What Does a Startup Have To Do To Get Noticed?

The space for startups is more crowded than ever. First of all, it’s now international, so you have startups from every country in the world competing for your customer’s attention and their business. Then there is the Internet, delivered through every media, including your smart phone, where the volume of data spewing out is like a new Library of Congress every 15 minutes.

According to a recent study done by the Ewing Marion Kauffman Foundation, there were 565,000 new businesses created per month in 2010 in the US alone, which is a 15-year high. The days when you could launch your business with a new web site, and the phone would begin to ring, are long gone. Even the Google search engine crawlers may take up to two weeks to find you.

So what’s an entrepreneur to do to get his new business noticed these days? According to many experts, including Michael Hyatt, in his new book, “Platform: Get Noticed in a Noisy World,” you need to build the highest platform you can, to stand out and be heard above all the rest.

Today’s platform is built of people, including yourself, contacts, connections, and followers, who can amplify your message through social media and spread it to your target customers. Most entrepreneurs I know are too busy creating a compelling product to give proper focus to the four phases of building a people and media platform that are equally critical for long-term success:

• Platform creation prior to launch. Make sure you have the five basic platform tools in place well before the launch – social media profiles with a great headshot (Twitter, Facebook, LinkedIn, and YouTube), website (with blog), business cards, email signature block, and an email address on your domain name. If these are not complete and consistent, your platform will always be splintered and lost in the noise.

• Building your home base with personal and product traction. Start your campaign and blog early, to get the message and vision out there (no selling), establish your value and expertise, show your commitment, and start building your home base of contacts and followers. Build a media kit, publicize endorsements from friends and beta customers, get dialogs going on Twitter, and optimize your website landing pages.

• Using the platform to expand your reach. For startups, you as the founder are the brand and the most important part of your platform. Be visible online and to traditional media, volunteer to lead, write guest posts for others, be responsive, give stuff away, and provide many ways to communicate. Nurture those links into other sites, and network to the max in relevant business organizations and trade shows.

• Make your customers your platform. Engage your customers through blog comments, product reviews, and personal customer service. Soon you will find that they are re-tweeting your messages, referring their friends to your products, and becoming your biggest evangelists. Your platform is now many times taller and stronger. Your customers will now be helping you to monitor, defend, and amplify your brand.

Success today is more than ever about who you are and who you know, and the platform is all about both of these. Your product or service is the “what,” and of course, that needs to have a “wow factor” to get above the noise, as well. Make sure you create products that exceed customer expectations, that you would personally use, and solve real problems.

The message here is that it’s necessary, but just not sufficient today to build a wow product. People are more distracted than ever, and competition has never been greater. You have to get your customer’s attention. Getting noticed is not about ego or being the center of attention. It’s about having something of value to others and finding the most powerful way of getting that message to those who can benefit from it.

The best entrepreneurs are stubborn, committed, and driven by their vision to produce a product with a wow factor, and to build a platform that rises above the noise. Their startups will get noticed. How about yours?

Marty Zwilling

Innovation to an Existing Business Can Limit Risk

If you are an entrepreneur starting a business for the first time, I recommend that you find a product concept that is already accepted and improve on it, rather than tackling that ultimate disruptive technology. Notice that I’m not suggesting that you steal someone else’s idea, but simply limit your risk by adding innovation to a proven entity.

Evidence of success using this approach is all around us. Look how the Japanese entered the auto industry, or how McDonalds imitated White Castle, or how Wal-Mart “perfected” the low-price high-volume approach. Once you have experience in running a successful startup this way, you may decide that the disruptive technology of your dreams was a bad idea in the first place.

It seems to me that in the startup world, imitation gets a bad rap. People tend to look down on “me too” entrants as inferior, or forced to copy because they have nothing original to offer. I can see many advantages to the imitation with innovation approach, beyond just limiting the risk to changing just one variable rather than many:

• Avoid initial major R&D cost. Statistically, the costs to the first inventor of a new technology are at least a third higher than to follow-on innovators in the same technology. Of course, the first one gets the patent. But patent disclosure requirements often make imitation easier, and smart technologists can work around most patents anyway.

• Learn from competitors and early adopters. Market research is more meaningful if there is already a market and real customers. Don’t just copy successful formats and strategies, but learn from what has worked and not worked for your competitors. Hopefully, you can skip some of the costly pivots made by them.

• Easier to find investors. Even banks, as well as equity investors, look more favorably on a proven business model than a new and unproven one. This is probably why banks will often support a franchise purchase for up to 70%, while they rarely if ever support any investment in startups.

• Imitation drives progress. If a product or process has already proven its value, more people working on it, determined to be more competitive, will find more and quicker ways to improve the base than if one company maintains a monopoly. Good imitators often disrupt the original innovator.

• Try a new country or market. Good imitators actively look for a new country or market as the innovation, rather than a new technology. Even though the world is getting smaller and smaller, very few startups can yet afford to patent or even sell their product in all the relevant countries at once. If that’s your home country, jump in first.

Of course, you still have to do your homework and market research. Just because something works in Silicon Valley, doesn’t mean it will work in Peoria. Also, imitations done without the normal operational discipline and strategic planning will fail, just like any other poorly run startup. Don’t assume imitation is reserved for children, animals, and dummies.

Just like apes learned the value of imitation to survive in an ancient hostile jungle, entrepreneurs need to learn the same value in the new business jungle. Fifty years ago, Harvard economist Theodore Levitt observed that the same companies that were serious about innovation often approached imitation in a much more casual manner. That mindset is still too prevalent today.

Thus, the place to start for new entrepreneurs is to look for a successful business (not a failing business) in your domain and think about how you could do it better. Your innovation may be simply a better location, better service, or a better price, or it could be a technology innovation. At minimum, it can give you the money and experience to take your dream step later with less risk. In fact, your imitation with innovation may BE the “next big thing.”

Marty Zwilling

Investors Reject Plans With No Clear Business Model

For survival, the objective of every business should be to bring in revenues which exceed their costs. Even non-profits have to do this to cover overhead costs, unless they rely totally on donations. Yet I continue to see business plans, or even talk to founders, and can’t find the specifics of the business model anywhere.

As Guy Kawasaki says in his book “The Art of the Start,” if you can’t describe your business model in ten words or less, you don’t have a business model. Avoid whatever business jargon is currently hip, like strategic, mission-critical, world-class, synergistic, first-mover, or scalable. Try something like, “the product costs $X, and we sell it for $Y.”

Guy also says and I agree that the smart approach is to copy somebody else. You can innovate in technology, markets, and customers, but inventing a new business model is a bad bet. Try to relate your business model to one that’s already successful and understood. Here is a summary of a half-dozen of the most common models:

• Facebook model. This is the most often attempted and failed business model today on the Internet – all the services are free, and you make money off the online advertising. This model only works once you have exceeded about one million page-views per month, and spent maybe $50 million to get there.

• eCommerce model. This was one of the first Internet business models, per Amazon.com, and still a popular one today. It’s the electronic version of a catalog and shopping cart, and today rarely involves any stock of product. Products are usually drop-shipped directly by the manufacturer.

• Shopkeeper model. This is the most traditional and successful approach in use for centuries. It implies setting up a store in a location where potential customers are likely to be, with products and services on display, being sold at some multiple of cost to cover the overhead and realize a profit.

• Bricks-and-clicks model. This is a hybrid of the shopkeeper and eCommerce models, in which a company integrates both offline (bricks) and online (clicks) presences. It is also known as click-and-mortar, as well as bricks, clicks and flips, with flips referring to catalogs. It’s great for big companies like Wal-Mart, but I don’t recommend it for startups.

• Razor-and-blades model. This one has been around for many years now, and is sometimes called the “bait and hook model” or the "tied products model". The premise is offering a basic product at a very low cost, often at a loss (the "bait"), then charging compensatory recurring amounts for refills or associated products or services (the "hook"). I’m sure you can think of many examples.

• Subscription or licensing model. Here a customer must pay a contracted price to have access to the product or service on a periodic basis (monthly, yearly, or seasonal). The model works online, offline, through magazines, newspapers, and television. The advantage is recurring revenue without finding new customers.

There are many more, with descriptive names like the auction model, direct sales model, value-added reseller model, multi-level marketing model, and the freemium model. Take a look at Wikipedia if you want more details.

The point I am making is – pick one and provide specifics in your business plan. Define clearly who is your customer, what will the customer pay for, how much will he pay, and how much do you expect it to cost for that revenue.

Then as investors, we can argue other equally important parts of the model, like how big is the opportunity, how fast it’s growing, and who are the competitors. Don’t let your business plan be tossed before you are in the game. What are the ten words that define your business model?

Marty Zwilling

Is Your Startup Relevant Enough to be Great?

Some investors seem to focus wholly on the strengths of your management team, or your sustainable competitive advantage, and in reality these are the core attributes for every funding equation. While these may be necessary for funding, they may not be sufficient to make your startup the great success embodied in your vision.

I have always struggled to communicate the multiple other relevant priorities, and the other intangibles required for a great execution. I found many of these in a new book, “Great From the Start,” by John B. Montgomery, which does a great job of laying out specifics, but also starts with a good summary of the intangibles, summarized as the five rules of relevancy, by Mark Zawacki:

1. A startup needs to be relevant and stay relevant. Relevancy for an early-stage company is the discovery and understanding of the real addressable market for a product or service. This is not the total opportunity out there, and not the total target market, but the subset of customers who have and will spend the money you need to cure their pain.

2. A startup needs to find a voice relevant to its ecosystem. These days, you have to foster a community of support for your business. That means educating targeted supporters is key, even before you start to sell. Selling too early triggers customer defenses and drives them away. Everyone hates being sold to; we all prefer to buy.

3. A startup must gain traction. This is not just sales traction, but a proper balance between resources, product, and customers. It means building a viable and desirable product before selling, assembling the right team with funding, and recruiting and educating enthusiastic customers who will be your best advocates.

4. A startup must form partnerships and alliances within its ecosystem. Today’s ultracompetitive global environment demands that you make alliances early. Startups often pay lip service to strategic partnerships, but they schedule these efforts far down the road. The right partnership strategy can make a company relevant.

5. A startup must maintain a laser focus. Too many early-stage companies are so desperate for customers that they operate in a frantic and random sales mode. They sell into multiple verticals, or pursue multiple revenue streams, such that they can’t develop a repeatable, scalable sales process, and don’t do anything well.

Of course, relevancy doesn’t work if you don’t have a winning business model. In the traditional business environment, this means the priority is an adequate return for your stakeholders, but today it also means your company should provide a material positive impact on society and the environment.

Great companies recognize that there are now multiple interdependent stakeholders, including customers, business partners, and social groups, who need to be part of your equation since they can drive or limit your success, in addition to management and stockholders.

In other words, your startup needs to be a “conscious” entity, constantly aware of the complex eco-system around it, and the factors driving change and evolution. This requires conscious leaders who are passionately committed to personal and professional growth, as well as the greater good of society. These leaders then cultivate the consciousness of their team members.

In reality, your people are the consciousness and relevance of your startup, and your customers judge your startup as they would judge a person. No relevant company can afford to focus on short-term wins over the long-term effects of its behavior on other stakeholders. How much time and how many measures has your startup applied regularly to the relevance issues above?

Marty Zwilling

5 Ways to Hire People Who May be Smarter Than You

Helpers do what you say, while good help does what you need, without you saying anything. People who can help you the most are actually smarter than you, at least in their domain. Top entrepreneurs spend more time putting the right team in place to accomplish their objectives than they spend on any other components of their job.

Some entrepreneurs are so in love with themselves (narcissistic) that they insist on answering every question, and making every decision. That’s not only impossible, but also counterproductive. Effective entrepreneurs team with or employ people who can provide the answers directly, pertinent to their particular area of expertise.

True leaders also know how to move out of the way to let others do what they do best. If you’re working too many hours and following up on every detail you may want to look closer at your team to ensure you’ve surrounded yourself with the right people.

In short, if you can find people with more passion, more knowledge, and more desire to succeed than you have, it will push you to be better and take the organization to new levels. Here are some key characteristics to look for:

1. Gets things done. Smart people know what’s required, or can figure it out, and are confident enough to make decisions without you. Getting things done is crucial to running a business. Often people with advanced degrees have academic smarts, but are not closers. You can’t afford to make every decision, or follow-up on every action item.

2. Recommend their own ideas. How often do the people around you recommend sound ideas that you never knew were possibilities? If you’re teaming with people who are smarter than you, you should be frequently surprised with their new ideas and solutions. You will be constantly learning from them.

3. Passionate and positive. The smart people you want are as positive and passionate about your business as you are. They take ownership and responsibility for their actions. They convince you with their actions and questions that they understand the big picture. They speak confidently and deliberately, rather than defensively.

4. More listening than talking. Look for team members who are active listeners, where you can see yourself seeking them out for answers, rather than always the other way around. It’s great to team with inexperienced people who are growing so fast, that you can envision working for them soon, or having them take the helm of your business.

5. Avoid the narcissists. Their energy, self-confidence, and charm make them look smart, but they resist accepting suggestions, thinking it will make them appear weak, and they don't believe that others have anything useful to tell them. Narcissists will take credit for all successes, and always find someone to blame for their failures and shortcomings.

One of the most important jobs of every entrepreneur, and definitely one of the toughest, is to find and nurture people who are smarter in their roles than you. Resumes don’t provide much of a picture in this regard. Supplement this with networking input, references, and your own personal interactions.

If you are looking for a potential business partner, count on building a relationship over several months, before you really know the person. The business relationship at that level is just as important as a personal relationship before marrying (no overnight affairs). If you are hiring, make sure you have multiple interviews, and input from multiple people on the team to balance your view.

In my view, one of the most important aspects of being a successful entrepreneur is surrounding yourself with people smarter than you. Don’t let your ego get in the way. It’s the best way for you to grow the business, as well as yourself.

Marty Zwilling

Don’t be Too Busy to Do Some Reflective Thinking

Startups and entrepreneurs are drowning in the information overload, where the volume of data created is like a new Library of Congress every 15 minutes. That creates a huge gap between data and meaning, and makes quick decisions and action ever more difficult. We all need to take a little more time to think.

On the other end of the spectrum, some people “over-think” things to the point of inaction. Acting without thinking, and thinking without action, are both deadly to a startup. The challenge is to find the right balance, and to make the thinking deep and reflective thinking.

In his recent book, “Consider,” Daniel Patrick Forrester talks about how some successful entrepreneurs, like Bill Gates, former CEO of Microsoft, force some think time in their schedule by abandoning the office for a cabin in the woods every few months for some reflective thinking. Others simply reserve an hour every morning for private thinking, despite a densely packed schedule.

What are the issues and questions that these successful leaders reflect on within their own organizations, and related to their own behavior? Here is a summary as put forth by the research from Mr. Forrester:

• Control we assert. While none of us can stop the flow of data and the creation of content that swirls around us, we can control how we structure the moments that arise and our responses. As leaders, the control we assert in problem solving sets a tone that will be followed by the whole organization.

• Level of attention given. Now we work in a state of giving our “continuous partial attention” to issues before us. While not all matters require deep thought, we find the ones that do are afforded equal footing with ones that don’t. We must come to a conclusion about the consequences of giving only partial attention to top initiatives.

• Type of communication used. If email or text messaging is the default way you interact, then you have already declared where it sits in your hierarchy. While technology allows for speed and immediacy, it doesn’t usually convey the texture and empathy of face-to-face interaction that is key to many important issues.

• Value of disconnected short dialogues. In many ways, problem solving has devolved into a series of dialogues that take place across digital transmissions with occasional face-to-face interactions. Failure to think deeply about forward-looking events and big ideas will come at a cost.

• Time booked for your thoughts. With the tethering to technology that happens to us throughout the course of a day, it is clear that we treat time with our thoughts as a low-level priority. Even if you can’t book a week away to thin, it isn’t hard to book a meeting with yourself, when you are off-limits to everything but your thoughts.

• Reflecting before delivering messages. When people demand immediacy from you, do you consider how the people on the other end will receive it, before you dash off a message? Sometimes multiple crafting and editing iterations are required as you think about the ramifications. Is an electronic message even the right answer?

Think-time and reflection don’t just happen when we are alone. Startups will inevitably engage in discourse and dialogue through meetings. You need to insure effective discourse in meetings (“thinking out loud”) by making sure there are no negative consequences to dissent and debate. Otherwise meetings will be perceived as a waste of time by the people who count.

While technology and the Internet allow you to act and react more quickly than ever before, you need more than ever to consider decisions reflectively before making them. In addition to solving problems the right way, make sure you are solving the right problems.

Marty Zwilling

The Wrong Advisory Board Will Hurt Your Startup

If you are an entrepreneur for the first time, or entering a new business area, it’s usually worth your time to assemble an Advisory Board of two or three executives who have travelled that road before. But if you select the wrong people, or use them incorrectly, the impact will not be positive for your company or your image.

For perspective, you need to remember that boards of advisors, unlike directors, have no formal power or fiduciary duties, but rather serve at the pleasure of you the business owner. But they are not likely to stroke your ego, or be cheerleaders. They need to tell you the truth about your business, good or bad.

Using them effectively requires real effort on your part. If you give and ask for nothing, you will get nothing. Used correctly, they will be your best advocates to investors, and can save you from making major mistakes. Here are some tips on using your advisory board effectively:

• Select people who complement your experience. If your experience is primarily technical, get someone who has built a business. If your business is too small for a CFO, get an advisor with heavy financial experience. If the business area is new to you, find someone who has lived it. Balance is best.

• Be specific on help needed. If you've chosen your advisory board members carefully, you're asking busy, successful people to carve even more time out of their schedule to help you. Let each one know how you see his/her expertise – it may be insight on trends, organizational advice, or funding connections. Set a fixed term, like one year.

• Formalize the compensation. Most advisory board members sign up because the want to help you, not because of the compensation. Yet you should offer a small monthly fee and/or some stock options to show you are serious about the position. If you want out-of-town members on your board, you foot the travel expenses.

• You need to drive to process. It’s smart to schedule a monthly Advisory Board meeting, with a formal agenda, as well as informal communication to keep everyone on the same page. Advisors can’t help you if they only hear from you once every six months. They expect you to initiate specific requests, rather than having to ask for updates.

• Respect their time commitment. For a business executive, nothing is more annoying than a poorly run meeting where the presenter is unprepared, rambles, and wastes time. Make sure every meeting is facilitated well so that concrete action steps, deadlines and assignments result. Have someone take notes so that decisions are recorded.

• Recruit the best for your real Board. Your Advisory Board is a pre-cursor to your Board of Directors, a bit further down the line. This is your chance to test commitment, chemistry, and contribution for that more formal position. It’s a great networking opportunity to expand your connections to include all their connections as well.

On the other hand, if you find your Advisory Board is a burden on you, or you find yourself hiding things from them, then you have the wrong people, or you are letting your ego get in the way. Members can provide a mirror so that you can see your company as experts see it, as long as you look in that mirror with eyes wide open.

If you are looking for someone to fill an operational gap, or to do product design, it’s usually more productive to look for a partner, employee, or consultant. These can help you when you don’t know what you don’t know, or to create what you don’t have.

If you use your advisory board to feed your ego, or correct your mistakes, you will likely be disappointed. Worse yet, your image as an entrepreneur will be damaged. That will inevitably spread through networking across the business community. You don’t need that kind of help.

Marty Zwilling

8 Clues that Your Business Honeymoon May be Over

Starting a business is a lot like starting a marriage. At first, all parties are in dreamland, with a vision of changing the world, having lots of fun, and raking in the profits. But all too soon, reality sets in. Product development is stuck at that 90% mark, a key person leaves, and customers are talking but not buying.

In his book Reality Check, Guy Kawasaki summarizes some of the key issues. I’ve seen them too often, and they seem to be the same for every company (and every marriage) no matter how great the team is. I challenge any startup to show me they have avoided all of these:

1. One of the founders isn’t delivering. Maybe he was the only guy around who could design the product you envisioned, but delivering a scalable, quality product is another story. Besides, he is now more interested in designing the next product.

2. The product is behind schedule. When I was a software development manager, I tried to get a “bottoms up” time estimate from the team, and then pad it by 50%. Invariably we were in crisis mode by delivery time, and the common complaint was that “management” always forced unrealistic schedules on developers.

3. Sales aren’t meeting projections. The team buys its own propaganda, and fully expects customers to be leaping tall buildings to get to your product. You never dreamed that customers would be slow to accept an unproven product from an unknown startup in the middle of an economic downturn.

4. The team is not getting along. Things go wrong. People on the team haven’t worked together before, and they don’t fully trust any ideas except their own. As the top executive, you have to make some tough decisions, and spend much more time than you expected on communication and mediation.

5. Your marketplace buzz is non-existent, skeptical, or even negative. You have been too busy with your own issues to be out there building the wave, but your competitors have been actively positioning you far below them. The press is focused on things that exist, rather than your early marketing hype.

6. Requirements changed in the middle of the cycle. While everyone was busy building the product and business model you detailed in your business plan, early feedback from the field makes it clear that you were somewhat wrong. Or the economy has taken a sudden turn for the worse, so your high-end product no longer has a market.

7. Investment partners are squeezing you. It may look like micromanagement, but they are just nervous that the milestones you promised have disappeared from your charts. Maybe you think they aren’t “rolling up their sleeves,” but that can’t happen until you actually admit your failures and ask for help.

8. Cashflow is killing you, with no new money in sight. You scaled up your infrastructure, to make sure early sales didn’t swamp you. Nothing is coming in, money is going out, and you are too busy managing pennies to look for a new funding round.

If you are a true entrepreneur, these should scare you, but they shouldn’t immobilize you. As I asserted earlier, virtually every new startup experiences these problems. What separates the successful ones from the failures is how effectively they handle the problems, rather than how many they avoid in the first place.

So I encourage you to take full control and responsibility for your company’s destiny, learn from the challenges, and emerge from every crisis stronger than before. Remember that when the honeymoon is over, that’s when the real fun begins.

Marty Zwilling

10 Concrete Steps to Assure Business Innovation

Continuous innovation is required to survive in all businesses, beginning with a startup, and increasing in importance as your business matures. Technologists often insist that new things can’t be invented on a schedule, but successful companies seem to be able to do it on a regular basis.

Many people have tried to define a process for innovation, but most are too abstract for me. I like the easy to remember approach found in “Robert’s Rules of Innovation: A 10-Step Program for Corporate Survival,” by Robert F. Brands. It seems to be more concrete, and chronicles several decades of practical experience to solidify the principles which together spell INNOVATION:

1. Inspire. The first and most important step is to identify a leader who can inspire and drive the process. In a startup, that needs to be the founder or CEO, and that person has to be regularly and personally involved. This is an imperative.

2. No risk, no innovation. Not every idea can, or will, be a winner. Without risk, there can be no innovation. Innovation teams perform best when they trust that failure or a pivot will not result in punitive measures. Fear of failure can kill innovation.

3. New product development process. A formalized process with timelines and milestones is a must. This should include at least the key elements of idea generation, prioritization, prototyping, commercialization, and measurement.

4. Ownership. Innovation needs ownership, a champion and team leader within the organization. The champion must have the credibility to convince others to take calculated risks and work outside of one’s comfort zone.

5. Value creation. Successful innovation turns ideas into money, to enhance customer value, and thus shareholder value. Longer-term, enhanced product value begets superior company valuation through your organization’s intellectual property (IP) portfolio.

6. Accountability. This is a critical component of the trust equation, even when the process is akin to “herding cats.” Team members need to feel responsibility for on-time delivery. Slippage is the sure way to jeopardize the entire process.

7. Training and coaching. Proper hiring of people with a natural curiosity, open-mindedness, and ability to see the big picture is the way to create and enhance the right mind-set. Ongoing coaching from the top is essential to maintain the attitude and spirit.

8. Idea management. Build and manage a pipeline of ideas. From time to time, include customers and sales members in ideation sessions. Make sure all team members have some connection with the product – has either used it, or sold it, or assembled it.

9. Observe and measure. Tracking results are essential to optimal ROI. Product life cycles keep getting shorter and shorter, which mandates accelerated innovation cycles. Once a new product is launched, a key metric is the ratio of new product sales to overall sales.

10. Net result and reward. Based on ROI, incentives should be developed for all participants. Reward your people. Frequently, the key motivator is less financial than it is recognition for a job well done. People are your best innovation resource.

Sustainable innovation is really the only sustainable competitive advantage. But innovation is hard, because people by nature resist change, and company cultures are most comfortable with status quo. Yet survival in today’s world of rapid business change requires that you keep one step ahead of your competition. Innovation is what gives life to your business initially, and keeps it alive in the long term. Make sure your business can spell it.

Marty Zwilling

7 Reasons for Entrepreneurs to ‘First Know Thyself’

If you are going to be a real entrepreneur, it’s important that you know yourself well. After all, you won’t have a direct manager charged with giving you feedback, and your team probably will be afraid to tell you what they really think. Entrepreneurs need to recognize their own strengths and limitations.

In any case, your skills, talent, knowledge, personality, and strengths are your best assets as an entrepreneur. I’ve extracted many of the following points about knowing yourself from a book aimed at women professionals, called “Career GPS”, by Ella L. J. Edmondson Bell, Ph. D., but I see them applying equally well to every entrepreneur, man or woman. Let’s see what you think:

1. Self-knowledge builds confidence. Know who you are and make sure you’re comfortable in your own skin. It will help you be a strong, effective leader. But don’t overdo it. We all know people who act supremely sure of themselves, but they are usually trying to hide some deep insecurities or fears.

2. Self-awareness is one cornerstone of effective leadership. Leadership isn’t about how big your role is, or how big you act. Self-aware leaders are able to see the larger picture, the context and purpose. They actively listen and don’t put themselves ahead of others. They allow others to be the best they can be.

3. Being sure of who you are allows you to make sound business decisions. When you are running a startup, having a better sense of who you are and what you want can help you push away things that are not really important, and urge you to go after the things that are really in your heart.

4. Knowing, accepting, and liking who you are encourages others to do the same. Being authentic and genuine makes you attractive to your customers, respected by your team, and effective as a leader. Individuality is the hallmark of a successful and strong entrepreneur.

5. Understanding your wants and needs helps you say “no” when necessary. Startup businesses are very demanding. You’ll be expected to be present just about 24/7 while keeping everything else in your life managed. Knowing your limits – just how far you can stretch before you break – is an important skill.

6. Know all of you - the good, the bad, and the ugly. No one, even the best of us, is all good. The good encompasses the parts of ourselves that are our natural gifts and treasures. The bad are those parts that need work. The ugly parts are generally hidden, especially from ourselves. Use the good, fix the bad, and learn to live with the ugly.

7. Knowing yourself allows you to maximize performance. There’s more to being successful than working hard. You have to be able to create a winning business plan, cultivate relationships, and build your brand. Work smart and focus on results in everything you do. This will reduce stress and increase satisfaction.

When you understand how you work most effectively, you will do a better job of delegation, use of outsourcing, and selection of partners and employees. Figure out what you love to do, and what you can do well, then hire people to complement your abilities.

If you are by nature a big picture person, and have trouble with follow-through, then you need to find a detail task manager to fill in the gaps. On the other hand, if you get bogged down in systems details when you should be working on the long-term strategy, get yourself a mentor to keep you on the right path.

In fact, there has never been a better time or more opportunities for entrepreneurs. The current economic recovery demands a transformation of business processes and cultures, beginning at the startup level. Now is the time to know yourself and believe in yourself – and use this power to win.

Marty Zwilling

Startups Are All About the Execution, So Tell Me How

When entrepreneurs come to me with that “million dollar idea,” I have to tell them that an idea alone is really worth nothing. It’s all about the execution, and investors invest in the people who can execute, or even better, have a history of successful execution. Execution is making things happen, and for startups it usually means making change happen, which is even more difficult.

For most people, execution is one of those things that seems obvious after the fact when done correctly, but is hard to specify for those trying to learn to do it better. Recently, I finished a new book on this subject, “The 4 Disciplines of Execution,” by Chris McChesney, Sean Covey, and Jim Huling, which seems to talk to startups as well as the corporate world it was written for.

These authors argue effectively that the hard part of executing most strategies is changing human behavior – first the people on your team, then partners, vendors, and most importantly, customers. No startup founder or leader can just order these changes to happen, because it isn’t that easy to get other people to change their ways. Changing yourself is tough enough.

Here are four key disciplines that I believe the best business leaders follow to expedite the change and forward progress implicit in the successful execution of a million dollar idea:

1. Focus always on one or two top priority goals. We all live with the stark reality that the more we try to do, the less well we do on any of the elements. Thus focus is a natural principle. Narrow you and your team’s focus to one or two wildly important goals, and don’t let these get lost in the whirlwind of daily urgent tasks and communications.

2. Identify and act on leading measures first. Some actions have more impact than others when reaching for a goal. Hold the lag measures for later (results available after the fact), and focus on lead measures first (predictive of achieving a goal). For example, more customer leads is predictive of more sales revenue later.

3. Define a compelling scoreboard. People on your team play differently when someone is keeping score, and even better when they are keeping score, and even better when they have defined how their score is measured. This is the discipline of engagement. If the scoreboard isn’t clear, play will be abandoned in the whirlwind of other activities.

4. Create a frequent forum for accountability. Unless we feel accountability, and see accountability on a regular cadence, it also disintegrates in the daily whirlwind. It’s even better if team members create their own commitments, which become promises to the team, rather than simply job performance. People want to make a contribution and win.

These four disciplines must be implemented as a process, not as an event. That means your team needs to see them as a normal and continuous focus, not a one-time push which fades in the rush of other daily priorities. The team needs to see the process practiced by the startup founder, as well as preached regularly.

Startup founders also need to realize that building and managing a company is quite different from learning to search for and solidify an idea that can grow into a company. Every entrepreneur has to navigate that personal change from thinking to doing to managing.

It’s not only the change from thinking to managing, but also the change and learning from constant iterations. Major changes, called pivots, are terrifying to a team that has put months of constant focus into executing what they thought was a great idea. If you don’t have an execution process, you have chaos.

Overall, every entrepreneur should be concerned if they don’t regularly feel stretched beyond their comfort zone, meaning mastering the art of execution if you are mainly creative, or developing creativity if you are mainly process driven. Don’t forget that the fun and challenge is in the learning, so enjoy the ride. The entrepreneur lifestyle is not meant to be comfortable.

Marty Zwilling

6 Key Attributes of a Winning Business Culture

I’m seeing a renewed appreciation of culture and values in business these days. Maybe it’s just another example of nature abhorring a vacuum, but I prefer to think it’s a natural evolution of the pervasive social networking communities, where people relate to and expect to interact with businesses and products they like. They drive the market, rather than the other way around.

Your values as you create a startup are the key to creating an enviable culture that attracts more customers, according to Ann Rhoades, in her book “Built on Values.” She would assert, and I agree, that you need to get it right the first time, because first impressions are critical, and changing your values and culture in the eyes of customers and employees is extremely difficult.

I believe in a startup culture that strongly transmits the values of integrity, customer focus, and results. Ann outlines six fundamental principles that are key to building this culture, or changing an existing culture to improve financial return, customer satisfaction, and employee performance:

1. You can’t force culture, you can only create environment. Every culture is the culmination of the leadership, values, language, people processes, rules, and other conditions, good or bad, present within the organization. No leader can “create culture,” just the environment where the desired culture can emerge and flourish.

2. You are on the outside what you are on the inside. The service you provide for your customers will never be greater than the service you provide to your employees. You can’t force people to treat customers well if they feel ill-used themselves. Hire people who fit your desired culture, and treat them the same way.

3. Success is doing the right things the right way. By defining your values and behavior by the right actions, you simplify and enable everyone to make the right decisions on the front line. Empowering and educating everyone to make the right decisions at every opportunity leads to happy customers and business success.

4. People do exactly what they are incented to do. Your expressed values will be perceived as hollow and meaningless unless you base compensation and rewards on the behaviors that go along with the values. It takes diligence and courage to hire only people with these values, and fire ones who have lost them.

5. Input = output. Your organization will get out of values only what they are willing to put into them. Communicate your values often, and use values-based performance metrics to gauge your results, measure the level of implementation, leadership development, and succession planning.

6. The environment you want can be built on shared, strategic values and financial responsibility. Conscious action, beginning with determining a set of shared values, can set up the necessary condition for encouraging a culture that will make a startup into a leader. Values are most critical when making tough decisions, but that is also when they come in handiest to illuminate the way forward.

Startups are the only businesses able to set their culture and values from a clean slate. Values start and emanate from you, the founding entrepreneur. Your values are not what you proclaim on your mission statement (if you have one), they are made real and set the culture by what you live by and project on the front line in day-to-day actions.

Strategy matters, but without a winning culture and the right values to drive it forward, your strategy will take you nowhere. Good leaders matter, but you need a positive values culture in order to attract the best leaders to compete effectively.

Leaders drive values, values drive behavior, behavior drives culture, and culture drives performance. High performance makes new leaders. This is the self-reinforcing circle of excellence every startup needs to succeed. You can’t afford to wait on any of these, so get your culture right sooner rather than later.

Marty Zwilling

You Can’t Be the Victim as an Entrepreneur

People with a victim mentality should never be entrepreneurs. We all know the role of starting and running a business is unpredictable, and has a high risk of failure. For people with a victim mentality, this fear of failure alone will almost certainly make it a self-fulfilling prophecy.

I’m sure you all know someone who is the perennial victim. The problem is that most of these people aren’t likely to accept your assessment, so it’s hard to help them. They don’t see themselves as others see them, and many simply refuse to accept the reality of the world in general.

According to an article by Karl Perera, called “Victim Mentality - You Don't Have to Suffer!” there are many indications of a victim mentality in a person’s thought process. Here are some key ones he mentioned, applied to the entrepreneurial environment:

• “When things don’t work, I secretly believe I’m the cause.” Victims act as though each business setback is a catastrophe and create stress for themselves. These people feel more importance and ego when relating problems rather than successes.

  A survivor believes that bad things are an anomaly to be brushed off, or just another challenge to overcome. In fact, they look forward to the challenges, and get their most satisfaction from declaring success.

• “When I talk to myself, I never have a positive discussion.” Second-guessing every decision affects mood, behavior, and happiness, and is likely to cause or intensify a victim mentality. If you are negative, you cannot see reality, leading to more bad decisions, confirming you are indeed a victim.

  Survivors continually relive their positives, and see themselves as miracle workers. They live in the present or the future, and rarely dwell on mistakes of the past. They have faith in themselves, and life as a whole.

• “When others put me down, I‘m wounded to the soul.” Negative comments from others are devastating to a victim. Offensive behavior towards you actually says more about the other person. But if you have a negative mentality you will just take what they say or do at face value, and believe that you deserve to be the victim.

  The survivor always stands up and fights negative comments, and usually turns the blame back on the deliverer. He is quick to counter with all his positives. He builds boundaries around negative or toxic people, and avoids them at all costs.

• “I believe in fate, even though it’s unfair.” If you succumb to fate, then you think you are responsible for all the bad things that happen to your business. The victim feels that he or she has been treated unfairly but is trapped. There seems to be no way out.

  Survivors believe that they can make things happen, rather than let things happen to them. They accept random turns in their life as new opportunities, rather than unfair punishment.

• “God punishes for a reason.” Religious beliefs can have a positive or negative affect on your life. If you believe in a God who is responsible for everything, it’s easy to believe that your pain and misery is punishment for something you did wrong.

  Survivors obviously take it the other way. They enjoy a personal relationship with the God of their understanding, and feel a gratitude for everything positive in their life. They may ask their God for help, but rely on themselves for results.

This victim mentality is not a good thing under any circumstances, but it’s particularly lethal when applied to an entrepreneur. If you would like to be an entrepreneur, remember that you don't have to be a victim. Take a hard look in the mirror. Truly the only one who makes you feel like one is the same person who can make you a survivor - you!

Marty Zwilling

7 Ways to Gauge Your Commitment to Your Startup

We’ve all heard the old joke “In a bacon-and-egg breakfast, the chicken is involved, but the pig is committed.” This quote epitomizes the true essence of commitment. We all know at least one self-professed entrepreneur who claims to committed, but seems to treat it like a part-time hobby, won’t put any personal skin in the game, and is quick to give up when things are tough.

There are no middle roads to real commitment, and if you are not ready to fully commit to all the rigors of a startup, you are better off sticking with your current role. For your calibration, here are some characteristics you will recognize in a truly committed entrepreneur:

1. Actively seeks leadership and responsibility. Many people need the comfort of following, rather than leading. When things go wrong, it’s then easier to point to someone else as the scapegoat. As an entrepreneur, the promises anyone makes on your behalf are yours. You need to be ready to accept “the buck stops here” and make it work.

2. Exhibits surging raw ambition. Successful entrepreneurs are generally ambitious and confident in their abilities. They may have many ideas, some of them are more workable than others. Failure is viewed as a learning opportunity, so it’s no disaster that some ideas don't actually get done the first time.

3. Minimum positive feedback required. As I’ve said in previous articles, it’s lonely at the top. If your psyche is one that needs regular positive feedback, and a commensurate paycheck, to stay motivated, you need to find a real job rather than an entrepreneurial one.

4. Social life is not the highest priority. If you find yourself unable to clear your head of work-related thoughts at the end of the day, that’s committed. Social relationships are important, and you do need to blank out work from time to time, but if social priorities are at the top of your list, you probably won’t enjoy the role of entrepreneur.

5. Comfortable with unpredictable working hours. Some people need a predictable schedule, for family reasons, or just peace of mind. Entrepreneurs need to be flexible, and assume there will be long working hours. If you are annoyed rather than exhilarated at the long or unpredictable schedule at your startup, you are involved but not committed.

6. Vacation is an interruption. Most entrepreneurs I know can’t remember the last time they had a “real” vacation (without bringing their work along). This may not be healthy, but it illustrates the level of commitment that you are competing with in the marketplace. If you insist on vacations “without checking in,” go and work for a big company that gives you a holiday allowance.

7. Hasn’t even thought about retirement. Many people involved with startups are working hard, but are looking forward to retirement. The committed entrepreneurs wouldn’t think of retiring, even if they made millions from the current project. They enjoy work too much to stop, and can’t wait to start their next venture.

Making a commitment is a serious matter and one which should not be taken lightly, especially in a startup venture where the team needs to pull its weight together to achieve goals. Individuals who need structure and workload predictability won’t be able to maintain the high levels of enthusiasm and motivation of a startup team.

This isn’t a statement of right or wrong, just different strokes for different folks. The next time you have the urge to chuck your day job and live the dream of being your own boss, remember to test yourself for how committed you really are, before you jump off the cliff!

Marty Zwilling

Keep a Grand Vision but Execute With a Laser Focus

It’s great to dream big, but your startup needs a laser focus in the beginning to get market and investor attention. Google did it with search engines, Apple did it with a personal computer, and even Wal-Mart did it through low prices. A business plan I saw a while back to combine all the good features of several popular social networks on one site does not do it.

Trying to do everything at once probably means that none of the items will be done well. Plus it’s almost impossible to craft a message that will make your offering stand out in the minds of customers. I can’t think of a company that launched to superstardom with a broad focus. Can you?

Here are the common sense reasons why a laser focus is more likely to lead to startup business success:

• Time to market is critical. It takes too much time to build processes and products to capitalize on a broad strategy. Meantime, small competitors will appear and seize your business opportunities and steal your targeted customers.

• Keep infrastructure costs low. Every business needs some basic equipment and infrastructure, and ongoing development costs. Attempting to roll out the big dream internationally all at once costs lots of money. Getting more money is hard, but not as hard as building the big infrastructure and getting it right the first time.

• Need to be nimble. Every successful startup I know has had to “dodge and weave” or pivot quickly as they learn what their customers really want, and what really works in product design and marketing. Bloated products and the grand unifying “theory of everything” won’t allow you to adapt quickly to market changes and mistakes made.

• Innovate to market leadership. Success requires market leadership in your product area, and it’s easy to see that pushing more products and services dilutes your focus and attention. Market leadership isn’t a one-time thing, it means continuous innovation, or you will be left behind.

• Maintaining quality is key. The more you try to do in parallel, the harder it is to maintain quality. Remember the old maxim that “you only get one chance to make a great first impression.” Customers are fickle, and good quality and good customer service is hard, even with a focused product.

• Personal bandwidth is limited. When things become too messy and complex, and even you are not sure of priorities, people get disillusioned, tired, lose motivation, and tend to give up easily. A laser focus is easier to communicate, easier to manage, and more likely to get done quickly and well.

As with everything, there are two sides to every coin. When applied appropriately, focus will result in rewards exceeding your expectations. Conversely, focusing on the wrong things will result in a downward business spiral. Focus on exploiting strengths and achieving success rather than resolving weaknesses and avoiding problems. Don’t get burned by focusing on the wrong thing.

Remember that most people can confidently and competently accomplish one thing at a time, and most customers are only looking for one thing at a time. After you saturate the market with your focused offering, then you will have the time and resources to broaden your offering.

Don’t give up your grand vision, since no investor wants to buy a “one trick pony.” But also don’t try to be the “one-stop shop” for all on day one.

Marty Zwilling

Know the Right Resources for Your Startup Stage

Some entrepreneurs start polling venture capitalists for that multi-million dollar investment before they even have a business plan. That’s like trying to sell part of something to a stranger for big money when you haven’t fully defined it yet. It won’t work, it costs time and money, and hurts your credibility for when you need them later.

Every entrepreneur needs help and support along the way, from developing the initial idea, to selling off the successful business (exit strategy). The challenge is finding and using qualified affordable support organizations for each stage. Don’t waste your resources on the wrong ones.

It’s helpful to think of startups as proceeding through several stages, which I have defined before from a funding perspective. Let’s take a look here some similar stages from a support perspective:

1. Idea stage. The first step toward a business with any idea is to write it down, and build a business plan around it. If you need help at this stage, look for a local university teaching night courses on entrepreneurship, or how to build a business plan. The alternative is to work with an innovation institute to evaluate your technology, or hire a consultant. If you need money now, is has to come from friends and family.

2. Early or embryonic stage. The most common support organization at this level is called a startup incubator or accelerator, and these exist in most countries, usually sponsored by a university, local government organization, or even local individuals. Usually these will not give you money, but will provide very inexpensive space to work and office services.

   Their real value is your access to senior advisors with experience, and other startups in the same stage. Sometimes these will ask for 5%-15% of your equity for their support services. They are not trying to make money, but simply to recoup their costs over time.

   Separately at this stage, you may look for small funding amounts from angel investors, called seed investments. Funding of $25,000-$250,000 may be available from angels, who are private individuals spending their own money. The incubator organization can help you find them, or show you how to apply for a government grant.

3. Funding or rollout stage. This is the time for you to step out on your own, find office space, and open your business. Once you have some traction, you can approach venture capital organizations, with funding amounts of $1-10 million for the real rollout, often referred to as the “A-round,” or first institutional funding.

   Support organizations at this stage are usually professional financial advisors, or investment banks, which have nurtured relationships with institutional investors. These usually charge you a fixed fee up front, and then perhaps a small percentage of the raise.

4. Growth and exit stage. Companies at this stage must have a large market, good traction, and be focused on scaling infrastructure and market adoption. This normally means more then 30 employees, and more then $1 million in revenue. Support organizations are investment banks, similar to the preceding stage.

As startups pass through each stage, they need to use support resources wisely to minimize costs, wasted time, and maintain credibility to support movement to the next stage. Typically, they must also change and tune their executive team, to keep up with the increasing demands of a growing company on process discipline and sustainable success.

Obviously, if you bootstrap your business, you can avoid all the investment implications, but you still need a business plan and professional support. Otherwise, not paying attention to the expectations associated with each stage will likely jeopardize your business success. Do it right and enjoy real progress in each step of the journey.

Marty Zwilling

Great Businesses Evolve Innovation to a Revolution

Great businesses these days start with innovation, and then take it up a few notches to make it a revolution. An example is Google, who turned a new search technology into a tool that most of us couldn’t live without. As an entrepreneur, how do you know if you have the potential to innovate, and what are the steps to get from innovation to revolution?

While digging into this subject, I came across a recent book by Patrick J. Howie, called “The Evolution of Revolutions,” which makes the points that resonate with my experience. He starts with a discussion of the Big Five personality traits, used to explain individual differences across all walks of life. The following three seem to relate most closely to innovative potential:

• Openness to experience. Scoring high on openness has been found to be the top predictor of an entrepreneur’s innovativeness. Having a curiosity to learn about all new things increases the likelihood of “seeing” novel solutions.

• Hardworking and responsible. Innovation is hard work. Good entrepreneurs have to develop sufficient knowledge and enjoy the difficult problem-solving process to achieve real innovation. That requires a high level of commitment, and a high degree of ambition.

• Desire to communicate. If an entrepreneur creates an innovation but never talks and shares it, then the innovation may never be recognized. An entrepreneur doesn’t have to be a raving extravert, but working with other people and selling are required capabilities.

With the right personality traits, the next step is to follow a productive innovation process. The sad fact is that the vast majority of new products and new companies fail to make it to market or fail to turn a profit. Here the key steps of a process that good entrepreneurs espouse:

• Problem identification. Useful innovations are ones that solve a real human problem, rather than simply illustrating a capability of a new technology. Many entrepreneurs start with an impressive technology, but forget to relate it to a problem that affects large numbers of potential customers who have the means to buy it.

• Motivation to inspiration. The germination of an innovation is elusive. Overt attempts to motivate people to be innovative or usually counterproductive. Good entrepreneurs are usually intrinsically motivated by a dream or vision, or even money, or inspired by a personal challenge or opportunity to change the world.

• The new reality. Entrepreneurs need to critically evaluate their “habits of perception” to come up with new concepts of reality. This is called re-conceptualization, using the innovation they bring to the table. The hard part is bringing customers to that new reality.

The final step to successful innovation is to get it adopted by real customers, rather than simply being the subject of an academic report or technical journal. Patrick calls this “taking an innovation to a revolution.” This involves moving through the following three stages:

• Overcoming resistance. All new innovations are evaluated against the current option, which may be doing nothing. The reality is that most people have a natural bias against change and innovation, so your challenge is to get them to re-concepualize.

• Clarification and iteration. Most new products are not conceived or developed perfectly the first time. Thus resistance is a good thing, since it helps the entrepreneur to be more precise as they iterate on the definition, production, and selling of the innovation.

• Evolution to a revolution. Every innovative product needs continuous follow-on, meaning additional innovation, with a cumulative value much greater than the original. Failure to pass this stage means your innovation is a fad, or a ‘one-trick’ pony.

Notice that none of these elements mentions risk. Traditionally, the level of innovation is aligned with the level of risk, yet many entrepreneurs do not consider themselves to be risk takers at all. If your goal is to spark “the next big thing,” it has to start with innovation, but that is only the beginning. Can you make the evolution from there to a revolution?

Marty Zwilling

Test Your Business Model Against These 10 Elements

You can’t succeed in business without an operational model that delivers value to customers at a reasonable price, with an underlying cost that allows you to make a profit. There are no “overrides” – for example, businesses don’t thrive just because they offer the latest technology, or because everyone wants to be “green, or because their goal is to reduce world hunger.

I expect that should seem intuitive to all entrepreneurs, but every investor I know has many stories about startup funding requests with major business model elements missing. The most common failures are solutions looking for a problem, lack of a defined market, and giving away the product.

There are dozens of sources to help you construct your business model, and a good example is a recent book by venture capital investor Elizabeth Edwards, simply named “Startup,” which is really designed as a handbook for launching a company for less. I support her assertion that a business model consists of at least the first seven of the following ten basic elements:

1. Value proposition. What is the need you fill or problem you solve? The value proposition must clearly define the target customer, the customer’s problem and pain, your unique solution, and the net benefit of this solution from the customer's perspective.

2. Target market. Who are you selling to? A target market is the group of customers that the startup plans to attract through marketing and sales their product or service. This segment should have specific demographics, and the means to buy your product.

3. Sales/Marketing. How will you reach your customers? Word-of-mouth and viral marketing are popular terms these days, but are rarely adequate to initiate a new business. Be specific on sales channels and marketing initiatives.

4. Production. How do you produce your product or service? Common choices include manufacturing in-house, outsourcing, off-the-shelf parts. The key issues here are time to market and cost.

5. Distribution. How do you distribute your product or service? Some products and services can be sold and distributed online, others require multi-level distributors, partners, or value-added resellers. Decide whether the product is local or international.

6. Revenue model. How do you make money? The key here is to explain to yourself and to investors how your pricing and revenue stream will cover all costs, including overhead and support, and still leave a good return.

7. Cost structure. What are your costs? New entrepreneurs tend to focus only on product direct costs, and underestimate marketing and sales costs, overhead costs, and support costs. Test your projections against actual published reports from similar companies.

8. Competition. How many competitors do you have? No competitors probably means there is no market. More than ten competitors indicates a saturated market. Think broadly here, like planes versus trains. Customers always have alternatives.

9. Unique selling proposition. How will you differentiate your product or service? Investors look for a sustainable competitive advantage. Short-term discounts or promotions are not a unique selling proposition.

10. Market size, growth, and share. How big is your market in dollars, is it growing or shrinking, and what percent can you capture? Venture capitalists look for a market with double-digit growth, greater than a billion dollars, and a double-digit penetration plan.

Investors will want to understand your business model very well and very early. They don’t want to hear your customer sales pitch, which naturally avoids any discussion of how much money you intend to make, and how many customers you expect to convince. Giving that pitch to investors will only frustrate both you and them.

A viable and investable business model is one of the first things you need to highlight in your business plan. In fact, without a business model, your startup is just a dream.

Marty Zwilling

Successful Startups Often Come With a High Price

Most entrepreneurs expect to face the “normal” challenges of starting a business, which include finding the right opportunity, building and executing a winning plan, and financing their venture. But many forget the pitfalls associated with traditional business jobs which can apply even to the smartest and most dedicated people running their own business.

Often these facets of entrepreneurship don’t rear their ugly head until well down the road. Yet before you start, you should think about what the impact might be on your psyche, and how to neutralize these challenges in your own plan. I’ll summarize them here, but you can see more detail in an article by David Finkel in D&B Small Business Solutions:

• Long-term daily job grind. Sometimes entrepreneurs are so set on creating a successful business, they forget to create one that they love to work on every day. After a time, they find that they have merely created a job for themselves, with the same rote responsibilities and stress that they experienced in a prior corporate world. Daily attendance is mandatory in order for the business to succeed and be profitable, and the so-called freedom is hard to find. Vacations and time-off don’t happen for years.

• Formal training courses. Larger enterprises are always sending their “high fliers” to leadership refreshers, new technology updates, and training on employee performance management. Entrepreneurs find themselves all alone in the trenches, without the time, money, or incentives to do these things. The result is a sinking feeling after some time that you are no longer vital and competitive in your own domain.

• Personal wealth management. Entrepreneurs find that the business skills needed to grow their business are not the same as the personal wealth skills needed to manage a healthy personal wealth plan for their family and their retirement. Their business is their entire portfolio. They are at the mercy of innumerable catastrophes, making this a huge risk.

  For these individuals, a lack of financial fluency often leads to poor decisions after they no longer have their businesses. They wake up one day without their business, and with nothing to show for the years spent building it.

• How society perceives you. As a young entrepreneur, everyone looks up to you for running your own business. But later you find that you may be perceived by many as a person without job security, unlike your classmates or ex-colleagues, who are sought after or being placed in well-known large company or multinational positions.

  Even worse, you find that your business domain has developed a negative stigma through no fault of your own, as has happened to investment banks, mortgage brokers, and many nightlife businesses. It’s no fun to hide your business role rather than proudly proclaim it.

• Business must be more than the money. Years into a successful business, owners often wake up one day facing a painful question: Is this all there is? To truly be successful your business must be about more than the money.

  Good entrepreneurs find a great personal adventure, like Richard Branson, or great philanthropy, like Bill Gates. Guy Kawasaki says the best reason to start an organization is to make meaning – to create a product or service that makes the world a better place.

Every business startup has to have a viable idea, but it also needs a strong sense of realism on the possible pitfalls. Starting a company as an entrepreneur should be viewed as the beginning of a lifetime career, not a work project that you expect to be over in a few months. As such you should consider the long-term challenges as well as the short-term ones.

Life is too short to end up with pain and regret after a “successful” career.

Marty Zwilling

Smart Entrepreneurs Plan Multiple Rollout Iterations

The traditional mode of starting a company is to plan a serial process, where you complete only once all the steps, leading to the “big bang” launch of the company. I strongly recommend a dramatic departure from this model, called “planned iteration,” where you assume you won’t get it right the first time.

This idea was well articulated by Paul Graham in an old essay, called “Startups in 13 Sentences” in which he talked about “making a few people really happy rather than making a lot of people semi-happy.” One of his key points is that “launching teaches you what you should have been building,” and I agree.

All you old software development types will recognize the analogy to the traditional two year “waterfall model” of software development, which has been totally replaced with the Agile iterative methodology. Agile assumes and plans for iterative development, where requirements and solutions evolve as more is known and markets change.

Don’t mistake this for a license to launch an incomplete or poor quality solution. Your strategy today should be to define and excellently prepare the absolute minimum product that will excite a selected small segment of your intended customers, and roll it out to them – as a Beta, early promotion, or even a give-away.

Then you assess feedback, adjust your offering, and iterate until you get it right (have some very satisfied customers). Plan on multiple small launches, with iterations, rather than a big launch. Here are the advantages I see with this approach:

• Faster time to market. If you launch fast, you can be working with real customers in 4-6 months from your start, rather than 1-2 years. In today’s fast moving marketplace, needs, competitors, and costs change rapidly, so even if you were right, two years later the wave has moved on. Equally likely, your first target was wrong, and you will need to adjust.

• Get traction before funding. Let’s face reality, the angel or VC funding process now takes 4-6 months of almost dedicated effort and time, and usually fails because you don’t yet have a product or customer. By using a laser focused approach for the first iteration, you may actually produce something and get a customer without funding. Now investors will pay attention, since scale-up funding is less risky and has a time frame.

• Find customers, partners and channels early. There is nothing like a real customer pipeline to convince you that you need partners and channels, and to convince partners, channels, and investors that you are real. Get out there personally and find that first customer. It will narrow your development focus, and adjust your strategy for you. Spend your time finding renewable sources of customers and iterate.

• Use social networking to start the wave. Costs are low these days to set up a credible website, do some search engine optimization, start blogging, and start mining the social networks for interest. It won’t cost you your whole funding pot to start some momentum, or to realize that your original strategy needs major tuning.

Think about it. Where did Google, eBay, and Facebook come from? They inched their way into public view before the first multi-million dollar funding rounds, and they have never had a big public launch. New product companies in the offline world start one store at a time, or in one geographic area.

Big bang product launches are the domain of big enterprises, and you can never match their clout and budget. The biggest advantages you have as a startup are speed and agility. Use them.

Marty Zwilling

10 Tips on the Value of Collaboration in Startups

Any entrepreneur with a vision can postulate a new business, but it takes a collaboration of many people to make it a success. Today the complexity of forces required for success include multi-disciplinary skills, competencies, and experiences in which the whole is greater than the sum of the parts. Entrepreneurs who embrace the “lone wolf” approach usually live to regret it.

I just finished a new book, “The Collaboration Imperative,” by Ron Ricci and Carl Wiese, which makes the case very well for why collaboration matters in every business, as well as startups. Every entrepreneur should heed the following lessons on collaboration derived from the authors work on the culture, process and technology of collaboration in hundreds of companies:

1. Consensus is the enemy of collaboration. Collaboration leaves everyone with a feeling of “win-win,” while consensus is “win-lose” or even “lose-lose.” Collaboration opens more possibilities, while consensus narrows them to a compromise.

2. Collaboration has to start at the top. Company culture is not set by words, but by the actions of the founder. That means treating everyone with respect, and providing regular constructive feedback. Trust is required for every successful collaboration.

3. The biggest barriers to collaboration are not technical. They are cultural and organizational in nature. Startup executives need to first build a culture and processes with communication and shared goals, rather than internal competition and bureaucracy.

4. Collaboration cannot be deployed – it must be embraced. Executives and managers must be willing participants, modeling collaborative behavior and embracing the technology tools, not just taskmasters. All team members must be committed.

5. Good ideas come from anywhere, so the more voices the better. These are critical in arriving at a clear idea of what is important, exploring what is possible based on constraints, and coordinating effective actions to produce successful outcomes.

6. Collaboration enhances personal communication skills. As team members interact and play to their strengths, they learn to be authentic and genuine, which increases their effectiveness as well as their skills. They reach agreement faster and communicate more.

7. You get out of collaboration what you put in. According to a global study of business conducted by Frost & Sullivan, the return on a collaboration investment progressively improves as better tools are deployed and a collaborative culture takes shape.

8. Collaboration success means changing both roles and rewards. This means creating processes that allow more perspectives, but make it clear who has decision-making rights. It’s essential to provide incentives to change ingrained behavior.

9. More interaction opens opportunities to create more value. Within any given startup environment (market, industry structure, competitors, product/service mix, etc.) opportunities exist that are often missed unless everyone is listening and communicating.

10. The average return on collaboration is four times the initial investment. From the study referenced, measured gains ranged from three to six times. This ROI comes from cost avoidance, cost reductions, business optimization, and faster business decisions.

In today’s highly competitive and unpredictable environment, it’s not enough to do one thing better than your competitors. You need to change your organization so that it can rapidly recognize and adapt to new opportunities and new threats.

Collaboration is the new imperative. It may be the only way to accelerate innovation, improve agility, increase adaptability and cut costs all at once. But building a collaborative culture is not an easy transformation for the traditional fiercely independent entrepreneur. How long has it been since you have taken a hard look at your own startup?

Marty Zwilling

The Best Entrepreneurs Are Undaunted by Failure

If you haven’t had a failure, you aren’t pushing the limits. If you are really an entrepreneur, you are a risk taker and less cautious by nature, so failures should be expected. Wear you startup failure as a badge of courage. Don’t go after failure, but embrace it when it does happen and grow from it.

People who are afraid of failing should not become entrepreneurs. They can't overcome the psychological fears of making a mistake, and are afraid of losing money. They are better off keeping their day job. Successful entrepreneurs, on the other hand, tap into the positive power of failure. Here are three examples:

• Steve Jobs was fired by Apple Computers in 1985, the company he helped to create. He went on to acquire Pixar, made it a success, and then came back to reinvent Apple as a very successful consumer products business.

• Dean Kamen, the creator of the Segway Human Transporter, several successful biomedical device businesses, and holder of 440 patents, jokes that his biggest failure is “that I have too many to talk about.”

• Thomas Edison invented the electric light bulb, central power generation, and the phonograph, but failed in his effort to extract low-grade iron ore from sand. He brushed this off, and went on to many successful media and transportation businesses later in life.

According to investors I know, young entrepreneurs who have failed at least once are more likely to get funding from them, compared to entrepreneurs with a perfect track record. Investors know that founders often learn more from a failure than they do from a success, so don’t be so quick to delete a failure from your bio. Serial failures, on the other hand, send a different message.

A failure can be a milestone on the road to success, if you celebrate that failure for what the mistakes taught you – and use the experience to move to the next idea. Here are three points of learning that many famous failures emphasize:

1. Accept responsibility, don't spread the blame. It’s easy to blame partners, investors, customers, and the economy. If you blame someone else, you'll never learn from your mistakes. Remember, you volunteered to be the entrepreneur, so you are not the victim.

2. Capitalize on the good relationships you found. In every bad deal, there are always some good people. Many entrepreneurs have taken on one of these as a new partner, and gone on to make millions of dollars. The good investors will fund you again, and the good customers will gladly take your next offering.

3. Study and profit from your mistakes. Mistakes are priceless lessons, so you should learn from them, rather than run from them. Making mistakes and becoming smarter is the job of an entrepreneur, while not making mistakes is the job of an employee.

Failure is not usually a single event, but a collection of mistakes and circumstances that add up to test the patience of the founder. Failure combined with a strong sense of business ethics can motivate and produce innovation, while failure due to a lack of ethics can lead to desperation. Certain types of failures, like failures of integrity and ethics, are harder to recover from.

Failure, even multiple failures, can be the first stage of a very successful journey. Success usually comes to those willing to keep coming back. Resilience and agility are really the only sustainable edge in business. So when you experience your first failure, just give up your ego, let it go, and get back to work smarter on your next success.

Marty Zwilling