How to use cash float

Sam Ovens had a promising startup, but no money to invest in it.

“I had an awesome idea with SnapInspect,” he says. “I knew it was going to do well, and it was growing, and it was profitable, but I wanted it to grow faster, and I wanted to build more features.”

To do that, he needed cash. But Sam is in New Zealand, with no access to Silicon Valley money. And he didn’t want to take on investors, anyway. So instead, he took a hint from Warren Buffett.

Sam had read about how Warren Buffett used the “cash float” from his insurance business to fund his other companies. “For those of us who don’t have the luxury of owning multiple companies, consulting businesses can be used in the same way,” says Sam. “I realized I had a lot of basic skills and that consulting would be a good business to do on the side of SnapInspect, to make some money, and to stimulate SnapInspect’s growth,” he says.

Sam started a consulting business that now brings in $35,000 per month, which he poured into his startup. With a full-time developer and other staff, SnapInspect took off. Today SnapInspect has about 1,500 paying customers and revenues of $37,000 per month.

In his Mixergy course, Sam shows you how to use “cash float” to fund your startup. Here are three highlights from the course.

1. Go Where the Money Is


Most people target customers who don’t have any money.

“When I first started out trying to get consulting clients, I would approach companies that…didn’t have enough money,” says Sam. “A company that’s scraping month to month, even if you’re going to solve a big problem for
them and you’re really going to help them, expenses is the last
thing they need.”

The result? He wasted a lot of time trying to make it work with those clients, and he made almost nothing.

So how do you find prospects with money?

Look for success indicators

Find prospects who are already spending money on advertising.

“I’d just go through the yellow pages,” says Sam, “and I looked for full-page, color ads, or just big ads…and just tear them out without looking at who the business was. I’d just go through and rip them all out.”

Then he grouped the ads by industry. “I could actually see which industries were…spending a lot on marketing, just by cutting and tearing full page ads out of the yellow pages,” he says.

2. Get Past the Gatekeeper


Once Sam had prospects with money, he had to figure out how to reach them. But cold-calling is hard, and people sort their mail over a trash can. Sometimes your mail never even makes it past the secretary.

“A lot of times, you’ve got to get through gatekeepers with mail in bigger companies,” says Sam. “They’ll open it, and if it’s marketing stuff, people see brochures and stuff, trash bin, trash bin, trash bin.”

So do you reach the successful prospects?

Make it to the top of the pile

Send them signature-required “lumpy” mail.

To do that, Sam created a package with the prospect’s yellow pages ad, a sales letter, a CD with a 5-minute critique of their website, and the offer of a risk-free 30-minute consultation.

“If it’s in the bubble-wrap pack and it’s lumpy, it gets you excited and you want to open it,” says Sam.

Plus, something lumpy can’t sit at the bottom of a pile, and a secretary won’t open it. “The gatekeeper’s going to think, ‘Well this is something he’s probably bought, personally, on the Internet. I’ll let him open it himself,’” says Sam.

3. Give Yourself a Scooby Snack


Marketing yourself isn’t fun, so Sam avoided it as much as possible.

“When I first started out, I’d constantly find myself inventing things to do to, like, oh, we need a new WordPress theme, or I need more Twitter followers, or my profile picture isn’t good enough,” says Sam. “Stuff that doesn’t generate money.”

Then he heard Tim Ferriss ask, “Am I inventing things to do to avoid the important?” Sam realized that selling was important, and that he was avoiding it because it was uncomfortable.

So how do you make yourself do the thing you’re avoiding?

Make success a habit

Find a trigger, a task, and a reward.

Sam read The Power of Habit, which says that every new habit requires three things: a trigger, a task, and a reward. He decided that his trigger would be starting work in the morning, “before email, before anything,” he says. His task was sending out direct mail pieces. “I’d drive to the post office, send it, and then my reward for doing that was I’d go to the cafe next door, and I would get a $5 coffee that I always used to think was too expensive, and I would just sit there, and I wouldn’t care if I took half an hour just to sit there,” he says.

After a few weeks, it became harder to not do it than to do it. “If I didn’t do that, if I
didn’t send that piece and get that coffee, I just felt guilty, and it became a habit so quickly that it was, like, the only way I could get satisfaction…was to do that,” says Sam.

Tweetable Insights

“Fund your startup with skills you’ve forgotten you have.” Click to Tweet

“Don’t waste your life chasing customers with no money.” Click to Tweet

Get the rest of the course here.

Written by April Dykman. Production notes by Alex Champagne.

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  • http://www.famesbond.com/ aditya menon

    Wow, pretty amazing advice. PRETTY AMAZING ADVICE. Thanks.

  • Arie at Mixergy

    Thanks for checking it out Aditya

  • http://www.michelledemarco.net/ Michelle DeMarco

    Really great suggestions.

  • Niall Doherty

    Love it! Thanks for the inspiration and actionable tips, Sam.

  • selfpubsuperstar

    Great tips – thanks!

  • Arie at Mixergy

    I’m glad it was helpful

  • emmet o’riordan

    Wow.. I love this. Finally someone with REAL advice..

  • William Parker

    Simple, yet effective! Thanks Sam!

  • http://www.twitter.com/DBradleyRI DBradleyRI

    Great advice — I love the piece on how to get past the gatekeepers! Brilliant!

  • http://aarontrank.com/ Aaron Trank

    This course is absolutely fantastic! If I wasn’t already a Premium Member, I would buy the membership just to get access to this course!

  • Arie at Mixergy

    I’m glad it was so useful

  • Nikhil Paul

    Genius in its simplicity, thanks for sharing Sam.

  • Kyle Patrick McCrary

    First line of the last paragraph of the summary… Shouldn’t it read “it became harder to not do it THAN to do it.”? (I could easily be wrong here)

    KPM

  • Arie at Mixergy

    Great catch! Thanks KPM–we’ve made the correction.

  • Kyle Patrick McCrary

    Awesome.

  • http://internetlifestyleproject.com/ Terry Tiessen

    Really great post, it goes right to the heart of the matter that I find myself in. I have a few gates to crash, great idea!

  • Stephan Bayer

    Loved the course. Thanks so much for the tips. Loved the part about offering customers options and finding out customers are willing to pay for the more expensive package.

  • John Strange

    Sam can i get a copy of the video’s that they deleted off the warrior forum sent to my email address strangemarketing@gmail.com

  • Arie at Mixergy

    John–if you don’t hear back, let me know and I’ll see if I can help

  • http://www.linkedin.com/in/derekdodds Derek Dodds

    Great interview. Would love a copy of the sales funnel worksheet, is it possible to get a link to that Arie?

  • Arie at Mixergy

    I’ll find out for you

  • Arie at Mixergy

    Derek, we added the funnel to the course toolbox

  • http://www.linkedin.com/in/derekdodds Derek Dodds

    Awesome.