Startup Q&A #10: Web Hosting Issues, Marketing, NDAs, Getting Started with Investing

Hey everybody, Matthew Paulson here. Today we are going to talk about web hosting issues, where to put your marketing dollars, whether or not you should sign a non disclosure agreement, and getting started with investing. Let's do this. This is officially episode 10 of Startup Q and A, the online video show that helps startup founders, entrepreneurs and small business owners grow their businesses faster and achieve their dreams of financial freedom. So whether you're just getting started or if you have 100 employees, this is the show that will give you actionable ideas and advice that you can implement both in your business and in your personal life. Before we dive into the questions, I wanted to share a tip in a brief segment that I call the Tip of the Week. So this week's tip is to use a service called BuiltWith. And what BuiltWith does is it allows you to type in the name of any website and it'll tell you everything that was used to build that website or that service. So if you have a competitor's website or just a website you really like and you want to know what tools they use to make it, BuiltWith will tell you so. It'll tell you. What kind of web host do they have? Is it based on a Windows server or a Linux server? What content management system do they use? Is it based on WordPress? Is it based on Drupal? Something else? You know, what kind of ad networks does the website run? What maybe what are some plugins installed? What kind of caching technology are they using? Just a ton of different, very interesting and useful data about any website on the Internet. So if you go there, you type MarketBeat, it'll tell you that we use a Windows web server. It'll tell you that our site is based off a programming technology called asp. Net. It'll tell you that we run ads from Google, AdSense and some other stuff that you might not be able to figure out yourself unless you're highly technical and you really know what to look for. So Definitely go to builtwith.com, type in the name of your competitors, see what they're doing, maybe they're doing something that you're not doing. And you can use builtwith.com to identify that and maybe come up with some ideas for your own business. So that is the tip of the week. Let's dive into the questions. Every week we take four or five questions that are submitted through Facebook or through our website. So if you have a question that you would like to have answered on a future episode of Startup Q and A, go to the domain startupqa co and it's a page on my website and under the Startup Q and A Show menu there is a link to submit your question there. So you can do that. Or I periodically post just a post on Facebook saying hey, does anybody have any questions for the Startup Q and A show? See one of those posts comment there and there's a great chance that it will be included in a future episode of the Startup Q and a podcast or show. The first question comes from Dan Pickering, and Dan asks, what should you plan on doing if 100% of your business is based on an Internet platform and it goes down? So if your server happens to go down for your website, really how much of a disaster it's going to be largely depends on the prep work that you did ahead of time. So if you have nightly backups of your website through a service like ManageWP, it's not that big of a deal if your server goes down, because you can upload that backup onto another server, port your domain to the new server, and you're back in business. You can also mitigate the impact of hardware failure so that you have server the hard drive dies. That's typically pretty bad news. But if you have a cloud server through Amazon aws, something like Elastic Host or Microsoft Azure, you live on top of one of these platforms, it's not a big deal if the hardware fails, because they can just move your website over to another server really easily and you're back in business. You can also reduce the likelihood of your site going down by having good caching plugins and a content delivery network in place. So you could put something like cloudflare in front of your web server and they will cache a lot of the content on your website so that when somebody comes to your MarketBeat.com the content isn't served from our server always, but often it comes from Cloudflare, which speeds up the website and reduces the load on our server so we can have more concurrent people on MarketBeat.com than we would otherwise. We get a ton of traffic. We're probably not going to crash the website because cloudflare is doing a lot of that heavy lifting for us. Depending on how much money you stand to lose if your server goes down, you might have a backup in place. We have a backup in place for our WordPress servers at MarketBeat, because they can go down sometimes. So if we have a catastrophic event with the server, we can move all the sites over to the other server and we'll be back in business pretty quickly. For most people, if you're just getting started. You don't need a backup server. But if you're doing a million dollars a year in revenue, go ahead and spend the extra $250 a month and put that backup server in place. Finally, remember, with web hosting, you kind of get what you pay for. So if you're spending $20 a month, $10 a month on a shared web hosting platform, you're not going to have great performance. And there's a pretty good chance it's going to go down more often than if you had a virtual private server or a dedicated server. And the reason for this is, is that your website is sitting on a server with a bunch of other different websites. And if one of those other websites has a problem, it will impact your website as well. The real cost of running a dedicated server is probably about $200 a month, something like that. So what hosting companies do, they'll do is say, okay, we'll take 20 small websites, we'll charge them 10 bucks a month each. We'll put them all on the same server. But when one website has problems, it impacts the server, which then impacts the rest of the website. If you have a business that makes a lot of money, don't put it on a shared hosting account. Get some dedicated resources. Spend the money on a dedicated web server or virtual server somewhere so that your website isn't impacted by other websites on that server. So let's say your server actually does go down. The first thing to do is to call your web hosting provider, call their support number, don't send them an email because they'll get lost in a support queue. So either do live chat or just call them and say, hey, my website's down. Can you fix it? And usually what happens is the server is just kind of locked up for who knows what reason. They'll reboot it and everything is back to normal. If there's a more serious problem, your server has some kind of hardware failure, ask them to move your account over to a different server. Don't expect them to have backups with your web server. Sometimes they do, sometimes they don't. But that's not something you want to leave to your web hosting provider to do for you. Have your own backup. So say they don't have a backup. They can't put you on a different server. You take your backup, you can fire them as a web hosting account, get a different account, or have them set you up on a new account. You upload your backup, and then you're good to go again. So really, it's just a matter of being responsive right away. Communicate with your web hosting provider. Don't just get angry and wait for them to fix it. Be proactive. Call them up, use a live chat, do whatever you can to talk to their support people directly. More often than not, it's usually a pretty easy fix. But if it is something more serious, have your backups in place and then you can move to another server pretty quickly. So if you do some of that basic preventative maintenance, a lot of these downtime issues can be avoided. So if you have good backups, you have caching tools in place like Super Cache, a CDN, like cloudflare, pay for a good web hosting account. Most of these things just don't happen. I have two dedicated servers for my WordPress websites. They work just fine. I spend maybe 500 bucks a month on them. It's an investment, but it's well worth it because I haven't had any major downtime issues in the last year and a half. It was before that when I was at a different web host. I had some problems. I switched to my current company, which is web Hosting Buzz. I'm a big fan of them, especially for their dedicated stuff. Good support and good hardware and good prices. I really like those guys. So once I've moved over to web hosting buds, I haven't had any problems and they're a decent hosting company. I'm not saying they're amazing or anything, but just the fact that you have dedicated hardware with multiple hard drives. So if one hard drive fails, it'll fail over to the other one. Having some good stuff like that in place, you can usually just avoid a lot of these potential issues. The next question comes from Sheila Ray, and Sheila asks, where do you put marketing money in a startup? So obviously there are a ton of different marketing channels you could try. You could try to get press, you could buy billboards, you could try to do social media, you could do pay per click, you could do email marketing, put ads in magazine, newspapers, you could do direct mail. And there are just a ton of different ways that you, you could spend marketing dollars. But obviously you can't do everything, so you really have to do the things that are most likely to work depending on who your audience is. So your first task is kind of to identify who are my customers? Who are the people that are going to buy from my business? This is the old idea of what is a customer avatar? What does my customer look like? What is their age, gender, what are their interests, where do they live? Do they rent or own. What kind of jobs do they have? What other interests do they have? If you can describe your ideal customer as best as possible, then you can really begin to think about, how do I reach this ideal customer of mine? Now, Sheila happens to run a flourless bakery. It's a very unique idea, but she makes baked goods for people that are gluten intolerant or just can't eat flour for whatever reason, or just can't have a normal diet. So she sells to a pretty narrow niche. There's kind of the healthy food niche, and then in that, there's kind of a very sub niche of gluten intolerant people or people that can't have flour that also want baked goods. So she's talking to a very narrow segment of the whole food market. So in Sheila's situation, first I would start with any kind of alternative health publication that you might find locally. So Sheila is also based in Sioux Falls, where I am. I look at all the local magazines, say, is there anything that's a good fit here? And then maybe place an adnos magazines, because with those, you know, you're targeting a local audience because you can only pick those things up locally. And if there is a health magazine, you know, people that are into alternative health, they kind of get crazy about it. So they're probably reading that magazine. The other thing you would. I would do in your situation is I would probably do targeted Facebook ads. So you could target people that are within 25 miles of Sioux Falls. You could target people that like certain pages or like certain websites for gluten free eating or whatever the diet restriction is. So there's just lots of different ways on Facebook that you can target people and you can cut down to that really narrow kind of sliver of people you're going after. So you might know that the majority of your customers are women age 35 to 55 that live in this one community that have expressed interest in this, this or this. And then you can make a Facebook ad to them. You can offer them a free baked good if they come in and print off the ad. Or you could give them a coupon of some kind. I think that would be a great way to target your potential, your potential audience. One other idea that I had is that maybe you could do like community education classes for people that want to cook without flour and dairy. And that would allow people to. Anybody that sees that class that you're offering through community, Ed would say would be able to scan through it. And if it was interesting to Somebody, they'd be able to raise their hand. That way you could kind of start building that natural audience of people that want the types of food that you cook or you bake. People come to your class, you show them how to make gluten free, dairy free muffins or something like that. And then you could get all their email addresses and then you kind of have a natural initial customer list to work off. So that's another idea. So obviously everyone's business idea is going to be different than Sheila's. What works for Sheila isn't going to work for MarketBeat. What works for MarketBeat isn't going to work for Sheila. And it just really, it's a matter of identifying who your customers are and then how do you get a hold of them, how do you reach them? And it's really just a matter of the types of media they consume and just, you know, what channels exist out there that you can get in front of them in and then leveraging those channels. So the next question comes from Marissa Poppins and she asks should I ever sign a non disclosure agreement or ask somebody to sign a non disclosure agreement? So good question, Marisa. So what? A non disclosure agreement is more commonly referred to as an NDA. It's a legal document between two people that prevents one person from talking about something that the other person told them about. So let's say I've got this top secret idea from MarketBeat. I want to share it with somebody, but I don't want them to copy the idea. I don't want them to go blabbing about it. I might have them sign a non disclosure agreement to legally prevent them from doing that. It sounds like a very good idea in theory. It doesn't typically work out in reality for a lot of different reasons. There are just plenty of issues with them. There is a place for non disclosure agreements when you have something very specific and narrow that you are going to talk to about a company or to somebody else in your industry. There is a place for that. But usually people that ask other people to sign NDAs don't really know what they're doing and don't really understand what an NDA is for and what it's not for. An NDA is not to protect a vague idea that you've written on the back of a napkin. It's not for that. It's not for a general business idea, it's not for a general business plan. It's just overkill for that. So I generally, I don't sign NDAs because there's typically never a benefit for me to sign an NDA. Somebody wants my help and they say, I'd love to meet you for coffee. I want to talk to you about this idea with you, but first I need you to sign this NDA. You know, at that point, I just say, thanks, but no thanks. I don't sign NDAs. That's just a matter of course. If you want to talk to me, happy to talk to you, but I'm not going to sign your NDA. The reason I don't sign them is just there's no real financial or any kind of benefit for me to do it. I'm really just locking myself into a legal agreement for no real benefit to me. So it's just there's no good reason to sign somebody's NDA. And, you know, it also kind of limits what I can do down the line. Because let's say somebody has me sign an NDA, then if somebody else in that same industry wants to talk, talk to me about their thing, they come off and be successful. This other person could say, hey, Matt talked to them. He must have given them their idea. And then it would just be kind of a big mess. So really, there's not a good reason to sign NDAs in most cases. At the Angel Fund, we had somebody that wanted us to sign an NDA. We just said, we don't sign them as a matter of course. For this reason, this reason and this reason, I said, but we do have a confidentiality agreement placed in our membership documents that was good enough for them. So they set that aside and we were able to continue on without ever signing an NDA. Most of the time, people that ask you to sign an NDA, they don't really know why they're having you do it. Somebody told them they should. So we just say, we don't do it. Love to talk to you, but we don't sign NDAs for this reason. Typically, that isn't much of a roadblock, and you'll talk to you anyway. Second, people have you sign. You might want to have somebody sign NDA because you're afraid of them copying your idea. Don't be afraid of somebody copying your idea. People are busy. They've got their own stuff going on. They don't want to copy your idea. Everybody has their own good ideas that they'd love to implement, but not everybody is an executor. Everybody's an implementer. So there are a ton of good ideas, not a lot of people executing it. So if you Have a good idea. The value that you're going to have is executing on that idea, not having the idea itself. Having the idea doesn't do anything. You have to be the person executing on it. So if somebody else has your idea too, it doesn't really matter because they're not going to execute on that idea. So don't be afraid of somebody copying your idea. That just usually doesn't happen unless you're talking to a direct competitor. Then obviously you probably wouldn't want to talk to them anyway because you're competitors with them and you don't want them to copy your stuff. So the question should you ever have anybody sign an NDA? Maybe if it's something very specific and detailed where it's maybe like a 10 page business document or something you have a patent on or something that you'd love to work with somebody. But it's very tangible and specific. Saying this specific marketing campaign, this strategy, this ad copy, something very narrow that somebody could directly copy and benefit from, that's highly valuable. In that case you might. But generally, as a matter of course, they're just kind of a waste of time. More often than not, they don't stand up in court because their burden of proof to prove that somebody violated an NDA is really high. And more, it usually doesn't work out, usually doesn't provide benefit for people, and it kind of shows you're focusing on the wrong things. Instead of focusing on getting your idea done and getting valuable advice, you're focused on protecting your idea. And really what you want to be focused on is executing your idea, not hoarding your idea, hoarding it to yourself and hoping that nobody copies it. Next question comes from Sam Lopez and Sam asks this is a little bit different of a question. Sam is not an entrepreneur, but she asks a very important question. So I wanted to take time to answer it on the show. So Sam Lopez asks on investing for low income folks who can manage to save up to $5 a month other than holding it till you get enough for a bond or CD, how can they invest $5 a month? How does it work with brokers and all? Can you break it down into simple steps? Steps for folks that have no generational history of investing? Sam, let me say this first. I really appreciate what you're trying to do and kind of create a better future for the next generation in your family. I know it's really hard to change the generational path of your family. And for you to step out and say, I want to do something different and Better than has happened in generations before me. I really applaud you and appreciate you for that. So to get started with investing, there are really kind of two types of concerns that you should be aware of. The first is I'm saving money for retirement. 1 what is the money getting invested in? Is it getting invested in a stock where I have ownership of a company? Is it getting invested in a bond where I'm lending a company money or a government money? Is it a CD where I'm loaning money to a bank? Is it investing in real estate where I own property? Property? Where is the money going? That is usually a good first question. Kind of a basic rule of thumb on what your money should be in. It should be in a mix of stocks. So owning a company and a mix of bonds, which is lending money to a company, Stocks tend to generate higher returns than bonds, but they're also more risky. So you want more stocks when you're younger, more bonds when you're older, because bonds are less risky and they pay you income to own them. So as you get closer to retirement, you want to own fewer stocks, more bonds. And just as a matter of course, an easy rule of thumb is that you should own your age in bonds and the rest in stocks. So let's say you're 40 years old. You might have 60% of your income in stocks, 40% of your income in bonds. If you're 50, then you own 50% of your income in bonds and 50% in stock. This will kind of give you a nice basic asset allocation that gets more conservative as you get closer to retirement. The second thing to worry about is what type of account is my money in. There are lots of different types of retirement accounts. The most common one is a Roth IRA. And with a Roth IRA you can put away up to $5,500 into an account. And all the money that your investment earns over the years is tax free. You'll never pay any tax on any money that the investment account makes, which is a great benefit. You have kind of a unique situation, or if you can only invest 5, $10 a month or something on the very low dollar amount size when you're first getting started. Most of these Roth IRA accounts have minimums of $1,000 to $3,000. So that can be kind of a big challenge to get to that thousand dollar mark or that $3,000 mark. But there is a special type of account for low income people that want to get started saving for retirement. It's called the Myra or Myra, and it is a program that President Obama set up a couple years ago to help working families, low middle income people get get started when they don't have enough for a minimum for a Roth ira. So what this program is, it kind of functions like an IRA or Roth IRA. You can put as little as $5 a month into it, there are no fees or anything like that. And then you earn an interest rate on the money in there up until the point that you can save up for to have the minimum balance required for a Roth IRA. At which point then you can go to say vanguard.com and set a real IRA up there. So I strongly encourage you to go to the website myra.gov so it's my r a dot gov. Check it out, check out the program, read about it. If you want to get started with investing, you don't have a lot of money to spare. Each month you're on a lower income. That is a great place to get started. And eventually you'll be able to work in into that Roth IRA or full retirement account. I like the MYRA because there are no fees and you can get started with practically nothing. So that is just a really good place for somebody to get started saving for retirement. I also want to say it's important that it's just important to recognize that $5 a month, $10 a month is not going to get you to a place where you can retire probably ever. But I don't want to discourage you from saving either because you can only save $5 a month now, but maybe later you can save more. So I think it's probably more important that you start the habit of saving for retirement more than how much you actually put away each month. So maybe you start out at $5 a month, then you go to $10, then you go to 20 and before you know it you're saving $100 a month or something like that. Or maybe next time you get a raise, instead of spending that raise, you put your raise towards your retirement account. Or maybe you figure out how you can get a part time job or just some extra income you can make every week for 20, $25, you can put that into your Roth IRA. So if you can find a little side job where you're doing who knows what. And if you put that money into your Roth IRA or your MYRA account, that will compound that money a lot faster. So I really think it's important to start that habit of saving and then eventually you'll figure out ways to figure out how you can save more for retirement. So no $5 a month isn't a lot, but it's a great place to start. And then you kind of know you have a bigger goal to work for in the future. So hopefully this will be helpful to you. Sam, again, I'm really encouraged by your question and I wish you the best of luck in trying to permanently change your family tree. So those are the questions for today. If you would like to subscribe to Startup Q and A and get next Monday's show delivered to you automatically, go to the domain startupqa Co and there are links to subscribe via email, Facebook, RSS, iTunes, YouTube and Stitcher. If you enjoyed the show, please go to itunes and take a couple minutes to give us a five star review and say yes, I love the show. You don't even have to write a review. Just click that five star button and that will go a long way in helping us help other people grow their businesses faster and achieve their dreams of financial freedom. So that's it for today. Have a great week.