Monday, October 31, 2016

8 Steps In Securing A Bank Loan To Fund Your Startup

Seal_of_the_United_States_Federal_Reserve_SystemA common question I get is “How do I get a bank loan to fund my startup?” The default answer is that it probably won’t happen, because most banks just don’t make bank loans to startups. The failure rate is just too high, and startups typically don’t have the assets or revenue stream to back up the loan. That’s why Angel investors are so sought after by entrepreneurs.

In my experience, some startup founders do overcome these odds, but you need to be realistic and do your homework. Here are some tips and rules of thumb to improve your odds and help you understand when a bank loan or line of credit is possible, and how to get it:

  1. Write a good business plan first. Approaching a banker without a business plan, and asking for money, is a sure way to be rejected and leave a bad first impression. Pay particular attention to the financials, and have a CPA friend review for reasonableness before presenting.

  2. Clean up your credit rating before you apply. Good credit ratings, both personal and business, are essential to getting a loan or line of credit. This is just common sense, since every loan has a repayment schedule, and your credit score reflects your track record of paying bills on time.

  3. Pick a business domain that is squeaky clean. Certain business sectors have historical high failure rates and are routinely avoided by banks and investors. These include food service, retail, consulting, work at home, and telemarketing. Also, don’t expect enthusiasm for your gambling site, porn site, gaming, or debt collection business.

  4. Show a significant personal investment. Most loan programs, and most investors, want to see that you have “skin in the game’ before helping you. If you have nothing at risk, your own level of commitment is suspect. As a general rule, your investment should be at least 20% of total projected loan requirement.

  5. Demonstrate an ability to repay from revenues, not collateral. Bankers will insist that you have collateral to back the loan, like equipment, or even your home. They actually prefer to see that you have a revenue stream to repay the loan, since they don’t want to own another home. The more conservative ask for two years of positive cash flow.

  6. Demonstrate experience in starting a business, ideally in this domain. Bankers, like investors, fund people rather than ideas. Your idea alone will not get you a loan, but your experience running businesses may get you a loan, even if not intimately related to the current proposal.

  7. Conduct meetings at your site, not at the bank. You have an advantage if you can get them on your turf, and even get several key employees to tag-team the presentation. If you are a startup operating out of your garage or basement, you are likely too early in the cycle to get banks interested.

  8. Eliminate your salary from the use of funds. Most startup founders don’t take a salary for the first year or two, since most investors as well as bankers won’t give you money so that you can pay yourself. The most positive use of funds is to buy raw materials to build product for existing customer orders. In fact, customer orders are great collateral.

Even if you can’t meet all these criteria, it’s definitely worthwhile to utilize the free services of the Small Business Administration (SBA) and SCORE in the US to get their help in preparing for the loan option. They have contacts with the more “startup friendly” banks in your area, like Silicon Valley Bank, and might even be able to arrange a “loan guarantee” if you meet these criteria.

In all cases, the loan option should be investigated before looking for an Angel investor, since the “cost” of a loan is usually considered less than giving up a large share of your company equity and control to Angel or venture capital investors. I’m told that 21 companies on the Inc 500 list started with bank loans, so you can do it too.

Marty Zwilling

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Sunday, October 30, 2016

11 Ways To Start Pulling Customers To Your Solution

customer-relationshipTraditional marketing says you have to “push” your message out to customers, over and over again, to get you remembered. A more effective approach in today’s Internet and interactive culture is to use “pull” technology to bring customers and clients to your story. You pull people in by providing new content with real value on your website at least every few days.

Guy Kawasaki, in his classic book “Enchantment: The Art of Changing Hearts, Minds, and Actions” provides some in-depth recommendations on the “how to” of pull technology. Here are some of his recommendations for web sites and blogs that I particularly recommend to entrepreneurs and startups:

  1. Provide good content. This may seem obvious, but how many websites have you reviewed that are static and just plain dull? A website or blog without appealing or entertaining content for your market segment is not enchanting.

  2. Refresh it often. Ideally, you should update content at least every two or three days. Good content that doesn’t change isn’t good for long, and customers or clients will not return to your website or blog if you don’t regularly provide something new.

  3. Skip the flash (and Flash). You may think it’s cool that a sixty-second video plays when people enter your site, or pop-ups occur with every interaction. Most people come with a purpose, and if you won’t let them get to it immediately they won’t come back.

  4. Make it fast. It’s a shame when anyone can get right to your home page, but then has to wait for it to load. With today’s technology, there’s no excuse for a website that takes more than a few seconds to load.

  5. Sprinkle graphics and pictures. Graphics, pictures, and videos make a website or blog more interesting and enchanting. If you’re going to err, use them too much rather than too little, except for a Flash front-end and popups.

  6. Provide a “Frequently Asked Questions (FAQ)” page. People love FAQs because these cut to the chase. Figure out what the most common questions might be and answer them in one place to minimize hassle.

  7. Craft an “About” page. Visitors should never have to wonder what your organization does and why you do what you do. Provide all this information in an About page. Confusion and ignorance are the enemies of enchantment.

  8. Help visitors navigate. Enable people to search your website or blog to find what they are looking for. Also, a site map helps people understand the topology of your website. Forcing paging to complete a single message (to expose more ads) is not enchanting.

  9. Introduce the team. Few people these days wants to deal with a nameless, faceless, and location-less organization. A good “Who Are We?” page solves this problem, and is necessary to establish trust and expertise.

  10. Optimize visits for various devices. No matter what device people are using, your website and blog should look good. These days, 20% or more of your audience will be using smart phones or iPads, and they’re probably the most relevant customers.

  11. Provide multiple methods of access. Some folks like websites and blogs, and others prefer RSS feeds, email lists, Facebook pages, and Twitter feeds. Provide multiple methods to engage people and make these options easy to find.

Let’s face it, static websites are dead. You need a blog and social media interaction to keep your content fresh and responsive to the market. Interaction and repeated visits due to the pull of enchanting content will transform a potential customer transaction into a relationship. Everyone remembers a relationship.

Marty Zwilling

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Saturday, October 29, 2016

7 Lessons For Founders On How To Stick Your Neck Out

Western_painted_turtleWillingness to take a risk is the hallmark of a serious entrepreneur. That’s why one of the first questions that potential investors ask is “How much of your own money, and friends and family, have you put into the new business?” If you won’t risk yours, you won’t get investors to risk theirs.

A while back I read the classic book “When Turtles Fly” by Nikki Stone, an Olympic champion, which explains this well. She provides many examples of success stories from entrepreneurs to Olympians. She proclaims that if you want to be successful, you need to be soft on the inside, have a hard shell, and willing to stick your neck out (“Turtle Effect”).

She goes on to outline seven lessons that are key to mastering the Turtle Effect, and I believe that you need to relate to every one of these before you can dare to even call yourself an entrepreneur:

  1. Find your passion. Entrepreneurs, like Olympians, tend to put a competitive spin on anything they find a passion for, and once they are snagged, they have to win. This passion, while it is your soft inside, is probably the single most important factor in achieving business success.

  2. Make sure you are focused. This is where many entrepreneurs fail. If you try to do too many things at once, you probably won’t do any of them well. All successes are best achieved from a root focal point, one step at a time, through focus on the questions and focus on the process.

  3. Get committed. No one truly understands how much they can accomplish until they develop their hard shell of commitment to a goal you really want. The commitment has to not be one day, or someday, but today. Nothing good comes without hard work. In business, that means first put it in writing with a business plan.

  4. Overcome your adversities. Adversities are the norm, not the exception. We all face them, and a few overcome them. Today it is the economy, tomorrow it could be your health. Successful people bounce back, plan for the unexpected, stop the downward spiral, and enjoy the rewards of a comeback.

  5. Believe in yourself. Confidence is not something that we are born with. It’s something we develop. Peter T. Mcintyre said, “Confidence comes not from always being right, but from not fearing to be wrong.” Focus on your own strengths. Pick a positive future goal, and visualize success. Then go for it.

  6. Take some risks. Be willing to stick your neck out. The best entrepreneurs always believe their startups will thrive despite the odds. Don’t worry if you feel some fear. Fear is a natural emotion, and fears can actually help us to be alert. Especially, you must not fear failure. People learn more from failure than from success.

  7. Use teamwork. No one in business gets to the top alone. The real genius is in recognizing where and when you need support. Finding support is the easy part. Using someone else for support may even allow you time to turn your attention toward more important issues.

Remember that there is no business without sticking your neck out, and no approach that will eliminate risk entirely, so learn to live with it and manage it. Most experts agree that entrepreneurship is more about reducing risk and managing failures, than it is about pure willingness to take risks.

So if you want to be an entrepreneur, you need to learn the secrets of successful people who know how to stick their neck out, but maintain a hard shell. Practice the seven lessons outlined above, and enjoy rather than suffer through the entrepreneurial adventure of a lifetime.

Marty Zwilling

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Friday, October 28, 2016

7 Accepted Startup Principles Violated By Steve Jobs

Steve_Jobs_HeadshotSteve Jobs was a one-in-a-million entrepreneur who seemed to violate many conventional rules of starting a business and dealing with people, yet undeniably achieved great success. According to various reasonably credible reports, including his authorized self-titled biography “Steve Jobs,” by Walter Isaacson, he often ignored customer input, berated team members, and misused key business relationships.

As a result, I don’t recommend to aspiring entrepreneurs that they try to emulate his style as a model for their first startup. I don’t proclaim to understand the genius of Steve Jobs, or how his unconventional approach led to success, but I do know some accepted startup principles that he seemed to go out of his way to violate:

  1. Validate your vision with real customers. Steve Jobs once proclaimed, “It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them.” While this approach makes some sense for “paradigm shifts,” most new entrepreneurs can’t survive the high marketing costs, high risk, and long acceptance cycles of big changes. Even Steve Jobs struck out several times with this approach.

  2. Nurture business relationships with key industry players. It is a good thing to have strong convictions, but not so smart to actually feud with potential partners. Steve Jobs battles with Bill Gates are legendary, as well as his breakup with John Scully and others. Most successful entrepreneurs learn from relationships without jeopardizing them.

  3. Establish trust and communication with your team. Jobs was exceptionally hard on key member of his team, starting with Steve Wozniak. He was prone to emotional outbursts which caused team members to “walk on eggshells” around him, and often not share realities. Management by fear is not a recommended style for business success.

  4. Define a solution within the realm of the possible. Bringing innovation and real change to the market does not mean demanding the impossible from your team. Jobs had the reputation of pushing people to “bend reality” through sheer mental force, and it sometimes worked. In my experience, most good teams break and fail under this assault.

  5. Look for startup opportunities within your area of expertise. According to Steve Wozniak and others, Jobs did not understand technology and was not an engineer. Yet somehow he was able to drive great engineers to implement his vision of “insanely great products.” For better odds of success and funding, I recommend you chose a domain where your expertise can help you avoid the impossibilities.

  6. Don’t hold out for perfection on the first iteration. Jobs’ passion for the perfect solution and the perfect product launch seemed to be the key to his long-term success, but caused him to miss release dates, cost targets, and even markets (with NeXT). For the rest of us, I recommend the minimum viable product (MVP) lean startup approach.

  7. Don’t count on multiple failures catapulting you to success. Most entrepreneurs have learned to wear an initial failure like a badge of courage, highlighting what they have learned and destined not to make the same mistake twice. Yet they realize multiple high-visibility failures make it hard to find quality teams, partners, and investors. According to many counts, Steve Jobs suffered at least seven failures, but never lost his credibility, and is still remembered as one of the most successful entrepreneurs of this era.

At the same time, Steve Jobs was a strong advocate of other key startup principles for success, including creating insanely great experiences (not just products), following your heart to do what you love, and thinking differently to produce real innovation. He was also a master marketer who believed in selling dreams, not products.

The bottom line is that every entrepreneur is unique, and there is no magic formula for success in business. Thus the more you know about yourself, the market, and technology, the more likely you will be able to achieve success. Steve Jobs didn’t want to follow conventional principles, but he also didn’t believe in going into business with blinders on. That’s a model for all of us to follow.

Marty Zwilling

*** First published on Inc.com on 10/13/2016 ***

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Wednesday, October 26, 2016

Build On-Demand Teams Instead of Hiring Employees

LisaHufford.com_photoWith the pace of change ever escalating, entrepreneurs today can’t afford to acquire talent through traditional hiring alone, and need to revise the perception that “talent” is only full-time employees. At the same time, more people in the workplace don’t want to be “employees.” According to an Intuit study, that number is quickly rising and will approach 40 percent by 2020.

The answer to both is a new fast and flexible talent strategy based on freelancers, consultants, experts, and specialists, who are part of the new “1099 economy” including Baby Boomers and Millennials. I just finished a new book, “Navigating the Talent Shift,” with convincing arguments for this approach by Lisa Hufford, Founder of Simplicity Consulting talent solutions.

The author outlines eight necessary steps for every business and entrepreneur to capitalize on this movement to on-demand project teams, versus permanent hires. These steps are the new keys to driving business innovation, controlling costs, staying nimble, and getting better results:

  1. Build teams to meet goals rather than organization charts. Too many entrepreneurs, as they grow their business, are focused on hiring to fill a traditional organization chart, rather than acquiring skills and talents to meet their current goals and needs. They use generic job descriptions and plan for long-term business stability, which rarely happens.

  2. Focus on deliverables and skills required right now. Conventional hiring strategies usually follow a vanilla approach to talent acquisition. It’s a numbers game of filling positions, without clarity on the expertise needed to deliver now. With contract players, you assume a project duration, with easy transition to new players for the next campaign.

  3. Prioritize objectives and seek expert talent to match. For example, if your first scaling effort is a global one, you should be prioritizing “global launch experience.” The notion of holding out for the “expert in all domains” wastes too much time, effort, and money. In fact, you will never predict required pivots, and generalists rarely outperform specialists.

  4. Build an on-demand team of strategic do-ers. The most effective people to execute strategic initiatives are likely ones who have recently led similar activities in multiple related environments, not ones who have been grown and trained inside. This team of specialist consultants is then easily tuned as your strategy evolves based on the market.

  5. Think in terms of projects to keep up with an evolving strategy. Each strategic priority should be managed as a project. Some projects are big and long-term, while others are small and more tactical. Projects need not be constrained by organizational boundaries, long-term budgeting, or conventional staffing and training practices.

  6. Stay nimble by quickly filling gaps in the existing team. When you identify a skills gap or feel you need additional expertise or insight, signing up on-demand help is the only timely solution. Assigning an existing team member who isn’t qualified, or is already overloaded, will likely delay both projects, and kill existing team member motivation.

  7. Leverage the broadest possible network. The on-demand specialized talent pool already includes 65 million people not interest in being full-time employees. By leveraging this broader network, you will improve your probabilities of finding the right skills and experience for your current project, and bring fresh ideas and solutions into your team.

  8. Maintain budget flexibility as the business changes. By leveraging on-demand experts, you pay only for the vital work you need immediately, not the overhead and ongoing costs (development, training, severance, benefits) that go along with hiring full-time employees. It’s the best way to handle budgetary restrictions and cuts.

This on-demand talent model, dubbed SPEED by the author (Success, Plan, Execute, Evaluate, Decide), is good for the company, and good for all specialized, dedicated, and high performing people in the workforce today. Your company gets the flexibility to adapt quickly to the needs of a rapidly changing marketplace, and workers get to broaden their experience in the work they love.

We are living in an on-demand world and an on-demand economy, ranging from the movies we watch, to manufacturing and delivery, to the computer resources we need. Welcome now to the on-demand workplace. It’s here to stay.

Marty Zwilling

*** First published on Huffington Post on 10/25/2016 ***

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Monday, October 24, 2016

Every Entrepreneur Wins With A Goal-Oriented Mindset

goal-oriented-mindsetSuccessful entrepreneurs are usually hard-driving, and highly focused on some specific goals, like being the dominant player in a given domain, or the low-priced provider of their product. Yet other entrepreneurs will talk for hours about all their ideas, and how they intend to change the world, but I don’t hear any specific goals or milestones.

Many people are very hesitant to set specific goals, due to lack of self-confidence or whatever. The result is that they don’t ever get anywhere, because they never really knew where they wanted to go. If you find yourself in this category, try the following simple steps highlighted by Brian Tracy in his classic book “No Excuses: The Power of Self-Discipline”:

  1. Decide exactly what you want. If you want to increase your income, decide on a specific amount of money, rather than just “make more money.” Without precise goals, you can’t measure progress, and you miss the real satisfaction of knowing when to declare success.

  2. Write it down. A goal that is not written down is like cigarette smoke; it drifts away and disappears. It is vague and insubstantial. It has no force, effect, or power. It’s too easy to forget or push aside when outside forces arise that you hadn’t anticipated – and they will. On the other hand, most people don’t hesitate to write down excuses.

  3. Set a deadline with specific milestones. Pick a reasonable time period and write down the date when you want to achieve it. If it is a big enough goal, set intermediate milestones for measurement reference points. The rule is “There are no unrealistic goals; there are only unrealistic deadlines.” Don’t be afraid to change the deadline – for cause.

  4. Make a list of things you need to do to achieve your goal. The biggest goal can be accomplished if you break it down into enough small steps. Make a list of obstacles and difficulties, knowledge and skills required, necessary people, and everything you will have to do to meet the goal. Add to these lists as you learn more.

  5. Organize your list by both sequence and priority. A list organized by sequence requires that you decide what you need to do in what order. A list organized by priority enables you to determine what is more important. Then develop a business plan which embodies all of the above.

  6. Take action on your plan immediately. Don’t delay. Move quickly. Procrastination is the thief of time, and it shortens your life. Winners in life take the first step now. They are willing to overcome their normal fear of failure and disappointment, and take a small step, and then other one, until they reach the goal.

  7. Do something every day that moves you in the direction of your major goal. This is the key step that will guarantee your success. Do something every day that moves you at least one step closer to the goal. In this fashion, you develop momentum, which further motivates, inspires, and energizes you. Soon it becomes automatic and easier.

You can’t control the future, and that’s not the purpose of goal setting. It’s also a recipe for failure to assume that the path to your goal will require suffering and sacrifice. In fact, the whole objective of all steps above is to allow you to avoid stress and suffering, and be more fully motivated by your progress.

As you adopt a goal-setting mindset, you will find yourself setting different kinds of goals. These are lifetime goals, not just a collection of near-term objectives. It’s these really big objectives, that seem unachievable even to you right now, that will inspire you the most, and motivate you to real success and happiness.

Marty Zwilling

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Sunday, October 23, 2016

How Entrepreneurs Select And Nurture Top Performers

choose-top-performersIsn’t it amazing that some people you know always seem to be working hard, but never seem to get anything done? As an entrepreneur, you need to avoid partnering with these people, or hiring them into your startup. The challenge is to find people who get things done, as well as work hard. LinkedIn profiles and resumes still focus too much on responsibilities rather than results.

The best entrepreneurs never confuse motion with results. It’s easy to find people in every organization rushing around from one meeting to the next, often working overtime to generate more work for themselves and other people, but rarely taking the action to close an issue or contract. We all need more people around us who make every motion mean something.

So how do you recognize those few people on your team who are getting things done, or even recognize ahead of time those who have that potential? Such people are different, but are not necessarily the smartest or the most skilled. But they do seem to have some common characteristics and approaches that you can look for:

  1. Possess street smarts, as well as skills and experience. People like this quickly figure out how businesses really work, and how to resolve the challenges in their business. They have a special ability to cut through the confusion, dodge any head-on collisions, and negotiate compromises leading to required actions and resolution.

  2. Able to avoid or navigate the politics of the organization. Understanding politics is not the same as being a politician, or using political clout. People who get things done don’t worry about building their own image, but they are politically astute enough find alternate routes around the political and power bastions.

  3. Recognize what it takes to get power leverage, but don’t blatantly use it. The key is to be open and listen to recommendations from those who have to be moved, and find a way to create win-win situations, rather than win-lose. They get things done by using their power to get recognition for key players, rather than for themselves.

  4. Maintain a laser focus on narrowing the scope, rather than expanding it. This means effective negotiating to eliminate sidetracks, combat opinions with facts, and finding the glass half-full, not half-empty. It requires being able to accurately assess the position of others, find some common ground, and snapping people back to reality.

  5. Able to negotiate agreements without committing to future paybacks. People who get things done are driven by an insatiable desire to make progress and help others. They are not looking to build a cache of favors or special attention, and are not willing to make deals that compromise the solutions and can come back to haunt them.

  6. See every problem as an opportunity to innovate, rather than a chance to fail. Obstacles are seen as innovative and creative challenges, not barriers. All the reasons something can’t be done are replaced by better ways to get it done, quicker and at less cost. Nothing is immutable, even the culture of the organization or the business.

  7. Able to balance the paradoxes of highly effective leaders. People who know how to get things done can be analytical as well as intuitive, aggressive or patient as required, and confident and humble at the same time. They instinctively know when and how to escalate issues to the right level, without stubbornly entrenching their position.

To get things done more effectively, people need to really think about each element of their work before they make a move. By culture and habit, many of us expect most of our daily work and personal activities to be pre-defined, and we just go through the paces (the way it’s always been done). We need to practice overt thinking about desired outcomes, to make them a reality.

If your desired outcome is to move up in the organization, or just to get more satisfaction from your daily efforts, now is the time focus on the attributes listed above, and emulate the people on your team who get things done. If you are the entrepreneur or executive in the organization, make sure you are the role model in execution and in hiring. That’s the only way to win in the long run.

Marty Zwilling

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Saturday, October 22, 2016

6 Ways To Create Experiences That Customers Crave

Nick-at-ESXFor decades, efforts to satisfy customers have been built around demographics – capitalizing on race, ethnicity, gender, income, and other attributes. Today, in this age of pervasive social media and two-way communication, the focus needs to get beyond demographics into personalities. Customer personalities define customer experience, and sets what they love, and what they hate.

Even businesses with highly specialized market segments will find it more effective and simpler to focus on who customers are as people, rather than the “what” of their demographic attributes. Customers today expect highly personalized and exceptional experiences to stay loyal and become advocates, rather than just conventionally “satisfied.” Satisfied is far from memorable.

The challenge for every entrepreneur and every business is to understand the pragmatics of identifying and reacting to what their customers love and what they hate. I found some excellent guidance on the specifics in a new book, “What Customers Crave,” by Nicholas J. Webb. As a popular strategist in the areas of customer experience design and innovation, Webb knows.

He outlines six key steps in your journey from yesterday’s customer service to today’s required delivery of exceptional customer experiences:

  1. Define the whole customer experience versus service. Traditional customer service, focused on fixing bad transactions, is too little, too late. The total customer experience includes identifying with your company culture, the shopping experience, the customer-facing team and social media interaction, as well as resolution of any transaction glitches.

  2. Add the extra mile to make the experience exceptional. There is no one set of exceptional experiences that will work for all customers. That’s where you must know the personalities of your customers, to know what they love and what they hate. Ideally, you need to convince each customer that you have personalized the experience just for them.

  3. Display real customer value feedback versus value claims. Customers react poorly when they hear your value claims for them, and see more value to you (bottled water in your hotel room at a high price as a “convenience” to you). Customer value statements must come from customer feedback to other customers, rather than from your marketing.

  4. Build blended digital and non-digital experiences. Some businesses excel in customer-facing people, but have poor digital interfaces for feedback, shopping, or communication. Others have delivery silos, where one fragmented deficiency can override all other positives. Integrate and blend all elements of your customer experience.

  5. Train customer-facing team to collaborate with customers. Internal training and policies are not adequate to create great customer experiences. Employees must learn to develop relationships with real customers, and engage these customers to understand what each customer expects, and how to get customers to engage other customers.

  6. Assure exceptional commitment within your customer-facing team. Commitment means signing up willingly, showing up mentally, standing up for the customer, and never ever giving up. To get this, you need to find the best people for each role, give them the latitude to do their job, and reward them publicly and privately for achieving results.

Many business leaders still believe that exceptional experiences cost too much, and reduce profit margins and growth. In fact, just the opposite is true today, since more and more customers expect good feedback from others before they consider you, and decline to return if they don’t get a great first experience. The result is that an average business can spiral quickly into the ground.

If you are looking for a lasting competitive advantage, I recommend that you follow the steps outlined here to create experiences that your customers crave. It’s not only good for your business, but it will add meaning and joy to your customers, and will also enhance your personal satisfaction and well-being. That’s a win-win-win opportunity you can’t afford to miss.

Marty Zwilling

*** First published on Huffington Post on 10/21/2016 ***

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Friday, October 21, 2016

5 Keys To Crossing The Chasm To Mainstream Customers

Technology-Adoption-LifecycleEvery technical entrepreneur is an early adopter of technology, so naturally they build things with people like themselves in mind. Unfortunately, for most solution markets, early adopters represent only 10 to 15 percent of the total opportunity, so it’s easy to get mislead on the real requirements of mainstream customers. Psychologists call this the confirmation bias. I call it failing by early adopters.

The good news is that early adopters are never reluctant to sign up as beta customers and will provide you early feedback on product quality. The bad news is that they are not a good test of basic usability and ease of operation, which are always a key to the much larger market of regular customers. Consider the long market acceptance struggle of digital wallets and home automation.

Listening too much to early adopters often leads to an expensive death spiral, since these users will request more and more features, more precise control of the technology, and more interoperability, all of which increase the complexity of the product, and decrease the usability for the average customer. The result is a bigger and bigger chasm to cross to your real market.

Many in the business world has heard of the old bestseller by Geoffrey A. Moore, “Crossing the Chasm,” but most entrepreneurs don’t realize how much it relates to them. In fact, it’s all about understanding the differences between early adopters and mainstream customers, and managing your own marketing and development efforts to cross this deadly chasm.

Here are the critical points that you must understand for optimal product management and marketing to maximize results from early adopters, as well as maximize your opportunity from the mainstream later adopters as well:

  1. Collect feedback across the total range of customers. Early adopters may be the most vocal, and easy to sign up, but your technology assessment panel must include customers from the early majority, late majority, and even technology laggards. These last three groups usually comprise up to 85 percent of your real market.

  2. Usability features are as important as function. Features you designed for non-technical users, including wizards for setup, dashboards for overview operation, and simple buttons for complex processes, will get little or no feedback from early adopters. They will request and be more vocal about technically tricky and elegant features.

  3. Eliminate interface complexity and clutter. Early adopters are not intimidated by dense user interfaces, with more options to control the technology, and the flexibility to do almost anything. Regular users like to see more white space, and are more impressed with the Amazon patented one-click-buy button, to complete a purchase in one click.

  4. Balance your focus on engineering elegance. Many technical entrepreneurs continue to “tune” the system, and add new parameters for users to worry about, simply because they can. At some point, this becomes compulsive engineering, and the tradeoffs in time to market, cost, and user friendliness move the product out of the intended market.

  5. Early adopters are cool, so you need them to kick-start word-of-mouth. You certainly can’t afford to ignore early adopters, or antagonize them. They are your early opinion leaders, so they are required to build the image that the rest will follow. The challenge is to attract them with an innovative solution built on great technology, while still keeping it usable, timely, and cost effective for the rest of us.

Early adopters are a critical but small market segment that must be treated with respect. They can be your best evangelists or your biggest critics at that critical point when you are crossing the chasm to the larger mainstream customer segment.

But don’t ever be become complacent due to excitement and passion from your early adopters. You still need the same reaction from your other market segments, and an appropriate marketing strategy for scaling the business into other segments. Ten percent of even a large opportunity can still leave you in the valley of death, rather than the pinnacle of success.

Marty Zwilling

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Wednesday, October 19, 2016

How An Entrepreneur Can Win In This Age Of Disruption

TerenceMauriThe cost of entry to the entrepreneur lifestyle is at an all-time low, but the challenge of winning and success is at an all-time high. Anyone can build a new web site, or publish a smartphone app for a few thousand dollars, but getting market penetration requires a lot more. Customers have come to expect disruptive change, so yet another social network is not the way to get traction.

As an Angel investor, I quickly look behind the idea or solution, to gauge the mindset and the leadership capabilities of the entrepreneur. That’s why this new book, “The Leader’s Mindset: How to Win In The Age Of Disruption,” resonated strongly with me. It was written by Terence Mauri, who has worked extensively with Sir Richard Branson and the London Business School.

Mauri offers some practical, actionable advice for entrepreneurs who want to develop a leader’s mindset, on how to spread the right message to potential customers, as well as investors. He outlines three shortcuts for simplifying how we think, how we act, and ultimately how we lead, which I have paraphrased and amplified here:

  1. Expand your mindset to think better by a factor of ten. Most entrepreneurs think about how they can improve cost or usability by ten or twenty percent. When was the last time you set a challenge for your team that pushed all of you to deliver more than you thought was humanly possible? People who shape the future, like Steve Jobs, do this.

  2. Push your mindset to tackle the seemingly insurmountable. A bold mindset excels at speed, creativity, and decisive action. Entrepreneurs in this category are real risk takers, such as Elon Musk. He recommends imagining creative solutions to a problem to “cut through the noise and focus on the signal.” Take a hard look at SpaceX or HyperLoop.

  3. Develop a learn-fast mindset to seek the latest and the future. Those who proactively seek knowledge and learn fast build knowledge pools and tap into the wisdom of mentors and industry leaders to raise their game. For them, adapting and stretching their limits is the norm. They learn from their mistakes, and collaborate with well-connected people.

Leadership on ideas is a start, but entrepreneurial leadership requires the ability to deliver on the new reality as well. The best entrepreneurs relish the opportunity to overcome the personal and team obstacles that come with every team contemplating disruptive change, including the following:

  • Fear of failure, fear of the unknown, procrastination, and doubt. All these fears can cause flight-fight, freeze behaviors, or a hasty retreat from dreams, goals, and plans for disruptive change. Fear keeps your mindset locked in a state of helplessness and will stop you from reaching your goals.

  • Constrained by talent shortages and lack of commitment. A key requirement for every disruptive entrepreneur is to fuel the organization’s growth by attracting and nurturing the best and most committed talent. The best leaders find a team and every individual unique strength to do great work and make a difference beyond chasing profit.

  • Dragged down by excuses, inertia, and negative energy. A top priority of all entrepreneur leaders is to avoid falling victim to “somebody else’s problem (SEP).” Lack of accountability is a mindset that is diametrically opposed to the required leader’s mindset. Don’t let this contamination infect you, your team, or your disruptive venture.

Overall, the leader’s mindset begins with zero compromise on purpose. It demands that you believe in what you are doing from the heart, and that your contribution is essential to the future world you envision. This must be matched with the intellectual courage to change business models multiple times to remain viable, based on real-time feedback from the market.

Becoming an entrepreneur is easy, but winning is still tough. Do you have the leader’s mindset required to compete and win?

Marty Zwilling

*** First published on Huffington Post on 10/18/2016 ***

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Monday, October 17, 2016

Accelerate Your Startup With Help From An Incubator

Y_Combinator_Summer_2009One of the reasons that now is the time to be an entrepreneur is the explosion of startup assistance organizations, usually called incubators or accelerators. According to the National Business Incubator Association (NBIA), there are over 7,000 of these locations worldwide, and new online versions springing up all over the place, like Founders Space in Silicon Valley.

Most of these are non-profits, set up by a university to commercialize new technologies, or a municipality to foster business development for the local economy. A few are still trying to make a profitable business out of nurturing startups, but it’s a challenge to make money when your customer startups don’t have many resources to give.

But there are notable examples of for-profit incubators that are thriving, including YCombinator, led by Paul Graham in Silicon Valley, and TechStars, led by David Cohen and located in several key cities around the country, that have an excellent reputation and track record. I believe their competitive advantage is their top on-site leadership, exclusivity, and connections to investors.

Variations on the incubator theme are sometimes called business accelerators, science parks, or the Small Business Administration's Small Business Development Centers (SBDCs) in almost every state in the U.S. Accelerators generally accept startups at a slightly later stage, and attempt to compress the timeline to commercialization into a few months, instead of a year or more.

Common resources provided by most of the incubators and accelerators today include the following:

  • Access to shared office facilities for multiple startup teams at a very low cost.
  • Shared business support services, including telephone answering, conference rooms, teleconferencing, administrative support, and a business mailing address.
  • Mentoring and technical assistance from volunteer or paid experts.
  • Direct seed funding, for a share of the equity, and introductions to investors.
  • Peer-to-peer networking with other startups and founders in the same stage.
  • Health, life, and other insurance at group rates.

If you don’t need these common resources, but need specialized technology services, you should look for technology parks and research facilities, often sponsored by leading companies in specific technologies, like Intel New Business Initiatives and Google Ventures. As well, these companies usually bring real new venture funding opportunities to the startups they sponsor.

To get started, go to the National Business Incubation Association (NBIA) web site, and use the lookup tool provided to see what’s available in your area. This association is definitely one of the world’s leading organization for advancing business incubation and entrepreneurship. Another good online approach is a simple Internet search for articles like the “The Best Startup Accelerators Of 2016

But don’t expect incubators to magically convert your pre-hatched idea into a successful company. The good incubators are highly selective, and expect you to demonstrate your commitment and a hard work ethic to meet expected milestones and show continuous progress. According to some recent feedback, YCombinator takes roughly 3 percent of applicants who apply to each batch cycle. Assuming 60 companies are accepted in a specific batch, that would mean around 2000 companies applied. That’s about the same ratio that Angel investors claim.

I believe the real value of an incubator is in the relationships you can build there, with peers as well as domain experts, investors, and potential strategic partners. An incubator won’t help you if the market opportunity is small, the competitors are large, or your solution doesn’t address a real need.

As evidence that it does work, VentureBeat calculated in 2015 that YCombinator startups had raised over $7 billion, with a $65 billion total valuation. In fact, eight were already billion dollar unicorns. That’s over 500 successes in less than ten years. However, if you are looking to find an incubator like YCombinator for easy money and free services to hatch your startup, it probably won’t work.

Growing up and surviving in the entrepreneur world requires a fine balance between an independent determination to be self-sufficient, and a humble willingness and ability to listen to and learn from the best and the brightest startup mother-hens out there. Are you and your startup ready to make the cut?

Marty Zwilling

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Sunday, October 16, 2016

You Can’t Build A Business Without Accountability

John-Miller-QBQMaybe it’s just me, but I sometimes feel that accountability is a rare talent in business today. In big businesses, people are quick to defer with “that’s not my department,” and even startup founders too often blame failures on the economy or the lack of investors. As an investor and advisor to entrepreneurs, I see accountability, or lack of it, as an override to even the best idea.

I believe accountability is a personal decision that we all can make, largely driven by personal confidence and determination, and is certainly one that we can learn. It’s not baked into our DNA, and there are many resources available to direct improvement.

For example, I found some great guidance to the how, why, and who of accountability in the newly released “QBQ Workbook,” by John G. Miller and Kristin E. Lindeen. Miller is well-known for his classic bestseller on this subject, “QBQ! The Question Behind The Question.” His advice starts with a request to stop blaming, and start asking, “What can I do to improve this situation?”

Very refreshing. If you are an entrepreneur building a new business, there are many things along these lines that you can and must do, including the following:

  1. It’s up to you to be the model of accountability. Don’t expect your team to be accountable, if they often hear you complaining about the workload, competitors, or partners. Accountability is a culture that starts from the top, and is reinforced by your hiring of skilled and positive people, delegating responsibility, and rewarding results.

  2. Clarify and constantly reinforce expectations. Team members can’t be accountable unless they know what is expected of them, and they understand how to deliver. Communication must be ongoing, both written and spoken, followed by some active listening on your part, to understand the gaps. Remove the “I didn’t know” excuse.

  3. Set measurable goals and objectives, with benchmarks. Accountability assessments must be based on objective facts, not opinions, politics, or a desire for power. Setting expectations beyond the realm of possibility, or frequently changing them, does not lead to accountability. Provide the tools for team members to measure their own results.

  4. Align individual responsibilities with relevant business goals. Team accountability must be correlated to responsibility and relevancy. You can’t hold your sales team accountable for manufacturing quality, but they should be responsible for profitability and volume. When expectations are aligned with motivation and interests, everyone wins.

  5. Truly delegate responsibility and decisions. Accountability can’t happen without control. If your management style is to make all the decisions yourself, don’t expect any accountability from your team. If you find yourself buried in work, with no time off, and feeling indispensable, it may be time to ask direct reports to call you out on delegation.

  6. Accountable teams need timely and actionable feedback. Getting to the source of problems should never involve blame. Accountable people need safe havens where challenges and performance can be discussed, individually and as a group. The goal must be continuous improvement and learning, not accusations and penalties.

  7. Provide resources and training to enable accountability. Tools and data are necessary for accountability, but must not be allowed to be the absolute determinant of a response. Provide the tools, but trust the people. Other necessary resources include training, reasonable financial leeway, mentoring, and access to relevant executives.

  8. Accountability requires consequences, both positive and negative. People who demonstrate accountability must be rewarded (awards, acknowledgement, promotion). In the same context, team members who consistently make excuses must be moved out of the organization to minimize the impact on others. No consequences mean no learning.

The best part about a focus on accountability is that it leads to real change, learning, and action, and these are the keys to entrepreneurial survival. When a business stops changing and learning in today’s fast-moving world, it stops growing and thriving. Every business is really a set of people. Are you growing and thriving?

Marty Zwilling

*** First published on Huffington Post on 10/15/2016 ***

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Saturday, October 15, 2016

7 Tips For Aspiring Entrepreneurs Who Stay In School

Harvard_Business_SchoolA popular myth these days is that finishing college only dilutes your entrepreneurial instincts, and the best of the best, including Bill Gates, Steve Jobs and Mark Zuckerberg, dropped out early to hasten their success. I agree with Robert E. Litan, former VP of research at the Kauffman Foundation, that these are exceptions to the rule, rather than a model to emulate.

Some people even believe that entrepreneurs must be born with the right genes, and no element of education is relevant. While I do agree that many attributes of a good entrepreneur, such as curiosity, confidence and determination, are largely determined by early-life experiences, a good education is critical in understanding the elements of creating a business and wooing customers.

In my view, the most effective entrepreneurs are those with a background of an array of real-life experiences, both positive and negative, as well as good academic and coaching activities. In fact, failure has been shown to be a better teacher than success, so parents and schools who protect their charges from any failures may not doing them any favors in the long run.

While we all know a few good entrepreneurs who dropped out of school, the Internet is full of stories on many more who capitalized on at least four years of college, including Sergey Brin and Larry Page of Google, Chad Hurley of YouTube and Bob Parsons of GoDaddy.

A more important question, then, for an aspiring entrepreneur, should be what to study in college for maximum value, rather than whether to drop out or stay. Here are my thoughts on the right focus at a college or university:

  1. Take entrepreneurship courses, but major in a more specific discipline. Depth in a specific business area, such as marketing or accounting, is important in understanding the internal and external processes of a business. Entrepreneurship is more about pulling all the elements together, making change happen and building relationships.

  2. Practical business courses are better than an advanced degree or MBA. Starting a business is not rocket science. A breadth of understanding of common business principles, such as management, personnel and finance, is more important than a depth of knowledge in a technical area. Don’t forget business writing and communication.

  3. Get involved in startup-business incubator activities with peers at school. Most universities have formal incubator and business development organizations that focus on coaching, grant writing and technology licensing. These present a huge opportunity to take your first steps as an entrepreneur with minimal risk and maximal support.

  4. Produce a real business plan for critical feedback from outside investors. It’s important to go well beyond the passionate idea stage. Writing a business plan is the only way to determine if you even understand what your dream is all about. Once you graduate, the feedback will cost much more, and it’s too late to take one more course.

  5. Extend your networking into peer interest groups outside your school. Start with your school connections with peer universities around the world. Then branch out to local business groups. Peers won’t be able to help you much in finding external investors, co-founders with prior experience and industry connections for distribution and marketing.

  6. Find summer internships and part-time work in your field of interest. You can’t really learn all you need to succeed in any business domain from textbooks. The idiosyncrasies of supplier relationships, distribution and pricing are just as important as the generic elements of time and money management. Get real experience early.

  7. Incorporate your first business before you graduate. It’s never too early to stop studying and start doing it for real. You will learn the most by facing the tribulations of establishing an LLC and dealing with insurance, personnel and tax issues. Remember, it’s the learning that counts, not the size of the bet or the ultimate success of your first try.

The best thing you can learn in school is how to learn -- fast and effectively. In the real world, change occurs very rapidly, so all the specifics you memorized from textbooks will likely be obsolete by the time you need them. Your academic credentials will have very little value as well. The value is in your ability to get new credentials in your business faster than your competitors.

If you are already in Harvard, and have proven that you learn quickly, then feel free to drop out and change the world. For the rest of us, a bit more practice before jumping feels like a better bet. We need all of you at your best.

Marty Zwilling

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Friday, October 14, 2016

Join The Unicorn Club Of Billion-Dollar Companies

the_lion_and_the_unicorn_v_by_loupombreI’m sure all of you know one or more of the 200 or more young companies that are currently valued at one billion or more by investors and stockholders. These are popularly called “unicorns.” Some of the most well-known include Uber, Airbnb, Snapchat, Xiaomi, and Pinterest. What every entrepreneur is asking me these days, is “How do I get to be a unicorn?”

The first thing I have to remind everyone is that the odds are stacked against you, just like in a lottery. Based on some good estimates of how many new ventures have been started in the last five years, the statistical odds of any individual startup making it to this level are less than one in a million. But, of course, that doesn’t mean you shouldn’t try.

The fact is that valuations are largely set by top venture capital investors and financial firms, and they all have their own proprietary formulas for assigning value. But let me assure you that in the final analysis, the numbers and key elements are highly subjective. Yet there are a common set of driving factors that every entrepreneur should know, including the following:

  1. Extraordinary marketplace traction. If your new venture is still in the idea or development stages, don’t even think about a high valuation. Premium ventures need real traction, such as 100 million users, 10 million in revenue, or brand recognition around the world. It helps to have a following of loyal advocates in the mainstream press.

  2. Active interest by a multitude of investors. When top tier investors compete for a piece of the action, the price can go up exponentially. If you don’t yet have a hundred investors knocking on your door, it’s time to put more focus on viral marketing, closing customers, and exponential growth. Keep working on increasing the momentum.

  3. Experienced team of superstars. Every investor bets on the jockey, more than the horse. It may be time to bring in a new executive team with visible integrity and a sterling track record, or round up some new advisors who have connections with the venture community. Don’t be afraid to give up equity to get a small share of a very large pot.

  4. Opportunity and scalability are unlimited. The target market better be a big one, certainly over a billion dollars, with a double-digit growth rate, and large enough to absorb multiple entrants. Scalability in the worldwide arena must already be demonstrated, with plenty of growth potential ahead. Most unicorns pop up first in new solution categories.

  5. Strong intellectual property and defensibility. Patents and other intellectual property are a necessary initial “barrier to entry,” but these are just the beginning. Additional defensibility elements that unicorn investors look for include speed of implementation, rate of revenue and user growth, and exceptional team strength and leadership.

  6. Credible yet flexible exit strategy. The number of new ventures that successfully navigate the path to a public offering (IPO) with big numbers is still small. The smartest ventures are always courting a multi-billion dollar sale or merger with giants in the industry, including Google (YouTube), Microsoft (Skype), and Facebook (WhatsApp).

But remember, things that go up fast can also come down just as fast. More and more pundits are predicting that the unicorn bubble has grown through hype beyond sustainable value, and will soon collapse. They point to the valuation implosion of former superstars Groupon, Dropbox, and Zynga, which have dropped to valuations that are a fraction of their once lofty numbers.

In addition, achieving unicorn status brings a new set of challenges to a young growth company. The pressure is always on to take more money, to drive the valuation higher and stay in the spotlight, just at the point where a company begins to make money rather than burn through it. Too much money often leads to bad decisions, and has led to the demise of more than one promising growth venture.

But, I’m not suggesting that you take the focus off of valuation. The numbers may be relative, but the principles behind them won’t change, and work for smaller startups as well as unicorns. My advice is to aim high, but be realistic in negotiating with investors.

Unrealistic valuation expectations are one the key reasons that investors walk away from a promising startup, leaving you with no valuation, and perhaps no future. You have to earn a billion-dollar valuation, not declare it. How well does your new company stack-up today?

Marty Zwilling

*** First published on Inc.com on 09/29/2016 ***

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Wednesday, October 12, 2016

A Positive Business Strategy Is Key To Success Today

Business_Strategy_CoverDoes your business have a visible positive strategy, or do your customers and employees still see your primary focus as closing more sales and killing competitors? Certainly that has been the strategy of many companies, and has worked in the past, but today’s customers and workers are looking for more. They want relationships, positive experiences, and a win-win for society.

With the pervasive and instant communication of social media and the Internet, businesses can no longer hide behind the mask of their own hype, either inside the company or outside. The right positive strategy is integral to claiming leadership as well as making it happen.

I just finished a new book, “The Strategic Leader’s Roadmap,” by Harbir Singh and Michael Useem from the Wharton School, which provides some specific steps along the way. I believe these steps are especially critical to the success of entrepreneurs who are rolling out new businesses today. It all starts with setting the right company strategy, including these elements:

  1. Inspirational statement of purpose and direction. The old mission statements declaring your intent to be the “low-cost provider” is no longer a motivating vision for employees or customers. Engaging visions today include elements of social and environmental responsibilities, as well as economic returns to constituents.

  2. Market and customer positioning. Clearly focusing on the right market and customer profile sets your competitor differentiation. It starts with understanding the drivers of customer excitement in advocating your solution, and ways to strengthen relationships. When customers are excited, your team becomes more engaged and productive.

  3. Customer and employee value propositions. What are the company’s solutions and practices that will be seen as win-win value by all constituents? Your managers and everyone on your team needs to understand how their actions and leadership relate to value provided. The strategy must drive leadership so that leaders can drive the strategy.

  4. Competitive and leadership leverage. A good strategy provides opportunities for internal actions and leaders to optimize and extend a firm’s competitive advantage. This requires effective communication of intent, flexibility in implementation, and positive rewards for innovation and initiative in improving customer experience and quality.

  5. Constant restructuring for future advantage. A strategy that does not evolve as the market changes is a losing strategy. The internal team must see a reward in fostering change and leadership, and customers must be energized by new and improved processes, practices, and solutions. The best strategies are dynamic, rather than fixed.

A positive business strategy allows you to lead strategically by mastering the elements of both, separately and as an integrated whole. The authors argue that strategic leadership is an acquired capability that can and must be mastered by managers at all levels. It needs to extend to the firm’s directors, as well as investors. Everyone has to think and act strategically.

Another growing force for strategic leadership is the evolution to globalization. New companies are automatically global in reach and visibility, which makes a lack of strategy more impactful, since there is no move to an alternate environment for correction and restart. You need to get it right the first time, or there may not be a next time.

Above all, no company can afford to confuse strategy with tactics. Strategy is the “what” part of the equation, and tactics are the “how” activities. Every business, especially startups, have limited resources to implement tactics, so they need to be totally clear on the strategy first. Even if you could unleash unlimited tactics, the results would be confusing and non-productive to employees and customers alike.

Business success is an elusive target – with over fifty percent of new businesses continuing to fail in the first five years. We are also seeing an increasing number of former leaders disappear from the scene, including Blockbuster, Kodak, and Sharper Image. Start with a focus on strategy, and keep it there. Maybe it’s time to check yours with your employees and your customers, and see how positive it is today.

Marty Zwilling

*** First published on Huffington Post on 10/11/2016 ***

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Monday, October 10, 2016

Some Business People Talk While Smarter Ones Listen

Shimer_College_Susan_Henking_listeningAs a business advisor, I certainly recognize the need for talking to make an investment case, close a sale, or communicate with your team. I also recognize the need for active listening. The challenge is to know when it’s time to switch from one to the other. You can’t learn anything new while you’re talking, yet many business professionals and entrepreneurs seem to never stop.

It’s a sad spiral, since the longer you talk to someone without stopping to listen, the less both of you really hear, meaning they don’t learn anything and you weren’t listening, so you have to spend even more time talking to get the message across. Here are some guidelines for the most productive interchanges with business associates, investors, and customers:

  1. Limit your statements and answers to sixty seconds or less. Long business responses are usually read as attempts to dominate the conversation, or cover basic weaknesses in your argument. Shorter verbal exchanges help the conversation to flow smoothly, and lead to win-win relationships, rather than debates with a winner and loser.

  2. Listen attentively to responses, and do not interrupt. Practice active listening to the speaker, instead of looking the other way, or formulating a defensive rebuttal. People who maintain eye contact while listening are more like to gain the speaker’s trust, and may actually learn something from the response, leading to effective results.

  3. Lead your response with a thoughtful pause. This pause will convince the speaker that you have heard and processed their input, and gives them an additional incentive to actively listen in turn to your response. The result is greater awareness and impact on both sides, resulting in real learning and the most productive business exchange.

  4. Don’t hesitate to ask questions for clarification. Asking a follow-on question demonstrates that you are really listening and care about the speaker’s view. Questions also are effective in narrowing the focus of the discussion, and more quickly resolving the issue or completing the communication. Asking good questions improves productivity.

  5. Use part of your talking time to summarize what you have heard. This always improves your credibility as a speaker, since it convinces people you are also a listener, and confirms your progress in understanding the message. The result will be a better use of your time and theirs, and a more effective learning process on both sides.

  6. When speaking to an individual, address them by name if possible. This gets their attention and focus, and builds trust and respect for you as an authoritative speaker. The next step is to use personal analogies and familiar terminology to get even higher attention, comprehension, and impact. This will help you get more done in less time.

  7. Choose the right environment and mode of communication. The concept of talking too much is equally applicable to non-verbal discussions, including texting and email. No business person likes long and rambling electronic messages, and in many cases these are ineffective, as they lack body language and the ability to adapt to mood.

  8. Practice the connect, convey, and convince strategy. Every speaker’s challenge is to get people’s attention quickly, succinctly convey the desired message, and move the listener to action. Talking more only confuses the issues, causes people to disconnect, and invites a defensive reaction. Listen for key points, and think before responding.

In business, if you find yourself talking more than listening, it may be time to tune your skills in both. Responsible, effective communication will give you a sustainable competitive advantage over both your peers and your competitors, by allowing you to get more done in less time. Time is a critical resource in these rapidly changing times. Don’t waste it repeating your message ad nauseam.

Marty Zwilling

*** First published on Inc.com on 09/27/2016 ***

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Sunday, October 9, 2016

7 Startup Scenarios That May Be Judged Non-Fundable

riskvs-rewardIf you aren’t willing to take some risk as an entrepreneur, then don’t expect any gain. Yet everyone has limits, and every investor implicitly has similar limits on what makes a startup investable, or one to avoid at all costs. If you need investors, it’s important that you understand their filters, and even if you are funding your own efforts, you need to recognize the red flags.

Of course, every risk level can be mitigated by a good plan that addresses the issue, offers a credible action plan, and will convince you, as well as investors and customers, that what looks like a risk to many is actually a sustainable competitive advantage for your startup.

Nevertheless, we can all benefit by understanding a collective view from investors on the high-risk elements that every new business has faced historically based on the team, as well as in the marketplace. Here is my perspective on the highest risk elements, from my years of working with investors and watching startups come and go:

  1. All the co-founders are first-time entrepreneurs. A strong team has one or more executives who have run a startup before in the current business domain. Even top big-company executives are considered high-risk in a startup environment. The challenges are as different for them as a jewelry store owner now building medical devices.

  2. Your startup is in a high-failure-rate business sector. These historically have included work-at-home, restaurants, telemarketing and social-service providers. On the Internet, I am wary of one more search engine provider, clones of existing social-media sites, and yet another new dating site. You need a big differentiator in these arenas.

  3. Products requiring changes to government regulations. Things such as driver-less cars and new medicines are far more than a technology challenge. They require exhaustive and money-consuming tests and trial periods, followed by bureaucratic approval cycles that can take forever. If you have deep pockets, these ultimately can be very lucrative.

  4. Huge ramp-up time and money required. For new car companies such as DeLorean and Tesla, designing and testing the product is only the beginning. Huge investments are also required to ramp up manufacturing, build a distribution network, and provide the support infrastructure. New drugs usually fall in this category, due to side-effect testing.

  5. Niche or low growth-rate businesses opportunities. Investors are looking for large opportunities (greater than a billion dollars) with double-digit growth rates. Others may indeed make good family businesses, but are usually deemed worth investment. These are ones you need to bootstrap, crowdfund or pitch to friends and family.

  6. Marginal legality or public image. Don’t expect investors to line up for your new online gaming site, adult entertainment or quick sources of cash. Professional investors put great value in their integrity, so they won’t risk it by making investments that some people would view as in poor taste. These may traditionally have high returns, but are still high risk.

  7. Off-shore or foreign-country based. Every country has their own unique business requirements and customer culture. Thus investors in one country do not assume that they know what works in another country, even if it sounds good locally. If you want U.S. investors, for example, it may be worthwhile to set up an office in New York City or Silicon Valley.

No entrepreneur should consider any of these challenges as hard barriers, but they do need to be aware of higher risk perception, and include their mitigation strategy in their business plan for all to see. I encourage you to be proactive on these issues, rather than saying nothing unless questioned. Responding to a challenge will always make you look defensive, and many people will walk away without asking.

It’s also not smart to switch from a domain you know and love to a perceived lower-risk business that you know less about, or have no passion for, just because it may be more attractive to investors. Passion and commitment can overcome many risks, and these will also drive you to expand your scope of options for funding and implementation, leading to success.

If you are a true entrepreneur, you will find that a reasonable level of risk is necessary to incent you to go beyond the status quo of an existing problem. But in all cases, it pays to keep your eyes wide open, and do your homework on the pitfalls that others before you have faced. Only then can you enjoy the journey, as well as reach the destination.

Marty Zwilling

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Saturday, October 8, 2016

How To Master Business Decisions And Problem Solving

Problem_Solver_SealOne of the most important skills for every entrepreneur is timely and effective decision making. In a startup, any decision is better than no decision. One of the primary roles of every founder is to solve problems, make a decision, and manage the decision to results. The best entrepreneurs relish this role, while others struggle mightily and ultimately lose their health and their company.

In fact, there is much evidence that these same skills are a key to happiness and success in every area of your life and career. I just finished a new book, “Master Your Time, Master Your Life,” by noted speaker and productivity expert Brian Tracy, who highlights decision making and problem solving as one of the most critical determinants of your success in everything you do.

Since I’m not a life coach, I can’t comment on the broader implications, but in my role as advisor to many startups, I do often find myself recommending a focus on many of his key points, which I will paraphrase here:

  1. Think in terms of action. Action starts with absolute clarity on the goals you want to achieve. Thus I always recommend that you document and clarify, first to yourself, the results you see in your vision of a new venture. Having a great idea is necessary, but not sufficient, to create a great business. Success in business is all about actions, not ideas.

  2. Assume there is always a solution. To solve problems, you need confidence that there is a solution and that you can find it. Without this confidence and determination to make a decision, you will likely fall victim to the malaise of excuses. Everyone needs the growing momentum of solving small problems to incent them to “change the world” with their idea.

  3. Expand your definition of the problem. In business, as in life, most problems have multiple dimensions. The more you understand the scope of a problem, the more likely you are to arrive at the right definition, which will lead to the correct solution. In fact, there are always multiple solutions, so a better definition always leads to a better decision.

  4. Separate symptoms from real constraints. In a new venture, much time can be wasted attacking symptoms rather that the real constraints holding your business back. The right first step is to go back to your goals to focus on the real limiting factors when you encounter problems with sales, growth, profitability, market share, or costs.

  5. Use brainstorming for a range of solutions. Harried entrepreneurs too often jump on the first solution that comes to mind, rather than looking for the best solution. Many techniques have been developed, such as brainstorming, to expand your thinking and identify up to twenty solutions for a given problem. The best will not be first on your list.

  6. Assign responsibility for results. It’s amazing how many business problem-solving meetings end with a clear, agreed-upon decision, but two weeks later the problem still exists. This represents a lack of responsibility assignment or acceptance, or lack of follow-up. Your job as entrepreneur or executive does not end with picking a solution.

  7. Work to enhance your problem-solving skills. Problem-solving skills need constant tuning as your position of responsibility improves, and your business becomes more successful and visible to competitors. Even the best entrepreneurs find more experienced and skillful mentors to help them improve, and explore new tools to conquer problems.

In all cases of business problem solving and making decisions, another important skill is your ability to think about priorities, both before you act and while you are acting. The best entrepreneurs have the ability to focus on the really important issues, and say no to all the other requests vying for their time. Thus they effectively accomplish vastly more than the others.

If you are looking to move up in your business career, or looking to adopt the lifestyle of an entrepreneur to take control of your time and your life, make sure that you follow the steps outlined here for success, self-esteem, and real happiness. Life is too short to be unhappy in your work.

Marty Zwilling

*** First published on Huffington Post on 10/07/2016 ***

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Friday, October 7, 2016

A Paperboy Explains The Keys To Success In Business

tulsa-paperboyCreating a new business is not rocket science. Whether you are starting a paper route, or commercializing a complex technology, the same basic principles of success apply. I found this illustrated well in a new book I just finished, “A Paperboy’s Fable,” by a young entrepreneur and writer Deep Patel. It doesn’t take a superior intellect or big credentials to succeed in business.

Although just seventeen years old, Patel has some great insights that I can extrapolate for every aspiring entrepreneur to answer the most common question I get as an advisor and mentor – “Where do I start?” I’m convinced that anyone who really practices the principles outlined in his book not only will have no trouble starting, but also will have a higher probability of success:

  1. Search for big opportunities. Most founders know exactly what they want to sell, and they are personally convinced that everyone will buy one. Yet you should realize that your view is likely biased, so outside industry expert data is needed for validation. Selling something that only a few people need, even newspapers, is not conducive to success.

  2. Invest in your own future success. It takes time, effort, and other resources to start a business. Be prepared to learn some new skills, assemble the right team, and make some sacrifices to get things going. Aspiring entrepreneurs who expect outside funding, reduced work hours, and friends to volunteer, will likely find a hard road ahead.

  3. Harness ingenuity and innovation. Nothing worth doing hasn’t been tried before, so winning requires bringing something new to the table. Newspapers can be delivered sooner or more accurately, or technology can be innovatively packaged or personalized.

  4. Don’t forget the marketing. “If we build it, they will come” is not a winning business strategy. You need to find the customers, rather than waiting for them to find you. With social media and conventional selling, the people with the best message get the order.

  5. Add value and reduce cost for universal appeal. Addressing a worthy cause, such as helping the environment, has a good secondary appeal, but near-term value delivery is usually necessary for business sustainability. Goodness alone doesn’t make a business.

  6. Create customer advocates. Every business needs multipliers to succeed, and one of the best is customers who are so excited and satisfied that they drag in friends. Paper routes succeed best when customers recommend you to neighbors and associates.

  7. Choose a business that you can scale. Services businesses are hard to grow, as you need to clone people to expand. Product businesses are easier to scale, through manufacturing and automation. Don’t be too slow to expand your territory and partners.

  8. Utilize the power of diversification. The author didn’t forget that newspaper customers make good candidates for lawn services and cleaning products. Even huge businesses, like Facebook, have expanded into dating, through Tinder, and games, with Angry Birds.

  9. Hire more expertise and delegate authority. No matter how dedicated, one person can only do so much, while making every decision. Smart entrepreneurs learn quickly to hire people who can operate independently, utilizing the existing brand, and make 1+1=3.

  10. Don’t box yourself in with your brand. Brand for the future. It’s hard to expand “Ty’s Newspaper Business” into landscaping and home products. It’s always expensive to change and rebuild a brand image. Give yourself the maximum flexibility in brand building and naming.

Following these principles, and practicing incremental and continuous learning, are the best ways to prepare for the life you want as an entrepreneur or business professional. Also, before you can decide where to start, you need to define what success means to you.

Success to you probably includes financial gain, but don’t forget that money doesn’t buy lasting satisfaction and happiness. The happiest business people don’t work for money, and don’t even think of what they do as work.

Marty Zwilling

*** First published on Inc.com on 09/22/2016 ***

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