Monday, February 29, 2016

7 Startup Strategies To Gain From Your Limitations

know-your-limitationsAs Clint Eastwood once said, “A man’s got to know his limitations.” Every new entrepreneur soon realizes he or she has some big ones, but very few figure out how to use these them to their advantage. I believe that the resourcefulness to turn constraints into competitive differentiators and new opportunities is a trait that separates the great entrepreneurs from the “wannabes.”

For example, the Facebook business model of offering a product free to customers while gaining revenue from advertising was born out of the need to survive as a business while offering a fun service. By contrast, as a startup investor, I still see too many entrepreneurs looking for another check to keep them going -- without any convincing plan to ever be self-sustaining.

Smart entrepreneurs understand that more funding often comes with onerous constraints on who is in control, what can be done by whom, and who gets to share in the returns. These founders follow alternative strategies, including the following, to push themselves and their team harder for innovative and less expensive approaches to a complete product, advertising and new markets.

  1. Do it yourself with new tools rather than hire outside help. They look for creative solutions to problems that are inhibiting progress, rather than the conventional solution of outsourcing or hiring people. For example, many founders now use makerspaces such as TechShop to build prototypes without the costs and long lead times of manufacturers.

  2. Focus on a top productivity bottleneck each week. Startups funded by large venture-capital investments rarely think about productivity. I can think of cases where executives actually created make-work activities to keep idle people on the payroll in case they might be needed later. It’s better to use creativity and tools to find better ways of doing things.

  3. Use big constraints to drive innovation. Doing things the way they have always been done only works with unlimited resources. Constraints are great motivators to finding a better way, or maybe even deciding that something doesn’t really need to be done at all. Sometimes the quality of a result is inversely proportional to the amount of money spent.

  4. Strategically reduce the budget on your most expensive projects. It always amazes me how work expands to exceed any deadline or budget, and, conversely, how the important work still gets done when budgets and staffing are cut. Apply the 80 to 20 rule for maximum value, and urge people to work more efficiently rather than longer hours.

  5. Find partners to complement your strengths. If you have a great product and need customers, find a partner with many customers who needs a new product. If your strength is building businesses, find a partner who is a technologist. These are win-win situations requiring less resources and time for each side.

  6. Look for disruptive solutions rather than linear innovations. Without constraints on pricing and size, computers would still look like mainframes rather than fit in your wristwatch. The most successful and innovative solutions come from understanding and honoring constraints -- rather than feeling like the victim of limitations.

  7. Create new business models and new ways to measure value. Focus in recent years on social issues and saving the environment has created whole new industries, including solar power and the electric automobile. On the business side, we now have the subscription model, the freemium model and others. There is still room for many more.

Entrepreneurs need to celebrate the fact that constraints and limitations are sources of opportunity in the marketplace, and sources of profit and competitive advantage inside the business. Get past the victim mentality -- where every limitation is seen as an inhibitor to the realization of the vision.

The challenge of being an entrepreneur is in being able to turn constraints into advantages for fun and profit, and enjoy the journey as well as the destination. Are you having fun yet in your new venture, despite the limitations?

Marty Zwilling

*** First published on Entrepreneur.com on 02/19/2016 ***

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Sunday, February 28, 2016

9 Practices Make You A More Effective Communicator

Kathy_Ireland_Warren_Buffett_and_Bill_GatesEvery business professional and entrepreneur believes they are good communicators, but how do they know? It’s really the perception of the recipients that counts, and poor communicators are almost always poor listeners, so they don’t hear the shortcomings. Warren Buffet once told a class of business students that better communication could boost their value by fifty percent.

That’s certainly worth going after, so it is time for all to take a hard look in the mirror, recognize the need to improve, and make the commitment to change. But looking in the mirror doesn’t help unless you know what to look for. I see real help a recent book, “What MORE Can I Say,” by Dianna Booher, one of the most recognized business communication gurus, which clearly calls out the parameters of effective business communication.

In that context, she offers a nine-point checklist for success in the art of communication and persuasion that I believe every professional should use in their own self-evaluation. I’ll paraphrase a few of her insights here to get you started:

  1. Generate trust rather than distrust. Effective communication requires trust in you, your message and your delivery. We tend to trust people that we think are like us, or we have social proof that others trust, or we feel reciprocal trust from the sender. People who are optimistic, confident, and demonstrate competence generate trust. Are you one of these?

  2. Be collaborative rather than present a monologue. Collaborating for influence has become a fundamental leadership skill. Be known for the questions you ask – not the answers you give. Statements imply that you intend to control the interaction, whereas questions imply that other input has value to arriving at a mutually beneficial decision.

  3. Aim to simplify rather than inject complexity. Simplicity leads to focus, which produces clarity of purpose. People distrust what they don’t understand, what they perceive as doublespeak, or things made unnecessarily complex. Influencing people to change their mind or actions requires building an intuitive simple path to your answer.

  4. Deliver with tact and avoid insensitivity. Some word choices turn people off because they are tasteless, tactless, or pompous. Phrase your communication to avoid biases that might create negative reactions. Consider using other authority figures or quotes to deliver a more persuasive message while eliminating any sensitive implications.

  5. Position future potential instead of achievements alone. The allure of potential is normally greater than today’s actual achievements. This is especially true for career advancement, motivation, and the power of systems. For customers and clients, let them have it both ways. Consider what you can package as your own untapped potential.

  6. Consider the listener perspective rather than the presenter. Listeners tend to average all the pieces of information they hear and walk away with a single impression. More is not always better, so reduce the length of presentations and speeches. Perceptions are more important than reality. Avoid the over-helpfulness syndrome.

  7. Tend toward specifics rather than generalizations. Many executive speeches miss the mark because they aim for the general constituency and hit no one. People need to know how a message relates to them personally, not just what has to be done and why. Your challenge is to make the future seem attainable and applicable to each listener.

  8. Capitalize on emotions as well as logic. Emotion often overrides logic, but logic rarely overrides emotion. For many listeners, a logical explanation merely justifies and supports an emotional decision that has already been made. Recognize and calm first any emotional reactions of fear. Engage multiple senses to reach a listener’s emotion.

  9. Lead with empathy before your own perspective. Empathy starts with active listening to what’s being said and what’s not being said. Listen for the gaps and distortion between perception and reality, and then focus on closing these gaps before any persuasion to your own perspective is attempted. Let others help you listen, and tune your response.

As the economy continues to improve, and the competition gets tougher, you need every ounce of communication skill you can muster to land the career and business opportunities that will be coming your way. Standing still means falling behind. Are you listening and changing at the right pace to get your fifty percent advantage?

Marty Zwilling

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Saturday, February 27, 2016

7 Lessons They Don’t Teach You In Crowdfunding School

Indiegogo-logoCrowdfunding is the hot new vehicle for raising money to support your entrepreneurial efforts, with over 1,250 website platforms around the world to help you, according to a 2015 industry report. In fact, the report suggests that the total amount raised annually (over $30 billion) now exceeds the funding from venture capitalists during the same period. How can you go wrong?

The most popular platform examples are still a couple of the earliest, Kickstarter and Indiegogo, but you can find a comparison of many others online. In addition to funding, the good news is that all of these provide aspiring entrepreneurs with an opportunity to perfect their marketing pitch, get some valuable target customer feedback and improve visibility to other funding sources.

While all this is definitely a boon to entrepreneurs, it does come with its own set of challenges. Here are seven lessons I’ve accumulated from real life experiences on how crowdfunding can lead you astray -- and guidance on how to offset these potential negatives:

  1. Keep your attention on the business model as well as the solution. Crowdfunding interest, by definition, is primarily from non-professional investors who are more focused on features and value, rather than the financials of your business. Several crowdfunding successes have failed as a business. Project your costs as diligently as your revenues.

  2. Don’t underestimate the amount of funding actually required. An advantage of professional investors is their validation of required amounts for marketing, inventory and staffing. Understating or overstating your request will likely kill your credibility or your startup in lieu of follow-on requirements. Get funding sizing input from senior advisors.

  3. Be prepared to manage a crowd of inexperienced investors. Every entrepreneur with multiple contributors will tell you how hard it is to communicate effectively with a couple of investors. With crowdfunding, the number may be hundreds, all expecting current status and results. You need a professional team and additional funding just for this effort.

  4. Resist the temptation to skip the business plan. Many new entrepreneurs believe the myth that a business plan is only required to satisfy professional investors and can be skipped with crowdfunding. In reality, the value to you of a detailed plan is even greater when you won’t have investors challenging it. Get professional help to validate the plan.

  5. Make sure the crowd response represents your target demographic. Crowdfunding is still an early adopter phenomenon, and these people may mislead you on requirements for the mass market or the size of the opportunity. On the other hand, if your solution is aimed at boomers or requires in-depth technical knowledge, crowdfunding may be futile.

  6. Be extra careful with your intellectual property. Crowdfunding platforms don’t have the facilities to handle non-disclosure agreements that you might expect from every professional investor. With a large number of unknown investors demanding details, you are highly exposed to potential competitors. Keep all IP details close to the vest.

  7. Don’t forget to account for the time and cost of crowdfunding campaigns. Naïve entrepreneurs believe crowdfunding is essentially free. They forget about the platform fee -- typically 5 percent -- taxes on pledges, preparation and social media commitment to prepare and execute the campaign, and the give-back required if you don’t meet your goal.

Overall, there is now no question that crowdfunding is here to stay, and it represents a major new source of funding for innovative new businesses, non-profits seeking donations and artists looking for some recognition for their creative efforts. However, like every opportunity, this one comes with huge risks and much hard work.

So far, the crowdfunding failure rate on all platforms to achieve funding has been well over 50 percent. Many more of the funded startups fail to achieve business success, even with the money. With odds like these, you can’t afford to make all the same mistakes that others have endured before you. A lesson learned from others is a mistake you don’t have to pay for.

Marty Zwilling

*** First published on Entrepreneur.com on 02/17/2016 ***

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Friday, February 26, 2016

10 Steps To Profitable Strategic Business Decisions

how-to-make-better-decisionsMost entrepreneurs are so overwhelmed by the day-to-day challenges of their business that they rarely take the time to work on longer-term strategy (they work in the business versus on the business). As a result, strategy decisions are made in the same ad-hoc crises style as operational decisions, and the business suffers. Gut reactions are rarely the optimal solution to any problem.

In reality, the discipline most often reserved by entrepreneurs just for strategic decisions should be used for all decisions, including operational ones. As detailed in a new book, “Smart Decisions,” by Dr. Thomas N. Martin, decision makers need to develop and practice the art and science of strategic decision making early in their career to thrive in this complex business world.

I support his assertion that good ethical decisions are best made by applying the following ten steps to the analysis and decision process:

  1. Start with creativity to expand decision alternatives. The act of coming up with alternatives forces everyone to dig deeper and look at the problem from different angles. This will force you to step outside your normal patterns of thinking and come up with more innovative solutions. Decisions made without innovation lead to a stale business.

  2. Evaluate alternatives through a future-oriented lens. All decisions and actions have immediate as well as future consequences. For example, it is only from the perspective of future orientation that the decision to re-invest profits, versus distributing them, makes any sense. Decisions made for immediate relief feel good, but rarely add long-term value.

  3. Learn from previous results to eliminate repeat mistakes. Making a wrong decision once means you are willing to take risks, but repeating that same mistake a second time means you didn’t learn anything. Own your bad decisions, with no excuses, but wisdom is the accumulation of learning and experience and is required to succeed in business.

  4. Don’t try to satisfy everyone with every decision. Trying to please everyone can cause you to lose sight of your values and strategic goals. Certainly you must actively listen to the opinions, suggestions, and ideas of others, but the decision has to be yours, even in the face of second guessing from those with negative consequences.

  5. Test the quality of information available for analysis. If you're not using data to make decisions, you're flying blind, and gut decisions are based primarily on emotional data. To assess objective data quality, look for completeness, consistency, and timeliness, relative to the decision at hand. The best analysis done on bad data will still yield a bad decision.

  6. Ask open-ended questions to stimulate critical thinking. The ability to ask and answer questions is central to both thinking and learning. The “5 Whys” is another iterative technique used to determine the root cause of a problem or stimulate creative and in-depth thinking. Every entrepreneur benefits from critical thinking and learning.

  7. Don’t allow information paralysis to delay reaching a decision. Analysis paralysis is the state of over-thinking a decision, to the point where a choice never gets made, or is made too slowly. Always identify your top objective for any specific decision, and use that to drive you in decision making. Timeliness must always be a top business objective.

  8. Factor in personal values, assumptions, and intuitions. These are valid and important in any decision, but need to be communicated effectively to all constituents in order to foster total understanding and support. Perceptions are as important as reality, and the wrong perception of your decision rationale can derail even the best effort.

  9. Always define one or more backup or contingent solutions. Contingency plans make sense in every case where you don’t have all the decision information you need, or there are factors involved that you can’t control, such as regulations, economic conditions, or market trends. They should never be used as a shortcut for not doing proper analysis.

  10. Communicate the primary solution to all, with implementation steps. Decisions without a viable implementation plan are counter-productive. Thus the best entrepreneurs map out an implementation plan, and make sure everyone understands what has to be done and how to do it. Finally, they monitor and manage the rollout, with required pivots.

In fact, the business decision-making steps and process have to be uniquely applied to three situational states – the current state, a future state, and the transitional state in between. The author defines a detailed framework and process that fits all three of these to make the best decision possible, whether it be strategic or operational. It’s an art and a science that will make or break your business. How much of your time do you spend now working on your business?

Marty Zwilling

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Wednesday, February 24, 2016

10 Ways To Turn Entrepreneur Failures Into Success

how-to-defeat-failureIf you can’t deal with failure, then the entrepreneur lifestyle is not for you. Don’t believe that urban myth that all you need is a good idea, a little fun work, and the money will start rolling in. When you are pushing the limits, nobody gets it right the first time, or even maybe the tenth time. That’s why the term “pivot” was invented, so you don’t have to call every change a failure.

Thomas Edison called every failure an experiment (now it would be a pivot), and each one told him successfully what didn’t work. Mistakes are more insidious than failures, and should be avoided at all costs (use your advisors and other resources). Mistakes are things you do on purpose, with negative consequences already known, because you didn’t do your homework.

Failures and pivots come in all shapes and sizes, but entrepreneurs need to adhere to a common set of principles for failing productively, leading to ultimate success:

  1. Don’t allow the same failure twice. This is called the “fail forward” strategy, or learning more about your business from each failure, as well as developing the confidence and commitment to make decisions and take responsibility for them regardless of the results. Repeating the same failure, or the common failures of others, is a huge mistake.

  2. Keep the cost of failure survivable. Keep the key elements in your strategy and rollout small enough and tested early, so that a single failure will not bring down the rest of your startup. This is often called the “fail fast” strategy, with the ability to adapt and iterate to success, based on learning.

  3. Make each move forward a planned experiment. Don’t rely on random opportunities and default decisions to set your strategy. The idea is that there is a right way to go wrong, and “failing smart” allows you to learn something from each pivot. Overt decisions, based on rational thought and real data, will always trump no decision.

  4. A credible failure makes an entrepreneur more investable. Emanating from Silicon Valley, there is a culture of “fail often,” and you’ll succeed sooner. But be aware that failures are analyzed as closely as successes, to see if they represent real innovation, real learning, and a rational decision process, indicating success potential.

  5. Actively seek and don’t ignore critical feedback. Successful entrepreneurs assume some adaptation and change will be required, so they actively seek feedback, spot failures and fix them early. They avoid the instinctive reaction of denial, or the stubbornness of charging straight ahead despite evidence that a strategy is not working.

  6. Determine not only what went wrong, but also how to do it right. Avoid random trials and errors. If you don’t learn from a specific failure, it becomes a mistake that is destined to happen again. Every failure deserves a root cause analysis, so that you end up fixing the real problem, and not just a symptom.

  7. Document and update business processes after each failure. Too many failures in startups result from key business processes not being documented at all, or being non-functional. Failures should result in better processes and better documentation, or they become mistakes destined to be repeated.

  8. Never blame bad luck, poor timing, or misjudgment. These are most often excuses, rather than reasons for a failure. There will never be a perfect time to launch a startup. There will always be uncertainty, and we will always be humans, using judgment calls in lieu of knowledge and real information. Explore the root cause of every failure.

  9. Listen to conventional wisdom and advisors, then chart your own path. New paths are the key to success for an entrepreneur, but unless you listen and do your homework, you will be unable to recognize the old proven paths to perdition. Blindly following old paths, or ignoring known dangers, are unforgivable mistakes.

  10. Practice resilience as the best antidote to failure. Thomas Edison had resilience, bouncing back after 1000 failures on the light bulb alone. Many experts believe that the primary cause of startup failure is not running out of money, but quitting too early. If you accept failure as learning, it’s not discouraging to keep adapting until you find success.

Success may not really always start with failure, but the wise entrepreneur should expect it, embrace it, and capitalize on the learning opportunity. In reality the difference between success and failure in a startup is very small – for example, being acquired in the throes of a bad experiment might be seen as a success or a failure, depending on your perspective. In the entrepreneur lifestyle perspective, every learning experience is a success, so failure is not an option.

Marty Zwilling

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Monday, February 22, 2016

8 Ways To Survive And Prosper Around Negative People

cat-unhappy-faceTo be an entrepreneur, you have to have a thick skin and not be defensive to customer feedback and constructive criticism. On the other hand, no entrepreneur should tolerate negative vibes and complainers on their own team. The challenge is to understand the difference between these two situations -- and to respond effectively to both. You can’t reinforce negative thinking and stay positive.

Even active listening to negative team members and partners, as you would with customers, will perpetuate the toxic habit. In addition, the other members of your team may become infected with the same negativity and will erode the passion and innovation that you need to compete and survive. In my experience, good entrepreneurs proactively minimize negativity as follows:
  1. They stifle their own occasional negativity in front of the team. We all get frustrated when the economy turns against us, investors can’t be found or a customer turns into a nightmare. In these cases, you must keep your thoughts to yourself, and be the role model for positive creative solutions. Your team will practice what they see and hear.

  2. Extract and highlight potential positives from every negative. If your team is struggling with quality problems before shipment, remind them that it’s great to have found these problems before customers could be impacted. The alternative is that everyone, including yourself, will eventually feel defeated and de-energized.

  3. Turn responsibility back to the complainer and ask for solutions. Sometimes, team members are frustrated and just want to vent, so asking them to bring you solutions, not just problems, will set a more positive tone and may circumvent future negative outbursts. For those who don’t learn, it’s time for swift job reassignment and performance counseling.

  4. Don’t accept excuses for any negative outcomes. Excuses are a way of not accepting full responsibility for actions, if there is a negative outcome. Even worse, some people believe negativity is a way of impressing everyone with their wisdom. Make sure that complainers understand from your reward system that excuses don’t mitigate failures.

  5. Restrain from engaging complainers at their level. If none of these approaches work, it’s better to defer the discussion to another time and place with no emotion. Trying too hard to convert people to the positive view will likely result in you becoming the target, or permanently breaking the relationship. It’s better to listen in silence.

  6. Remove yourself physically from a toxic environment. Presence without engagement may be taken as tacit concurrence, so it’s best to exit the situation to somewhere neutral and quiet. The last thing you need is to be brought down to the same level, and lose your ability to provide positive leadership to the team.

  7. Overlook occasional lapses in yourself and others. Even the best professionals and leaders find themselves being negative occasionally. It’s human nature, in times of stress, when people are physically or mentally exhausted, or multiple deadlines loom. The challenge is to make lapses less frequent as a habit rather than more frequent.

  8. Build a personal negativity shield from your confidence and passion. All business leaders as well as innovative thinkers learn to deflect negative energy with an invisible cloak that allows them to move forward despite negative feedback from the crowd. They continually remind themselves of their vision to make the world a better place.
When negativity is positioned by team members as constructive criticism, be sure to ask for the constructive positive part of the message, offered in a friendly manner. Living with complainers in any business is a burden you don’t need, and it impacts everyone’s performance and mindset. Just as a positive mindset is infectious and brings the whole team up, a few negative ones will sicken your whole team and jeopardize your business. You can’t afford that kind of help.

Marty Zwilling

*** First published on Entrepreneur.com on 02/12/2016 ***

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Sunday, February 21, 2016

8 Big Business Tenets That Don't Work For Startups

big-company-tenetsAs an advisor to many startups, I often see business principles espoused that may make sense for a large and established business trying to foster innovation but won’t work for a new startup. I’m a strong proponent of new entrepreneurs starting with a big vision, and believing anything is possible -- but I’m also a pragmatist who believes in factoring some realism into any plan.

The fact that entrepreneurs tend to think outside the box with passion and persistence is a big positive, and it's clearly the reason many large companies now fund or buy successful startups for new innovations rather than depend on internal projects. On the other hand, large companies with existing resources and qualified people have different rules for innovative efforts.
  1. Great ideas will have no trouble getting funded. Big businesses fund internal ideas with the money and people they already have. Startups don’t typically find any funding from investors until they prove they can execute, have a proven model and are ready to scale. Entrepreneurs who expect funding at the idea stage are usually disappointed.

  2. First-to-market is a key competitive advantage. Too many startups are proud of being the first-mover in a new market -- only to be overrun by big gorillas with more resources who see the startup traction. First-to-market is only a sustainable advantage for a large company, like Apple or Google, with the resources to back up their first move.

  3. Always start with a Big Hairy Audacious Goal (BHAG). This approach works for big companies who struggle to think outside the box and need a long-term goal for evolving their business. Startups are better served by attacking an existing painful problem or unmet need with near-term as well as long-term potential, placing smaller bets faster.

  4. Don’t start until you know the risks are minimized. Large companies have lawyers and executives who get paid to reduce risk to near zero. Entrepreneurs have learned that there are no rewards without risk. If they want growth and sustainability, they often increase the smart risks, meaning more risk for growth or competitive advantage.

  5. Successful projects are well-staffed and methodically executed. This is a business axiom that works well when the scope of a project is well known. For a startup, nothing is well-known, and staffing is non-existent. Entrepreneurs must assume that initial iterations will require several pivots, and money and people will always be a struggle.

  6. Hire or train a specialist for each of the key elements. Big companies depend on specialists and experts, while startups need more generalists. Startups can only afford a few people, so each is expected to do several or almost any role. An entrepreneur founder may be a technology expert, but successful ones are also good businessmen.

  7. If we build a great product, customers will find it and us. Great companies, like Apple or IBM, have a large customer base and quality products, so new technology along the same lines will be found. A startup has no brand, so new products, no matter how great, need real marketing, social-media advocates and education efforts to attract customers.

  8. Keep innovations in stealth mode until ready to ship. Hiding new solutions makes sense for large companies who can be sued for “pre-announcing” a new product to stall the market or kill a competitor. Smart startups make their intentions visible at the idea stage to test customer interest and make corrections before spending real money.
As an entrepreneur, if you are a recent graduate from the corporate world, or have just acquired a prestigious master of business administration degree, be careful when applying the tenets from the business world textbooks to your first startup. The principles of business are critical to both, but startups are more of an adventure into the unknown. It’s a fun journey -- but don’t blindly follow all big company tenets.

Marty Zwilling

*** First published on Entrepreneur.com on 02/10/2016 ***

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Saturday, February 20, 2016

7 Indicators Of Employee To Entrepreneur Potential

employee-to-entrepreneurAs a mentor to aspiring entrepreneurs, and having graduated from a big company myself, I talk to many people who have spent years struggling up the corporate ladder who dream of jumping ship and becoming an entrepreneur. I typically suggest that the grass always looks greener on the other side, and the move from employee to entrepreneur is very risky and not for everyone.

In fact, in my experience, many current employees simply don’t have the attributes and mindset to be an entrepreneur. My challenge is to be more positive on who could make the leap. In that context, I was impressed with the specifics offered in a new book, “Be Your Best Boss,” by William R. Seagraves, who has also successfully lived on both sides of the fence like me:
  1. You know how to play nice with others in business. People skills don’t come easily, especially if you are an introvert, have a big ego, or are prone to emotional outbursts. However, working in a corporate setting for years can smooth out highs and lows, shaping you into someone who’s comfortable dealing with new people and situations.

  2. You may be smarter than your boss. After surviving and learning from several corporate regimes, and managing a few yourself, you start to recognize the skills and knowledge required to run a business. If you can’t wait to control the results yourself, and avoid the dysfunctions above you, your employee to entrepreneur potential is high.

  3. You serve as a role model at work and home. If you are at a place in life where dependents and other employees already look up to you, it means that you have overcome the fear taking the lead in tackling obstacles and taking control of your life. Entrepreneurs must be the model of personal empowerment in their new venture.

  4. You’ve got the thick skin of a rhino. Wisdom also comes in the form of a tough skin. After years of learning not to take setbacks personally, you have managed to flourish with your ego on the line. You have learned to adapt, develop a backbone and the stamina to get through business hurdles, and accept how much work is needed for success.

  5. You’ve had practice managing money. At some point in your corporate career, you’ve likely had to create and manage a budget for a project, department, or division. The rules of accounting don’t change just because you’re the owner. You now understand the need to account for every dollar, and find ways to fund your spending before and after revenue.

  6. You have some savings you can leverage. A retirement fund or savings for a rainy day built from a corporate job puts you in an enviable position of starting a business without begging from friends and family. It’s also the only way to truly run your own business, rather than trying to satisfy hungry investors or friends who often change their mind.

  7. You have a passion that you would like to turn into cash. If you see your passions as mere hobbies, you could be missing the boat. These interests could be your ticket to a career of doing something that ignites a fire inside you every day, and makes money, versus a routine that you bores you to death. It’s your chance to build a legacy of love.
Everyone who feels stuck in a rut at work, is recently unemployed, or is hanging on to an existing job and sanity for dear life, needs to take a hard look at themselves relative to these potential positives. If you can’t find an enthusiastic yes for most of them, perhaps it’s time to appreciate the positives of a regular weekly corporate paycheck for predictable work you know how to do.

The old American dream, of plenty of challenging work and benefits for all, is gone. We can either lament the passing of the “way we were,” or we can slip into the new American dream, and view it as a blessing, before others steal your opportunity. You might even be able to make a difference, like feeding the poor, or cleaning up the environment. Welcome to the age of the entrepreneur before it gets too crowded!

Marty Zwilling

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Friday, February 19, 2016

10 Ways To Use Analytics To Supercharge Your Business

BigData_predictive-analyticsTraditional business intelligence (and data mining) software does a very good job of showing you where you’ve been. By contrast, predictive analytics uses data patterns to make forward-looking predictions that guide you to where you should go next. This is a whole new world for small businesses seeking enterprise application opportunities, as well social media trend challenges.

According to Eric Siegel in his newly updated book “Predictive Analytics,” it’s the power to predict who will click, buy, lie, or die. He calls his book a primer, but his real-life examples illustrate well how predictive analytics unleashes the power of data, and how “big data” embodies an extraordinary wealth of experience from which to learn.
Eric provides many examples of potential and real application areas that are ripe for predictive analytics, but my view is that smart entrepreneurs can extrapolate these to hundreds more, just waiting to be tapped. Here are ten examples to get your creative juices flowing:
  1. Targeted direct marketing. The challenge is to increase response rates and propagate a single view of the customer, by integrating customer data from multiple Web and social media interactions. Then companies can determine promotional effectiveness by narrowly defined customer segments, by location, or by delivery channel.

  2. Predictive advertisement targeting. Online, everyone wants to know which ad each customer is most likely to click. Then they can display the best ad, based on the likelihood of a click, as well as the bounty paid by its sponsor. Everyone wins, since consumers hate being presented with ads that are irrelevant to them.

  3. Fraud detection. We all want to know which transactions or applications for credit, benefits, reimbursements, refunds, and so on, are fraudulent. On the other side of the table, businesses need to minimize false insurance claims, inaccurate credit applications, and false identities.

  4. Investment risk management. Whether you are contemplating an investment in your favorite startup, or a little-known stock on a public exchange, there is “big data” out there that can’t possibly be evaluated by you without predictive analytics. Companies need the same service on partner and acquisition candidates, even vendors.

  5. Customer retention with churn modeling. Every business wants to predict which customers are about to leave, and for what reasons, so they can target their retention efforts. New one-time customers may be incented to return. Without predictive targeting, a retention campaign may cost more than it gains.

  6. Movie recommendations. Movies are selected, or recommended to customers, based on past reviews, related interests, or analysis of Twitter comments. On the movie production side, it’s time to start doing analyses on movie scripts, based on reaction to similar movies, to predict box office revenue and cities to hit.

  7. Education – guided studying for targeted learning. Every quiz show aficionado would like some guidance on which question areas need more study, and every student needs help on how to spend his limited study hours more effectively. Schools need the same analysis to provide more effective teaching media and techniques.

  8. Political campaigning with voter persuasion modeling. I’m sure every campaign would love to know which voters will be positively persuaded by specific contacts, such as a phone call, door knock, flier, or TV ad. The rest of us would rather not be annoyed by the multiple contacts of the wrong type.

  9. Clinical decision support systems. With costs escalating in healthcare today, it’s more important than ever to determine which patients are at risk of developing certain conditions, like diabetes, asthma, heart disease, and other lifetime illnesses. Additionally, predictive analytics can help make the best medical decision at the point of care.

  10. Insurance and mortgage underwriting. Predictive analytics will allow auto insurance companies to accurately determine a reasonable premium to cover each automobile and driver, which helps their bottom line, as well as ours. A financial entity needs the same ability to more accurately assess a borrower's ability to pay before granting a mortgage.
Some experts group predictive analytics in the new term “business analytics” intending to define an umbrella group including data warehousing, business intelligence, enterprise information management, enterprise performance management, and analytic applications. But whatever the name, the opportunity is still there, and it’s large.

According to a recent Markets and Markets report, the predictive analytics market is growing at a compound rate of 27.4%, and is expected to reach $9.2 billion by 2020. Despite all this, the best opportunity for you is still the one you love and know the best, and one that no one else has recognized. The possibilities are endless, so why haven’t you started yet?

Marty Zwilling

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Wednesday, February 17, 2016

10 Setup Steps To A Compelling Startup Presentation

colleagues-startup-pitchThe average length of a funding pitch to Angel investors is ten minutes. Even if you have booked an hour with a VC, you should plan to talk only for the first fifteen minutes. The biggest complaint I hear from investors is that startup founders often talk way too long, and neglect to cover the most relevant points. Or they get sidetracked by a technical glitch due to poor preparation.

If you start by pitching your extended life story, that’s the wrong point. Equally bad is a full tutorial on your new disruptive technology. Investors are more interested in your solution and your business, rather than your technology. Here are some tips on the right approach and the right points to hit:
  1. Match your material to the time allotted. If you have ten minutes, that means no more than ten slides. Then match your pace to cover all the material. I’ve seen several presentations that never moved past the first slide before running out of time. An obvious effort to keep talking after the time limit won’t save your day with investors.

  2. Remember you are pitching to investors, not customers. Some entrepreneurs seem to think that their product pitch is also their investor pitch. I outlined what investors expect to see in an old article “Adding Slides Does Not Enhance Your Investor Pitch.” These are tuned to the ten-minute limit, but are just as adequate if the investor gives you an hour.

  3. Check the setup and set the stage. If the projector doesn’t work, or won’t connect to your laptop, you are the one that loses. Have at least one backup plan, such as copies of your slides to hand out and discuss, in case all else fails. The first words out of your mouth should be “Can everyone hear me, and read the screen?”

  4. Research your audience before presenting. The most respected presenters are the ones who have done the research before-hand to know who is in the audience, and have tailored their message to these interests. If you know only a few people in the audience, acknowledge them, and convince the others that this is not a random cold call for you.

  5. Dress appropriately and professionally. It’s always better to be over-dressed than under-dressed. Business casual is the standard. Remember that most investors are from a generation where faded and torn jeans were on the wrong side of success in business.

  6. Let the top person do all the talking. Tag team shows don’t work in short venues. More importantly, investors want to see and hear the top guy – typically the founder or CEO. They will be judging his aptitude, his character, and his passion. Others can be present for effect, but deferrals to team members for answers are a sign of weakness.

  7. First, get their attention with your elevator pitch. Start with the problem and your solution. These are your hooks, and they better be covered in the first 30 seconds. State your value proposition, and what specifically you are offering to whom. Skip the acronyms, history of the company, and the colorful autobiography.

  8. Lead with facts, but skip the details. Skip the generic marketing phrases like more user friendly, massive opportunity, and paradigm shifting. “According to Gartner, the opportunity is 100 million by 2016, with 12% compounded growth.” Investors don’t need to know the implementation details of your patent or customer support plan.

  9. Don’t forget to ask for the order. How much money do you need, and what percent of your company are you willing give up for that amount? If you want investor interest, the business parameters of a deal should be presented as clearly as the product parameters.

  10. Close by asking for questions and promising follow-up. Acknowledging feedback and actually listening for ways to improve will always lead to a positive impression. You should answer questions with data if you have it, but avoid defensive responses in favor of a promise to follow-up after the meeting.
Most importantly, don’t forget to practice, practice, practice. Just because you have given a thousand pitches in your life, don’t assume you can finesse this one by reading the bullet points in real time from the slides that your team put together for you. You need to be totally familiar and comfortable with your pitch to give it effectively.

Forget the theory that you can “rise to the occasion” and impress everyone with your dynamic speaking ability. If you are pitching the wrong point in the wrong way, the occasion will be more your demise rather than the rise of your dream.

Marty Zwilling

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Monday, February 15, 2016

7 Keys To The Right Decision The First Time, Every Time

right-decision-Blank_ForkEvery entrepreneur has to be a decision-maker, even with information overload, emotional employees, angry customers and competitors hovering from every direction. Making a decision without thinking or over-thinking things to the point of no decision are both deadly in business. The challenge is to find the right balance and make good and timely decisions every time.

It’s a tough challenge. According to Ohio State researcher Paul Nutt, business decision-makers today fail about half the time on initial decisions for their organizations. Examples often cited include decisions which led to the demise of Pets.com, Excite, and WebVan. Although these cases involved strategic thinking, operational decision mistakes are even more frequent.

Much has been written about the thinking process of more successful decision-makers, including Warren Buffett and Elon Musk. Some reserve time daily for reflective thinking despite a busy and hectic schedule, while others use regular sabbaticals away from the office for a mental refresh. Yet they all seem to have similar thinking habits in their day-to-day decision making process.
  1. Stop to think before jumping to a decision. Especially in a crisis or under stress, it’s tempting to make a snap decision based on a gut feeling or prior similar experiences. As leaders, the approach you take to asserting control and making decisions sets the tone for others to follow. Set the model for always thinking first and acting with deliberation.

  2. Focus fully but selectively on issues of consequence. Trying to spread your attention across many issues concurrently does not work. First select only those issues which are important to you, and delegate the remainder. Then give the selected matters your full attention for a timely and thoughtful decision. Don’t over-think any issue to no decision.

  3. Use person-to-person interaction to confirm your thinking. Most business decision issues are complex enough to suggest the need for direct input from a key constituent or to test your understanding. While text messaging and email may seem more expedient, these do not convey the tone or body language you need to make the right decision.

  4. Allocate contiguous time and process for critical decisions. Many short dialogs in chaotic environments separated by other activities do not facilitate deep thinking or lasting decisions. The cost of recovery from a bad decision can far outweigh the effort of managing the thinking process with the right people, the right place and the right time.

  5. Think past a potential decision to a plan for execution. Planning the next steps, before finalizing a decision, will validate your thinking or perhaps clarify that more work is required. Decisions made without proper consideration for execution consequences often lead to more serious and continuing issues. Extrapolate your thinking far into the future.

  6. Communicate your thinking as you deliver a decision. Decisions delivered as edicts are never satisfying and may actually cause a backlash that negates a good decision. Respected leaders have no qualms about summarizing their thought process on issues and take the time to effectively communicate the key points to relevant constituents.

  7. Manage and monitor the actual resulting implementation. Even the best thinking and a good decision can be undermined by unforeseen events or people misunderstandings. Small course corrections made quickly and follow-up communication can forestall major new issues and make your decision the right one the first time.
The ability to make the right decisions on a timely basis is what defines you as an entrepreneur. It’s not a skill that anyone is born with, and it is one that you can definitely learn and improve your habits over time. For new entrepreneurs, I recommend that you seek the assistance of a mentor that you trust and not be afraid to ask for assistance from your peers and senior advisors.

While new technology allows you to act and react more quickly than ever before, none of these tools are a substitute for thinking, deliberating and making your own decisions. Ultimately, every business is about people interacting with other people. Your challenge is to convince them that they are at the center of your thinking.

Marty Zwilling

*** First published on Entrepreneur.com on 02/05/2016 ***

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Sunday, February 14, 2016

Investors Love To Fund Solutions That Are Scalable

investor-cashInvestors will tell you that they love to put money into startups that are scalable, and ready to scale. But what does that really mean? Simply stated, it means that your business has the potential to multiply revenue with minimal incremental cost. Ready to scale is when you have a proven product and a proven business model, about to expand to new geographies and markets.

A software product is a classic example of a scalable solution, since it costs real money to build the first copy, but unlimited additional copies can be quickly cloned for almost no incremental cost. Most consulting services, like marketing, are not scalable, since they must be delivered by experts, and cloning experts is slow and expensive. Investors don’t invest in services startups.

Here are some pragmatic tips on how to make your startup more scalable and investable:

  1. If you need investors, start with a scalable idea. Just because all your buddies think an idea is cool, that doesn’t mean it is scalable. Investors like ideas based on market research from outside experts, like Gartner Research, proclaiming a billion dollar opportunity with a double digit growth rate. These are more likely scalable and investable.

  2. Build a business plan and model that is attractive to investors. I see too many business plans that are really product plans for customers, touting free services and long feature lists. It’s hard to build and scale a business on free high-support products. Scalable businesses have high margins (over 50%), low support, and minimum staffs.

  3. Use a minimum viable product (MVP) to validate the model. No product, even with a large opportunity, is ready to scale until you can show it working, with multiple customers paying the full price, to validate the business model. Count on multiple pivots with real customers, before you get it right, before you ask for investor money to scale.

  4. Build a strong team to take yourself out of the critical path. If you are still spending most of your time working “in” your business, rather than “on” your business, then you are not yet ready to scale. Show that you have and can continue to hire the right people to run the scaled business without you being everywhere and making every decision.

  5. Outsource what is non-strategic to optimize leverage. Smart entrepreneurs never outsource their core competency, and never rely on intellectual property they don’t own. They also don’t try to do everything in-house, since growing all the expertise you need is slow and expensive. Scaling requires leveraging outside resources.

  6. Focus on marketing and indirect channels to get the message out quickly. Direct marketing is generally not scalable, especially on low-cost high-volume products. These days, heavy marketing is always required to make your startup visible and scalable amid the flood of information from all sources to all customers. Word-of-mouth does not scale.

  7. Automate to the max. A startup that is labor intensive and staff intensive is not scalable. Start early looking at production automation, proven process technologies, and minimum staff approaches, before you begin scaling. Document processes and build online training videos so new people can come online quickly and consistently.

  8. Attract and relish investor funding. Organic growth (reinvesting profits only) will not allow you to build the “hockey stick” growth curve desired by premium buyers at exit, or financial analysts positioning you for public stock sale. You will give up some control with investors, but their expertise and experience is usually more than worth the cost.

  9. Consider all possibilities for licensing and franchising. Many markets already have major players, so figuring out how to make them partners is much more effective for scaling than trying to out-market them. In other areas, once you have a documented and proven model, franchising will let you scale much faster than managing every location.

  10. Define a business that is open-ended and continuously improving. If your startup sounds like a one-trick pony, it won’t be perceived as scalable. Don’t try to solve every customer problem at the same time, but build a strategy and plan that shows continuous innovation, leading to follow-on complementary solutions well into the future.

Let me make one thing clear – not everyone needs or wants investors, or a highly scalable business. Ninety percent of small businesses today are family businesses, which can be very successful, satisfying, and small by design. It’s a strategic decision. If your passion is to change the world, or even dominate an industry, scalability is the only way to multiply your arms and legs, and the hours in your day. Are you feeling the need yet in your own startup?

Marty Zwilling

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Saturday, February 13, 2016

10 Answers That Make Your Startup Plan Investable

how-to-write-a-great-business-planEntrepreneurs who are looking to attract investors need to develop and pitch a plan -- preferably written -- that answers every potential investor question about your startup before it is asked. You may be quick on your feet with answers, but if investors have to ask any of these questions, you raise the specter of hiding something, or of not being astute enough to know what’s important.

Either of these qualms can ultimately sidetrack your startup as not worthy of investment, so it pays to do your homework on what you say and how to communicate effectively. As a startup advisor and investor, I recommend a pitch deck with about 10 slides backed up with a written business plan of approximately 20 pages, both containing quantified answers to the following key questions.
  1. What is the business problem you are solving? This may seem obvious, but I still hear too many “solutions looking for a problem.” Just because your technology is exciting and potentially disruptive doesn’t mean you are ready to build a business. Investors want to hear about customers with money who have a painful problem that you can solve now.

  2. What is your specific solution and value proposition? Investors are looking for a concise description of your product or service without technical jargon or fuzzy marketing terms with value quantified in customer terms. This is also the place to first mention patents and any other differentiators that put you ahead of competition.

  3. How big and growing is the total market and your target segment? Investors will be looking for a sizing validated by industry analysts large enough for good investment returns. They like billion-dollar markets with double-digit growth rates. They expect to see focus, and evidence that your data is based on market experience and expertise.

  4. How does your business model make money? Good causes such as feeding the world’s hungry may help your marketing but may not sustain a business. The business model has to clearly define who is your customer, market penetration expected, how much customers pay versus total costs and the investment required to sustain cash flow.

  5. Who are your competitors, and how do you win? Every new offering has competition and alternatives, so it’s not credible to claim no competitors. Name the three top ones, and present your sustainable advantage as well as barriers to entry for new startups. Don’t degrade competitors, but use their specifics to highlight your advantages.

  6. What are your specific marketing and sales plans? Here I would expect to see a timeline for rollout, with specific milestones and partnerships. You need to identify pricing details, sales channels, strategic partners and a customized marketing plan consistent with your industry and target segment. Highlight elements of traction you already have.

  7. How is your team uniquely qualified for this venture? A highly investable team has prior experience in the same business domain as well as credentials and skills in their roles. Investors invest in people more than the idea. As a team, they cover all key skills required. Include advisory board member qualifications and key industry connections.

  8. How big is the funding request, and how much equity will you give? Since investors are buying a part of your company (not your product), this is the most important question, and is one often not answered. Justify funding requirements, use of funds and specify a current valuation estimate. Quantify founder investments, both cash and sweat-equity.

  9. What are your forecasts for revenue, expenses and cash flow? Forecasts are evaluated as a level of commitment and a measure of your business savvy. Numbers should be aggressive, but not irrational, based on market size and conditions. I ask for five-year projections, since that’s the average time before investors can cash out.

  10. How much and when do you foresee investors getting a payout? Technically, this is your exit strategy, usually a merger and acquisition (M&A) or initial public stock offering (IPO). If you don’t plan a liquidity event, you won’t find many investors interested. Find a comparable company to show potential sale value and return on investment (ROI).
The best answers are not the longest ones or the ones with the most graphics. Serious investors who have heard a 1,000 pitches and read hundreds of plans are most impressed with founders who make the right points in the shortest amount of time with the least prompting. The only question you want to hear is -- “How soon can I sign up?” It’s really not that difficult.

Marty Zwilling

*** First published on Entrepreneur.com on 02/03/2016 ***

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Friday, February 12, 2016

6 Steps To Refocus Your Business On Customer Delight

STARBUCKS COFFEE COMPANY - True North Blend™ Blonde RoastHaving the best solution is a good start these days, but a solution alone is no longer enough to keep customer attention and loyalty. They expect to be surprised and delighted as well by their pre-purchase experience and post-purchase interactions. The most memorable businesses, like Starbucks and Apple, no longer sell products, they sell ‘experiences’ with a product at the center.

The challenge is to transform and hardwire your entire team to think in these terms, rather than the default focus on distinct towers of product quality, closing the sale, or fixing a complaint. I just finished a new book, “Driven to Delight,” by Joseph A. Michelli, with inspiring stories on how one well-known company, Mercedes-Benz, made the transition and is profiting as a result.

It’s a tough transformation for an existing business, requiring a strong leader and lots of effort. For new entrepreneurs and startups, I recommend an initial focus on these six steps from the very beginning to set the right culture and save the tremendous cost of a transformation and risky competitive catch-up later:
  1. Start with an overriding top-down focus on customer experience. The right message must be delivered from the top, by your words and your actions. Start with feedback from real customers, set measurable objectives, and make sure rewards and incentives are tempered by customer experiences, rather than only internal thresholds.

  2. Find the best of the best models, and aim even higher. Look inside and outside your industry for role models, and apply some innovative thinking to put you ahead of the game tomorrow, rather than yesterday. Your competition is global, so today’s customers are demanding world-class service. Set the expectation for continuous improvement.

  3. Make sure the team understands the ‘why’ and the ‘how’ will follow. Since customer experience is not a fixed process, it’s most important to get buy-in on the ‘why’ first. The ‘how’ will follow as each team defines how their processes intersect with those of others. Your objective should be for everyone to look for opportunities to say yes rather than no.

  4. Tie customer experience to all compensation and recognition. Customer-driven compensation is now the norm in most industries, not just consumer-facing ones. You see the exceptions being ridiculed daily in online media – employees getting bonuses despite customer pain and bailouts. Strive for customer visibility on the positive side.

  5. Practice is better than training on what saying ‘yes’ looks like. Give your front-line people the mission and freedom to practice delighting customers. Providing scripts and reading manuals won’t do it. Ask key team members to step outside the company and record their experience as a customer looking in. Then let them apply their own input.

  6. Collect and publish compelling stories of customer delight. Real stories are inspiring and more powerful than any executive or marketing messages, both for team members and potential new customers. Stories illustrate concepts and evoke emotions in a way that even the best facts and figures can’t. They highlight the impact of ‘yes’ to all.
A culture of providing great customer experiences doesn’t happen by chance, and it requires more than just excellent operational procedures. Surprising and delighting customers as the new norm requires a backdrop of strong leadership, deliberate planning, and integrity in execution. It requires brand-building at its best.

According to a recent American Express survey, more than 3 out of 4 customers say they have spent more with a company and recommended it to friends because of a history of positive experiences. If you surveyed your customers today, what percent of your customers would put you in the winning category?

Marty Zwilling

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Wednesday, February 10, 2016

10 Survival Strategies From Winning Team Leaders

PHC_Debate_TeamDid you ever wonder why some entrepreneurs always seem to have all the luck and success, while others never seem to catch a break? As an angel investor, I quickly learned that luck has very little to do with it, and I now look for some personal characteristics and leadership styles that separate the potential winners from the losers.

These differences are the reason that investors say that they invest in people, rather than ideas. As I was reminded recently in the classic book by Dennis Perkins, “Leading at the Edge,” this isn’t a new concept. He illustrates this by comparing the acts of numerous teams which faced the edge of life and death as early Antarctic explorers in the 1800s.
He was able to identify ten strategies that were the common threads to survival in the winning explorer teams, which I believe apply equally well to the survival and success of business startup teams today:
  1. Never lose sight of long-term goals, but focus real energy on short-term objectives. Don’t be afraid to pivot, and commit to new objectives with as much passion and energy as the original. Andy Grove of Intel fame started making memory chips, but switched to microprocessors with a vengeance when Japan totally undercut his pricing.

  2. Set a personal example with visible, memorable symbols and behavior. Under the stresses of a startup, visible leadership cues can make the difference between success and failure. When McDonald’s was still a small company, Ray Kroc, the CEO, had a penchant for asking a store manager to help him clean up trash in their parking lot.

  3. Instill optimism and self-confidence, but stay grounded in reality. That means you must first find optimism in yourself. Then it extends to the hiring process. Herb Kelleher, while CEO of fledgling Southwest Airlines, said he only wanted people with positive attitudes. He also famously said," We don't do strategic planning. It's a waste of time."

  4. Take care of yourself: Maintain your stamina and let go of guilt. Evidence shows that effective entrepreneurs have high levels of energy, and handle stress well. But no one is superhuman. I once worked for a CEO of a startup company who insisted on working 20 hours a day, until a health crisis almost killed her, and did kill her company.

  5. Reinforce the team message constantly: “We are one – we live or die together.” Teamwork is the hallmark of high-performing startups. Establishing a shared identity is the first step to creating unity. The Google team stayed tight as they developed the technology, first working out of Larry Page’s dorm room at Stanford, then a garage.

  6. Minimize status differences and insist on courtesy and mutual respect. CEOs who talk, and really listen, to everyone in the organization gain the highest reputation. Amazingly, Tim Cook, current CEO of Apple, has surpassed Steve Jobs high score, and was ranked by a Glassdoor Survey as the #1 respected CEO as voted by employees.

  7. Master conflict – engage dissidents, and avoid needless power struggles. Some entrepreneurs go to great lengths to avoid interpersonal friction, or engage the wrong way. Those of you who viewed the movie The Social Network, saw some examples of entrepreneurs dealing with conflict poorly, almost leading to the demise of Facebook.

  8. Find something to celebrate and something to laugh about. Especially under the constant pressures of a startup, the ability to lighten up, celebrate, and laugh can make all the difference. Herb Kelleher, mentioned earlier, is one leader who also understood the power of humor in business, with his own antics, and focus on “fun ware.”

  9. Be willing to take the Big Risk. Risk aversion does not always result in disaster, but neither does it create change. Risk takers make things happen. Think of the risk taken by CEO Todd Davis of LifeLock when he posted his Social Security number online, to assure customers the he could protect them from identity theft. It worked.

  10. Never give up – there’s always another move. Rather than expecting things to go right, entrepreneurs have to assume things will go wrong, and solutions are elusive. Colonel Sanders started at a late age to build his chicken recipe into KFC (Kentucky Fried Chicken). It took two years of persistence to get the money. The rest is history.
Investors (and team members and partners) find that it’s more effective to assess an entrepreneur’s fit to these personal characteristics than it is to assess the real potential of an idea, or the probability of good luck. We listen to you and judge how many of these are practiced by you. When it’s time for due diligence, we will talk to your team. Their perception is the only reality. What do you think they will say?

Marty Zwilling

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Monday, February 8, 2016

Entrepreneurs Need More Relationships And Fewer Friends

business-relationshipsSuccessful entrepreneurs understand the difference between a good business relationship with more people and having more friends. In fact, the focus on social networking platforms, starting with Facebook, has destroyed the meaning of the word friend and even changed it from a noun to a verb. It’s now common to have hundreds or thousands of friends online -- but no relationships.

In the world of entrepreneurs and startups, professional relationships are critical. You can’t start a business with friends alone. You need business partners, investors and customers. Of course, we all need friend relationships in our private lives, and some of these may evolve from or lead to business relationships. Here is my summary of how business relationships relate to friends.

  1. Everyone needs private friend relationships. Most psychologists agree that starting from a very young age, friend relationships are critical to building social skills and lead to a balanced view of morality, integrity and right versus wrong. These should never be confused with social-media friends that you have never met or hardly know.

  2. All business relationships need not be friends. The best professional relationships may also involve friendship, but entrepreneurs need to be able to manage relationships with competitors, partners and customers who have no interest in being friends. Friends are motivated to help you, while business people want to help their business.

  3. With friends, quality is more important than quantity. With maturity, most people actually shrink their circle of friends to focus on a few trusted ones who become confidants. There is some evidence that the average circle has grown smaller over the years, as the level of trust in other people has dropped from 77 percent to 37 percent.

  4. In business, you can’t have too many relationships. More professional connections means more credibility, more insight into the market and more customer clout. This fact is the basis for the business axiom -- “It’s not what you know, it’s who you know.” Many entrepreneurs will admit that they get almost all of their business through relationships.

  5. True friendship requires a personal emotional connection. Friendship is a person-to-person relationship involving mutual affection, the ability to be oneself, express feelings and make mistakes without fear of judgment from the friend. Many entrepreneurs find their role lonely due to the fear that business and friendships simply don’t mix well.

  6. Business relationships depend on accentuating the positive. The first rule of business is that spilling your troubles won’t help your business, your leverage or your relationship. Some entrepreneurs assume that they can make everyone their friend by exposing shortcomings -- only to find out that these are often used against them.

  7. Social networking friends have real business value. Free mobile and online technologies will find friends at no cost, with no emotional investment required, so they have very little personal value. Ironically, these friends have real business value since they may become advocates and write testimonials or influence their real friends.

  8. Online networking alone does not build business relationships. Networking may identify an opportunity, but personal contact is normally required to build a real relationship. It’s too easy to create a false persona online, compared to the authenticity of connecting face-to-face, comparing beliefs, goals, point of view and personality.

Friendship with emotion is the glue that makes personal relationships work, but these same emotions often get in the way of decisions in a rapidly changing business requirement. Business relationships, on the other hand, are more logically tuned to expediting business transactions. If your business seems harder than it should be, maybe it’s time to stop focusing on friends.

Marty Zwilling

*** First published on Entrepreneur.com on 01/29/2016 ***

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Sunday, February 7, 2016

6 Critical Steps To A Winning Company Culture

We_Can_Do_It!Creating the right company culture must be a top priority of every entrepreneur and business leader. Simply speaking, culture-driven businesses put their people first, and people make the business, rather than the other way around. Today’s business mantra must be “Take care of your people and they will take care of your customers.” Unfortunately, it’s easier said than done.

Most entrepreneurs start from a base of one or two co-founders, and their vision and focus is on developing an innovative solution, rather than developing people. When they need more team members, they tend to assume that these will come with the same passion and motivation that the founders feel. Moving these employees to first place, ahead of their solution focus, doesn’t happen automatically or easily.

Once a product-first, customer-second, and employee-last culture is set, it is extremely hard to change. Transforming an existing culture is even harder than setting it correctly at the start, as outlined in a new book, “Cultural Transformations,” by leadership experts John Mattone and Nick Vaidya. They do believe it can be accomplished, with the six specific steps paraphrased here:
  1. Culture starts by thinking different and thinking big at the top. In the midst of daily crises and information overload, it takes a strong leader to develop and communicate regularly to employees the “big picture” of where the company is going and why that is a good thing from an employee perspective, as well as for customers and for society.

  2. Accept the vulnerability of confronting leadership mistakes. The best, most able entrepreneurs, look first at themselves and acknowledge that they make mistakes. They practice one of the most important leadership tenets from an employee perspective – humility. This is necessary to solidify the trust between leaders and team members.

  3. Communicate what greatness looks like in the roles you need. Team members will never create your desired culture if they don’t know what you expect of them. They need to understand and be rewarded for the desired attributes, competencies, and results. You need to paint a compelling future for your company that they can all connect with.

  4. Transform team member mindsets, behavior, and results. The more successes you can help them create, the more chances they will have to interpret these wins as permanent, pervasive, and personal. As they rack up – with your leadership – yet more and more positive reference points, they internalize the causes and consequences.

  5. Find, nurture, and reward talent in support of a compelling future. A key step is to push every talent lever in support of your compelling future. Make sure you are hiring, training, and promoting the future leaders who possess what it takes to create the organization you want. Be sure to differentiate compensation and rewards correctly.

  6. Measure and measure again, and be quick to course correct. You must have a passionate and diligent focus on key results and required pivots. Most importantly, you must measure the strength and vibrancy of your current culture. As well, you need to focus externally on getting feedback from customers, suppliers, and competitors.
In medicine, prescription before diagnosis is malpractice. In the world of cultural transformation, the same is true. Culture determines engagement levels, not the other way around. Don’t confuse engagement or satisfaction surveys with culture surveys.

According to the authors, a good culture survey will show you the relative strength of the five desired cultures in the organization: the “can do” culture; the “will do culture; the “must do” culture; and the “team performance” culture. All of these combine to determine the health and vibrancy of your overall business.

Perhaps it’s time to take a hard look at the business culture in your organization, and what has transpired or not been done to set or transform it to a higher competitive level. In any case, this effort is not a one-time shot or a sprint, but a marathon. Your long-term business success in today’s world depends on it.

Marty Zwilling

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Saturday, February 6, 2016

10 Steps To Becoming A Thought Leader In Business

Exemplary_Thought_Leader_awardSuccessful entrepreneurs often start with a “random” idea, but they quickly focus their efforts and follow a “system” to organize their startup and maximize the clout of their activities. Too many entrepreneur “wannabes” never get past the idea stage, or strike out randomly in many directions, hoping that their passion will convince people to follow them and make their business grow.

There are many systems for business out there, but all of them need a way to keep score on progress and impact. If your business is to be a thought leader in the social media world, the dominant system of grading how much influence you have online today is your Klout score, as explained in a book on this subject, “Klout Matters,” by Gina Carr and Terry Brock.

I’m not convinced that maximizing Klout will maximize your clout in every business, but I do agree that social media must be a part of the system that every entrepreneur needs to implement today to build their business. I especially agree with the ten steps that these authors outline for building systems leading to businesses with clout in today’s world:

  1. Clearly define your purpose. You have to clearly understand what you want to achieve before you are likely to achieve it. If you can’t write it down, you probably don’t understand it. Key factors gating your success will always be your level of competency in your chosen field, level of demand for that skill, and how easily you can be replaced.

  2. Find those arenas where your needs are met. If you want to be a thought leader, find where your potential followers hang out. If you have something to sell, build relationships in the community of buyers. Experimentation is an important part of this process. You will need to test groups constantly to make sure you are in the right one.

  3. Allocate some time to spend on social media. Social media is critical today to almost every business. But make sure the time you spend is quality time, focused on your objectives, and balanced in relation to all your other business requirements. Spend time learning new techniques, and time measuring the return from your efforts.

  4. Be a great resource for others. What we all need is trusted advisors who can help us decipher the clutter. As you become an expert in your field, you need to offer yourself as a trusted advisor, and you will quickly gain a loyal following. Writing, audios, and videos are all great ways to do this, since these all facilitate the one-to-many multiplier.

  5. Provide a unique point of view. Be creative and add value to what you offer your target market. This is true for thought leaders, entrepreneurs, as well as anyone who is looking to be hired in a job. Adding value builds influence and subsequently can build your business, as well as your Klout score. People don’t follow followers or repeaters.

  6. Continue to learn and grow. One of the most important skills that every leader must nurture is how to learn. Some people learn best from conferences, while other learn best from blogs and other information online. Standing still is falling behind, and you can’t afford to fall behind in today’s fast paced business environment.

  7. Forget the old “spray and pray.” A popular old marketing concept was that if you did enough broadcasting of your message to enough people, you would find success. Today you need to talk with, not at, your customers and constituents to get ideas. The best thought leaders have learned how to listen and acknowledge their community.

  8. Build a team. Operating alone in today’s complex business world, including the many social media channels, is not physically possible as your business grows. The good news is that with new technology and the Internet, you can tap into the services of, and build relationships with brilliant people around the world, to build an integrated virtual team.

  9. Seek exposure to new people who are relevant. People come and go in the real world and on social media. Thus it is important that you continually expand your network to engage new people who are building influence in your community. Only in this way will you be exposed to new thoughts and ideas, and enhance your own digital influence.

  10. Focus on a specific niche. You need to find a niche where you have both passion and competency. More passion is not a substitute for focus and competency. Make sure the niche is large enough, and includes people with money, enough to provide an income for you to continue your efforts and be successful.

Influence is more important than ever in today’s connected world as brands, companies, and individuals vie to become the next big phenomenon. Do you have any idea how much influence your company commands today, and what is your business doing to extend that influence to the bottom line?

Marty Zwilling

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Friday, February 5, 2016

7 Steps to Master the Art of Persuasion

Reed_Hastings,_Web_2.0_ConferenceMany entrepreneurs are so passionate about their new startup idea that they can’t believe any intelligent being, investor or customer wouldn’t react just as excitedly after a quick introduction. They don’t realize that they can often kill their credibility -- and future opportunities -- by communicating only with passion, responding with a cynical comment or giving up too soon.

The art of getting others to see things as you see them -- usually called persuasion -- is a key one for entrepreneurs, and it needs to be honed from the first day that you formulate your new idea. You have to persuade the right partners to join and build the solution, the right investors to fund it and the right customers to buy it. Good marketing is just a subset of these efforts and skills.

The psychology involved in winning over others has been studied and preached for generations and continues to evolve as our culture changes, as documented on the website Psychology Today, and many others. Aspiring entrepreneurs need to study all of these but also need to learn from the pragmatic practices and tactics of successful peers and business advisors.
  1. Repetition is the key to getting people’s attention. Many entrepreneurs mistakenly assume that their passion will cause their message to immediately stand out above the din of today’s information overload. In fact, most people today have developed filters to ignore unsolicited inputs until they have heard it several times in both written and verbal form.

  2. Postulate the message in a context important to the receiver. Tune your message to each receiver’s situation or context. Avoid abstract or technical declarations that may sound like an effort to impress or mislead your audience with your intelligence. Use specific value propositions rather than fuzzy terms like easier to use, better and faster.

  3. Use contrasting story scenarios to illustrate the impact. Stories are often more convincing than simple statements of fact. If you can integrate the receiver directly into the story, the potential impact is even greater. The power of contrast, or side-by-side comparison of outcomes, is an effective mover of people from old beliefs to new ones.

  4. Personalize your message to match receiver background. Whether approaching investors, partners or customers, you need to listen first to find a personal intersection of interest with your idea. If the person is creative and intuitive, don’t hit them with a logical and analytical message. Establish a relationship or do some homework first if you can.

  5. Use friends and advisors as sources of warm introductions. Everyone is more prone to listen and believe new people brought to them by someone they know in common, especially if that connection has strong relevant experience or expertise. Even if it takes longer to arrange such a meeting, your credibility gain and impact may be well worth it.

  6. Materialize your idea into a prototype or demo. People always put more credibility into something they can touch and feel, versus mere words and arm waving. What you are visualizing in your mind’s eye is not so obvious to others, especially investors who will likely not have your depth of expertise in the product domain you represent.

  7. Present evidence of interest and excitement from others. Social media is a powerful tool for testing your idea with minimal cost and risk with a huge potential for spreading and amplifying your message to the right people. The evidence of 1,000 people responding positively to your message is much more effective than you alone pitching.
In the end, the most convincing evidence of a great idea to investors and partners is business execution traction. They want to fund and work with people who are willing and able to move an idea into the execution phase. Ideally, that means a solution has been built, with a proven business model, and real customers who have paid full price with high customer satisfaction.

Indeed, all entrepreneurs have to start at the beginning with passion for an idea. Then comes the hard part of convincing others that the idea has the same merit you see, persuading others to join and support your effort and persuading customers to buy. According to some experts, persuasion is the most important skill you need to succeed in business.

Are you convinced?

Marty Zwilling

*** First published on Entrepreneur.com on 01/27/2016 ***

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