Friday, September 30, 2016

How To Counter Criticism Of Your Million Dollar Idea

Idea_Logo.svgIn business, and in your personal life, the ability to anticipate and overcome criticism is one of the biggest differentiators between leaders, who make things happen, and followers, who may have great ideas but never seem to get things to go their way. In fact, leaders are not remembered for their dreams, aspirations, or intentions – they are remembered because they achieved results.

In my role as an advisor to entrepreneurs, I often find founders who have such conviction and passion for their new idea, that they can’t believe anyone could challenge it. They bristle quickly when investors or even potential customers raise issues with real value, competition, risk, and sustainability. The reality is that important change is always challenged, so you need to expect it.

The best entrepreneurs and business professionals learn to anticipate these push-backs before they happen, and respond calmly and effectively. I like the specifics on how to do this in a new book, “The Agenda Mover: When Your Good Idea Is Not Enough,” by leadership expert Samuel B. Bacharach, Cornell Professor and cofounder of the Bacharach Leadership Group.

Bacharach details seven possible criticisms that every leader with a good idea should anticipate, and provides guidance on how to overcome each. I’ll paraphrase a few of his key points here, with comments from my own experience in business:

  1. Your new idea is too risky. A new idea is a step into the unknown, and always represents some risk. Rather than arguing the level of risk, a better strategy is to highlight the size of the reward. Then mobilize your support for these rewards through testimonials, input from experts, and traction. Increasing your credibility will reduce the perceived risk by all.

  2. The idea will only make things worse. Resistors often make the argument that while the idea seems fine on the surface, something later is certain to turn things upside down. This usually means that your message needs clarification to offset generalized qualms. Narrow your focus through specific case studies and quantify value and results.

  3. This idea won’t change a thing. When faced with this type of “paternal” criticism, the best path is to again ground your case in very specific examples to show that while the idea might not be a total paradigm shift, it will at least represent a significant change in cost or return. Negotiate the time and resources to do a trial, and measure results.

  4. You don’t know the issues well enough. The main goal of this type of criticism is to challenge your ability to lead and question your credibility. The antidote to such criticism is usually less passion and more facts to show that you have done your homework, assembled expert validation, and are interested in full disclosure and opposing views.

  5. You’re doing it all wrong. “The way it’s always been done” may work well for routine repetitive tasks, but it never applies to new ideas. This argument is actually attacking your ability to execute, rather than the idea. To offset this criticism, you need to highlight your prior experience, the expertise of your team, and the quality of your advisors.

  6. It’s been done before. This sort of resistance is predicated on the assumption that there is historical knowledge or past experience that makes your idea irrelevant or doomed to failure. This can be countered best by a proactive comparison of specific elements of your new idea to past practice and experience. Burst the balloon of generalities.

  7. Someone has ulterior motives. This challenge is one of trust, implying some hidden agenda or self-serving motivation for you and your allies, such as huge financial rewards or positions of power. The best strategy here is to not to over-react or be defensive, and highlight specific value to customers. This is where real leaders let others do the talking for them.

In all cases, the key words for countering criticism and moving things forward are anticipate, mobilize, negotiate, and sustain. Anticipate the agenda of others, mobilize your resources, negotiate buy-in and support, and get things done to sustain momentum in your campaign.

Don’t allow yourself to get involved in an escalating competition of egos, which can make others think that your ego is more important than seeing your idea come to fruition. True leaders in business with million-dollar ideas, like Bill Gates and Elon Musk, don’t stop until they have billion-dollar results. Where do you fit in this spectrum?

Marty Zwilling

*** First published on Huffington Post on 09/29/2016 ***

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Wednesday, September 28, 2016

Intrinsic Motivation Models Lead To Business Success

intrinsic-motivatorsIn my experience mentoring new entrepreneurs and aspiring business leaders, I see far too many who seem to be driven by all the wrong reasons. Everyone seems to espouse extrinsic motivations, such as getting rich, having power, and fulfilling parent dreams, when in fact a focus on satisfying internal interests and desires will likely lead to more success, as well as satisfaction.

I’ve had the pleasure of working with a couple of the best-known entrepreneurs of our time, and read about many more in the updated version of a classic book, “Discover Your True North,” by Harvard leadership expert and best-selling author Bill George. He makes a convincing argument that the best leaders and entrepreneurs follow their intrinsic rather than extrinsic motivations.

He emphasizes the value of finding a way to align your strengths with your intrinsic motivations, which he calls the sweet spot. Some of the most effective sweet spots and intrinsic motivations for today’s entrepreneurs would include the following:

  1. Making a difference in the world. When Bill Gates acted on his dream of putting a computer in every home and on every desk, he had no idea of the fortune it would bring to him, since he wanted only to make a difference. Extrinsic motivations often work against entrepreneurs by leading them to set unrealistic and overwhelming goals.

  2. Find personal meaning from building a business. In his book, “The Art of The Start 2.0,” Guy Kawasaki exhorts entrepreneurs to focus on making meaning, not money. He has said many times that if your vision for your company is to grow it just to flip it to a large company or to take it public and cash out, "you're doomed.” Do it for meaning.

  3. Satisfaction of doing something great. Steve Jobs summarized his intrinsic motivation in 2005 at Stanford in a talk titled “How to Live Before You Die.” He said, “Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.”

  4. Personal growth and accomplishment. To be a successful entrepreneur, one can never stand still. The best entrepreneurs enjoy the journey as much as the destination. They have a thirst for knowledge that helps them in their business, as well in their own personal growth. That synergy creates a sweet spot that maximizes their impact.

  5. Seeing the real value of one’s beliefs. When asked why he created Facebook, Mark Zuckerberg replied “It's not because of the amount of money. For me and my colleagues, the most important thing is that we create an open information flow for people. Having media corporations owned by conglomerates is just not an attractive idea to me."

  6. Helping others achieve their goals. If you want to achieve your goals, help others achieve theirs. Great entrepreneurs keep your eyes open for other businesses in a related space that can complement theirs. Elon Musk has opened up Tesla car battery patents for use by anyone, which obviously will benefit his business as well as theirs.

Most entrepreneurs will tell you that once they discovered the real purpose for their efforts, they found a new sense of commitment and leadership which allowed them to really inspire and empower others, as well as direct their own actions. At this point they can make the strategic decisions they need to really make a difference, enjoy satisfaction, and leave a lasting legacy.

Many have found that initial failure is one of the best teachers in this regard. I counsel new entrepreneurs to expect failure, and wear it as a badge of pride, rather than trying to hide it. In fact, most investors are wary of anyone who claims to have never failed, reading that claim as an indication of too much caution, or not able to face their own reality.

The primary message here is not to hide your real motivation from yourself, your team, or your investors. You can’t fool them all for very long, and you won’t be happy trying. If you can’t find any intrinsic motivations for what you are doing now, it’s probably time to take a hard look at your lifestyle and your future. Life is too short to be unhappy and unfulfilled for any part of it.

Marty Zwilling

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Monday, September 26, 2016

Add A Personal Story To Make Your Business Memorable

storytelling-in-businessThe biggest challenge for every entrepreneur and every startup today is to get noticed and remembered in today’s information overload. The number of entrepreneurs worldwide is huge, starting an estimated 50 million new businesses in the past year, or 137,000 per day. Every one of these probably has a unique story, but in my years as a startup advisor I only remember hearing a few who capitalized on their story.

The impact of a memorable story was highlighted for me recently as I completed a new book, “Sell With A Story,” by Paul Smith, who is an expert trainer on increasing business results through storytelling. His focus is primarily on improving the results for traditional sales professionals, but I’m convinced that the same principles are equally critical for entrepreneurs selling their startup to investors, strategic partners, and customers.

I say that because I’ve heard too many abstract pitches about the next paradigm-shifting technology, which I can’t relate to, and only a couple with stories that really grabbed me. The best story I remember related the family impact of devastation wrought by Alzheimer’s disease, leading to the development of a mitigation process, and I am now fully committed to this effort.

I learned from Smith that a memorable story doesn’t have to hit you personally, but it does have to include six key attributes to raise it above the standard sales pitch, or new venture problem statement, opportunity sizing, and value proposition. These attributes include the following:

  1. Specific moment-in-time indication. Most entrepreneurs were incented to start their venture at a specific moment they remember well, so telling the story of when and how this happened is a natural. The result will always have more impact than merely outlining a new technology, cutting costs, or tackling a known problem, such as world hunger.

  2. Place where it happened. A memorable story needs to start with location specifics to make it real. Stories relay events, and these events have to happen somewhere. The words can be simple, like “I was meeting with a customer in Boston,” or “When my home was devastated by a tornado.” It’s even acceptable to make up a place with a “what if.”

  3. Every story needs a main character. This should be obvious, but much of what passes for “a story” these days are things like elevator pitches or product descriptions that have no characters at all. In the context of new venture stories, the character would most likely be the entrepreneur, a potential customer, an investor, or all of the above.

  4. The obstacle or the painful need. This is the villain in the story, which should be the problem you are solving. If could be a disease you are designing medicine to combat, missing data that your solution provides, or a safety risk in a common process. The explanation of your solution, financial return, and the rollout comes later.

  5. A worthy goal. The main character in a story must have a specific goal, ideally one that is appreciated or even noble in the eyes of the listener. These days, it’s not cool to have a primary goal of making lots of money, but it is smart to include evidence that the new venture is sustainable as a business, and will provide a satisfying return to constituents.

  6. Something has to happen. Statements about your product’s amazing capabilities or your service commitment, or testimonials about how awesome your company is, are generally not stories because they don’t relay events. They are just someone’s opinion about impact which still belong in marketing collateral, but won’t make you memorable.

If possible, every entrepreneur should craft a unique story, or tune their story, for different audiences, such as investors and customers, to convey your values and your commitment in their specific context. Add emotion, surprise, dialogue, detail, data, and other elements to make your story fresh and effective. Always close stories with succinct lessons and recommended actions.

A compelling story is best used as a “grabber” to get people’s attention and make your venture and brand memorable, but it doesn’t replace any of the new venture basics, such as the business plan, investor deck, or financial model. It can be your competitive advantage over peers and existing players, and it’s fun to do. How prepared are you to tell your best story?

Marty Zwilling

*** First published on Huffington Post on 09/24/2016 ***

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Sunday, September 25, 2016

10 Tried-And-True Strategies For Funding New Ventures

investment-dollarsOne of the most frequent questions I get as a mentor to entrepreneurs is “How do I find the money to start my business?” I always answer that there isn’t any magic, and contrary to the popular myth, nobody is waiting in the wings to throw money at you, just because you have a new and exciting business idea.

On the other hand, there are many additional creative options available for starting a business that you might not find for buying a car, home, or other major consumer item. If you have the urge to be an entrepreneur, I encourage you to think seriously about each of these, before you zero-in on one or two, and get totally discouraged if those don’t work for you.

Of course, every alternative has advantages and disadvantages, so any given one may not be available or attractive to you. For example, professional investors put great priority on your previous experience in building a business, and they expect to own a portion of the business equity and control for the funds they do provide. These are tough for a first-time entrepreneur.

Thus it is always a question of what you qualify for, and what you are willing to give up, to turn your dream idea into a viable business. Here is my list of the ten most common sources of funding today, in reverse priority sequence, with some rules of thumb to channel your focus:

  1. Seek a bank loan or credit-card line-of-credit. In general, this won’t happen for a new startup unless you have a good credit history, or existing assets that you are willing to put at-risk for collateral. In the US, you may find that the Small Business Administration (SBA) can get you infusions of cash without normal backup requirements.

  2. Trade equity or services for startup help. This is most often called bartering your skills or something you have for something you need. An example would be negotiating free office space by agreeing to support the computer systems for all the other office tenants. Another common example is exchanging equity for legal and accounting support.

  3. Negotiate an advance from a strategic partner or customer. Find a major customer, or a complimentary business, who sees such value in your idea that they are willing to give you an advance on royalty payments to complete your development. Variations on this theme include early licensing or white-labeling agreements.

  4. Join a startup incubator or accelerator. These organizations, like Y Combinator, are very popular these days, and are often associated with major universities, community development organizations, or even large companies. Most provide free resources to startups, including office facilities and consulting, but many provide seed funding as well.

  5. Solicit venture capital investors. These are professional investors, like Accel Partners, who invest institutional money in qualified startups, usually with a proven business model, ready to scale. They typically look for big opportunities, needing a couple of million dollars or more, with a proven team. Look for a warm introduction to make this work.

  6. Apply to local Angel investor groups. Most metropolitan areas have groups of local high-net-worth individuals interested in supporting startups, and willing to syndicate amounts up to a million dollars for qualified startups. Use online platforms like Gust to find them, and local networking to find ones that relate to your industry and passion.

  7. Start a crowdfunding campaign online. This newest source of funding, where anyone can participate, per the JOBS Act in the US, is exemplified by online sites like Kickstarter. Here people make online pledges to your startup during a campaign, to pre-buy the product for later delivery, give donations, or qualify for a reward, such as a tee-shirt.

  8. Request a small business grant. These are government funds allocated to support new technologies and important causes, like education, medicine, and social needs. A good place to start looking is Grants.gov, which is a searchable directory of more than 1,000 Federal grant programs. The process is long, but it doesn’t cost you any equity.

  9. Pitch your needs to friends and family. As a general rule, professional investors will expect that you have already have commitments from this source, to show your credibility. If your friends and family don’t believe in you, don’t expect outsiders to jump in. This is the primary source of non-personal funds for very early-stage startups.

  10. Fund your startup yourself. These days, the costs to start a business are at an all-time low, and over 90% of startups are self-funded (also called bootstrapping). It may take a bit longer, to save some money before you start, and grow organically, but the advantage is that you don’t have to give up any equity or control. Your business is yours alone.

You can see that all of these options require work and commitment on your part, so there is no magic or free money. Every funding decision is a complex tradeoff between near-term and longer-term costs and paybacks, as well as overall ownership and control. Yet with the many options available, there is no excuse for not living your dream, rather than dreaming about living.

Marty Zwilling

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Saturday, September 24, 2016

10 Keys To Great Startup Encores Following An Exit

startup-encore-successEntrepreneurs who experience success with their first startup are often amazed to realize that the risks and fears of doing it right the second time go up, rather than down. Encores are tough, especially in the high-risk world of startups, yet every entrepreneur I know can’t wait to start over and do it again. Sometimes their haste or ego causes them to ignore basics, and they fall hard.

Every startup success is a function of great people, products, and profits. But there is no magic formula on how to bring these together a second time, but I did see some good insights on the parameters in a recent startup business parable, “Endless Encores,” by Ken Goldstein, who advises startups and has built corporations in technology, entertainment, media, and e-commerce.

I have pulled together here a few of our joint recommendations to every entrepreneur and startup that I advise. These work the first time, and are required every time for success:

  1. Seek extraordinary people and revere talent. In the heat of the battle, when you have the least time and money to attract the best, it’s easy for an entrepreneur to settle for who is available, rather than who can bring real value and innovation to the business. Repeat leaders think more about talent, while short-term leaders worry first about output today.

  2. Hire for character, competency, and compatibility. Hiring is the single most important thing you do as a leader, and firing is second. It’s more than filling an open slot on your team. You start with skills, but then you have to delve deeply into motivation, trust, ambition, chemistry, and experience.

  3. Diversity on your team expands thinking. Hiring people who are just like you may eliminate revolts, but it won’t get you outside your own box. Creativity requires constructive conflict, a willingness to collaborate, dealing with failure, and boundless iteration. Solution and business model innovation require pushing the limits.

  4. Self-demanding beats boss-demanding every time. Startup successes are never perfect. Too many entrepreneurs are their own worst enemy, trying to do everything right the next time. Remember to embrace pragmatic goals and solutions, and accept a little bit of luck and assistance along the way. Perfectionists never win in the startup business.

  5. Leapfrog products invent and reinvent markets. Incremental product ideas do not change markets. It takes a paradigm shift, like autos to airplanes. On the other hand, making the user experience easier, richer, and more pleasant, as Apple has done repeatedly, can reinvent existing markets. Focus on the customer for repeated success.

  6. Eat your own dog food. If you don’t, why should they? The basic premise is that if a startup expects paying customers to use its products or services, it should expect no less from its own team. There is no better way to get quick and honest feedback on strengths, weaknesses, and usability. Even encore startups should expect to pivot to get it right.

  7. A business model is not an after-thought. Passion and ego are no substitute for a business model that makes sense. Some entrepreneurs are so enamored by their first success that they inherently believe that their next idea will make even more money. If your solution is free, or you lose money on every sale, it’s hard to make it up in volume.

  8. Strategy is charting a course, not making a move. Implementing a strategy doesn’t force the answer you want, so it pays to map out the alternatives and envision the possible as well as the problematic. Markets change rapidly these days, so the strategy that brought you success the first time, may lead to your demise the second time.

  9. Recurring revenue is the foundation for growth. Everyone loves the subscription model, since transaction costs exclude the cost of acquiring a new customer. Investors love this and other recurring revenue models because they facilitate growth through scaling. Sometimes repeat entrepreneurs forget that they must acquire new customers.

  10. Use cash wisely, as if it were out of your own pocket. Every new startup has extensive cash flow out, before any flows in. Serial entrepreneurs, with new bigger ideas, often forget that part of the equation, and are caught short. Repeating successfully means the same focus and due diligence on cash you had the first time around.

Thus the path to repeat success in business is to utilize what you learned from your first experience, and subvert any illogical fear of being exposed as a fraud or a lucky accident. If you have been able to “bring the crowd to its feet” with the success of your first venture, the principles outlined here could bring you endless encores.

Marty Zwilling

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Friday, September 23, 2016

Reflections Of A Retired Senior Manager

By Ernst Gemassmer, Chairman, Startup Professionals

I am a retired executive with ample time to reflect on my personal and business life. My career, in several companies, included management consulting, different positions in many functional areas, heading up international operations and eventually leading to several positions as interim CEO. I have worked in the US, Germany and Holland in addition to travelling the world extensively either developing, managing or turning around different businesses.

As I reflect on my life and career, I would like to elaborate on several aspects, to provide insight and possible guidance to rising young managers and entrepreneurs. Hopefully the reader will benefit from my experiences and avoid hidden pitfalls.

During my entire career I was laser-focused on climbing up the executive ladder, resolving complex issues and meeting ever increasing personal and business targets.

  • Don’t forget your wife and kids. We all work in order to establish and support a family. It is not beneficial to bring your work home with you, since your spouse and partner may not understand or follow the complexities of your work. Above all, remember and celebrate special occasions.
  • Don’t forget your school colleagues. Having attended a number of different high schools and colleges I had the opportunity to meet, get to know and develop friendships with many different and unique individuals. This was a very enriching experience.

    For a number of years I kept in touch with old colleagues and visited them whenever I had a chance. However, my increasingly busy professional life left little or no time to continue these relationships.

    I should have made the time to cultivate these relationships, it would have further enlightened me and broadened my horizons.

  • Don’t forget your friends. Living in different cities, continents and countries, I met numerous neighbors and developed friendships with them. It requires real work and dedication to stay in touch. They (or you) may need your (their) understanding, support and guidance.

    I should have done a better job in staying in touch. Dedicate at least a portion of your time to your old friends. Your company may fail, but your friendships can and should continue.

  • Don’t forget your colleagues. In my various roles I met and worked with many different people. Changing from one industry to another caused me to lose touch with many of these colleagues

    It is well worth the effort to stay in touch and thereby keep up friendships, professional relationship. This will enable you to know what is going on in different companies, technologies and countries.

  • Don’t forget your mentors. During my career I had the pleasure of working with several mentors. They provided unbiased guidance and critique where I needed it most. Over time, changing industries and locations I lost touch with most of my mentors.

    Take the time to keep in touch with those who helped you navigating your career. They deserve it and will appreciate your thoughtfulness.

  • Don’t forget to take care of yourself and have fun. Global travels, challenging work and family are real challenges to getting enough exercise and eating sensibly.

    Make time for workouts and closely monitor your eating and drinking habits. Use your limited free time to do what you enjoy and are passionate about. Your body and your mind will reward these efforts.

  • Keep on learning and follow changes in technology, industry and society. I have seen fundamental and revolutionary changes in technology, our industrial structures and society. There are numerous examples of companies which have disappeared, managers and entrepreneurs who have failed and traditional practices which have fundamentally altered.

    Therefore, even if it seems challenging, keep on learning and stretch your limits from time to time.

Overall I have had a successful life as well as a varied and rewarding career. I have no regrets, but could have paid more attention to the critical elements mentioned above. Hopefully my comments will cause you to reflect on and guide your personal and business career. Good luck and good health.

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Wednesday, September 21, 2016

5 Engagement Principles Now Drive Business Leadership

leadership-business-engagementThe days of leadership without engagement are gone. With interactive social media and video everywhere, everyone needs to feel they have a relationship with their leaders, and every brand needs leader personification for customers to relate. Soon you won’t be able to name a business as one of your favorites if you can’t personally visualize and relate to company leadership.

In the same way, great entrepreneurs and company leaders should no longer rely on faceless and nameless processes to drive business strategy and innovation to stay competitive. The old way doesn’t work, and results more than ever in slow decision-making, lack of real connection with employees, and ignorance of what customers really want.

The new principles of engagement, as well as the dysfunctions of the old, are well illustrated in a new book, “Why Are There Snowblowers in Miami?” by Steven D. Goldstein. He speaks from a wealth of personal experience in private equity, as well as top executive positions at American Express, Sears, and Citigroup.

He found the dysfunctional engagement that sent snow blowers to his store in Miami every year. As a result of this incident and many others, he defined five key engagement principles which resonate with me as just as relevant for new business founders as mature business executives. Here is my adaptation of his engagement principles for all the aspiring entrepreneurs I advise:

  1. Learn to adopt an outsider’s perspective. Every entrepreneur, even though confident in his domain, needs to fight complacency in a world that changes almost daily. You need to look at everything through fresh eyes, continually ask questions not usually asked, and actively listen to contrary views. No change means you are falling behind as a leader.

  2. Interact with employees and customers on a regular basis. Authentic communication at all levels and encouraging feedback is how you find out what is really going on. More meetings in your conference room won’t get to the truth as well as simply talking to people who interact with customers directly. Never be too busy to talk to real customers.

  3. Focus on two or three pertinent metrics in any situation. Keeping it simple is the best course. No one can remember your top ten priorities and measurements. Unbundle projects into smaller elements, and personalize the top couple of metrics for each team. These simplified targets are crucial to motivating a team, and getting the focus you need.

  4. Help people know more, so they can do their job better. Knowledge is power, and good information flow and collection tools are of the utmost importance. Information that is relevant and timely needs to be shared widely and efficiently. It’s also important to share the evaluation insights, and to tie the next action steps directly to current results.

  5. Accept that whatever speed you are going is too slow. Time is the enemy in today’s global marketplace. Follow the guiding motto of Andy Grove at Intel, “Only the paranoid survive.” It’s vital to get quick wins, learn rapidly from failures, and get comfortable with constant change. Waiting is never an option, as competitors will always be moving.

In the same fashion, these engagement principles must be applied to customers. More and more, I see evidence that customers want to be pulled to your company by engagement, rather than feel that you are pushing yourself on them. There are a multitude of opportunities through social media to engage your customers, as well as getting out of your office into the marketplace.

Customer business leadership through brand icons, such as Ronald McDonald and Aunt Jemima, is fading fast. Customers as well as employees want to relate and engage with real people as leaders, and business leaders need to interact with real employees and customers to stay vital and current.

As an entrepreneur, you need to start this focus early, with the same passion you currently apply to your new idea and solution. Have you taken a hard look recently at where you are spending most of your time?

Marty Zwilling

*** First published on Huffington Post on 09/20/2016 ***

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Monday, September 19, 2016

How To Stretch Your Comfort Zone For Business Success

comfort-zoneAs an entrepreneur looking for an idea, it makes sense to explore problem areas within your knowledge comfort zone, but when you are building a business with the solution, you have to stretch your comfort zone to keep up with the market and stay ahead of competitors. I haven’t found a successful and satisfying venture yet that was a comfortable and easy win.

The idea is the only easy part. The hard part is the business execution. For example, the concept of an online platform for social networking is a simple one, and has been attempted by thousands of entrepreneurs past and present. In fact, I still hear startup idea variations on social networking more often than any other, yet most people can only name a couple that have really worked.

The challenge is to isolate the actions that maximize your chances of a successful execution. I’m convinced that it’s not all luck, amount of money to spend, or super intelligence that makes the difference. Business is not rocket science, and success comes from pursuing a basic set of action steps well past your comfort zone – with innovations and perseverance that exceed competitors.

These actions steps include the following:

  1. Solidify a positive “can-do” mindset. The mindset I’m looking for is one that sees the business challenge as exciting rather than threatening, setbacks as learning opportunities and a conviction that effort and perseverance will overcome any obstacle. In addition, I look for do-it-yourself confidence that minimizes any dependence on outside help.

  2. Document and commit to specific goals. Building a specific business requires a roadmap or business plan, much like programmers needs specifications to keep them on track. Entrepreneurs who have no formalized goals often spend years in a random walk, without realizing they have no way of knowing if they are about to achieve their dream.

  3. Gather resources and skills for the journey ahead. The idea to run a marathon pales in comparison to the difficulty of the actual event. Smart entrepreneurs prepare for their business marathon by building a support team around them, honing their skills, and assembling resources in anticipation of stretching their comfort zone beyond past limits.

  4. Stop talking and start executing. Action trumps thinking and talking, especially when you are blazing new paths. I hear entrepreneurs who talk about their plans for years, but never get around to starting. You can’t learn much while you are talking. Your best learning will come from mistakes and pivots, so don’t fear those possibilities.

  5. Focus your efforts and prioritize tasks. Focus means starting with a single problem and solution, rather than broadening your solution to solve everyone’s problem. Lack of focus only confuses customers and dilutes your scarce time and resources. Practice the Pareto Principle, where 80 percent of results come from 20 percent of the tasks you see.

  6. Define and use metrics to measure your progress. You can’t make a correction if you don’t know you are off the path, and you can’t fix what you don’t know is broken. If your comfort zone is relying on gut reactions, it’s time to stretch your understanding of what constitutes customer acquisition cost, margins, pipeline closure rates, and sales ROI.

  7. Celebrate small successes with the team. Affirming and rewarding team members for every step forward creates momentum, excitement, and loyalty. Constant team communication and accentuating the positive may be outside your comfort zone as a technologist building a product, but these are key drivers to business success.

  8. Validate and scale your business model to success. Technical entrepreneurs are usually more comfortable continuing to perfect their product, than validating a minimum viable product (MVP). They also tend to focus on developing additional features, rather than scaling the business to capitalize on the first. Grow the business, not the solution.

Creativity and innovation in building the business are just as important as in building the solution. Yet too many entrepreneurs approach business building as a standardized process that can be learned from textbooks, or outsourced to professionals. If you are not stretching your comfort zone to learn and practice the business principles outlined here, even your best new idea will likely never get to the finish line.

Marty Zwilling

*** First published on Forbes on 09/13/2016 ***

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Sunday, September 18, 2016

Walk In The Shoes Of Your Boss To Excel In Business

shoes-of-the-bossOne of the things I’ve learned in working with aspiring entrepreneurs is that managing and leading a team is a scary venture into the unknown for many people, even if they have worked as a business professional for years. Having worked in my own career on both sides of the fence at various times, I recommend that everyone practice thinking like the boss in every role to prepare.

This will improve your effectiveness in your current role, and give you a head start towards a future role, such as startup founder, where you are the boss. You will find that the same key principles apply in both situations, and that every business professional has a boss, and should be a leader in their own domain to others with less experience and expertise.

I found some good insights and details on this approach in a new book, “How To Be A Great Boss,” by Gino Wickman and RenĂ© Boer, who speak from years of experience working with leadership teams of both small and large companies. Here is my summary of their key principles on being a great boss, which I will characterize here as applying to any business professional:

  1. Surround yourself with great people. As an entrepreneur, executive, or team member, you are most impacted by the people you gather around you. The smartest team members and the smartest bosses spend more time with people who are smarter in the relevant domain than they are. Then when you have to hire people, you will pick the best.

  2. Make more effective use of your own time. We all know bosses and peers who are always too busy, but never seem to get much done. Make sure that person is not you. Free up time for others by eliminating low priority tasks, and delegating items to the right people. Work on habits that improve your productivity, and find better tools every day.

  3. Understand both leadership and management. In business, leadership consists of creating the vision and direction, while management is primarily about gaining traction to achieve it. You don’t have to be a boss to be a leader or a manager. You should be practicing both in every role, and there will be no surprises as your career evolves.

  4. Train yourself to follow leadership best practices. If you practice all the key elements of leadership in every role, you will make a great team member or a great boss. These elements include giving clear direction, providing tools and training to the right people, getting out of the way, walking your own talk, and reflecting regularly on the big picture.

  5. Focus on demonstrating accountability for your actions. Accountability is everyone’s obligation, to accept responsibility for their activities, and to disclose your results in a transparent manner. Accountability cannot be imposed on you by a boss or entrepreneur – it’s a practice that you must learn to impose on yourself to be effective and appreciated.

  6. Develop productive relationships with people around you. Effective relationships, inside your business and outside, are critical in every professional, management, and leadership role. The most productive people get things done by working in concert with others, not demanding actions and results, but by orchestrating win-win relationships.

  7. Learn to deal effectively with people who disappoint you. While highly productive relationships lead to success, dysfunctional relationships make you a poor employee and a bad boss. People issues cannot be solved by avoidance or edict. If you surface and manage relationship issues early with respect and minimum emotion, you will be seen as a good team member and a good boss.

Thus, putting yourself in your boss’s shoes to see what they see, and act as you would expect them to act, is the best way to assure success in your role today, or prepare you for the startup founder role you dream about. In fact, the best team members and managers I work with always see themselves as their own boss. Try it – you may find and train that great boss you never had.

Marty Zwilling

*** First published on Huffington Post on 09/17/2016 ***

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Saturday, September 17, 2016

Push Marketing Has Been Replaced By Pull Marketing

content-pull-marketingEntrepreneurs have always believed that their product or service must show real value to customers, but today the smart ones are even able to make their marketing valuable. The days are gone when marketing was all “pushing product.” Now customers seek out people who are willing and able to add value, with expertise and insight, even before they have a product.

This new approach is often called “pull marketing,” where the idea is to establish a loyal following and draw customers to your content, and eventually your solutions. Customers don’t even see this as advertising. For example, top bloggers today, including Rand Fishkin and Gary Vaynerchuk, find no need to advertise, as customers come to them for value from content alone.

The impact of the right marketing content, and the principles of providing it today are outlined well in a recent book, “Content, Inc.,” by the so-called godfather of content marketing, Joe Pulizzi. He provides details on six key principles that every entrepreneur needs to practice in building and executing any modern successful startup:

  1. Fill a need independent of your product or service. For example, Seth Godin’s daily articles online on marketing are so valuable that he pulls loyal customers without ever mentioning his publishing services, consulting services, or speaking engagements. Make your content answer some unmet customer need or question without pushing a product.

  2. Consistently deliver new and valuable content. The key is consistency. Startups that haven’t updated their website since rollout, or publish a new blog once a month or less, won’t be followed for valuable content. In this context, content is like advertising, unless customers see you every day, they won’t remember anything about you, good or bad.

  3. Customers relate to other humans and relationships. As a startup, you the entrepreneur are the brand. Customers like to think they know you, so you need to find a voice, and share it. If you have a story, share that too, and invite interaction and comments. It’s more true than ever that people buy from people, not companies.

  4. Value is in your point of view. Everyone knows how to use Wikipedia, universities, and textbooks for facts and history. Experts and advisors offer new value from their insights, opinions, and experience. Don’t be afraid to take sides on matters that can position you and your company as an expert. People appreciate that, and come back for more.

  5. Avoid “sales speak” and pushing your product. The more you talk about your solution, the less people will value your content. Pulizzi has measured that page views drop quickly by as much as 75 percent on self-serving content. Skip the flowery phrases and frequent adjectives that make up so much of the advertising copy we all recognize.

  6. Demonstrate best of breed through actions. Although you might not be able to reach it at the very beginning, the goal for your content is to be best of breed in your chosen domain. This means that, for your content niche, what you are distributing and your recommendations are the very best of what you and other experts have found.

Pulizzi argues, and I agree, that great content can be used by entrepreneurs to build an audience of potential customers first, before you have a product to sell. It’s the smartest and least expensive way to test the value of your concept, as well as the potential makeup and size of your target customer set. You then have the opportunity to monetize an already loyal following.

By experimenting with content, every entrepreneur can explore their own sweet spot, where they can comfortably offer value to an interested customer set. They can find their personal tilt that sets them apart, build a base of followers as a foundation to a business, and then harvest the audience for diversification and monetization.

What we call “marketing” has changed from a focus on “selling” customers with push marketing, to a focus on providing value early and in every way possible, such that customers are drawn to you as a trusted provider of value. That’s the loyalty you need, to have them recommend you to their friends, and keep you ahead of the many competitors easily visible on their radar.

Marty Zwilling

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Friday, September 16, 2016

A New Venture Needs Connected Leadership To Thrive

Richard-Branson-SpaceportMost startup ideas begin in the mind of an individual, but an idea is not a business. It takes a team, with effective leadership, to build a business. Many aspiring entrepreneurs default to team leadership by domination and control. Yet in my experience, the best entrepreneurs quickly learn the art of people connection. They connect and inspire the right people to achieve more with less.

Connected leaders often become transformational for people and the company, as they use their people insights to incent a new level of performance, leaving team members feeling proud and deeply satisfied. Richard Branson, for example, often makes a point of rewarding outstanding people by taking them aside and telling them that they are now in charge of the new company.

The principles of connected leadership are outlined well in a new book, “The Vitality Imperative,” by Mickey Connolly, Jim Motroni, and Richard McDonald. As principals of the Conversant consultancy, they speak from experience in improving people connectivity and leadership through working with over 400 organizations in 100 countries.

While their focus has been primarily larger organizations, I believe the principles they espouse are equally applicable to startups and small businesses. Here is my extrapolation of their key elements of connected leadership into the entrepreneurial world:

  1. Be visibly present and aware of individual sensitivities. In the chaos of a startup, it’s easy to have “not enough time” to listen and relate to individual members of the team. As a result, impatience increases and effectiveness declines, leaving even more to be done. Presence without prejudice increases leader trust, and enjoyment of work by all parties.

  2. Seek to appreciate team goals, worries, and circumstances. People in a new venture are not mechanical elements. Align your leadership practices with human nature, which requires empathy. In any organization, large or small, empathy improves accountability, accelerates learning, increases influence, and facilitates future planning.

  3. Define and highlight a business purpose, beyond profit. A common purpose creates a community. Process without purpose leads to frustration and bureaucracy. The tangible benefits of a purpose, such as reducing environmental pollution, include making work more meaningful, promoting teamwork, and improving personal role commitment.

  4. Speak the truth, even if painful, over avoidance and deception. Authenticity creates trust, accelerates the solution process, improves agility and resilience, and inspires innovation. Some leaders avoid candor to reduce employee fear, and others to induce fear. But the most destructive fear is the fear of deceit, only eliminated by authenticity.

  5. Outline future potential for the business and the person. Connected leaders don’t let probability and ordinary work destroy possibility. Seeing wonder in the future breaks the grip of the past, redeems mistakes, creates options, and ignites vitality. This leads to new connections and creates new possibilities for the venture and the person.

  6. Build a culture of innovative evolution after initial revolution. Startups often begin with a revolution, but continuous revolution is risky and stressful. A better sense of timing is a commitment to an agile, ever-evolving venture, where the return on investment can be predicted. This improves team leverage, getting more out of time, money, and talent.

  7. Leverage small surprising results into repeated cycle momentum. Momentum is a powerful multiplier that supercharges community, contribution and choice. Surprising positive results are energizing, cause people to update their beliefs, and cause positive chain reactions. Connected leaders share the lessons and show due appreciation.

The vitality of a startup team, and the founder leadership provided, are more key to startup success than the potential of the initial idea. This is why professional investors will tell you that they invest in people, rather than ideas. How much value can the principles of connected leadership bring to your new venture?

Marty Zwilling

*** First published on Forbes on 09/11/2016 ***

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Wednesday, September 14, 2016

5 Steps To Maximizing Your Startup Cash Flow Runway

green-dollarCash flow is a basic survival metric for every startup. Investors check your burn rate to assess your efficiency, and project your remaining runway before you run out of money and into a brick wall. Don’t wait until you are almost out of cash before managing every dollar spent, or looking for the next refueling from investors. Desperate entrepreneurs lose their leverage and die young.

It doesn’t take a financial genius to recognize that you need to keep your burn rate low. Yet it always amazes me that I can find two different startups, seemingly working on the same problem, with one having a burn rate several times higher than the other. Of course, their answer is that the second intends to get to market faster, but every engine has limits regardless the fuel applied.

If your runway is less than a year, it’s time to either begin looking for a new cash infusion or defining and implementing a Plan B to assure survival. Your goal is that magical breakeven point and hockey-stick profit-growth curve. Raising money from professional investors, even friends and family, takes time. Count on six months from beginning the funding process until a new check is cashed.

As a mentor to many entrepreneurs and startups, here are my best recommendations for keeping the burn rate low, planning ahead and maintaining credibility with investors:

  1. Manage cash flow personally every day.  A big influx of orders may feel like success, but can kill your business if you don’t have the cash to produce, deliver and wait for payment. The best entrepreneurs manage cash flow ruthlessly and never delegate decisions about spending money. Cash flow out equates to burn rate, and the runway depends on your reserves.

  2. Buffer your projected resource requirements. You will make mistakes. Things will cost more than you expect. Always add 20 percent to your best estimate of funding requirements when approaching investors. They understand startup realities. Better to ask for more early. Going back to investors for more money ahead of the plan is high in terms of credibility and leverage.

  3. Use future cash for payments where possible. Deferred payments start with stretching the payables period but, more importantly, include giving employee equity in lieu of a higher salaries and negotiating vendor deferred payments out of future revenues. Think of these alternatives as paying interest on a loan, and manage them wisely.

  4. Be a miser with contract services and facilities. One of the main reasons that former corporate executives often fail as startup CEOs is that they expect a big office and an entourage of expensive professionals to do the real work. Cash flow can be drastically reduced by working out of your garage. Tackling most of the support tasks yourself.

  5. Use social media for early marketing.  Hire a professional marketing and public relations agency once you have a good revenue stream but you don’t need them to start a free blog, establish Facebook and Twitter accounts with initial content and complete the basics of search engine optimization. Social media is not rocket science.

The timing of cash flow is everything. Waiting until you have something to sell before bringing on a sales and operations staff. Getting a sales contract before manufacturing inventory. Match your office, facilities and computer equipment to the size of the staff you have today, and intend to have in the next six months.

As a rule of thumb, your monthly burn rate should be less than 10 percent of your last funding raise or starting cash in the bank. For example, a software development startup raising $250,000 from angel investors better be able to operate on $25,000 per month. This could equate to two technical founders (with a minimal salary), funding two developers for a year.

In this case, the primary cash outflow would be for product development and operating expenses, with potentially enough runway to build the initial product, get a patent, attract some early adopters, and build the initial revenue stream. That should equate to an adequate valuation for a $2 million follow-on Series-A round, without giving away all the equity.

Overall, managing cash flow and burn rate is more critical to your business success than having the right idea and the right product.  It’s why most investors proclaim that they invest in people, more than the idea. If you adequately manage your burn rate, your startup is much less vulnerable to flaming out before you get to that elusive break-even point.

Martin Zwilling

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Monday, September 12, 2016

How To Create Customer Value And Profit To Survive

digital-vortexAs a startup advisor, I see too many entrepreneurs get distracted by technology or their favorite cause, and then wonder why they can’t find an investor, attract customers, or build a long-term business. Every startup needs to start with an honest assessment of how they provide customer value, and how that translates into a sustainable business return for stakeholders and growth.

Customer value used to be a simple concept of how much they pay for a solution, compared to their incremental cost reduction driven by your business. Now these principles are complicated by the worldwide instant access to many competitive alternatives, indirect social and environment impacts, and the velocity of change enabled by the pervasive market move to digital.

The market is now a chaotic swirling storm of change, which is characterized well in a new book, “Digital Vortex,” by Jeff Loucks et al, as causing digital disruption on a massive scale. In this new world, finding customer value is elusive, where out of nowhere startups and other tech savvy disruptors attack, and your most loyal customers bolt for the door at the slightest opportunity.

The authors focus on the many new principles of customer value in the digital disruptor age, which I believe every business executive and entrepreneur needs to understand, in order to make their business more competitive and investable. These principles include the following:

  1. Free and ultra-low cost may no longer be competitive. The old saying that it’s pretty hard to compete with free no longer holds, when cost is not the primary customer value element and free is the norm. Customers now put big value on experience, social impact, empowerment, and feedback. Value to second-order customer advertisers is key.

  2. Internet disruptors make prices and margins transparent. A wide range of digital comparison-shopping tools enable customers to see differences, and instantly source at the lowest cost worldwide. Competitive customer value that can be monetized for stakeholders has to go beyond the short-term value of special deals and coupons.

  3. Customer empowerment and digital tools removes middlemen. Circumventing middlemen (going direct) do-it-yourself (DIY) and placing the customer “in charge” are core element of digital disruption to traditional customer value levers. For example, Netflix uses a digital model to unbundle television programming, creating new customer value.

  4. Digital customization creates unique experiences for each customer. Value is now derived by tailoring the product per customer, or interpreting a user’s location and specific needs to create an experience that maximizes value. Even advertising and search results are personalized per user for maximum impact and improved business return.

  5. Instant gratification requires automated digital fulfillment processes. This business model gives customers the value they want without have to wait, either by delivering physical products quickly, or by providing digital versions instantaneously. In today’s world, time is often more valuable then margin to the business as well as the customer.

  6. Digitizing processes reduces friction and increases convenience. Automation provides customer value by using technology to complete tasks and arrange for the completion of tasks by others. Customers and businesses alike benefit from not having to enter the same data multiple times, and making better decisions from accumulated data.

  7. Digital platforms create network effects that multiply customer value. Network effects are huge value generators. They span the gamut from peer-to-peer interactions to crowdsourcing, gamification, and communities. They are a powerful competitive force, once successfully established, that is difficult to dislodge with winner-take-all potential.

Digital disruptors have also introduced the concept of value vampires, who shrink the overall revenue and profit pool in a market to gain competitive advantage. On the other side of the equation, every business needs to find value vacancies, which are market opportunities that can be profitably exploited via digital disruption.

Thus customers and investors still need to see customer value at the key deliverable from your business, rather than technology or a “save the world” mission. But in this Digital Age, customer value has many new dimensions. Make sure you are focusing on the right ones for your customer segment, and the return for your business will let you live long and prosper.

Marty Zwilling

*** First published on Forbes on 09/05/2016 ***

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Sunday, September 11, 2016

7 Due Diligence Steps Will Validate Any New Venture

segway-vehicleIn my experience, consummate entrepreneurs tend come up with more startup ideas than they can ever implement, and some of the ideas may not even make business sense. But how does any entrepreneur know which ideas to implement, and which ones are best left behind?

After all, most great breakthroughs, like a computer in every home, seemed like a crazy idea before Steve Jobs and Bill Gates made it happen. Now we soon expect a computer on every wrist.

That doesn’t mean that entrepreneurs should ignore business and market realities, under the assumption that success is a random phenomenon. Passion, optimism, and determination are necessary but not sufficient to assure a successful startup.

Some analysis and due diligence along the following lines should be performed on every idea, as a reality check, before committing your efforts and other people’s money to building a business:

  1. Look for places where competitors are few. Even if the idea sounds unique to you, it’s worth your time to do a few Internet searches using relevant keywords. If you find more than a dozen solutions that loosely match your idea, it may be time to skip that one and try another. Don’t forget to consider customer alternatives, like trains versus airplanes.

  2. Check for intellectual property barriers in your way. These days, you can find existing patents and trademarks through Google and the US Patent Office online site without spending thousands of dollars with your favorite patent attorney. Of course, existing patents don’t stop you from innovating, but charging ahead into a wall is no fun.

  3. Find a recognized billion dollar and growing market. If you will be looking for professional investors to help you along the way, recognize that they expect to see data from credible market analysts on the size and location of your solution opportunity. Look for double-digit growth data from Nielsen, J.D. Power, Frost & Sullivan, or others.

  4. Separate nice-to-have ideas from ones solving painful problems. All your friends may love your idea on how to find the nearest bar or gym, but how many others are willing and able to pay money for your solution? Even good social causes need to bring in revenue to continue their worthy efforts. Ask domain experts to quantify value for you.

  5. Choose projects with financial resources within your reach. These days, you can build a new e-commerce website to sell home-made wares for a few hundred dollars. New smartphone apps cost only a few thousand, if you have the programming skills. Unless you have a rich uncle, it’s probably not smart to challenge Intel for the next computer chip, which would require several million dollars in investment.

  6. Minimize infrastructure dependencies. Sometimes your solution is impressive, but mass acceptance requires a big culture change, a large support system, or government legislation. For example, the Segway personal vehicle was proven technology 15 years ago, but is still constrained by right-of-way laws, liability issues, and charging stations.

  7. Availability of necessary skills and team members. Most startup projects require special skills and a motivated team. Entrepreneurs with ideas may not have access to the support skills required, or the ability to put together a motivated team. A successful startup is more about the right people and the right execution than the right idea.

Despite what you hear from some Internet spammers, there are no slam-dunk entrepreneur ideas that can make you rich with no risk and minimal effort. In fact, from painful experience, every real entrepreneur I know could probably add at least one item to this list of reality-check items. Thus I’m suggesting that you do your due diligence carefully, and pick the right idea before you start.

Sometimes I have to tell wannabe entrepreneurs that their million-dollar-idea is actually worth very little, in their own hands. It may indeed be better to freely donate your idea to a more qualified entrepreneur or team, rather than foolishly running it into the ground or sitting on it. One hundred percent of zero is still a small number.

Martin Zwilling

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Saturday, September 10, 2016

10 Ways To Win A Coveted Job In That Hot New Startup

female-job-winIn a corporate environment, the focus of a job interview has long been demonstrating your match to the skills and experience outlined in the job description. In my experience with startups, that is still necessary, but not sufficient. Today’s business world has become totally customer driven, so customer-centric and people abilities really make the difference between winners and losers.

I found these required attributes outlined well in a recent book, “Customer Service the Sandler Way,” by customer care expert Anne MacKeigan. This book is focused on strategic customer support jobs in every company, but I believe the hiring rules apply equally well to every job in a startup, since customer focus has to be pervasive from the beginning in modern new companies.

As a job candidate for any highly desirable position in a startup, here are ten key attributes that will give you the winning edge over other candidates:

  1. Bias toward action. Today’s business landscape is constantly changing, dealing with many unknowns, and the amount of data available on the Internet is overwhelming. Customers and competitors won’t wait, so every new business is looking for people who can make a decision and get things done. Talk about results, not job assignments.

  2. Sense of personal responsibility. When problems arise in a startup, blame is a useless tool. People who can demonstrate that they take responsibility for required actions, with no excuses, are extremely valuable in any position. Show that you have done in previous jobs more than you were paid to do, without anyone watching.

  3. An ability to step outside the process. Stepping outside the process means you need to recognize the need for a process, but also be willing to go beyond it when the process fails or is incomplete. Winning job candidates show that they have used good judgment to handle process boundary exceptions, based on a high level of customer sensitivity.

  4. Success in building business relationships. If you don’t show your people skills during the interview, you probably won’t show them later with customers and peers. Startups know that hiring employees who build good relationships will result in higher internal morale, less burnout, and higher customer retention. Highlight your good relationships.

  5. Tendency to question and qualify. In a startup, it’s everyone’s job to more fully understand requirements, competition, as well as customer satisfaction. In an interview, be sure to show your curiosity, ability to ask good questions, practice active listening, and the analytical ability to ferret out relevant meaning behind the data.

  6. Persistence with tough challenges. Smart interviewers will be checking for candidates that are not resistant to hard questions, and are quick to dig deeper into situations they are not familiar with. No candidate wants to be viewed as an inflexible management challenge, or a potential turnoff to customers. Highlight your record of persistence.

  7. Ability to quickly “read” a situation. People-smart candidates, meaning good communicators, socially intelligent, and skilled at reading body language or emotion, are invaluable on small teams as well as customer-centric activities. Things are rarely black and white. Don’t let your ego bias your reading of interviewer expectations.

  8. Low need for approval. Candidates with this attribute are always confident and business-like, friendly but not necessarily best friends. Use examples of achievements that required initiative and determination, without orders from above, to show your ability to handle tough startup situations and customer requests with minimal support.

  9. Strong empathy for others. This attribute is the ability to put yourself in someone else’s shoes to see what they see, and feel what they feel. When you display deep empathy toward others, their defensive energy depletes and their positive energy rises. Show how you have changed a confrontational situation to a positive and relationship-building one.

  10. Good manners and etiquette always. Good manners are a two-sided positive tool; they not only convey respect to everyone with whom you interact, but they also command respect from those people. Good etiquette contributes to personal presence. Make sure you are really present and engaged with your interviewer, and watch your manners.

Good resumes and LinkedIn profiles may get you an interview, but they won’t get you the job, in a startup or a corporate environment. Entrepreneurs and investors have learned that success in the marketplace today is usually more about the people focus and customer focus of the team than the quality of the product. How many of these attributes can you highlight in your next interview?

Marty Zwilling

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Friday, September 9, 2016

Entrepreneurs With A Great Idea Need A Great Partner

Wozniak-and-Jobs-1976It only takes one person come up with a great startup idea, but in my experience as an investor, it’s a rare entrepreneur who has all the skills and resources to build a business as well as a solution. Yet I meet inventors and startup founders every week who balk at the thought of sharing the founder position. In my view, it’s a key reason that 90 percent of startups fail to launch.

It’s fine for one to be the visible head of the company, but if you look at recent great successes of recent times, almost always there is a partner behind the scenes who was key to making the right things happen. For example, Apple was initially built by Steve Jobs and Steve Wozniak, PayPal by Peter Thiel and Max Levchin, and Facebook by Mark Zuckerberg and four roommates.

Sometimes it’s just serendipity that brings the right players together, but more often it takes real effort, just like finding that perfect life relationship partner. I don’t have any magic formula for making it happen, but I do recommend eight key steps which definitely will improve your results:
  1. Look for people with complimentary skills and experiences. It may seem like a perfect match to find someone who thinks like you, but these don’t broaden your perspective and generally lead to disagreement on details. Inventors and engineers need business people, and creative types need a logical perspective to balance their dreams.

  2. Consider relocating to a more startup-friendly environment. Face reality. If you are having trouble finding partners and team members near you, you will likely also struggle to find investors and advisors. It’s easier to move before you have big local investments and people dependencies. Now is the time to set priorities on lifestyle and act on them.

  3. Expand your scope beyond friends and family. The best way to start is business networking through local groups and online forums. It’s always valuable to build relationships with other startup founders, as well as startup advisors and investors. Make an honest list of what skills and experience you really need to build the strongest team.

  4. Do online research on crowdfunding and partner dating sites. The challenge is to find people with your interests, but complimentary skills. Remote partners and teams are very common today, so don’t be afraid to contact others, including competitors. Examples of co-founder dating sites include Build It With Me, CoFoundersLab, and Founder2be.

  5. Look into other business areas and other cultures. Often times, the help you need is outside your familiar domain, and more into marketing, distribution, or manufacturing. It may be outside your country, in a different culture or environment. Many entrepreneurs outside the U.S. would love to partner with someone here, and bring much to the table.

  6. Don’t underestimate the value of experience and connections. Every first-time entrepreneur should find a co-founder who has built a startup before. Beyond that, connections to investors, suppliers, distributors, and major potential customers are almost always more valuable that technical or business organization skills.

  7. Test potential partner compatibility outside of the office. Startup co-founder relationships have to survive severe stress, disagreements, and changes in direction. Take your time in getting to know a potential partner on a personal and emotional level, as well as a business and technical level. Co-founder implies a long-term relationship.

  8. Negotiate and document task assignments and titles. Although you may have a clear view of your co-founder responsibilities, it probably doesn’t match your partner’s view. A simple partner agreement, signed by both parties and updated every six months, will prevent future breakdowns and lawsuits that have destroyed many promising startups.
Finding the right partner or partners is one of the most challenging, yet critical, tasks of a new entrepreneur. Don’t let your ego, procrastination, or greed get in the way of getting your startup of to the strongest possible start. Make it the beginning of a satisfying lifestyle and many startups together, rather than a frustrating and disappointing end to your dream.

Marty Zwilling

*** First published on Forbes on 09/02/2016 ***

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Wednesday, September 7, 2016

Turning Ideas Into A Business Requires Smart Selling

sales-successMost aspiring entrepreneurs believe that a great idea alone will assure business success. Experts argue that it’s more important to have a great plan, and personal business acumen. Hardly anyone mentions selling principles. Yet in this age when customers have a thousand alternatives, and are overwhelmed by a multitude of messages, sales efforts can make or break a business.

In fact, I believe modern entrepreneurs need to be super sales people, in the most positive sense, to their team as well as customers. I recently found the classic sales training book “Bootstrap Selling The Sandler Way,” by Bill Morrison, who has 20 years in sales leadership roles, and I was amazed at how many of his sales lessons are great lessons for new entrepreneurs as well.

Based on my many years of watching entrepreneurs struggle and too often fail, here are some of his key lessons for dedicated sales professionals that every entrepreneur should take to heart:

  1. Focus on what customers want to buy, not what you want to sell. You can either find customers for your solution or you can find solutions for your customers. The smart answer is to find solutions your customers need. Putting all your effort into driving your favorite solution can lead to forgetting the problem being addressed in the first place.

  2. Your first idea about where pain resides is nearly always wrong. Smart founders and smart salesmen look for customers with a painful problem, rather than pushing a nice-to-have solution. No pain usually means no sales. Then every startup has to learn to pivot, because their first understanding of the real problem is usually not quite right.

  3. Your price and their value are not the same thing. Entrepreneurs set the price of their solution based on their costs, and their perception of value. Customers set value based on similar products found. For example, with smartphone apps, most are free. Thus, no matter what your value, it’s hard to build an app business that makes money today.

  4. You and the customer have to be on the same side. Too many entrepreneurs, especially ones with work-at-home schemes and multi-level marketing, believe that someone has to lose to help them win. Like many salespeople, they see themselves as hunters. With the best solutions, the customer gets value which exceeds your revenue.

  5. You are not the servant of your customer. At the same time, every customer isn’t always right. Entrepreneurs need to be customer advocates, but not a slave to their every whim. Businesses must part quickly with low-profit or abusive customers to focus on those who deliver greater return, and appreciate the value their solution provides.

  6. Proactively look for problems, rather than react only. In every new business, as in every sales territory, problems happen. Reacting to a customer crisis is always more expensive to recover, than to view a problem brewing, and head it off with proper actions. That mentality has to be part of the culture of every startup team member from the start.

  7. Make the tough decision rather than no decision. It’s easy for entrepreneurs to postpone decisions in tough situations, in favor of more study. Yet a startup image can be destroyed more quickly than a big auto company, by not taking action on a customer problem today. Sales people alike, who won’t face their fears, lose in the long run.

  8. Telling isn’t selling. Having a snappy presentation on your solution or startup is great, but it’s only half the battle. Entrepreneurs need to actively listen to customers, investors, and other constituents, just like sales people need to listen before they talk. Push marketing doesn’t work well today, in the age of interactive networking and peer reviews.

  9. People buy from people and companies they like. Entrepreneurs who fail to invest in establishing rapport with their customers will suffer the same consequences as sales people who don’t put themselves in the shoes of their prospects. Through social media and customer interaction, you must convince customers that your culture matches theirs.

Morrison espouses a selling success triangle of good techniques, behavior, and attitude, to turn prospecting opportunities into business success and personal value. Again, these same attributes are equally relevant for an entrepreneur turning an idea into a business. So before you conclude that your technology alone will catapult you to riches, take a success lesson from some super sales people who have learned the hard way.

Marty Zwilling

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Monday, September 5, 2016

Smart Entrepreneurs Build Startups Without Investors

Garrett_Camp_UberIn my experience as an advisor to aspiring entrepreneurs, I often encounter the myth that an initial startup requires investors. The reality is that over 80 percent of new businesses will never attract venture capital or Angel funding, according to experts, and there are many good reasons for skipping that painful and distracting process. Outside funding is not a startup entitlement.

The media tends to highlight experienced entrepreneurs who succeed with early new venture funding, like Uber’s Garrett Camp, but fail to point out the more common bootstrapping successes. Notable examples include Bill Gates, Michael Dell and Richard Branson, who took no early outside money, and waited for confirmed initial success to go public or scale the business.

Here are some key advantages I see in starting a new business through bootstrapping, without outside investors:

  1. The business is all yours, and you are really the boss. Many aspiring entrepreneurs jump ship from corporate environments, complaining that they want to be their own boss, only to find that investors are more demanding bosses than the ones they left. You don’t have to fight for your equity, and no one can slow you down in decision making.

  2. A limited budget makes for a better business plan. Entrepreneurs who don’t have someone else’s cash for outsourcing come up with the more innovative and creative approaches to get things done. Flaws in a business plan are often masked by money, but ultimately will kill any startup. You need to see them quickly, and pivot as required.

  3. Startups need to stay nimble and adapt to change. After you have honed and given your investor pitch a hundred times, your mind and your investors are hard to change. Every startup I know has pivoted at least once, so learning from your mistakes should be a positive experience, rather than a painful error that will cost you credibility.

  4. Keep your focus on customers rather than investors. Even the best investors will dramatically increase your workload, with daily communication, agreement expectations, and business overhead. They normally expect a C-corporation versus a far-simpler Limited Liability Corporation, office space, and staffing efforts to fill key roles quickly.

  5. Don’t quit your day job until the revenue is flowing. Investors expect nothing less than a full-time commitment, even in the early stages when the business model has not yet been proven. Investor money burns quickly, and can leave your family with no startup and no means of support. For aspiring entrepreneurs, a fallback plan is always good.

  6. Keep later critical financing needs viable. Every round of investing makes the next more expensive and less likely. The most critical need for financing will come as you scale initial success, when you need money to cover new inventory, delayed receivables, and location expansion. Don’t let early funding increase risk and dilute your potential.

  7. Spread your equity internally to build the team. Bootstrapping doesn’t mean that you don’t share equity. You can use it best to entice outstanding team members and partners, building a level of commitment you don’t get with salaries alone. You can also use it acquire or merge with other companies for exponential growth.

  8. Keep your exit strategy options open as you learn. Investors want their money back, with sizable gains and no hassle, in three to five years. Thus they will insist on a sale or public offering at every opportunity, which will likely force you out. Your dream of changing the world may take longer, or be the legacy you want to stay with.

These days, it is possible to bootstrap almost any type of business, if you are willing to think creatively about deferred paybacks to developers, advances on royalties, equipment financing, and bartering of services. It’s also possible to extend your own investment capabilities with lines of credit, receivables factoring, and simply moving slower through organic growth.

Smart entrepreneurs understand that changing the world is not a mad dash to the finish line, but a long journey, with many twists and turns along the way. You will be more likely to get to your destination if you set out, your way, to enjoy the journey as well as the destination.

Marty Zwilling

*** First published on Forbes on 08/31/2016 ***

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Sunday, September 4, 2016

Entrepreneurs Need The Right Mindset Before Products

frustrated-basinessmanAs an Angel investor and a mentor to aspiring entrepreneurs, I’m always disappointed to see founders who seem stressed out most of the time, and more annoyed than energized by the abundance of challenges they see in building their startup. The entrepreneurial lifestyle is a tough one under the best of circumstances, and it’s one you have to love in order to succeed.

Obviously, it’s not that simple, but making the right first impression is critical for an entrepreneur, not just with investors, but also with partners, customers, and even yourself. Even though I’ve been working with entrepreneurs for many years, I’m sure I’m not the only person who can quickly spot the ones whose mentality for the role is suspect.

We would all prefer that aspiring entrepreneurs take a hard look in the mirror early, before they assume they can step easily into the role of a Mark Zuckerberg, Richard Branson, or Bill Gates. Here are some key mindset attributes to look for, which I believe are essential for every entrepreneur to see in themselves:

  1. You relish the role of leading the charge. Being a visionary or an idea person is not enough; you have to be anxious to jump in and get your hands dirty. Most success stories in business are not about envisioning the next big thing, but about making that change happen. Investors and strategic partners look for entrepreneurs who can execute.

  2. Able to balance right-brain and left-brain activities. Most technical entrepreneurs are left-brain logical thinkers, even perfectionists. Yet every business today needs a focus on visualization, creativity, relationships, and collaboration, which are normally in the domain of right-brainers. Successful and happy entrepreneurs have that rare whole-brain focus.

  3. Enjoy being outside your comfort zone. New businesses are an adventure into the unknown. You need to be mentally prepared to enjoy the roller coaster ride, rather than face it holding your breath with your teeth gritted at every turn. Only then can you enjoy the thrill of victory when you survive a major turn, and be energized for the next one.

  4. Proactively seek input, but make your own decisions. Great entrepreneurs seek out critical customers and industry experts, and actively listen, but are not afraid to trust their own judgment as well. Ultimately they accept the responsibility of “the buck stops here,” meaning they live by their own decisions, and never make excuses.

  5. Willing and able to do a little bit of everything. Technology experts tend to have a very deep level of knowledge, but not very wide. If your real interests are not very broad, then building a business will likely be frustrating and expensive. Startups have limited resources, so the founders have to enjoy trying things, and learning from their mistakes.

  6. Viewed by others as a successful problem solver. The best ideas for a new business are solutions to a real customer problem, rather than great ideas looking for a market. Creating a new business means tackling one difficult problem after another, until success suddenly appears. Entrepreneurs see problems as milestones to success, not barriers.

  7. Don’t demand or expect immediate gratification. Seth Godin once said “The average overnight success in business takes six years,” and he is an optimist. For some entrepreneurs that success is financial, and for others it is a legacy of good deeds. Because it takes so long to get there, it is important to be happy with the journey.

I’m not suggesting that you need to fit every aspect of my view of an entrepreneur’s mentality for success. Certainly there are winning businesses run by people from every background and personal style. But if you are looking for investors, team members, and demanding customers, it helps to understand what their biases might be in committing to and helping the ideal partner.

I do believe that if every aspiring entrepreneur spent at least as much effort looking inward, understanding their own drivers and preparing, as they do in working outward by building solutions, seeking investors, and writing business plans, the startup success rate would go up.

Overall, the entrepreneur mentality is a state of mind that enjoys the activities and requirements of starting a business. Happiness is more likely to lead to success, than success leads to happiness. Are you certain that your desire and expectations of being an entrepreneur are being driven by the right perceptions?

Martin Zwilling

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