Test Your Aptitude for Business Internet Jargon

Many of the businesses and entrepreneurs I know still don’t realize that they need to use and understand the Internet, even if their interest is not e-commerce. Maybe you have also heard a lot of Internet terms, but are not sure you can explain how, when, and why they are relevant to your business success. Here is a quick test of your real Internet savvy.

See how many of the following “new” Internet concepts you recognize, and can explain in terms of value to your business. If you have heard the lingo, but most of these are not in your startup business plan, you are already in jeopardy as an entrepreneur:

1. Blogging. A blog is basically a journal (“web log”) that is published on the web. Business blogs are an extension of your website and can effectively communicate the value of your business. You are now reading one of about 50 million out there already. Blogs composed of video clips are called “vlogs.”

2. Social media marketing. Today there are huge communities online, like Facebook and Twitter, which grew in popularity for socializing with friends. For businesses, these are now prime sources of business networking, customer service, and client leads. Facebook alone has 800 million active members. Do you have a business presence there?

3. Search engine marketing (SEM). This popular form of Internet marketing seeks to increase website ranking in search engine results. Techniques include search engine optimization (SEO) and paid result placement. No SEM plan means you are missing a huge marketing opportunity.

4. Viral marketing. This is a marketing program on the Internet that you make so popular it spreads like a virus, like "word of mouth." Examples include give-aways, contests, and celebrity stunts that grab attention. Viral marketing costs real money, but is often worth it.

5. Streaming video. Watching video has now surpassed text searching, with popular sites like YouTube, so you see more video ads – in banners, news lead-ins, and site placements. Most videos are now in-stream (no download first), and new ones can be interactive, with clickable hot spots.

6. Internet radio. Sometimes called blogtalk radio, this is essentially the same as regularly broadcast radio, except it is streamed (realtime) on the Internet from websites such as AccuRadio, which alone reaches nearly a million listeners per month. People simply log on and listen. Use them to deliver a business message.

7. Podcasting. This is a variation on Internet radio, named from iPods and broadcasting. A pod-caster creates music and/or business material and makes it available for Internet download to iPods or other devices, where users may then listen at their convenience.

8. Pay per click (PPC). This is how you make money from advertising – someone else runs ads on your site or your blog, and you get paid for everyone who clicks on the ad. Rates per click are very low, so don’t try to live on ad revenues until visit rates are very high.

9. Crowdsourcing. This is a term indicating the use of “crowd wisdom” to get a task done free by interested people on the Internet. Wikipedia started this, but it is also used for technical support, software, and product reviews. You can use it for your business.

10. Wiki. This is an Internet website that allows the easy creation and editing of interlinked web pages via a web browser text editor. Wikis are used to create collaborative websites on a given subject, maintain corporate intranets, and build simple data bases.

Just for fun, I’ve come up with a scoring system based on my own non-scientific survey to help you rate yourself on your level of Internet business acumen. How many of the terms defined above have you personally used or explained in the context of your business?

• 8 to 10 – Excellent business savvy (or a Gen-Y)
• 5 to 7 – Average, keeping up with the crowd
• 2 to 4 – Beginner, struggling to catch up
• 0 or 1 – Wake up, the business world has moved on

The Internet is here – there is no going back. It’s probably the biggest source of change and innovation in business today. As entrepreneurs and business people, it behooves us all find and adopt changes which can improve our startup. These days, a static business is a dying business. How dynamic is yours?

Marty Zwilling

How to Recognize a Great Boss, or Even Be One

Everyone can recognize a great manager a mile away, so why is it so hard to find one? We all remember a few that are “legends in their own mind”, but that doesn’t do it. In fact, the clue here is that the view in your mind is the only one that matters, rather than the other way around.

Almost every one of us in business can remember that one special manager in their career who exemplifies the norm, who commanded our respect, and treated us like a friend, even in the toughest of personal or business crises.

I’ve asked many peers for the traits or attributes they saw in that person, and most will list the following positive functional traits of a good manager:

1. Leadership. Shows outstanding skills in guiding team members towards attainment of the organization’s goals and the right decisions at the right point of time. As Drucker said, "management is doing things right; leadership is doing the right things."

2. Plan and delegate. Possesses foresight and skills to understand the relevant capabilities of team members, and then scheduling tasks and delegating to the right people to get tasks done within deadlines. You are a guide, not a commander.

3. Domain expert. Demonstrates complete knowledge of his field and confident about that knowledge, with the common sense to make quick productive decisions, and ability to think outside the box.

4. Set clear expectations. Employees should always know what is expected of them. One of the easiest ways to do this is to set deliverable milestones for each employee over a set period of time. Then review the performance vs. the roadmap or deliverable at least six months prior to a performance review and discuss ways to improve.

5. Positive recognition. Immediately recognize team members, publicly or privately, when they complete something successfully or show initiative. Congratulate them on a job well done. Most employees are not motivated by money alone. Good managers know that employees want regular recognition that their job is being done well.

In my view, these are all “necessary” attributes, but are not “sufficient” to put you in that ‘great’ category. Most people recognize that it takes more to be ‘great,’ but the attributes are a bit more esoteric, and harder to quantify. Here are a few:

6. Active listener. Shows traits such as listening with feedback, optimistic attitude, motivating ability, and a concern for people. Listening to what is said as well as what is not said is of the utmost importance. It is demoralizing to an employee to be speaking to a supervisor and be interrupted for a phone call. All interruptions should be avoided.

7. Shows empathy. This refers to the ability to "walk in another person's shoes", and to have insight into the thoughts, and the emotional reactions of individuals faced with change. Empathy requires that you suspend judgment of another's actions or reactions, while you try to understand them, and treat them with sensitivity, respect, and kindness.

8. Always honest. Simply put, today’s managers live in glass houses. Everything that a manager does is seen by his employees. If a manager says one thing and does another, employees see it. Managers must be straightforward in all words and actions. A manager must “walk the talk.” That also means recognizing weaknesses, and admitting mistakes.

9. Sense of humor. People of all ages and cultures respond to humor. The majority of people are able to be amused at something funny, and see an irony. One of the most frequently cited attractions in great personal relationships is a sense of humor.

10. Keep your cool. A great manager is an effective communicator and a composed individual, with a proven tolerance for ambiguity. He/she never loses their cool, and is able to correct the team members without emotional body language or statements.

Whole books are written on this subject, but hopefully you get the picture. Great managers must do the technical job well – and they also must do the people job very well. Now that you understand these things, I’m not sure why it is so hard to find a great manager. I guess an even harder question I should ask is why is it so hard to be one?

Marty Zwilling

Boomers Lead and Drive the New Wave of Entrepreneurs

The buzz from startup executives, especially high-tech ones, has long been that startups are no place for Baby-Boomers (1946-1964) – you must have the high energy and crazy determination to work 20-hour days to succeed. Only the under-35 age group need apply.

I will argue that times have changed, and you better take another look. First of all, the Boomer demographic is currently the single largest, mainstream pool of experienced talent in the market today (76 million people strong). They have worked with high technology and computers for at least 20 years, are highly educated, and highly motivated. Last year about 40% of the total workforce was Boomers.

Most surprisingly, according to a report from the Kauffman Foundation, the highest rate of entrepreneurship in America has already shifted to the 55–64 age group, with people over 55 almost twice as likely to found successful companies than those between 20 and 34.

In addition to being startup founders, there are several other key roles that I see Boomers taking more often these days to drive successful startups:

1. Advisory Board. How can you beat finding someone who has been there and done that, able to mentor Gen-Y, has lots of connections to people in your industry, and is often willing to work for equity alone? Most actually have the time and inclination to help you, rather than compete with you.

2. Angel Investor. Almost all angel investors are “high net worth” individuals who made their money running a successful business in your domain, and they will mentor your team as well as demand the discipline you need to make your business work. Boomer angels won’t squeeze you for every dollar; they want to see your joy in success.

3. Interim Executive. Startups can rarely afford or even attract the young superstar C-level executives they covet – these people want big salaries, big staffs, and big budgets – who are also known to push founders out of the way. What you need is an experienced executive, who is willing to work for equity, and will happily step aside in a couple of years when your revenues exceed $20M.

4. Customer Service. Who better to run your customer service than an experienced professional with a little gray hair, who is firm but calm, soft-spoken, and credible around your customers? They know how to arbitrate immature tantrums, and lead by example.

5. Executive Assistant (aka Secretary). Here you want someone who knows the ropes, never gets ruffled, always shows up on time (no kids to drop off at school), and knows that their retirement depends on doing this job well. They have the maturity and sophistication to deal with your demanding executives and partners.

Of course, there are other positions were Boomers are sometimes not the best fit:

• Leading-edge technology architects, designers, consultants, and engineers.
• High-travel sales and buyer positions.
• Retail sales to Gen-X and Gen-Y.
• Construction and heavy labor jobs.

With the current difficult economic times, when companies fold, merge or cut back, more workers of all ages find themselves in search of new jobs. While everyone around you is snapping up the younger workers, my recommendation is that you think carefully about the job requirements in your startup before you follow the crowd.

In my view, there is an obvious opportunity here for a win-win situation by bringing together the best of Boomers with the high energy and crazy determination of the under-35 crowd. The crowd of Boomers won’t be going away any time soon, and more and more of them are finding that taking another bite of the apple is a healthy step for them. Join them today.

Marty Zwilling

5 Easy Steps to Your Own E-Commerce Startup for $100

If you have a unique creation or invention, and you are not selling it around the world on the Internet, now is the time to start. The cost of entry has never been lower. Anyone can be an entrepreneur today, without a huge investment, bank loans, venture capitalists, or Angels.

In the early days (20 years ago), most new e-commerce sites cost a million dollars to set up. Now the price is closer to $100, if you are willing to do the work yourself. Here are the key steps for a personal home-based business website selling a few products (as an alternative to Ebay):

1. Go online to reserve a website domain name. Be sure it matches your business, and get a hosting agreement from one of the popular providers like GoDaddy. The cost for the domain name is maybe $10/year, and the hosting starts around $50/year. Start simple.

2. Download free website tools. Many hosting services offer free tools, or will build a default website for you. Other popular tools are available at low cost, with built-in e-commerce capabilities (pay via PayPal or credit card), including FrontPage in the Microsoft Office Suite, and DreamWeaver by Adobe.

3. Open an account with PayPal. This costs nothing, and allows you to safely collect money from customers all around the world. If you want to also accept all the popular credit cards, that will require a merchant services account for a low monthly fee.

4. Personalize a simple web site. Customize your website using one of the tools above, selecting one of the standard templates for design and layout. You probably want at least a home page, product page, order page, and contact page. The menu should include a link to your blog, separately set up on Blogger, Wordpress, or TypePad, again free.

5. Publish the site and now you are in business. But don’t be fooled into expecting people to flock to your site after you tell a few friends. Now the real work begins – promotion, marketing, blogging, and all types of search engine marketing. But even these can be done for almost no cost, if you are willing to learn and do the work yourself.

Obviously, commercial e-commerce sites handling thousands of products and back-office functions are more expensive, and usually require professional help to do the custom programming and special site navigation features. All this may cost a few thousand dollars, but don’t get talked into an Amazon.com replacement just yet.

The next step in complexity is building a software product that you can offer as a service to your customers. A simple example might be mortgage calculator to add to your real estate sales site. Any credible software developer should be willing to tackle this kind of tool for a couple of thousand dollars.

Then there are full-featured software sites like Facebook. The logic behind all these features is millions of lines of code, and cost millions of dollars to develop and maintain. Don’t expect that you can create a new social networking site in your garage, and steal all the users away from Facebook. Facebook is making money today, but only after a $150 million investment.

But even Facebook started simple, and then developed more and more robust iterations as user interest caught on. I give this advice all the time “launch fast and iterate.” You can’t get it all right the first time, and the market will be gone if you try to include every feature in the first version.

The net is that if I see a website business plan today with a projected development cost greater than $200K, I suspect the founder must be including some fancy perks, or they don’t understand the market dynamics of e-commerce today.

Budding entrepreneurs and home-based businesses should be writing business plans before they start, so they understand and can manage the tasks ahead, but no outside investor need ever see the plan. Fund it yourself (bootstrapping) and do-it-yourself entrepreneurs are the best kind, because they can focus on the business, rather than fund raising, and have full control of their destiny. Life is more fun that way. Grab your shopping basket.

Marty Zwilling

10 Clues That It’s Time to Start Your Own Business

Many budding entrepreneurs struggle mightily with that first step – out of their comfort zone and into the unknown. They keep asking people like me whether the time is right, and the truth is that there’s never an ideal time to start your own business. It’s like starting a personal relationship, if you wait for exactly the right time, you’ll never do it.

I’ve talked to many experts, and everyone has his own view of the right personal attributes, and the right business conditions to jump in. In my own view, the recovering economy is ripe for new startups, but successful startups are more about the right person, than the right idea or the right climate. So the real challenge is looking inward to check your alignment with these clues:

1. Running a business is a passion you crave. This is a necessary, but not sufficient reason to start a business now. It’s not the same as “I want to change the world (volunteer for a good cause)” or “I’m tired of the corporate grind (take a vacation).” It does mean you have a compelling new business idea, and a willingness to face risk.

2. You know what needs to be done, and not afraid to make the decisions. This is the right context for being your own boss. You get great satisfaction from overcoming all obstacles, and you have no problem with living or dying by your own decisions. You have never had a problem putting together a plan and making it happen.

3. The opportunity to make real money excites you. You have read all the stories of Google and Apple hitting on a great idea, beating the odds, and being worth millions in just a couple of years. You like the idea that most of the money you make will be yours, not just merged into corporate profits.

4. You believe the economy has tilted the odds in your favor. The recent recession has definitely opened up opportunities for new products, and skilled people at lower costs are abundant. Many of the great entrepreneurs of the past started their companies near business recessions and depressions.

5. You get to set the deadlines, and manage your own priorities. You have always felt that you can do more than expected by current bosses, if allowed to do it on your own schedule with your own milestones. Your self-motivation is more effective for you than any arbitrary rewards and even salary increases.

6. You get to do the interesting things, for a change. First of all, the business you intend to set up is your dream, not someone else’s. Within that context, you can delegate or find partners for things that bore you, like marketing, rather than feel that you have been assigned to do the least interesting work.

7. A variety of challenges stretches your abilities to the maximum. If you love to learn new things, and are stimulated by change, you will love the new business environment. Every day is different, from dealing with creative elements, to financial challenges, marketing and sales, and customers of every type.

8. Your office is where you want it. Many entrepreneurs enjoy working from their home, where they are more comfortable, and can interact better with their family. Some like an old eclectic loft downtown, or a local coffee shop to minimize the commute. In these days of global links, you can actually run the business from halfway around the world.

9. What you envision doesn’t seem all that hard to you. In fact, the cost of entry into most businesses has come down greatly in the last twenty years. You can now start an e-commerce site for $100, or develop software applications for smart phones for a few thousand. The right reason to start a business is because you have done your homework, and are convinced that you have the skills and knowledge to do it easily.

10. You are really ready for a second career. This is especially applicable to Boomers and anyone who has had a successful career, but now ready for a new challenge, with a little time on their hands. The good part of having your own business is that you don’t even have to give up your first job to start the second.

If a few of these reasons are calling your name, now is the time to start building your business. There's no better time, especially if people around you are hesitating due to an apparent fit to my other list. It means you'll be facing a lot less competition. What are you waiting for?

Marty Zwilling

Can You Move From Thought Leader to Business Leader?

By definition, most entrepreneurs are thought leaders. They have the ability to recognize a market need, the skills to design and implement a solution, and the drive to start a business from that solution. It all comes from within themselves. A business leader does the same thing and more through the people around them. Most entrepreneurs are not both.

In reality, a successful startup can be built by a thought leader, but growing a successful business requires a business leader. That’s why venture capital investors often replace startup CEOs as a condition of their scale-up investment. That’s why so many startups plateau after gaining some initial traction, and are run over or acquired by their competition.

Much has been written on this subject, including the integration and update of two famous business books by Steve Farber (former partner of Tom Peters), this one called “The Radical Leap Re-Energized”. Farber highlights succinctly the traits of radical and profound leaders (extreme leaders) as follows:

• Cultivate love. Successful leaders model the intensity and energy that it takes to stay ahead competitively and meet ever more ambitious goals. They do this because they love what they do. As they continue to pursue their passion, they remain focused on the contribution made to others and to the surrounding community.

• Generate energy. Ask yourself this question – Do I generate more energy when I walk into a room, or when I walk out of it? Do your actions create positive energy for those around you, or are you an “energy vampire,” sucking the life out of your workplace? Hopefully you are the former, and not the latter.

• Inspire audacity. This is a bold and blatant disregard for normal constraints. Thinking and acting, “outside the box.” Audacity inspires people to do something really significant and meaningful. It enables them to change the business, the world, and themselves, for the better.

• Provide proof. How do we prove to ourselves (and to others) that we are really exercising extreme leadership? The simple answer is “Do What You Say You Will Do” (DWYSYWD). The best leaders achieve their own success by raising the self-esteem of followers. They build credibility by looking for ways to respond to the needs and interests of others.

In this extreme leadership model, leaders aren’t afraid to take risks, make mistakes in front of employees, or actively solicit team feedback. Farber asserts that most of us, at some level, have the innate ability to become a business leader. Getting fully in tune with who you are, and then following your heart, goes a long way towards helping you discover the leader you can become.

Many entrepreneurs who are great thought leaders are unwilling to listen and network. They can’t imagine that their vision for the business can be improved, or even implemented by others. They don’t hire people until it’s too late, because no one else can do the job up to their standards, or with their commitment. At best, they hire “helpers” rather than help, and are too busy to train the helpers.

Obviously some people who call themselves business leaders are only posing. They wear the label and assert the title without putting their own skin in the game. The best leaders approach the act of leadership as an extreme sport, and they love the fear and exhilaration that naturally comes with the territory.

Business leadership is not a solo act. Real leaders accept the job of recruiting, cultivating, and developing other leaders as priority one, as well leading on the thought side. Learning to be both a thought leader and a business leader can make you great. Steve Jobs is an example of someone who struggled with this one, and won. Where are you along the spectrum?

Marty Zwilling

Customer Centric Trumps Customer Service Every Time

New product startups rightfully begin with a heads-down focus on creating the ultimate product – whether it’s a new technology, a new look and ease of use, or a new low-cost delivery approach. Most then add customer service at the rollout, but very few really understand what it means to be truly customer centric, and even fewer really achieve it.

Customer centricity is far more than providing excellent customer service, although that’s a step in the right direction. Customer centricity is a strategy to fundamentally align a company’s products and services with the wants and needs of its most valuable customers, with the aim of more profits for the long term.

As I was reminded recently by Peter Fader’s new book, “Customer Centricity” from the Wharton School, Wal-Mart and Costco aren’t really customer centric. They do provide the right products at the right price to save all customers money (with good customer service), but they don’t try to find their most valuable customers, and nurture them to buy more or bring in friends.

Customer centric means building loyal customers, like Apple appears to have done recently. It means recognizing that all customers are not the same, and that all customers are not always right. It means pursuing Fader’s four tenets that can lead to even greater long-term success and profits than a great product at a low price:

1. Accept that all customers are not the same. By recognizing the fundamental and inevitable differences among your customers, you can give your organization a strategic advantage over your product-centric competitors – who may know little to nothing about the customers who account for their success and survival.

2. Focus on individual customer value. By understanding that there is real and quantifiable value to be found in individual customers, you can better focus your long-term marketing efforts on precisely those customers who will generate the greatest long-term value.

3. Quantify the value and cost of acquiring every new customer. By working to quantify the value of each and every one of your customers, you can gain enormously valuable insight about how much you should be willing to spend to keep an existing customer and how much you should be willing to spend to acquire a new customer.

4. Personalize your offering to each customer or group. By moving forward with a highly focused customer relationship management initiative, you can gather and leverage more information about your customers. This will allow your company to serve those customers in a more personalized (yet genuine) manner than any competitor can.

In reality, you don’t need to get to know each individual customer. But you do need to segment your customers into homogeneous groups. Then you can decide on a marketing program, loyalty program, or a level of attention that is appropriate to each group, for acquisition, retention, and profitability.

Remember, this is not a one-time effort. The needs and interests of your customers are ever-changing, so you have to constantly re-align your resources to build mutually beneficial relationships. Don’t focus only on your products and operational efficiencies, unless you already have the brand image and leverage to prosper with price as the key differentiating factor.

Success hinges on progressing past lip-service, to the real work of building a customer centric organization to execute the focus. That means setting up operational and financial metrics, educating team members, and rewarding the right actions. Can you name three elements today in your startup that go beyond good customer service? If not, competitors are approaching.

Marty Zwilling

10 Preparation Steps to Win an Angel Investment

Every new startup I know dreams of being funded by an angel investor. Yet according to the latest data from Gust (formerly AngelSoft), only about 3 out of 100 companies who initiate the formal request process actually get funded.

The Gust Deal Funnel from the last 12 months indicates is that 70% of the interested companies never make it past the initial screening process. Over half of the survivors remaining are eliminated during live presentations, and another 6.5% are eliminated during due diligence.

What is this daunting process, and what can you do to optimize your chances of surviving it? Over the past 10 years, I have had the opportunity to see how the process works, several times from the startup side, and more recently from the angel perspective (as a member of an angel group selection committee).

So what should you do to prepare for this stage in your venture, and optimize your chances of making it through the process? Here is my list of top ten action items to best prepare you for success in achieving a funding event with angels:

1. Incorporate the business now. If you expect to require external funding, you should first incorporate as an S-Corp, C-Corp, or LLC, rather than the more expeditious sole proprietorship or partnership. The corporate entity lends itself best to the concept of “sharing” equity required by investors, and unincorporated entities don’t get funding.

2. Line up an experienced team. Remember the old adage that “investors fund people, not ideas.” That’s why this item is so important, and is probably the biggest stumbling block I see in getting through the initial angel screening. If the founders are not experienced, find a couple of advisors from the business sector to fill the gap.

3. Get your Internet domain name and website. In today’s world, if you don’t have a web site up and running, you will not be perceived as a real company. Investors routinely go to candidate web sites to get a feel for the tone and scope of the company, as well as its maturity and offerings. Reserve the company name on social networks to protect it.

4. Define some intellectual property. File a patent and trademarks to show real intellectual property. Having a defensible competitive advantage or “barrier to entry” is another critical step to funding, and another common stumbling block during all phases of the funding process. Start early on this one, or you will lose the opportunity.

5. Build a prototype product. A conundrum for many frustrated entrepreneurs is that they need money from investors to design and build a prototype product, yet most angel investors expect to see at least a prototype before they invest. Use your own money or friends and family to demonstrate progress early.

6. Build an investor presentation and summary. Investors expect a one or two-page executive summary sheet for the initial screening, backed up by a ten-slide Powerpoint investor presentation. Remember to aim the content of both of these at investors, not customers. They must amplify your “elevator pitch” to investors, as well as key points from the business plan and the financial model.

7. Prepare an investment-grade business plan. Every entrepreneur needs a professional business plan for their own use, whether they intend to seek investor funding or not. As a founder, you may think that everyone understands your vision and plan from your passion and words, but it doesn’t work that way. It should answer every question an investor or associate might ask, including current valuation, funding needed, and exit strategy.

8. Finalize your financial model. Like the business plan, a financial model is required as much for your own use as to impress angel investors. In most cases, a Microsoft Excel spreadsheet is adequate, with projection formulas for revenue, costs, and cash flow over the next five years. Variables for “what if” questions add credibility.

9. Close at least one initial customer. This must be someone who is willing to pay real money for your product or service. Free trials don’t count. All the conviction and market research in the world are no substitute for real customers paying real money. This is called “validating the business model.”

10. Network to the maximum with investor connections. The last and possibly most important action item is to build relationships with investors and friends of investors BEFORE you need their help in building your company. A good start is taking an active role in relevant technology groups, trade associations, university activities, and local business groups.

In summary, being touched by an angel can lead you to your dreams of a new and successful business, but it doesn’t happen without planning, hard work, and careful preparation. Most angel investors are seeking psychic as well as financial benefit from their investment. Do your homework first to get their attention, but don’t expect anyone to swoop down and wave a magic wand.

Marty Zwilling