Blueprinting your Social Network

First, try to describe your concept in one sentence with a few keywords.  The thinking here is that you should be able to describe your web start-up in one succinct sentence so that you can then stick to this core concept when fleshing out the details of your site.  Remember that oftentimes the more narrow in focus and easy to understand your start-up is the more potential it has to go viral. Think Google.  People won’t talk about it if they don’t know what it is or why it would benefit them quickly enough.

As an example, I am currently working with team to launch our start-up “social directory” SurviveDivorce.com.  In thinking about the concept, I have narrowed the description to: “SurviveDivorce.com is a social directory connecting persons going through divorce with professionals, resources and other’s at different stages in the divorce process.”  Notice I have stayed away from any fluff words and only spoke about the core utility of the site.  Fluff can come later.  Also, there are important features left out of this sentence.  For instance, one of the features we’re incorporating into the site is a “stealth mode” for users to give them ultimate privacy while they use SurviveDivorce.com to the fullest.  This will be a differentiating feature, but people aren’t going to come to the site for privacy, they’re coming for utility.  Privacy is simply a way we can earn their trust and time and differentiate from less-conscious competitors. Privacy is a feature we’ll describe in our Blueprint.

Now that you’ve brainstormed and written your concept sentence, it’s time to flesh that out to a basic outline.  And I do mean basic.  Write down the main features you are initially envisioning for the site.  Use bullet points.   This feature-set is sure to change, so just get everything on paper at this point.  Now that you’re ideas are on paper, it’s time to make a list of your competitors.

The reason I suggest analyzing the competition as such an early stage is because the web is a pretty fast-paced and innovative environment.  Before you spend hours and hours planning your concept without regard to what’s on the market, take the time now to see what’s out there.  Create a spreadsheet and do some creative Googling.  Find as many competitive websites as possible, focusing on direct competitors.  Add the URLs to your spreadsheet along with a brief description on the site.  Note its design, features, community size, length of time in business, strategy, and pricing to start with.  The goal is to be able to easily compare competitors as well as use this information to determine who the major players are and how business is going for them.

It’s also key in my opinion and based on experience to not marry your idea before you date it for a while.  I see many entrepreneurs so in love and committed with their first idea that they are blind to reality.  You must think of the business planning phase as test driving a car or going on a date.   Your goal is to flesh out your idea, check the facts and then make an educated decision on how to proceed.  Don’t be afraid to abandon ship if you don’t like what you find or don’t feel as comfortable as you did before you realized Goliath was already present in the marketplace.

Next time we’ll talk about analyzing your target market, further fleshing out the website concept in the form of a blueprint and building financial projections.

Within my role as CEO for Eclyptix, we receive dozens of social network leads a month and the industry continues to grow.  Despite the rough economic climate and wary investors, entrepreneurs appear to be resiliently breaking through and innovating in order to take their idea to reality.  I’m not going to lie: there are a lot of bad ideas out there.  Without getting into specifics, let’s just say a lot of prospects I feel are doomed from the start.  But a small percentage of these prospects have a solid idea, a strategic plan and an initial budget to do things the right way.  And I’ve gotten better at identifying the things that set apart the successful ventures from the ones doomed to fail.

Because all social networks are not the same, it’s important as a first step to think about what kind of social network you are looking to build.  You essentially have two initial options to consider:

1) Use a turnkey platform or provider that is quickly deployable and has minimal costs like Ning, Pringo Networks, KickApps, etc… (typically hosted solutions, where you are “leasing” the website)

2) Have a social network built “from scratch” that is built specifically to meet your objectives and you own the source code.

Don’t worry, you don’t have to decide right now.  First, you need to blueprint your social network concept and then you can decide what the best solution is.  So next post we’ll break down how to blueprint your social networking website.

Making the pitch
Having a killer pitch is of utmost importance in securing investors for your project.  It’s imperative you have a business plan, marketing plan and projections.  It’s important to have an engaging executive summary.  A project blueprint for the website is critical to investors understanding and feeling comfortable with the launch strategy.  A logo for your business/website and any mocked up pages from the website helps tremendously.  Essentially, the further along in the process of building out a successful website, the better off you are.  The more you can provide in the way of blueprints, designs, coded pages, functional sections, or a beta version the higher your chances of landing investors are.

It’s really quite simple.  Humor me and pretend for a minute that you are a multi-millionaire investor.  You’re successful, busy and used to people wanting your money.  You would probably like to review ideas where they are as tangible as possible – where you can visualize how it will be built and what the outcome will look like.  You want to minimize risk, maximize return and make sure you’re getting in bed with someone who isn’t going to lose you money.  What would you bring yourself if you were an investor?  Here’s what I recommend preparing:

• Executive Summary
• PowerPoint Presentation with no more than 15 slides highlighting the investment opportunity
• Introduction E-mail
• Bio for Investment/Business Website Profiles
• Business Plan w/Financial Projections and Works Cited (research!)
• Marketing Plan
• Project Blueprint
• Any Completed Web Page Designs or Work
• Google Yourself and Your Website and Your Company
• Create bios on popular social networking services, business websites, etc…
• Create business/website profiles on popular social networking services, directories, etc…
• Begin blogging
• Have a splash page on your website until the beta is launched (provide info on your start-up and collect e-mails)

Recommended Resources

• http://www.inc.com/guides/finance/20797.html
• http://www.entrepreneur.com/howto/raisemoney/index.html
• http://smallbusiness.blogs.cnnmoney.cnn.com/category/raising-money/
• http://mixergy.com
• http://quicksprout.com
• http://www.fastcompany.com/tag/investment
• http://socialnetworkingwatch.com
• http://www.mashable.com
• http://www.jasonnation.com
• http://www.techzulu.com
• http://www.techcrunch.com

“Seeking Financing” – a compilation of notes and resources from around the web

Finding the moolah
“Roughly speaking, investments break down into two forms: debt and equity. You take on debt when you borrow money from a lender, and pay interest on that investment. You are compelled to repay the money with interest over time. Or, you can take on an equity investment — in which you sell a portion of the company to an investor in return for cash or something else of value. Each source carries advantages and disadvantages. Consider them well before making choices, for finance decisions are hard to undo. It’s not enough to find lenders and investors; you have to pick the right ones. Try to find investors who bring more than cash to the table. Look for supporters who can help you with financial advice, technical assistance, or who can connect you with key customers. Seek patient capital from a sage who can listen to your problems over breakfast and set you straight by the time you reach the offices. ‘Capital raising should be an extending circle,’ says Scott Shaw, founder of the Austin Grill, a successful Tex-Mex restaurant in Washington, DC. He explains that you start small with an immediate group of investors who can help you directly. Then you gradually build on that platform, seeking larger amounts from people you come to meet and with whom you will probably have a more formal relationship. Shaw also counsels that you “listen to the capital markets.” They may be trying to tell you something about your venture. If you’re having trouble raising money, there may be a very good reason why. If you are going out to seek capital — and the associated advice — from people who may have more experience, it’s a good idea to listen to them! They may know something you don’t.”

Bank Loans

“SBA Express was launched in yet another effort to lessen the paperwork hassles attached to applying for a Small Business Administration-backed loan. Bank-qualified business owners can borrow up to $150,000 without going through the standard SBA application process and are guaranteed a loan decision within 36 hours. Since the loans are guaranteed by the government agency only at 50% of their face value, many of the 500 or so eligible “preferred” lenders (which include commercial banks and other financing institutions with good track records on their other SBA loans) have yet to sign on. To track down active lenders in your area, contact your SBA district office, or visit the agency’s Web site. SBA also offers normal loans and microloans through local banks. President Barack Obama signed legislation last week that will pump another $80 million of stimulus money into the Small Business Administration’s lending programs. That sum may not sound like much, but the SBA says this added funding will support nearly $3 billion in loans to America’s small businesses.”

“Community banks, the antithesis of all those huge financial institutions that are merging and acquiring themselves into the deal-making stratosphere, offer the best (and maybe the only) chance for many small or young companies to start building a banking relationship. While the small banks may have fewer products than the giants do, their advantage to entrepreneurs is their flexibility. To locate possible lenders in your region, contact the Independent Bankers Association of America, which can provide leads to more than 5,000 community banks. You can visit the association’s Web site, call the group at 800-422-8439, or reach it by E-mail.”

“National banks — the (self)chosen few is the way we like to think of that select group of national banks that do more than just talk about their interest in backing start-up companies. Their loan officers are out there–even in today’s chilly credit climate–aggressively launching new products and actually approving deals. Silicon Valley Bank perennially crops up on this list; so, increasingly, do Chase and Fleet Bank. (One caveat: companies with less than big-scale growth plans need not apply.) To tell if a big bank belongs to this limited group, look for new products that demonstrate a commitment to today’s credit challenges.”

“Asset-backed borrowing may be the only game in town for many entrepreneurial companies, as long as bankers keep buzzing about the need for “credit-risk premiums,” a “flight to quality,” and other euphemisms for reducing their risk. If that is the way your company must go, so be it. But don’t think in narrow terms. An asset-backed loan can be anything from a home-equity line of credit or an SBA deal backed up by your kids’ college-savings account, to those pricey, but ever-handy, transactions tied to accounts receivable, contracts, or inventory. A very good source of information is GE Capital’s Guide to Asset Based Lending. (Call 800-572-1838 to obtain a free copy.) You may want to skip the 6-page sales pitch about the company’s various business lines, but the 19-page glossary is a must-read.”

“Microloans, which typically are under $35k can make sense for certain situations. We recommend considering this early-stage option if a small infusion of capital could make a difference to your venture’s cash flow or growth-related activities.”

“Third-party loan guarantees typically require that a relative or close friend cosign a credit-line agreement when a company’s credit history (or that of its owner) leaves something to be desired. But with personal indebtedness significantly on the rise, entrepreneurs may have trouble finding among their nearest and dearest someone who is both willing to cosign and is also deemed creditworthy by prospective bankers.”

“A new breed of financing intermediary has stepped forward that will consider cosigning your corporate credit line for the right price (either a fixed fee or a percentage of the face value of the loan). Since these guarantors will be liable for any borrowing you can’t repay, expect a close evaluation of your financial credentials. Still, their standards are probably more flexible than a banker’s. For contacts within this relatively new profession, network through your accounting, legal, or financial advisers.”

Nonbank Creditors

“Credit cards have always been the mainstay of the small-business owner. But these days any entrepreneur who relies on his or her credit-card company for just, well, credit cards is walking around blindfolded. Some of the perks, like yet another free on-line news service for business owners, don’t exactly ring our bell. What we do like, though, is the range of unsecured credit-line alternatives offered by both Visa and American Express. If bankers slam the door in your face, contact all the major credit-card suppliers to compare prices and options. As you would with a bank, make sure you’ll have opportunities to increase your borrowing limit  once you’ve proved that your company is a good customer. If you don’t really care about the credit-card part of the equation, consider a conversation with Merrill Lynch, whose portfolio of small-business credit products looks good these days. We particularly like a working-capital revolving line of credit, WCMA Reducing Revolver Loan, that’s competitive with what most banks could–but wouldn’t–offer many fast-growing companies. Also you can consider tapping personal credit cards for your business financing needs as well.”

“On-line credit search engines are practically a dime a dozen. (OK, so we exaggerate. But so do many of them.) The best are the ones that guarantee confidentiality, don’t charge an up-front fee, and can point to successful results in hooking up companies like yours with legitimate lenders. One site that we like (www.getsmart.com) launched a business-financing section. It’s affiliated with 17 banking and nonbanking lenders, including American Express, Heller Financial, and First Union.”

Family & Friends

“Tapping personal ties to raise cash for a company that’s either too new or too small to get financing elsewhere is an age-old formula that still makes sense. But here’s one risk too big to ignore in today’s highly competitive capital marketplace: if you don’t follow professional standards in structuring and documenting “F&F” loans or equity arrangements, your sloppiness will likely come back to haunt you.vThat’s because if and when your company grows to the point at which it can credibly approach banks or professional investors for funds, their lawyers will examine your corporate and capitalization structure with a fine-tooth comb. Even in the best of times, the lenders would delay the closing of any deal until errors or inconsistencies got cleaned up. In today’s market that could mean you’d wind up losing opportunities altogether. Paying a lawyer now is a cheap way of avoiding problems later.”

These are good articles on the subject:

• http://www.entrepreneur.com/money/financing/loansfromfriendsandfamily/article51542.html
• http://www.nolo.com/legal-encyclopedia/article-29499.html

Private Equity

“Performance-oriented, flexible terms can make or break a deal in these risk-averse times, especially for a private-equity investor who is weighing the most attractive opportunities that have been around in years. One thing that can help lure investors is the so-called clawback technique. A financing deal starts off with one set of terms–your equity investor receives a certain percentage of stock in return for a specified capital investment–but those terms can shift, depending on how successful you are in meeting agreed-upon goals according to a fixed set of deadlines. “What I tell business owners all the time is ‘Who cares how much stock you give away going into the deal as long as you maintain control? If you can get a good chunk of it back based upon your performance results, that’s what matters,” says A. Gordon Tunstall, a financing consultant and intermediary in Tampa. ‘Meanwhile, these kinds of terms increase the comfort level of private investors in times like these.’ ”

“The wide world of the Internet still offers a mixed bag for the corporate seeker of capital. Once you start visiting financing Web sites (which seem to proliferate endlessly), you can find yourself in a black hole–unable to turn off the computer but also unable to come up with any cash. Still, cynical though we may be, we recommend that you check out some of the best sites, which offer business owners the chance to research a wide range of funding options. Among the sites we like is www.vfinance.com, which provides information on more than 200 venture-capital firms, as well as frequent news updates about the industry.”  The following websites are other valuable sources of information for finding venture capital and angel investment:

• http://www.gobignetwork.com/funding/
• http://angelsoft.net/
• http://www.inc.com/articles/2001/09/23461.html
• http://www.mycoplan.com/
• http://www.fundingpost.com/alt1/index.asp
• http://investor.fundinguniverse.com/
• http://www.go4funding.com/funding.aspx
• http://www.findthatmoney.com/index.php?file=index
• http://www.gaebler.com/venture-capital-firms.htm
• http://www.ladigitaldirectory.com
• http://www.entrepreneur.com/vc100/stage/early.html

Corporate Support / Partnerships

“Strategic partnerships aren’t just a much-talked-about trend; they’re the best alternative for many companies that find themselves either shut out of traditional financing deals or unwilling to swallow the equity valuations or interest charges required to make those deals happen. Cash infusions connected with strategic partnerships are usually much smaller than they might have been with a traditional financing deal (and sometimes investments aren’t a factor at all). When a partnership’s synergy clicks, however, the resulting growth can often yield far greater capital options later on.”

Networking/Connections

It’s important to tap as many connections as possible within your current network as well as grow your network.  In Greater LA, there are many groups that you can join on Facebook in order to get event invites and be able to network with group members.  I recommend joining the following as well as searching for other Facebook and LinkedIn groups.  I also recommend searching event calendars (e.g. on Mashable) and adding other tech / business related groups in other geographic markets.

1. Tech Coast Venture Network (http://www.tcvn.org/)
2. Digital LA (http://www.facebook.com/group.php?gid=8965717386)
3. Startup LA (http://www.facebook.com/group.php?gid=20956644014)
4. Black Card Circle (http://www.facebook.com/group.php?gid=4783092010)
5. Social Media Club (http://www.facebook.com/group.php?gid=18295985805)
6. Media 2.0 Workgroup (http://www.facebook.com/group.php?gid=2460411391)
7. Social Networking Professionals (http://www.facebook.com/group.php?gid=30068098851)
8. LATechConnect (http://www.facebook.com/group.php?gid=6104555993)
9. BlogWorld (http://www.facebook.com/group.php?gid=5607245325)
10. LA Mixers (http://www.facebook.com/group.php?gid=8731106939)
11. TechZulu (http://www.facebook.com/group.php?gid=12652861964)
12. Social Networking Conference (http://www.facebook.com/group.php?gid=25413307804)
13. Twiistup (http://www.facebook.com/group.php?gid=2438232599)
14. Web 2.0 (Entrepeneurs) (http://www.facebook.com/group.php?gid=2208499259)
15. Social Networking Industry Group (http://www.facebook.com/group.php?gid=25413307804)
16. LA Web Professionals Group (http://www.facebook.com/group.php?gid=108772512008)
17. San Diego Business LinkedIn (http://www.facebook.com/group.php?gid=58673085404&ref=search&sid=55700960.995457968..1&v=info)
18. San Diego Business Network (http://www.facebook.com/group.php?gid=36467713888&ref=search&sid=55700960.995457968..1)
19. Top 1000 Professionals of San Diego (http://www.facebook.com/group.php?gid=295949469082&ref=search&sid=55700960.995457968..1)
20. OC Investors (http://www.facebook.com/group.php?gid=43539340787&ref=search&sid=55700960.3741734922..1)

Events

There are quite a few events in the Southern California region to network and meet investors and people that know investors.  Obviously Silicon Valley and the Bay Area is a strong tech hub as well.  There are also valuable tech and business events in other tech cities like New York, Seattle, Vancouver, Las Vegas, etc… Attend as many as you can, at least one local event per month.  You must be vigilante in the beginning though to get out there and attend and try and meet the right people. There are local and national calendars and resources like the Mashable social networking event guide (http://mashable.com/category/events/).  Read top industry blogs like TechCrunch and Mashable and you can stay abreast of industry happenings.  There are social networking conferences and venture capital summits.  There is SXSW and Blog World Expo.  In LA, do’t forget Twiistup, Social Media Club and Digital LA events. The easiest way to get in the loop with regards to tech, social media, business and investor events is to do lots of Google searches, find well connected people on Facebook and see what events they attend or recommend, and keep tabs on event calendars.

Crowdfunding/Peerlending

“Crowdfunding/peerlending is a newer trend where you can raise money from other people.  Prosper.com and Kickstarter.com are good examples.  In one interesting crowdfunding example, “Like a homespun IPO, CatwalkGenius.com helps hoi polloi bankroll upstart fashion designers. British documentary filmmaker Franny Armstrong raised more than £450,000 ($815,000) to finance–and work full time on–The Age of Stupid, which she hopes will premiere at the Sundance Film Festival in January. People who gave 20 quid ($35) got a credit on the film’s website; those who gave £5,000 ($9,000) and up will get a percentage of the profits, if there are any.”  This logic would be interesting to consider for GD.  Perhaps pre-sell annual and lifetime memberships, newsletter spots, etc…?  Or having “founding members” or “contributing sponsors”?”

Investment Consultants

“There are many companies that act as investment consultants.  They help you package your concept, give you strategic advice and connect you with investors. Capital intermediaries have been around a long time, and we’re the first to admit that they’re a mixed bag. Still, a skillful intermediary with valuable contacts at a wide range of capital sources can be, simply, the best friend a business owner has. But do your homework. Talk to absolutely every businessperson you respect (including your team of advisers) and ask each one to recommend an intermediary who typically handles companies similar to yours in size and industry.vWhen you’ve generated a short list, ask each intermediary for 10 business references, including satisfied customers, bankers, lawyers, and so forth. Make sure the references include names you recognize (and don’t hesitate to check out any that strike you as dubious). We’d like to recommend that you stay away from intermediaries who charge up-front fees, since that’s a typical scam technique, but we won’t because there are some very credible and successful intermediaries who insist on them.”

Alumni

One option to consider is tapping into your Alumni network for investment.  Check with your local chapter, hit up homecoming, and/or ping your former professors and classmates.

Planning and forecasting
It’s absolutely imperative to have a carefully thought out, researched and professional master business plan for your website.  Equally important is a marketing plan.   It’s also very important that financial projections and monetization strategy is incorporated into your business plan.  Investors want to see your concept fleshed out, stacked against the competitive marketplace and thoroughly analyzed.  The more information and context you can provide them, the more likely you are to ease any concerns they may have and preempt their otherwise imminent questions.  If you don’t have a master business plan, marketing plan and/or financial projections you can hit the ground running by using one of these tools:

• Mac Users: JIAN Business Plan Builder
• Windows Users: Business Plan Pro

Make sure your plans incorporate extensive and credible research, are carefully constructed and organized and give investors the information they need to make an educated and comfortable decision.

Blueprinting & showcasing your website concept
Just as important as a business plan is a thorough Project Blueprint for your website.  A project blueprint is the road map to building your website and should detail every aspect of every module within the site.  A project blueprint is most effective when produced by a qualified web design/development company or consultant in conjunction with your vision for the site.  This creates synergy ensuring that the planned website is thoroughly researched, discussed and documented based on different expert opinions.  Let no stones go unturned! A project blueprint consists of your website broken down into modules with each module thoroughly discussed and planned as well as wireframes created for layout purposes.

Beyond the project blueprint, the further you can progress into your website project before engaging investors, the better.  The more you can provide, the better as it will build investor context and confidence.  If you can design half of the pages without investors, do it!  The more you have to show to them as “proof of concept” the better.  Ideally you will at least have the project blueprint, logo and web page designs ready so the only thing left would be coding, development and launch of the beta version.  Of course, if you can advance further into the project without their help, do it!

I do want to note that many people can only finance so much on their own so they may go with a lower quality firm for the work in order to have more proof of concept for investors.  Though sometimes building a lower quality, cheaper website to show its potential can work, it oftentimes backfires.  You know what they say, “put your best foot forward.”  If you have analyzed the market opportunity and are confident in your website, you should make every effort possible to ensure you can make a high quality site and afford to market it properly.  Otherwise, it could all be for moot. Additionally, if you go with a cheaper website build-out initially, it can backfire and cost you time and money later when it has to be rebuilt to scale.

Building your bench
Just a brief note here that every business person knows the importance of a CPA and lawyer.  Even if you can’t afford to use them that much, do some research and find a good CPA and a strong lawyer.  This can also make you look more prepared to investors, though they may end up requesting a new CPA or lawyer!

If you’re building a website, it’s also imperative to thoroughly research and find a solid web development company, Internet marketing company and hosting company.  These three vendors will become your allies in building out your dreams.  Keep this in mind when choosing them.

Finally, it’s a good idea to recruit a few advisors, even if you’re not forming a formal board for your company.  Find some solid and credible advisors to add credibility to your project and give you every shot at being successful.

When viewing companies and websites to potentially invest in, investors are looking for a variety of different things. They want to see that your website or concept is thoroughly researched, protected and as close to market as possible. The more of the “legwork” you take care of before you bring on investors, the better. Not only will this demonstrate your ability to effectively plan and account for the many aspects of running a successful business, it can protect your intellectual capital, ideas and even discussions with investors themselves. The fact of the matter is: the more organized and legitimate your business is, the more it’s going to be taken seriously. So let’s break it down:

1. Choose a business structure that is best for your current or planned situation and file within your desired state (http://www.irs.gov/businesses/small/article/0,,id=98359,00.html)
2. Register your “Doing Business As” if required based on your business structure and state (http://www.business.gov/register/business-name/dba.html)
3. Apply for an EIN (Employer Identification Number) (http://www.irs.gov/businesses/small/article/0,,id=98350,00.html)
4. Apply for a city business license as necessary based on your location
5. Apply for any other licenses needed based on your location (e.g. work from home permit)
6. Register your name and logo for trademark protection (http://www.uspto.gov/trademarks/index.jsp)
7. Register your domain name for at least five years
 (http://www.godaddy.com)
8. Get a D&B D-U-N-S number to begin establishing business credit 
(http://smallbusiness.dnb.com/establish-your-business/12334338-1.html?cm_mmc=google-_-keyword-_-online-_-d-u-n-s&LID=13619855)
9. Open a business checking account and credit card (choose your bank carefully based on their business products and services and with attention to their business financing if needed)
10. Utilize QuickBooks and keep careful records (it’s imperative to carefully notate every expense and all important details on your business for the sake of future taxes, investment, valuation, etc.)
11. Customize a Non-Disclosure Agreement (NDA) for discussions with investors, friends, vendors, etc…

Coming Next: Part 2: Planning & Forecasting

It is unwise to pay too much.  But it is worse to pay too little.

When you pay too much, you lose a little money; that is all.  When you pay too little, you sometimes lose everything, because the product you bought is incapable of doing what it was bought to do.

The common law of business prohibits paying a little and getting a lot.  It can’t be done.

If you deal with the lowest bidder, it is well to add something for the risk you run.  And if you do that, you would have enough to pay for something better.

There is hardly anything in this world that someone can’t make a little worse and sell a little cheaper~and people who consider price alone are this man’s lawful prey.

~John Ruskin 1819-1900

vs.

Benjamin K. from Florida asks: “I have a limited amount of time to spend on social media marketing for my apparel company. If I had to choose, should I spend more time on Twitter or Facebook? Which provides the best ROI from a time perspective?”

This is a great question! Since both Twitter and Facebook are free services, ROI is computed based on time spent as well as opportunity cost (what could have been done with that time). Many businesses are also paying staff or outside support to manage their social media presence using Facebook and Twitter. Both services have received a lot of press, positive and negative, especially in recent days. Facebook is growing into a worldwide phenomenon, effectively linking six degrees of separation together for the first time in history. Twitter has been criticized and raved about equally as much and it’s merits as a business promotional tool still have many confused despite the hype. So what gives?  Which is better?

To start off my answer, let’s first touch up on what these two services provide:

• Twitter is a social networking and micro-blogging service that enables its users to send and read 140 character messages, known as tweets. Tweets are posted on the author’s profile page and are delivered the the author’s subscribers, known as followers.
• Facebook is a social networking site with over 250 million users worldwide. Users can create profiles and and send messages to friends. Users can join networks organized by city, workplace, school and region.

In my opinion, Twitter is more quantity-driven (it’s primarily about the number of tweets and followers a user has) while Facebook is more quality-driven (it’s primarily about connecting people that already know each other through two way and public conversation and the sharing of content like photos, videos, links, notes, etc…).

Time spent on Twitter would be spent creating a profile, tweeting messages from your Blackberry or computer, following other users, adding your profile to directories, promoting your tweets, making lists of users, attempting to consistently stay relevant, interesting and/or useful with your tweets (no easy task), etc..

Time spent on Facebook would be spent creating a profile, adding friends, posting content (photos, videos, notes, polls, discussion board topics, pages), managing wall posts by fans, managing ad campaigns, viewing fan page statistics, creating and/or promoting Facebook apps for your band, post on other’s walls, etc…

Facebook is usually a more personal medium while Twitter can be more ambiguous (or less, depending on what’s being tweeted).  If you’re a business or consultant, the additional layers of content and tools you can utilize with Facebook may allow you to better brand your product and more persuasively and visually communicate with your target audience.  Twitter, on the other hand, may be a better customer service tool (customers tweeting issues and receiving quick feedback) for easy two-way communication.

The Conclusion: Facebook wins!

Facebook currently provides more tools for businesses and brands to promote themselves in the way of tailored fan pages and profiles, pay-per-click advertising and the Facebook developer platform.  It also currently has the biggest user base (250 million+).  In my opinion, it’s also easier to use.  It’s nearly just as portable as Twitter (it can be accessed and managed on most cell phones).  It allows you to leverage yourself (through a personal profile) as well as your brand (through a fan page or business profile).  It has a great, cost-effective advertising system offering pay-per-click marketing that is highly targeted.  Facebook provides more statistics for businesses and brands to manage their efforts as well. If you have less time, Facebook can be more useful as in my opinion it is easier and more engaging to connect more with your existing network via Facebook than Twitter.  Plus, it is very likely that more of your existing friends, family and customers will be on Facebook than Twitter.  This is why for initially building your social media presence, Facebook is a good place to start and Twitter is a good place to expand to.  I think Facebook should be the backbone of your social media presence and Twitter your customer service and branding “skin”.

Twitter’s value shouldn’t be diminished because I’m choosing Facebook over it in this post. Twitter is a great tool and one of the most interesting and hyped sites ever made.  It’s helped Iranians organize rallies and President Obama raise money. But Twitter tends to work faster and better for established brands and personalities, not new wannabes.  If you’re a new company or have a new product, you have to start from scratch without name recognition, making your results slower to come by than, say, Ashton Kutcher or Coca-Cola would experience.  Facebook’s a bit more turnkey and provides more value quicker for the average company.  Too many small businesses and consultants brag about thousands of Twitter followers, but they don’t know any of them that well and most are junk or not in their target market.  Better to have a few hundred high quality customers, friends, family, and prospects than a few thousand random people that you don’t know and that doesn’t care about you.

I also think guys like Seth Guru are on to something when they limit the number of social media channels they utilize.  Seth Godin, a prolific marketing and web author,  has written previously about why he has limited his social media usage to one or two services.  The simple adage “jack of all trades, master of none” rings true in social media.  Try to do it all and you may end up simply managing a bunch of accounts instead of successfully building community and engagement with one consistent audience from your main social media presence.  Limiting your time to one or two main services doesn’t necessarily limit your reach, it can make your more effective!

The good news: you can use Twitter without using Twitter

If you are one of those people who doesn’t have the time (or willingness) to manage multiple social media profiles, don’t fret!  You don’t have to miss out on Twitter.  Turns out, you can tweet without tweeting!

You can (and should) still use Twitter even if you only have enough time for Facebook.  There are many free tools and websites that offer ways of hooking up your Twitter account with your Facebook account.  For instance, you can set it up so that your status updates on Facebook in addition to your notes and wall posts are automatically tweeted to your Twitter profile!  The reverse is also possible, where your tweets are sent to Facebook for promotion with your network there.  This makes it easy to post your content and messaging at one site and yet communicate with several.

- @RobbyBerthume

“In 2000, when he was 14-years-old, Robby Berthume started building web sites for local businesspeople. When he turned 22, the LA Business Journal featured him in its “Twenty in Their 20s” report because his company was earning healthy profits on about seven figure sales by building web sites like WhereToGetEngaged

I invited Robby to Mixergy to talk about what he learned about building profitable sites.”

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