Page experience has become the result of how the quality of online search results is strategically important to Google. To improve it even more, it will begin applying new Core Web Vitals quality factors in May 2021. However, Google announced that it is a postponing page experience update. It gave ecommerce website owners more time to improve the website (if they still did not make it). The update rollout will be gradual. It starts from mid-June 2021 and lasts until the end of August.
Although Core Web Vitals update will be a small ranking factor, it will determine key loading speed and usability indicators based on actual user experience. It is still a lot of work to be done until ecommerce websites will feel the impact on their rankings as there are hundreds of other ranking factors. Website owners prioritize core updates first, so only 60% of SEOs have done work before the Google Page Experience Update, and over 98% of websites have accessibility issues.
While too many SEOs are underestimating Core Web Vitals, they could neglect the actual user experience in the first place. Let’s find out the story behind it and key page experience factors to keep an eye on.
Page Experience deep dive
Initially, Google announced the Page Experience update back in 2020. However, Google’s approach to user experience and page load speed was well-known long before. So it came as no surprise that Google stepped up on this one more time. Since a year passes, all SEO news resources published their ultimate guides on-page experience factors, SEO platforms advance their audit tools and buy more ads.
And society splits into two parts – those who read official Google guidelines and mostly ignore pages experience hysterics, and those who read doubtful blogs and over-optimize their website. So let’s take a deep breath and find out how to find a middle way between accessibility and guessing Google plans to an update.
Page experience, in Google’s view, is all about how people interact with a page and if it is a good experience for them or not. For a long time, the four pillars of this were:
Core Web Vitals
Google adds Core Web Vitals to the bowl that focuses on three major areas: loading, interactivity, and visual stability partly covered in core ranking factors.
- Loading stands behind LCP or Largest Contentful Paint metric. It measures how long it takes for the largest element of the current viewport to be rendered. In some sense, it indicates the moment the user can read/view most of the information on the page. A good LCP score is 2.5 seconds or less.
- Interactivity is a key feature for FID or First Input Delay metric. It is the delay between the first user action and server response, e.g., clicking on the URL, scrolling the page, entering text, etc. A good FID score is 100 milliseconds or less.
- Visual stability describes CLS or Cumulative Layout Shift metric. You probably had such situations when you wanted to click on the button after the site loaded, but after a few seconds, it shifted to another place, and the action was not performed. Well, now it is a bad indicator for ecommerce sites. Google has finalized the change to how it calculates the CLS: maximum session window with a 1-second gap, capped at 5 seconds. It is now added to Google Search Console.
So, in short, Google wants websites to show most of their content and react to user input as soon as possible while being visually stable.
Search engine algorithms background
We all remember the early days of SEO when ecommerce site owners stuffed their pages with keywords uncontrollably to get higher in the search results, and it really worked. Then links started to matter, and it all almost turned into black hat SEO with huge backlink farms of sites created with this single purpose in mind.
Google had to respond in kind and develop up-to-date ranking algorithms to provide users with relevant search results with credible websites. They started to take user behavior signals into account, along with hundreds of other factors.
If we look into the history of user experience-based Google updates, it will be:
- Panda (2011) started ranking high-quality content better, penalize duplicate content, and generally emphasize quality vs. quantity in many other ways.
- Google Hummingbird (2013) focused on semantics and was the first Google attempt to understand user intent.
- E-A-T (2014) – as another way to focus on better quality content, Google started to measure pages in the space of Expertise, Authoritativeness, and Trustworthiness.
- Mobile Update (2015) – Google started ranking mobile-friendly websites higher in response to the continuous growth of mobile traffic share.
- RankBrain (2015) introduced machine-learning prediction of user intent.
- Mobile-First Indexing Update (2018) ranks sites with mobile versions higher.
- Broad Core Algorithm Updates (2018) was another set of updates aimed at ranking more relevant content.
- BERT (2019) introduced neural network analysis of conversational queries, which followed the footsteps of RankBrain. BERT is still in testing mode.
- Covid-19 Update (2020) was a continuation of E-A-T practices with a specific focus on fighting misinformation.
- Google June 2021 Core Update & July 2021 Core Update are low-effect (by now) updates that we expect this summer.
Examining the timeline above, there is no surprise Google is looking for clues to rank pages based on user experience again.
Technical SEO audit to be ready for Page Experience update
In light of these upcoming changes, it’s worth checking how your site meets Google Core Web Vitals right now and make changes ahead of time if necessary. A website audit will help you with this. It is a comprehensive check-up for your site that includes dozens of different parameters. Audit the ecommerce website automatically with dedicated tools that do not require in-depth knowledge, such as the SE Ranking Website Audit, HubSpot Marketing Grader, or others.
The greatest value in SEO audit software is a detailed issue report with instructions on fixing every aspect of the website. They carefully analyze all the pages of your site for many parameters, including technical errors, site loading speed, meta tags, content, links, images, and so on.
Below we will look at the individual stages of the website audit that most SEO tools cover and possible ways of correcting the deficiencies found.
Page loading speed
As the Core Web Vitals update is more related to technical issues, the ecommerce site maintenance and page speed are growing even more important. One of the metrics worth paying special attention to is the speed index when doing a website audit. The speed index indicates how long it takes to load the visible part of the page. Actually, it’s a scoring system that evaluates several site speed metrics. A total score of 90+ is considered great; 50-90 points mean that you need some improvements. Less than 50 points are considered poor.
To see if your site performance and loading speed are okay, you can refer to the corresponding section in the SE Ranking website audit report and enter your domain in Google PageSpeed Insights or Lighthouse.
Heavy pages with lots of images and videos load really slowly, and that’s crucial in terms of the Core Web Vitals update. Here’s what you can do if your loading speed is low:
- compress images;
- delete scripts you don’t use;
- implement lazy loading;
- delete custom fonts.
Content is the king, as Bill Gates once said. The content on your pages affects the user experience. Making a content audit is an important part of a comprehensive ecommerce website audit. Here’s what you should check:
- Titles and meta descriptions for each page and the length of those;
- H1 and H2 tags, their length, and duplicates;
- Duplicate pages;
- The amount of text content on each page (should be more than 250 words);
- What keywords each page is optimized for;
- Keyword density, etc.
Also, remember that it is now better to focus on long-tail queries and keywords that match the specific intent. For example, when a user sees your online store site in the search results and goes to it, they want to find a solution to some specific question or need. Remember that intents fall into the following categories:
- Informational intent;
- Navigational intent;
- Commercial intent;
- Transactional intent.
When doing a website audit, analyze your pages and think which user intents they match.
The principle of mobile-first indexing has long been introduced, and with each update, Google is increasing the importance of having a mobile website version for the online store. However, if your site is not mobile-friendly, it will never appear in the SERP despite your best efforts. Therefore, it is imperative to check how responsive your site is for gadgets accessing it. To do this, you can use the following services:
- Google Mobile-Friendly Test is a free tool with recommendations;
- Responsinator shows how your ecommerce site looks on different screens;
- Symby helps check all basic page elements (fonts, images, etc.) on different screen dimensions, including custom ones.
If you’ve found some issues with displaying your pages on mobile screens, here are some tips:
- adapt images to fit the screen using a CSS parameter;
- scale video in CSS;
- hide long descriptions under the buttons;
- partially hide menu items or hide the entire menu under the “hamburger”;
- hide filters and parameters for product selection;
- remove or reduce advertising banners and pop-ups;
- optimize the font for correct display on all devices;
- change the number of displayed blocks depending on the type of device.
Website security audit
User safety is essential to Google. For example, sites that contain suspicious content or do not provide a secure connection do not rank high. In addition, Google introduced its Safe Browsing to warn users if they are trying to access a site that Google considers dangerous.
To see whether your site contains suspicious content, use the Site Status diagnostic tool. If an ecommerce website is found unsafe, Google will show warnings on Google Search and in web browsers. If your site is considered dangerous, users simply won’t be able to access it.
To get ranked higher, provide an HTTPS connection instead of HTTP. To do that, obtain an SSL certificate. There are different levels of it, depending on the scale of your business:
- DV SSL for individuals and small businesses;
- OV SSL for midsize businesses;
- EV SSL for large companies.
Minimize the impact of Google Page Experience algorithm
When the news about the Page Experience update initially came out, it caused quite a concern in the SEO circles, and people started asking questions to Google representatives. One such Google expert, Danny Sullivan, stated that Core Web Vitals wouldn’t cause massive and sudden changes and repeatedly spoke about the same in his tweets.
I said it shouldn’t be the case that overnight, we flip some type of switch and there’s a massive change. That’s not typically how rollouts of this nature (such as speed, mobile-friendly) have worked. And also that things tend to be relative…
— Danny Sullivan (@dannysullivan) February 24, 2021
Even right before the update, Ryan Jones, along with other experts, emphasizes the prioritization of core factors in the first place.
way too many SEOs are over-thinking CWVs. It’s gonna be such a minor factor. There’s no way google will show a faster site over one that better answers the query.
Not saying don’t fix CWV. definitely do. but prioritize appropriately.
— Ryan Jones (@RyanJones) May 26, 2021
However, ecommerce website owners should understand that even if Core Web Vitals are not perfect now, Google’s actions are directed to the improved user experience. Moreover, 32% of global ecommerce traffic comes from the search, which makes it reasonable to update your website event for less impactful ranking factors (data was gathered from E-commerce 2020 KPI report by Wolfgang Digital). So it is the best time to start working on your accessibility now, rather than observe website ranking fluctuations during the next update that we are not warned about.
Evaluating Page Experience for a better web
A good place to start with preparing for the Page Experience update is to define measuring tools.
- Lab Testing Tools (Lighthouse, Chrome DevTools Performance Panel) evaluate the performance before releasing the application or website. The best option here is to simulate user behavior and fix errors beforehand.
- Field Testing Tools (PageSpeed Insights, Web Vitals extension) measure more accurate data to show real user experience.
- SEO platforms (SE Ranking, DeepСrawl, WebSite Auditor) also measure COre Web Vitals and are essential for SEO specialists that want a complex website audit without switching tools.
There you can find and evaluate your current metrics for mobile and desktop versions of your site. Having a grasp on this, you can try the following:
- Identify the blocks on your website pages that are causing problems. Fixing or deleting those blocks will help improve your page ranking;
- Time to First Byte (TTFB)
- First Contentful Paint (FCP)
- Time to Interactive (TTI)
- Total Blocking Time (TBT)
- CLS looks for unstable elements, so work on their improvement. Those include adding size attributes to images, ad elements are without dimensions, and adding new UI elements below the fold.
The upcoming update from Google will affect your page rankings. It depends on you whether the ecommerce site goes up or down in the Google search results. Soon, the main aspects to focus on are the site loading speed, its interactivity, and the absence of noticeable changes in the site layout after a full load. In addition, Google is increasingly focusing on matching pages with user intent. Poor, irrelevant, and bland content will not bring you a high ranking.
You can get a Core Web Vitals report in your Google Search Console, analyze the recommendations, and start implementing them right now to ensure that the ecommerce site will keep your positions or even get higher in the SERP after the summer of 2021.
Image Credit: caio; pexels; thank you!
20 Team Building Activities Your Team Will Actually Love – ReadWrite
The human race has evolved over millions of years by sticking together, working in groups and teams. Living in groups has helped humankind survive on this planet and thrive better than any other species. Considerable credit goes to this particular nature of humans, i.e., living in teams. Therefore, team-building activities are a must for relieving the stress of employees.
Most jobs today — especially in tech, involve interacting with others, and often, these team members are not even in the same line of profession. So there has always been the need for dedicated, effective teamwork in any field — whether that means jobs in the business sector, science, or finance.
Steve Jobs revolutionized the entire pattern of living with his innovative and creative mind — but without his team of hard-working professionals and their abilities, his innovations would not have reached the hands of so many people worldwide.
All of the new world facts swirling around us makes it important to have effective ways to develop teams to obtain our best results. Here are 20 Team Building activities that can assure the development of professional bonds and coordination between team members:
20 Team Building Activities for Your Team
This activity aims to develop good quality communication and understanding between team members and understand how they think.
First, divide everyone into pairs. Then with each pair/team, do the following:
Give a pen and paper to one of them and give a picture to the other. Now the one with the picture has to explain to the other what it is without actually telling what it is. With this explanation, the other person has to draw the picture within a given time limit.
This game helps to know your team members on a personal level.
This is a virtual game and is great to play during times like the unfortunate pandemic — or anytime you have a large portion of the team working from home (like work-from-home-Friday). Each member has to make a short video of their homes and their favorite things about it and show it to everyone.
This fun activity works great to help team members bond with each other and design effective strategies for problem-solving.
Firstly gather some eggs and make several teams of 3-5 people. Give each team some office supplies like tape, pencils, straws, plastic utensils, etc. The teams will have 20-30 mins to create a platform that’ll prevent their eggs from breaking when dropped from the 2nd floor.
The activity is highly based on trust, communication, and effective listening, which are integral for any team.
Find an open space and place obstacles on the floor like cones, bags, drink cups, water bottles, etc. Then, divide everyone into pairs and put a blindfold on one team member. The other team member must help the blindfolded member cross the obstacle course (without touching anything) by voice instructions.
This activity promotes self and mutual awareness. It also helps team members understand each other on a personal level.
Ask everyone to take coins out of their purses and wallets. The entire group is supposed to create a logo using these coins and other materials like notebooks, pens, etc. The logo should, in some way, represent their team/organization. At the end of 15 mins, ask everyone how that logo represents their department/organization or team.
The classification game is a great activity for an icebreaker session for team building or a company party.
Create groups of 3-5. In front of their teams, each person in the group says three sentences about themselves with a like, dislike, and one dream. At the end of a quick discussion, each team has to develop a category to describe their entire team as one single group like sporty, night-owls, rain-lovers, etc..
This activity aims to state the importance of minor decisions that affect the entire team.
The leader has to choose a picture of some cartoon character and cut it into several small pieces. Then, each person gets one of the pieces, and they have to draw the same piece five times bigger. In the end, all the larger drawings are joined to see who dis-coordinated with the team. This is fun to do with paint — (as you see above) with acrylic on poster board. You can use cheap brushes from a local craft store.
This activity aims to create good communication and team building.
Make everyone stand in a circle facing each other. Then ask everyone to grab the hand of a random person on their right and left sides. After everyone is holding hands, ask them to untangle and form a circle without leaving any hand until they are in a tight knot — have a rule that they have to have someone step through (over hands) twice. Then have them untangle. (Yes, it is difficult to step backward over hands to untangle.)
Scavenger hunts test team-thinking and decision-making.
Divide everyone into groups of 3-4. Leave clues at multiple points that lead to the final Prize. The team that reaches there first wins.
This game improves meeting productivity and motivates everyone to work instead of trying to leave the meeting.
Before starting a meeting, make everyone stand and share what they aim to contribute to the meeting. The team will ultimately decide who actually contributed to the meeting, the point they shared earlier. The winner gets a prize.
Group juggle is a great icebreaker session for new teams.
Make everyone stand in a circle facing each other and throw a ball at someone. The one who catches it has to say their name and throw it to someone else. The one who catches it has to do the same. After some time, throw another ball into the circle and continue the activity with more balls.
Improves meeting productivity and attentiveness.
During routine meetings, say random things in the middle of the discussion topics and ask everyone about them at the end of the meeting to know who was listening. It can also be played as a team 1 vs. team 2 activity. You can also whisper an important point of a meeting in a person’s ear to the left and a different point to a person on the right. Then have them pass around the information around the circle. Finally, have the last two people who get the information tell what the information is.
This team-building exercise inspires creativity and individual innovation.
Divide everyone into groups and then share an object name with one member of each team in secrecy. They then have to explain what the object is, without saying anything but just with actions.
It is a great way to break the ice for new hires.
Write several pairs on pieces of paper, like Mario on one and Luigi on others. Ernie and Bert. Paste these papers on the back of everyone and make them find their partners.
The objective helps people work in groups and acquire problem-solving, creativity, and robust communication skills.
Take a 2-meter long table cloth and make 4-5 people stand on it. The aim is to flip the cloth upside down, but the condition is that they can only use their feet to turn the cloth. Another way to do this is to have the team stand around the cloth and turn it over, never touching the ground.
This activity is based on leadership skills and problem-solving. In addition, it aims to improve the overall teamwork and coordination of team members.
Make some teams of any but equal sizes and give each team a jigsaw puzzle of equal difficulty. The twist is that some of the pieces will be mixed in different teams. The missing pieces can hence be negotiated among the teams, but whatever happens, will happen as one decision of the entire team.
Truth and dare aim to develop honesty and interaction between team members.
As simple as it is, truth and dare can be a very effective game to help your team know each other better and create stronger bonds based on honesty and interaction.
This game improves problem-solving, knowledge about your office culture and is just also very fun to play.
Create a list of trivia questions regarding your workplace and see which team gets the most correct answers. You can type a document of the questions leaving an area blank for the answers, or do a live quiz.
Apparently, singing is a great building exercise and allows everyone to bond with each other.
Your team can all go out to a karaoke bar or sing karaoke in the office with the help of karaoke games like SingStar. Our team has had great fun dividing into teams and picking songs at a karaoke bar, then trying to outdo each other and vote who picked the best song, had the best singers, did the best harmony, etc.
It aims to develop coordination
Make everyone stand in a circle with their heads down and eyes closed. Then they have to start counting to 20, but only one person can speak a single number at a time. If more than 1 person is speaking at the same time, they start at one again.
There are numerous ways to build the team spirit of your company. We also play ping-pong, bocce ball, spike ball, various versions of volleyball (even without a net), and baseball (softball) when we can get to the field. By performing team-building activities, one can ensure a stronger bond together. The spirit of becoming the best team and achieving a collective goal helps boost confidence and further build trusting bonds.
If you have employees who have a great connection and trust; you are already halfway through the success door.
In the end, what matters is how happy your employee are. If they have a good time working at your organization, you will find a great coworking space. Let them mingle and choose your business as the best learning platform to which they have come up.
At the same time, engage them with skills and development programs to improve their skills, or they can take them as their hobbies like photography, public speaking, or some basic technical skills like dedicated WordPress hosting based web development which is quick and easy to learn.
What We Have Found
We feel that if you are using team-building activities — your team is much more likely to ask questions of each other when they don’t know a piece of technology — and they are happier to help each other with project issues.
The teams are more likely to work together to solve personal (work) problems rather than “tell” the boss/leadership that someone isn’t doing their job. They remind each other and are kinder and less harsh or judgemental to each other.
It is easier to engage your employees to do extra projects. The employees are more likely to keep themselves motivated to work towards your goal — This allows them to carry on with their side hobbies and learning. We have also found that our team building work has brought good results to our company in the end.
Nobody wants to keep changing jobs or avoid work until they are enjoying work with disciplined freedom. But, unfortunately, it seems that nowadays, everyone thinks it’s the responsibility of the HR Team to create better workplaces and cultures — but as a manager and leadership — you don’t always need HR to take care of everything — you can do it yourself.
I hope you build stronger teams with these team-building activities.
Incidentally: these games are great with kids, families, and family reunions, and large parties.
How to Build Ideal Partner Personas for Channel Marketing – ReadWrite
The world of marketing has become increasingly more complex in recent years. With omnichannel approaches, platforms, and various approaches to content. it can sometimes seem that a marketer’s work is never done. But, thankfully, new ways of dealing with our marketing issues have also arisen, including process improvement strategies, and new ideas.
How to Build Ideal Partner Personas for Channel Marketing
You will often hear the term channel marketing used, and it will often be used in conjunction with the term partner personas, but what do these terms mean? How can they benefit you and just how do you go about building this so-called ideal partner persona?
What is Channel Marketing?
At its simplest, channel marketing is about being involved in the total lifecycle of a product; from the point of initial production to its final usage by the consumer. That lifecycle can consist of several levels of people, organizations, and activities. Not to forget who is involved in the process as a whole.
Partners in your channel marketing help you promote the benefits of the product, either to end consumers or to other links in the chain. This can also include distributors, affiliate partners, agents, resellers, and other third parties.
Channel marketing is based on the idea that the relationship is both symbiotic and mutually beneficial. Unlike your normal way of promoting and advertising your products, your channel partners may be independent businesses who are promoting the same product as you, which means that your product can reach a different audience than if you were operating alone.
Third parties benefit as well as your business, as they may receive a percentage of overall sales or, in the case of resellers, they can access discounts if they buy your product in bulk. Channel marketing can also be of advantage if you do not have the (human or financial) resources to facilitate the required levels of marketing alone.
The Partner Persona
Image Credit: pixabay; thank you!
The first thing to emphasize is that a partner persona is not a real person. Instead, it is a representation of who your ideal channel marketing partner may be. It is most often based on market research and data analysis of who your target demographic consumers are. There are several benefits in defining that partner persona:
- Identify – helping you find partners who are relevant to you (your business type, your market, and your target customers).
- Understand – aiding you in understanding what drives your partners, what their perspectives are, and what motivates them.
- Communication – A good definition of partner personas means it can be easier to communicate with them, especially if you share a common UCaaS platform.
- Engagement – It is easier to engage with any partners if you have a clear understanding of who they are and what they want.
- Customization – clearly define your partner personas – it makes it easier for you to customize any partner programs to be mutually beneficial.
How to Build Ideal Partner Personas
Image Credit: pixabay; thank you!
Creating your perfect partner persona is not just a case of jotting down a ‘wish list’. If you approach this exercise without due care, and careful research, then you could do your business more harm than good. There are a number of factors that contribute to the partner persona:
- Demographics – ideally, they should already be working with the demographic groups you want to target (or be positioned to do so). For example, if you want to offer content writing services, it would make sense to partner with an organization offering SEO optimization services and keyword research.
- Size and Reach – the whole idea of bringing partners on board is to extend your reach and to increase sales. There is little point in partnering with a sole unit that has a limited customer base.
- Credibility and Expertise – you want new partners to have some experience in your particular sector. Experience and knowledge of the product – or at least the product type – means they have credibility with potential customers.
- Cohesiveness – when an organization offers products or services that complement your own, then they can make an ideal partner. For example, if you are offering a complex SaaS package, then a business that can offer localization testing could be a good partner to have.
- Values – sometimes you have to look beyond basic financial factors and consider whether a potential partner meets your company’s values. For example, if you are producing reusable silicone cups and mugs, you will probably not want to partner with a company that produces a high volume of single-use plastic items.
- Benefits – there should be some equality as far as benefits are concerned. That is not to say that any profits are equally split but more that you both benefit from forming any sort of partnership. That benefit does not have to be financial; it could mean increases (for you both) in brand awareness, visibility, reach, and reputation. For partners, it could also include a widening of their knowledge base if you offer product training.
- Customer service -how does your potential partner provide customer support? Do they have a dedicated call center or use a high degree of automation such as IVR?
- Goals – Ideally, a good partner should share some of your goals and motivations. If you both want to work towards the same – or similar – goals, then it is more likely that a successful partnership can be established.
How Do You Establish a Successful Channel Partner Program?
Image Credit: pixabay; thank you!
So, you’ve spent some time creating what you see as your ideal partner persona. And further research has identified potential partners that you feel fit that persona. How do you begin to create the channel partner program you have imagined. Some factors include the following:
- Profile – build a profile of your potential partner. Where do they do marketing/selling? What challenges will they face in marketing your product? What help – if any – do they need in order to be a successful partner?
- Program – put together what you see as a good reseller program. List the benefits they will receive and what support or assistance you can offer.
- Introduction – finding the right way to introduce yourself can be crucial. Will you send an introductory letter with detailed information? Or will you arrange for a meeting (in person or virtual) to discuss this in more detail?
- Timeframe – suggest a timeframe for the partnership to be authorized and established. This should include aspects such as product training (if needed) and an agreed start date for them offering your products to customers. This could also include a checklist for various goals or progress points.
- Application and/or Contract – if needed, ask the reseller to make a formal application listing their qualifications to sell on your behalf and experience. If details are already agreed upon through meetings or calls, then draw up a contract that defines the relationship between you and what you both expect from the agreement.
- Policies – this can be included in any contract and will cover all policies and procedures to do with your partnership. For them, that could include how to deal with leads and for you, it could also cover other factors such as training programs.
Successfully marketing (and selling) your product has many different approaches. For example, you may want to combine content marketing for SaaS with a solid channel marketing strategy that includes partners who complement your product well. How you identify partners and build a program will also depend on the industry you operate in.
Software developers seeking partners may often ask what is QA and its place in your current business model. A business offering organic fruit and veg is going to look for a partner who values sustainability. Customizing your partner personas to suit you is crucial when approaching the issue.
Top Image Credit: kaboom; pexels; thank you!
Startups Should Make Their First Dollar Before They Raise Their First Dollar – ReadWrite
The world of startups is a bit like a gold rush right now: there’s lots of money to be made, almost no rules regarding who will make or lose it, and only a few will actually see a sustained profit at the end of the day. Global venture funding hit a record high in the first half of 2021, with $288 billion being poured into early-stage businesses. Numbers that high are probably leaving entrepreneurs everywhere wondering what they need to do to get a bigger slice of that pie.
Small business leaders salivating at the idea of getting a big cash injection from an angel investor need to slow things down a bit and focus on their own company first. The answer to the age-old question of whether your business should be trying to make money or raise money is almost universally the latter. Generating solid revenue streams early on will make many of the fundraising problems much easier to handle later on.
4 Reasons to Focus on Revenue Before Fundraising
1. More Independence
It doesn’t matter how good your idea is, how scalable it can be, or how interested investors are: a startup already making money is in a completely different league from one with no revenue. That’s not to say that there’s anything wrong with startups that can’t initially generate cash.
Some ideas require larger amounts of capital than others to become viable — but the early establishment of revenue streams completely changes the relationship between your business and its investors.
If you’re already making money, you’ve already proven that you have an established model to maintain a successful business.
Any investors who hop on board later will need to acknowledge that they’re joining an already-successful enterprise, not trying to build one from the ground up. On the other hand, if your company has yet to make any money at all, your investors will want a bigger say in how you eventually go about doing so.
Every dollar you make before allowing investors to come in is a piece of evidence showing that your business works and doesn’t need an investor to come to save it. This can help protect you against any overbearing “angels” later on down the road.
2. More Leverage
Along those same lines, revenue also makes investor negotiations much easier to navigate. If you’re running a business without products currently deployed, it can be difficult to negotiate with investors in good faith. How can either of you confidently give a valuation of a business that doesn’t make money? How will you be able to push back against offers that seem too low, too controlling, or not cash-heavy enough?
The truth is that revenue is your ace in the hole when it comes to negotiation.
Not only does it increase your standing among investors, but it also ensures that your business doesn’t become fixated on ideas that only become profitable at a massive scale, ceding even more control to your investors.
According to Devon Fanfair, co-founder of startup studio Devland, “building companies that demonstrate enterprise value is the best path for new builders because they generate revenue with very little investment.
It allows operators to focus on solving quantifiable problems and building momentum that is fed with every new iteration. Unfortunately, some startup builders get lost solving consumer pains that are harder to validate without scale. This can prove to be adversarial to growing confidence and routine behaviors that breed traction.”
If it’s solid and consistent, even modest revenue can make a world of difference during seed rounds.
3. More Choice
The logic here is pretty simple: there is a relatively small subset of investors interested in investing in startups founded on great ideas that have yet to deploy them at a profit, but nearly all investors working today are willing to invest in companies that have an already-proven ability to make money out in the wild. So the more spoiled for choice you are when it comes to interested investors, the better terms you’ll be able to secure when negotiations eventually rear their ugly head.
If you don’t believe me, listen to Geoff Ralston, President of legendary startup incubator Y Combinator: “Investors need persuading. Usually, a product they can see, use, or touch will not be enough. They will want to know that there is a product-market fit and that the product is experiencing actual growth.
Therefore, founders should raise money when they have figured out what the market opportunity is and who the customer is, and when they have delivered a product that matches their needs and is being adopted at an interestingly rapid rate.”
A revenue stream of practically any size at all proves all of the things listed above — and more.
4. Greater Chance of Long-Term Success
It’s no secret that the vast majority of startups fail within the first 5 years after their founding, whether they received funding or not. While this issue is often thought of as germane only to the world of startups, businesses of all kinds are in constant peril of failure if they can’t find a way to make money.
Investor funding can only prop up an unprofitable business for so long, but it can disguise some of the internal problems young startups often suffer from. Eschewing early investment in favor of revenue generation ensures that your company never has the chance to mask unsustainable losses with investor money.
Secure revenue streams also mean that your business always has something to fall back on.
If plans for expansion and new products go completely awry, you can always be sure that there is at least one pathway for your business to remain viable into the future.
The world is so saturated with seed money right now that it’s easy to lose sight of what running a business is all about. Focus too much on investors, and they’ll never return the favor. Instead — prove that you have a business plan capable of surviving and thriving, and you’ll have no difficulty attracting the interest you want.
Image Credit: dziana hasanbekava; pexels; thank you!