last couple of seasons worth of episodes, not to mention lots and lots of of training and stuff like that we've done over the years. And of course, I mean, we're we are 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 uh podcast episodes. So, we can go way way back. And you know, if you try to go back to like season 1 and you can't find it, let us know and we will go, you know, find the uh the digital archive wherever 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. Bonus while I grab something to drink. So it's interesting within that challenge as you're going through this process. The whole point of launching a company, building the business is understanding your customer, understanding the problem you're trying to solve. Be careful. It's not a bad thing to be ambitious, but it is potentially could be a bad thing as far as funding and getting things started. So for instance, if you want to try to centralize all the tax rules in the US into a single website with a single API that people could hit and basically become the new uh tax option for all tax software uh that could be very demanding there. There are a lot of tax codes, a lot of things out there. Now, if you wanted to do something scale down just a little bit smaller to begin with, maybe do something like, hey, um, let me start with all the state taxes for like the state of Tennessee. Let me build a site for that. So, you start with one, you build the premise, you build the idea out, you then you can make sure that it is solvable, meaning that you have business, you have people that want this, and that it's successful. You work out the kinks. And then from there you can scale up as big as you want. You can do state by state. You can then get into federal government. There are many ways to skin that cat. But the problem is make sure that you don't start so big that you are trying to appease so many people at once. You're not going to identify your prime customer. An interesting example of that is Path of Exile 2 is in beta and they did early access. You could pay to get into it. and their success kind of counteracted their business plan. They thought early access was going to give us some feedback, help us, you know, vet the systems. Within a week, they realized that they have essentially pre-launched the game. The game is now live. So, all their ideas for tweaking and they had to completely pivot. That is a both a good thing and a bad thing. But that's one of those cases where you might want to get it in front of your customers first. Maybe in small chunks, but if you go big, go big. But just be warned that you may have too many inputs as to where you should go and you're going to struggle with that customer feedback. You know, you're going to have a lot of haters, a lot of lovers, or a lot of in the middle. So, be careful with that. But keep that in mind. Maybe start small and then expand, but start out with the big model and see how you can peel it back and kind of maybe do like stage one, stage two or phase one, phase two. Uh, and then you have a roadmap. So, not only that, you can now, hey, my business plan, look, I've got a 10-year model. Now, most businesses will be like, let's see you make money the first year, but that just gives you an idea of where and how you can grow these business plans or your ideas to launch that business. H you make me laugh because you brought up a this is something we have talked about so many times. Uh and actually what I was going to do was going to say hey one of the best ways to get money is to have something concrete in front of the whoever you're pitching the investment to because they're going to want to see is this more than just smoke and mirrors. And so it is not uncommon for people to be in a situation where they basically need an MVP in order to get the funding that they want to really move forward. And so the MVP is more about um while it is about something valuable to a customer, it is almost more about being important and useful to the investor, which is a you're serving a little bit of a different master in that case. The challenge with this is exactly what Michael said is that you end up in a little bit of a chicken and egg situation, but it's also one where I don't know how to continue that analogy, but it's like where the chickens look the eggs look too tasty or something like that because you can build an MVP. You can put it out in front of somebody and it is good enough that they say, "Well, you know, well, it's there. Why do we instead of us investing $10 million we can invest $20, right? And that's where so if you get to that you have to be ready to defend what is the what is that next step. It does go back to a business plan. It goes back to saying yes this is where we're at. This shows you that we have solved this problem and it's actually a it is a leverage tool for you because if you go in looking for investors and you can say we have solved this problem, we have a solution but this is where we want to go and we need you to join us on this fun journey with your bags of money signing some checks so that we can get to where we want to go because we don't see this as the end point. We see this as just barely the beginning. So be careful what you run into. Um, and keep an eye on that because it may be a situation where you start this saying, "Okay, this is my plan. I'm going to build an MVP. I'm going to do all of this and this is how I'm going to progress." And the MVP is uh received warmly enough that those other plans get to change because you're like, I can start selling this right now. People love this. We can bring money in. So we don't have to go to investors. We can now actually, you actually bootstrap it. So, those are some things to think about while you're crafting that email to us. Of course, just if you've missed it somewhere along the way, [email protected]. We would love to hear from you and where we're going. Where we are going right now is to take a break until the next episode. Uh, we will be back. We will talk about that. I think we already know what it is, so it'll be a brief one and then we'll dive right into the next podcast. But guys, go out there and have yourself a great day and we will see you here back on this channel next time. [Music]
Transcript Segments
[Music]
recording in progress. Everybody's
favorite phrase because we are live. Um,
yes, we're still alive. We have survived
the storms. We are both in the uh
Tennessee tornado
Alley trying to think of something that
tornado alley. I was trying to get like
another tea, but throughway I guess
we'll say we have we have survived even
though we are a lot wetter than we used
to be. I don't know if that's a good
thing or a bad thing. We're going to
find out. So, we'll have to add some dry
humor to like figure this out. Anyways,
uh so it has been a week. It's been a
while. Let's talk about what do we want
to talk about today. I think you had
some ideas, so you want to throw a
couple out? So, yesterday I was over at
Union University. they were doing some
uh hackathon uh thing for uh uh I think
it was the energy department Jackson
energy was doing a hackathon with some
of the students there and they invited
local small business to come in and they
were pitching their ideas and it's
interesting to hear a perspective from a
student trying to like brainstorm this
like these big business ideas uh you
know how to make it work using fiber and
One of the things I I I struggled with
with talking to the students, and this
might be something good for our
discussion, is
uh how big or lofty should your initial
idea for your business be? Cuz some of
these guys had really great ideas, but
they were so lofty. It's like, oh, you
probably need to peel off one of those
pieces, focus on that first, and then
grow into the other sectors, or you
might be overwhelmed. You might run out
of money, you might run out of time. Um,
it's one of those it's like, how
ambitious should you be out of the gate?
You know what I mean? That's a
[Music]
um and it was hard telling them no on
some of that or could because their
deadline basically they had to come up
with this big idea and and like how do
they sell it? How do they pitch it? And
it's like well I don't want to get into
too much but one of them encompassed
like government regulations and
securities.
Well, that's a whole boatload of topics.
And how are you going to handle and
tackle all of that to kind of be like
the central go-to place for that? It's a
really interesting idea because of um it
gets
into it does get into like how do you
because you can't bootstrap some of
those. I mean, maybe you can, but like
if you want to and this is something we
sort of we I don't know we've ever
actually touched on this is the I we've
talked about people that say, "Hey, I
want to build eBay on, you know, a $500
budget or I want an Amazon. It's Amazon
but not Amazon thousand budget." You
know, stuff like that. It's like, look,
they've been doing this for years and
spent trillions of dollars effectively.
So, no, your budget is totally off. But
I don't think we've ever talked about
and part of it's because it's not
something this does get a little bit out
of our wheelhouse. So just to be honest
everybody there in the the Yahoo world
or the Yahoo world, the YouTube world.
I'm sorry. I was like I just I just
moved decades right there. I was warping
time and space.
Um is that is when it it does get all to
like well how do you do that? Because
you can't bootstrap it. So
what how do you try to match your
business vision and your plan against
things like okay what if we go out and
we get a loan or we find venture capital
or we you know we go through funding
rounds and stuff like that or do we go
you know pitch it to investors and what
does that look like and some of those
things that we really haven't talked
about and I think it's more because now
we're talking which is I think it's a
it's a cool thing
to discuss because now we're really
talking business. We're not talking side
hustle at this point. We're talking all
right. Now,
what if you want to make a business?
What? Because you're not going to side
hustle. Nobody's going to give you $10
million round seed round and say, "Oh,
yeah, you're side hustling and you can
give us whatever you give us after your
day job." Like, no, you better be
they're not going to give you bags of
money unless you are fully committed to
that. So that is a that is a really neat
topic. Uh like angel investors uh like
crowdfunding things like that too. Yeah.
I mean it is it's all of those pieces.
And it's it's this is definitely a just
like scratch the surface of where where
you can go. But I think it's an
interesting one to at least put out
there because this is going to be more
of a I see it more of a like here's some
things you should consider. Here's some
things you can look at. How do you
approach it? But I don't think we we're
going to be able to get too much in the
details. Um so that's really cool. What
what but what you mentioned the
situation
um gave me an idea would be like a
um I'm just making this crap up as I go.
I don't know if it exists, but sort of
like a pitch party is how do you get
customers to talk to you in a way that
allows you to maybe make them a pitch?
Now, we, you know, there's always the
one-on-one elevator conversation kind of
thing or elevator pitch, but there's
also the like, can you set stuff up? And
that what I'm thinking would be things
like one of the things that is
recommended to uh consulting companies
is that you have like for example like a
podcast or a blog where you talk to
potential customers and walk through
like what their problem is. Like this
is, you know, some people it's like free
consultation or stuff like that. Some of
it's where you say, "Okay, well, we're
gonna have something." It's just like uh
what's his name? Uh Dave Ramsey like you
know he's got a radio show and he talks
to people about min like money and
financial problems and getting out of
debt but that's also the product that he
sell is you know is procedures and books
and all this stuff to get out of debt.
So, it's the same kind of thing as
having a a content channel that allows
people to see you working. And actually
for developers, it's even where you
could have like there are developers out
there. They record themselves writing
code. And that would be something you
see, oh, I can see how this person
thinks. I can see how they're solving
this problem. Um, but it's basically
like how to find ways uh we'll call it
like, you know, different ways to to
spend time, you know, connecting with
customers, things like
that. I mean, these are a little
bit he's a little
meta, but that might be a good follow up
to the first one cuz that's what I'm
thinking.
So, that being said, because we've never
had a bad episode
ever, we'll start with um I'm just
calling I've got like notes as I don't
know where to call. We'll figure out
we'll come up with a a better way to
describe, but basically I've got the
notes of how big is like, you know,
okay, if your company's not if it's
probably more
like launching a company versus a side
hustle. So, and as always, we
will improv our way through it and see
how it goes. And hopefully we will come
to an ending that makes sense. Now, ch
I'll have to figure out challenges as we
go through this. This will be a fun one.
Um, actually, the challenges could be
related to the funding.
It could be. It may just be do
research. Okay, everybody listening at
home, don't tell the audio
people. Don't spoil All right, we're
going in our famous three, a two, one.
Well, hello and welcome back. We are
continuing our season of building better
businesses, but we are actually the
building better developers podcast, the
developer podcast. I am Rob Broadhead,
one of the founders of developer, also a
founder of RB 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. So, bad thing, we had
the storms come through and I had a
night where the siren started at 2:00
a.m. and they didn't stop until about 6
or 6:30 a.m. It was 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 not 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 the crap, the stuff in my
life. Um, so I have a lot less things
right now, but that is a very good
thing. I may even someday do some blogs
or, you know, write a book on
simplifying because it really is does
take you to a different plane of
existence. Somebody who is also on a
different plane of existence on a
regular 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 Malash. I'm
one of the co-founders of developer
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 Rob 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
custommade, 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. 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. Um, because we've had so much
flooding. Uh, but thankfully, we're on a
hill. The downside is the hill is
starting to wash away.
So that's my uh 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. Uh 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's I'm going to get stuck in
from all this rain." With all that
water, you might watch out for shark
fins as well. You know, it like Yeah,
that is that is the beauty of uh at
least in my experience, Bermuda. I 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 pregaming it, I don't know that
we've ever actually spent time on this.
Um 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 is this
does apply in this case because it's
when
you we'll 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 look 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 uh
when they talk to me it's usually like
an 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, 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 uh go hire 10
people and have a small company or do
you have funding that you can go hire a
100 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 ship 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
uh you know an
enterprise application that's going to
have to require u you know maybe years
of development and it's going to require
documentation. It's going to require
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 about we've usually
talked about bootstrapping because that
is easiest because the only person Well,
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. And 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 know, things like
that. Once you start bringing in, now
the the next step would be bring in 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. So, these are 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 like you could
do you can do loans. You can go to you
can get business loans through you name
it um 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 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 till the cows come
home. Um, but there are there are banks,
there are and there are sites and there
are uh, you know, different places you
can go that they're really focused on
business loans and the the small
business organization uh, out of um, if
you're in the US, there's things like
that that you can go to your, you know,
some of your local uh, 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, you know, 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.
Uh, 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 uh more likely going to be
individuals, although there are groups
there as well. They tend to have a
little bit different approach to it. Um
they tend to be a little more and it
varies from one to one to the next, but
they tend to be a little less maybe
hands off. uh they tend to be a little
more handsoff, but they also are more
likely to be a I guess a true believer
where they feel like, okay, I'm going to
do this and they're not gonna, you know,
maybe not take as much, maybe they will,
you know, your your experience may vary
on all of those. And then I said once
you get into like venture capitalists
and and larger uh 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 in
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 you have an
under 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 you know 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 is this shows that I've spent
the time and now we're talking black and
white numbers. we're talking I need, you
know, $5 million to give me 12 months
because that's what it's going to take
me to get there and I'm going to start
seeing payments in, you know, 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 under fun 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 are 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 liked uh kind of the roundt
discussion. Uh Rob mentioned, you know,
if you get 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
figured out the cost for the product,
but you have not actually included you
you've calculated the material cost. 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 willing 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 project 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, you know,
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, uh, 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 they
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 the numbers to say, okay, one
person can do X amount of work. Is that
enough to meet my deadline from the
beginning of the project 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 up front. So for
instance, if this is software
development, you may need to hire the
project owners, the uh designers up
front, your architects up front to get
the system going, then you can hire the
developers once you have a little bit
better idea where it is. So you can kind
of stretch that out 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 time frame 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 cuz if you'd
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, you know, cost you
overhead. Even it then you could
possibly get like a small business loan
and have 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 that's kind of
where I think this goes through the
process. Uh the other thing I would say
um that we haven't touched on at all yet
is really getting that seed money,
getting that 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. Uh, 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 side hustle.
Thoughts on that,
Rob? 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 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. Um, 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 you, and by that I
mean like if it's 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, you know, 15 months worth of
funding or probably, you know, 18 months
worth of funding. You you do that usual
20% like we do for development times and
that always tech%. I would think even
more than that. I would say it's
actually a little bit I think once you
get beyond about six months of a of a
road map. 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 that are 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
real just
briefly where I didn't quite time it
right. um but aired 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 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, I am 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, it's 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. Um, we
similar situation is the team got built,
the development team probably got built
out a little sooner than it needed to
be. Um, it made the first sprint or two
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. Um, so make sure you've
got enough runways 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? And you're you're adding
stress that, let's face it, we don't
need more stress in our life. And if
somebody says, you know, 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, you know, and maybe it's a
little bit, you know, it's a little more
money on their part, but, you know,
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, you know,
lowball you or however you want to
refute 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 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
uh low risk for them and that's okay.
But that's just make sure that that that
MVP is something that solves 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. Because Michael, you
know, 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
I'm pay for. 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+ student
challenge is to write a business plan
for that thing that you have moving
forward if you haven't. Uh 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 you know maybe adjust
how you approach things? Uh if you don't
need the A+ then just
like put together like a one pager just
sit down and spend a little time about
like what do you spend what do you make
how is this going to grow and what's
that going to look like and do you need
to you hire other people do you need to
bring in part-time workers what you know
is there something you're going to need
to do to grow that
company as always would love to hear
your feedback at info developer.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. be fun for
us to you know share without anonymously
of course uh but also you can reach us
on x at developreneur you can reach us
on our Facebook page there's a developer
Facebook page of course developer.com
should be your goto 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 developer channel we've got this and
the last couple of seasons worth of
episodes, not to mention lots and lots
of of training and stuff like that we've
done over the years. And of course, I
mean, we're we are 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 uh podcast episodes. So, we can
go way way back. And you know, if you
try to go back to like season 1 and you
can't find it, let us know and we will
go, you know, find the uh the digital
archive wherever 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. Bonus while I grab something to
drink. So it's interesting within that
challenge as you're going through this
process. The whole point of launching a
company, building the business
is understanding your customer,
understanding the problem you're trying
to
solve. Be careful. It's not a bad thing
to be ambitious, but it is potentially
could be a bad thing as far as funding
and getting things started. So for
instance, if you want to try to
centralize all the tax rules in the US
into a single website with a single API
that people could hit and basically
become the new uh tax option for all tax
software uh that could be very demanding
there. There are a lot of tax codes, a
lot of things out there. Now, if you
wanted to do something scale down just a
little bit smaller to begin with, maybe
do something like, hey, um, let me start
with all the state taxes for like the
state of Tennessee. Let me build a site
for that. So, you start with one, you
build the premise, you build the idea
out, you then you can make sure that it
is solvable, meaning that you have
business, you have people that want
this, and that it's successful. You work
out the kinks. And then from there you
can scale up as big as you want. You can
do state by state. You can then get into
federal government. There are many ways
to skin that cat. But the problem is
make sure that you don't start so big
that you are trying to appease so many
people at once. You're not going to
identify your prime customer. An
interesting example of that is Path of
Exile 2 is in beta and they did early
access. You could pay to get into it.
and their success kind of counteracted
their business plan. They thought early
access was going to give us some
feedback, help us, you know, vet the
systems. Within a week, they realized
that they have essentially pre-launched
the game. The game is now live. So, all
their ideas for tweaking and they had to
completely
pivot. That is a both a good thing and a
bad thing. But that's one of those cases
where you might want to get it in front
of your customers first. Maybe in small
chunks, but if you go big, go big. But
just be warned that you may have too
many inputs as to where you should go
and you're going to struggle with that
customer feedback. You know, you're
going to have a lot of haters, a lot of
lovers, or a lot of in the middle. So,
be careful with that. But keep that in
mind. Maybe start small and then expand,
but start out with the big model and see
how you can peel it back and kind of
maybe do like stage one, stage two or
phase one, phase two. Uh, and then you
have a roadmap. So, not only that, you
can now, hey, my business plan, look,
I've got a 10-year model. Now, most
businesses will be like, let's see you
make money the first year, but that just
gives you an idea of where and how you
can grow these business plans or your
ideas to launch that business.
H you make me laugh because you brought
up a this is something we have talked
about so many times. Uh and actually
what I was going to do was going to say
hey one of the best ways to get money is
to have something concrete in front of
the whoever you're pitching the
investment to because they're going to
want to see is this more than just smoke
and mirrors. And so it is not uncommon
for people to be in a situation where
they basically need an MVP in order to
get the funding that they want to really
move forward. And so the MVP is more
about
um while it is about something valuable
to a customer, it is almost more about
being important and useful to the
investor, which is a you're serving a
little bit of a different master in that
case. The challenge with this is exactly
what Michael said is
that you end up in a little bit of a
chicken and egg situation, but it's also
one where I don't know how to continue
that analogy, but it's like where the
chickens look the eggs look too tasty or
something like that because you can
build an
MVP. You can put it out in front of
somebody and it is good enough that they
say, "Well, you know, well, it's there.
Why do we instead of us investing $10
million we can invest $20, right? And
that's where so if you get to that you
have to be
ready to defend what is the what is that
next step. It does go back to a business
plan. It goes back to saying yes this is
where we're at. This shows you that we
have solved this problem and it's
actually a it is a leverage tool for you
because if you go in looking for
investors and you can say we have solved
this
problem, we have a solution but this is
where we want to go and we need you to
join us on this fun journey with your
bags of money signing some checks so
that we can get to where we want to go
because we don't see this as the end
point. We see this as just barely the
beginning. So be careful what you run
into. Um, and keep an eye on that
because it may be a situation where you
start this saying, "Okay, this is my
plan. I'm going to build an MVP. I'm
going to do all of this and this is how
I'm going to progress." And the MVP is
uh received warmly enough that those
other plans get to change because you're
like, I can start selling this right
now. People love this. We can bring
money in. So we don't have to go to
investors. We can now actually, you
actually bootstrap it. So, those are
some things to think
about while you're crafting that email
to us. Of course, just if you've missed
it somewhere along the way,
[email protected]. We would love to
hear from you and where we're going.
Where we are going right now is to take
a break until the next episode. Uh, we
will be back. We will talk about that. I
think we already know what it is, so
it'll be a brief one and then we'll dive
right into the next podcast. But guys,
go out there and have yourself a great
day and we will see you here back on
this channel next time.
[Music]