Cash flow vs Profit

Cashflow positive means: More ‘actual’ cash money is coming in than is going out. It does not mean revenue exceeds expenditure. It means physical cash or bank desposts – not promises to pay.

So in order to break it down for the startup crew out there, here it is in simple language we can all understand, whether we are techies, designers, craftspeople or retailers.

Cash vs Profit:

It’s impossible to go broke while your business is cash flow positive.

It’s possible to broke while your business is making a profit.

This is why cashflow is King.

It’s also possible to be making a legal loss, while we are dripping in cash. So startups out there only need to focus on one thing. Are we collecting more cash than we are spending?. Do this, and it’s impossible to go out of business.

Pre-empt reality – success requires it

Entrepreneurship and startups are a lot like starting out in your career. People want you to have experience before they will hire you. It’s that ironic circular reference in which it is impossible to get the job, to get the experience required until we’ve got the experience – right? hmmm.

Often startup businesses need a lot of people before the idea, concept or thing simply works. Kind of like email or fax machines. They only become useful when everyone has one…. or at least some form of critical mass in which we can exchange things of value. Aside from the fact this proves that the most powerful element in any business mix is distribution, it also indicates we all have a chasm to cross before success can become a reality.

So how do we cross the chasm? How do we make success a reality?

We must preempt it.

We must preempt our future reality. As though it already exists. We must talk and act as if it has already happened. Not just internally, not just convincing ourselves, but to all of those whose paths we cross day to day in startup land. We have to sell the future, before it arrives, as if it’s already happened.

Sometimes we might have to use ‘creative language’ which somewhat stretches the truth (our current reality). We ought not feel bad – every successful entrepreneur in history has done this. Every successful entrepreneur in the future will do this. It’s just a necessary element in creating the future. It’s not lying, it’s part of the creation process. Screw it – sell the sizzle and make it real. By the time the people catch up to the today’s reality – you’ve already created the future version.

Bill Gates sold MS DOS before he even built it. He said to IBM – “we have what you need.” Despite the fact it was metaphysical at that stage.

Generating media and interest in your start up is one of the areas where this must happen. Whether it’s in traditional media, the blogosphere, or other means, people don’t want to cover us until we’ve had success. What they fail to realise is that their coverage is the thing which often starts the success. Then people who read about our brand, website or widget say, “Wow, I better check that out”. They believe in ‘the people’. If other people are embracing it, it justifies them checking it out. it’s the wisdom of crowds, as far as people are concerned, we only count when other people care.

When people ask about your startup and want the obligitory progress report – paint the most positive picture possible. Use creative language that makes it sound bigger, better and closer. No – use language that says it has already arrived. Make the future your present reality.

Best business card 2008 – Goddess of Revenue

I recently met Kim Chen from tjoos at Startup Camp Melbourne. Smart girl.

The thing that impressed me the most was her business card. Job Title = Goddess of Revenue. Love it.

So it’s a bit hard to read above, but being a ‘Goddess of Revenue’ says so much. The first thing it says is that Kim ‘gets it’. It says she knows that fun is important, but revenue is vital.

Then on the flipside is more useful stuff.

The kind of stuff which just maybe gives her a permanent place in someones wallet or purse. A good chunk of simple, yet useful information.

It’ll be handy next time in Sydney on business…. and her simple business card made me remember Kim, it even got her a story on this here blog.

If we are going to the trouble of printing business cards – we should make it worth remembering.

Blog action day

Here’s the video for blog action day 2008.

[youtube=http://au.youtube.com/watch?v=nOnjMusOBfs]

Startup blog got involved last year – which you can read here. And I’m excited to do so again – it’s pretty cool that new digital media has given us a voice, best we use it.

Critical thinking

Many entrepreneurs start their careers working for big business.  There are many things we can learn from big business. One of which is Critical Thinking – the ability to analyse a set of circumstances and make a commercial decision.

Every startup has gaps. Gaps in strategy, gaps in the launch campaign and gaps in financing the venture.

Gaps that would usually be criticized in large conglomerate X during the mandatory ‘Critical Thinking’ session. If we want to get our startup off the ground , then we simply must ‘unlearn’ some of the things which we have leanred and adopted from our life in the large corporate sector. Critical Thinking is one of them.

What we need is Complimentary Thinking.

Pointing out the good and building on the parts that will work. Is what entrpreneurship is about. To criticise anything in the embryonic stage is counter productive. Critical thinking aims at protecting revenue – not inventing it. Critical thinking leads to finding a reason not to do something. Complimentary thinking builds on what we have, it finds a way to make things happen and accept imperfection.

Our ability to unlearn ‘critical thinking’ is really one of the important differences between being an employee and becoming an entrepreneur.

Silicon Beach with yours truley

Silicon Beach Australia [siliconbeachaustralia.org] was formed with no plan, just a question:

“How can we bring the Australian technology community together?”

“Silicon Valley has a supporting ecosystem that makes Internet innovation thrive, so what can Australia do? How can our big island with the best beaches in the world, harness the passionate, intelligent individuals who care to do more?”

It’s a very cool initiative and hopefully something which will harness the intellectual capital our country is renounced for. Instead of losing it to countries who appreciate and embrace innovation.

One thing is for sure – it all starts with conversations. I was fortunate enough to be invited into the conversation yesterday for their 3rd Podcast to discuss a bit about rentoid, and all things entrepreneurship…

I was fairly candid with things like my corporate exit, business philosophy, the financial crisis and just the way I like to go about things. You can check it out by clicking here.

Radvertising or badvertising? – TDK

Here’s a photo I took in my local suburb of an outdoor campaign by TDK.

If you’re a Kylie Minogue fan you may recognise her… We’ll no, actually it isn’t her. Just a model with similar looks wearing an exact replica outfit from one of her famous video clips ‘Can’t get you out of my head’. (it comes into view at 1.10 mins)

At first I thought they we’re trying to ‘pass off’ as having good old Kylie on their side…. then I saw the tagline.  “Believe your ears”

It’s a nice piece of outdoor advertising once you see the tagline – if you manage to miss the line… then things don’t quite work.

Radvertising or Badvertising? What say you?