Startup Q&A #9: Online Business Tools, Health Insurance, Finding Investors, and Formal Education

Hey everybody, Matthew Paulson here. Today we are going to talk about software tools, finding investors, health insurance, and whether or not you should get a college degree before starting a business. Let's do this. This is officially episode 9 of Startup Q and A, the online video show that helps small business owners, entrepreneurs and startup founders achieve their dreams of financial freedoms and grow their businesses. So whether you're just at the idea phase of your business or Whether you have 100 employees, startup Q and A is the show that will give you actionable ideas and advice that you can implement in your own business. Now, before we dive into the questions, I wanted to share one of the best business books that I read last year in a segment that I call the Tip of the Week. That book that I'd like you all to read, especially if you're going to start any kind of business that has recurring revenue, is called Automatic Customer by John Warrilow. So if you ever want to start any kind of business where people pay you automatically every month for some kind of service, the Automatic Customer is the book that you should read because it gives you several different examples of business models that involve recurring revenue, how they work, how to do marketing for them, and then it also shows you the metrics that you have to make work in order to scale kind of a recurring revenue business. So you'll learn what things like customer acquisition costs mean lifetime value and really kind of what the math equation has to be in order to build a successful scaling recurring revenue business. So I highly encourage you to read the Automatic Customer by John Warlow. If you ever wanted to build a business that has recurring revenue. Recurring revenue is just a very. It's a great idea for business because when you're selling something that's a one off every month, your sales are starting back at zero and then with recurring revenue, the money just comes in automatically. So you know, MarketBeat has a strong recurring revenue component. Subscriptions make up about $50,000 a month in revenue for us. And that money comes in whether or not I'm in Hawaii or I'm in my office here working. So it's kind of nice to have that pad. That 50 grand in revenue covers all of our expenses. So we know that if we get no advertising revenue at all in a month, you know, we're still covering our expenses, we're paying our salaries, everything's good to go because we have that reoccurring revenue component in place. So check out that book that is the Tip of the Week. And with that we are going to dive right into the questions. So every week we take four or five questions that are submitted to Facebook or or through our website. So if you would like to have your question answered on Startup Q and A, go to the domain startupq and A co and fill out the form to submit your question. Okay. The first question comes from my friend Jamie Masters. She is the host of the Eventual Millionaire podcast. If you've never heard it before, go to eventualmillionaire.com, check out her show. It's great. I've been on it a couple of times. I highly recommend it to other online entrepreneurs. So Jamie writes. I'm working on writing an ultimate post about the tools millionaires use in their businesses. I'd love to hear about some of the tools you use to run MarketBeat. What are some of the tools that you use in your business? Especially the ones that maybe no one has ever heard of before? So I think I want to share five different tools that I use to kind of run MarketBeat on a day to day basis. Some of them I've talked about in the show before, some of them I haven't. Some of them. So let's just kind of run down that list of some of the tools that are really important to me to markbeat as a company. The first is cloudflare. Cloudflare is kind of a web based firewall and content delivery system. So it makes your website run super fast. It prevents your server from being bogged down. It's kind of something that sits in between the Internet and your web server and it caches a lot of stuff, you know, images and scripts and CSS files so that those files are served from Cloudflare and not from your server. So it kind of increases your server capacity by, you know, lightning the load on your server. It also blocks a lot of malicious traffic. So if you have like a WordPress website, there are all sorts of bots and things that Try to hack WordPress websites for black hat SEO purposes. Cloudflare will block that stuff before it ever gets to your server. That's very important. If you've got somebody trying to DDoS you, Cloudflare will kind of stop that because you can block IP addresses and they can block a lot of that bad traffic before it gets to your web server. We use cloudflare on all of our websites. It's been a great addition. That caching layer has allowed us to live with maybe half the servers we would. Otherwise it really doesn't cost much. They have a free tier and they've got a $20 a month tier and a $200 a month tier. All of our sites are on at $20 a month tier. And it has definitely been worth it to us. The second tool that I want to highlight is Zapier. I think it's pronounced Zapier, but it's a tool that connects different web applications together. If you've heard of the service called if this, then that or Ifttt, it's kind of like that, but it's much more on an enterprise level for quality and it's got some better integrations. And you can use multiple accounts for the same service where like with if this, then that you're limited to kind of one account on that service. So say you want to connect to Twitter and you want to post something to say 10 different Twitter accounts with if this, then that you need 10 accounts. With Zapier, you need one Zapier account. And it just makes it a heck of a lot easier. It's more reliable, more consistent. You know, in Zapier we just, it's a very valuable tool in our business. So for MarketBeat, we use Zapier to automatically post content from our internal system to StockTwits and Twitter. That's been a very valuable integration for us. And we also use it to move stuff from our from Stripe and our internal system into QuickBooks. That's been a helpful integration. So it really makes working with other people's APIs really easy. You don't actually need to be a programmer to do it, but if you've always thought, you know, it would be great if, you know, if I did something with Facebook, it happened over here too. Zapier is kind of the tool that can make those automations happen for you without a lot of custom software work. The next tool is called Mail Monitor and this is particularly relevant to people that run email marketing businesses or businesses that involve email marketing. But one of the things that cause people to lose money with their email marketing strategies is the messages that you send never get to your subscribers inboxes or they get stuck in a spam folder and people just never see them. Mail Monitor is kind of an early warning system that will say, hey, at this particular isp, all of your messages went to spam. You should probably try to do something about that. So the way Mail Monitor works is you add a list of email addresses that they give you to your mailing list and then whenever you send out a mailing, you'll be sending it to Mail Monitors addresses too. You know, at Hotmail and Gmail, And Yahoo and aol. So they can say, hey, for this particular campaign, all of the messages sent to Gmail or AOL went to spam. Maybe here's why I did that and what you can do about it. So Mail Monitor is a great way to make sure that your messages are actually getting into the inbox. The next thing is ManageWP. We've talked about this on a previous episode, but this is a tool that lets you manage all of your WordPress websites in one place. So you can do updates, backups, install plugins on multiple sites at once. If you run more than say five WordPress websites, I think ManageWP is an invaluable tool that you should probably be using in your business. The next is kind of a set of three tools from Google, but it is Google PageSpeed Insights, the Google Mobile Friendly Test, and the Google Structured Data Testing tool. So these are three different tools that I guess kind of lumping together that Google has created to help webmasters build websites and kind of publish them in a way that they would like you to. The Google Mobile Friendly test will tell you whether or not your website it's mobile optimized and if it's not, how to like what specific things you need to do to fix it. You know, Google is really trying to get people to do mobile friendly websites because you know so many people are browsing the web on smartphones now. If you don't have a mobile friendly website, your site's not going to rank well on Google when people search on phones. And I think that's only going to increase over time. So you really want to have that mobile friendly website and this tool will help make sure your site is mobile friendly. The PageSpeed Insights is a tool that tests how fast your website loads and if it loads slowly, it tells you what you can do to fix it. Page load speed is very important because every second that you add your page load time, that is a higher likely chance of somebody just abandoning your website and forgetting about it. You really want to have your site load in under three seconds. If your site takes longer than that to load, people are just going to leave and never think about your website again. So you know, if you can increase that how fast your website loads, you'll make more ad revenue. Your customer or your website visitors will be more sticky. It's just a very important thing to do. And Google Structured Data Testing tool, it's a relatively new thing that most people don't use, but a trend kind of recently in I guess search engine optimization is that there are now different ways that you can give Google information about your webpage that you couldn't before. That's kind of in a structured way so that if, say I have a news article, I can say here's the title, here's the author, here's the image, here's the description, here's the keywords, a bunch of different stuff like that. And then when Google wants to put that into say Google News or whatever or like a rich snippet or something, they have all those structured pieces of data that they can use. One way we use this on MarketBeat.com if you search for like site MarketBeat.com and then the name of a company you'll see in the search results there are star ratings. So we can say this stock is a four star stock based on what analysts say. And that makes some really nice kind of search results that people are more likely to click on than those that don't have it. So we've really been able to ramp up our search traffic by adding those review snippets in. And there's lots of different ways to do snippets, but that's how we've done it and it's been a nice little SEO play for us thanks to Google Structured Data Testing Tools. So those are kind of the five tools. Cloudflare, Zapier, Mail Monitor, Managewp and then a combination of three between PageSpeed Insights, the Google Mobile Friendly Test and the Google Structured Data Testing tool. Those are some tools that we use in our business. So the next question comes from an anonymous reader or viewer and they ask how do you navigate insurance as a self employed individual? So first I want to say don't try to be an expert on this yourself. Insurance is really complicated and you're busy running your business. You don't need to become an insurance expert. So what I recommend is that you find an independent insurance agent that can sell from multiple different health plans. Here in South Dakota in Sioux Falls, I use a gentleman named Jesse Haller, friend of mine, I was roommates with his brother in college. But he runs company called Compass Financial Group. And one of the things they do is they sell insurance for all the major health plans in the state. So you can go to somebody like Jesse and say, hey, we need health insurance. I don't get it from my day job. I don't have a day job, so help me figure this out. He can say, well if you want to be on Stanford, you should do this plan. If you want to be on Avera, you Should do this plan. Here are kind of the best two or three choices for you and then you can pick. And he sets it all up for you and it just makes it really easy. So if you're self employed, I strongly recommend you find an independent insurance agent. Let them do that search for you. They know what to look for, they know who's got the most competitive rates, all that good stuff. I'd strongly recommend you check out an independent agent. Little story about that. This year, state I'm in, there's a company called Walmart that I had insurance through. They decided to exit the individual insurance market. So they basically said, so Matt, we're not going to renew your insurance next year. Go find somebody else. We don't want your business. They're like crap, what am I going to do? I've got kids that are in therapy. There's a lot of stuff that they need. So I had to go find a new insurance provider. It could have been a catastrophe. But I just emailed Jesse and said figure this out for me. He found a new plan that let us keep almost all of our doctors and stuff like that. It didn't go up by 20% this year like everybody else did it. It was within $20 of what I paid last year, which is amazing given what the insurance market is doing lately and just how much health insurance is going up every year. So this year I got a reprieve from crazy price increases. I'm spending like $1,400 a month for me, my wife and my two kids. Still a lot of money, but it could have been a lot worse than that. A couple notes, other just things to consider. You don't make a lot of money. You might qualify for a subsidy under the Affordable Care Act. So you can go to healthcare.gov, type in all your info and they can tell you whether or not you'll get a subsidy towards your health insurance payment from the government. So if you have a family of four, I think you can make up to $92,000 a year and still get some kind of subsidy under the Affordable Care Act. And who knows how this is going to change over time. With a Republican controlled Congress and presidency, it will change at some point, but it's not going to change this year probably. So that is out there right now and you might as well take advantage of it while it's there. Second, I want to open up your mind to some health insurance alternatives that are out there. So there are a bunch of religious based medical sharing groups. Most of these are Christian based Organizations, but there are companies like Medishare, Samaritan Ministries International Christian Healthcare Ministries and Liberty Health Share. And these are kind of, they function like insurance, but they're not really insurance. It's basically a group of people getting together saying, hey, we'll pay for each other's medical expenses. There are some caveats to this. Well, first, they tend to be a lot cheaper than traditional insurance because they're not regulated. So, you know, I've seen people, you know, pay half of what they would for health insurance through these types of things. Works out really well for them. But they don't always cover everything. You know, stuff related to alcohol and smoking and sexual, sexually transmitted diseases. Sometimes these aren't covered because these religious organizations say you shouldn't be doing that stuff anyway. So we're not going to cover you if you get yourself into trouble with those things. There's also not a guarantee that they're going to pay all of your medical bills that could get you into trouble. There's no like legal guarantee anyway to say they will, but that's out there. So these can be a good thing. Maybe if you are really healthy and don't use a lot of medical care, but if you have some significant medical needs, like our family does with their two premature children, maybe that's not something for you to look into, but it could be good for you in the right situation. Definitely check it out if you're trying to save some money. Those organizations are out there and are worth considering. So the next question comes from Katy Day. And Katy Day asks, how do you find investors to invest in your business? So first you have to understand whether or not you have an investable business. And there are kind of two criteria that are a good place to start to figure out if somebody is going to want to invest. So first, do I have a team in place? Am I more than just me? If you are the business, it's probably not an investable thing. You really need to have a team in place. You need to have systems, employees, something that's just more than you and what you do because if you get hit by a bus, the investors lose all their money. If you decide to quit doing a company, they're out of money. So if there are three of you instead of one of you, that reduces the risk for investors. So investors love to see teams over individuals. So if you can get a team in place that is always preferable to investors over an individual. Second, you need to have kind of a high growth type of business that can grow to 78 and even nine figures in annual revenue. So if there's no kind of clear path for you to get to being a really big company that makes lots of money, if you're just going to be like a local restaurant or retail store, that's going to be tough to find an investor for. And the reason for that is that angel investors, venture capitalists, they're making really high risk, high reward kind of investments. As an angel investor, I know that 7 out of 10 companies that I invest in are going to fail. So the two or three companies out of 10 that I invest in really have to pay for the losses of those seven or eight that are going to fail. So I really need to get high returns on companies that succeed. So I have to focus on companies that can grow big so I can get the returns that I need to cover all of those losses. 7 out of 10 will fail. 1 or 2 will be kind of a first base hit where you get your money back or maybe double your money back. And hopefully one out of 10 will give you that 30-60x kind of return on your money that you're looking for as an angel investor. So if you have a scalable business, you can then go out and look for investors. The way to do this is to find other companies in your space. So let's say you're an educational technology company like my friends over at Montesorium. If I were them, I would go find other edtech companies that have recently raised money and try to make a list of their investors. So I would get that list of companies. I would look them up on angellist and Gust and Crunchbase and any news articles I can find about them and make a list of people that have invested in that company. And it's actually a lot of the information is out there, you just have to go find it. So if you can find it, make that list. You've got a list of people you can pitch to. Then you start cold calling, cold emailing and say, hey, we've got this thing. We'd love to get some feedback or advice and just go down and have all those meetings. And that's a good way to find investors. The other opportunity for early stage kind of capital are angel funds and venture capital groups. I run one, it's called Follow the Angel Fund. So there are groups of angel investors that pull their money together into a fund. The goal is to kind of diversify a little bit and invest in a bunch of different companies that are all in that early stage that have high growth potential. But haven't gotten there yet. So at Falls angel fund we've raised 1.35 million to invest in 10 to 15 high growth startups. And we're actively looking for companies to invest in that meet our criteria. So there are five of those in the state of South Dakota and there's probably a lot more of these in bigger states than ours. But these groups exist. So if you can find them, get on their radar, apply to pitch, show them that you're credible, get in front of them, that can be a great way to raise some money. In addition to any individual investors that you might find, I think it's also important to recognize that you're probably going to have multiple investors. So you're raising a million bucks. It's probably not going to come from one person, it's probably going to come quarter million from one person, 100,000 from a few people, 50,000 from a few people. There's going to be a breakdown like that where you've got a whole cap table of people that have given you money for part of your deal. That's a more likely scenario than having one big investor giving you money. So that's kind of the idea advice that I give to people. One, make sure you have a scalable company. Two, find investors that have invested in similar businesses or in like similar geographic locations as you have. And then three, also look at angel groups and venture capital groups and see if there are any other opportunities to pitch there. The next question comes from Lisa Gruen and she asks, do you recommend a formal education for a new entrepreneur like a BS in Business administration, an mba, a basic accounting class or anything like that. So I guess the short answer is no, I don't recommend you go out and get a college degree before starting a business. I have no formal business education and I somehow managed to build multiple six and seven figure revenue businesses. And I've never taken an accounting class, a business math class, marketing class, anything like that. I kind of learned on the fly. So there are plenty of successful people that have, you know, much more successful than I am by a factor of 100 or a thousand that have just really hit it out of the park. People that don't have college degrees. So people like Ted Turner, Mark Zuckerberg, Michael Dell, Sheldon Adelson, Larry Ellison, Bill Gates, Steve Jobs. None of these people have college degrees and they've all managed to become billionaires. So clearly it might be good for some people. But obviously you don't need a college degree to be successful. So I really recommend, you know, A college degree is, I think it's good for some purposes and good for some careers. So if you want to be a doctor, you want to be a lawyer, you want to be an engineer, you probably have to go to college and go learn those things and do it the hard way and become, you know, get that qualification to do those careers. You know, a liberal arts degree, not going to do much for you. A general business degree, if you want to go to college, you might do it anyway. But you don't need that business degree to start a business. You just don't really. You want to if you don't have that knowledge in place about basic accounting and marketing and corporation, all that stuff that goes with a business. Just read some books, talk to some people, get advice from people, do kind of on demand learning. So like, oh, I need to incorporate my business, how do I do that? You go read a book on how to incorporate your business, you learn that one thing, you go do it and then you wait for the next thing to come up that you don't know how to do, and then you learn how to do. That college degree is going to take you four years to do, maybe three, who knows. But it's just, it's a lot of time to delay starting a business. And by the time you're done with that degree, maybe you've changed your major and you've just given up on a business idea altogether. But that is a long time to delay if your end goal is to start that business. So I'd say skip the degree, start your business and just go ahead and learn on the fly. And you will probably get your business off the ground sooner and get a lot more done than waiting and getting that college degree. So those are today's questions. If you would like to subscribe to Startup Q and A and get next Monday 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. You can also follow me personally on facebook@facebook.com MatthewPaulsonPage and on Twitter. My ID is MatthewDP. So Matthew and then D as in dog and P as in pony and then you can find me there. Also, if you enjoyed the show, take a few minutes, go on itunes, leave us a five star review, tell us you love the show or you hated it, that's fine too. But reviews on itunes are a great way for us to reach more people with the message of financial achieving financial freedom through starting, I guess, high growth scalable businesses or even lifestyle businesses. But really the goal of this show, I'm not making money from it. I'm not getting famous from it. I'm certainly not getting famous from it. I do this for you guys. I want other people to build successful businesses like I built and get the kind of lifestyle benefits that I've gotten from it. I can do whatever I want now because I have this business. If I want to take a day off work and play with my kids, I can do that. Because I've done the work for the last several years to build this business. I'm now in a place where I really am the master of my own destiny. I don't have a boss other than my wife. I see the value in doing your own thing and creating your own income separate from a job. And I just want that for. I want for everybody else what I've gotten for myself through entrepreneurship. I really believe being an entrepreneur is really the best way to have a great life because you are the master of your own destiny. And if you can just help spread this message by telling people about startup Q and A, that'll help me help other people achieve their dreams of financial freedom through entrepreneurship. So that is the show. I think that's it. Thanks for watching. I'll see you next week. Sat.