Friday, July 31, 2015

8 Common Elevator Pitch Blunders, and How to Fix Them

emergency_elevator_phone Every entrepreneur needs a value proposition statement for his or her startup that can hook potential investors and partners in less than a minute -- the short time you might join them in an elevator on the way to their offices. This may sound easy, but every investor I know is frustrated by wasted time listening to rambling, emotional pitches that are not to the point.

Passionate entrepreneurs tend to talk on and on about their disruptive technology, their intent to change the world and free services, but if a business can’t provide quantifiable value to real customers, the dream will likely turn into a nightmare. The better you understand what makes an effective elevator pitch, the more likely you will attract investors and customers.

Here are the most common elevator pitch missteps I see often as an angel investor and advisor to startups, with some quick advice on how to address each:

  1. Insist on leading with the story of the company. You don’t have time for any story at this point. Until an investor hears about a real customer problem, and understands your solution, the background is irrelevant. There will be plenty of time for the details of your arduous journey later, but for now my advice is to postpone the story to a later meeting.

  2. Rely on marketing content and emotion vs. facts. It’s good to speak with passion and conviction, but only quantified facts make a business. Skip the fuzzy terms, such as nice to have and easier to use in favor of specifics, such as costs 50 percent less or increases productivity by 100 percent. Skip the sales pitch and avoid preaching.

  3. Build up for the punch line at the end. Always start with a hook to get the investor’s attention. Good hooks define a real problem, followed by a specific solution (not technology). For example, “I have patented a new LCD with double the intensity at half the cost, already proven locally, and I just need resources to scale for this market.”

  4. Highlight features rather than differentiators. Investors worry about competitors more than customer features. Your second sentence should acknowledge competition, but highlight your added value. For example, “Unlike all the other LCD providers, our patented high intensity light has no blue tint or glare that looks unnatural.”

  5. Focus on the solution and skip your team. Smart investors invest in people, even more than a great product. Thus your third sentence should highlight why you and your team are the right ones to support. For example, “As you may know, my team and I are uniquely qualified for this opportunity, based on our first successful startup with solar.”

  6. Try to talk fast and extend the time available. Limit your elevator pitch message to about 150 to 225 words in 30 to 60 seconds. Trying to cram 500 words into that first interaction will only antagonize the receiver, and potentially lose the key impact of a highly-focused message. Always exude energy, conviction and commitment.

  7. Neglect to ask for any specific next step. Obviously, you won’t close many investment deals in a minute in the elevator. Don’t forget to ask for a follow-up session to present your full pitch. Ask for an hour, but always plan on speaking for only 10 minutes to leave plenty of time for addressing questions and concerns.

  8. Come unprepared with no written documents. For investors, you always need to offer an executive summary of your business plan to show this is not a dream, and provide reinforcement of the message you have just delivered. If you have no business plan or investor pitch to back it up, and the investor asks to see it, you will lose your credibility.

In reality, a good pitch is not just for elevator meetings. It should be in the introduction section of your business plan, on the first slide of your investor pitch and the beginning of your executive summary. You will find it the best way to start every networking opportunity, and a key communication vehicle that everyone on your team should know and use.

An entrepreneur’s elevator pitch embodies the value proposition that is being brought to customers, as well as investors and partners. Don’t hide it behind too many words, an urge to stay in the spotlight longer or unbridled passion. Catch the elevator up to make it a business.

Marty Zwilling

*** First published on Entrepreneur.com on 7/22/2015 ***

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Monday, July 27, 2015

7 Must-Have Attributes of a Super Startup Team Member

Teamwork and team spirit Every entrepreneur realizes that building a great team is critical to the success of his or her startup, but many don’t realize that it takes more than multiple qualified employees to make an effective team. It’s possible, or even likely, that a set of skilled individuals can result in a dysfunctional team, where contention, jealousy, lack of communication or work habits jeopardize results.

As a mentor to entrepreneurs, I recognize that it’s easy to spot a dysfunctional team after the fact, but it’s not so easy to spot the right attributes of new team candidates, in the context of existing members. The approach I recommend is to make sure all candidates and existing members exhibit the following team-centric attributes, in addition to a unique set of skills and experiences:

  1. Comfortable being challenged by associates. The attributes to look for in interviews and reference checks would include minimal ego, self-confidence and a willingness to work with others. Team members who won’t listen, immediately become defensive and react emotionally to all suggestions will quickly make your whole team dysfunctional.

  2. Enjoy a healthy level of conflict. The most productive teams regularly engage in some healthy friction and heated debates between team members, but are able to avoid the emotion and drama that negates the value of these efforts. That’s the way smart teams make real change happen. Remove team members who initiate unhealthy conflict.

  3. Commit to the team despite individual qualms. Commitment means a willingness to negotiate and support a team decision, despite personal qualms and some risk. People who are perfectionists are not usually good team players. Test new candidates for their reactions to hypothetical and actual past situations.

  4. Willing to take team accountability as personal. Accepting accountability means not making excuses for the team, and avoiding the fallback to highlighting personal performance. It also means coaching and challenging peers on the team on behavior leading to dysfunction, even when it means risking a friendship.

  5. Support the team view in external discussions. You need team members who will support team efforts and progress, despite customer challenges or questioning from executives. Non-team players are quick to jump ship, and defer support to a popular counter view, thus undermining the effectiveness of the whole team.

  6. Focus on team results vs. individual performance. Team members that exhibit more concern for individual status and results are doomed to failure. A critical role of the founder is to effectively communicate the collective goals, characterize progress in the context of the team and integrate individual performance results.

  7. Accept team relationships as personal as well as business. Effective teams get to know each other on a personal basis, and find opportunities to meet for lunch or an outside event as a team. If you find a team member who truly dislikes other members, or doesn’t trust them as individuals, the whole team dynamic will be compromised.

In my experience, a few entrepreneurs seem to actively discourage any real team synergy, perhaps due to a lack of confidence in their own abilities, too much ego or a desire to retain autocratic control over each decision. This is a self-defeating strategy, since cohesive teams will normally outperform any set of star individual performers.

Thus the ability to build effective teams is one of the key differentiators of a great entrepreneur that outside investors look for, and the validation of having effective teams in place is high on the list of due diligence items before investor funding is committed.

If you find you have a dysfunctional team at your startup, fixing it should be a top priority. If you are just now hiring, be sure to keep the team-centric attributes on the same plane with other qualifications. On either end of this spectrum, teamwork or lack of it can make or break your startup, independent of the strength of your business concept.

Marty Zwilling

*** First published on Entrepreneur.com on 7/17/2015 ***

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Sunday, July 26, 2015

8 Entrepreneur Principles For Managing Your Destiny

career-destiny-entrepreneur Maybe starting a new business isn’t your passion, but in these days of rapid change, where everyone is dealing with uncertainty, I believe that thinking and acting like entrepreneurs will help you get ahead in any profession. In simple terms this means taking control of your life, going after something you love to do, and taking action. Stop letting life decisions happen to you.

As a long-time mentor to aspiring entrepreneurs, I’ve been convinced for some time that good entrepreneurs have the right mindset, and the right attributes, to be good at anything they want. Starting a new business is actually one of the toughest things that anyone could aspire to, since it always involves making decisions and progress in uncharted territory, with no one to follow.

So how do good entrepreneurs do it, and what do they do that everyone can learn from? I saw some good insights in a recent book “Own Your Future,” by Paul B. Brown, who has been studying and writing about business leaders for many years for Forbes, BusinessWeek, and Inc.

He offers a collection of lessons regarding how entrepreneurs think and act, which relate equally well to almost any profession or lifestyle. I’ll summarize a few of his principles here as examples, and I’m adding a few from my own experience:

  1. Use act, learn, build, and repeat to move forward in increments. The entrepreneurial approach is to decide what you want, take a small step toward that goal, pause to see what you have learned, build off that learning, and iterate the process. Other people often seem to bounce around randomly, and be the unhappy victims of other people’s actions.

  2. Embrace smart risks, but don’t be reckless. Smart entrepreneurs work extremely hard to find smart risks, like really large opportunities, but limit potential losses, because they know that success is an iterative learning process, with many pivots required. Other people never take risk, or let their passion overcome them to bet the farm on a long shot.

  3. Avoid overthinking yourself, leading to no action. When the future is unpredictable, as it is today, action trumps thinking. Action leads to evidence, in your job or in the market, which is the best fodder for new thinking. If all you ever do is think, you can gain tons of theoretical knowledge, but none from the real world, and make no real progress.

  4. Nurture relationships with people who can really help. Entrepreneurs build listening relationships with peers, mentors, and investors who may not even be social friends, and ask them the hard questions they need grow their business. Other people think relationships are only for personal and social use, and only mention work while venting.

  5. Find and sell your unique competitive advantages. Successful entrepreneurs focus on amplifying their strengths, while many people focus on eliminating their weaknesses. Everyone needs to sell themselves with the same fervor that entrepreneurs sell their product or service. If you don’t highlight your competitive advantages, no one else will.

  6. Focus on problems you can solve and who is your target. A key step in selling yourself or your product is to identify your customer, and focus on value that you can deliver to that customer. Don’t discourage yourself by broadcasting your value to the wrong people, or not doing your market research on the problem they need solved.

  7. Always see the glass as half-full, rather than half-empty. Maintaining and projecting a positive attitude is critical to career and personal progress, as well as business growth. How many people do you know that always focus on their setbacks, rather than their progress? Every hiring manager, as well as investor, reads your attitude carefully.

  8. Generate energy, rather than sucking it out of others. Your actions must always create positive energy for those around you, or people will hasten to get away from you and your business. Entrepreneurs learn this early, to keep their team and customers motivated. You need to do this, to keep your lifestyle and your career moving forward.

I assure you that if you follow these principles in your current career, and think like an entrepreneur, you will advance more quickly, get more done, and be a happier person. According to a classic study by the Wharton School of Business, entrepreneurs running their own business ranked themselves happier than all other professions, regardless of how much money they made.

More career planning and more education is not always the answer, especially when the future is as unpredictable as it is now. Embrace entrepreneurial tactics, assume control of your lifestyle and career, and take action today to assure your own success. Are you still thinking about it?

Marty Zwilling

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Saturday, July 25, 2015

10 Reasons For Startups To Be Wary Of Outsourcing

Callcentre These days, it is almost impossible to find a small business where everything is done at the home location, by full-time employees. We are in the age of outsourcing, by any of many popular names, including subcontracting, freelancing, and virtual assistants. These approaches allow your startup to grow more rapidly, save costs, but costly mistakes can lead to business failure.

There are many books written on this subject, but one just last year by Chris Ducker, “Virtual Freedom,” manages to pack a lot more practical guidance into a small space that many others I have seen. He is regarded by many as the number-one authority on virtual staffing and personal outsourcing, and is himself a successful entrepreneur based in the Philippines.

I was impressed with his summary of the top ten outsourcing mistakes made by entrepreneurs, followed by real guidance on how they can and should be avoided. In terms of quotes I hear too often, here is my interpretation of his most common mistakes, which every entrepreneur should avoid at all costs, before these assume that outsourcing will be their salvation:

  1. “With outsourcing, we won’t need many managers.” Contractors and freelancers, like any other business, manage their own internal processes, but they can’t manage your business. Don’t over-manage remote workers, but don’t expect them to manage your business. Hire and train your own managers for internal and external work projects.

  2. “With the high-speed Internet, our workers can be anywhere in the world.” Labor rates are lower in some countries, but culture and language match are the real keys to productivity. Countries near you may be in the same time zone for easy communication, but lack the skills you need. As with real estate, it’s still about location, location, location.

  3. “Let’s cut costs by outsourcing all from this point forward.” Some entrepreneurs get outsource-happy to save costs and begin outsourcing everything and anything that lands on their desks. Ideal outsourced tasks are outside your core competency, can be specified in detail, and managed with quantified deliverables and checkpoints.

  4. “Fixed price bidding is the only effective outsourcing model.” Getting a fixed price bid works for well-defined short-term projects, like blogging or programming. But trying to use it on call centers, affiliate marketing, or even data entry probably won’t be effective. Do your research with peers, and check the alternatives on every project. Be flexible.

  5. “Fair compensation is the lowest price we can negotiate.” Outsourcing won’t work if you don’t keep the virtual team happy. Unhappy workers will do a poor job, so cheap is not a good deal. Fair compensation is normally something higher than the market price at the outsourcing location, but lower than you would have to pay in your location.

  6. “I expect everyone working for me to adopt my culture.” The outsourcing team will always try to adapt to your situation, but success depends on their cultural work ethics, time constraints, social status, language quirks, and an overall attitude. Adapting to culture goes both ways, and training is the key. Recognize and embrace differences.

  7. “Current workers will manage the outsourcing as I grow.” Don’t set up outsourced projects under a professional who doesn’t want to manage, or is simply unavailable to the different work hours, or insensitive to cultural differences. Virtual teams need a lot of stability and structure, extra communication, standard protocols, and contingency plans.

  8. “My IT budget will go down as remote users use their own tools.” When you sign up remote workers, you’ll start to rely heavily on collaborative tools, Internet bandwidth, and new data security tools. You will need to invest more in training your own team, and increase your capital budget for new hardware and software. Don’t get caught off guard.

  9. “Utilization and personal growth of virtual employees is not my problem.” Some entrepreneurs view their outsourced employees as temps, or as a cheap way to staff the company during its startup phase. You should never hire internal or external staff based solely on what they can do now. Bored and unmotivated teams are never cost-effective.

  10. “I’ll outsource software development, since I don’t understand it.” Entrepreneurs need to know every component of their business at a management level, or have a cofounder who does. Relying totally on a virtual team implies they are managing your company, not you. If you don’t know where you are going, you probably won’t get there.

In summary, an entrepreneur should never approach outsourcing as an inexpensive and easy method of offloading work. With modern technology, and worldwide reach, it should be seen as an important tool for building an efficient, lean, and competitive business, optimized to give you more time for strategic focus.

As every entrepreneur quickly learns, their time is a scarce resource, and it can’t be outsourced. To grow the business, every entrepreneur needs to spend more time working on the business, rather than in the business. How many hours a day are you working on your company? Maybe it’s time for some smart outsourcing.

Marty Zwilling

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Friday, July 24, 2015

8 Ways That Blogging Will Kickstart Your Startup

blogging-social-media As the number of sites on the Internet floats around one billion, the challenge with every new startup is to be found and stand out. More important, if someone does find your site, the content better be enticing enough for them to come back. Blogging is one of the best ways to do this and build a brand, even before you have a product or service.

In this age of relationships, you, the entrepreneur, are a very important element of your new brand, and it’s never too early to start marketing the value of your expertise, insights and ideas. A great solution is necessary, but not sufficient, to build a great startup. Thus I recommend that every entrepreneur start blogging in parallel with solution development for the following benefits:

  1. Get customer idea feedback before you commit resources. Every entrepreneur should count on at least a couple of adjustments or pivots before they get it right. The challenge is to spend minimal time and money learning. After a few blogs about your concept, the comments better match your passion, or it’s time to rethink your idea.

  2. Blogging will improve your site search engine ranking. New and relevant content on a regular basis is a major driver in search engine optimization, as well as the inbound and outbound links that blog comments generate. If you post on industry sites, or get syndicated to popular sites, your scores and visibility will go up even more.

  3. Develop an efficient and effective writing style. A good blog is a short and tightly-written message, which is key to every business communication. I see too many investor pitches, and even executive summaries that ramble on for many pages without a clear message. Practice makes perfect, and feedback will tell you quickly if you are on target.

  4. Let that ideal co-founder find you. Blogs are a great way for potential business partners to find each other, and build a social media relationship before getting into the hard negotiations of who gets how much. Your reach with a blog is much broader than traditional business networking channels and industry conferences.

  5. Demonstrate thought leadership to potential employees. In small companies and startups, people seek out leaders they want to work for, in lieu of a big company with more job security. From your perspective, you want team members who are taking the initiative to stay current by seeking out new ideas and leaders from blogs on the Internet.

  6. Start building your customer community early. Don’t promise what you can’t deliver, but marketing is all about building excitement and suspense. It is never too early to start collecting leads and building a brand. You may even find alternate revenue streams, including speaking engagements and consulting, to bridge the gap to product rollout.

  7. It's the first step to full use of social media marketing. Every blog entry needs promotion through social media, so you will learn how to use Twitter, Facebook, LinkedIn and other sites. From there it’s a short step to podcasting, YouTube videos and Instagram. Customers these days expect to find your information where they are, not where you are.

  8. Establish visibility and attract funding sources. Be assured that the best investors are actively scanning blogs for new entrepreneurs and new ideas. It’s far more satisfying and fruitful to be approached by potential investors, rather than cold-calling a list of people who never heard of you. Investors invest in people as much as the idea.

All of this is possible on every entrepreneur’s budget, since the major blogging platforms, including Tumblr, WordPress and Blogger (Google) are free. Each can be linked directly into your site domain name for maximum SEO impact. In fact, WordPress can also provide a simple base website through static pages, thus even eliminating standard site hosting fees.

Never forget that blogging is most effective for “pull marketing,” and should never be used push your product. If you provide value to your audience, they will be pulled to you and your website for related solutions. That’s a win-win situation for you and your customers, and puts you head and shoulders above the crowd. Start today.

Marty Zwilling

*** First published on Entrepreneur.com on 7/15/2015 ***

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Monday, July 20, 2015

Checklist To Find The Startup Partner Of Your Dreams

Eric_E_Schmidt As an advisor to startups, I often get asked what to look for in an ideal co-founder or business partner. My first response is that it’s much like finding that ideal spouse, where chemistry, common interests and complementary communication skills are key. After some reflection, I now realize these attributes are necessary but not sufficient to be an ideal business partner.

Other attributes of a great business partner, such as real experience and near opposite ends of the age spectrum, may actually be counter to ones you look for in a spouse. A great example was when Eric Schmidt, with years of experience at Sun Microsystems and Novell, joined forces with Sergey Brin and Larry Page at Google. This was a win-win in business, but not a marriage.

In either case, it pays to find someone that you trust and enjoy being with for hours at a time, even through hard times. Otherwise, the relationship will be doomed to conflict, stress and unhappiness. Believe me, life is too short to have that happen in business, or in a marriage. I recommend that you look for these additional traits to make a business partnership work:

  1. Recognizes the need for relationships. Building a business is not for loners or autocrats, no matter how smart that person may be. Many of the entrepreneurs I meet prefer to focus on the technology, so they desperately need a people-oriented partner for balance. Together they can attract investors, employees and even customers.

  2. Able to help, rather than be a helper. This means every entrepreneur needs partners who are smarter than they are in complementary domains. For example, a technologist needs a strong finance person or a strong sales person who is willing and able to make decisions. You need to believe that you can learn from them, not manage them.

  3. Shared vision, values and culture. If your vision is to change the world, don’t sign on with a partner whose primary drive is to get rich. This also applies to how you both see quality, service, work ethic and employee relationships. Too many entrepreneurs later see their partners as working against them.

  4. Credibility, visibility and connections you need. Most startups need investors, vendors, distributors and industry support at different stages to achieve aggressive customer growth and penetration objectives. These are partner values that can far exceed any budget you might allocate, or all the hard work you might contribute.

  5. Similar dedication and work habits. More than one startup team has been broken due to differences in work style -- for example, if one person works on the business 20 hours a day, while the other has a nine-to-five mentality. It’s very difficult to maintain a productive relationship when one person prefers texting, and the other only communicates face to face.

  6. High integrity and commitment. Most business people form a quick impression of the level of integrity of people close to them, and become very uncomfortable trusting their future with those who are perceived to be on a different plane. In the same fashion, they expect a level of commitment that’s at least equal to their own.

  7. Business ethics and moral values. In the last few years, the ethics and moral compass of a business have become more and more important to success or failure. In a world of instant communication, everyone knows if employees are not treated with respect, or if business practices are negatively affecting the ecology or economy.

  8. No perceived negatives or red flags to overcome. As a startup, your key team members' image is your brand. Thus partnership decisions are much more critical then employee hiring decisions. Even if all initial interactions look positive, don’t forget the due diligence process, especially follow-up discussions with previous partners.

If you can find and attract a business partner or two that satisfy all these criteria, your company may likely be the next Google, no matter what the business idea is behind it. That’s how important the right people are to a new startup.

Marty Zwilling

*** First published on Entrepreneur.com on 7/08/2015 ***

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Sunday, July 19, 2015

10 Reasons For Joining The New Startup Wave Now

entrepreneur-startup-wave Since the recession, and at least partially sparked by it, I’m seeing a real resurgence of entrepreneurial spirit, and more startup activity than ever before. I believe the days of the “job work” mentality are thankfully waning, with more people looking to get satisfaction by making the world a better place, rather than just tolerating brain-numbing work to fund enjoyment elsewhere.

According to the latest Kaufman Startup Activity Index, entrepreneurs are making an unprecedented comeback in America, with data showing the largest year-over-year increase in two decades. The rate of new entrepreneurs increased about 10 percent, from 280 out of 100,000 adults in the 2014 Startup Activity Index, to 310 out of 100,000 adults in the 2015 Index.

There is additional encouraging news for aspiring entrepreneurs on many fronts, just in case you are thinking about joining the existing ranks:

  1. Valuations of successful startups have hit an all-time high. An unprecedented number of startups, over 100 at last count, are now valued above $1 billion, according to a recent Wall Street Journal article. Two of these, Uber and Xiaomi, are already above $40 billion. Thus a record number of entrepreneurs (and employees) are getting rich.

  2. Initial Public Offerings (IPO) are back as an exit strategy. Last year was the most active year for IPOs in the United States since 2000. 275 IPOs were completed in 2014, topping the 2013 total of 222 by more than 23%. Total U.S. IPO proceeds also shattered 2013’s high-water mark of $55 billion, with an impressive $85 billion in proceeds.

  3. Funding for early-stage startups is more available than ever. According to Statistic Brain, angel investors, numbering almost 300,000, contributed a record $25 billion to early-stage startups in the U.S. in 2014. With more startups, angels still limit their focus to about one out of 40 requests. No wonder 90% of the successful startups still bootstrap.

  4. Cost of entry for a startup is at an all-time low. I can remember when creating a web site for eCommerce could easily require a million dollar investment. Now you can create a web site for almost nothing - and be on your way with your latest invention or personal services. Smartphone apps can be built for less than $10K, so who needs an investor?

  5. Startup incubators and accelerators are popping up everywhere. Business incubators were all the rage before the dot-com bubble (700 for profit, many more non-profit). After the bubble burst and the recession, more than 80% of them disappeared. Now they are back in every community, with the best even waving money at graduates.

  6. The world is a now single market, both homogeneous and heterogeneous. Entrepreneurs now can think globally about the opportunity, from day one but start locally. This approach, popularly known as “glocalization,” means you design and deliver global solutions that have total relevance to every local market you plan to attack.

  7. Social media is a boon for entrepreneurs and startups. With the key social media platforms today, an entrepreneur can tune a product, build a brand, and grow the business with very low cost and a high interactivity never before possible. The elements include communications, mobile platforms, and location-based services.

  8. Large corporations have lost their ability to innovate. Conglomerates, which were the engines of growth and vitality in the twentieth century, have proven themselves unable to innovate, and have a tarnished public image due to financial woes and poor management. Most now routinely buy startups for new technology and new products.

  9. Women are a growing force as entrepreneurs. According to Fox Business, women-owned businesses have increased 68% since 1997, running more than 9.1 million businesses in 2014. Women inherently should have an advantage, since women already control over 70% of household income and $20 trillion of consumer spending.

  10. Baby Boomers are joining the fun in record numbers. The number of entrepreneurs who are Baby Boomer starting a business has grown from 14 percent in 1996 to over 30 percent last year. In fact, in every one of the last 15 years, Boomers between the ages of 55 and 64 have had a higher rate of entrepreneurial activity than Gen-Y.

Looking ahead, the National Venture Capital Association (NVCA) predicts that 2015 will bring further good news for entrepreneurs across several fronts, including more investment, greater IPO volume for exits, greater employment opportunities at startups, and even more improvements in the economy.

The image of an entrepreneur is at an all-time high, so why would you continue to work in a job that you hate, or provides no satisfaction? Step into a new entrepreneur era where the definition of “work” is something you love. It’s not too late to start.

Marty Zwilling

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Saturday, July 18, 2015

8 Keys To Providing Consulting Services To Startups

Manpower_Branch I may be old fashioned, but the term consultant still conjures up an image of a self-proclaimed expert who can make great presentations, generate recommendations and leave you to do the hard work of implementation. This may work for big companies who have specialized staffs, but it doesn’t work for startups and small businesses who are already understaffed and overloaded.

Startups need outside experts who can do the work, as well as provide training on what needs to be done. That’s called leading by example, and it is actually appreciated by businesses of every size. In my view, it’s time to eliminate the term consultant, as well as focus on activities and approaches that appeal more to the growing volume of small businesses today:

  1. Join the movement to contract roles. Businesses stopped hiring for lifetime commitments some time ago, as markets change so rapidly and companies need to tune their workforce for changing economic conditions. It’s time to move from traditional consulting to a freelance execution role as a hands-on interim professional or executive.

  2. Change your title to professional or specialist. Simply defining yourself as a specialist or professional minimizes the stigma of a consultant role (think marketing specialist or staffing professional). Specialists and professionals are already seen as experts who do the work, rather than just make recommendations for others.

  3. Adopt a project-based revenue model. Agreements based on projects to be completed, rather than an hourly rate, put the focus on quantifiable business outputs vs. time spent. For example, a marketing project would be the number of leads generated or ad impressions, instead of recommendations for improving the process.

  4. Be willing to work at all organization levels. Leadership by example works at all levels of a company. It is not limited to the realm of the top executive or board of directors, who could bring in consultants for studies and analysis. Specialists today can justify their cost based on more direct return on investment calculations at all operational levels.

  5. Treat a startup as a customer, not a client. A client relationship suggests that the consultant is in charge, whereas the customer designation recognizes the more modern model of the customer in control. It also highlights all aspects of required customer service, satisfaction, loyalty and referrals to peers.

  6. Be responsive to every customer communication. Many consultants today are hard to contact between scheduled meetings, due to their formal communication processes. It’s time to adopt your customer’s favorite mode of communication, whether that be texting, phone calls or social media, and not limit responses to office hours.

  7. Adapt a style to meet the new business work models. If your customer dress code or decisions process is informal, you should adapt yours to fit in, rather than continue to act and look like an outsider. If the startup team is distributed around the world, your challenge is to meet their process requirements, rather than expect them to meet yours.

  8. Deliver results rather than recommendations. PowerPoint presentations are not business results. If your customer needs service and support procedures, then your deliverables should include customized creation, implementation and training, rather than simply recommendations on what to include.

Google and social media have transformed the business world. There are expert blogs and curation sites, like this one, covering every aspect of business and leadership. With a few Internet searches, anyone can find all the recommendations and advice that even the best consultants have at their disposal today. All that is missing are the skills and experience to execute.

The number of startups is at least an order of magnitude larger than big companies. The startup world today doesn’t need consultants, but they do need specialists and professionals with experience and expertise who can do the job, and provide coaching while producing results, at a predictable cost.

Wouldn’t you like to increase your opportunity by an order of magnitude?

Marty Zwilling

*** First published on Entrepreneur.com on 7/10/2015 ***

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Wednesday, July 15, 2015

5 Startup Steps That Prove You Are Ready To Execute

entrepreneur-startup-preparation As a mentor to startups and new entrepreneurs, I continue to hear the refrain that business plans are no longer required for a new startup, since investors never read them anyway. People cite sources like this BusinessWeek story a while back “Real Entrepreneurs Don’t Write Business Plans,” or even my own article on this subject, “10 Reasons Not To Write A Business Plan First.”

Let me be clear – business plans are never “required,” they should never be written “just for investors,” and if you sold your last startup for $800 million, most investors will not ask for a written plan for the next. On the other hand, if you are a first-time entrepreneur, the discipline of building a business plan will dramatically improve your success odds, and your odds of finding an investor.

For aspiring entrepreneurs, or if your last startup failed, it’s all about standing out above the crowd of others like you, and demonstrating your readiness. There is no crowd of successful entrepreneurs. Here is my outline of key deliverables that could convince me that you are a cut above the “average” entrepreneur that approaches me with nothing but a dream and a prayer:

  1. Personal video introduction with elevator pitch. Successful startups are all about the right people with the right stuff. In a two-minute video clip, you can introduce yourself, show your passion and the engaging personality you need to win over customers, partners, and employees. Net out the problem and your solution in the first 30 seconds.

  2. Executive summary glossy. For the more traditional investor, or for that chance meeting in a real elevator or meeting, you need a two-page brochure (two-sided page). The challenge here is not to see how many words you can get onto each side, but how you can make this so engaging in layout and content that an investor will ask for more.

  3. Investor and strategic partner pitch. A perfect size is ten slides, with the right content, that can be covered in ten minutes. Even if you have an hour booked, the advice is the same. I’ve seen a lot of startup presentations, and I’ve never seen one that was too short - maybe short on content, but not short on pages. Pitch your company, not your product.

  4. Written business plan.  Disciplining yourself to write down the plan is actually the best way to make sure you actually understand it yourself. Would you try to build a new house without a plan, if you have never done it before? In simple terms, it is a 20-page document which describes all the what, when, where, and how of your new business.

  5. Financial model.  Most new entrepreneurs tend to avoid the financials of the business, and as a result are badly surprised by cost realities, and can’t answer investor questions. I suggest a simple Excel spread sheet loaded with your revenue, cost, and margin targets covering the first five years of your business. Investors will expect it for due diligence.

Thus you see the business plan is only one of five elements of a package that every aspiring entrepreneur needs to build to stand above the crowd, in your own level of understanding of your business. You need it for communicating to your team, finding strategic partners, or soliciting investor funding from friends and family, angel investors, VCs, and crowd funding.

The ability to communicate effectively is critical to standing above the crowd. Good communication is not talking louder and longer than others, but practicing active listening, and providing a package of other elements to effectively to back up your words. Make yourself unforgettable, in a good way. This means adding value before, during, and after every interaction.

Believe it or not, there are many people in the entrepreneur crowd with outstanding ideas, but building a business is more about execution. If you have built a successful business before, you don’t need all the components above to convince anyone, including yourself, that you can do it again.

Even including repeat entrepreneurs, statistics have long shown that the overall failure rate for startups within the first five years is greater than 50 percent. The real objective of “standing above the crowd” is to give you as an aspiring entrepreneur every chance to end up in the winning group, rather than the crowd of losers. Starting without any written plan elements may seem easier, but is not the way to win.

Marty Zwilling

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Monday, July 13, 2015

8 Ways Startups Spend Resources Without Adding Value

Capability_Value_Contribution Every entrepreneur I know is short on resources, including time, money, and skills. The last thing they can afford is to waste any of these, but in my mentoring and coaching activities, I see it happening all too often. Waste in a startup is any activity that spends resources, but creates no value or competitive advantage in the eyes of customers.

Much has been written about this subject in the world of manufacturing, stemming primarily from the 1990’s work by Taiichi Ohno, called the Toyota Production System (“Lean”). More recently, the concepts have been applied to the general business management context, in a book by Certified Turnaround Professional, Thomas H. Gray, titled “Business Techniques for Growth.”

While his book goes well beyond controlling waste as an element of growth and success, I was struck by how relevant the waste points are for every startup and every small business. Thus I am morphing the points here, with specific focus on the entrepreneur, who would never think of themselves in the context of automobile manufacturing:

  1. Offering too many products and services concurrently. In the startup world, this is often seen as a lack of focus. Trying to do too many things with too few resources, usually means the startup will not shine at anything, and will not survive the competition. That’s a deadly waste you can’t afford. My advice is to keep it simple, and do it well.

  2. Inventory and features added too soon. Inventory is money sitting idly by, adding no value. For market changing products, build first a minimally viable product (MVP), and never build products for sale until you have real orders in hand. More features and inventory added early will be wasted as you will need to pivot to match the real market.

  3. Bottlenecks to team productivity. Time utilization inefficiency is wasted time. Make sure you are not the bottleneck for your team. Many entrepreneurs insist on making every decision, and spend too much time working in the business, rather than on the business. The result is lower productivity all around. Hire real help and learn to delegate.

  4. Lack of communication. Communication is the fuel that controls the speed of startups. Delays in sharing, or lack of communication from the top, result in time and effort wasted, adding no value to the business. As an entrepreneur, you need a visible business plan and weekly team meetings, so everyone is working on current issues and real goals.

  5. Poor or too many business processes. Business processes can be your biggest time saver, or your biggest waste. Productive processes start with a plan, and end with metrics that measure value delivered. Entrepreneurs have to embrace creativity and change, yet move quickly with trained teams who can deliver repeatable processes.

  6. Focus on activities rather than results. Too many entrepreneurs confuse action with momentum and results. Focus on the 20% of your important tasks that will deliver 80% of the results. Judiciously apply 20% of your energy where it will achieve 80% of the momentum you desire. Then always measure customer results, not work.

  7. Defective products and services. Poor quality products and poor customer service are doubly deadly wastes. You lose the customer you paid to acquire, and the unhappy customer spreads the word to potential customers that you are spending marketing resources on, but will never win. Recovery efforts are wasted resource which rarely succeeds.

  8. Underutilizing people skills. When people can do more than they are asked or motivated to do, the money spent on others doing that work is waste. The solution is to maximize your own staff productivity first. Recognize and reward the people who excel, provide training, and challenge the team to invent new methods for significant change.

Entrepreneurs and small business always operate on the edge. There is no cushion. Waste means death. Are you as an entrepreneur really ready to deal with the new technology, new regulations, and a new workforce schooled in the digital age? How much time have you spent learning to use the practical techniques and new tools available? It won’t be wasted.

Marty Zwilling

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Sunday, July 12, 2015

How To Prepare For The Entrepreneur Life You Want

Brad_Smith_(entrepreneur) One of the simplest questions I get from aspiring entrepreneurs, and ironically one of the hardest, is “How do I start?” I want to tell them to just start anywhere, but I realize that most have no idea where anywhere is. They just aren’t prepared for the life they want, and are really asking me how to learn to be an entrepreneur. It takes more than passion and a course on business basics.

We all come from the era where our society and education prepared us for the labor market, meaning working for someone else as an information professional, factory worker, or retail associate. Now change is driving an opportunity society, where the next step is undefined, and entrepreneurs are in the forefront of the wave of people whose best skill is learning how to learn.

I just finished a new book, “America's Moment: Creating Opportunity in the Connected Age,” put together by a group of fifty current leaders from across American life, that points out well some of the tools and navigators that can help all of us learn how to learn in this rapidly changing world of new opportunities. I have adapted their key recommendations here for aspiring entrepreneurs:

  1. Business gamification and simulation. Learning doesn’t have to be all work. We know now that people learn from a younger age, and keep coming back for more, from sources that are entertaining and educational (edutainment). With new tools like Thrive15 and GamEffective, people of any age can learn to start or take their business to the next level.

  2. Adaptive business advising and learning. Every business and every entrepreneur is at a different stage, so it’s time to seek out learning tools that can adapt to you, rather than the other way around. Universities and the marketplace are spawning tools like OpenStudy, which is a learning network enabling massively multi-player study groups.

  3. Help entrepreneurs with constant learning. The wealth of online education offerings is a great start, but is not enough. Business advisors need to be ready to help at every stage, and I see it beginning to happen. Yet many new entrepreneurs are hesitant, perhaps out of fear or ego. If you are not constantly learning, you are falling behind.

  4. Mix business learning with doing. Entrepreneurs don’t need to know everything about business before they start. They do need the first few steps, and where to find the next steps. There is no standard course for this, but the answers are accessible online, if you know how to search, follow blogs, and interact with the relevant social media groups.

  5. Business financial aid alternatives. Crowdfunding is just the latest alternative for assistance to entrepreneurs who need help, supplementing the existing alternatives of loans, grants, angel investors, venture capital and many others. These days, if you can’t find money, you haven’t tried hard enough or maybe your idea isn’t a good one.

  6. Utilize business content curators and coaches. Potential resources available to entrepreneurs are enormous, but often under-utilized. The challenge is to find these just-in-time, including community and university startup incubators, accelerators, and advisors. Entrepreneurs should be monitoring online curator platforms and blogs.

In this new opportunity society, the personal traits for success have also changed from the industrial age and the information age. The days of long-term loyalty to an employer and methodically following direction are gone. Now the premium is on creativity, willingness to take a risk, and ability to keep up with change. Persistence and problem solving are sought-after virtues.

Nurturing these traits, and practicing incremental and continuous learning, are the best ways to start the life you want as an entrepreneur. Finally, before you start, you need to define what success means to you. It may include financial gain, but more likely the lasting satisfaction and happiness will result from your legacy of change in technology, or your impact on the social ecology of the world. If you can’t tell me where you want to go, I can’t really tell you how to start.

Marty Zwilling

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Saturday, July 11, 2015

7 Top Business Disciplines That Win On The Street

street-smart-businessman As a mentor and advisor to entrepreneurs, I find it’s easy to recognize “street smarts” when I see them, but it’s hard to explain the specifics to someone on the other end of the spectrum, even if they are willing to learn. Some people argue that street smarts are only a natural born skill, but I disagree. I believe they are disciplines that can be taught and learned.

In the urban world, being street smart means instinctively knowing how to keep yourself safe from scams and bad guys. It means you know your way around, how to handle yourself in tough situations, and how to “read” people’s intent. In reality, the startup world contains those same very risky streets, but in the business context.

Thus I was happy to see some help in a classic book by John A. Kuhn and Mark K. Mullins, “Street Smart Disciplines of Successful People” that put some meat on the bones of what it means to be street smart in business. I like their outline of seven key disciplines, all of which can be learned and practiced, that may actually be required for business success:

  1. Work smart. This means using discipline to get smart before you start working. Find out everything you can about the business domain you are targeting. In addition, maintain a change-oriented and future-focused mentality, with an actionable execution plan. When someone tells you they are working hard, it’s usually an excuse for not working smart.

  2. Skip the chatter. If you are trying to gain commitment or persuade someone, practice the discipline of thinking beyond conversational chatter. The four steps of a successful presentation always include preparation, practice, delivery, and asking for the order. Make these part of every interaction with partners, customers, and team members.

  3. Deal with people. People do business with your people, not your startup. Finely tuned people skills make you more likeable, warm, friendly, open, and effective. Put yourself in their heads to see things from their perspective. Have patience, and listen actively before speaking. Street smart entrepreneurs practice this discipline until it is not work.

  4. Watch your money. It’s not unusual for creative entrepreneurs to find finances difficult to understand, intimidating, or just a numbing bore. If you feel that way, find a partner who loves that critical side of the business. In reality, the discipline to manage cash does not require a financial genius. It just requires a discipline of relentless focus.

  5. Get more business. This discipline is the art of making a constant of new business opportunities, new customers, and new revenue flowing into your startup. Develop an aggressive prospecting mentality, stay close to current and past customers, get referrals, and optimize Internet marketing. If you startup isn’t evolving and growing, you are failing

  6. Manage yourself. Entrepreneurs will always be wearing many hats in their business and personal life. Even the more important activities can sometimes be excuses to avoid the underlying challenge of working toward your life-changing goals. Learn and practice time management disciplines. Banish procrastination. Be decisive. Have fun.

  7. Everybody sells. It may not be in their job descriptions, but everyone in a startup should be selling. The very first moment that you have contact with an investor, or a customer has contact with your team, an impression and a perception is created. That perception is your reality, and you only get one chance to make it a good one.

Overall, street smarts also requires that you can put all these things together for problem solving, and to dodge and weave effectively through the risky business streets. It means balancing your idealistic vision of how things could be, against the realities of the business world. Confidence and a positive attitude are also required to be a street smart and successful entrepreneur.

But attitude and problem solving are not sufficient, without the basic disciplines outlined above. No one is born with all these disciplines. These represent the knowledge and experience of many successful business people. Study them carefully and practice them religiously. The alternative is a long and painful learning curve, which neither you nor your investors can afford.

Marty Zwilling

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Friday, July 10, 2015

How To Make Money Like Facebook With Online Ads

Facebook_t-shirt One of the most popular and least successful models I see in new business plans for startups is the so-called Facebook model, providing free services to users while collecting revenue from ads to offset costs and grow the business. To make this work, you need heavy traffic on your site -- probably at least a million page views per month -- which most sites never achieve in their lifetimes.

That’s an especially tough challenge in your first year or two of operation, even if you use every technique known to get traffic flowing. While you are doing all this work, of course, you need deep pockets to fund all your efforts, content and growing website hosting fees. When Facebook did it a few years ago, the company used more than $100 million in venture capital funding before it became profitable.

It helps to understand how online advertising really works. When I first took a look at it, I was overwhelmed by all the terminology and acronyms, so I spent some time sorting it out and simplifying it for aspiring entrepreneurs and the rest of us:

  1. A site owner gets paid when a visitor clicks on an ad. This model, called pay per click (PPC), is the one most commonly offered to entrepreneurs. For the advertiser, this is the cost-per-click (CPC) model. The goal is for your visitor to be redirected to the site or product being advertised. The average click-through rate hovers around 5 percent, with a payment of a few cents for each, so don’t expect to get rich quick on this one.

  2. Get paid every time an ad is displayed on your site. With this model, advertisers pay for the number of times an ad is shown regardless of whether it is clicked on. Technically, this is called pay per view (PPV), pay per impression (PPI) or pay per mille (PPM), which is a thousand impressions. Advertisers see this as cost per impression (CPI) or cost per mille (CPM). Advertisers pay even less for this one, since they don’t like to pay when your visitor ignores their ads.

  3. Your visitor must take action on ad before payment. With this variation, no payment comes to you until your visitor get redirected to the ad site and performs a desired action there, such as filling out a registration form. This is called pay per action (PPA) or pay per lead (PPL). The advertiser sees it as cost per acquisition (CPA) or pay per performance (PPP). This model arose a few years ago to mitigate the risks of click fraud.

  4. Share of revenue from ad action initiated by your visitors. This is a variation of the preceding model, called performance-based compensation. It has the best potential to maximize your income, but the results are totally unpredictable. Advertisers see it as a method of shifting the risk on untested ads or products to you, so do your homework.

  5. Fixed compensation rate for a specified time period. This approach is the most predictable way to anticipate revenue from advertisers. You simply negotiate a fixed price per day for displaying the ad on your site, which advertisers see as cost per day (CPD), independent of the ad’s visibility or your visitor response. But rest assured that the advertiser will be measuring results, so a long-term revenue stream is not so predictable.

It’s also important to know that advertising delivery technology has come a long way in the past few years. The ads you see from day to day may change as your site content changes, and every visitor may see a different ad based on their profile and interests. Now ad space is often auctioned to the highest bidder in the few milliseconds while your page is being built.

But all this doesn’t change the reality that it’s hard to make any money on ads in the early days of a new startup. Even Facebook required nearly five years and 300 million users before it became cash-flow positive from advertising. With the competition today for ads on popular sites such as Twitter, the probability of new sites building a big revenue stream from ads is even lower.

So if you want to make money like Facebook from ads, your first step is to grow a very large visitor base, funded by a revenue stream other than advertising, or investors with a strong ongoing commitment to your success. In other words, it’s time to think of advertising revenue as a benefit of your success, not the source of it.

Marty Zwilling

*** First published on Entrepreneur.com on 7/1/2015 ***

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Wednesday, July 8, 2015

10 Ways For Entrepreneurs To Meet Cash Flow Peaks

Piggy savings bank The “valley of death” is a common term in the startup world, referring to the difficulty of covering the negative cash flow in the early stages of a startup, before their new product or service is bringing in revenue from real customers. I often get asked about the real alternatives to bridge this valley, and there are some good ones I will outline here.

According to a classic Gompers and Lerner study, the challenge is very real, with a majority of new ventures that don't attract investors failing within the first three years. The problem is that professional investors (angels and venture capital) want a proven business model before they invest, ready to scale, rather than the more risky research and development efforts.

My first advice for new entrepreneurs is to pick a domain, such as online web sites and smart phone apps, that doesn’t have the sky-high up-front development costs. Leave the world of new computer chips and new drugs to the big companies, and people with deep pockets. For the rest of us, the following suggestions will help you survive the valley of death:

  1. Accumulate some resources before you start. It always reduces risk to plan your business first. That includes estimating the money required to get to the revenue stage, and saving money to cover costs before you jump off the cliff. Self-funding or bootstrapping is still the most common and safest approach for startups

  2. Keep your day job until real revenue flows. A common alternative is to work on your startup on nights and weekends, surviving the valley of death via another job, or the support of a working spouse. Of course, we all realize that this approach will take longer, and could jeopardize both roles if not managed effectively. Set expectations accordingly.

  3. Get a loan or line-of-credit. This is a most viable alternative if you have personal assets or a home you are willing to commit as collateral to back the loan or credit card. In general, banks won’t give you a loan until the business is cash-flow positive, but there are notable exceptions. Nevertheless, it’s an option that doesn’t cost you equity.

  4. Solicit funds from friends and family. After bootstrapping, friends and family are the most common funding sources for early-stage startups. As a rule of thumb, it is a required step anyway, since outside investors will not normally consider providing any funding until they see “skin in the game” from inside.

  5. Use crowd funding to build reserves. The hottest new way of funding startups is to use online sites, like Kickstarter, to request donations, pre-order, get a reward, or even give equity. If your offering is exciting enough, you may get millions in small amounts from other people on the Internet to help you fly high over the valley of death.

  6. Apply for contests and business grants. This source is a major focus these days, due to government initiatives to incent research and development on alternative energy and other technologies. The positives are that you give up no equity, and these apply to the early startup stages, but they do take time and much effort to win.

  7. Join a startup incubator. A startup incubator is a company, university, or other organization which provides resources for equity to nurture young companies, helping them to survive and grow during the startup period when they are most vulnerable. These resources often include a cash investment, as well as office space, and consulting.

  8. Barter your services for their services. Bartering technically means exchanging goods or services as a substitute for money. An example would be getting free office space by agreeing to be the property manager for the owner. Exchanging your services for services is possible with legal counsel, accountants, engineers, and even sales people.

  9. Joint venture with distributor or beneficiary. A related or strategically interested company may see the value of your product as complementary to theirs, and be willing to advance funding very early, which can be repaid when you develop your revenue stream later. Consider licensing your product or intellectual property, and “white labeling.”

  10. Commit to a major customer. Find a customer who would benefit greatly from getting your product first, and be willing to advance you the cost of development, based on their experience with you in the past. The advantage to the customer is that he will have enough control to make sure it meets his requirements, and will get dedicated support.

The good news is that the cost for new startups is at an all-time low. 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. Software apps that once required a 10-person team can now be done with the Lean Development methodology by two people in a couple of months.

The bad news is that the valley’s depth before real revenue, considering the high costs of marketing, manufacturing, and sales, can still add up to $500K, on up to $1 million or more, before you will be attractive to Angel investors or venture capital.

In reality, the financing valley of death tests the commitment, determination, and problem solving ability of every entrepreneur. It’s the time when you create tremendous value out of nothing. It’s what separates the true entrepreneurs from the wannabes. Yet, in many ways, this starting period is the most satisfying time you will ever have as an entrepreneur. Are you ready to start?

Marty Zwilling

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Monday, July 6, 2015

8 Business Name Mistakes That Investors Hate to See

Delete "MISTAKE" Every new baby gets a name before it is introduced to the world, and yet some entrepreneurs continue to send me business plans with TBD (to be determined) in place of a business name on the front page. They don’t realize that the name they choose, or lack of it, sets an initial perception of the business that may override all of its value. Your business name will have the same impact on potential customers.

Just as with names of people, there isn’t any ultimate right or wrong, and every name has unique implications in different cultures, economies and markets. Names can imply strength, value, connection or friendliness, or they can set opposite tones. As you search for that perfect name, it pays to avoid the key mistakes that we investors and business naming experts hate to see:

  1. Trivial names and acronyms are not sticky. Your spouse’s initials may be meaningful and memorable to you as a company name, but won’t get you very far in business. In this world of information overload, you need a name that will remain memorable and meaningful for years to come, even after trends change and your startup has pivoted.

  2. Tricky spellings send customers to competitors. Today, everyone expects to find you online, and competitors quickly learn to route all misspellings of your business name to their sites. Use conventional spelling, or phonetically consistent spellings, rather than the cute variation that implies a double ententre and amuses all your friends.

  3. Nonsense phrases and non-words are tough to brand. These may be easy to trademark, but there are few plans strong enough, or companies with enough money, to make Google and Xerox recognized brands. Most startups don’t have the resources, and should be more humble in starting with a name that customers will recognize.

  4. Every extra syllable or special character makes it harder. Two syllables seems to be the optimum for a business name, especially if it can be easily turned into a verb, such as Facebook or Twitter. Hyphens, special characters or mixed case in the name only invites the misspellings and memory problems mentioned earlier.

  5. Beware of international and cultural implications. Even if you have not thought of going international, remember that every website on the Internet is visible around the world. Do your research to be sure you will not be embarrassed by a name that has negative or obscene implications in another culture or language.

  6. Don’t limit future expansion possibilities. Business names that have specific geography references or product implications will come back to haunt you as the market changes or new growth opportunities emerge. Changing the name later and rebranding is a very expensive proposition, and takes a long time.

  7. Your desired name is not available on the Internet and/or social media. These days, before you adopt a company name, you need to make sure you can secure the domain name for your website, the trademark is not taken and the name is available on all the social media sites that your customers might frequent. Confusion will cost you customers.

  8. Skip the new wave of domain name suffixes. Even though the standard .com or country suffix can now be replaced by virtually any word, including .bank, .sport, or .coke, I don’t recommend it yet for startups. While these may sound attractive in defining your company name, they still don’t have full recognition by most customer segments. At best, they should be reserved as alternates, with website redirects to forestall competitors.

In all cases, I recommend that you spend some time building a short list of three to five names that satisfy your objectives, but avoid the shortcomings above, and try them out on potential customers, peers and advisors. Feedback from friends and family is the least valuable, since they have the same biases that you do.

If you choose a name, and realize based on early results that it was not the right one, it’s smart to change the name immediately, rather than hope to overcome the limitations with more marketing. Changing your branding is always hard, but it’s one of the most common pivots that startups make. It will cost you some money and time now, but not changing your name will likely cost you your business later.

Marty Zwilling

*** First published on Entrepreneur.com on 6/26/2015 ***

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Sunday, July 5, 2015

10 Startup Practices That Usually Lead To Disaster

AT_YOUR_OWN_RISK Starting a new business is a serious undertaking. Yet many aspiring entrepreneurs I know approach it as a fun project, get-rich quick scheme, or perhaps an expensive hobby. Others quit their day jobs and commit everything to their new passion, without regard for their own well-being, or the welfare of others around them. Neither of these approaches bodes well for success.

As an entrepreneur, you need to start early to implement the discipline and business practices that will lead to success. Even though everyone has an opinion on good early stage practices, I was impressed with the actionable blueprint in a recent book by Scott Duffy, “Launch! The Critical 90 Days From Idea To Market,” focusing on the first few steps that determine long-term success.

Duffy emphasizes the often overlooked personal side of entrepreneurship, including balancing finances, relationships, and your health. I am paraphrasing here, based on his book, ten of the top failures we both see in the early stages of entrepreneurship, followed immediately by recommendations to mitigate losses from each of these items:

  1. Take the largest risk to get the biggest return. Startups always involve risk, but should not be risky. Every business move should be planned and well thought out, with milestones set in advance. Processes should be in place to ensure that even if something does not go as planned, you, your family, and even your job are secure.

  2. Let your passion drive your cash flow projections. Moderate your optimism. That means coming up with revenue and expense assumptions that balance your natural optimism and determine how much cash the business will really need. Then take your revenue projections and cut them in half. Now take your expenses and double them.

  3. Your idea will attract the funding you need. Assume that raising money from investors to get started will be difficult, unless you have a track record in business, or friends with deep pockets. Will key funding be your family’s entire nest egg, or just half? Are you going to bootstrap, or borrow from personal assets?

  4. Pretend your family doesn’t matter. Discuss the plan and the costs with your spouse or significant other. It’s essential that the two of you be in agreement on key milestones and how much to put on the line. It is better to risk less and be on the same page than to risk more and have your spouse worried and resentful day after day.

  5. Mix personal and business funds. Put your risk capital into a separate checking account before you start. Once you see it moved from your savings account to an account tied to risk, it becomes real. You now have a clear financial framework to help you make better decisions, and you will act more strategically, less impulsively.

  6. Use personal credit cards for business. Keep your personal credit cards separate from the business. You need to do this as a way of tracking, accounting, and leveraging business payments and expenses for tax purposes. Never commingle personal and business funds. Remember that credit card cash advances are very expensive loans.

  7. Keep business expenses in the bottom desk drawer. Hire a bookkeeper or setup a QuickBooks chart of accounts on your first day in business. If you don’t set up a system early, you will spend tremendous amounts of time and energy going back trying to reconstruct business transactions, for you, your investors, and tax preparers.

  8. Don’t formalize the business until you get revenue. Have an attorney set your business up as a Corporation, by the books, before the first transaction. We live in a very litigious society, so you need to at least protect yourself from liability. Set aside money to create a proper legal entity and get business insurance. It is not just about you.

  9. Strive for success before thinking about your own payback. Being unprepared for success is the fastest way to lose your first million. It is important to constantly expand your understanding of how investments work, so that as your business grows and spills off cash, you are able to manage personal profits.

  10. Hedge your bets by starting several initiatives or products. Decide to launch one business or product at a time. The best route to success is not to spread your energy and focus on ten things, hoping one will work. Give that one focus everything you’ve got, or you will likely not have the resources to anything well.

Obviously, avoiding all of these errors won’t guarantee success and won’t save you if you don’t have a viable offering or a viable business model. Being an entrepreneur may start with passion and an idea, but turning that idea into a great business is all about smart execution. Don’t let a million dollar idea turn into a million dollar loss, for lack of proper discipline, personal balance, and business execution.

Marty Zwilling

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Saturday, July 4, 2015

7 Ways To Balance Business Versus Personal Goals

independence-day-usa I know some entrepreneurs with successful businesses, and others who seem to have a great relationship with their family, but I can’t think of many who have both. Some people would argue that these two successes are mutually exclusive, but I’m not convinced.

Individually, they both take focus, commitment, and a variety of skills, all the strengths of a good entrepreneur. Assuming a person wants both a family and a business, the challenge is to achieve a balance that can satisfy both. This July 4th Independence Day Holiday in the USA is a good time for all of us to do a reality check on our own efforts.

From my observational experience, as well as my personal struggles on both sides of this equation, here are some of the key parameters of that balance:

  1. Start with a solid family and business foundation. A successful business won’t lead to a great family relationship, and vice versa. Don’t assume that your focus will change once your startup gets past the initial struggle. Keep in mind that your loved ones often see your business enthusiasm and energy as negative reflections on them.

  2. Be realistic about what brings happiness to you. Many entrepreneurs, especially women, gravitate to entrepreneurship because they see it as the way to balance work and family demands. That could mean they are forgoing happiness on the business side. Some men want a family relationship, but the business is what makes them happy.

  3. Find fun things in and out of work that are high priority. These don’t have to be expensive or hard-driving activities like sports competition. They can be simple in nature, like being present for school engagements, or regular Friday night “date nite” with the spouse. Practice consistency with “fun” and “high priority” elements.

  4. Assess your ability to compartmentalize the two roles. Achieving a balance requires an ability to put aside the burdens of work at the end of the day, and giving your full focus to important relationships. Separation of work and home are fuzzy for an entrepreneur, and it’s easy to find yourself on duty 24/7. Can you find the off switch on your cell phone?

  5. Be accountable for decisions you make. Remember, as the entrepreneur you are in control, and the business is not. Don’t let the urgent crisis of the moment become the priority of your life, to the detriment of your balance. Keep in mind that the sacrifices you make for the business also impact your family.

  6. Say “NO” and “YES” with equal frequency in both roles. Be honest in how your decisions will affect others in either role. Be in control of your priorities. The first step is to track yourself on these responses. Most people don’t recognize that they may have a habit of being negative in one role, and positive in the other.

  7. Communicate well and often at your business, as well as with family members. You need to keep an open mind and listen effectively to people in your business, and to people who are in your relationships. Pay attention to body language, emotion, and time spent speaking versus listening. Talking is not communicating.

Most people consider entrepreneurship as a lifestyle, rather than a job. Being married is a lifestyle, and raising a family is a lifestyle. Recognize that it’s harder to balance two lifestyles than it is balance a job with your real lifestyle.

Also mixing business with pleasure is one thing, but mixing business with family yields an altogether different, and often volatile, dynamic. Running a family business or “FamilyPreneurship” is even more difficult, and can derail or splinter cherished relationships.

Before you conclude that entrepreneurship is your chosen lifestyle, make sure you understand the balance it will require, and make sure those around you are prepared to accept that balance. A failure in this regard will likely cause you some fireworks you hadn’t anticipated.

Marty Zwilling

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Friday, July 3, 2015

6 Reasons Smart Entrepreneurs Think Twice Before IPO

Philippine-stock-market-board The visibility of Google, Facebook and a few others continues to propagate the myth that the ultimate objective of every entrepreneur should be to take their startups public via an initial public offering at the earliest opportunity. Everyone thinks this is the route to become the next billionaire like Mark Zuckerberg.

In reality, this option is a nightmare that can bump you out of the driver seat, dilute your equity and create a business entity you can’t control. For financial reasons alone, an IPO is a statistically rare phenomenon, happening just 275 times in 2014, out of almost 500,000 startups. Many of these may still fail spectacularly, such as Webvan and Pets.com.

As an advisor and mentor to startups, I try to make sure entrepreneurs understand both the pros and cons of an IPO as an exit strategy. Facebook, for example, ended up raising almost $16 billion through its IPO. It’s hard to imagine any other investor mechanism that could have raised that much money. On the other hand, Zuckerberg signed up for a lifetime of challenges:

  1. Large personal and corporate liability exposures. As a public company executive, your management style, and even your personal life, is subject to extensive scrutiny by stock analysts and stockholders. Violations of integrity and accepted business practices is malfeasance and can result in corporate and personal fines, and even prison terms.

  2. Extensive government reporting and compliance rules. To prevent another Enron scandal, public companies and their officers are measured against strict and growing government rules for reporting and compliance, popularly known as Sarbanes-Oxley, or SOX. Private companies are largely exempt from these reporting requirements.

  3. Doubling or more of overhead expenses. These new reporting and compliance rules require expensive new processes, systems and consultants. When including lawyers and a chief compliance officer, many experts argue that the costs can quadruple those of a private company. That extra money raised better kick-start your opportunity.

  4. All strategy and operational moves become public. Every public company has to answer to thousands of public stockholders now, rather than just a few private investors. This is a huge communication requirement, as well as a tremendous disadvantage in flexibility and dealing with competitors. The public is not an easy master to satisfy.

  5. Public expectation of growth every quarter. The pressures to maintain a profitable and steep growth curve, vs. reinvesting returns in new markets, are very frustrating to entrepreneurs who get their satisfaction from the flexibility of a startup in addressing new opportunities. Even perceived weaknesses can dramatically impact company valuations.

  6. Control moves to external directors and the public. Private companies typically have an internal board of friendly owners, unlikely to be pressured by the media to consider an unfriendly tender offer from another major player in the market. Even with private equity and private acquisition transactions, control stays internal to the principals.

Of course, there are cases where a new technology or medical startup needs that huge financial infusion to build the infrastructure needed for real growth, so the rewards are worth the risks and costs. In the long run, building a global company with the relatively unlimited public resources is still only possible by starting with an initial public offering and giving up your startup.

For every entrepreneur, I recommend first a personal assessment of your goals and strengths. If you enjoy the challenges of a startup and being in charge of your own destiny, you probably won’t survive the move to a public company, and you certainly won’t enjoy it, even if it makes you and all your friends rich. Greed is not an easy master to satisfy either.

Marty Zwilling

*** First published on Entrepreneur.com on 6/24/2015 ***

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