Startup Q&A #2 - Content Creation at Scale, Automation, Business Debt and More.

Hey everybody, Matthew Paulson here. Today we're going to talk about creating businesses that rely on automation, mentorship, business debt, creating content at scale, and investing in commercial real estate. Let's do this. So this is officially episode two of Startup Q and A, the online video show that helps small business owners, startup founders and entrepreneurs achieve their dreams of financial freedom and grow their businesses faster. Whether you have a dozen employees or you're just getting started, Startup Q and A will give you actionable ideas and advice that you can implement in your business. Before we dive into the questions, I want to share a tip in a segment that I refer to as the Growth Hack of the week. So the growth hack of the week this week is to use web push notifications on your website. Web push notifications are a new browser technology that is baked into Firefox, Chrome and Safari. So if you were to go to MarketBeat.com right now, you will be asked in one of these browsers if you want to allow the website to send you web push notifications. And if you were to say yes to that, you would receive an automatic push notification inside your web browser every day, which when that day's analyst recommendations become available. So this technology allows us to get about 500 people back on our website each and every day, which leads to more advertising revenue as well as higher email opt in rates. And I really think web push notifications are just really a great supplement to email marketing and social media and any other kind of outbound kind of marketing campaigns that you might have. It's effectively another form of retargeting. But you don't have to pay Facebook or Google to run ads to people that have already been on your website. You're just allowed to send them messages for free, which is obviously much better than paying. So it's really easy to set up web push notifications on your website. We use a service called One Signal. They give you a big piece of code, kind of like Google Analytics would, and you just copy and paste that into your website and then your website will automatically be collecting web push subscribers. There is one small caveat to this. For this technology to work, it actually requires you to have a secure website. So your website needs to show up as HTTPs or have an SSL certificate set up. If you don't have that, you can't do that. There is a workaround. It just doesn't work as well and your opt in rates are lower. So for the best possible results, I strongly encourage you to enable SSL on your website to get those higher Opt in rates. I've actually created a whole video guide on how to do this. It's on mathpulsen.com I'll put a link to the Show Notes or this in the Show Notes which are available at Startup Q and A Co that will show you exactly how to enable web push notifications on your website and then automatically send new blog posts to Web Push subscribers. It's a really great technology. I'd strongly encourage you to check it out and implement it in your business. So that is the growth hack of the week. Let's dive into the questions. Every week we take five questions that are submitted through Facebook and through our website. So if you would like to have your question answered, go to StartupQ&A CO and fill out the form on the website and ask your question. So the first question comes from Anonymous. Anonymous asks who are you? What are you doing here and why should we give a crap about what you have to say? That is a great question. Anonymous okay, actually nobody, nobody asked that question. But somebody did comment on the first show and say hey, maybe you should give some reason why people that don't know you might want advice from you or give a crap about what you have to say. So I thought I would just take a minute and provide a little bit of background about myself and kind of share why my advice and expertise might actually be helpful to somebody launching a business. So if you are listening to episode two of Startup Q and A, there is a pretty good chance that you know who I am. But let's just say that you don't. Here's some background About Me I'm an online entrepreneur. I've been doing this for about 10 years. I've built and sold multiple six and seven figure businesses online. My biggest business is called MarketBeat.com it is a daily investment newsletter that we send out to about 425,000 investors. That business does about 2.7 million in annual revenue. We were number 529 on the Inc. 5000 list last year. A couple other businesses I currently run. It's called Google Photo Contest that is a business that helps animal shelters raise money through online photo contest fundraisers. That business has helped animal shelters raise about $4.5 million in the last three years. I run a golf company, I guess a golf publishing company. I'm the chairman of a local angel investment fund called Follows the Angel Fund. I've written several books on personal finance and entrepreneurship. I've been on a number of major business podcasts. You've probably listened to all of them Entrepreneur on fire startups. For the rest of us, Mixergy just go down the line. There's a whole bunch of interviews I've done on my website that you can check out. So if this experience my 10 years experience of building and selling online businesses, if that's valuable to you, keep on watching. Otherwise, feel free to go on YouTube and watch a cat video. Okay. Allen park asks hi Matt, I'm liking your posts. One thing I would love to see you talk about is how you come up with business ideas that utilize automation and have high revenue per employee. I'm not just talking about having good processes that employees follow, but businesses that actually have minimal employees due to value created through software automation. So yeah, marketbee does rely heavily on software automation. We automate as much of our content creation, customer acquisition, product delivery, ad placements, all that stuff, as much as we possibly can. This allows us to run an Inc. 5000 company with literally three employees, including myself. We're able to maintain an 80% gross margin because of this, and that just generates a heck of a lot of profit. So we kind of operate under the philosophy that anything that can be reasonably automated probably should because computers tend to complete tasks much more reliably than people do. And you don't have to pay a computer process to do something, but you do have to pay a person. So I like to build businesses that lend themselves to automation. And the way that I do this is that I build businesses that kind of rely on the acquisition, manipulation and presentation of data. These types of businesses are really easy to automate because there's a lot of repetitive work and that can be kind of automated through software. MarketBeat is a perfect example of this. We have about 30 data feeds and really all we're doing is presenting it to our users in kind of a unique and useful way. There's not a person involved putting together every day's newsletter. It all happens through software. Gogo Photo Contest is another example of this. There's lots of the automation event, but it's all about the software. So every interaction that somebody has with that business is through the software. The people that set up the contest, they use our software to set up their contest. The software runs the contest and then users interact with the software to submit pictures of their cats and dogs for that contest. So really, to have a business that's automatable at scale, that primary interaction between your customers and you really has to be through software for this to work at scale and to only have a handful of employees, yet have a large Business. I also think you need to have a reliable and repeatable marketing strategy. So something that doesn't involve talking to individual customers before they buy. This could be Facebook ads, it could be Google AdWords, it could be SEO, it could be anything like that. But a user should land on your website, read your marketing material, learn about your business and be able to become a customer without ever having to talk to anybody. And then if you can get all that done, yes, there's some work to set up marketing, but those processes kind of scale very well so that one person can set up that whole funnel. But then it can have pretty much an unlimited number of people go through it. There are also some kind of limitations that I have by focusing on these high margin, highly automatable businesses. Really I can't build a business that relies on inventory or physical goods because that takes a lot of people power and it takes a lot of effort to do shipping and to order stuff. It's just a very manual process. So I just don't do those types of businesses. Drop shipping would be feasible, but there's still a lot of individual processing of orders. So anything that relies on physical goods I just try not to mess with because the margins just aren't where I would like them to be. So I'm really able to achieve these great margins over and over again because one, I use reliable and repeatable marketing strategies that don't involve talking to people as part of the the ordering process too. I build purely, excuse me, I build purely digital businesses with no physical products and I build businesses that rely heavily on data that lend themselves to automation. And finally, as much of the customer interaction happens through the software and through our websites, as much as possible. Alright, next question. Tyler Stoons asks how do you feel about investing in commercial real estate, such as a strip mall? So obviously there are some people that have done very well in commercial real estate and I know some people that have built great businesses by operating commercial real estate buildings. A couple comments on this First, I think it's important to recognize that investing in real estate, whether or not that's commercial or residential, it's a business. It is not a passive investment like owning a stock or a bond or a cd. There is actually work involved. You have to maintain the properties, you have to keep them filled. If something breaks, you have to fix it. This is a business. It's just not something that you can kind of set and forget. Second, real estate valuations, particularly in the part of the country that I am, they're pretty high right now. Stuff is expensive and you can't get a really good capital appreciation rate on your money cap. Rates around here are 6, 7, 8%. And I can just do better than that in the stock market and through other investments. So where valuations are at today just aren't really attractive to me. I have done a commercial real estate deal through a company called Bird Dog Ventures that I'm pretty happy about right now. They're buying hotels in small communities in the Midwest and Great Plains and they're using investor money, which my money and some other people's money to do it. I get an 8% preferred return on that up front. And then the other investors and I, and then the people running Bird Dog Ventures kind of split the remaining profit. I really like this deal because there are people that I know like and trust running the show. You know, they do all the management, they do all the work. The only thing I do is collect a check. And it's just much more of a passive investment than other ways that you could invest in real estate. Alright, so real estate can be a great investment in the right environment, but you do have to be the right person for it. You know, if you want to invest in real estate but you don't want to run a real estate business, you know, there are some pretty good limited partnership opportunities that I've done. And then you can also invest in publicly traded real estate investment trusts or reit. A couple that I have money in is Wellmark, that is symbol HCN and then Realty Income Corp, which is just a symbol O. Their valuations are pretty high, so I probably wouldn't buy more right now. But overall I think they're very good companies. So yes, it can be a good deal if you want to run a real estate business, but if not, there are some pretty other good investment options available to invest in real estate as well. A lot of people talk about mentorship, both business and personal. I'm highly interested in this concept. But I'm wondering what's the expectation as the mentee for a service like this? How do I go about finding someone worthwhile to obtain mentorship from? That's a great question, Joshua. So every good mentor mentee relationship that I've seen comes from a personal relationship. There's no service where you can go to and sign up and say, hey, find a mentor for me. You really have to identify somebody on your own accord that would like to mentor you and that you can convince them that you are worth their time. So ideally you'll want to find somebody that is in your industry that has more experience than you do and is willing to help you out, even if there's not a whole lot in return for them, which is often the case. You can kind of identify some of these people by going to networking events in your community or, or you can just stalk people on LinkedIn and find somebody that might be a good fit. So if you've identified somebody that you would love to have mentor you, the first step is to ask them out for coffee. Don't tell them up front before you meet with them that you're looking for a mentor. Just tell them that you'd love to learn from them, you'd love to learn more about their story, and just get help with a couple of things that you're working on right now. Most people that aren't crazy busy or just too important for you will probably take the time to do it. And if you can't get a yes to a coffee meeting, they're probably not going to mentor you, so just move on to the next person. So if you have coffee with them, it seems like a good fit. Ask for another coffee meeting a few weeks later and then at that meeting then you can ask them to meet with you on a regular basis just to have coffee and to mentor you for a little bit. It might be bi weekly, it might be monthly, but at every meeting you have with your mentor, they should give you advice at that meeting. And then between that meeting and the next meeting you should go implement that advice and tell them how it went. I think the more likely that you or the better job that you do, defining expectations up front, the more likely it is that they're going to say yes to your requests. I'm actually currently mentoring somebody else that runs a financial website. He is a bit younger than I am and he's operating a similar business. He approached me very first, humbly asked for some help with a couple of specific issues. I gave him help just to be nice and eventually we kept talking and we figured out a way that we could work together. So he has become an affiliate for MarketBeat. That relationship now generates five figures a month in revenue for both me and him. So that mentorship relationship has really worked out. I value that relationship. So I give tips. Whenever I learn something, a way to make more money, I'll share it with him and he's found value to that. There's not always something in it for the mentor though, but that's kind of okay. Just happened to be in this case, there was. There doesn't always have to be something in it for the mentor, but you do have to respect their time. There are lots of old, experienced, successful business people that would love to mentor somebody that is kind of up and coming in that next generation. But you do have to respect them, appreciate their time, value their experience, and follow the advice that they give you. Otherwise, you know, they're just not going to want to meet with you in the future. Alright, next question Kevin Gilbertson asks How do you create good content without writing it all yourself? You know, this is a tough question because it is kind of hard to outsource certain types of content. You're going to have a really hard time outsourcing anything that tells your story, represents your brand, or just really is supposed to be coming from you because it's hard to hire somebody to write it that can embody your business's mission, vision, values and expertise. So if this is stuff like copy on your website, marketing material, or anything that gets you customers, you probably have to do it yourself. You can make this process of content creation easier though. You can identify what type of content creation is easiest for you. Is it easiest for you to write? Can you do an outline? Can you do a video audio? What is the easiest way for you to spit out information and record your information using that fashion, whether it's writing audio or something else. And then you could take that, hand it off to a copywriter and then have them kind of turn it your bullet points or your narration or whatever it is into something that is more appropriate for the medium that you need it in, whether it's for your website or something else. For more commodity like content, generic blog posts that you do for SEO purposes, you can hire somebody to do that. You do get what you pay for, so you're not going to spend $10 on a 500 word article and get great content that just doesn't happen. So think to yourself, how good does this content really need to be? And then just pay accordingly. For really good stuff, you might be paying $25 to $100 for a 500 word article. If you're not sure where to find writers, I recommend the Pro Blogger Job Board. That's a great resource. You can post a job on there for I think about 50 bucks and a ton of freelance writers will apply for it, assuming you're paying close to market rates. Final question comes from Adam Huber and he says, I would like to know your take on if there's ever a good time, in your opinion, to go in debt for business and if so, what Time frame an acceptable return on that debt would be. Thanks, Adam. So it really depends on the type or the amount of risk you're willing to take and the type of business that you're in. So if you have a business that relies on inventory, you are more than likely going to have to get an inventory loan on your business at some point just to finance inventory. A smaller business that grows organically, like MarketBeat. I never had to raise money from anybody or borrow money from anybody and that was good for me. Adam runs a mobile car detailing business and he is thinking about opening up a shop so you can do more work in the winter and do stuff when it's cold outside. So Adam, for you specifically, I think that really depends on how much risk you're going to take in your business. There is an inherent risk with borrowing money because you are generally going to be on the line for the money even if the business fails. So the bank will come after you personally. If the business doesn't pay the loan, that will happen. So I think if I were you, I would try to figure out, okay, how much more work is this business going to get from me? Then how long based on the money from that work is it going to take me to pay off this loan? So let's say you need to borrow $100,000. If that gives you $10,000 extra in work a month, that you is all profit, you'll pay off that loan in 10 months with your extra revenue, which seemed would be a no brainer for me. On the other hand, if it only makes you an extra thousand dollars a month for a $100,000 loan, that's like an eight year payback and I just wouldn't mess with that because who knows if your business is going to be even around that long. So personally I tend to shy away from money simply because the type of businesses that I run don't require heavy amounts of capital. So I generally don't personally borrow money from my businesses. But if on a higher cost basis of business, if you can borrow money and pay back within a couple years, specifically two years, that's probably worth considering. If you can take out a loan for a business to buy inventory, equipment, a facility, whatever, and get that money back or pay off that loan in two years worth of money from your investment, I think it's okay to do that. Let's move on to the final segment of the show, the resource of the week. In this segment, I recommend a book, a podcast or a tool that can help you grow your business faster. Since this is the first episode I'm doing a book recommendation on, I'm going to recommend my favorite business book of all time. And that is Business Brilliant by Louis Schiff. He debunks a lot of the myths about how famous people get wealthy. So people like Dave Ramsey and Suze Orbin, they teach things and principles that tell people to live on less than they make. To put money in a 401k, and if you do that long enough, you know, eventually you'll become wealthy. But if you look at how these people actually became wealthy, it wasn't that they worked a job and put money away in a 401k and 20 years later they were rich. No, they built giant audiences on the radio and on TV and through books, and they sold products to those audience. So if you. One of the great messages of the book is that if you want to be wealthy like they are, don't do the things they tell you to do. Do the things that they did themselves. And that's really only the first chapter of the book. It gets better from there. So if there's a ton of great stuff in the book, especially on negotiation, that's probably my favorite chapter in the book. There's some good stuff on team building, management. I really recommend that every entrepreneur reads this book. So that is the resource of the week. Okay. I think that's pretty much episode two of Startup Q and A. You'll notice that the production values are getting just a little bit better every week. I'm still waiting on some new equipment to make the video and audio 10 times better than it is now, but I'm gonna keep working on it. Keep releasing a show every Monday. We did change the name. I called it Business Q and A last week. I'm gonna call it Startup Q and A from here on out. I think that's probably a better name and a more accurate description of the show. So there's that. Hopefully this will become, you know, a well polished video program within a couple months when I start kind of figuring out all the kinks. But I'm going to keep doing this, so keep sending in your questions. If you would like to subscribe to Startup Q and A and get next Monday's episode delivered to you automatically, go to StartupQ and A Co, click on the most recent episode and then there's a link to subscribe via email, Facebook, RSS, iTunes, YouTube and Stitcher. Eventually might take me a couple weeks to get all those set up, but I am working on it. You can also personally follow me on facebook@facebook.com Matthew Paulsonpage and on Twitter matthewdp. So, Matthew and then D as in dog, p as in pony. I think that's it for the show. Thanks, everybody. I'll see you next week. Sam.