Imagine a Dating Site for B2B Strategic Partners

People tell me there are over 5,000 online dating sites, but I couldn’t find one that focused on matchmaking business-to-business (B2B) relationships. Yet, every business expert tells me that finding good business partners is just as tricky as a good marriage, without the sex.

Business partnerships come in all shapes and sizes, from finding a single partner to help you run your startup, to signing a strategic agreement with another large company for development, marketing, distribution, or sales. As with personal relationships, unbalanced deals don’t work, since the dominating entity finds it hard to adapt and appreciate the value of a partner.

Everyone agrees that successful business partnerships can provide cash for growth, reduce costs, provide new geographic markets, or bring whole new customer sets to the table. Bad ones will suck the energy out of your company, and leave you wanting more. The thrill of the chase is always the fun part, but making it work is a lot harder.

Just like personal relationships, if you are contemplating a business partnership, the first consideration should be the characteristics of the key people involved. In addition, your company engines have to synchronize, which requires changes beyond the honeymoon period. Here are some of the key elements of both:

• Principals on both sides need to be ready and willing to work with a partner. Some executives prefer to operate in solo mode. If you have worked for yourself for a long time, like living alone and making decisions without consulting anyone else, it may be hard to adapt to a shared decision-making environment.

• Look for a match in operating style and work ethics. A business partnership doesn’t come with a no-fault divorce clause. During the “dating period,” look hard for those characteristics that suggest complementary strengths, compatibility, chemistry, motivation, and values. Consider a business “pre-nup” agreement.

• Both sides should write down the shared objectives and vision. If there is nothing to write down, or the results are quite different, that’s a big red flag. At this point both need to put in some serious thought about common value systems and how integration will impact current operations and the “next generation.”

• Agree on performance indicators measuring partnership effectiveness. Every relationship needs to be mutually beneficial to foster trust and common commitment. If the value is channeled to one beneficiary, with more cost and effort to the other, the equation won’t work for either.

• Understand required changes to the current business model. These need to be understood up front, since implementation will likely require staff changes, process changes, and a more complex communication system. Both sides need to evaluate the intangible impact of these.

Even with the best of efforts, in my experience a high percentage of partnerships don’t work in the long run, because the underlying entities have different long-term objectives. This means prior planning for an easy dissolution. Document early the partner agreement detailing what each person is responsible for, who makes what decisions, and how disagreements will be resolved.

In summary, I did find a few sites, like PartnerUp and jobmingle, which are a step in the right direction, but they still seem focused on letting you do most the work (like Facebook) to find the ideal partner. How about finding the best fit for you through something like eHarmony’s “scientific approach to matching” with 29 DIMENSIONS® of compatibility?

I wonder how many dimensions of compatibility there are to a good business partnership? I know it’s rarely love at first sight. There is still time for you to be the first eHarmony.com of the B2B crowd!

Marty Zwilling

Entrepreneurs Can Thrive on Services or Products

You don’t need to invent an innovative product to be a real entrepreneur. Self-employed services specialists are just as important, and are a growing part of this new “age of the entrepreneur” that I discussed last week. Many of these new entrepreneurs were regular employees a few years ago, focused on a skill specialty. They are not the generalists required for new product startups.

Some specialists have existed for some time with titles like business consultant, independent contractor, or freelancer. But these titles have lost their credibility and aren’t even descriptive of the roles. I propose we standardize on the “specialist” title, which is much more meaningful and focused, and can be applied to almost any role. Here are a few examples:

• Marketing specialists. As your business starts up, you need marketing programs, Search Engine Optimization (SEO), Search Engine Marketing (SEM), a modern “pull” strategy based on social networks, and lead generation. This world changes rapidly and needs a highly focused specialist to keep up.

• Administrative specialists. These were once called secretaries, who looked forward to a long career with a single company, starting in the typing pool, with careers often paralleling top executives. Now some never see the people they support, but are experts on the technology involved.

• Writing specialists. Whether you are in manufacturing or software, you need experienced writers who can document your latest technology, write patents, and efficiently manage the multitude of data formats required by printing companies and advertisers.

• Information specialists. With information technology (IT) and requirements changing so fast, it’s definitely cheaper to find specialists rather than hire young employees and train them. When it’s time for the new generation of technology, there will be new specialists waiting in the wings.

• Software specialists. It’s hard to find employee programmers who can do rapid prototyping with “mashup” technology, as well as build scalable fail-over applications using the latest hardware and tools. Then your apps need to run on the new iPhone platform.

The days when these roles were stable careers for company employees are gone. Today we are seeing a rapid transition to independent specialists. Tomorrow, a similar change is likely to happen to sales personnel, customer service, even manufacturing and construction jobs. We are becoming a society of entrepreneurs.

So I believe we all need to learn how to be good entrepreneurs, in the sense of taking responsibility for our own education, skills, well being, and productivity. It shouldn’t be a huge transition. If you think about it, the best employees have always done this.

Independent specialists are becoming the preferred way to staff a business, regardless of the economy. Especially these days all businesses need to run lean and mean. Websites like Elance and Guru.com help you staff up with specialists, or find work if you are a specialist.

At any rate, you should realize that all businesses today are relying more and more on non-employee specialists to get their jobs done, for the practical reason that these minimize the long-term commitments to payroll and benefits, the expensive training, and the crises of downsizing and layoffs. Maybe it’s the incentive you need to jump on the entrepreneurial bandwagon.

Marty Zwilling

When, Where, and How to Raise Venture Capital

By Dave Lavinsky, President and Co-Founder of Growthink

At one point or another, most entrepreneurs find themselves in a place where they could use money. And oftentimes, they could use a lot of money. These entrepreneurs often dream about how much they could accomplish if they had millions in the bank. All the people they could hire. All the products they could develop. All the marketing they could do.

And as they sit and dream, most entrepreneurs think about venture capitalists. Venture capitalists, or VCs, are the folks with millions upon millions of dollars to invest in companies such as theirs. This includes the folks that funded Google and Yahoo and Netflix and Ebay, and many of the great recent companies which were able to start and grow to massive scale in just a short period of time.

And for a select few entrepreneurs, they are able to go out and raise the venture capital they need and make their dreams a reality. So, what it is about these select few entrepreneurs, and what do they do that makes them successful in raising venture capital? Below are the three core things they do:

1. They go after venture capital at the right time. Venture capitalists generally are not interested in funding companies at the idea stage. They want to see that you have taken some of the risk out of the venture by developing prototypes, gaining beta customers, and possibly already generating initial revenues.

   If you haven’t accomplished any of these things, you might want to raise funding from angel investors and other sources to achieve them. And then go back to venture capitalists later.

2. They make sure they are a proper fit for venture capital. Venture capitalists swing for the fences. They aren’t interested in getting a 1X or 100% return on their investments. Rather they seek a 10X or 1,000% return on every investment they make.

   VCs aren’t naïve, and understand that the majority of their investments won’t pan out. And so they need the ones that do pan out to have enormous returns, which can give them a high return across all of their investments.

   Now, not only does your company need to have the potential to give a VC a 10X return, but it has to meet two other key criteria. First, it needs to be able to grow quickly. Venture capitalists generally want to see a return on their investment within 5 to 7 years. As such, you need to be able to grow quickly and get acquired or go public within just a few years.

   A second criteria is that the investment size and return has to be big enough. No matter how exciting your company is, no venture capital firm wants to invest only $100,000 in it. Rather, VCs generally invest no less than $1 million in any one company. And for some VCs, that barrier is considerably higher. Consider that some venture capitalists have billion-dollar funds; these VCs can’t possibly invest the time to fund and manage thousands of small investments.

   So, to sum up, your company must have the potential to grow very rapidly, provide a massive return on investment, and be worthy of a multi-million dollar investment (which typically means that you will be able to sell for $50 million, $100 million or more within a few years).

3. They go after the right VCs. All VCs aren’t created equally. Some prefer to fund healthcare companies. Others prefer software. Most only invest within 200 miles of their offices. Some will only invest very large amounts of capital.

And even when you target the right VCs, chances are that they’ll say “no”. The fact is that VCs are bombarded with potential deals to fund. And even if you’re the best deal, you won’t always win (just like the prettiest and most talented woman generally doesn’t win the pageants since a certain degree of luck and noise typically kicks in).

So, raising venture capital is a numbers game. You need to create a large list of investors that are a fit (e.g., based on your geography, sector, amount of funding you are seeking). And then you need to methodically contact and meet with them.

Importantly, the best thing you can do to get a venture capitalist to invest is to let them know that other VCs have shown genuine interest. It’s all too easy for a VC to play the waiting game with you….to say that they’re interested but want to see your company progress (and minimize their risk further) before they invest in you.

But once a VC sees that they might lose the opportunity to invest in you, they often get more aggressive in taking the next steps to fund your company.

Raising venture capital is possible. And it is often the most important step an entrepreneur makes in building a highly successful venture. So follow these steps and make it happen!

#####

Today’s guest post is by Dave Lavinsky, who has taught thousands of entrepreneurs how to raise venture capital. Learn more about Dave’s Venture Capital Pitch Formula from his Growthink blog, or contact him directly at davel@growthink.com.

Learn Strategies for Tapping into Foreign Markets

By Christian Arno, Managing Director

Is your business tapping into foreign markets? If you haven't broken out of your domestic market, you are missing out on a big business opportunity. The idea of selling overseas is attractive to many small and medium-sized businesses. But many small business owners abandon any thought of selling abroad because they don't think they have the necessary resources. In fact, this isn't the case. The internet can provide a whole host of innovative strategies for businesses of any size to break into foreign markets.

Use localization in your online marketing

Online marketing is one of the most effective ways of establishing a presence in foreign markets. You are likely to see a good return on your investment in a properly localized website. Don't rely on your English-language website to do the job for you overseas. A website localized for your target market will build trust amongst consumers and potential trade partners.

So what does website localization mean? A big part of it is translating your content as accurately as possible. While online services, like Google Translate, are attractive for their speed and low-cost, they will never be as accurate as a professional translator. A translator will be able to alert you about any potential cultural issues with your web content. Cultural sensitivities could have an influence on the material you publish on your website, or the way it is presented. Content which may be perfectly acceptable in the USA or Europe may cause offence in other parts of the world. A properly localized website is attuned to these cultural differences.

Good website localization also involves hosting and web infrastructure. Your foreign market website will be more successful in local search engines if it uses the appropriate country domain and is hosted on servers within your target region. For example, a website aimed at the German market should have a .de domain name (e.g. www.yourcompany.de) and reside on servers within Germany. This will allow more effective search engine optimization within foreign markets.

Use local affiliate networks

Online affiliate marketing is a well-established sales channel for many businesses. If you're planning to launch an e-commerce website in a foreign market, local affiliate networks could prove useful in your online marketing mix. Apart from the large global affiliate networks, there are many others operating solely within regional markets. As well as driving sales, affiliate marketing is also useful for building your brand. Many small affiliate marketers use content like blogs, social networks, podcasts and video to monetize their affiliate relationships. Building an army of these small-scale content creators within a foreign market could do wonders for your brand recognition there.

Use local social media

Many businesses benefit greatly from well run social media campaigns within their domestic markets and this success can be exported to foreign markets. Social media is beneficial to many sales and marketing functions, including market research, competitor analysis, CRM and customer service. Utilizing local social media expertise within a foreign market can help you to assess market response to your overseas roll-out and drive traffic to your localized website.

Use the web to find local freelance expertise

One of the biggest risks in tapping into foreign markets is hiring staff overseas. It's not just remuneration that saps the budget; the recruitment process, handling legislation and training are also big costs. And, of course, you'll need premises for them to work in. However, the web has enabled millions of freelance contractors to offer their services on the global market. Whether you need a PR professional, a virtual assistant, a sales director, finance officer or pretty much any other expert, you can find them via online marketplaces like Elance.com or Guru.com.

Many businesses are using freelances to mitigate the risks of starting-up overseas. They are saving time and money by hiring professionals, located in their target foreign markets, without the hassle and expense of employing them on a permanent basis. You can build a workforce quickly and efficiently and easily restructure based on your changing needs throughout the start-up process. Some of the freelances you find may turn into permanent hires once your overseas operations are fully up and running. Thanks to the web, you can find the personnel you need, without permanent ties, half way around the world.

######

Today’s article is presented by Christian Arno, who is the founder and Managing Director of global translation services and localization agency Lingo24. See more articles by him at http://www.lingo24.com/blogs or contact him on Twitter at @lingo24chr.