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Business – what matters most!

All my businesses follow a model where it is split into 10 categories (opportunity, product, market, sales, operations, service, finance, legal, HR and other). The thinking comes from Michael Porters Value Chain framework. Today, I have started to look at this from a slightly different angel with respect to edocr.com.

Financial Profit and Valuation

Whilst a business should not be an accounting exercise, without a true picture of your finances, you have no business. I would argue, that the point of finances is to generate a profit and increase the valuation of your business. If we expand the profit further, its about growing your revenues, whilst improving working capital and cost efficiencies. Control of cost is vital in achieving a competitive advantage in the long run. Working capital in one sense is making sure the business has sufficient cash to operate, which is either funded by the cash flow arising from revenues or external funding in the form of debt or equity finance. Let’s not get bogged down in other exotic finances such as invoice discounting, asset financing, etc.

Product vs. Market Fit

You could design the most beautiful product in the world, but if there is no readily available market, you will struggle to achieve a meaningful traction. Creating new market is not without casualties. Entering an established market with a killer proposition with an aggressive sales and marketing plan can achieve wonders instead of focusing on the first mover advantage.

Value Proposition

Value proposition is as good as the paper its written on (or the web page), as long as it is understood and there are sufficient number of people willing to pay a price above your cost point. Having a product that fits the market requirements improves your chances, but you need to be able to articulate in a manner that puts you ahead of the competition. It was only this evening I was speaking to an early stage technology business with an email marketing tool. They have decided that it is not worth competing for the end client head on due to the sheer number of well established brands in a crowded market place, instead they are attempting to sell to middlemen who could dress the product in their branding and take it to the market. In this case, the product not just has to be fit for the market, but it needs to be now fit for both the end client and the middle man. So getting your value proposition right is crucial. One company that adopted this strategy successfully is BT, sell-to and sell-through strategy.

Operational Efficiency

None of above can be achieved without adequate resources in place, both in terms of numbers and level of skills, experience and competency. In addition, you need to achieve higher efficiency of resources with continuous improvements to have a chance of beating your competition.

So how does edocr.com fares with above four crucial elements? In terms of financial profit and valuation, we have bootstrapped the company so far generating modest revenues. We have a product that works, which was achieved through hard work with low investment. We have an acceptable cost efficiency, but need external capital to make a bigger impact. I am dwelling on this, especially with respect to the forthcoming sales seminar co-sponsored by Microsoft next week

In terms of product fit vs. market, we and a bunch of other early stage companies have created a new market which is now about 3 years old, but I would argue that the market is not quite there yet. In terms of value proposition, we have bet on that the customer will soon demand real tangible benefits from their social media engagements. In this respect they will be looking for hard numbers, and the best anyone can offer is sales leads, and this is exactly where our focus is right now. In terms of operational efficiency, we are not faring well suffering significantly due to resource constraints. This has created three options for us, (1) grow at current pace reinvesting revenues back into business, which is not ideal by any means, (2) take external equity investment and dilute the shareholding, which is not a problem as far as curent investors are concerned, and (3), a compromise between (1) and (2) with minimum dilution. I will be going into the weekend thinking about which direction we ought to focus on. Your thoughts on a postcard please!

Published inedocr.com
  • On the operational efficiency I totally agree and we are running into this wall now with our limited resources on the manpower side coupled with heavy demand for the Cazoomi brand in so many directions. However, walls are easily climbed and the market we address allows for this type of stretched network effect to smooth out the initial inefficiencies to gain a larger network to drive business to the Cazoomi brand.

    Ours sales team is now partnering with others to expand without taking on additional resources and this is working out very well. Look for some new announcements at SugarCon in the SnapLogic.com booth from our team.

    Always love the well thought out and written comments!

    ~Clint
    Cazoomi.com

  • ManojRanaweera

    Clint, Cazoomi is a great idea. It seem to have two emerging models, one where traditional sales of a partner product takes place and the second evolving to implementation, both requiring different skill sets, in my opinion. It would be interesting to note which will eventually emerge as the winner, i.e. just sales or sales plus implementation

  • Well, we started Cazoomi out of a SaaS support need coming from our members in the SaaS community on Facebook back in 2008. Today the platform allows our members do their own spec&select, choose their SaaS, even select the people involved in the implementations and finally the support package they need so really the winner will be the members. This can all be done without calling a single vendor until you have the information you need to make an informed decision with quote in hand.

    Think of any SaaS company doing their own sales, implementation and support of their solution yet the Cazoomi platform allows members to do align each one of these peices to fit their business not the other way around.

    Simple concept really to allow SMB'ers an easy on-boarding of SaaS solutions.