The Code for Equity Platform

Posted on March 30, 2013 by Nick Loper

Small businesses and startups often have a hard time finding qualified technical help to build out their grand ideas.

code for equity Founders can turn to freelance sites like Elance or oDesk, but it can be difficult to sort through the dozens of applicants to find the diamond in the rough.

On top of that, top-tier talent is expensive. Bootstrapped operations may find themselves compromising on quality just to meet budget.

But it doesn’t have to be that way.

What if you built out a platform to connect talented web designers, web developers and software developers with cash-poor but idea-rich entrepreneurs?

It could be a win-win for both parties. The companies could get the technical work done on the cheap or free, and the developers could get an ownership stake in the company or a share of potential future cash flows and growth.

The platform could be monetized in a similar way, by taking a small equity stake in each project. Over the long-term, that could be a very lucrative strategy if you end up facilitating some big hits, but might be complex to execute. Another option would just be to charge a flat listing fee for each project.

Strengths

This unique set-up allows developers to essentially play venture capitalist, except with their time and skills instead of with their money. If they don’t need the income today, but have an eye for a great idea, the payoff could be much greater in the long-run than doing the job as a standard freelance gig.

In addition, there would be a greater incentive to build it right because they would have a legitimate ownership stake. Some skin in the game, as it were.

For business owners, your code for equity platform would solve the problem of finding and motivating engaged talent. And if your project lingers with no one jumping to help, perhaps that’s an early indication the idea isn’t that good.

Weaknesses

Freelancers are freelancers and most of the time just want to get paid. They take on risk with each job and might not have the stomach for even riskier work — with the distinct possibility of never getting paid at all.

Even though the platform would allow them to pick and choose which projects they take on, I think it would still be a big hurdle to overcome. They can’t buy groceries today with startup equity and the promise of potential income tomorrow.

And in the reverse of the strength above, in the long-run the companies may end up dramatically overpaying for the initial development work if the project really takes off.

Opportunities

As far as I know, no one else is facilitating these kinds of freelance arrangements. (OK, I didn’t research it at all.) The concept could generate some buzz in the industry — positive and negative for sure.

But I believe there is a large market out there of entrepreneurs and wannabe entrepreneurs who have good ideas but don’t have the time or money or capacity to build them out. This platform would give them a low-risk alternative to go out and try and make something happen.

Threats

In terms of competitive threats, if this business idea takes off I imagine it would be pretty easy for Elance or oDesk to add “code for equity” checkbox and even provide some boilerplate legal contracts to set up the arrangement.

But if you can gain some traction I think there’s definitely room for this kind of unique niche in the freelance market.

Wrap Up

I like this idea because it’s not just about building one business, but about building hundreds or thousands of new businesses. And it’s about sharing the value created from those new enterprises.

What do you think? Should we build this? Better yet, should we try and get it built on a code for equity model to test the idea?

5 Business Ideas for Stay-at-Home Moms

Posted on March 11, 2013 by Nick Loper

Do you ever get the feeling life is passing you by because you’re always stuck in the house?

Even if you go out and do things during the day it still might not be enough. You chose to stay home and look after the kids, which is great, but it doesn’t mean you can’t try to make your life a little more exciting.

Have you thought about what you could do to pass the time when you have any available? Why don’t you try and start your own little home business?

Moms don’t need to sit around doing nothing and if you have an entrepreneurial spirit it’s quite easy to make a little cash on the side. At the end of the day, it doesn’t even need to be about the money, but watching your bank account increase is fun even if you aren’t struggling to put food on your table.

You might even be able to turn it into a bigger business once the kids have grown up, so if you’re interested we can look at a few ways you can get started building a home business.

Baking Cakes

If you are great in the kitchen you could easily bake cakes all day at the same time as looking after the children. The cakes you make will depend on your skills, but if you could get people to order birthday or wedding cakes you could easily turn a nice profit.

You don’t have to limit yourself to making cupcakes for the village fair. You will need to do a big of marketing to generate some business, but once you have started word of mouth could help you along.

Selling Clothes

If you love designing your own clothes you could easily bring your creations to life faster than ever before. Once you have the proper machines you just need to go around collecting the materials and you’re set.

If you make a few garments for people you know they can show them off to everyone and rave about you. People are always looking for custom clothes that are unique and it means there should be enough people who will order from you.

Writing

If you love writing then doing it at home with the intention of selling books is easy. You can easily write them all day long and upload them to somewhere like Amazon for free.

In the beginning it’s going to be tough, but after you built up an audience that loves your work you can easily sell a decent amount of copies. You might not become the next best-selling author, but at least you will have fun doing what you love.

Build an Online Business

If you were a businesswoman in a previous life you could start your own online business that can slowly be built up over the years. If you don’t have something to sell online you could think of something, or you could even provide a service to other people.

As your company grows you could slowly start to hire more staff and because everyone can work from home they will be easy for you to manage. You just need to find something the market wants.

Daycare

Some moms are not so lucky and they have to keep working because there might not be enough money coming in. That means they need someone to look after their small children.

You could start a little daycare center in your home because you’re going to be looking after your children anyway. If you love children it could be a fun way to pass the time, plus if you see how much daycare centers charge these days you’ll know you can make a nice bit of money.

Creative commons image credits:

Kish Winner is the author of today’s guest post and also an expert blogger. You might be interested in his Guide to franchise article, which gives tips on starting your own franchise.

Common Business Idea Mistakes

Posted on March 7, 2013 by Alex Genadinik

Nine months ago I created an Android app which helped people plan a business. While I didn’t have a budget to advertise the app, the users of the app loved it, gave it great reviews and shared it, helping the app grow organically.

Recently the app hit 50,000 downloads and out of those downloads, there have been over 10,000 businesses planned on the app!

However, I noticed that the entrepreneurs on my apps were consistently running into difficulties in the idea-generation phase.

Since the topic of business ideas is such a common one, I have written extensively about some of the best-practice ways to come up with business ideas that are right for you. It is precisely at the idea stage that many companies make big, but very avoidable mistakes.

In this article I want to focus on some of the common problems with business ideas, and what the common pitfalls to avoid.

IDEAS ARE THE EASY PART

The overwhelming majority of entrepreneurs who need help with business ideas are first-time entrepreneurs. The reason for that is that there is a very low barrier to entry to begin thinking and dreaming about an idea.

But in reality, dreaming and hoping does not make someone an entrepreneur. Execution makes someone an entrepreneur. Ideas are worthless without execution. To the point we give them away for free on this site. Like the header says, “Ideas on us. Execution on you.”

So naturally, I observe a very high rate of people simply quitting their business ideas once there is no further material to dream about, and once there is actual work that needs to be done.

Part of the reason is that people often dream up ideas that do not take the full picture into account, largely because they do not have the experience to draw from in order to conceptualize what the big picture is for a particular idea. That commonly results in ideas which are simply not a great fit for the entrepreneur.

IDEA-FOUNDER MISMATCH

Often, people do not take their skills, strengths, and passions into account when evaluating their ideas. A good founder-to-idea match should have a balance of all three of these while also avoiding any weaknesses.

For example, if a person loves to cook, they may dream of opening a restaurant. And even though food is a passion of theirs, restaurants require quite a bit of money to open and run until they can break even financially. So if the person cannot raise that money, then this kind of a business is not really playing to their strengths as much as it originally seems. Additionally, enjoying to cook is one thing, but running a restaurant is an entirely different thing — where the owner has to do everything else except cook.

IGNORING FINANCIALS

First time entrepreneurs almost never know how to think deeply about the financials of a business.

Let’s take the same restaurant example. How much money does it take to open a successful restaurant? Most people find it difficult enough to count up the costs to start the business.

What is more difficult is to understand how many months the restaurant will be open, but will be losing money on a month to month basis, and how much money it will lose during those months.

But this is not even the most difficult part. The real challenge is gauging customer demand at various price points, while covering the costs to operate the restaurant at sustained long-term profitability.

And those concepts barely scratch the surface of the financial analysis that might be required to manage or run a restaurant (or any other business).

A first time entrepreneur rarely thinks that far ahead, let alone explores this issue with the care it deserves. Which means they’re often faced with ugly financial realities when it is already too late.

IDEA AS A PERSONAL FINANCE SOLUTION

As we just saw in the example of a restaurant, getting into a business you may not understand deeply can lead to a substantial financial loss if you put your own money into it.

That is counter-intuitive to many people because many people see the idea of starting a business as something profitable. In reality, businesses started by first time entrepreneurs have a shockingly high failure rate, and require substantial commitment of money, time and energy. The odds are high are that starting a business might actually make a person’s financial situation worse than it had been before, at least at the onset.

So as we’ve seen, a business idea is very different from actually starting a business. It is fun to dream and think about, but if you are actually planning on doing the business, you must approach it with a lot of care and discipline, and if you are able, get mentors who can help you.

The Treadmill Desk Revolution

Posted on March 4, 2013 by Nick Loper

Background

Study after study after study keeps coming out with new findings about how bad sitting is for you.

Employees and employers are both starting to take notice. In recent years, we’ve seen dramatic increases in the number of alternative workspaces: desks with adjustable heights, exercise balls for chairs, standing desks (and chair-less conference rooms), and even the holy grail of them all — treadmill desks.

The Opportunity

There are literally millions of office desks in the US and all around the world that will be replaced with more “healthy” models. Understanding the long-term health risks of a sedentary environment, workers will begin to demand it, and employers will need to make the investment to attract and retain the best talent.

In the coming decade there is a HUGE opportunity for a motivated entrepreneur to step in front and ride this wave. Remember, “find a parade and get in front of it?” Well I sincerely believe this is going to be one giant parade.

Even if you only manage to capture a tiny fraction of the market, the office furniture business is a huge one, and it’s ripe for some serious disruption.

The Product

A treadmill desk, if you’re not familiar with the contraption, is simply a tall desk that stands over a treadmill. This way, workers can walk at a slow pace while they work. Of course it also works in “off” mode as a standing desk for when people get tired of walking.

I wouldn’t try and manufacture the treadmills yourself, but rather find a reliable existing model and look for either an adjustable desk you can customize around it, or have the desk portion manufactured.

One modification that will likely be necessary to the treadmill is some sort of noise dampener.

I built mine over a year ago (and absolutely love it!), but it is noisy. Both the treadmill and desk were acquired on the cheap on craigslist. The motor casing is just cheap plastic; I think with a little foam or other noise insulation it would run much quieter.

The benefit of sourcing from an existing supplier is you don’t have to worry so much about maintenance or warranty issues — done right, customers can be covered under the manufacturer’s product warranty.

And of course there’s the additional profit center opportunity of selling extended warranty plans for each treadmill.

The Competition

The treadmill desk idea has been around for a few years, but many entries in the marketplace are very expensive. Like $2000 and up!

At the other end of the spectrum are the hacked together DIY-jobs that are potentially unstable and loud, especially for an office environment.

An opportunity exists for a quality product with a middle-of-the-road price point. Do you think you can build and deliver that product to world full of unhealthy office furniture?

Next Steps

Begin researching the marketplace. How are office furniture sales typically made? Who are the decision makers? Make some calls and find out. Imagine landing an entire floor of an office, or an entire call center or complex as a client.

Find a suitable treadmill manufacturer. Inquire about volume discounts or wholesale pricing.

Do the same for the desks.

OK as I’m writing this the more and more I think this could really be a viable venture with a giant market. Anybody interested in checking it out and testing the waters?

Business Ideas 24/7

Biz Ideas, all the Time

Monthly Archives: March 2013