Rebirth 03: Starting a Business After Giving Up a Secure Job

Chapter 114 Participation Bidding

The following afternoon, Zhao Ling, the finance manager, called Lin Feng.

"Boss, this is Zhao Ling. The preliminary financial data has been compiled. I'd like to report the key items to you first." Zhao Ling's voice came through the receiver, accompanied by the subtle sound of papers turning.

"Okay, go ahead."

"First, let's look at the revenue. Our main sources of revenue over the past month were as follows:"

MP3 sales revenue: Last month, total MP3 sales revenue was RMB 1215 million, which is the company's main source of cash inflow.

Revenue from ringback tone services: revenue from the sharing of ringback tones "Lilac Flower" and "Mice Love Rice" was 62 RMB last month.

Next is the expenditure section. The company's main operating expenses for the past month are summarized below:

MP3 business-related costs mainly consist of production costs, logistics expenses, channel commissions, and artist revenue sharing, accounting for approximately 70% of MP3 sales revenue, or about 850 million.

In terms of cash flow, the company needs to set aside advance funds for a batch of production.

Employee compensation and benefits: The company currently has a total of 40 employees. Among them, there are 12 people in the Chengdu team and 28 people in the Shenzhen team.

The Shenzhen team experienced an increase in overall human resource costs due to higher salaries in the city and the recruitment of new technical directors such as Wei Zejun. Total salary and benefits expenses last month were approximately 28 yuan.

Office and operating expenses: including office rent in Shenzhen and Chengdu, utilities, property management fees, daily office supplies, server and bandwidth costs, travel and entertainment expenses, etc. Last month, this expense was approximately RMB 10.

Business promotion and special expenses: mainly include printing of on-the-ground promotional materials, transportation and communication subsidies, and expenses related to online and internet promotion. Last month, this expenditure was approximately NT$5.

In summary, over the past month, the company's net operating cash inflow from its main business was approximately RMB 440 million. This demonstrates the strong cash-generating capability of our core MP3 business.

Zhao Ling continued, "Next is the cash balance and cash flow forecast that you are most concerned about."

"As of yesterday, the company's readily available cash and short-term investment funds in its bank accounts totaled RMB 1826 million. This includes accumulated profits from previous business operations."

"The biggest expense in the next three months is the order for 40,000 MP3 players, with a total cost of 14 million yuan."

"Personnel compensation and benefits, taking into account the possible expansion of the Shenzhen team, are estimated at 28 to 35 yuan per month."

"Office and operating expenses: Considering that server bandwidth costs may increase with traffic, it is estimated to be 12 to 15 yuan per month."

"Business promotion expenses: This is the biggest variable. If the current website promotion efforts are maintained, it will cost approximately 5 yuan per month. If paid promotions such as Baidu bidding are launched, the cost will increase significantly and is difficult to predict."

"In summary, conservatively estimated, the company's monthly net cash outflow to maintain basic operations is approximately RMB 43 to 47. Large expenditures such as MP3 order payments need to be planned separately based on sales forecasts and inventory status. Currently, funds are sufficient and will not affect the assessment of operating funds."

Zhao Ling concluded, "Boss, overall, the company's cash flow is very healthy, and its capital reserves are substantial. Even if the monthly promotional expenses for the website business increase to hundreds of thousands per month, it will not pose a substantial threat to the company's financial security in the short term."

"The data is very clear. Thank you for your hard work, Manager Zhao." After hanging up the phone, Lin Feng understood the situation.

The order for 40,000 MP3 players was a single contract, but it was actually divided into four batches, with production and payment scheduled and made in batches, each batch consisting of 10,000 units.

Lin Feng's initial purpose in signing the contract in this way was to reduce financial pressure and to maximize the efficiency of his funds by implementing phased sales and production.

With cash reserves of 1826 million, compared to monthly operating expenses of less than 50, he had ample confidence to experiment and make mistakes.

The robust revenue-generating capacity of the MP3 business provided a solid foundation for the website's exploration.

After hanging up the phone, Lin Feng's previous doubts vanished.

Funding is no longer the primary constraint; the core issue now is how to use funds efficiently to open up opportunities for the website.

He reviewed Zhou Bin's Baidu bidding promotion plan again: the budget of 1000 yuan per day and 3 yuan per month was affordable.

This money can be invested with confidence, in exchange for the initial impetus to break the ice with data and traffic.

Lin Feng made up his mind to purchase targeted traffic through search engines and verify what kind of users and value it could bring.

He summoned Zhou Bin and gave clear instructions: "Start the Baidu bidding immediately. The initial budget will be as you proposed in your plan; allocate 10 yuan as a special fund. There are three requirements:"

First, I need to strictly control the average cost per click; I need to know the true price of each valid click.

Second, we will focus on monitoring the conversion effects of the core keywords "Shenzhen rental housing", "Shenzhen job postings", and "Shenzhen second-hand housing", including visit depth, conversion of incoming calls, and final posting and transaction leads.

Third, data. I need to look at data reports every day: how much money was spent, how many people came, and what they did.

This 10 yuan isn't just for buying traffic; it's also for buying our future online promotion "operation manual."

"Understood, Mr. Lin! I'll personally oversee it and make sure every penny is used effectively!" Zhou Bin confidently accepted the order and left.

With clear instructions and financial support from the boss, Zhou Bin and his technical team acted swiftly.

They carefully selected the first batch of keywords, including not only core category terms but also more specific long-tail terms such as "renting in the science park" and "renting in Huaqiangbei".

The landing page has also been slightly optimized to ensure that users can quickly find the information they want after clicking.

A few days later, Google Ads, a paid search advertising service, quietly went live, bringing an immediate increase in traffic.

However, Lin Feng and his team soon discovered that buying traffic was far more complex than simply setting a few keywords and controlling the budget.

This is a sophisticated digital game, and a real-time contest against countless unseen opponents.

The first challenge is the rapid rise in prices.

Initially, the cost per click for core keywords like "Shenzhen rentals" was around 0.3 yuan.

But in less than a week, Zhou Bin discovered that to maintain a relatively high ranking, the cost per click had quietly risen to 0.6 yuan, or even higher.

"President Lin, a competitor has entered the market." Zhou Bin said, his brow furrowed as he held the latest backend data.

"The bids for our core keywords have been driven very high. There are indications that at least two new Google Ads are competing, possibly local small agencies, or... other newly established classifieds websites."

This means that the number of clicks that can be bought with a limited budget is decreasing.

If it comes down to simply competing on price, Lin Feng's monthly budget of 30,000 won't last long in the face of a potential "arms race."

Lin Feng looked at the "average cost per click" curve in the backend; the upward line looked like a death knell.

He asked Zhou Bin, "Besides directly competing on price, what other data can we see in the backend? For example, which keywords bring in the most clicks? Which keywords have the best conversion rates?"

Zhou Bin pulled up more detailed data: "'Shenzhen city rentals' has the highest click-through rate, but it is also the most expensive. Long-tail keywords such as 'Science Park rentals' and 'Chegongmiao single rooms' are much cheaper, but bring in more user browsing depth and phone click-through rates."

Additionally, for the keyword "Shenzhen Jobs," we didn't offer a high bid, but many of the results were from small restaurants and shops posting job openings for waiters and shop assistants; the posting rate was very high.

"That's right." Lin Feng tapped his fingers on the table.

"Don't just focus on those big keywords; shift your budget and energy towards long-tail keywords and high-conversion keywords."

Maintaining exposure for broad keywords is important, as they serve as entry points for brands and traffic. However, the real "cost-effectiveness" and effective users may lie in more specific and segmented keywords.

Our advantages are: accurate information, local coverage, and the ability to solve specific problems like "shared apartments with balconies near the science park" or "job openings in the science park." We use these precise long-tail keywords to attract people with clear needs.

The strategy was adjusted immediately.

Zhou Bin's team reduced bids for popular keywords such as "renting in Shenzhen" and allocated more budget to hundreds of specific long-tail keywords such as "renting in XX community", "shared accommodation near XX subway station", and "urgently hiring deliverymen in Shenzhen".

At the same time, they created more targeted landing pages for different types of search terms.

Searching for "job posting" will directly display a list of job postings and a simple posting portal; searching for a specific neighborhood name will prioritize displaying listings for that neighborhood.

The second challenge is "traffic quality".

The number of clicks increased, but not all clicks brought value.

Zhou Bin discovered that some IP addresses clicked "GG" multiple times in a short period of time, consuming the budget but without generating any subsequent behavior.

This could be malicious clicks, or it could be spying by competitors.

"Set an IP frequency limit," Lin Feng ordered decisively. "Multiple clicks from the same IP address within a certain time frame will only be billed once. Is there any technical difficulty in doing that?"

"It's somewhat difficult, but we can try to limit it by combining cookies and IP addresses. Although it can't completely eliminate it, it can reduce waste," Zhou Bin replied.

"Go ahead and do it. At the same time, closely monitor the cost-per-click and conversion rates at different times. For example, those searching for 'renting' during the daytime work hours are likely white-collar workers with genuine needs; while those clicking frequently late at night should be viewed with caution. Allocate more of your budget to times with high conversion rates."

The third challenge is "catching" and "converting" traffic.

Baidu's paid search advertising acts like a pipe, bringing in traffic. But if the website itself is a leaky bucket, no matter how much water comes in, it won't stay.

Lin Xiaoqiang and Wei Zejun were the first to feel the pressure.

Rental demand from searches has surged, but the growth rate of listings on websites, especially high-quality private listings in real time, is not keeping pace.

Users frequently call customer service to complain: "Your website says there are many apartments near the tech park, but when I click to look, there are very few available for rent!"

"Brother Qiang, the pressure is on you." Lin Feng called Lin Xiaoqiang and Wei Zejun together.

"Users who come through search have the most direct needs, but they are also the least patient. We must get them to click in and see enough new information."

Xiaoqiang, your team, in addition to continuing to expand your network of new landlords, must prioritize "information updates".

We need to mobilize our existing landlords who have properties for rent or whose properties are already rented to promptly notify us of the status updates via phone or the contact information we provided. We aim to establish an "information preservation" mechanism.

Lin Xiaoqiang quickly took notes: "Understood, boss. I'll adjust the groups and assign two people specifically to follow up with the landlords we've already partnered with, making regular phone calls to urge them to update their information. Also, add a line to the signs posted on the street: 'Direct rental from landlord, information is valid indefinitely, please call to update for any changes.'"

"very good!"