Wednesday, November 30, 2016

5 Quotes From Business Founders Destined To Fail

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Marty Zwilling

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Monday, November 28, 2016

7 Poor Leadership Habits You Must Avoid At All Cost

head-business-stressLike many other career-minded business professionals, are you still waiting impatiently for that appointment to a leadership position, so that you can begin demonstrating your real leadership ability? In reality, you are already being evaluated for leadership by the habits and attributes you demonstrate today, so now is the time to sharpen your focus and behavior, not later.

Everyone knows that leadership means taking the lead, but some forget that there are negative behaviors that can override even the best initiatives. Leadership is not about how well you give orders as the boss – it’s much more about what you do than what you say. In that context, here is a list of things from my experience that you need to stop doing now, to qualify as a leader:

  1. Don’t ever play the blame game. Blaming something or someone for any failure, however slight, is a sure way to get you branded as a non-leader. Everyone makes mistakes, so accepting responsibility and learning from the consequences, rather than denying culpability, is what separates winners from the losers in the longer term.

  2. Stop stressing out and worrying out loud publicly. Team members expect leaders to calm their worries, not create or amplify them. At best, worries expressed by others come across as excuses for possible later failures. Every leader has qualms and fears, but only verbalizes their own positive ideas for moving ahead to overcome the challenges.

  3. Never highlight the negatives of others or the company. Leadership is all about highlighting positives, rather than punishing negatives among team members. People who speak critically of co-workers, friends, and customers, are positioning them as scapegoats for later failure. Leaders seek private discussions for negative feedback.

  4. Avoid the perception of being too busy to help others. Real leaders always find time to be accessible and listen to others, and make genuine offers to help. Being “too busy” or overwhelmed is the most common excuse for leadership failure. Your skills in prioritizing, managing time, and delegating are the antidote to the busy perception.

  5. Don’t use multitasking as an excuse for mediocrity. In every job position, the leader is one that you can count on to demonstrate integrity and quality in everything they do, no matter how many distractions or related tasks must be managed. Mediocrity is a disease that will quickly infect others, and can ultimately bring down your whole company.

  6. Procrastinating and keeping your work area unorganized. If it looks to others like you're out of control in your present assignment, you'll never be considered for a leadership position or more responsibility. Doing things haphazardly and procrastinating is error-prone and not productive. Co-workers are always looking for positive role models.

  7. Failure to communicate regularly and effectively. If you find yourself with a thousand emails in your inbox, or regularly don’t bother to follow-up or call people back, it’s unlikely that anyone will consider you for a leadership position. Communication must be consistent, timely, and efficient in all media types, whether written, oral, or texting.

Some of these behaviors slip out of all of us in extreme environments. The challenge is not to let them become habitual, and to exhibit more good habits than bad ones. Otherwise you and the people around you will see only bad habits, and not your accomplishments. Your reputation and morale will suffer, your consideration for promotions will decrease, and productivity will suffer.

Leadership habits and attributes don’t happen as part of a promotion, or automatically appear after years of work. The best habits are learned by proactively taking small steps forward every day, learning from failures, and highlighting the strengths you already have. Anyone can improve their own behavior over time, and suddenly finding themselves an “overnight success.”

Marty Zwilling

*** First published on Inc.com on 11/14/2016 ***

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Sunday, November 27, 2016

Seek Support Organizations Based On Startup Stage

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

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

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

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

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

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

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

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

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

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

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

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

Marty Zwilling

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Saturday, November 26, 2016

How To Lead Effectively In This Age Of Relationships

business-leaderStartups provide leadership in the market. Entrepreneurs provide leadership to their startup. There are many styles of leadership, like dictatorial, laissez-faire, and democratic. One that I hear discussed more these days, in this age of relationships, is called “servant” leadership.

What is servant leadership? The servant leader serves the people they lead through mentoring, direct assistance, listening, and acting on their employees input. It’s the opposite of self-serving, domineering leadership, and makes those in charge think harder about how to respect, value and motivate people reporting to them.

The concept was developed by Robert K. Greenleaf in 1970. Servant leaders are felt to be effective because the needs of followers are so looked after that everyone reaches their full potential, hence perform at their best, individually and as a team.

Greenleaf says that Martin Luther King, Gandhi, and Jesus were good examples of servant leadership. What do you have in common with them? If you recognize yourself in most of the following questions, you may not be another Gandhi, but you are well on your way to becoming a servant leader:

  • Do team members believe that you want to hear their ideas and will value them?
  • Does your team believe that you have a strong awareness of what is going on and why?
  • Does everyone follow your direction because they want to, as opposed to because they “have to”?
  • Do others on your team communicate their ideas and vision for the organization when you are around?
  • Do people believe that you are committed to helping them develop and grow?
  • Do people come to you when the chips are down, or when something traumatic has happened in their lives?
  • Does everyone have confidence in your ability to anticipate the future and its consequences?
  • Does the team believe you are leading the organization to make a real difference in the world?
  • Do people believe that you are willing to sacrifice your own self-interest for the good of the team?
  • Does everyone feel a strong sense of community in the company you lead?

Some of the characteristics implied in these questions come more naturally to some people than others. Experts argue that some are inherent, and are difficult to learn. But characteristics such as listening, awareness, persuasion, and building community are all learnable skills.

You should reflect and thoughtfully assess the degree to which you have what it takes to be a servant leader. If you are committed to being the best servant leader than you can be, I urge you to continuously work to develop these characteristics.

For some executives, serving people's needs creates the image of being slavish or subservient, not a very positive image. In addition, leaders need to serve the needs of customers and stakeholders, as well as those of team members, so a sense of balance is required.

For comparison purposes, autocratic leaders tend to make decisions without consulting their teams. Laissez-faire and democratic leaders normally allow people within the team to make most of the decisions, based on consensus. In reality, the very best leaders are those who can use a variety of leadership styles effectively, and use the right style for each situation.

I encourage you to take a look in the mirror, and check your leadership style. Just to make sure you are not looking through rose-colored glasses, ask a few of your most trusted associates what they see. If the answers surprise you, it may be time to find a leadership mentor.

Marty Zwilling

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Friday, November 25, 2016

5 Keys To Success In Rolling Out Software Worldwide

Global_development_teamBy Ernst Gemassmer, Chairman, Startup Professionals

With the pervasiveness of the Internet, the world is smaller. The cloud makes software easily accessible, without waiting for CD shipments to arrive and be installed. The good news is that the reach of your new software application is instantly worldwide, and the bad news is that most people still prefer to work in their own native language. That means that you need to face the issues of translation and localization sooner rather than later.

The process of localization is still a time consuming, manually intensive, and expensive effort. Localization is not only desirable, but essential to gain and keep market share in specific countries.

In my experience, there are many considerations which are critical to the productivity and success of this effort. These include the following:

  1. Plan for international from the beginning. Even though it usually makes sense from a marketing perspective for a startup to stage software rollout to various linguistic groups, it makes no sense to design and implement your application that way. All implementation should be done in Unicode, with user interface, currency, date formats, and database considerations for all the languages required.

  2. Begin parallel translation early. It may seem less expensive to wait until all your screen layouts, online help, and written manuals are ‘final’ before arranging for translation, but the reality is just the opposite. Late translation will uncover design issues that are expensive to fix, and the inherent time delays and testing can set back delivery up to six months. Even though this process might require some re-work, a sizeable reduction in localization time can be expected. Note that this will require close and trusted cooperation between engineering/development and each localization group.

  3. Optimize the costs of localization. The cost of localization can vary widely, depending on the approach taken. Assuming that your company has an internal localization coordinator, who has personal contacts with localization firms in different countries, the direct cost of localizing into a single language could still be up to $50,000. However, if you utilize an outside firm to handle the entire process, the cost will be significantly higher. My advice is to select and work directly with a localization group in each selected country, avoiding middlemen. It is essential to develop trust between your company and the respective localization group.

  4. Prior experience is critical. For a startup, find an international partner, or hire a new team member who has done it before. As your company grows, this person should reside at corporate headquarters and report solid line to the head of international operations. In addition this person should report, dotted line, to product development or engineering. Ensure that the localization person is a good and patient communicator and is fully accepted by the engineering/development group.

  5. Measure the return versus the investment. There are literally hundreds of interesting locales in the world for every application, but not every one is a real market opportunity. Do your homework on potential, and then track the results, both with respect to incremental sales, as well as the costs of localization and maintenance.

There are many other pitfalls of poor localization practices, including high maintenance costs and costly delays in reaching attractive markets. Also, you must remember that localization costs are up-front costs, which must be fully funded before any incremental sales revenues can be achieved.

I have personally implemented the above recommendations repeatedly. The most successful project resulted in release of localized products, for all the major languages in Europe, within four weeks of US product introductions.

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Wednesday, November 23, 2016

10 Keys To Open Leadership While Maintaining Control

open-business-leadershipThe pervasiveness of social networking and the Internet has caused a new focus and value on “openness,” which leads to a new element of leadership, called “Open Leadership.” The mantra of open leadership is “Be Open, Be Transparent, and Be Authentic.” This is counter to the traditional business premise of “control,” so many companies are still pushing back.

Charlene Li, in her classic book “Open Leadership,” shows leaders how to tap into the power of the social technology revolution and use social media to be “open” while still maintaining control. I share her view of the ten key elements of the basic framework and vocabulary of open information sharing and open decision making:

  1. Explaining: creating buy-in. This element is sharing information through the new video, audio, and interactive media about, and the logic behind decisions, direction, or strategy with the goal of gaining buy-in to the idea so everyone is working toward the same goal.

  2. Updating: capturing knowledge and actions. New publishing tools, like blogs, collaboration platforms, and even Twitter provide updates that are easily available. These have the added benefit of being searchable and discoverable.

  3. Conversing: engaging in a dialogue with others. Employees can share best practices with customers on social network platforms and customers can help each other. When done well, an organization’s online community can become a competitive advantage.

  4. Open microphone: encouraging participation. Everyone and anyone is welcome to contribute through new collaborative tools with no preconditions. Search, combined with ratings and reviews become key in separating the useful from the rambling.

  5. Crowdsourcing: solving a specific problem together. The goal here is to grow the sources of new ideas and gather fresh thinking to create a new product or service. It can also be for solving everyday problems, like logo design or open source code.

  6. Platforms: setting standards and sharing data. Ebay is an example of open standardizing on how items are listed and how transactions are handled, enabling millions of individual sellers. Common platforms enable open data access at any level.

  7. Centralized. The key challenge of making centralized decision making more open is to open up information sharing in both directions, so that those in power have the right information and also have the commitment to share it back out to the organization.

  8. Democratic. Increasingly, voting is used to allow people to choose from a set of equally viable options, with the result is that employees feel a greater sense of ownership in the process. This is also becoming prevalent in decisions with customers on products.

  9. Consensus. Social technology tools now allow this process to be done quickly and less chaotically, with tremendous buy-in from everyone affected. This process works well in today’s extremely flat and non-hierarchical startup organizations.

  10. Distributed. This is a hybrid of all the preceding decision processes, in that it pushes decisions away from the center to where information and knowledge actually reside, typically closer to the customer. This mode requires more discipline and planning.

I’m still waiting to see how all this works out in real life. The challenge is to be open without abdicating all control, or spiraling into chaos. Hopefully, by embracing social media rather than banning it, leaders can transform their organizations to become more effective, decisive, and ultimately more profitable in this new era of openness in the marketplace. Are you there yet?

Marty Zwilling

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Monday, November 21, 2016

13 Red Flags To Avoid In Your Investor Funding Pitch

Red_flag_wavingAfter listening to hundreds of startup pitches, and reading even more business plans, most new venture investors develop their own favorite list of “red flags” that signal the beginning of the end of their interest. Others, like Guy Kawasaki, have irreverently called some of these “entrepreneur lies,” but I prefer to think of them as innocent enhancements or omissions that can kill your deal.

At any rate, here is my own list of red flags, from my years of experience advising and investing in aspiring entrepreneurs, which cause me to lose interest and start looking for a way out the door:

  1. Omit the facts on key management team experience and skills. Don’t forget that investors look as much at the people as the idea. They expect to hear about founders and team member’s prior experience in building a startup, and knowledge in the relevant solution domain. Not highlighting people is as deadly as not highlighting the solution.

  2. Lead with your intent to offer the solution free to customers. Of course, customers love free, but investors hate it. They know it’s especially hard to provide a financial return with a free business model. It takes a huge upfront investment to attract users, before advertisers are interested. Facebook spent over $100 million to kickstart the process.

  3. Emphasize their social commitment, but never mention profit. Even non-profits need money to scale, but their pitch should be to philanthropists, not equity investors. Many companies, including Patagonia and Zappos, have used their social focus to enhance their business, but highlight financial return when talking to investors.

  4. Terms “paradigm shift” or “disruptive technology” used more than once. These terms are so overused as hype that any meaning has been lost. In reality, fundamental changes in technology frighten away more customers than they attract, and take longer and more money to come to fruition than any investors wants to commit. Skip the hype.

  5. Target market sizing higher than $10 billion. It’s true that investors like large markets, preferably in the billion dollar range and growing, but sizing a startup market greater than the GNP of many countries is just not credible. Every startup needs focus, due to limited resources, so setting irrational goals implies overall poor business acumen.

  6. Sales projections are less than one percent market penetration. First, no investor is interested in a startup that sets their sights so low. Secondly, this projection usually comes with an assertion that everyone on the planet needs this, so less than one percent in five years is still a huge number. Entrepreneurs in this category are usually dreamers.

  7. Claims of no competitors or hundreds of competitors. Investors are wary of crowded markets, and untapped markets. Usually “no competitors” means there is no market for your solution, or you haven’t bothered to look. None of these cases are credible. I recommend a focus on the top three competitors, or top three competitor groupings.

  8. Spends time denigrating key competitors. Smart entrepreneurs highlight their own positives in competitive positioning, rather than competitor negatives. “Competitor X solutions are too expensive and too slow” should be “My solution provides double the performance at half the price.” Investors fear negative vibes will infect the business.

  9. Touts “first-mover advantage” as the primary barrier to entry. Investors read this as an excuse for no real intellectual property or innovation. When a big company is a first-mover, they have the resources to hold their lead, but when a startup shows real traction, they can be easily overrun by competitors with more money. Sleeping giants do wake up.

  10. Proclaims gross margin assumptions less than 50 percent. Many naïve startup founders believe that they can make good money with low margins. This may work for a year or two, until you grow to need employees with benefits, facilities, and more complex processes. Investors assume that even if you survive, returns to them will be unlikely.

  11. Declare a $10 million valuation with no revenue or customers. Equity investors are buying a chunk of your company at today’s value, not what you think it may be worth in five years. The average valuation for Angel investments is about $2.5 million, so early numbers in that range may be negotiable. Higher numbers cause investors to walk away.

  12. Annual revenue projections exceed $100 million before fifth year. Revenue projections should never exceed rational business growth constraints, or they defy credibility. Even Google, one of the most successful recent companies, only achieved $85 million in their fifth year. Numbers above this threshold will not attract investors.

  13. Use the term “conservative” multiple times in their pitch. Investors are not looking for conservative entrepreneurs. They expect aggressive projections (not crazy) on opportunities, volumes, and revenue. Investors know that entrepreneurs with a conservative mindset usually fail to meet even their under-stated numbers.

Remember, you only get one chance for a great first impression with investors, so don’t let any of these red flags destroy yours. I highly recommend that you screen your business plan and your executive presentation carefully for variations on any of these themes, and remove them. Your credibility is paramount, so don’t jeopardize it with hype and too much passion. Your future depends on it.

Marty Zwilling

*** First published on Inc.com on 11/03/2016 ***

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Sunday, November 20, 2016

4 Disciplines Are Key To Perfecting Business Skills

perfectionEntrepreneurs seem more quickly frustrated these days when their “million-dollar idea” doesn’t turn into a sustainable business overnight. They don’t realize that it takes many skills to build a business under the best of circumstances, and today’s world of instant gratification doesn’t leave room for the patience and practice to develop these skills.

Successful sports figures and musicians have long understood the value of time and practice in perfecting their skills. So why do entrepreneurs think that building a business is intuitively obvious, and should happen overnight? Building a business is a complex task, like building the product or service, and requires the same focus, discipline, and practice to get it right. Even the revered Steve Jobs of Apple didn’t get it all right the first time.

In his classic book, “The Practicing Mind,” Thomas M. Sterner outlines how people learn the necessary skills for any aspect of life, from golfing to business. He emphasizes the importance of a practicing mindset, and provides some clues on how to offset our modern culture of habitual multitasking, short attention spans, and giving up quickly in the face of any setback.

He believes, and I agree, that creating the practicing mind, and acquiring any skill, without stress and futility, comes down to following a few simple disciplines:

  1. Keeping yourself process-oriented. As entrepreneurs, we have a very unhealthy habit of making the product or service the focus, instead of the process of “changing the world,” which was the big vision in the first place. When you focus on the process, and see progress and learning with each small step, all pressure drops away.

  2. Staying in the present. In business, the world of customers and competitors changes every minute, so you learn by iterating and listening, taking all feedback as positive progress, rather than delays and mistakes. Don’t lose touch with your original dream, but fixating on the “final” solution is not productive or satisfying.

  3. Making the learning process your goal. Use the original dream as a rudder to steer your efforts. Success in business comes to those who learn most quickly, and adapt their processes most effectively. Don’t get caught up in achieving the exact product or service of your entrepreneurial dream, because it’s almost always wrong anyway.

  4. Being deliberate, and keep a clear picture of your destination. A random walk does not lead to business success. Deliberate intention is focused on a destination, but realizing that every step need not be predicted. Being deliberate is making each iteration land nearer to the destination, focusing on positive thoughts and positive actions.

Most of the anxiety that entrepreneurs experience comes from the feeling that there is an end-point of perfection in every product and business. The reality is that there is no ultimate product or business, since each improvement or business growth increment brings a whole new set of challenges, requiring more learning, more practice, and more skills.

Practice is required to replace bad and unproductive habits, like too much multitasking, with desirable habits, like solving important challenges more often than the crisis of the moment. Building new good habits is important, since they allow you to do required things effortlessly and without overt planning each time.

Even this is a process that must be practiced. First you have to be self-aware, and decide on what you want to be a habit. Then set up triggers to help you remember the action and the time, and finally make sure you have clear motivation for the action. Practice is the required repetition on this action with patience, until it’s effective and automatic.

Entrepreneurs should not be afraid to use the terms failure and practice interchangeably, since investors usually conclude that startups learn more from failure than from success. Obviously, it’s to your advantage to make your practice steps small ones in time and cost. Successful professionals actually enjoy honing their skills through practice. Are you having fun yet?

Marty Zwilling

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Saturday, November 19, 2016

Proper Staffing is Key to Effective Global Expansion

By Ernst Gemassmer, Chairman, Startup Professionals

globalisation-business-expansionSome time ago you needed to achieve success and size before venturing into international markets. However, international customers have found you through social media, US trade shows and technical papers. In order to manage international growth your company needs to be directly involved in international expansion rather than relying on distribution partners. In this article I would like to share with you recommendations for staffing, based on my personal long-term hands-on experience in this arena.

  1. The head of international must be experienced in building international businesses and must operate from corporate headquarters. It is both costly and in many instances complicated to enter foreign markets. Mistakes can delay market entry, result in fines or certainly delay establishment of a local presence. Thus, it is essential to appoint a ‘head of international’ with significant hands-on experience to chart your course in the global world.

    In my own experience, a significant amount of time was spent in explaining and obtaining approval from corporate staff for the actions required in building international. In many instances recommendations involve up front costs with no guarantee of precisely when specific revenues can be achieved. It is therefore essential that the head of international reside at corporate headquarters.

  2. Do not delegate selection of candidates to headhunters/search firms. Finding, selecting, and appointing the right individual to head up in country or even regional roles is critical. Mistakes can be costly. In my experience it is essential for the head of international to clearly define his needs, hire a professional to locate individuals and perform the initial screening.

    However, final selection of key international managers must be made by the head of international, in close cooperation with corporate management. Despite the costs involved, inviting the finalists to headquarters is essential.

  3. Thoroughly understand the specific laws relating to hiring and termination in each country where you plan to operate. Labor laws and prevailing practices differ in most countries. If you choose to operate in a specific country, you must meet local legal requirements and prevailing practices. Again the head of international will spend a significant amount of time explaining and justifying differences to his corporate colleagues.

  4. Retain the services of a local (in country) law firm specialized in labor laws. Since labor laws differ so much from country to country it is essential to obtain advice from local labor counsel. Not following this advice can and will be costly. Special attention must be paid to the construction of an offer letter. In those cases where a termination becomes necessary, you should also obtain guidance and direction from a local labor attorney.

    In my personal experience the head of our Italian operation resigned and we accepted his resignation. He then chose to sue us claiming that his supervisor, based in Germany, created a difficult work environment. Our Italian labor counsel recommended settlement, instead of going to trial. The cost to us was nine months of pay.

  5. Ensure that your pay practices for foreign employees are in line with local legislation and prevailing practices. Pay practices, commission and bonus plans need to be in line with prevailing local practices. If they are not, fines and difficulties with the local tax authorities can arise.

Having successfully staffed your international operations, you can now expand your markets greatly. However, remember to think long term, plan globally but act locally.

A successful head of international will spend time keeping updated on local conditions through participation in industry meetings, chamber of commerce memberships, as well as developing and maintaining corporate contacts. He is a broad-based general manager, has knowledge of most functional areas, is a diplomat and not just an international sales manager.

Don’t be afraid to venture into international markets. Most successful companies achieve over half of their revenues from markets outside the US.

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Friday, November 18, 2016

10 Obstacles To Product Adoption That Kill Businesses

business-failure-chartWhen entrepreneurs introduce new products to the market, their passion and conviction often leads them to assume that every potential customer will see the immediate need and value, and will quickly adopt the solution. They are devastated when their business growth never starts or stalls, and they have no idea how to get it moving again.

As an advisor to many startups, I often spend hours with business owners helping them anticipate every possible obstacle to the adoption of their solution, and developing a rollout plan to include antidotes. I just finished a new book, “Jobs to Be Done,” by Stephen Wunker, Jessica Wattman, and David Farber, which details well my perspective on these challenges and counter strategies.

While the authors mission is broader in intent, to provide a roadmap for customer-centered innovation, they definitely codify the principles I espouse in anticipating the primary obstacles to new solution adoption. Here is a summary of their key observations, with our joint specifics on what to expect, and how to overcome these obstacles:

  1. Customers don’t buy what they don’t know and understand. In today’s information overload, marketing is everything. Word-of-mouth is great, but it’s not a launch strategy that stands alone. The more revolutionary the solution, the more important it is to educate customers on a solution’s existence and value. Use every marketing channel available.

  2. Getting people to change behavior can be difficult. If your solution alleviates a high level of existing pain, customers more readily change. Yet most of the startups I see these days are providing a solution that is easier to use, more fun, or more productive. In these cases, you need testimonials, usage details, and return-on-investment examples.

  3. Multiple decision makers required to close a sale. Many healthcare solutions, for example, may appear to have great value to patients, but require doctors to feel safe, and insurance companies to approve. Entrepreneurs need to focus on selling each of the constituents in the chain, recognizing that more time and money are required for growth.

  4. Direct and indirect costs of the solution seem high. The most elegant products have the highest price tags, thus limiting market size. Every customer has a sense of what a solution should cost, based on competition, and the cost of doing nothing. A good tack is to sell exclusivity, or provide case studies to show return on investment and productivity.

  5. Solution brings risk to the customer, or high cost of failure. These days, people worry about the liability potential, or making a dramatic move that may be very expensive to recover from. These fears need to be offset by good marketing, education on benefits, and successful case studies. Expert testimonials and excellent support are essential.

  6. Products so innovative that they define a new category. Consider the Internet of Things (IoT) – a network of connected devices and sensors in a home or facility to allow control or access to almost everything. Just the concept requires learning, acceptance, and understanding value. Your business may die before all these elements come together and customers buy your offering.

Then comes a second set of longer-term obstacles to consider – things that cause customer sales to decline after an initial burst, or to stop usage after initial adoption. Here are the most common issues which cause this obstacle to growth:

  • Solution requires lagging support infrastructure. For example, electric vehicles offer attractive benefits for drivers and the environment, but they also need charging stations and government regulations to facilitate broad usage.

  • Adoption creates new pain points. Many new products sound great, but customers find them overly complex or difficult to use. Other new products are plagued with compatibility or performance problems, and customers quickly defer to new competitors.

  • The luster wears off cool new products. Sometimes cool doesn’t mean better. Very quickly, customers start to look for that usability, improvement in productivity or return on investment. Marketing alone cannot make a product great.

  • Products incorrectly targeted or not targeted. Initial hype can generate a sales spurt, but long-term growth requires a clear fit. The right market is the one that feels the most pain, and has money to spend. Nice-to-have for consumers with no money won’t work.

According to most experts, inadequate attention to these obstacles is the primary reason that more than 50 percent of newly launched products fall short of growth and revenue projections, and only 1 in 100 new products even covers its development costs.

Innovative solutions alone won’t make your business a success. You have to target and appeal to the right customers, and the right jobs that they need done. Is your business properly customer-centric?

Marty Zwilling

*** First published on Huffington Post on 11/17/2016 ***

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Wednesday, November 16, 2016

4 Major Trends Which Improve Business Decisions Today

decisionsI still know some entrepreneurs who boast of simply following their gut instincts, rather than listen to anyone or any data, to make strategic decisions. We’ve all worked with autocratic leaders in large companies who seem to thrive in this mode. They all forget or ignore the high-profile failures that have resulted from some single-handed business decisions.

One of the biggest in this decade was the merger of America Online (AOL) with Time Warner, engineered in the early 2000’s by Time Warner CEO Gerald Levin and AOL CEO Steve Case for a whopping $164 billion. Levin famously prevailed on his board and ignored everyone, but later admitted that he had presided over perhaps the worst deal of the century. Time Warner was forced to take a $99 billion loss only two years after the merger, and Levin was forced out. It’s been downhill from there.

A classic book by Thomas H. Davenport and Brook Manville, “Judgment Calls: Twelve Stories of Big Decisions and the Teams That Got Them Right” helped me put some structure around the better alternatives available today. I like the authors’ outline of four major trends which shape the new pattern for making good business decisions:

  1. The recognition that “none of us is as smart as all of us.” There is so much positive feedback on the value of involving customers in product development, and the use of social media for crowd feedback, at a very low cost, that’s it hard to argue that one person could have more insight alone, and be right more often.

  2. New models for “collaborative leadership” in organizations. The support for “open source” software and Wikipedia have pioneered other business archetypes based on open innovation, collaborative decision making, and flat hierarchies. The art of collaboration is now taught as a key success skill at every level within organizations.

  3. The use of data and analytics to support and make decisions. Intuition should never be ignored, but it should be supplemented by the growing wealth of data and analytic power available. The evidence is overwhelming that systematic analysis, not paralysis, leads to better decisions than intuition alone.

  4. Technology moves to the realms of knowledge, insight, and judgment. Ever-improving information technology makes possible the timely results and analytical decision support above. It allows for rapid capture and distribution of the many forms of explicit and implicit knowledge, derived directly from the base transactions.

All of these lead to a new paradigm of organizational judgment and decision making, to add some repeatable process and quantification to your intuition:

  • Decision making as a participative problem-solving process. Making important decisions is like any other problem to be solved, and must be approached with discipline and fact-based analysis. Smart executives seek collaboration with multiple points of view, including contrarian ones and stakeholders, before jumping off the cliff.
  • The opportunities of new technology and analytics. Technology and business intelligence are no longer the rarified provenance of “the geeks downstairs,” but are integral to decision making and the overall judgment exercised by executives at every level, whatever the industry or sector.
  • The power of culture. Organizations that practice great judgment have the basics embedded in their culture, including respect for problem-solving and leaders as facilitators of decisions, rather than monarchs. The also reward cultural change as analytical processes and technology evolves.
  • Leaders doing the right thing and establishing the right context. The role of the leader in creating organizational judgment is often first about reframing decisions as not their own exclusively. It’s also about building a team with the right mind-set, and giving them the responsibility and accountability to stand up and be counted.

Even the legendary Steve Jobs at Apple admitted to some early gut decisions which came back to haunt him, most notably his hiring of John Sculley to help him, who ultimately “destroyed everything I spent 10 years working for, starting with me.” It is said that at his second stint at Apple, Jobs relied much more on others in key decisions, but never sacrificed his values.

In my view, the days are long gone when a lone wolf at the top can make these key decisions, based primarily on intuition. Yet I still see too many executives in that mode most the time, usually driven by extreme passion and a large ego. Maybe it’s time to take a hard look at your own organization, and a hard look in the mirror, before your golden gut comes back to bite you in the butt.

Marty Zwilling

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Monday, November 14, 2016

Business Success Is All About Doing More In Less Time

Time-management

Every entrepreneur I know feels the pressure of the thousands of things that need to get done, all seemingly at the same time. There is just not enough time! The real solution is better productivity and less procrastination, to put you back in control of your business. You need to spend more time every day on important things for the future, and less on the urgent issues of the moment.

I just finished the latest version of a great book on how to do this, “Work Less, Do More: The 7-Day Productivity Makeover,” by time management expert Dr. Jan Yager. After reviewing her day-by-day recommendations to improve productivity in a single week, I have extrapolated her guidance to ten productivity tips specifically for entrepreneurs to regain that competitive edge:

  1. Focus on managing yourself rather than managing others. The key problem you need to solve is managing your distractions. These are the endless stream of email, phone calls, and daily crises which prevent really important accomplishments, like closing customers. Being a good role model is productive, but trying to control others is fruitless.

  2. Tackle high value tasks first rather than the easiest. Pareto’s law says you get 80% of your results from 20% of your efforts. Figure out what deserves your 20%, and focus on that. Start each day with the highest priority task you need done that day, and leave the emails and phone calls till the end of the day, if you have time.

  3. Take time to organize your work and integrate new tools. One of the top productivity killers is disorganization and wasting time finding key data. Take the time now to build a database of contacts, and structure your online filing system to include a total search capability. Find time to research and install the latest tools to expedite repetitive tasks.

  4. Strive for business excellence, but reject perfectionism. In today’s market, no solution is perfect for everyone, so achieving perfection is unrealistic and unproductive. I recommend that entrepreneurs test the market with a minimum viable product (MVP), before burning resources on the ultimate solution, only to find the market has changed.

  5. Fight procrastination and fear of failure. Fear of failure, or success, is at the root of most acts of procrastination. Psychologists assert that procrastinators actually sabotage themselves by postponing key activities. Incorporate your business today, register intellectual property, document partner equity agreements, and meet real customers.

  6. Balance your work time by taking time off to rest. Rest makes you more productive. Get enough sleep so you can remain active throughout the day and evening. Schedule time off work with your family, sporting events, and sign up for community activities you enjoy. Non-stop presence in your business is less productive and toxic to your health.

  7. Practice active listening to become more effective. Maximize your own productivity by listening more and talking less to your team and your customers. Let them tell you what they need and give it to them, rather than trying to tell them what they need. Do take the time to develop and communicate high-level business strategy and objectives.

  8. Don’t be afraid to say ‘no’ to low-priority requests. Highly productive people make it a practice to under-commit and over-deliver. Productivity is perceived results per unit of time, and is not related to actual hours spent working, or working intensity. Startups require focus, so you need to say ‘no’ to many things, in order to do important things well.

  9. Define clear goals and metrics for your productivity. If you don’t know where you are going, no amount of work will get you there. An entrepreneur’s ultimate task is to define success in term of results desired – number of customers, revenue, and profit. Without business goals and objectives, there is no productivity to measure, and no success.

  10. Truly delegate responsibility and decisions. Delegation of tasks to others who can do the work better, faster, and cheaper is a huge productivity multiplier, if you truly remove yourself from the process. You must still maintain the communication relationship with all key constituents to measure results and make the decisions on strategy.

With these tips, you can indeed get more done every day, and get important things done in less time. The key is to get started today, with a goal of hitting all of these items in the first week, and in every week thereafter. You will quickly notice the change in your own productivity, and the team will follow your lead. Savor the satisfaction of success, and watch the stress melt away.

Marty Zwilling

*** First published on Inc.com on 10/31/2016 ***

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Sunday, November 13, 2016

5 Ways Entrepreneurs Get Beyond Their Comfort Zone

beyond_comfort_zoneOne of the biggest impediments to starting a new venture is the “terror barrier,” as popularized by Bob Proctor, a 75-year-old millionaire and world renowned entrepreneur. This is the imaginary barrier that always seems to appear at the critical point where we would step out ahead of peers or competitors, but fear causes us to stop short.

Everyone has a comfort zone, or level of risk, where they feel in control. The problem is that if you stay in that comfort zone too long, you don’t learn and achieve new objectives. According to Bob, all growth takes place outside that comfort zone, and the edge of that zone is called the terror barrier.

If you want to be an entrepreneur and start a new business, you must be willing and able to break through your terror barrier. If you hope to succeed with any real “new” opportunity, you must be willing to learn new skills, set high goals, and get out of your comfort zone.

Overcoming the terror barrier requires first a passion for the new dream, willingness to take a risk, and determination to never quit. In addition, it helps to have a few specific strategies, outlined by Ingunn Aursnes a while back, to help you push through:

  1. Reconfirm how you have dealt successfully before with terror barriers. Everyone has had to deal with terror barriers, since the day you were born. Convince yourself that this one is only incrementally larger, not a huge jump. Contemplate the things that have worked before for you, and things that cause you to go off track.

    Some people procrastinate, make excuses, or feel real fear. We all have our “security blanket,” like sessions with a trusted friend, classroom training, or prayers to reduce the pain and keep us moving forward.

  2. Set specific goals, rather than rely on a generic dream. Make the goal increments small, so you can see yourself making each step, rather than face a step the size of a mountain. Create a picture in your mind of you achieving your end result, like you getting a Nobel prize for curing cancer, or relaxing on a beach with no more money worries.

    Then write down and prioritize your goals. If they are not written down, they don’t exist and it’s easy to forget the real meaning behind them. But don’t be overwhelmed working out the details and all the steps required just now. Work on one step at a time.

  3. Take the first step toward your first goal. You never get anywhere until you start. It doesn’t have to be a big step, but it has to be in the right direction. Put a stake in the ground, and start measuring how far you have gone. Remember that everyone takes one step backward for every two steps forward, so setbacks are normal bumps.

    Everyone learns more from failures than from successes. Moving forward, accomplishing goals, is a process rather than a continuous motion. After the first step, the second is easier, and after the first goal gives you confidence, the second will be easier.

  4. Recognize the terror barrier and see it as a growth opportunity. Take satisfaction in widening your comfort zone, the opportunity to learn, and the progress toward your goals. Use your mentor or support organization to get you over the hurdle, and celebrate the success.

    For team members, don’t forget your responsibility to help other members over their terror barriers. Helping others is the best way to forget your own fears and build the satisfaction of leadership as well as learning.

  5. Iterate the process, picking up confidence and momentum along the way. The more you persevere and keep moving in the direction of your goal, the easier it will seem and the better the results you will achieve. Even if the terror barriers get tougher, they will seem easier as momentum helps you achieve more of your goals.

People who avoid facing the terror barrier, or who back away easily, are actually falling behind, and they will quickly become less confident, less determined, and less happy. You want the spiral to go the other way, toward greater levels of success, ability to achieve greater goals, and to be a successful entrepreneur. Follow these steps and put your terror barriers behind you.

Marty Zwilling

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Saturday, November 12, 2016

7 Ways To Make Your People More Valuable Than Ideas

Human-vs-robotInvestors invest in people, not ideas. Customers buy from people, not companies. Employees rally for a great leader. As an entrepreneur, you need relationships to succeed. That means relationships with team members, investors, customers, and vendors. One of the best ways to build a good relationship with anyone is to make them feel important.

One of my favorite authors, Brian Tracy, in his classic book “No Excuses!: The Power of Self-Discipline,” outlined seven ways to make other people feel important, which I believe are extremely relevant to entrepreneurs and business:

  1. Accept people the way they are. Because most people are judgmental and critical, to be unconditionally accepted by another person raises that person’s self-esteem, reinforces his or her self-image, and makes that person much more likely to accept you and follow your lead.

  2. Show your appreciation for others. When you appreciate another person for anything that he or she has done or said, they will like themselves and you more as well. The simplest way to express appreciation is to simply say, “Thank you” for an idea, some good feedback, time spent together, or an order.

  3. Be agreeable. The most welcomed people in every situation are those who are generally agreeable and positive with others. Entrepreneurs who like to be argumentative, complaining, or disagreeable, will have a hard time closing a contract, investment, or a customer contract.

  4. Show your admiration. People invest a lot of personal emotion in their possessions, traits, and accomplishments. When you admire something belonging to another person, it makes him feel happy about himself. Everyone has positives, and it’s up to you to find them. In turn, these positives will be reflected back on you.

  5. Pay attention to others. The most powerful way to pay attention to someone is to listen attentively first, even ask questions, before you launch into a monologue answering every question they might never ask. Believe it or not, before you even say a word, you will become a more interesting and intelligent person in their eyes.

  6. Never criticize, condemn, or complain. In business as well as personal relationships, the most harmful force of all is destructive criticism. It lowers a person’s self-esteem, makes him feel angry and defensive, and causes him to dislike you. If your target is someone not present, it still causes a loss of trust in you, since your listener could be the next target.

  7. Be courteous, concerned, and considerate of everyone you meet. When you treat a person with courtesy and respect, they will value and respect you more. By being concerned, you connect with their emotions. Consideration is the discipline to do and say things to people that are important to them.

Think back on your own recent experiences as a customer or contractor. You don’t always buy the cheapest product or service, if you have a good relationship with the people involved. On the other hand, I almost never buy from someone that treats me like I’m not important.

If you want to be a leader, you need to inspire followership. Great leaders develop a good relationship with good people, who are then inspired to follow. A successful leader inspires people to do more than they might have done without the relationship, and more than they may have even dreamed possible.

So, if you follow all these seven ways to make other people feel important, you will receive a seven-fold payback on your own objectives of being a leader and building a successful business. That’s a lot cheaper and lot longer lasting than the best advertising and public relations you can buy.

Marty Zwilling

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Friday, November 11, 2016

Some Things Haven’t Changed In The Business Workplace

Sales_team_meetingAs a business advisor and advocate for entrepreneurs, I find myself almost always talking and writing about change. Yet there are many things about business and work that haven’t changed for a long time, and don’t need to change anytime soon. I’m always surprised when someone doesn’t seem to grasp these basics, or thinks it’s fine to throw the baby out with the bathwater.

I was reminded of a number of these by a recent book, “The Thing About Work: Showing Up and Other Important Matters,” by Richard A. Moran. With a bit of humor, he provides some serious guidelines for struggling career professionals looking to move up, and new entrepreneurs looking to build a company. Moran seems to speak directly from my long-time personal business career.

He points out that “There are lots of things – some big, some not – that we can all do to improve our lives at work.” He manages to highlight a couple of hundred of these with colorful vignettes, but here are eight key ones I found particularly useful for new business professionals:

  1. You can’t win if you don’t show up consistently. Showing up still matters. This is not about clocking in to work. It’s about colleagues, managers, and clients knowing that you care, and know how to find you when they need you. You need to really get to know your team mates and treat work relationships seriously. Someone is always taking attendance.

  2. Peers and customers alike still expect responsiveness. Today it is rare to find people answering phones at work, much less proactively following-up. Yet peers and customers notice phone calls and e-mails not returned in twenty-four hours or less. They expect the same response you give to your best friends. Anything less makes you non-competitive.

  3. Making a to-do list is not the same as getting things done. Everyone is “too busy” these days, but only the best always can demonstrate their list of results. If your list of results includes all the meetings you attended and all the phone calls you made, it’s time to ask yourself “What did I really do today?” Businesses only move forward on results.

  4. Networking effectiveness is a measure of your potential. Productive networking traffic does not happen by default. It takes effort to get out there, do your homework on the best traffic lanes, and follow-up on potentially valuable relationships to make them productive. Networking relationships still drive most promotions, jobs, and new clients.

  5. Work-life balance is not about equity, but about escape. The battle between work and life is no contest – work still wins. If you are committed to devices, work is always at the top of the screen. Yet successful people find an escape to the “life” part of the world. It could be a family, sports, hobby, or TV. All business brains need time to rejuvenate.

  6. Don’t count on job descriptions to define your role. “That’s not my job” has never been a successful excuse in business. Especially as an entrepreneur, every job in the business is yours. Your willingness and your ability to tackle any challenge are the only things that customers, peers, and managers appreciate. Business is not rocket science.

  7. Not finishing things you start kills careers and businesses. Entrepreneurs who claim to be big thinkers are routinely dismissed by investors, in favor of others who execute. Thinkers, and people at work who never say no, accept and start task after task, but they rarely finish one. Crossing the finish line is the milestone in a project that really counts.

  8. The most important skill you need is project management. The person who can demonstrate that he or she can effectively manage a project can write their own ticket for success. That means starting the project, keeping people engaged, and bringing it to a positive completion. If you can manage any tough project, you can probably build a business.

Of course, there are many more work expectations that haven’t changed, but the 80-20 rule still applies. If you are good on the ones listed here, you probably can hold your own on all the rest. You probably already understand why successful entrepreneurs keep starting new companies, even after they sell their first unicorn, and why retirees miss work as soon as they stop doing it.

Are you spending as much time at work focusing on the things that don’t change as you are on the things that must change? I call that the work-work balance. Keep it up, or you may not have a life at work.

Marty Zwilling

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

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Wednesday, November 9, 2016

7 Keys To Making A Micro-Business Your Success Path

success-micro-businessIn the last few years, I’ve heard more and more about a new type of small business, called a “micro-business” (or micro-enterprise). These are usually characterized as owner-operated, with five employees or less, and less than $250,000 in sales. With the low cost of e-commence entry, and powerful Internet technologies, they require minimal capital to start, perhaps as little as $500.

I see the potential for these to become big business in this entrepreneurial economy. According to the Voice of Microenterprise (AEO) website, if one in three micro-enterprises in the United States hired an additional employee, the US would soon be at full employment. These businesses are usually run out of the home, and range the gamut from consulting services to e-commerce.

Dal LaMagna, in his humorous classic “Raising Eyebrows: A Failed Entrepreneur Finally Gets It Right,” leads with the foundational principle of micro-businesses, which is to start small. This allowed him to learn enough from all his early mistakes to hit it big ($10 million revenue) with a global beauty tools company called Tweezerman. He and I offer seven key additional practices to reduce the risk:

  1. Tailor the business to you. Do you love antiquing? Fishing? Cars? Cooking? Now, think about what pursuing this passion might mean for your lifestyle. Think how you want to spend your day; where you want to live; whether you want to work with people or alone; in the morning or at night, and so on. Eliminate any aspect of your business that doesn't create your preferred lifestyle -- and will work against you.

  2. Be frugal. Don't spend money you don't have. Don't invest in anything you don't need. If this means baking cupcakes in the local church basement and delivering your signature pastries by bicycle to local stores -- two dozen at a time -- do it. Take the money you make and put it right back into the business.

  3. Record every expense. From the dollar you gave to the homeless guy on the way to meet a prospective client, to the new tie you bought to look professional, write down every single penny. The key to launching a micro-business is to keep expenses under control and fully accounted for.

  4. Keep a monthly profit-loss. For the first two years of your business, complete a monthly profit-loss statement. This helps you stay on top of where your business is going, where it could do better, and why it fluctuates.

  5. Find free stuff. Many items needed to start and run your small business are available for free or next to nothing. Be creative. Use freecycle.com; ask friends if they have an old computer or printer; or visit a thrift shop for office furniture or office supplies.

  6. Write down agreements. With a very small business, your clients sometimes make the assumption that they don't have to sign an agreement. Wrong. Get in the habit of thinking like a company founder and get promises in writing. And while you're at it, keep your side of agreements.

  7. Keep it simple. When Dal first started Tweezerman, he did nothing but focus on tweezers and selling them to cosmetic counters, one store at a time, which he did very well. If you can do one thing well, don't dilute your efforts until you have been turning a large profit over a consistent stretch of time.

My net recommendation is that if you consider yourself a do-it-yourself entrepreneur, preferring to do things yourself rather than forking over money to consultants, then definitely the micro-business approach is for you. The down side is that your business will probably grow slowly and more organically.

If you prefer to rely on others for most things, or want to get there fast, the investor approach may be the best answer, but the price is higher in time, dollars, and control. It’s your choice, but remember that the wrong choice probably won’t get you there at all.

Marty Zwilling

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Monday, November 7, 2016

How The IBM PC Made Me Appreciate Entrepreneurs

IBM_PC_5150Way back in the early eighties, I was privileged to be part of the original IBM PC development team, led by Don Estridge. He was a great leader, and one of very few who have even been able to dent the barriers to real change in a large corporation. We struggled with the differences between intrapreneurship and entrepreneurship, and I learned much about both.

For example, even though we were leading an entrepreneurial effort within IBM, we found it a challenge to deal with the inbred mainframe culture, reverence for process, and accounting practices of a large company. Despite a valiant effort, we only briefly succeeded in putting IBM in the personal computer business, but our efforts changed my view of entrepreneurs forever.

We all watched as several strong-willed entrepreneurs of the day, including Steve Jobs, Bill Gates, and Ed Roberts, without constraints, really drove the industry and changed the face of computing. For IBM, the Personal Computer was a paradigm shift from their big business legacy, built with new technologies for totally new markets, and battleships turn very slowly.

I’ve often asked myself why intrapreneurs like Don Estridge and peers from CDC, Burroughs, UNIVAC, and Wang are not household names today. They had the huge financial and technical resources of a large company, and they had the right dreams, but they also had a set of challenges that most entrepreneurs don’t have to deal with:

  1. Team members are not selected based on entrepreneurial acumen. Typically, team members must be sourced internally, with their performance and credentials based on prior corporate assignments and relationships. No consideration can be given to experience running a startup, breadth of skills, or even thinking like an entrepreneur.

  2. Partnering with outside entrepreneurial efforts is discouraged. The culture of a large technology company is to rely on internal development or large, stable, and proven external vendors. Dependencies on entrepreneurial efforts, like Microsoft and Intel, were frowned upon, no matter how innovative or relevant. Every such deal was an exception.

  3. Key operational and pivot decisions require corporate approval. Like startup investors several layers deep, parent company executives often demand approval rights and exert their power, without understanding the issues of starting a new business. Required pivots and budged changes are painfully slow and over-analyzed.

  4. Compensation and support carried the corporate burden rate. The burn rate was extremely high, with no one working for equity or deferred compensation. Legally and culturally, benefits, facilities, and work schedules for intrapreneurs have little flexibility. The alternative of an early spin-off from the parent with no return path was unthinkable.

  5. Measurements set on internal objectives, rather than market traction. In enterprises, performance objectives are usually tied to internal processes, rather than beating competitors, customer acquisition, and revenue growth. This approach, when applied to a new venture, often actually inhibits progress and market penetration.

  6. A single-minded focus and commitment is hard to maintain. In a corporate world, a small effort like the IBM PC was just one of hundreds vying for attention and resources. It’s easy for top executives to get distracted by the latest challenges or new opportunities. Intrapreneurs have a double visibility and selling challenge, both internally and externally.

  7. Corporate entities operate under strict competitive and accounting rules. For example, IBM was always under scrutiny for potentially impacting small competitors, equitable contracts, and meeting the reporting and disclosure standards for public companies. Internal legal reviews and required new processes were slow to finalize.

Even with these extra challenges, the IBM PC was developed and delivered in eighteen months – at that time faster than any other mixed hardware and software product in IBM’s history. This was done while breaking all the rules for using outside vendors, and publishing all the interface specifications for the first time, leading to a booming after-market for external entrepreneurs.

That experience helped me to understand the excitement, determination, and satisfaction of an entrepreneur, and it made me a better one when I later worked for and with several real startups back in Silicon Valley. But like most entrepreneurs, I’m still learning, and still anticipating the next round of technology and change. I still enjoy the journey as well as the destination.

Marty Zwilling

*** First published on Inc.com on 10/24/2016 ***

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Sunday, November 6, 2016

8 Keys To Getting Real Value From Business Networking

Business_Communication_Duplicat_modelThere is no skill more vital to an entrepreneur than effective networking. You can’t build your business alone, and networking is the best way to open doors, professionally and personally. For introverts like me, it’s not easy to step out of your comfort zone and meet new people, but if you approach the challenge correctly, I have found that it can actually be fun as well as productive.

I just finished a new book, “Hopping Over The Rabbit Hole,” by Anthony Scaramucci, a well-known entrepreneur, financier, and television co-host of Wall Street Week. He highlights the value and “how-to” of business networking strategy in eight key bullets which resonate with me, and I believe every aspiring entrepreneur practice these early:

  1. Push yourself to take the initiative, rather than wait to be found. If you wait for people to come up to you, they likely won’t be the right people. It pays to do your homework ahead of time on people you expect to find, or people you need to know. Otherwise listen to conversations around you, and join in ones where you can contribute.

  2. Try to find common ground outside of business. In business networking settings, it’s not very memorable to talk only about business. Remember that personal relationships are the ones that set you apart and will grow and last. Look for common family experiences, academic connections, or sports activities. Common interests lead to trust.

  3. Put yourself in a positive state of mind beforehand. Everyone is impressed with people who smile and exude authentic positive energy. Psych yourself up for this, if necessary, before you enter a room. Be the visual image of the people you need to meet, and the right people will gravitate toward you and view you as an influencer.

  4. Exchange connection info and follow up within two days. If you have interest in a real relationship, don’t let the initial connection fade. The follow-up should be simple and to the point, such as a quick email suggesting an opportunity to continue the discussion. Skip the hard sell here, and don’t be afraid to follow-up again in a few weeks if required.

  5. Networking and relationship building should be fun. Learn to relax and enjoy the process, but keep a clear head and remember to save your heated debates for one-on-one discussions in a more private setting. While the ultimate purpose of networking is to advance your career or business, don’t treat it with the formality or structure of work.

  6. Be prepared to give as much as you get from networking. If you start pumping someone you have just met for funding or referrals, he or she will realize that your intentions are shallow. Everyone has something to give to a relationship, no matter what your credentials. Open up and share what you can, before expecting anything in return.

  7. Never be intimidated by business titles and wealth. Successful business people are still people, like the rest of us. They have weathered hard times and failures, and love to talk and offer advice, if you are interested and willing to listen. No matter how shy you are, you must look the other person in the eye, and sincerely get to know them.

  8. Don’t try to be someone you are not, socially, or in business. Networking pretenses almost always lead to disaster. Integrity and trust are required before a new relationship can be productive. No matter how insecure you are, artificial efforts to bolster your image are not recommended. If you humbly treat people as equals, relationships will work.

Of course, business networking is just the beginning of your journey into entrepreneurship, In his book, Scaramucci offers much more – a firsthand, introspective, and candid account of his own failures, successes, and insights that led him to business and financial success. He offers inspiration and a concrete blueprint for achieving your dreams, despite unexpected adversity.

I’ve focused here on the how and why of business networking because I find that technical entrepreneurs, in particular, are often quick to discount and ignore the value of business relationships, in favor of technical conferences and peer experts.

As a technologist myself, I had to learn the hard way that while solutions can be built by a person or two, it takes a network to build a business. How robust is yours today?

Marty Zwilling

*** First published on Huffington Post on 11/05/2016 ***

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Saturday, November 5, 2016

8 Transformative Principles That Can Change The World

technology-transformativeEvery entrepreneur has an idea for transforming a market with innovative new technology, or transforming society with a new process. But unfortunately, most of these ideas fail at the execution level, or are not truly innovative. Entrepreneurs who have been really transformative, like Steve Jobs and Walt Disney, seemed to know how to deal with all the right elements.

Jeffrey A. Harris, in his classic book “Transformative Entrepreneurs,” provides examples of key elements of transformative ideas and leadership abilities that separate the winners from the losers. I found his observations, like the following, to be inspirational for those of us chasing an entrepreneurial dream:

  1. It’s all about the people. Ideas have to be implemented well to change a market, or the world. Good implementation requires a plan, and a great plan and great operational decisions come from great people. That’s why investors look for entrepreneurs who have true grit, dogged persistence, and a disdain for the status quo.

  2. Seek innovation that begets invention. It doesn’t always work the other way around. According to an MIT study a while back, only about 10% of patents granted in the United States have any meaningful commercial importance and less than one percent are of seminal importance. True business titans deliver both invention and innovation.

  3. Find enough venturesome capital. Nearly all new businesses aspiring to reach meaningful scale require some sort of outside funding to finance a competitive growth trajectory. The objective must be to get sufficient capital, with experienced and motivated counsel, to make the venture succeed.

  4. Create a formidable and durable business model. Your business model is your value proposition. “Free” sounds like a great model, but it doesn’t imply value. Look for customer-focused value creation. Make your business model your competitive differentiation, like Fred Smith with Federal Express, or Ingvar Kamprad with IKEA.

  5. Grab the next-mover advantage. First-movers have an initial advantage, but this position is fraught with risk, and often comes with a high price. Herb Kelleher, who started Southwest Airlines, wasn’t the first in the airline business, but he saw the need for low-cost short hauls, with exemplary customer service, and transformed the industry.

  6. Failure is an option. Building a business from a raw start is hard, risky work. That means that the process of innovation is not always pretty and rarely successful. The best entrepreneurs always regroup after a failure, learn from prior mistakes, persevere, and launch a new venture with considerably improved odds of success.

  7. Government matters. Government policies, initiatives, and leadership set the stage for economic growth, and provide resources for improving living standards, and enabling technological advantage. Transformative entrepreneurs pay attention and capitalize on these cues, rather than ignore or fight them.

  8. Innovate or die. In a world connected through a broadband Internet and mushrooming social networks, information flows quickly and relatively seamlessly, expediting the pace at which new innovations gain traction and speed. Standing still is tantamount to giving up. It is not an option.

These elements and the people stories in the Harris book highlight just how difficult it is to build a truly transformative business, yet at the same time illustrate that it can be done, and has been done many times, with no correlation to geographic, ethnic, age, or sexual boundaries.

In fact, I’m convinced that it needs to happen more often, with all the challenges we have in our modern world. So it’s up to each of you to assess your activities, and your potential, to be transformative. The investors I hear from want to see more innovation, and fewer “me too” startups. Can your idea generate some excitement to really change the world?

Marty Zwilling

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Friday, November 4, 2016

5 Ways Entrepreneurs Are Chefs Creating New Recipes

Celebrity chef and restauranteur, Emeril Lagasse signs his books and interacts with his fans during a booksigning at the Post Exchange Thursday.I realized a while back that creating a new company for the first time is a lot like whipping up a great dinner entrée for the first time – you need a recipe, even though it may look simple. You know the basic ingredients, and you can visualize the results you want. Yet you may not be so sure where to start, and how to put it all together.

In all cases, don’t skip the basic training. Any startup coach or business advisor will tell you that, on your way to being a great chef, you don't start your journey by inventing the ultimate entre. First you work in the kitchen for a while, learning some tools of the trade, experiment with a few recipes, and test on willing clients. Finally you create and document your recipe (business plan).

There are two parts to every recipe – the specific ingredients, and the instruction steps for putting the ingredients together. For a new business, you can provide unique ingredients, but the preparation steps in your business plan must follow a tried and true recipe for startup success:

  1. Identify a market with a real need. This means find some hungry people who would love a good dinner, and be willing to pay for it. If you can’t identify customer interest, it doesn’t matter how good your product is. (not a solution looking for a problem)

  2. Be sure you have a great team. You need a good cook, good marketing, and first-class service. Domain knowledge and experience is a huge success factor. All the investment money in the world won’t make your company succeed, if you have the wrong team. (investors invest in people, not ideas)

  3. Effective and timely go-to-market. Don’t be afraid to test your ultimate entrée on customers. Make them “feel the love.” Be adaptable to cultural tastes, trends in the market, and economic realities. But don’t practice too long. If your startup is over a year old, and your business isn’t yet ready, you have a problem. (time-to-market is critical)

  4. Viable financial model. Have you set the right price for your entrée, and correctly included all costs? Have you projected sales and marketing costs, cash flow, and capital requirements? Show return on investment, growth rates, and market penetration. (validate your business model)

  5. Continuous improvement. Don’t stand still. Emeril Lagasse is always ready to “kick it up a notch!” Companies and cooks who rest on their laurels don’t last. Develop metrics with which to measure yourself and use these to incrementally expand and improve your offering as fast as the market and capital will allow. (scale up the business)

If you are already a chef, and you have your own money, you can skip the instructions. You can vary the ingredients, change the formula, or add an extra pinch of salt, and your pasta salad will still be great. If it’s your first time, don’t try to get creative on the “how to” side just yet.

If you are already a celebrity chef like Emeril, meaning you have a record of success using your creativity despite the odds, you don’t even need your own money, and you only need to scratch your business plan on the back of a napkin to get funded.

For the rest of us, the business plan must be the complete recipe, combining ingredients with process. If you don’t have one, your chances of success are low, even if you are an experienced chef. Now you know why professionals and experienced investors are quick to toss an incomplete plan.

Follow the “how to” instructions above for combining the ingredients, combined with you own “special sauce” (competitive edge), and I’m sure you will deliver a tasty dish, on time and with a profit. You can look forward to being a celebrity chef later. For now, get cooking!

Marty Zwilling

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