8 Ways for Entrepreneurial Journalists to Think Like Business People
It takes more than a severance check and a good idea to become an entrepreneurial journalist. As media consultant (and E-Media Tidbits contributor) Dorian Benkoil put it during a meeting last week at Poynter, "If you're an entrepreneurial journalist, you have to think like a businessperson."
Benkoil, who came to Poynter as part of an entrepreneurial journalism initiative we're pursuing with the support of the Ford Foundation, offered some business advice in a meeting with staff and faculty.
Cash makes the difference.
There are several ways to describe the financial position of a business, such as a balance sheet, an income statement and a cash flow statement. Of those, the cash flow statement is often the most important, Benkoil said, and it can determine whether your business survives.
An income statement is predictive -- it shows how much cash the business should have if its invoices are paid on time. A cash flow statement, however, shows how much money the business has right now.
"Many, many businesses have failed where the income statement showed things were great, but they didn't have cash," he said. Cash flow is "the lifeblood of your business."
Keep a close eye on how quickly you get paid.
It's tempting to focus on the contracts you've signed and the deals you've closed, but if you're going to survive, you have to make sure you are being paid as quickly as possible.
"Every day faster you can collect your money is another day of cash you have" to spend on anything from salaries to servers, Benkoil said.
Consider this: If your business is on track to bring in $10,000 a month, but you don't receive your money until 60 days after you bill for your services, at the end of your first year you will have, at best, $100,000 in revenue, not $120,000 --17 percent less.
Strive to create revenue streams that complement each other.
A stable business shouldn't rely on one type of revenue for its survival. So while it's natural for content creators to turn to advertising, they also may be able to bring in money through subscriptions, events, e-commerce and by providing services. For instance, if you blog about college football (my example, not Benkoil's), you could offer deeper, more specialized information to subscribers.
Ideally, these revenue streams should offset each other, so that if one declines, you can shift resources to another that is doing better. And they should support each other; an event serves as marketing for your site, your site serves as marketing for a client service that you offer, and so on.
Be conscious of the advantages and disadvantages of different forms of revenue.
Advertising can be a wobbly foundation for your business because you don't get paid until well after you provide the service and it fluctuates broadly, Benkoil said. Subscription revenue is more stable and comes in before you provide the service. If you turn to e-commerce, you may need to be aware of hidden costs or delays in receiving your money.
Be open to building a revenue stream that's different from your perceived core product.
Perhaps you start out with a hyperlocal news site, and as part of your advertising package, you design Flash-based ads for local businesses. You may end up branching out to Web design and hosting.
Over time, your Web design and hosting services could bring in more money than the display advertising, perhaps to the point that those services end up supporting the hyperlocal journalism. The site may still be valuable as a portal to your business, however, even if some content is a loss leader for you, Benkoil said.
Strive to increase advertising revenue with content-specific ad networks.
Google is the easiest ad network to join, Benkoil said, but it's also the least lucrative. You may earn more by joining a "vertical" network that specializes in a particular content area. Some of these ad networks require certain information about your audience to make sure your site is a good fit.
If you follow this route, Benkoil said, you can also set up a "cascading" network of ads that seeks to serve the highest-revenue ad each time "so you can milk the most out of each individual ad spot."
Before you obsess over site metrics, think about why you're measuring what you're measuring.
Metrics don't mean much unless you view them against your goals. What are you using your metrics for? To allocate resources? To measure growth? To see if you're reaching new users?
By digging into your analytics, you can see if you're meeting your goals. For instance, if your hyperlocal site gets most of its traffic from outside the area, you're probably not reaching your target audience.
All page views aren't equal.
Let's say your site is set up with tiered access; some content is available to anyone, more is open to people who register, and everything is available for subscribers.
And let's say that your metrics show that one story had far more page views than the others. In looking more closely at the numbers, you see that your subscribers viewed that story the least of any in the top 10. Several other stories were much more popular with subscribers, even though those stories had lower traffic overall.
If you focused only on overall page views, you would overlook the fact that your subscribers weren't interested in that top story. And if you use that to guide your decisions, over the long term you may end up trading your subscribers' eyes for less valuable ones.