Best Startup Advices from Rob Rawson, a Founder of Staff.com

Startups with Rob RawsonEntrepreneurs face many challenges when starting small or global internet businesses. I’ve been there and done that before. Actually, nowadays I am still going through interesting business development stages running a global recruitment platform – Staff.com. Before I started my first worldwide software business (Timedoctor) I also succeeded in a few smaller startups. I’d be happy to share my business and marketing experience with those who want to start a small or big internet business.

Do you need to raise money to start a business?

Well, in my mind, it depends on what type of business you’re going to start. Some businesses don’t require any capital or only a very small amount of capital.    For example, a service based business where you offer services for web-design or SEO companies don’t require any capital at all and can be started very          easily.

Other businesses may require a lot of capital to start. Specifically businesses where you already have a winner who has taken all or most of the market. For example, if you want to compete with eBay – it’s almost impossible. If you decide to start a new eBay style website in a niche market, it will require a lot of capital, because you must gain traction for marketing with marketing dollars. In other words, with an eBay style site you need to have the sellers and the buyers in place right away. If you don’t have that, then it’s of no value to the people who visit the website.

So, in that kind of website you need a LOT of money and if you try to start without a huge investment you will almost certainly fail. Still, there are many type of businesses you can start with minimal capital.

Do you need a geek on board to start a technology business?

For example, I’m not a software developer, but I do know a lot about programming. I’ve worked with hundreds of developers and gained a massive technical background even though I’m a doctor by profession.

In my opinion, for software businesses like mine, some elements will require more capital and expenditures, but a purely software business can be started without capital if you’re a software developer. If you’re not a developer and you want to start a software business, then you need capital to pay for the developers, which is a bit more difficult.

Even if you have the money to hire developers you may face the common problem of trying to create a company that’s built on technology. If you’re a technology company you must have a technology brain trust in a leadership position. You need to have a geek on board. Why?

The only constant in a tech business is “change”. A good software will never be totally accomplished and relevant to the current time. It will always be in the middle of a change. You have to know the technology inside and out to be able to anticipate where things are going. Otherwise you may spend millions to do work that will be worth just $100,000.

You better have a geek on board if you're starting a technology business

OK, let’s say you’ve developed a website. How can you make people find you?

There are a lot of marketing strategies we use that require a small amount of money or even no money at all. Those are the strategies we started with. So the first was: content marketing, which means blog articles or cool explainer videos or infographics or different types of content that is valuable, useful, interesting and educational to people. This type of content requires a lot of time to build up and promote on the internet.

It’s a very good strategy, because it doesn’t require any investment other than time. The other thing that’s great about it is that it continues to bring traffic to your website for a long time into the future.

For example, we once did an article that compares different outsourcing platforms. It talks about oDesk and eLance and different platforms and compares them, how they work and what their advantages and disadvantages are. It’s a very long, detailed article, which I wrote more than two years ago. That article is still getting a lot of traffic and interest from people that find it on Google many years later.

Is Google Adwords a good option to start with for a startup?

At Staff.com we did try advertising on Google Adwords at the beginning. We weren’t able to spend money and get customer sign up at a reasonable cost, so we didn’t continue very much with Google or Facebook advertising.

But generally, Google Adwords is a good thing to try, because it’s very specific. You can find people, who are searching for some exact phrase. And if you choose the keywords correctly, so that they are very related to your customers and what your customers are looking for, then you can get good results on Google Adwords advertising.

You should understand though, that if you’re going to advertise on places like Google Adwords then you may need to have some capital. It will also take some time to get that money back. Most people who are advertising get their money back only after three to six months or even a year. In fact, it’s really difficult to find advertising that will pay back immediately within one month or on the first sale from the customer. Something like that usually requires a lot more time: 6 months to a year.

Our advertising, for example, requires a year for you to get your money back and after that you’re making a profit. This means that you will need a lot of funding to fund the advertising over the course of a year, creating a loss in the first year and then beginning to make a profit after that. I think the realistic timeframe is at least more than 3 months and in many cases, up to a year.

If you’re advertising on Google Adwords and you spend, let’s say, a $100 to get a customer and your customer is paying you $25 a month that means that it will take you 4 months to gain that $100 back. You need to look at it on average from all the costs that you’re spending on Google Adwords versus all of the revenue. You can also optimize it by removing some of the less effective keywords that are not paying back over a short period of time. That way you could get the length of time down from 6 months to perhaps 3 months.

Is it better to invest in the product development or marketing?

In our case, we are spending a lot of money on product development. I’m focusing on making a product as good as I can make it. I’m spending as much money as I can on product development. That doesn’t mean that it’s a choice between product development and marketing. It is a priority for me to focus on the product development.

If I found marketing that would pay off in the short period of time such as 3 months – then I’d definitely spend money on that advertising or marketing method. However, it’s extremely hard to find those marketing methods and I personally haven’t found any. So, you can choose whether to spend money on other forms of marketing or hiring somebody that may not pay off in the first year. Realistically, it may take more than year for that marketing method to pay off.

For example, I can hire a very good content development person to write articles for my website or someone to build strategic relationships with other companies. That person might have quite high salary if they had experience in this before. This is probably a reasonable thing to do in terms of marketing, however it’s not a guarantee that it will pay off in a short or even in a long period of time. So in this case, I’m actually not prioritizing the marketing for where I am in the business now, because I believe the product development is more important. I believe that if I can make a product as good as it can possibly be, then that is going to lead me to long term success success. This is the same philosophy that companies like Facebook and Twitter had – they were always focused on making best product possible, and they were not as focused on marketing. But this strategy is not for every company.

I think that for some companies it’s more important to get revenue in the door and to start marketing sooner rather than later. Getting customers may be much more important than the product development. A service business where you’re doing web-development, for example, you shouldn’t be spending a lot of time building up your website, because you don’t have a product in this case. You should be spending your time on marketing and on sales and prioritising that. So it does depend on the type business that you have.

How long does it takes to succeed in a start-up?

If you’re starting a software development startup it can take a lot longer than 3 or 6 months, because you need to build the software, you need to adjust it to the market and you need to constantly get feedback from the customers and improve the software.

If you’re starting a service business, such as a SEO agency, then it will take less time to succeed. You should be able to get money in the door within 3 months. The focus of the company should be getting customers in the door and after that, delivering on the sales.

If you get hit by a bus, is Staff.com still producing income the next day?

Yes, it does continue producing income, because the website and business is all automated online. If people sign up, they’re automatically charged every month on their credit card, so everything is automated.

But if something happens to me, the business would have a lot of trouble trying to continue for multiple reasons. If we cut our costs, we could potentially continue for a while, but I’m the main person the business is relying on at the moment. It is my hope that within a year or two, the business will no longer rely solely on me.

What will it take to organize a sustainable global business that will work without the founder?

I’d need to have trustworthy people that can do all the things I’m doing in the business, which means we would need enough money coming in the door to pay for those people. That’s ultimately what I should aim for. I should delegate everything that I’m doing now to someone else.

As the leader of the business it’s not my job to do everything, it’s my job to find great people, who can execute the vision, but that requires enough income to be able to pay those people. That’s why I need to increase our revenues to be able to afford the salaries for those reliable people.

What if your “trustworthy” employee becomes a competitor one day?

I think there are thousands of competitors in most cases to your business, so you do not need to worry about somebody else becoming a competitor. It’s not going to cause you any harm in most cases. You shouldn’t worry that you’re creating another competitor.

You should however, delegate at the time when you have enough income coming in to be able to pay for those people. So if your business is not earning enough money then it’s not the right time to be hiring lots of people. It really depends on where you are as a business and how well the business is doing.

In the summary, I’d like to share a cool question I was asked on the podcast of “EntrepreneurOnFire”:

Entrepreneur on fire question to Rob Rawson, founder of Staff.com

Take your time and answer that question yourself. This small exercise will never harm an entrepreneurial mind. In the meantime, you are welcome to consider my response:

“I think one of the best ways to start out is with services, because you can just get one client and you can make $4000 a month just from that one client. So I would use $500 for internet, then I’d e-mail 500 local businesses in my area that needed improvement that were already online. Maybe they had a website, but they didn’t have a mobile responsive website, maybe they didn’t have mobile app and then I’d say: “Give me a contract of $4000 a month”. And I’d actually use that money to hire some staff to execute on the contract. I’d probably offer to come in for free for one week as a consultancy just to help give them advice on their online marketing strategies. Maybe I can get 2 clients at $4000 or maybe 4 clients at $4000, make $8000 profits a month and then use that as a base for my living expenses to build up some resources. From there, I would look at how I can build an automated business or how to expand from that service based business.”