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How I Started A Startup from Scratch and Turned a Profit in Less Than 6 Months

This is a guest post from the founder of 48hourslogo.com, Chris. He’s awesome. And generous with his startup experience.

***

I graduated from Georgia Tech with a degree in Electrical Engineering and got a job as an application engineer in Silicon Valley.

48hourslogo was one of several side projects I initiated. Luckily, it turned out to be the one with the most potential and allowed me to quit my engineering job and fully focus all of my attention on my own startup.

I have always enjoyed reading StartupBros and thought that sharing my own startup story may provide some interesting insights for some of you. I’ll show you how I came up with the idea, how I had the site built, how I got customers and designers, and some ways we’ve grown the company. I think you’ll enjoy it!

Why 48hourslogo?

Like most people launching logo contests for their first time, I was amazed by the selection of logo concepts presented to me when I started a logo contest back in 2010. I liked it so much that I decided to drop my earlier business idea and start a logo contest website of my own.

The idea behind 48hourslogo is quite simple: Instead of paying an average of $400 to have 30 or 40 designers competing on your logo project, customers can spend a third of that and have 10 or 20 designers competing.  This is plenty for bootstrapping founders.

I like things done fast. So instead of having a contest running for 1 or 2 weeks, how about just 48 hours?

Lucky for me, this domain name was still available and that’s when 48hourslogo.com was born.

Getting Started

Starting a new business on your own is hard. The key is to break up your project into smaller steps that you can focus on one at a time. So for 48hourslogo.com, I broke it down to the following 3 steps:

Step 1: Website Development

Despite my engineering background, I did not know how to code a website. So I had to find a developer for my project.

Initially I was quite optimistic after browsing through different freelancing sites and seeing the kind development tasks that were posted and the eagerness of the many developers active on these sites. But after I launched my own project and started communicating with several freelance developers, I realized that it would not be as easy as I had originally anticipated.

Because I was working with an offshore developer, effective communication was the biggest challenge. I quickly learned that instead of explaining everything I needed in a Word document, it was much easier to ask him to just copy the existing functionalities from my competitor’s website and process further adjustments I wanted myself.

After 2 months of countless emails and about 3,000 dollars in total development costs, I ended up with a very basic but functioning website.

48hourlogo home

Above you can see the first version of 48hourslogo when we launched in early 2010. It only had the most basic features and the UI and layout design were significantly inspired by our competitors.

Some of the lessons I learned were:

A. Know your basic HTML

Unless you have a technical cofounder who will take care of the web development, you will most likely be working with Freelancers you found on the web. Knowing basic HTML will allow you to make small fixes yourself and communicate effectively with your developers.

B. Keep it simple

Building a website with any kind of custom functionality is going to be much more complicated than you think. Every button, link, or text input will require detailed design and consideration. So it is important to think of every little detail and simplify as much as possible before passing your requirements to your freelancer developer. Most likely he will get it wrong so your job is to make it so simple that it is almost impossible to understand it incorrectly.

C. Leverage as much as possible

Instead of starting from scratch, it is probably a good idea to copy from your competitors or other websites that offer similar functionalities. This offers 2 advantages.

  1. You get a chance to study your competitor’s website in much greater detail and discover many small tricks you didn’t realize before.
  2. Having your developer copying an existing product is much easier for him than trying to understand your unique specs of which there is no live demo.

Step 2: Recruiting Designers

Clearly I had a chicken and egg problem. Designers need clients and clients need designers. I had neither.

Before inviting designers to join 48hourslogo, I would need available contests they could participate in immediately after they signed up. To accomplish this, I did 2 things simultaneously:

A. Launching artificial logo contests

I created some artificial contests but with real prizes. I personally acted as the contest holder, selecting the contest winner for each contest based on what I thought was the best design and I awarded the prize accordingly. I did this for several weeks and awarded several thousand dollars until I was able to realize enough actual clients entering real orders.

B. Inviting designers to signup

I joined a number of graphic design forums, blogs, and discussion groups, and sent personalized invitation emails that were well received. Soon, I had more than 30 active designers working on actual client orders submitted to 48hourslogo.

Step 3: Acquiring Customers

This is probably the most straightforward part because all I did was set up a Google Adwords account and started bidding on my relevant keywords. There are many ways to market your business and attract potential customers.

Google Adwords is a good measuring stick to see where you stand among your competitors. If you can break even or even make a profit by acquiring customers via Google ads, you got a real business.

Some tips for running Google search ads:

A. Write descriptive ads

Remember that you are only charged when people click on your Ads. Do not write ads that promise someone the world. Instead, write descriptive ads, including your prices, to only attract your target customers.

B. Use exact keyword matches

Include your keyword combinations in square brackets. That means you ad will only appear if a potential customer types in your exact preconfigured search terms. For example, “logo design” and “logo design tutorials” represents 2 different types of potential customers.

C. Set maximum bids for your keywords

The average per-click cost for my main keyword “logo design” is about $3. Initially I used Google’s automatic bid, but was surprised to discover that the automatic bids went as high as $12 per click. Your ads do not have to be in the first place to receive visitors. 2nd and 3rd place is just as good and costs significantly less per click.

My initial Google search ad campaign was quite disappointing.

My profit on each new customer excluding my AdWords expenses was $25, but I was spending around $45 to acquire a new customer via my AdWords campaign, thereby effectively losing $20 on every new customer via my AdWords campaign. But losing $20 on every new customer was still better than setting up artificial contests where I had to give out $80 for each prize.

The most promising sign that I received at that time was that most of the customers which were using 48hourslog were quite happy with the level of service and the quality of design they received. I was confident I would be able to slowly turn things around.

How to Turn a Profit

So I had a money-losing business, but at least things were up and running.

The first thing I did was hiring a local developer in my city because communicating remotely was simply too much of a pain. After that, I added several features to really improve my conversion rate and turn 48hourslogo into a profitable business.

Redesigning the Home Page

We already had real customers getting quality logo designs via our site every day.

In order to give visitors a realistic sense of what to expect, I redesigned my homepage to highlight all recently finished contests on the front page.

48hourlogo new home

 

This allowed customers to easily see the contest prize offered and the quality and quantity of designs received. After the redesign, our conversion rate went up a notch.

Lowering the Entry Barrier

Even though our $99 minimum prize already offered the most affordable logo contest on the web, we decided to introduce the $29 initial payment option.

For customers who were still not 100% convinced, we facilitated the option to start a contest with just a $29 listing fee, and to pay the rest AFTER seeing the design concepts submitted by our designers.

48hourlogo lower

 

If they did not like what they saw, they could simply walk away and only lose their initial $29.

By lowering our initial cost to only $29, even skeptical customers were willing to at least give us a try.

Focusing on the Product

Our success depends on our ability to create a process that balances the needs of both our designers as our logo clients. So we spend most of our energy polishing our product. For example:

Blind contests

We made our contests blind during the initial design concept stage, meaning that the designers entering a contest could not see one another’s submissions, to maximize the design creativity of participating designers.

Relist & designer invites

If contest holders were not happy with the initial set of design concepts, we added an option to re-list the contest and invite new designers. We attached a $5 tip with each designer invite to really incentivize designer participation. This worked out really well for both the logo designers and contest holders.

Moderators & designer qualifications

To protect our clients from copycat designs, each winning logo is reviewed by our moderators to ensure its uniqueness and originality. We also implemented a new designer acceptance test to ensure our new designers possess the basic graphic skills needed to produce a professional logo.

In Summary

Starting a business is harder than you initially think, but interestingly enough, it gets easier as you set a plan and work on it step by step. When I first started 48hourslogo, I knew neither graphic design nor web development. But building a startup is all about taking action.

I am a big fan of Will and Kyle’s blog because it offers a step by step actionable plan of starting a business. When you have a detailed plan, things get a lot easier. So we have a special promotion for startupbro readers where we will give your a free “Featured” contest upgrade. Just click on the following link to get started:

http://www.48hourslogo.com/startupbros

 

Free Logo Design Giveaway

Thank you for reading my story. We are also giving away a free logo contest valued at $150. If you need a custom logo for your website or blog, Please tell us about it in the comment below. We will pick a winner who we think deserves this opportunity the most by the end of the month.

We read and reply to every one!
  • Just wanted to tell you guys that this links is not working :
    http://www.48hourslogo.com/startupbro

    Anyway i would love a new logo for my upcoming personal blog.You guys helped me pick the domain name with your awesome how to name your biz tutorial, would be cool if i get the logo from you guys too 🙂

  • Dwayne

    That is so cool Chris. I can see how your website evolved through trial and error, I i respect the fact that you stuck to the business even when you were losing money with Adwords, because that is when most people quit but your goal was just to get customers flowing to the site. Most people copulent take that pain and to be honest, I probably couldn’t either.

    • Thanks Dwayne. Yes, Adwords competition is fierce. But it’s a fast way to test the water and requires very little investment. Also, your first week results will be bad because I suspect that all your competitors will click on your ads to check out the new player. After a while, it should get back to normal. 🙂

  • Dwayne

    Ya. The link isn’t working.

  • Brian

    Great article. Wish I had thought of 48 Hours Logo.

    • There are endless opportunities waiting for your action. Choose carefully, then setup a plan. 🙂

  • i totally agree with the point that once you turn a startup into a project list, it becomes a lot easier to handle.

    I’d love to learn when the right time is to select your logo. I keep buying them too soon — as soon as a URL is purchased. Then, a couple of months later, I find that the concept has evolved so far from the original idea that the logo is unusable. It’s happened to me twice and I’m afraid to replace my second “too young” logo because: how will I ever know when my concept is done evolving (enough).

    • Hi Diedre,
      You brought up very good point. You could have a business idea floating around for month, and designing a logo for it is probably the first physical step you should take to turn that idea into reality.
      When writing your logo design brief, that’s when you seriously thinking about picking a name suitable your target audience, but not limiting in terms of future business scope. Also, check out your competitor’s website and logo for inspirations. Don’t start your logo design project if you don’t feel you have solid answers for your logo design brief questions. 🙂

  • Thank you for the clear description of how to get from A-Z! It is rare to find the majority of my questions answered by reading the article. It is even more rare for me to comment on the post…thanks again!

    • Thanks Mark for the nice comment. I only wish I’m a better writer to make the long article fun to read. But you know how engineers are, spelling things from A to Z plain and simple. 🙂

  • Zach

    Chris,
    Thanks so much for sharing your insights in regards to starting your business. This was a great story for me to read, namely for the following reason:

    I’m getting ready to graduate in May with my BS in Electrical Engineering (similar to yourself), and I’ve got a job lined up with a Semiconductor company (Analog Devices). Yet, I’ve got an ‘itch’ to get into the Entrepreneurial realm, but one idea persists: ‘If I leave the Semiconductor/EE arena, I may not be able to get back in if things don’t work out.’ I wanted to find out – were these ideas you shared in as well, or were you more optimistic about things working out? Obviously, no one can give us the guarantee, but I wanted to know what went through your mind, as I’m in a very similar situation (career-wise) to where you were. Thanks!

    Zach

    • Hi Zach,

      You question got me thinking. I didn’t start any Internet projects until 6 years into my semiconductor career. I didn’t have a hard decision because I build everything while holding a full time job and left after my projects are turning consistent profits.
      However, I do wish I had done this earlier where opportunity cost is much lower. Don’t worry about the discontinuity in your EE career because you haven’t even started yet. You can always get a job if you want to and your entrepreneur experience could be a asset. But most importantly, make sure whatever you are starting is what you enjoying doing because building something from scratch is much harder than getting a job at a company.

  • Kickass stuff, Chris.

    I really like how you went ahead and hired an offshore firm to code the site. Many entrepreneurs I know let their non coding ability stop them from launching tech businesses.

    (I’ve been guilty of doing the same)

    I’m curious – have you tried Facebook Ads and LinkedIn for marketing this?

    Also, how do you differentiate from competitors like 99Designs, et al (especially since they are pretty heavily funded)?

    • Yes. VC funded companies such as 99designs and designcrowd have the major share in this market. However, we are focused on being more cost effective by running the business more efficiently than they are. In the long run, customers will gravitate towards better deals.
      We are not doing much Ads these days because we feel the Ad costs are somewhat inflated by the venture capitals. We will probably stay small and focus more on “word of mouth” 🙂

  • Joan Teng

    I need a logo for my new sourcing/import business, pick me!

  • jason

    good stuff 🙂
    now let’s win a logo

  • That’s lot of great comments. I’m glad that you all find my story useful. Please don’t forget about the “Free Logo Design Giveaway”! Whether it’s for your website or personal blog, please tell us why you should have a new custom logo by leaving a comment below. The winner will get to experience 48hourslogo contest first hand 🙂

  • Hi chris,
    Great read, lots of important tips here. I run a non-profit in Somalia (website is under development at the moment) but our face book page is @Elman Peace and Human Rights Centre / we are based in Mogadishu and work with child soldiers, survivors of gender based violence, human rights and much more- working on redesigning our website now and looking for a new logo! Pick me 😀

  • Joel

    Hey Chris, fantastic article. It’s great to hear a unique idea for a business that sounds crazy at first but turns out to be successful. Some of the things you did to get the business going (especially sponsoring fake design contests) are something I never would have thought of, much less put the money into.

    This is actually the first article I’ve read at this blog. I was brought here moments ago by Kyle’s guest article ‘Stop Hacking Your Life’ at Art of Manliness. I know I use a lot of superlatives, but it was such an excellent read that I had no choice but to check out the blog he regularly posts at.

    I’ll go ahead and enter the logo contest. This’ll be a long comment, but I need to get used to telling this story so it’s worthwhile for me to practice it here. I believe honesty about the origin and growth of the company will be a successful driver in my future sales possibilities.

    My grandfather had a moderately successful industrial equipment business for 20 years that he sold 15 years ago. The guy he sold it to then turned around and sold it to a large company for what was likely much more than he paid for it, though I don’t know the details of the transaction. He kept one part of the business, though: the electric shaker his company designed. After the sale, he worked hard on the shaker, iterating and improving it over seven years before he started selling them. It’s always been a one-man operation, with him doing everything for the business and recruiting myself and my brothers to build shakers for him occasionally. I’m amazed at the amount of work he’s put into it, and it’s honestly the best shaker on the market, well-designed, built with quality parts and priced much lower than his larger competitors. (Sidenote: An electric shaker is a industrial machine that uses vibration to move scrap and product from metal stamping presses down trays into the designated bins.)

    I’m obviously not trying to sell a shaker here, just so you know. It really is a great product. And he gets some sales through his website and demonstration video, but I feel that it could sell much better with more sales and marketing effort put in. That’s where I come in. He originally paid a local “web designer” to design a website, and the end product would have looked terrible even in 1994. A few years ago I designed him a new site (dieprotection.com) , slightly less terrible, with no experience in web design. Last year I designed a mockup for a new website with a placeholder name at (innovativeindustrialequipment.com). Getting slightly better with every iteration, I now want to design a real website and lead page to get traction from AdWords, searches and maybe other sources as well. It will probably help my success selling them as well, having a professional-looking website to point customers to. I haven’t been very successful selling so far, but I’m improving daily in knowledge, skill and work ethic and hope to find success selling them very soon. My goal is to sell my first shaker by May 1.

    I’ll cut this off here, since the comment already seems too long. It’d be a great boost to win the contest and finally have a well-designed logo for the business. Otherwise, if I find some success selling the product in the next couple of months I will doubtless start a contest on your site when I can afford it. It does seem like the best and most cost-effective way to get a great logo for your business (and I’m not just saying that, I mean it).

    • Hi Joel,

      Thanks a very long comment. I’m a bit lost. Anyway, so do you already have a website built for which you need a redesigned logo?

      -chris

  • Lies

    Dear Chris

    Great article and fantastic project! It’s nice to read the ups and downs during the process, very inspiring.

    I’m on the road to start my own webshop and was planning to design the logo myself, but winning this contest and experiencing 48hourslogo.com sounds much more fun!

    • Hi Lies,

      So what’s this webshop you are about to start? Do you already have a website built for this? What’s the URL?

      -chris

      • Lies

        Hi Chris

        I’m thinking about doing jewelry, statement necklaces, fun clutches, … All the stuff that you don’t easily find in your regular clothing store. I really like sober clothing with an eyecatching accessory.

        No website yet, first I am getting married in july 😉 And I still have to work out where I will get my stock.

  • Chukwudi

    Great article Chris. You came through even without no knowledge or web development or graphic design. Am inspired. Thanks for sharing and well done!

  • Thanks for sharing your startup strategy. I recently launched a blog meant to inspire men to practice yoga. There’s no business aspect to it yet but I do think there is potential with it. A new logo would would be great to further establish the identity of the blog.

  • Alex W

    Thanks for the great first read.

    Interesting to see how people get the initial boost they need. I great time to use some creativity.

    I would love to upgrade my current logo for my amazon store. Please put me in the running if im not too late!

  • Hi Chris,

    Great read- I am starting up my first business called Dynamite Footprint which aims to build custom designed CV’s for people whilst also giving them up to date salary market data, easy to digest information regarding Visa’s for international workers coming to Australia- as well as common Visa’s for Ex-pat locations such as China, The UK and the USA. The site will also provide a number of interview tips from Senior Executives aimed at School Leavers, Middle Management and Executive job seekers and I am hoping to have sponsored partners through recruitment agencies and Visa legal firms.

    I’m in the process of building my site through Square Space at the moment- hoping to have it presentable within a week or two. I’m struggling to get things off the ground without sending myself spiralling into debt so I’d love the opportunity to be able to have a logo contest to help with a design from scratch.

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