We have invested in world-class engineering and design talent, but we need help on the data side of the operation. (You will be the 6th person in the company with commensurate equity/responsibilities.)

As things stand, we have a multi-tenant SaaS offering that delivers insights to startups and small businesses using backbone.js and Ruby on Rails with some pretty clever home-grown enhancements. On the backend we are running Postgres for persistent storage, Mongo for document-based storage and ETL staging, and redis for key-value stores and queueing.

The appeal of this role is the opportunity to build something users really need that draws from the best aspects of traditional business intelligence, big data, NoSQL, real time analytics, and statistics. Profitably is building the future of data analytics with a respectful nod to what’s come before, and you will be the tip of the spear.

Responsibilities

This position is an opportunity for an engineer to take ownership of a significant technical area of a fast-growing company. We will match the responsibilities to the candidate, but opportunities include:

• Owning the data strategy
  • Should we replace Postgres with InfoBright?
  • What’s the appropriate level of health monitoring and process auditing?
• Prioritizing customer-facing analytics
  • How would our user base want to view CAC and LTV metrics?
  • Is it worth merging in a Google Analytics feed to automate conversion metrics for the Plan vs. Actual area?
• Owning the data modeling/semantic framework
  • If we continue to use Ruby methods for defining metrics, do we lose on reporting flexibility or gain on design/engineering cycle time?
  • Should we implement a ruby-based MDX interpreter or consider a Mondrian layer?
• Owning the analytics framework
  • We currently use a “pragmatic” trigger-based caching strategy for customer-facing analytics that are too complex to run on demand
  • We would love for someone smart to implement something more elegant, performant, testable, and quick to engineer against
• Owning ETL and RESTful data acquisition
  • Underwhelmed with Pentaho and Talend, we have broken ground on a DRY/agile Ruby-based ETL library that stages raw data in Mongo
  • We would love for someone smart to grow this into something more elegant, performant, testable, and quick to engineer against (or build something from scratch!)

We think these are great opportunities, but we’re also open to the idea that your insights are vastly superior. Just so we’re clear, YOU get to drive this process as we sprint towards a world-class solution.

Compensation

• Cash compensation: “Almost competitive” for a venture-backed start-up
• Benefits: “More than competitive” for any startup
• 100% coverage of health insurance premiums
• $2500 spend-how-you-like budget for initial IT hardware setup
• Equity compensation: “More than competitive” for a venture-backed start-up

Our goal is to make it tough to join our company, but once you do, you’re family. We are dead serious about our mission, and we only bring people in who want to play a pivotal role in its success.

Qualifications

Most of these items are negotiable depending on the candidate, but to give you an idea of what we’re looking for:

• Experience working with real data. Dirty, messy, @&$% data. We aren’t parsing Apache logs, we’re working with real-life, human-entered garbage in.
• Experience with and strong opinions about when/how to use traditional and new data technologies such as Postgres/MySQL/SQL Server, Mongo/Couch, Cassandra/Voldemort, Redis, Hadoop, Mondrian, InfoBright/Vertica, MemSQL/Volt, etc.
• Knowledge of Business Intelligence best practices (even if we choose to ignore them!), statistics, and enough DBA knowledge/skills to effectively manage a outside contractor as required
• Hunger to work autonomously, to take something and rip its arm off Grendel-style, to work both quickly and smartly, to iterate like mad, and to build something people really need
• Preferred: Experience with our existing stack and working environment, including Ruby on Rails, Git, dynamic languages, agile methodologies, financial analysis, and distributed workers

But if we look at other corners of the company, we’ll see something changing. We’ll see that Web-based tools are not only transforming the way business gets done, but also taking it to the next level. Look at what Salesforce has done for the sales team. Web-based tools like HubSpot, Postling and HootSuite are changing the way the marketing team manages social media campaigns and drive inbound traffic. IT has helpful tools like Zendesk for support and droves of project management tools. HR pros have recruiting management tools like TheApplicants and Resumator. The list goes on.

Until recently, finance/accounting was missing out, destined to keep trudging along with Excel and desktop accounting software. But now there’s a wave of exciting innovation happening in our neck of the woods (clearly we’re not biased!). And it’s happening for a big reason: we are the keepers of the numbers—and numbers matter most.

Below we’ve compiled a short crash course covering all you need to know about Web-based software for the accounting team, what some of the most interesting ones are, how they can help, and much more.

To start, people throw around buzzwords like “cloud-based” as if everyone knows what they mean. We’ve learned that that’s not always the case. So when we say things like Web-based or cloud-based when referring to software, we’re talking applications that aren’t sitting on your desktop (i.e. Excel). We’re talking about apps you access online, sometimes for free and sometimes for a monthly subscription fee.

The benefits of apps like these? Well, it depends on your specific use (which we’ll get into below), but here are a few general thoughts:

• Anywhere Access: Who loves the experience of sending an Excel attachment back and forth, over and over? Changes getting lost. Versions conflicting. Formulas getting funky. We didn’t think so. Web-based apps let anyone with permission access a project from anywhere. No more attachments. No more delays. Always up to date.
• Ease of Use: Traditional accounting software has a reputation for being difficult to use and supremely unintuitive. Among those of us developing Web-based accounting apps, design and user experience are our guiding light. Why shouldn’t accounting apps elicit satisfaction and delight? Why shouldn’t data analysis churn out insights and reports that are not only readable but communicable in the monthly board meeting during which everyone dreads having to slog through financials?
• Targeted use cases: You might not want to leave QuickBooks behind after all these years (you’re not alone), but you don’t need to jump into Web-based software both-feet-in. Most solutions these days offer very specific functionality like planning, inventory management, expense reporting and shipping. So you can keep QuickBooks where it is and try out a solution that will tackle one problem for you or your clients.
• Interactivity: When you make a change in Excel it sits in Excel and that’s it. But the Web-based tools we’re talking about interact with QuickBooks or other accounting suites. So when you change something in one place, the data is reflected everywhere else. “One source of truth,” and “don’t repeat yourself” are the names of the game.

So what’s out there?

Here are a couple of the key categories we’re seeing emerge, as well as some of the top players in the marketplace today for each.

Accounting Software

There are lots of accountants who are comfortable with QuickBooks on the desktop and don’t want to see that go away. Conversely, there are others who find it pretty clunky and difficult, and they are looking for something Web-based and easier to work with. It’s that second group that is using tools like…

• Xero: One of the strongest Web-based accounting tools for small businesses comes from—of all places—New Zealand. They have a tremendous footprint in the U.K., South Africa, Australia and N.Z., and have recently entered the U.S. market. Their solution is stable and feature-rich. You will be hearing more from these guys to be sure. ($19-39 per month)
• NetSuite: They are the absolute No. 1 in terms of market share for Web-based ERP solutions, but they are a bit “upmarket” (read: expensive) of most small businesses. (pricing proprietary)
• Outright: A classic venture-backed startup, sort of the mint.com for small businesses ($9.95 per month)
• Indinero: Another venture-backed startup in the space, definitely worth checking out ($0-49 per month)

Planning and Analytics

Here’s your real opportunity to put Excel to bed (at least for some tasks…). These apps help put a plan in place and measure plan versus actual performance. Some provide easy to use reporting on existing accounting data that you and your clients can access easily from any computer.

• Profitably*: Cutting-edge planning software that connects to QuickBooks for plan vs. actual. Our advanced analytics provide insights into cash-flow planning, customer profitability, and employee analytics. (“Planning” is free, and the advanced analytics are $49.99 per month).
• 60mo: Planning software with direct connectivity to source bank data. Rich feature set and beautiful visual design. ($29-49 per month)
• Coreltyics: Dashboard software that plugs straight into QuickBooks and compares to industry benchmarks. ($29-59 per month)
• Qlikview: Perhaps in a slightly different category, Qlikview is a fantastic Web-based Business Intelligence tool that many small businesses are quickly embracing. (pricing proprietary)

Billing and Invoicing

Gone are the days of manually e-mailing clients for money or writing out checks by hand. That would be like manually entering transactions from bank statements. Now it’s possible to automate these processes, not only to save a TON of time, but also to reduce the incidence of errors.

• FreshBooks: The undisputed king of invoicing. If you or your clients submit invoices to get paid, FreshBooks is a lifesaver and a well-established company in the space (starting at $19.95 per month)
• Bill.com: Bill.com does both bill payment (AP) and invoicing (AR) and features a well-known accountant program. ($24-29 per month)

Other apps

There are so many solutions in the marketplace, it’s impossible to put together a short list. There are industry-specific solutions and solutions that solve very specific challenges. Here are a couple examples:

• Expensify: They claim to make expense reports that “don’t suck.” If you or your clients are tired of manually collecting expense receipts and wading through approvals, check them out. ($5 per month per submitter)
• BeneShip: They work with Pitney Bowes and other logistics providers to leverage spend and bring killer deals to companies that ship. Oh, and they connect to QuickBooks, making the process dead simple. (now in beta—get in there for free while you can!)
• AuditMyBooks: They pull your QuickBooks or QuickBooks online data automatically and scan for a broad range of audit flags. Every month, automatically. Need I say more? ($99 per year)

Clearly, there’s a lot going on out there. It can seem downright overwhelming in terms of how fast everything is moving forward. So as you dip your toe into Web-based finance/accounting apps, keep in mind the problems you want to solve, the objectives you are seeking to accomplish, and start by solving those. You don’t have to dump your existing processes to get started, either.

And one more thing. The CEOs of these companies are dying to help you get where you want to go. They’re in this for a reason, and you’re it. So if you’re not sure if it makes sense for you to use their tools or someone else’s, give them a ring. You might be surprised by how candid they will be. I should know—I am one of them!

Adam Neary is the CEO of Profitably (see *), a web app that helps small business owners plan, measure, and execute on what matters: their business. For more information, visit Profitably.com. And to ask Adam anything, email him at adam.neary@profitably.com.

How many of you plan your business with an Excel spreadsheet? It’s OK. This is a safe place. No one’s going to judge. Truth be told, I’m actually a huge fan of Excel. I used it to plan my wedding, to track weight loss, and of course I lived and breathed Excel during my consulting years. But as a business management platform, Excel can be a real nightmare.

Yet so many folks are using it to do just that.
So I suppose if saving time, saving money, and being able to act with confidence matters to you, then you owe it to yourself and your business to have an Excel intervention and see how you can spend your time focusing on the things that really matter like, say, running your business.

But first, let’s look at a few reasons why it’s bedtime for Excel.

Your business is dynamic, and Excel is static

Among larger companies, gone are the days of the formal annual budgeting process. More and more, businesses are adopting a rolling forecast that flexes to the constantly shifting marketplace. These same large companies are swiftly shedding the giant, clunky planning tools of the ‘90s in favor of agile, web-based tools such as Adaptive Planning or Anaplan.

But for small businesses, these names typically mean very little. That’s because the planning is happening in Excel. Based on our research, a whopping 93 percent of small businesses—including those using QuickBooks as their accounting software—are planning and managing their business with a spreadsheet.

The problem, in case we haven’t noticed, is that nothing is static anymore.
Manually keying historical data into Excel is a drag, and manually plying through QuickBooks to understand where you were off target and why the numbers don’t add up is time lost that could be spent thinking about your products and services or your customers. Your business is constantly generating new information, and Excel just sits idly by, waiting for you to fill it up. Then, it provides no “so what” or sense of what’s next.

Even your business model is dynamic

Not only is your data dynamic, but your business model is too. Let’s say you read an interesting article about the emergence of Content Marketing as a fantastic channel for driving new customers your way. You are thinking about dipping your toe in with exciting new tools like Contently or Kapost to help facilitate amazing new content, to facilitate amazing new traffic, to facilitate amazing new business… you get the idea. To fit that strategy into Excel, you’re adding a row here, inserting 10 there, filling down formulas, checking the results. Pretty soon, you realize that you’re spending more time building your business model when you should be building your business.

Because the very nature of your business is unique, and because it evolves, you need tools that are flexible enough to allow you to model out a new channel, or perhaps a new customer segment you’re thinking about going after. You should be able to test out a change in pricing and see the impact to your bottom line instantly. Excel can do that, sure. But it takes so much time to grind it out that most business owners end up following gut instinct rather than owning the numbers. And that’s a missed opportunity.

Everyone else has a web app…

Seems like a silly thing to say, right? But it’s true. The VP of Sales has Salesforce.com. The CMO has Hubspot. Your customer service team has Zendesk. It seems like every area of the business has the aid of smart, fast, cloud-based tools that turn a “one person team” into a one person army.

But what does the CEO/CFO have? What does the capable business manager have for planning, measuring, and executing on the business? They go to war with accounting software from the ‘90s and a spreadsheet from earlier than that. It just doesn’t make sense.

But those times are changing as a wave of young startups build sets of tools for the business manager that finally de-throne Excel as the go-to place to plan your business. And it’s a wave worth paying attention to.

I’m not saying you have to un-install Excel. (To many, it’s a comfort thing.) But just know that if you want to get back to building an amazing business instead of amazing spreadsheets, Excel’s days are numbered.

August was a fantastic month for Profitably, and I thought you would want to hear some of the good news!

Profitably launches Planning and traffic explodes

We just launched our highly anticipated Planning tools, and so far the response has been great. As a matter of fact, without a material difference in traffic to profitably.com, we actually saw more traffic inside our app in the 14 weeks after launching Planning than we saw in the 10 months prior! It amounted to 1,100% growth month-over-month. User engagement is way up. Net Promoter Score is way up. We’ve got work to do, but this is great news.

Among other things, the Planning suite doesn’t rely on QuickBooks, so people can get started straight away. Don’t worry, if you happen to use QuickBooks, we will be able to start showing you Plan vs. Actual shortly. But for all of you who just want to get rolling straight away, our planning tools are free, and you can get started in minutes here.

Profitably wins the 2011 Intuit Apps Showcase ($25,000 prize!)

Incidentally, we launched the planning tools at Intuit’s first annual Apps Showcase. Thankfully, we avoided any last-minute surprises with all that fresh code, and we won! Of the 300+ apps that applied, ~30 were picked as finalists to present at the Showcase, and 4 of us each won $25,000 when a panel of VCs voted us their favorites.

It’s great validation that we’re on the right track, but we’ve got plenty of work ahead.

Profitably in the press

Here are a couple articles you might not have caught:

• “3 Ways To Find Top Talent For Your Startup”
  from American Express Open Forum, featuring Profitably
• “Why Your Business Needs an Excel Intervention”
  by Adam Neary, featured in the New York Enterprise Report
• “A Founder’s Guide to Starting in 6 Weeks”
  by Adam Neary, featured by General Assembly

That’s it for today. Hoping you’re enjoying your summer as much as we are!

Warm regards,
Adam

Adam Neary | CEO
adam.neary@profitably.com
+1 (347) 926-3279
http://adamrneary.com
@adamrneary

1. You’re thinking about starting a company and looking to frame out how the business will work (you’re in the right place)
2. You’ve got a fledgling business already started, but now it’s time to start thinking about how it makes money and grows (you’re in the right place)
3. You’ve got a well-established business but want to be more structured in your thinking so that you can take it to the next level (yes, you’re in the right place)

In one sentence, a business model is the rationale behind how a business creates, delivers, and captures value. But I am not sure that’s a useful description. From my standpoint:

A business model is the combination of

1. a Structure or Framework for how a business works, and
2. the Unit Economics by which it will do so

The easiest way to think about the “Framework” piece is to think about the types of objects being modeled. These are the “things” we are going to plan for and measure later, and they include revenue streams, customer segments, customer acquisition channels, and the like. Somewhat unexpectedly, on one hand every business is entirely unique, but on the other hand, the types of objects being planned for are all the same. Your customers, your products/services, your employees, and your strategy itself are all unique. But you’ve got customers, products/services, employees, and a strategy of sorts in one form or another. Your business model begins by defining those things.

“Unit Economics” is an important term, and all it means is the revenue or cost behind 1 of anything. How much revenue comes from 1 customer? How much does it cost to attract 1 person to your website? How much does 1 employee cost? We will return to this concept later, but for now, the short answer is that once you have a framework for the objects in your business model, you’re going to want to understand the revenue and expense associated with 1 of anything.

You put these two elements together and you have a business model. It might not be profitable, but it’s a start!

The 1-row, 1-minute business plan

You don’t get any points, by the way, for coming up with a more complicated business model. In one row, in one minute, you can plan a business. Let’s say you’re going to become a consultant. Perhaps the unit economics of your new consulting career are that you can charge $1,000 per client, and each client only gets charged once, and that’s it. That’s “Unit Economics.”

The simplest “Framework” could be planning for and tracking how many customers you consult with. Say, 2 this month, 4 the next. 6, 7, 8. 9 the following months, and then you’re at full capacity at 10 per month indefinitely.

Simple arithmetic says that you’ll make $36k in the first 6 months and then $60k in the following. That’s $96k in the first year, and if you had no expenditures to speak of, in one row and one minute you’ve built a plan for the next year. Congratulations.

Then in practice, of course, your business model proves to be less simple than that.

First, you realize that you will need to find those customers in the first place, and means talking to more potential customers than you’re actually going to be able to charge. This is the seedling that grows into Sales & Marketing, but in it’s simplest form you’re going to want to divide up the “stages” of the customer acquisition process. Perhaps prospects convert to leads and leads into customers. There’s a lag time to this process, and there are conversion rates that improve over time.

Then, you realize that customers are going to come from a range of channels, between free word of mouth referrals, web traffic for the site you just launched, paid search, direct sales–with commissions–if you hire a salesperson…clearly each channel will have different potential volume, different upfront and variable costs, and it’s possible that each channel will bring a different mix of customers.

It’s then that you realize that a different mix of customers is something meaningful. That is, not all customers are alike. Depending upon your business, you might have high-value customers or “whales” that bring in tons of cash. You might have pro bono work, or you might give your services away for very little if they are friends/family or if they are a non-profit. These “segments” of customers are a new component of your business model, and each has different unit economics.

But it isn’t just your customers that vary. Your products and services vary quite a bit as well. You may have product segments just like you have customer segments. You may have a tremendous amount of product complexity, which is common in retail business models, or you may have only 1-2 products or services that you offer. This is part of your business model.

Then, to top it all off, you realize that as a part of your new consulting gig, you want to charge for your opinions, but you also want a share of the revenue if you recommend great products. This is a new revenue stream, and instantly your business model has a new level of complexity.

Fear not. This is easier than it seems, and sometimes a one-row, one-minute model is all you need. But if your business is more complex, it can be a very rewarding process to lay out these assumptions once and for all so that you can track against them.

Why?

If you’re thinking about starting a company and looking to frame out how the business will work, a little business modeling can tell you how many t-shirts you would have to sell to break even or how many employees you would need to reach $1M in sales. If you’ve got a fledgling business, a little business modeling can help you put structure around your activities, identify new sources of customers and revenue, and can help focus. And if you’ve got a well-established business, a little business modeling can help prioritize efforts and spend resources where they are going to make the most difference.

Step One: Revenue Streams

Revenue streams are all the different sources of income for your company.

Most businesses have multiple revenue streams, even if the majority of your income comes from a single stream. Depending the size of your business, these revenue streams might map to income accounts from your chart of accounts, they might even map to departments or business units in your business, or they might come out of thin air.

Let’s look at each of these examples:

1. Business units as revenue streams

If your business has grown to the stage where you have multiple business units, departments, or profit centers (all terms for the same concept, essentially), these units are–at a minimum–where you want to start from a planning standpoint. Most businesses will want to plan for both revenue and expenditures for business units, which is why they sometimes show up in accounting software as departments or “classes.” You will certainly be seeing revenue from most if not all departments, so starting there makes sense.

2. Income accounts as revenue streams

More often, if you’re not just starting out, and you’ve already set up your accounting software, the various accounts you’ve created as income are your revenue streams, and you can simply take them to start.

3. Revenue streams out of thin air

If you’re just getting started, and you haven’t set up any accounting software, sometimes it’s easiest just to pull revenue streams out of thin air. Seriously. Take a look at the examples below, and I bet you’ll have a sense for

4. No revenue streams, or “this has nothing to do with my business”

In rare cases, businesses just have one stream of revenue, and they call it “Revenue.” Like I said before, you don’t get extra points for complexity. If this is the case, leave it. You can always come back later to split out different streams as they emerge or if you realize there are some different things you would like to see in on a dashboard. Business plans flex. Business plans don’t judge.

A Personal Gripe about Market Sizing

Entrepreneurs at the helm of new startups are often asked to “size the market,” or estimate the total size of the market they are in. Small business owners often enough have to go through the same exercise when preparing to apply for a bank loan.

One of the most common mistakes–and a personal pet peeve of mine–is when the entrepreneur talks about the size of the market they are not in. Sometimes it’s called something fancy like “distinguishing between TAM and SAM” but the goal is to size your market and not someone else’s.

Leaving the specific numbers aside (they are throw-away), let’s say you’re planning a real estate brokerage business and say that you are in a $700B market because the real estate market is $700B. Well, there’s usually a geographic filter missing: perhaps you serve North America and North America is a $250B market. That’s a start.

But the bigger mistake is that the $250B figure is for the transactions themselves, and your revenue stream is commissions based on those transactions. If the max or average commission is 10%, your market is $25B worth of NA real estate commissions rather than $250B in NA real estate transactions. Similarly, if you are pitching an affiliate “play” in the eCommerce “space” and you’ve identified $100B in transactions annually in your market, if you make 1% on every transaction you facilitate, your market is $1B for affiliate revenue not the $100B market itself.

This is a common and easy enough mistake to make, particularly if you haven’t thought through your revenue streams. But if you have, then the total market size for your business is the sum of the market sizes of each of your specific revenue streams. Get gritty and realistic about how much money there is to be made with each revenue stream, and you’ve got an accurate market sizing…and you’ve avoided my wrath…for today.

Step Two: Customer Segments and Product Segments

Customer segmentation is the practice of dividing your customer base into useful groups.

The types of groups depend entirely upon your unique business, but since you will be looking at the unit revenue of each segment and eventually thinking through how profitable each segment is, this should guide you in thinking through what sort of segments make sense. A few approaches include:

1. Marketing demographics

Factors such as age, gender, interests, spending habits, and so on can be a great way to split up your customers, depending upon your business. These factors may drive very different revenue profiles, or they may just be considerations for Marketing.

2. Tiered bands based on unit revenue or lifetime value

Classic customer segmentation involves the old “Silver, Gold, and Platinum” segments, and if you have millions of customers to juggle, there’s no sense trying to look at the profitability of each. However, you might be trying to plan for high volume customers as separate from the one-off buyers.

3. Unique revenue profiles or business model considerations

Sometimes your business model lends itself to natural groupings of customers. Perhaps one channel delivers customers with 3x the normal revenue because they are higher touch. Perhaps you have a loyalty program, and you plan for loyalty customers and walk-ins. These are customer segments!

4. Industry

Less typically, your customers split up naturally into a handful of discrete industries, and a distinction like this can be quite helpful. Perhaps the pro bono work done for not-for-profits represents a very different type of customer than their “industry” counterparts.

Naturally, it’s just as common to have a combination of the above methods or an entirely different process. Most small businesses have little need for more than 3-5 customer segments, so it’s good to avoid the pitfall of listing out 40 different industries to which your customers belong. As usual, if you can’t distinguish a meaningful difference between segments in terms of unit revenue or profitability, there’s no sense planning for each segment separately. Leave that for Marketing!

A Word or Two About Unit Economics

When you hear Unit Economics, just think, “What does one cost?” Unit revenue is how much revenue you see per customer, and unit cost is what one of something costs, whether it’s an acquired customer, a new lead, a computer, desk space for an employee…you name it.

The reason unit economics is so important to the business model process is that when you begin forecasting volume of anything, you’re typically thinking of terms of how many of something you expect to see. How many shirts can I make? How many customers will come into my store? How many employees will I need to build something, and how many employees to maintain it and service my customers?

Unit economics are typically used to build a model “bottom up,” and consulting speak aside, you know you’re building a bottom-up model if you’re using multiplication (unit economics x forecast volume = unit economics). In contrast, you’re building a “top down” model if you’re using division (total revenue or cost / forecast volume = unit economics). This is important because businesses that are just getting started–and therefore have no historical data–tend to think bottom up by necessity. Those businesses with at least a couple quarters of relevant data tend to think top down by looking at aggregate figures and dividing to get to unit figures. But it’s these unit figures that define your plan, whether you start with them or try to calculate them.

Step Three: Channels

Channels are all your sources of new customers.

In addition to direct sales, most companies now acquire customers through a variety of channels to achieve wider distribution. Whereas your list of revenue streams and customer segments is highly customized to your particular business, the channels by which you acquire customers is likely not (forgiving differences in terminology, of course!). Here are some of the most common channels found in most business models, along with quick definitions and some commentary about which types of industries typically employ each:

• Offline advertising/media

If you do extensive offline (or traditional) advertising, it might be worth breaking up this category further into print, television, outdoor, radio, and the types of subcategories. Despite the meteoric rise of online advertising, these traditional channels remain prevalent and for many businesses highly effective. Providing customers unique discount codes constrained to specific channels is an easy way to track which customers are coming through these indirect channels.

• Direct sales

If the unit revenue or (customer lifetime value) of your business model is high enough, various models of direct sales may make sense. Direct sales tends to be one of the most expensive channels for acquiring customers, but if the model supports it, this may be required. Comparing “high touch” models with extensive pre-sales and a long sales cycle versus “low touch” models with customers initially coming through other channels but then being “closed” in a shorter sales cycle. These two models–and everything in between–can have dramatically different customer acquisition costs.

• Public relations

PR is “free” even though it isn’t. Many companies pay for a PR firm or less formal PR assistance, and then of course there is the cost of your time and your team’s time as you work to produce content and take interviews that will presumably build your brand and drive traffic to your business. At Profitably, we take a proactive approach to measuring PR results in terms of traffic and customers coming through PR channels. You can, too.

• Organic web traffic

Free tools such as Google Analytics help you quickly and easily determine what portion of your traffic (and converted customers) came through organic search. You can even see the terms for which your customers are searching.

• Paid internet marketing

Similarly to direct sales, paid search (Google Adwords, Facebook Ads, LinkedIn Ads, etc.) can be a very scalable means of acquiring customers if the unit economics of acquiring a customer fall below customer lifetime value. This is easy to track, and methods for optimizing your ad spend are well-documented.

• Content marketing

Brian and Dharmesh from Hubspot coined the term “Inbound Marketing” to describe the process of acquiring customers by being available to them with useful content and all the information they need to make informed decisions. An entire industry has evolved around content, including cheap “link bait” crap on one end of the spectrum and very well thought out (and at times expensive) content on the other. You can develop this content yourself or pay for content. Better yet, tools like Contently and Kapost are emerging to help manage the process.

• Affiliate marketing

There are a ton of emerging models around channel partners and affiliates. Depending upon the amount of business you do through these channels, you may want so split out several sub-channels. Affiliate marketing includes any individuals or marketplaces where your product or service may be promoted, typically in exchange for a revenue share. If someone is promoting you and taking a portion of the volume brought in, at some point that becomes direct sales, but the idea is there. Similarly, channel partners are semantically similar but often involve bringing you into a group of their existing customers at once.

• Customer referrals, word of mouth

Never forget to keep track of customers that simply come to you by recommendation from others. It came be difficult to differentiate this form organic search, but when possible, you want to know if someone came to you because they searched for “underwater basket weaving” versus if they searched for you by name after their friend raved about your underwater basket weaving class.

Naturally, it’s nice to be able to attribute each customer to one of these channels, though that can be a very difficult process. There are tools and methods that help you get there, and true ninjas even account for attributing customers to multiple channels. But if you’re not yet attributing customers to channels, the easiest way is to start out manually, even if it means asking customers how they heard about you. You’d be surprised how many will offer this information up happily.
SoSassy.com benefits from great word of mouth for their customer software business, but to transition to product sales online, they need to drive meaningful traffic. They are employing a portfolio of channels to get there:
• Word of mouth, referral
• Content marketing
• Paid search (LinkedIn ads)
• Organic search
• App marketplaces and affiliates
• External lead gen firms
• Events
Stretch has the footprint of a local/online hybrid business. As such, they do a little traditional advertising for local business and a little online marketing. Their business model reflects the following channels:
• Local newspaper advertisements
• Local events
• Word of mouth and referral
• Paid search (Adwords and Facebook Ads)
• Organic search
• Co-marketing with larger brands

Step Four: Stages

Your sales and marketing “funnel” may be simple or complicated. The sales cycle might be short and direct, or it might be circuitous and inconsistent in terms of the number of resources potential customers access before signing on the dotted line.

But from a planning standpoint, it’s best to keep it simple and measurable. What are the 2-3 big headings customers go through before converting, and how can you track those month over month?

• Web-based conversion stages: Visitor, Trial, Customer

On the web, you typically have visitors at the “top of the funnel” that include all unique individuals who visited your site. At the other end of the process, you have a converted customer (paying if you charge or “engaged”–however you define that–if you don’t). In between those two stages, you may or may not have other interim stages, but don’t over-complicate things. If you have a trial, that’s a great stage to capture. Ultimately, you’re going to want to know how many visitors convert to trial and how many trials convert to customers. Dave McClure’s legendary Pirate Metrics for Startups takes this a few levels deeper, though for planning you might just want to track Acquisition, Activation, and Revenue stages.

• Sales cycle stages: Prospect, Lead, Customer

If you have a sales team working leads, the traditionally sales funnel or pipeline involves Prospects, which are all points of contact with a potential customer; Leads, which are a qualified set of potential customers or prospects that meet a set of list-limiting criteria; and then final customers. Your company might have a different set of terms, and that’s fine.

Ultimately, if you are going to forecast customer volume, your business model should provide you a mechanism for doing so that reflects the customer acquisition process as simply and as accurately as possible. At Profitably, we track the volume of visitors, trials, and paying customers religiously–by channel–so that we can focus on what’s working and make more customers happy with fewer resources.

Bonus: Milestones

No business is static. Worse, businesses don’t grow or evolve in straight lines. Often enough, big shifts in unit economics, staffing models, and customer growths coincide with specific milestones. Perhaps you raise funding and hire a ton of people. Or, you are in quiet mode until you launch your product, and then marketing spend shifts dramatically. Perhaps you’re planning to open a second store, and your milestones including breaking ground on the new space followed by grand opening.

Sure, these milestones fit nicely on a timeline in theory, but in reality these timelines can shift quite a bit in a dynamic business.

Tragically, some people don’t believe in business planning specifically because their business is dynamic. They say, “How can I plan my monthly expenditures when I don’t know when we’ll be ready for launch?!” And they are missing the point entirely. “Create a plan just to have done it,” others say, “then throw it away immediately.” What a waste.

It is because businesses are dynamic that it’s so critical to identify key milestones that drive big shifts in unit economics in your business model and major inflection points in your forecasts. You don’t have to throw away your plan when things change. You just need to be cognizant that as these milestones materialize, you will be pushing phases of your business growth foreword or backward, adjusting on the fly.

More, planning around milestones can encourage fantastic discipline. If you define a pre-launch marketing budget and a post-launch marketing budget, it’s that much easier to turn down that event coordinator who’s trying to get you to spend $5,000 at an upcoming event before you’ve reached a critical milestone.

Resources

]]> http://profitably.com/resources/guides/planning-business-model/feed 0 http://profitably.com/about/press/profitably-takes-home-25000-from-intuit%e2%80%99s-apps-showcase?utm_source=rss&utm_medium=rss&utm_campaign=profitably-takes-home-25000-from-intuit%25e2%2580%2599s-apps-showcase http://profitably.com/about/press/profitably-takes-home-25000-from-intuit%e2%80%99s-apps-showcase#comments Wed, 17 Aug 2011 20:18:36 +0000 Adam Neary http://profitably.com/?p=1722 Read more]]> Profitably (profitably.com), a builder of web-based planning and analysis software for startups and small businesses, brought home a $25,000 prize from Intuit’s (Nasdaq: INTU) first Apps Showcase held on Aug 11 in Mountain View, CA. The company was one of four winners, along with Corelytics, Bill.com and Postcard Services. More than 160 developers applied to the Apps Showcase and just 30 finalists were called to present.

“We’re determined to help end the Excel nightmare for small businesses and startups,” said Profitably CEO, Adam Neary. “The idea of a CFO – or CEO for that matter – planning, measuring and executing his or her business in a tired, antiquated spreadsheet is absurd. We’re out to help them save time, save money, and act with confidence so they can spend time on their product and their customers. This $25,000 win shows we’re headed in the right direction.”

Profitably gave a sneak preview into the product’s latest business planning features. With these tools, startups and small businesses can easily map out a business model–for free–in mere minutes. Early adopters have been calling the new functionality a godsend and a refreshing departure from Excel. To learn more, watch Adam tackle the inner-workings of business planning here: http://vimeo.com/26844913.

The judging panel of the Intuit Apps Showcase included David Blumberg of Blumberg Capital, Josh Breinlinger of Sigma + Partners, Eric Byunn of FTV Capital, David Hornik of August Capital, David Mars of White Owl Capital Partners, Cindy Padnos of Illuminate Ventures, Cali Tran of NorthBridge Venture Partners and Tomasz Tunguz of Redpoint Ventures. Those in general attendance and watching via live stream also voted.

“Naturally we are really excited about where Profitably is headed,” said David Mars of White Owl Capital. “Cali and I actually had to recuse ourselves from voting for Profitably since both our firms were already invested. Then again, I suppose an investment is probably the strongest vote we can offer!”

About Intuit Inc.

Intuit Inc. is a leading provider of business and financial management solutions for small and mid-sized businesses; financial institutions, including banks and credit unions; consumers and accounting professionals. Its flagship products and services, including QuickBooks®, Quicken® and TurboTax®, simplify small business management, payment and payroll processing, personal finance, and tax preparation and filing. ProSeries® and Lacerte® are Intuit’s leading tax preparation offerings for professional accountants. Intuit Financial Services helps banks and credit unions grow by providing on-demand solutions and services that make it easier for consumers and businesses to manage their money. Founded in 1983, Intuit had annual revenue of $3.5 billion in its fiscal year 2010. The company has approximately 7,700 employees with major offices in the United States, Canada, the United Kingdom, India and other locations. More information can be found at www.intuit.com.

]]> http://profitably.com/about/press/profitably-takes-home-25000-from-intuit%e2%80%99s-apps-showcase/feed 0 http://profitably.com/resources/newsletters/862011-profitably-newsletter?utm_source=rss&utm_medium=rss&utm_campaign=862011-profitably-newsletter http://profitably.com/resources/newsletters/862011-profitably-newsletter#comments Sat, 06 Aug 2011 19:34:52 +0000 Graham Siener http://profitably.com/?p=1881 Read more]]> Every Company Should Have a Plan

Our bookkeeper tells her clients, "Just because you're making money doesn't mean you aren't headed for trouble." And Profitably wants to help! Thanks to your great initial feedback from our Space Monkey program, the team has been busily building a planning tool that's a refreshing alternative to staring at an empty Excel file. Click through for a few screenshots to whet your appetite, and hold tight for a first release next week!

• Getting Started
• Customer Segments
• Customer Acquisition Stages

Profitably Is Hitting The Streets

We are lucky to have such passionate customers, and we want to keep meeting more! If you're in San Francisco, come watch us launch our Planning tool at the Intuit Apps Showcasenext Thursday. Later this month, we'll be holding a roundtable discussionin our New York officeon using channels to more effectively forecast your revenue.

Lastly, In case you missed it, Adam kicked off TechCrunch's new Founder Office Hours and we got some great feedback from Chris Dixon and Josh Kopelman. The session was so useful, we were inspired to launch our own Office Hours to dedicate more time to helping entrepreneurs like you think through growing your business.

So, that's all for now. I wish I could tell you more but we've got a lot left before next week's launch. Stay tuned and thank you again.

Best Regards,
Graham Siener, VP of Customer Development

PS we've also enabled live chat on our website and in our app. If you've got a question, we can help straight away. This is all made possible by a company called Olark, and we love their product so much we strong-armed them into a great deal — a free month of their "Bronze" package.

]]> http://profitably.com/resources/newsletters/862011-profitably-newsletter/feed 0 http://profitably.com/resources/office-hours/august-23?utm_source=rss&utm_medium=rss&utm_campaign=august-23 http://profitably.com/resources/office-hours/august-23#comments Fri, 05 Aug 2011 21:07:29 +0000 Adam Neary http://profitably.com/?p=1524 Read more]]> Our first livestream-enabled office hours was August 23, and it was a great success in every respect but one…the livestream was awful. I will take responsibility for that. We actually tested all the equipment 30 minutes before the session, and everything worked great. When game time came, however, we had audio and video problems alike.

Hopefully the next session will be better!

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