Jim L.
June 25th, 2010
I know this has been covered many, many times before, but I believe that business plans in the web industry are highly unnecessary and a waste of effort. Business plans can be effective tools for brick-and-mortar businesses, where year over year planning can be more predictable and may be necessary to secure financing, etc. The web industry is a completely different animal though.
A business plan typically consists of the following pieces:
- Overview of the business
- Industry and market analysis
- Marketing and operational plans
- Financial planning
Sure, most of these pieces apply in some respect to a web business, but not to the same degree as a traditional business. Understanding your industry and the competition in your market is important for any business. For example, you wouldn’t want to open a new butcher shop in an area that already that already has a butcher, 2 major supermarkets, and a specialty foods store. In the web industry it isn’t quite as clear. If your new business offers a different experience or an advantage over the competition then you might have a viable idea. A web business will need a separate group of criteria to be measured against before being built.
Marketing and operational planning is the biggest waste of time in the entire business plan process. There is no way that what you write in your business plan will ever come to fruition. Business, especially web businesses, evolve far too quickly. And no one is ever going to update their business plan frequently enough to keep it relevant. Instead of long-term planning, do continuous short-term planning. You will know more about your business and industry next week than you know this week. Think in terms of days and weeks instead of months and years. A business plan is not the place for this type of planning.
Financial planning is much the same as marketing and operational planning. Anything that you put in your business plan is just a guess that is likely to be wrong. Budgeting should be done on more of a weekly and monthly basis. There are far too many variables to be able to create a realistic budget over 6 months in the future. Having broad financial goals is another matter, and is something that I highly recommend doing (as long as they are realistic and attainable).
Tags: Budgets, Business Plans, Thoughts
Posted in Business | No Comments »
Jim L.
May 25th, 2010
Profit and revenue are pretty basic terms when taken at face value. The picture becomes a little bit less clear when you apply them together and try to understand their relationship to your business and growth. A simple equation to understand the relationship is PROFIT = REVENUE – EXPENSES. The proportion of profit to revenue is your profit margin. Seems pretty simple and straightforward, right?
I’ll give a couple of examples to get started. Let’s say that company A has $50,000 of revenue each month with $30,000 of expenses. And company B has $30,000 of revenue and $10,000 of expenses monthly. Both companies have the same monthly profit, but company A has much more expense to achieve that profit. Company B clearly has a better profit margin (67% vs 40%).
So which company is in the better position for the future? Both companies have the same profit, but company A has more revenue. Having more revenue will theoretically allow company A to borrow more. (Have you ever noticed that business credit card applications only ask for the company’s revenue, not profit?) Company B has less expense and needs to make less revenue each month to be profitable. Both positions have benefits, but which is right for you and your company? I believe that company B, in general, is in a better position for future growth because their cash-flow needs are less, allowing them more flexibility and time to grow.
It’s important to think about the profit vs revenue picture when considering new business opportunities or significant new features to your existing business. If the new ideas will get you an extra $10k/month in revenue but will also result in $10k/month of new expense, are you really any better off? What good does increasing revenue do if profit does not also increase? At that point you are just moving from being company B to being more like company A. You have just decreased your margins and taken on new expense. The new expense opens you up to more cash-flow risk.
I would argue that a company that can qualify for more credit, like company A, will at some point need to take on more debt than a company that can’t qualify for as much. If your company produces widgets and has pretty significant cash-flow needs then you may benefit significantly from the added security that available credit would provide. If your margins are high then most likely your cash-flow needs aren’t as great, so available credit wouldn’t help you tremendously. I should make it clear here that I believe in a business having as little debt as possible, but the reality is that many small businesses with lower profit margins will need to rely on available credit at some point; more so than their higher margin brethren.
I suggest the following for all businesses: try to increase your profit without having to significantly increase your revenue. Each incremental improvement in your profit margin improves your cash-flow situation, which is the lifeblood of any business. For companies like company A, you first try to reduce expenses. If that doesn’t yield significant results then it’s time to look at your product offering and see if you can realign to improve margins. For companies like company B, you don’t have as much expense to eliminate, so try to grow your revenues without increasing cost.
Tags: Cash-Flow, Profit, Revenue, Thoughts
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Jason H.
May 13th, 2010
One of the goals for Shrinking from the beginning was to offer a food and exercise calorie calculator. We wanted to not only make it easy to track your weight loss measurements and weight loss goals, but also provide tools to actually help you achieve success. We thought at first this was going to be a big challenge with several weeks of development time, trial and error, managing profiles and calorie data. We decided to move forward and begin the research and development to create this new tool.
Our first task was to see if there was any type of food nutrition fact resources out on the internet that we could tap into for data. We found a handful of databases with raw data for calories, fat, protein, and carbs, but we were not very happy with how some of the search features worked and search results of the data. It looked like we were going to have more development time that we initially thought. We continued looking for resources that provided full API access to data and search features. We came across the FatSecret Platform and quickly realized we had found exactly what we needed to offer this food and exercise calorie calculator.
FatSecret Platform not only offered the food and exercise calorie calculator, but did it with a very easy to use API. The search feature of adding food and exercise to your daily totals was very fast and efficient. It also returned search results in an order that was easy to use and kept with the simple interface Shrinking has. Shrinking quickly interfaced with FatSecret to create a handy three tab interface for Food Diary, Exercise Diary, and a Calendar. Each FatSecret profile is linked to your own individual Shrinking account, so you can track your personal food calorie intake and calories used during exercise. The calendar lets you see your calories eaten and burned on a daily basis by month.
The FatSecret JavaScript API combined with the PHP REST API wrapper class of FatSecret allowed for a very easy integration! Following are the details of how we implemented this new feature.
We first off had to figure out a way to get existing users’ profiles to work with the FatSecret API and simultaneouly work with new users. We start off by having a user accept the Terms of Conditions, which is a link to the ToC on the FatSecret Platform website. Once they accept and continue, we use that time to store the fact they did agree to the ToC, but also gave us a chance to create the profile on FatSecret. This gave us the perfect situation to call FatSecret->ProfileCreate and pass in the user_id of the Shrinking user, existing or new.
The FatSecret ProfileCreate returns a token and secret key that we store locally in the Shrinking tables for that user. When a user visits the Food Diary tab of their account in Shrinking, we make a call to the FatSecret->ProfileRequestScriptSessionKey passing in the saved token and secret key of the logged in user. The ProfileRequestScriptSessionKey returns a session_key that we then pass into the HTML view of the Food Diary. That session_key is used as a variable when we make the call to the FatSecret JavaScript. By passing in our Shrinking FatSecret API key, along with the generated session_key to the Javascript, we can populate a canvas with the FatSecret returned interface, and then we can style it using CSS to match the Shrinking interface.
Shrinking food and exercise calorie calculator powered by FatSecret Platform
Tags: API, Development, integrations, PHP, Shrinking, tools
Posted in Development, Tools We Use | No Comments »
Jim L.
April 22nd, 2010
We’ve added a major new feature to Shrinking over the past couple of weeks. Now you have the ability to track your diet and automatically calculate calorie consumption. Check out the Shrinking blog for more details on this helpful new feature.
Tags: New Features, Shrinking
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Jim L.
January 15th, 2010
We’re excited to announce that our latest project, Shrinking, is now live. Shrinking is an easy to use weight-loss tracker that helps you stay on track on your journey to weight-loss. Check us out and signup for a free account.
Tags: Launch, Shrinking
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Jim L.
December 29th, 2009
The MediaLeaf team is extremely happy to announce that SparkCDN is now live! SparkCDN is the content delivery network for everyone. Our approach is different from the big guys. We believe that there should be no contracts or expensive minimum spends each month.
SparkCDN offers Flash and Windows Media live streaming, regular streaming, and progressive downloads. Spark also offers a full-featured CDN solution for your web files so that you can improve your page load times.
Tags: Launch, SparkCDN
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