It’s her online baby

Find A Babysitter has been such a runaway success that founder Delia Timms says the online model is suitable to many markets. Her online network of carers, which started out with baby steps, is now is driving her company along.

Delia Timms, 37, founded FindABabysitter.com.au in July 2005. In two years she has built up a network of 3500 carers, who register on her site for free, and 1500 parents, who subscribe for three or 12 months for access to the carers database. Revenue in 2006-07 will triple last year.

Timms, a mother of two, is projecting strong growth for 2007-08, driven by an expanding market (there’s a baby boom in Australia!), more internet usage and her market-leading position.

She shares the story of Find A Babysitter’s gestation and success, her forays into revenue generation through subscriptions and prospects for developing other markets with SmartCompany. Delia is happy to answer your questions (see end of this story). Email to feedback@smartcompany.com.au

Jacqui Walker: What is the niche you saw when you started the company?

Delia Timms: We identified (and are part of!) the niche market of parents with children who don’t have sufficient childcare and need an affordable and effective way to find nannies and babysitters. These parents are often professionals, are internet-savvy and confident to screen and select their own carers.

The idea was sparked by personal need. We have two small children ourselves and had been on the merry-go-round of childcare waiting lists, employing part-time nannies, finding babysitters, etc. We were increasingly frustrated and disappointed by the old-fashioned ways of finding carers.

They were either expensive, ineffective or time-consuming. We stumbled across a similar site in the US and felt there was a market for this in Australia. Jeff (my husband) took time off from his IT consulting job and I put my speech pathology career on hold to launch Find A Babysitter.

Some of the underlying factors creating the need are:

• The Australian Bureau of Statistics confirms there is a baby boom in Australia.
• There has been a childcare crisis in inner city areas where families are staying and cannot find childcare places.
• Many parents are lacking family support (and extra babysitters!) because they have relocated interstate or internationally.
• Many women have established careers pre-baby and are returning to the workforce post-baby. They either cannot find formal childcare in centres, or choose to use nannies for the one on one care.
• Women are starting families later in life, so grandparents are older and less able to help.

How many subscribers do you have?

a) Parents subscribe for three or 12 months. We have over 1500 parents with current memberships.

b) We have more than 3500 current carers at FAB (and over 10,000 have registered in the past). Babysitters and nannies register for free, until they choose to become “invisible” or delete their account with us. We also “retire” them after a period of time if they have not been logging in and updating their profiles.

How many staff do you have now?

Two part-timers – Jeff (IT support and development) and me (customer service, marketing and PR). We outsource some of our search engine marketing, but otherwise continue to operate Find A Babysitter on a pretty basic staffing level.

How did you decide to generate revenue through a subscription model?

We felt a subscription was a fair and reasonable way to charge for Find A Babysitter’s service. We surveyed lots of parents about this and were guided by the feedback. The three-month subscription gives plenty of time to interview and select a nanny or sitter.

And the 12-month subscription means that families will always be able to find a carer no matter what needs they have during the course of a year (for example after-school care, vacation care, ad hoc babysitting, more or less daytime care). We didn’t want to put advertising on the site initially because we wanted to keep the site uncomplicated.

What have been the advantages and disadvantages of that model?

The advantages: Customers pay online via credit card upfront. It is secure and simple for them to do. We don’t have to spend time and money dealing with billing and collections. We feel that customers get “value for money” with their subscription. Plus we don’t have to chase advertising to place on the site.

The disadvantages: You need to explain to customers the value proposition, because some other websites offer free services. We need to demonstrate that we can deliver results and follow through on this.

How did you build the traffic to your site? Did you do marketing and advertising?

Planning and research, supplemented by some trial and error! We began with paid search engine listings, some viral email marketing, word-of-mouth and limited print advertising. Over time we’ve learnt what works and what doesn’t.

The majority of our customers come from search engine marketing and word-of-mouth. Word-of-mouth has been very powerful. Don’t lose sight of the fact that your customers will spread the word offline, even for an online business!

Along the way I’ve also been fortunate to gain some great PR. The childcare issue has been a hot topic across Australia, along with the success of an internet business.

How much did you invest in it?

How much did we invest in starting up? We began with a very small investment of our own money. Jeff developed the site for free – so we only had to pay for some hardware, software and hosting to get started.

How much did we invest in marketing? We began on a shoestring budget and grew as the site expanded. So we never had to hock the furniture to pay for marketing! We continue to tweak our marketing spend based on return on investment.

Was it harder to attract parents or nannies to the site?

Neither – they seem to attract each other! Somewhat like “network effects” we discovered that when a critical mass of sitters joined in a location, then parents would follow.

As parents joined, more babysitters would register. The site just spiraled independently. Having said this – of course we’ve had moments where we’ve worried about the ratio of carers:parents or vice versa. Now we track the ratio regularly and put efforts into specific areas if and when needed.

What are your best tips for building an online community?

As a starting point, people need to have enough in common to want to create a community. Children are a very powerful common denominator! Next you need to provide the opportunity for people to communicate easily using technology – whether it is texting, or emailing or instant messaging.

If it isn’t easy, it won’t happen. You need to keep people “in the loop” by notifying them of any online additions; for example, emails when a new comment has been posted. Apart from this we don’t do anything proactive to build the community.

Parents are understandably nervous about hiring people they don’t know to mind their children. How did you build the credibility around your site?

We put a lot of thought and work into this. Being parents ourselves we understood this question. We provided detailed babysitter profiles online (these included check boxes for police checks, qualifications and references). We developed interview questions and screening guidelines to help parents make an informed decision.

And we built a ratings system – like eBay – so parents could share relevant feedback about the babysitters. Finally we also ensured the “look & feel” of the site conveyed the right message.

Parents have told us that they’d rather view the paperwork and interview candidates first-hand. Ultimately the parents are ideally suited to make the right choice for their own children.

What was the biggest challenge in getting the business off the ground? How did you handle it?

The biggest challenge was taking the plunge! Taking the risk and putting time and money into a start-up business with no guarantee that it would work. We handled it by seeking good advice (we have a great business coach from Small Business Victoria), doing realistic and thorough financial projections, doing weekly business planning, building the business gradually without overextending ourselves. We also learnt to live with a little risk! It is part of the risk-reward equation!

Do you intend to expand internationally? How would you do this?

Find A Babysitter is easily “skinnable” to other markets globally, or even other industries. Time permitting we’d love to explore new opportunities! It would be pretty simple – some market research, a few weeks of coding, tailored marketing and we could do it.

How do you make decisions about adding functions and which technology to use? Do you have inhouse expertise? Do you outsource website development?

We gather feedback from customers, list and prioritise it. We are always doing small fixes and upgrades. We also brainstorm regularly about our “wish list” and set goals to work on with deadlines.

IT is literally in-house – I am married to him! We have never needed to outsource development.

What are the pros and cons of this?

Pros – the speed and responsiveness of my IT resource is excellent! We can change things ‘on the fly’ as we see fit. No need to write up detailed specifications, we usually just discuss and document things briefly.

Cons – sometimes it is too easy for me to ask for changes. And I have to try not to talk work at home too often!

What are the latest technological advancements you’re seeing online today?

According to Jeff:

1. Mash-ups – where people are bringing together different sites and content to create something completely new and useful. For example, combining Google Maps, with mobile phone technology to produce a site showing which friends are on the phone and where they are.
2. Get anything on the internet cheaper and faster! For example, we have an online tour at Find A Babysitter and had the voice-over done for us remotely and sent to us electronically. I listened to voice samples online, sent my wording via email and got the completed voice-over within days.
3. New web programming techniques are giving customers better usability experiences – for example, Ajax.

How is your industry changing and who are the biggest winners? And losers?

Customers are more internet-savvy, connected online and confident to use technology. They are using technology to help solve problems more efficiently.

Winners: the customers are the winners because they get more choice!

Losers: any company that doesn’t have a good value proposition will be under pressure. Technology offers much more streamlined, efficient and affordable services.

Web 2.0 – what works best?

Jeff can help here too. From a user perspective Web 2.0 helps communities connect with each other more effectively. From an IT perspective Web 2.0 makes technology seamless and easy to use.

What plans do you have for the business?

We have lots of exciting ideas to develop on FAB. There are always new features to add to make the customer experience better. We’d love to create more of an online community for both carers and parents. We’re exploring other revenue streams such as advertising and ecommerce sales. Just to name a few!

What is your exit strategy?

Exit planning is an ongoing process for us as directors of the business. We continue to refine the business to ensure it runs efficiently with minimal input from us. We designed Find A Babysitter originally so it could easily be transferred and sold; at the right price.

There are any number of opportunities for others to leverage Find A Babysitter, build upon it, expand it or even replicate it in other markets and industries. We have had approaches from several interested parties and wouldn’t be surprised if more queries come our way – given the rapid growth of the site and the opportunities that exist.

We think it is important for us to consider serious approaches, but Jeff and I are focused on operating the business day-to-day and use independent advice to assess the merits of any approaches.

Personally, has starting up the business and managing its growth been tough?

Starting an internet business from scratch is a fantastic learning curve, full of challenges and uncertainty at times! I have learnt lots about marketing (online and offline), running a business, customer service and juggling competing tasks.

The rapid growth of the site has been manageable because the site is scalable, fortunately. We have been very lucky that the site met such a significant need and has taken off so well.

Are you working long hours even now?

I continue to work part-time running FAB. Jeff works full-time on another internet start-up – www.contractconnect.com – and does FAB work in his spare time. With small children we make a conscious decision to keep our work hours in check.

Anything you would like to add?

I think there is a lot to be said for being a “first mover” to capture a market, being responsive to customers and moving forward with new ideas.

For more entrepreneuer online stories click here

Your Questions and Delia’s Answers

Delia is happy to answer your questions. Email to feedback@smartcompany.com.au

 

Paul asks: My novice queries are very general ones directed more to determining whether starting an internet business is worthwhile.

Two things right up front – it is not a dating service!

And, I apologise for the “cagey” nature of this inquiry. The reasons for this, like many others who have nothing more that just a “good idea,” will become apparent as you read on.

My idea involves a limited group of people (Group A) who as individuals wish to acquire knowledge by selecting individuals from a larger group (Group B), each of whom have a particular talent.

The idea involves the members in Group A paying a modest registration fee to be on the site and to be able peruse the persons in Group B. Group A members may also be asked to pay a small user fee each time they actually choose a person from Group B.

Similar to your nannies and baby-sitters, the persons in Group B would pay nothing to register their particular talent on the site.

The individuals in Group A would then enter their own casual arrangement making it worthwhile for the registrant in Group B to register in the first place.

The responsibility of the website owner would extend no further than creating the vehicle which allows people in Group A to meet people in Group B to effect the “talent exchange.”

The idea, even the name, is eminently franchisable and could theoretically be transplanted worldwide.

Question 1: How do I assess the viability of such an idea as a business, apart from my gut feeling that this could be a great business?

Question 2: How do you know who to trust when divulging your idea to someone who might be able to help develop your idea? I think it’s accepted that there is no copyright in just an idea and that only the physical manifestation of an idea gives it real commercial value that is worthy of protection.

So, what do you do before your idea is a reality? Are Confidentiality Agreements commonplace, so that some web developer doesn’t run off with your idea and unique name and register it worldwide?

Question 3: Wouldn’t a web designer, say like your husband, with the hands on experience, both “front end” and “back end” of setting up your site, be the ideal person to:

• (a) assess viability;
• (b) enter some confidentiality arrangement?

Question 4: I know you got it for free, but if yes to Question 3, what would something like that cost?

 

Delia answers: Congratulations on thinking of an innovative idea. A smart use of technology to introduce people who otherwise might not meet! These days ‘introduction sites’ don’t have such negative connotations. So you will have to ensure people know it isn’t a ‘dating’ service, but you won’t have to stress too much about the concept.

But to go over your questions… Question 1: How do I assess the viability of such an idea as a business, apart from my gut feeling that this could be a great business?

1a) Market research is essential. You need some solid facts to back up your gut feeling. You don’t have to spend loads of money on it. But you will have to put time, energy and creative thought into getting the right information. Write down the top 4 or 5 facts you need to know and build your research around this.

– What is the ‘significant problem’ that people have that you will be solving? What ‘pain’ are they experiencing? What is the turning point that will drive them to join your site? How much are they willing and able to pay for this help?

– Are there any internet competitors in this space already? How are they progressing?

– Are there any similar concepts off-line and what info can you glean from these groups (eg mentoring associations come to mind). Have mentoring programs taken off? Do they have enough mentors to offer help to mentees? Is this a show-stopper or not?

– Think about who would be in your “A” and “B” groups and try to survey as many of these people as possible. Hundreds if you can. Use emails, phone surveys, coffee meetings – whatever way you can get people to respond. Maybe even try an online survey like ‘survey monkey’ if you have a good list of emails of potential “A”s and “B”s.

– Think about any official sources of information about the industry. Any government offices that have this info? Any professional associations who do something similar and might give you some info? The Australian Bureau of Statistics has lots and lots of data about all sorts of things!

-1b) Financial projections are crucial. Viability comes down to numbers in the end. So you’ll have to do Business Establishment Costs and Projected Cashflows. I found this eye-opening when I did my numbers. Then you need to estimate how many people will join, how much people will pay for this service, and when they’ll join.

Question 2: How do you know who to trust when divulging your idea to someone who might be able to help develop your idea? I think it’s accepted that there is no copyright in just an idea and that only the physical manifestation of an idea gives it real commercial value that is worthy of protection.

In reality I don’t think many people would take your idea and run away with it. I think starting a new business from scratch requires a unique mix of knowledge and skills (& interest & motivation & money & time & commitment etc etc etc). It just isn’t that easy. Most business people are focused on their niche (eg developers just want to develop, graphic designers just want to design). However you need to use your judgement and avoid giving your idea to a large, well-resourced, cashed up group that might take it!

So, what do you do before your idea is a reality? Are Confidentiality Agreements commonplace, so that some web developer doesn’t run off with your idea and unique name and register it worldwide?

Yes, I would register domain and business names as early as possible. This is fairly cheap to do and no big deal if you don’t move forward in the end. I didn’t use confidentiality agreements (because I didn’t have to outsource too many things and I trusted the people I met). There is a certain amount of information you’ll be sharing during the process of starting up – so I think once you decide to go ahead you have to set a deadline and go for it.

Make sure people know you own the idea and you’ll be launching very soon. In the end the threat may not be from professionals you share your idea with, it might come from other competitors. So focus on building trust with the people you work with and enable them to get your site launched well!

Question 3: Wouldn’t a web designer, say like your husband, with the hands on experience, both “front end” and “back end” of setting up your site, be the ideal person to:

(a) assess viability;

(b) enter some confidentiality arrangement?

An IT professional who has experience in the field would have solid knowledge about parts of the business. An IT person won’t be able to answer the big question about ‘is there are market for this?’. But he can answer ‘how much would it cost to develop and maintain a site like this’. You’d want to talk to someone with a demonstrated track record – who can give you a realistic idea about the timeframe, costs etc.

Question 4: I know you got it for free, but if yes to Question 3, what would something like that cost?

We estimate that our development costs would have been around $100,000. Our site is transactional with lots of complex functions – so it is costly to develop. If you were simply launching a shop-front you could do it for a tenth of this!

I am sure you’ll have many more questions as the idea develops. I can recommend getting a business coach. I had a great coach from Small Business Victoria (who I selected from a profile online on their site!). She was instrumental in the early stages of scoping out the idea, developing marketing messages, creating PR, refining customer service etc. She also gave me confidence to do it! Somewhat like a mentor and coach.

Finally – there are no guarantees. That is the risky bit about starting a business from scratch. There will probably always be an element of the unknown. You have to gather as much information as possible to make an informed choice. But in the end you need to accept a level of risk.

All the best!