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Month: April 2018

A Capital Idea Is The Art And Form Of Deal Structuring

Posted on April 8, 2018 in Uncategorized

In the capital markets, both domestic and foreign, there are myriads of titles to define “finance or capital markets”. This financial jargon, in many cases, appears more symbolic than real or practical. Stereotype words, phrases or expressions referencing capital, credit or financing categories can easily mislead, or more specifically, if misinterpreted, lead to incorrect assumptions and strategies.

Consider the numerous headings or titles used to describe financial instruments or tools of negotiation. An Open Credit Facility, Revolving Credit Facility or Contract Credit Facility, for example, as understood by one CEO/CFO, or one Banker/Lender, may convey an entirely different meaning to another. The same would apply to conventional terms used for institutional criteria, regulatory policy or lending philosophy.

Consider also the stereotype financial language Bridge Financing or Bridge Capital. These headings can be applied to “an interim state of funding while other forms of capital are being sought”. This same language could also signal “911-Finance” to make payroll or stave off creditors until “real financing” is in place. In the traditional corporate sense, the first instance of bridge financing supports a positive funding platform that “bridges the gap between negative to positive cash flow and/or term debt or debt/equity or an IPO”. In the second instance, however, the bridge financing could provide a solution to a crisis for management or a remedy for damage control to prevent creditor default or reorganization bankruptcy.

Ultimately, all financial categories and/or symbols can be demonstrated or applied creatively and uniquely to an individual transaction. Through the various methods and techniques of capital strategy, deal structuring, capital structuring and other forms of money lending and/or investing, this demonstration or application must in turn fit–be applicable to customary and standard regulated institutions and/or government regulations, both domestic and foreign.

The principal of lending and/or investing, in addition to financing a “good deal”, is largely structured around regulatory requirements: government standards, banking, insurance, institutional, etc. Without the working knowledge of this principal, which governs and operates the capital markets and legal systems, even the best transactions would never fund. Therefore, the art and form of deal structuring involves marketing models, economic models and “structured term sheets and financial statements” to reflect the unique and individual transaction, under GAAP standards. This leads essentially to capital strategy, to capital structuring and to creative applications that result in funding.

The art and form of deal structuring of a capital idea is creative, practical and individual; it is never repetitive. The goal is to fully realize the benefits of the marketing model, enhanced assets and value added through the deal structured term sheet and financial statements: a capital idea is the art and form of deal structuring.

The Art and Science of Book Promotion – To Delegate or Not to Delegate

Posted on April 1, 2018 in Uncategorized

Backward glance

I introduced to you the concept of handling your book promotion project like a small business in its start-up stage. We also got down to the basics of one of the important tools in the small business start-up process-capitalization. In this article, we will delve into the second tool-delegation-through which you will learn whether, when, what, why, and how to delegate particular tasks in book promotion.

To Delegate or Not to Delegate

In an article from entrepreneur.com, “delegation” is described as something that is easy to talk about but difficult to do:

“… it’s a critical decision, mainly because some tasks should be handled only by you but others, which take up your valuable time, can easily be handled by someone else.”

Organization psychologist and entrepreneur, Dr. David G. Javitch, states that one of the common reasons why entrepreneurs refuse to delegate tasks is the fear of losing control over the project. Although it is a common mentality among starting businessmen to think that they are “the ‘best’ or ‘only’ person who can do the job right,” the excuse is not sound, logical, or practical when huge chunks of time, effort, and money go to waste because the boss does not want to involve or trust other people. Delegation of tasks, however, plays a significant role in business operations and must therefore be learned.

To instill the idea of task delegation in your book promotion business, let’s start with a number of things that have to be done in order to get the delegation system running like a well-oiled machine. There are three categories that need to be considered: things you are already good at; things you have no idea and never will have an idea of how to do on your own; and the unknown in between the two, or what we’ll call the “I dunno” category. Unfortunately, that third category takes up the biggest portion of the picture.

You don’t need to be a book promotion expert to gather a list of the most common 15 or 20 book promotion activities or services; the aforementioned Taleist survey is a good start. You can go to the websites of a number of firms that offer promotional services to authors. It would also be smart if you look for firms that work for traditional publishers in the area of promotion and publicity, as they are likely competent, but unfortunately very expensive. You may find them out of reach, but the goal here is for you to do your own “guerrilla” research. There are also promotional services by freelancers who can help you build your list, although the vast majority areal so too expensive, and as you hire freelancers you start to have to do much more research to vet them. The point is for you to try to learn about every promotional effort on your list, no matter how silly it sounds, so that you aren’t a ‘mark’ for unscrupulous providers.

Once you have your list, split each of these tasks into the three groups mentioned earlier:

• Things I can do

• Things that there is no way I can do on my own

• I dunno

The goal is for you to be prepared for conversations with prospective professionals who can help you get started. Knowing what you’re getting into and having an idea of what you want or the results you want to get is very important. There is an analogy that describes this goal well: you can go to an auto mechanic with no knowledge of cars, and then watch your money drain away without getting your car troubles solved. Or you can go to an auto mechanic equipped with at least the basic knowledge of how an engine, transmission, charging system, exhaust, suspension, and brake system work, and be able to not only spot the crooks, but also recognize the best value for your money honestly. In the end, it is essential to have at least a baseline education as this is, after all, your business, not the business of someone you hire.

The Chicken-and-Egg Dilemma

In terms of promotion and funding, there is a chicken-and-egg quandary. You have a budget-at least you think you have a budget. You have sales goals and therefore promotion goals. You need to fund a budget to attain your sales goals, and you need to match your sales goals to what you can realistically budget.

The first rule of thumb: Don’t spend any money on something that will put you in a dire situation. A majority of small business start-ups that fail would have survived if they could undo the mistakes they made in their first year, and the majority of first-year mistakes involve overspending. The difference between those who succeed and those who fail usually has to do with how much self-education a person did before spending the first nickel. Impatience is your enemy. I have made this mistake myself and it is an extremely painful one; avoid it.

Chicken and egg: If you do your homework, you will go through a phase where you have a list of promotional activities you think you need to have, and when you do rough estimates of cost for those parts you don’t know how to do yourself, the cost is about five times the amount you can afford. That’s normal; don’t get discouraged. Your next phase is that you either rob a bank or you prioritize all the different promotional efforts from top to bottom. Look at your “I don’t know how to do this, but it’s possible I can learn.”

Don’t go out on a limb: You probably aren’t going to become an SEO-Search Engine Optimization-expert unless you are a heavy geek (then go for it). Pick some of the services on your list and read up (Google) all the how-to articles you can find. You’ll quickly start to understand whether a particular promotional service is on the “I can do it” or “no way I can do it” list.

Breaking it down: Have you ever played to an empty room? Gave a speech when nobody showed up to listen? Started your fledgling comedian career by trying to make a bunch of empty chairs (or the bartender) laugh? It’s not a lot of fun. There is a key to book promotion that is above all other factors-you need a large audience before you can have any hope of reaching a breakeven point on book sales. To gain momentum towards being profitable, reinvest profits only in more promotion. Then do it all again for a second title.

The math is simple (and believe me, the following arithmetic is horribly oversimplified). If every week, 1 person out of every 300 in your audience decides to buy your book, and you have an audience of 150 listening to you as an author each week, you are going to sell a book every 2 weeks, which adds up to 26 books per year. If you, however, have the same sell ratio with an audience of 6000, that means 20 sales per week or 1040 books per year. That might not sound like much, but if you did your production/distribution phase well, that means $3500 in royalties, and that should be in the neighborhood of breakeven.

The reason I am mentioning audience size in a delegation article is this: if you don’t have a system that builds an audience of people listening to you, it doesn’t matter if you do everything else right; you have nothing. This should be your key when you are looking for experts in the various sections of promotion you don’t know how to do.

Unless you (or your grandson) are a geek, you are not going to be able to do the SEO on your own. You might be able to learn how to create your own Facebook fan page or Twitter account (but it may be difficult for you to make sure you have links, art, structure linking all together with book sale sites, blogs you will be writing, or other content important for you to impress people). You can tweet for sure. You are a writer; you’d better be able to tweet. However, managing a Twitter account, with all its analytics and ability to end up with big audience numbers and audience that actually pays attention to you-that has to be right. It is highly recommended that you hire a pro, at least in the first year. You probably cannot create a professional video teaser. You might be able to study press releases and distribution systems, but you need to see a few professionally made ones first before trying your hand on it.

Choosing the right people

There are four main attributes to be considered in picking your team and deciding who does what:

• homework

• integrity

• knowing yourself

• being important

Homework: To refer back to my earlier analogy, you have to prepare yourself to “talk to the auto mechanic for 10 minutes and leave him with the impression that you might be able to do a few things on your own and do them right.” Anyone who has access to Google has no excuse; there are experts everywhere trying to impress you, trying to teach you things about A, so they can provoke your interest in buying B from them. You can have a list of promotional tools and strategies and have enough knowledge to be able to talk for five minutes-or hopefully much longer-about each and every one of them. If you can’t, don’t write a check until you can.

Integrity: You have to have it, and you have to be able to recognize it in others (see the mechanic analogy above). First, you need to NOT lie to the experts-the candidates for your team-ever. There is no reason to do so. If you plan on doing 4 of the 12 promotional items yourself in your first year and 6 in the second year, they need to know that. If you are trying to educate yourself, so you can decide what you should delegate and what you should keep to yourself, they should know that too (they might, in fact, tell you clearly which goes in which column). You have to make sure that you are a good partner, as this will attract good partners for you.

Self-publishing authors have had to endure a number of firms that are predatory liars, have a large market share and have created a level of cynicism in many authors that is toxic. However, that toxic cynicism is foolish and something to be avoided at all costs. Just because Adolf Hitler lied to Chamberlain doesn’t make Jimmy Carter – or Angela Merkel – snakes. There are author surveys that show that more experienced authors (measured by number of books published) also tend to be more satisfied with the services they received from providers. These authors tend to use providers that have the highest author-satisfaction ratings. Keep your eyes open for the crooks (there is a section on how to do that in a later article in this series), but keep your eyes open with a soft heart for the good guys by being one yourself. You can be cautious with your checkbook and still maintain high character in your relations with your candidate team members. It isn’t hard to do.

Your team members have to have integrity as well. If you don’t have a great feeling in your gut about a provider, run away. If you do have a great feeling, you aren’t done with your vetting, but those candidates make the first cut.

With your knowledge of what they do, if you ask open-ended questions initially (don’t show off too much of your knowledge initially), you will be able to eliminate likable (and unlikable) cons. The good guys should give you some sense that they are protective of your interests. They should be able to tell you the bad news about what you are doing. Beware of those that have no bad news. You should be able to verify their competence and integrity from completely independent sources. I’ll give you more on this when we get to the “avoiding predators” section of the next articles.

Knowing Yourself: If you visualize yourself personally doing, say, 5 of 12 promotional efforts you and your candidate team think are needed, visualize it as if you are going to be doing it every week-some 3 or 4 times per week-forever. If the things you have picked are things that sound fun and interesting, if you try them and like them, you are probably on the right track. It may not be wise to think, I cannot stand doing this one, but I’ll grit my teeth for a year, because you likely won’t be one of those uncommon birds who will actually do it. In this arena, it would be good to ask your husband, wife, son, best friend, or trusted colleagues for their opinion of you doing A, B, and C. Once you are convinced that you know what you like and what you hate, or at least what you will do and won’t (or can’t do), you’ll be able to focus on your candidates.

Be Important: You might have to have two trusted professional providers, or you might have five. Some firms try to be all things to all people and fail, while others are actually quite good at several things. The providers need to be competent in all areas you are asking them to be; there is nothing wrong with asking them which area they are best at and which they think they aren’t. There is something very important to consider, however, when picking the final team: the more business you give them, the more important you become to them. If you ever get the feeling you won’t be important enough, walk away. It’s better to have a provider that is great at three things and good at two (provided the two are survivable, so don’t make “audience building” something you compromise on) than having five firms with each only great at one thing. You need to be important to your team members, whether it is because of money, reputation, or simply because of their personality.

Establishing author-vendor relationship through trust and honesty

You want quality, professional, well-considered work for your book. You also want to transform your book promotion into a business that is affordable to run as quickly as possible. Lastly, you want to have an honest vendor that provides and helps you with things you can’t do on your own and things you are unsure of. The way to do this is to be upfront from the beginning. You have your list. You know what parts of the list you aspire to learn to do yourself. You know what parts you will never be able to do at all, or at least not without help.

A well-done book promotion is time-consuming and therefore expensive. In your research about firms, you will see both honest and dishonest vendors that offer services that are either ridiculously costly or suspiciously cheap. On the other hand, there are also a lot of authors who have what you might call “champagne taste on a beer budget.”

Some authors approach promotional firms and freelancers with the thought that they can pay a small amount and get big, custom professional efforts and results. This is exactly the wrong way to launch a small business, primarily because it never works. Quality providers will either say no at the beginning or they will defer from your project midstream if they discover that this is your intent. If you have a prospective provider that seems to be saying yes 100% of the time, it is because they are planning on either running automated services that are ineffective, or are planning on capturing you as a client before they start charging add-on fees at every turn or trapping you in a variety of ways so it is very difficult to leave them. Run away, quickly.

Even without a certain budget to afford long-term services, you can still be a long-term client. What you need to do, however, is to be trained by the vendor to be able to do some of the services yourself after a certain period of time, so you can afford to be a long-term client. Some quality professional firms are very happy to do this. Others have policies against coaching, as they see it as a way to teach themselves out of a client. What you need to do is find those quality firms that match your honesty and openness and are willing to partner with you on that. You can also talk to them once you are sure they are among those firms you seek to help you on “Things you have no idea how to do” and the “I dunno” category. You can also ask them to help you eliminate services from your list that are bad ideas, given your situation, or just bad ideas in general.

If you’re thorough in this phase, you will be educated enough to get a decent promising start. You will be talking to a firm that can help you learn how to do part of your business on your own, as well as help you in the other parts of your business they have expertise in. A symbiotic relationship, wherein both participants benefit from one another, will be created-you will have a main vendor you can trust, and the vendor will have a long-term client. If you do this first part well, you will have established a team that has a good chance to help you launch your book promotion and make it prosper through effective marketing campaigns with higher chance to get good sales, good following, good reputation, or better yet, all of those things mentioned.

Looking forward

With the subject of delegation tackled, you are now ready to learn about the third fundamental tool in starting your own book promotion business. On the next part of The Art and Science of Book Promotion series, we’ll be discussing “expectations of returns” and how its principles apply and contribute to marketing your own title.