There are several reasons to keep an attorney away from those first contracts:

1. The money spent for attorney fees are better spent building value in the company
2. If you have nothing, there is nothing you need to protect (!)

Contracts have a different importance in different parts of the world and you will always have to weigh the risks against the benefits.

I’m a big fan of the so-called One Page Business Contracts, which is simply one page in a plain language that both parties understand and that can easily be read and altered without legal assistance.

There are 6 phrases I will always include in my One Page Business Contracts:

1. Stupidity from Your Customer

Customer’s representatives will have the necessary skill, expertise, experience and employment permits, will act professionally and in due time with reasonable skill and care.

By including this sentence, your customer guarantees that you will not have to waste time working with stupid people who will delay the project or to whom you have to teach the basic skills.

2. Changes in the Project Specification or Missing Payment

It is expected that the project will be completed by 1st January 2012. This assumption is based on no significant new information becoming available during the work on the project and that the payments are processed according to the payment milestones in this project.

The client often changes project specifications without expecting the deadlines to change accordingly. This phrase will both protect you against changes in the project specification and lack of punctual payments.

3. Increase Price with Project Changes

This price is based on no significant changes in the project description.

Rarely will any project be executed according to the plan and with unchanged specifications. This phrase lets you increase the price with any changes in the project regardless of whether or not it involves additional work.

4. Wipe all previous communication away

This agreement replaces the provisions of any other communications between the Customer and Vendor relating to this project.

In sales situations, promises will be added which do not necessarily comply with the project or product that the customer is purchasing. It is therefore important to wipe any previous communication regarding the project in the contract.

5. Deem the Invoice Accurate

Invoices shall be deemed accurate, if not disputed within 90 days of invoice date.

Some clients just refuse to pay the last invoice as the project is completed and, after months, they are getting back to you arguing that something is wrong with the invoice.

By deeming the invoice correct, if not disputed after a specific period of time, it will give you a much easier job and it will actually enforce debt collection in many countries.

6. Limit the Risk

Client agrees that the maximum aggregate liability for Vendor in no event shall exceed the total amount paid by the client for the project

This will limit your risk against liabilities for more than what the client actually paid you for the job. Makes a lot of sense and will effectively stop any claim that you will have to cover lost revenue of Millions of Dollars for a 100 Dollar job.

As Is – No Warranty

The tips in this article are provided As Is and with no warranty or liability. I’m not a trained attorney or have any other legal background.

The phrases suggested in this article are based on my own experience reading and signing hundreds of contracts across several parts of the world.

Do you have any Killer Phrases that you use in your contracts? Use the form below to let us all know about them.

Image courtesy of Flickr user smlp.co.uk.

6 Killer Phrases to Include in any One Page Business Contract is a post from: Egil Fujikawa Nes

If you do not fear to fail when starting a company, you do not risk enough.

When entrepreneurs are talking about failure, there are two main distinctions that need to be made:

• Personal Failure
• Technical Failure

If you never feared personal failure you should stop reading right now and start vesting more of yourself into your company.

I’m vesting myself into my companies to the point that I have gotten physically ill due to fear of personal failure. If you are like me, we might be able to share some experience.

1. Compare within your League

Do you compare your business to public traded corporations in your industry?

I did, and it made me sick to see how well my much larger competitors could do in the stock market while I had to struggle keeping a positive cash flow in the exactly same industry.

When comparing my company to these public traded monsters, I looked like a failure. The reality was that a few years later, when the stock market collapsed, the balance of success changed.

It is good to pick competitors that are larger than you, but nothing good will come from comparing results out of your league.

I’m sure that the players of Sporting Devils FC in the English 10th division wished they played like Manchester United in Premier League, but constantly comparing their own team with Manchester United would make them look like failures even when they win matches.

2. Never Focus on Failure

If we should believe modern motivational theory, the brain is working in strange ways. It will attempt to achieve what you focus on, but it does not understand negative context.

If you are in doubt, try the following experiment:

“Do not think about the Eiffel Tower.”

What was the first thing that came into your mind when reading the sentence above?
(I guess the Eiffel Tower).

Instead of obsessing about the likelihood of your company to fail and spending all of your time finding the pitfalls, you should try to find out how great businesses turned around difficult situations successfully.

Personally I can recommend both Richard Branson and Marc Benioff as people who have good stories to tell about how they turned around difficult situations.

3. Be a Leader, Change your Business Before it Fails

It has been fancy lately to talk about “Pivots”. The pivot refers to a complete change of business area due to a previous failure.

Changing your business completely can seem like a risky task, but it is the only right thing to do if you head towards failure.

The book “Wikinomics” by Don Tapscott features a great example, showing how changing the business against all common sense helped the Canadian gold mining company, Goldcorp Inc., to bankruptcy:

“Expensive internal geologists were having trouble finding the exact location and needed more time and money. Using Open Source business logic the company decided to give up terabytes of the company’s proprietary information online and prize money to anyone who could find gold on the company’s land

Responses from around the world, many from disciplines outside geology, led to discovery of 8 million ounces of gold. The change in business strategy moved Goldcorp Inc. from an underperforming $100 million company into a company with a market cap of $9 billion.”

4. Do not Embrace Personal Failure

In business, as in life, there are winners and losers. Even though you are a good entrepreneur, you will have success and you will have failure.

As mentioned at the beginning of this article, there are two types of failures: there is technical failure and there is personal failure.

It’s common wisdom that you should learn from your failures, but all failures are not equal. There are plenty of things to be learned from the technical failure.

Technical failures are enterprises that fail because the R&D didn’t turn out as hoped for or expected. These failures should be embraced and shared so nobody in the future tries to create squared wheels or cars without breaks.

The problem is that most of the failure corresponds to entrepreneurs that fail, fail on the personal level. Typical cases of personal failure include:

• Hired the wrong people
• Our timing was wrong
• We ran out of money
• The customers were not willing to pay enough

Despise what any failed entrepreneur is trying to tell you, this is all personal failure. You will be better off spending 15 minutes learning about Marc Benioff’s strategies to hire a winning team in Salesforce.com than listening to 100 failed entrepreneurs trying to explain that their company failed due to the team they hired.

There are more to be learned from success than from failure and you do not need to take my word for that. Harvard Business School has published a study showing that failure is not an effective way to learn entrepreneurship.

Image courtesy of Flickr user Hjem.

4 Ways to Handle Fear of Failure as Entrepreneur is a post from: Egil Fujikawa Nes

When we established The Brazil Business we intended it to generate leads for our consulting firm. What we hadn’t anticipated was the amount of inquiries we received related to services and industries in which were we weren’t consulting .

In this post I will explain how creating a reverse referral model can earn you cash that otherwise would be left on the table.

What is a Reverse Referral Program?

I assume you know what a referral program is. Typically, businesses will give a percentage of the sales amount to the source of the referred customer. The program is created by the business that receives the referrals.

In the scenario of a Reverse Referral Program, it is the business that sends the lead that has created the program and decided what commission it should receive.

A System Will Give you Leverage

In the first attempt to monetize on the amount of the leads we generated, we approached our law firm that we trust and would gladly recommend. Our suggestion was a referral partnership.

Sure, they were interested, but what would be the correct commission?

The negotiation went back and forth because none of us had a system in place. We realized that most professional service providers have taken their time to create a referral program.

Creating a system or a model gives you leverage in any partner process where no solid framework is already established.

After having created a system, we never had to negotiate conditions with new partners ever again; it’s a simple take it or leave it offer.

It’s a Custom Built Referral Program

There are millions of referral programs that you can find online today. However, a majority of them aim to sell either consumer goods or cheap domain names.

By utilizing a reverse referral program you can select the companies that you want to direct business to.

It will require a bit more of a sales job from your side to make sure that the company you select will actually take part in your reverse referral program. If you have created a reasonable program, the sales job should not be difficult; most companies would not turn down referral business.

How to set the commission

As an eager entrepreneur, it is tempting to ask for a 75% commission from your referral partners, but in reality you will not get any businesses to refer to with such conditions.

I believe the best model for establishing a reasonable commission rate is to look at the average Customer Acquisition Cost in the industry you are targeting.

Keep in mind that many company owners have no idea about their Customer Acquisition Cost so quoting reliable sources can make the sales process much easier.

Ask for Lifetime Value

Always ask for commission upon the lifetime value of the client you refer. Including commission upon Lifetime Value is a relatively simple condition that can make a huge impact on the payment you receive.

Many customers will place a small first order to test out a new provider so only receiving commission from the first order can become very bad business for you.

You can of course not ask for a commission payment on the expected Lifetime Value, so you will have to agree with your partner about a way to report the lifetime value.

Ask for Sub-sequential Commission

When asking for commission upon Lifetime Value you should also ask for sub-sequential commission. Just as the Lifetime Value commission, this usually is a simple condition to get your partner business to accept.

However, some companies will argue that it is unfair when you claim your sub-sequential commission. After all, if the lead you refer to the business also starts to refer the same business, you ask to receive a commission of his referral job.

Make yourself irreplaceable

By generating good leads for a business you will make yourself irreplaceable. This will of course give you leverage to negotiate better conditions as the partnership moves forward.

You will have to be smart, never just increasing the commission rate you are expecting, as this seems greedy. A common model is to create different partner levels. The negotiation will then be that you will give more in return for a higher commission.

What you provide in return can be very simple and inexpensive, but still provide a value for your partner. Here are some ideas:

• Exclusivity (everybody wants this!)
• Better visibility
• Preferred referral destination
• Guaranteed number of referrals

Exclusivity does not mean a global or industry wide exclusivity. It can be as narrow as the only accountant in São Paulo state.

Demand vs. Supply is the key to success

When setting up your reverse referral program you will need to manage the demand (being the lead) vs. supply (being the partner).

If you have too many leads with too few partners you face the risk of partners being swapped and not able to manage all the requests. On the other hand, if there are too few leads and too many partners, you risk to be forgotten by the partner who rarely hears from you.

At The Brazil Business we have found that 10 qualified leads per partner per week is a good balance.

Who can benefit from a reverse referral program

So you are reading this but you do not believe that this can be applied to your business?

I urge you to rethink this and think about complimentary products or services to what you already sell. Here are some ideas to get you started:

• Wine stores can refer to cheese stores
• Painters can refer to paint stores
• Incurrence brokers can refer to contractors
• Bloggers can refer to consultants

6 Action Points to Get Started

Getting started is easy and you should be able to do so with a minimum of effort:

1. Start collecting referral leads
2. Create a program contract
3. Create a one page introduction aimed at partner businesses
4. Sign-up the first partner businesses
5. Set-up reporting routines
6. Start sending leads and invoices

This can all be one in a weekend and might be the most profitable time you ever invested.

PS: Start collecting leads before starting to sign-up partners. If you fail to collect leads, the reverse referral program will have not had any value for you or your partners.

Creating a Reverse Referral Program for Your Business is a post from: Egil Fujikawa Nes

I will give you some tips about how you can troubleshoot and enhance web application performance without necessarily being a techie or having millions of dollar in venture capital to scale your web application.

1. Don’t Do The Same Job Twice

This seems obvious but it is surprising how many use processing resources to do the same job several times. Doing the same job twice is often a result of laziness in application design or a way to try to reduce complexity.Doing the same job multiple times often happens when you repeat the same dynamic operation many times.

Example: If you are dynamically resizing an image on-the-fly you should cache the resized image so the second time the image is requested, it is simply loaded from cache rather than using CPU power to resize it from the original again.

2. Work In Batches And Use Queues

The single most common reason that web applications completely fail under much traffic is that they get clogged with the jobs they have to handle. A system that runs effortless with 4 concurrent jobs to handle can completely crash with 5 concurrent jobs to handle.
Example: We often see this type of problems in registration forms that require server side work. If it’s not strictly necessary with instant feedback to the user about the result you can simply capture the data into a queue and use a scheduled job to process a segment of the queue.

Symptom: The web application crashes with too little memory when you receive more than usual tasks to process.

Solution: Figure out what’s the maximum amount of concurrent tasks that your web application can handle and create a system to capture tasks without processing them.

3. Databases: faster to read than to write

Databases behave just like regular books; they are faster to read than to write. Many types of databases can also just handle one writing process at a time so if several processes want to write to the same database they have to wait in queue.

Symptom: The web application is responding slowly and the CPU and memory usage on the server is high when you have more than one concurrent user.

Solution: You should always try to reduce the number of writing commands to the database. If you are handling temporary data they can be stored in memory rather than in the database. Take a look at all operations that trigger an insert or update of your database to see if you have any unnecessary transactions in your workflow.

4. Eliminate DNS Lookups

DNS is a type of phone book for internet that holds all information about domain name and translates it into IP addresses. In the same way as you look up domain names you can also lookup IP addresses and get them translated into domain names.

Symptom: The browser is hanging for a very long time with the status message “Connecting to…” before the page is suddenly loaded as quickly as normal

Solution: It is always a good practice to eliminate reverse DNS lookups completely. Revers DNS lookup both create a point of failure and slow down the web application if the DNS server is responding slowly or is unavailable.

If you use DNS lookup for internal systems like database servers, it is more effective to hard code the IP address to the hostname in the host file of your operative system.

5. Compress Data Before Transfer

You are probably familiar with file compression like ZIP or RAR files. What most people don’t know is that modern web browsers have a compression functionality built into it allowing your server to send compressed HTTP data to the client. For regular text content like HTML, CSS and JavaScript, this compression technique can reduce your data transfer with as much as 90%.

Although compression and decompression slightly increases the CPU usage on both the client and the web application server, it’s still much faster than to transfer an excessive data volume over internet.

Symptom: Your data transfer bill is quickly increasing and your users experience a slightly slow load time.

Solution: Enable compression of HTTP data before transfer on server side.

6. Force Client to Cache Data

This is the most under-utilized performance parameter in web applications. Many developers believe that since a web application is a dynamic application, we cannot let the user cache information in their client.

I believe that this conclusion is completely wrong; you have a lot of elements that the user should cache forever and never revalidate. This includes all design and layout items. In cases where you need to update css or javascript files, you simply give the file a new name.

All modern browsers have limits for how many connections they can establish to the same server, for example Firefox only accepts 4 concurrent connections to the same hostname.

This means all type of content: images, css, html, etc. If you have six images on a page, the browser will download the first four and wait with the last two until the two images from the first batch are completely downloaded.

To learn more about client cache of data I recommend you to read Caching Tutorial for Web Authors and Webmasters

7. Move the Data Closer To The User

If you have already enabled the best possible strategy on caching of data on clients but the page still seems slow due to many dynamic components that cannot be cached, you will have to move the data closer to the user.

The most efficient way to move data closer to the user is to use Content Distribution Networks. There are a lot of options for these type of CDN services and you will have to research who best covers the area were your user base is located.

For most web applications, it is a relatively easy job to implement a CDN service. However, you need to be aware that the data transfer cost from a CDN service will usually be significantly higher than from a regular hosting provider.

8. Revers Proxy

In reality, many web application owners do not have full control over the code that is implemented. It can be that the developer is no longer available or that you simply bought a of the shelve solution. That’s when a revers proxy can be implemented.
A revers proxy has two use cases in a modern web application. It will work as a transparent caching engine for your web application that will effectively eliminate for the same job to be done twice.

The other use case is for situations where your site experiences an extreme data throughput (more than 100 Mbit/s) where properly designed revers proxy servers can deliver a much higher throughput for cached data than most traditional web servers.

Warning: Installing and configuring a reverse proxy requires a good knowledge about the web application logic; not all content can be cached and the result of miss configured revers proxy services can be catastrophic.

Conclusion

If you are a non-technical entrepreneur, it can often be difficult to determine if you have the right person to look at your performance issue. In the ideal world, you should not let your web application performance troubleshooting relay on your developers.

Developers are great people and they know your solution the best, but most web developers have never been trained or actively worked with infrastructure matters. The infrastructure design and relation between the server and the client will significantly affect the overall performance of your web application. Good developers are always functionality driven and focus on creating high quality code; ironically, this might sometimes be the source of your performance issues.

Other resources regarding this topic includes:

• Best Practices for Speeding Up Your Web Site
• How to speed up your web application performance

Please use the comment form below to bring your insights about how you troubleshoot web application performance or ask me questions about the challenges that you are facing.

8 Ways to Troubleshoot Web Application Performance is a post from: Egil Fujikawa Nes

1. Give your ego a cold shower

It is easy to get addicted to being “Mr. Important”. The chance is that you either are or you some time have been addicted to this position yourself. Getting your ego stimulated by the number of inbound e-mails and phone calls you receive is not uncommon for entrepreneurs. You are subconsciously bragging about how important you are by telling people how terrible it is to receive so many phone calls and e-mails.

People who have not experienced this addiction might consider it unhealthy, but it’s natural and even healthy. Being “Mr. Important” gives the self-esteem that entrepreneurs need in order to lead their organization in innovation. However, by starting to rebrand yourself you have to accept to be less important for a while.

2. Diversify your name

The reason you need to rebrand yourself is that your current personal brand is not elastic enough to cover what you want to do next. Although it goes against common “expert” recommendations, I recommend to diversify your personal brand as elastic as possible.

Some of the world’s most successful entrepreneurs have adopted this strategy with great success; people like Olav Thon (Norway), Silvio Santos (Brazil) and Richard Branson (UK) have earned their fortune by diversifying their activities across different industries and creating an elastic personal brand.

You can argue that Steve Jobs, Ingvar Kamprad and Bill Gates are all worth more money than the entrepreneurial billionaires, but Mr. Jobs & co are all one time start-ups and have invested their entire life into one industry. Isn’t this like playing Russian roulette?

3. Simplify your story

As a part of a rebranding strategy, you need to compile a solid life story explaining how you become the person you are today. You should never be lying about your achievements but sometimes your life can be a bit too complex to actually tell the entire story.

Carefully build your story and make it consistent just as if you would build a marketing story. It does not hurt including a couple of setbacks in your life, as it is more appealing and easy to sympathy with. Nobody likes braggers.

Do not try to tweak your story according to who you are talking with; even though you are not lying, you will not benefit from an inconsistent story in the long term.

4. Get a new contact network

Your contacts already know you by your old personal brand and it will take time to make them understand that you have changed the way you want to be approached. If you used to be the geeky computer engineer you cannot suddenly re-introduce yourself for your existing contacts as a business entrepreneur working across several industries.

The easiest way to deploy your new personal brand is to build a new network and introduce yourself to new people with your new personal brand. After some time away from your old contact network you get the possibility to catch-up with them. They will ask you what has been up since the last time you spoke and you get the possibility to tell them your new life story

5. Dress and act according to your personal brand

Personal rebranding is not only about your story but also about how you present yourself. If you are going to convince people that you have changed, they need to see it before you tell them. The changes do not need to be huge, but need to be enough to be noticed.

Do you have any other personal rebranding tips? Please use the comment form below to let us know what you think about personal rebranding.

5 Tips for Personal Rebranding is a post from: Egil Fujikawa Nes

I have been in the SLA industry for more than a decade and it never stopped suppressing me how obsessed some customers are about the SLA document. The only reason to obsess about a document named SLA is if you don’t understand the service that will be provided to you.

If you see IT services as woo-do or pure magic, you can only trust the SLA. If you understand a little bit about IT services, never trust an SLA; you will get screwed for sure.

Why do you really need an SLA?

While physical services are easy to understand, IT services seem to create a lot more headache for lawyers.

I have never seen a legal team inspecting an SLA for a hotel before a hotel room is ordered nor an SLA for an airline before the ticket is purchased. However, I have seen a company asking their lawyer to review an SLA before purchasing a web hosting service for USD 3 per month!

There are only two reasons why you will ever need an SLA:

• You do not trust the provider
• You want to cover your own ass

Both of them are common but stupid reasons why you may want an SLA agreement. When buying an IT service, you are buying peace of mind. If you don’t trust your provider go get another one, and if you need to cover your own ass, you might be better off in a different job.

Most IT services are much like hotels ; you rent a small part of the provider’s asset for a period of time. You pay according to how much of the asset you are using and your main goal is to have a good night’s sleep.

What to ask for?

Any IT service will be unavailable at some point; true, 100% availability does not exist (even though the SLA says so) and the more complex a service offer, the less reliable it will be.

1. Redundancy – It might take your service down

Always ask questions about anything that has to do with redundancy, fail-over and other fancy terms for resilience in the infrastructure.

Resilience makes any IT service more complex and, contrary to what you might think, this will often make the service less reliable.

2. Ignore historical availability

Never put any value to statements like: “historically, our service has 99.9999999999999998% availability”. There are two reasons why this doesn’t mean anything for your purchasing decision:

1. It’s impossible to proof or control from your side of the table; the provider can make up any number he wants to.
2. In IT, it’s stupid to build any logic on decision on the premises that the future will be like the past.

If a provider proudly evangelizes about its availability track record, you should counter with a response like “so you don’t do much maintenance, I guess there will be more downtime in the future”.

3. Ask to talk with a client that experienced a problem recently

This is the reference that no IT service provider will ever want to give you. They are scared to death that their image of perfect availability will be slammed to the ground with a simple phone call.

Your intention should not be to prove the provider’s wrong but rather to find out how well the client was treated and if he was taken seriously right away. Service providers don’t like to give references that had problems recently since service interruption often becomes a very emotional experience where the emotions fade away over time.

I recommend to speak with a client that has been experiencing a problem within the last 2 weeks. If the client still gives a good reference it shows that the company was treating him well and they will most likely do the same with you.

Be Reasonable

When I’m creating SLAs for services like MailGrupo, I try to be reasonable with our clients. The SLA needs to reflect the reality and give the client the correct expectation about what’s our responsibility and what’s outside our control.

If you are working in a larger company, you might have a legal department that provides the SLA and the provider has to comply with your conditions. Some providers might accept this type of agreement, either because they are new and don’t have much to lose anyway or because they simply need your business.

In situations like that, it’s important to remember that your legal department most likely is not reasonable against your provider. You might have good intentions, but your legal department does not. Let me give you an example:

Some years ago, while IT services were still kinda woo-do, a prospect came to me with a 200 page SLA written by their legal team. The SLA stated that we, as providers, would be responsible for all type of “subjective unavailability”.

You might want to stop here for a moment and think about what this actually means. If the client’s office does not have electricity, this can be considered as “subjective unavailability”.

Would like to hear what your experience is and how you value SLA documents when deciding about what service to purchase. Please use the comment field.

Don’t get Screwed by Stupid SLAs is a post from: Egil Fujikawa Nes

Find Your True Superpower

Companies do not pay for all-round consultants, they pay for superpower consultants. As entrepreneurs, our problem is often that we are all-round people, we do sales, accounting, HR and handyman work all day long. This is not a superpower; this at best defines housewife skills.

You need to find a superpower that is decidable and that companies would pay good money to have access to. Lawyers have knowledge about law as their superpower and taxi drivers have their local knowledge and access to a car as their superpower.

It’s a great exercise for entrepreneurs and you will instantly know what tasks you should delegate and what tasks you should take care of yourself in your next company.

Don’t come up with a lame superpower statement like “intermediate the technology needs with the business goals of the organization”; it sounds like you are just another Accenture consultant;the world already has too many of those.

My superpower is:“to create excitement and momentum about a new technology related product or service in a greenfield market”. What is your superpower?

Become a Better Seller

People who have chosen entrepreneurship as a career are often gifted sales people, but selling your own consulting services might be even harder than raising venture capital for a start-up.

You put yourself out there, naked and without any bells and whistles. If the client refuses you, it’s highly personal; it’s not the product that isn’t good enough or the marketing that wasn’t fancy enough. It’s you who’s not good enough.

Being a consultant is like being a prostitute with a different superpower. There is no product to demonstrate and the only assurance you can give is a promise about a great result.

For entrepreneurs that are not familiar with how to sell like a prostitute I recommend to read the blog post from Neil Patel: “Do Business Like A Prostitute”

Learn About Other Companies

As an entrepreneur you really get an inside look to another organizations, how they work and collaborate among them. Yes, you have some ideas by working with partners but this is not enough as long as you don’t get full insight into the organization.

In Connection Consulting, we have been working with companies sizing from 10 to 5 000 employees located on 4 different continents. It’s amazing what you learn about corporate culture, workflows and strategies working with such a wide range of companies.

By providing our superpower to companies, we have learned about their organization, successes and challenges as a part of the process. This knowledge is not taught in universities but it will put you above and beyond any competitor when founding your next enterprise.

Learn About a Different Industry

In today’s business world, very few companies work exclusively in one industry. Used car sellers make their commission by selling finance products, computer manufacturers make mobile phones and computer programmers solve business issues.

If you start consulting, the chance is big that you will have to learn about new industries that you didn’t even know that they existed. Getting inspiration from other industries can become extremely valuable. Some years ago I learned about the funeral business and the complexity of the industry from a client. I was blown away seeing their custom built ERP system for the industry. The logic and workflow are similar to many other industries, but the sensitivity in use of labels in the software is extremely important. A funeral company does not have clients, they have mourners, and their CRM is completely empty for leads.

Always try to win projects where you can use your superpower in an industry you normally don’t do business in. I have learned about so many industries in great depth by offering my technology related superpower to companies.

Extend your Network Through Consulting

This is the part I like best about consulting in a small scale like I’m doing. I get to change the business card in my folder or at least change the presentation on my beamer and be another company for some hours or some days.

Large organizations will approach you in a very different way and with different people if you introduce yourself as Mr Smith from Large International Corporation Inc. than if you present yourself as Mr Smith from Garage Start-ups LLC.

Your new and extended contact network is yours to keep after the consulting gig is finished.

Are you an entrepreneur that consults? Leave your thoughts and comments in the field below.

5 Reasons why Entrepreneurs should Consult is a post from: Egil Fujikawa Nes

I have tried both the affiliate and the reseller models with several companies, products and services. Both models have their strengths and weaknesses.

The basics for any partner program

Both Affiliate programs and Reseller programs are a way of defining a supply chain to the end-users. In today’s open business philosophy we often hear about all type of meaningless partnerships including fancy names like:

• Strategic Alliance Partner
• R&D Partner
• Media Partner

The simple question to ask before start working with a partnership is: Will this partnership affect my sales budget? If the answer is no, the partnership is just a way of saying you fancy another company and it is not worth working with.

A Reseller Based Model

The reseller model is used by almost every single retail supply chain where a vendor establishes a wholesales agreement with a store or a chain that is responsible for all interaction with the end-user.

A similar model is often used in the IT industry but is often decried with other terms like:

• Channel Partner
• Value Added Reseller
• Integration Partner

The reseller approach is often considered to be more clean in terms of letting the end-user understand who benefits from the final sale.

Pros with a Reseller Based partner model

There are many advantages of working on a reseller base with your partners. Depending on the industry you are operating in, you will often find that resellers are more committed to your product than a typical affiliate partner would be. Other advantages include:

• Less invoice management
• Reseller handles the entire sales process
• Reseller handles 1st line support

I personally created my first reseller network with great success back in 2001, inspired by the model used by the retail model of doing business. Back then, the common way of selling hosting services in Norway was through affiliate agreements.

The affiliate agreements were upsetting for many smaller IT consulting firms that the customer often hired to give a single point of contact for all IT related issues. The IT consulting firms wanted to sell their professional services (including hosting support) as an add-on service to our hosting. We had resellers that sold our services with up to 2000% mark-up simply by providing local support to their clients.

Cons with a Reseller Based partner model

There are indeed some cons with the reseller based partner model as well. The most scary for most companies is that they do not own the customer relation nor the customers locality. In situations where the reseller chooses to switch partner or, even worse, totally disappear, it is challenging. Other cons include:

• Not owning the end-user relation
• Less ability to manage the way your product is presented
• More complex legal relation to the end-user
• Resellers want a larger part of the deal than affiliate partners

For service companies with recurring payments schemes, it is also important to remember the challenges that appear when suspending service delivery due to missing payments. The end-user is unaware of the relation between the supplier and the reseller and you might end up suspending the delivery of a service that the end-user actually has paid the reseller for.

An Affiliate Based Partner Model

The affiliate model is a more complex model in terms of the end-user approach; badly executed, this model can make your customers feel like you have fooled them.

If you choose to approach an affiliate model, it is important that your affiliate partners make it clear for the end-user that they actually benefit financially on recommending your product or service; otherwise, it may feel like a bribe for the end-user.

Most of us have experienced badly executed affiliate partnerships at hotels. When we ask the concierge about a restaurant recommendation and he instantly suggests reserving a table on your behalf. At that point, you know that the hotel will receive a commission from the restaurant, and you are likely to ask yourself if this is actually the best restaurant around. This is bad for both the hotel and the restaurant, but they do not care, as you most likely won’t be coming back there anyway.

A good implementation: if an affiliate model can be found at telecom stores. Most stores will have several mobile operators with which they can help you get a contract . They present you with the different options and might give you some guidance and recommendations. You know that their recommendations can reflect what operator pays the best commission, but in the end, it is your decision with which operator you will sign a contract. It is clear that the store will receive a commission from all the different mobile operators with which they “help” you sign contracts .

Pros and Cons with an Affiliate based partner model

The huge advantage of an affiliate based partner model is the ownership to the end-user and everything that comes with actually managing the end-user relation. Another aspect is that affiliate partners at their simplest form do not need any training.

Another important parameter is that affiliate partners often ask for less commission than the discount that resellers get. On the other hand, affiliate partners have one responsibility for post-sales activities and no financial risk.

Recommendation: Reseller or Affiliate partner program?

I have practiced both and learned from both models. In Connection Consulting, we use affiliate based models due to the complexity of the products sold by us and by our partners and because affiliate models are very commonly used in the Brazilian professional service market. In Norway, I have used reseller models with great success with standardized hosting services.

My recommendations are the following:

• Complex products benefit from the affiliate model
• Standardized products benefit from the reseller model

It is not recommended to be a first mover in an industry that does not have a tradition for affiliate based business models. This can create distrust from your end-users as soon as the model is disclosed. Imagine if you find out that your doctor receives commission per prescription from the pharmaceutical company that produces your medicine.

The reseller model can be a great way to differentiate yourself in an affiliate dominated market. Affiliate partners have a less significant role in the distribution channel than a reseller has. If there is a large group of affiliate partners that would like to have a more dominant position, they will come your way by simply offering a reseller status where your competitors only offer an affiliate option.

What do you recommend, or what do you prefer? Please leave a comment below to let me hear your opinion.

Should you create an Affiliate or Reseller program? is a post from: Egil Fujikawa Nes

YouTube can backfire at you

Publishing content on your corporate website using the YouTube service is a risky game. For many people, YouTube is the only reference for online video marketing. The enormous possibility, simplicity and appealing offering can make the most sceptic marketeer forget about the side effects that YouTube presents.

One of the companies that was able to utilize the virile capacity of YouTube is Lloyds TSB and their famous Lloyds TSB for the journey advert. At the moment they have more then 100 different copies of their advertising published on YouTube and the ads have been watched by millions of users.

To demonstrate how badly YouTube can backfire I’m using a video named “Blade, IBM vs HP, detailed presentation” as example. This is a educative marketing movie made from IBM to point out the differences between IBM servers and their main competitor HP’s servers. The movie is 7:57 minutes long and published by a person with nickname “IBMTom” leading me to believe that this is an IBM employee.

Printscreen showing 4 HP movies and 1 Sun movie in the end of a IBM marketing movie

After been watching an almost 8 minutes long movie about IBM server, most marketeers would expect that the correct thing is to place a call-for-action in the end of the movie. Well, YouTube do that for you automatically, they come up with a list of 7 new movies they think the user would like to see. The bad thing in IBM’s case is that 4 of the movies are from their competitor HP and one from the competitor Sun. That’s a really bad call-for-action.

I have never seen IBM embedding a YouTube movie on their website but if they did they could give HP and Sun a great possibility to target IBM’s customers.

How to highjack a YouTube marketing video

It’s as easy as stealing candy from a kid.

Soon you will see your movie on your competitor’s webside. The best of all is that if you just use your logo trough the whole movie, you will have your logo displayed on your competitor’s website.

Viral Content – King of YouTube

YouTube isn’t just bad. In fact it’s a great marketing channel and a online phenomenon it’s worth to pay a great amount of attention to. YouTube is designed for viral content and serve viral content like no other online video service. Here is some pages that it’s worth to read to take advantage of YouTube’s great potential:

• Ten Ways You Can Use YouTube To Promote Your Online Content
• The 7 Qs of Great Viral Content
• 37 Viral Post Ideas You Can Use Today

Lesson to learn

Use YouTube wisely to syndicate your marketing message but do not embed YouTube movies to your own corporate website or blogs. Failing to follow this lesson can easily make your competitors able to “highjack” your potential customers on your own website.

Highjack YouTube Marketing Videos is a post from: Egil Fujikawa Nes

Before we start

This article will only cover Flash video files. Most likely you have a video file in a different format so you will need to find a program to convert your file to .flv format. During this conversion you can set video and audio quality. I’m using ffmpegX for Mac, but there are a lot of other options both for Windows and Linux.

Audio and Video bitrate

In this article we will be playing with the audio and video bitrates to compare the quality and size difference in the final result. The lower the bitrate is, the poorer the quality will be.

Progressive download

Most Flash videos are delivered with a technique named progressive download. This gives the user the possibility to start watching the movie before it’s fully downloaded in the same way as a regular streaming server, but it doesn’t give you as a publisher any possibility to protect your content.

Low quality video

The two first movies are converted to an extremely low quality both when it comes to video and audio.Try to view the video in fullscreen mode and see how the video quality looks like.

First video in 28kbit/s

Second video in 64kbit/s

Medium video quality

To achieve a medium quality video you will need to increase the size of the files with about 25%. A workaround to get better video quality without increasing the file size is to reduce the audio quality.

First video in 128kbit/s with 56kbit/s audio

Second video in 200kbit/s with 56kbit/s audio

Third video in 128kbit/s with 24kbit/s audio

High video quality

To increase the quality even more, you will need to compromise a lot on file size. This can be useful for fullscreen options. Please try the fullscreen button on the video player to experience the quality.

First video in 640kbit/s

Second video in 1000kbit/s

Larger formats

All the previous videos were resized to a 320×240 format which is the most common format used for Flash video. But nothing stops you from choosing another format. Here you have some 640 x 360 examples.

First video in 128kbit/s – File size: 3.5 MB

Second video in 200kbit/s – File size: 3.5 MB

Third video in 640kbit/s – File size 4.8 MB

Video Quality Guide is a post from: Egil Fujikawa Nes