Saturday, September 30, 2017

10 Steps To A Winning Strategy For Your New Venture

vision-plan-action-successDeciding to be an entrepreneur is a lifestyle move, and should be part of a long-term strategic plan. You shouldn’t be making this decision just because you are mad at your boss, or you would like to be rich, or someone else thinks it’s a good idea. In these changing times, if you already have a startup, with no plan, maybe it’s time to think ahead for a change.

Formally, that’s called developing and maintaining a strategic plan. Usually that means writing something down, since it’s hard to maintain something, or track yourself against it, if it’s not written down. From my experience, and the experience of other entrepreneurs, here are the key elements you should think about as part of the process:

  1. Personal interests and aspirations. Do you love managing your own schedule, overcoming obstacles, starting a new adventure, facing financial risk, and relish the opportunity to change the world? Money should not be the big driver here.

  2. Right idea at the right time. Do you believe that you have an idea for a company that you can implement better than anyone, and maintain a competitive advantage? If you are thinking nonprofit (social entrepreneur), can you rally the world around your cause?

  3. Take inventory of what you have. Look critically at yourself and your existing organization for strengths, weaknesses, opportunities, and threats (SWOT). What resources do you have, skills and functions, and what do you do best?

  4. Assess customer demand. Do customers really need what you want to do, or might they see it as “nice to have?” In the relevant market large enough, and growing fast enough, to make it a profitable opportunity?

  5. Providing minimal resources. One of the biggest stumbling blocks for all entrepreneurs is time and money for the ramp-up period. Do you have money saved, or available from friends, or current employment to support the transition?

  6. Visualize the future. What do you envision your business looking like in five to ten years? Is your mind full of ideas for repeating the experience, or are you looking to build a family business that you make your legacy?

  7. Manage existing relationships. How important to you is the balance between family, outside relationships, and work? Do you have dependents that must be factored into every career and lifestyle equation? What personal support resources are available?

  8. Education and training roadblocks. Does your dream require additional time and money for training or academic credentials? If so, can these be done concurrently with an entrepreneurial rollout plan? What other roadblocks exist?

  9. Location, location, location. Most entrepreneurial efforts can best be done, or can only be done, in a specific geography or country. Are you willing to relocate as part of your strategic plan? Can you start where you are and relocate later?

  10. Willing and able to measure. Can you define measurable milestones to help you track progress and provide feedback? Strategic plans that cannot be measured will never be accomplished. Are you committed to achieving milestones and measuring progress?

I’m not suggesting here that a strategic plan is a one-time set-in-stone effort. In fact, quite the opposite, every plan must be improved and adapted as you learn more and the world changes around you.

On the other hand, if your way of doing business might be described as fire first and aim later, to seize today’s opportunity, you are charging into the future on only a wish and a prayer. The crash landings can be tough, and definitely won’t feel good as a long-term strategy.

Marty Zwilling

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Friday, September 29, 2017

7 Steps To Building The Right Team For Your Business

Business People. Successful Business Partner Shaking Hands in the office. Business TeamMost new entrepreneurs work alone in developing their idea or a solution to a problem, but ultimately realize that starting and growing a business requires more. Not many people have the bandwidth to simultaneously cover all the required bases in finance, marketing, manufacturing, and operations, as well as solution development. It takes a working team to build a business.

What many don’t realize is that building that team is as critical and as difficult as building the solution. If you have the wrong people on your team, or the team can’t work together, you have no chance of making an epic business, no matter how great your solution. Witness the many memorable failure examples, including Friendster, Pets.com, and Webvan.

I see plenty of guidance of developing ideas, but very little on how to build the right team. Thus I was particularly pleased to see the new book, “Do Big Things,” by Ross, Paccione, and Roberts, that highlights the team building process specifically, based on their years of experience facilitating leadership teams around the world.

The authors detail seven steps, which I adapt here to new businesses, for mobilizing the hearts of minds of your team, in order to make the epic impact that you envision:

  1. Define your desired business culture and find people who fit. The first step is to assemble people who are willing and able to work together as a team. Getting subject matter experts is necessary but not sufficient. Finding interns or family members to save money won’t work. You need team members who are aligned in their thinking and action.

  2. Make sure the team embodies a common definition of success. Find people who share your vision of success and have confidence in you and what you are setting out to do. Teams that do big things do not team casually or randomly. They are willing and able to leverage failure, without losing confidence, since every business has many unknowns

  3. Everyone must choose to contribute, activate, and connect. Each team member must be determined to bring their best to the role, bring out the best in others, and choose to partner across their areas of expertise to deliver on the shared objective of a successful new business. Make it clear how you will measure each person’s results.

  4. Assure each team member has barrier breaking authority. Because every new venture has limited resources, the team will have to deal with real barriers, perceived barriers, and symptomatic barriers. The toughest barriers are competing priorities caused by business leadership not being aligned on a common purpose, strategy, or plan.

  5. Foster solid relationships to keep focus on what matters. It’s impossible for a team to effectively focus its energy on executing a plan when team members are distracted by poor relationships with one another. If you want epic team results, equip team members to have epic relationships, and clearly communicate purpose and milestones expected.

  6. Energize the team around a shared purpose and reality. A team can only build a successful business when the members of that team have an open mind that is receptive to your vision of changing the world. Energy that is being used to protect yourself cannot simultaneously be used to build the connections necessary for the team to succeed.

  7. Convert your vision to milestones to mobilize hearts and minds. Empower the team to create action plans for delivering a new and innovative business. Every team member must be equipped to ask the types of questions that lead to positive results, not boilerplate questions that aren’t intended to solicit answers or forward movement.

Every new business team has a big job to do – against swirling priorities, rapid change, and seemingly impossible deadlines. Too many teams are formed as groups of people thrown together with outdated and naïve ways of working with others. With scarce resources, this means that the average team is destined to flatline and fail. Don’t let your new business be the casualty.

Marty Zwilling

*** First published on Inc.com on 09/14/2017 ***

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Wednesday, September 27, 2017

10 Strategies For Managing The Stress Of A Startup

Work_Stress_Claims_ExpertsOne of the most common complaints I hear from entrepreneurs is that they are overwhelmed by the workload and stress of starting their company. Then there are the additional challenges of balancing the demands of family and friends. Having too much on your plate can turn your dream into a nightmare.

Some people will tell you to just get a bigger plate, meaning hire some help. But with the pressures of the economy, and limited access to outside funding, we all know this isn’t always possible or appropriate. I recommend the opposite, or getting things off your plate that shouldn’t be there in the first place.

In reality, many entrepreneurs are their own worst enemy, trying to do everything, working inefficiently, and imagining things that need doing which will never happen. Here are some tips on how to look at work, make some hard decisions, and keep your health and sanity:

  1. Maintain a big picture perspective. It’s easy to be overwhelmed by day-to-day details, to the degree that they all seem like big items, driving up your imagined workload. Take a few minutes each day to reflect on your real goals, and eliminate items which don’t relate.

  2. Set realistic deadlines. The more your workload grows, the greater is your temptation to set unrealistic deadlines for yourself. This results in poor quality work, which generates more work to fix previous efforts. Allow some buffer on every item.

  3. Prioritize the work items. Relentlessly reprioritize your list and complete them in order, resisting the urge to skip over the tough ones. The longer that high-priority items stay on your list, the more stress you will feel, and consequences will add new items.

  4. Keep a written to-do list. Most people can’t manage more than five items in their head, and when your list gets longer, it seems infinite. Write it down, but even then, keep it to the top ten priority items or less. Multiple pages of work items won’t get done anyway.

  5. Block out time for priority work items. Don’t allow your day to be monopolized by distractions and the crisis of the moment. Close your door, or move to another location where you will not be interrupted so that you will complete the top item on your list today.

  6. Count the completions. At the end of each day, check off, count, and celebrate your positives. A sense of progress is important here. Look positively at your progress as a glass half full, rather than half empty.

  7. Take a break to recharge. Even a few minutes each hour to relax will re-energize you. Regular non-work breaks, like a trip to the gym, or time with family will be ultimately more productive than slugging it out all night on a given problem. Get a good night’s sleep.

  8. Discuss the tough ones with a mentor. Don’t be afraid to discuss your challenges with a trusted friend, or business advisor. This will clarify the issue in your own mind, and let you see it from other angles. You need to stop and regroup when you hit a brick wall.

  9. Stay in control of your emotions. Stress is a normal part of life. Don’t let it lead to anger and frustration, or loss of productivity. We can choose how we handle tough situations, and the best approach is always to stay calm and in control.

  10. Eliminate phantom work items. These are items that you never intend to do, and probably don’t need, but you carry them on your list because of guilt or direction from someone else. You can’t complete an item that you don’t understand.

Wearing all the hats required to initiate a startup is tough in the best of situations. Then your business really starts to take off, and it gets even more challenging. As an entrepreneur, you need to seriously apply the discipline of these principles early and always to survive, and hopefully even enjoy the journey.

Marty Zwilling

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Monday, September 25, 2017

8 Steps To Build Winning Self-Confidence In Business

self-confidence-in-businessIn my years of mentoring entrepreneurs, a problem I have seen too often is low self-esteem, and over-compensating through arrogance and ego. These entrepreneurs find it hard to respect customers or team members, and their ventures usually fail. As a team member, low self-esteem leads to low confidence, poor productivity, and no job satisfaction. Fortunately, both can be fixed.

Organizational change expert Paul Meshanko, in his classic book “The Respect Effect,” explores the human science behind these issues, confirming that people with a healthy self-esteem perform at their best and treat others with respect, getting their best. All of us shut down when disrespected. He assures us that anyone can train themselves to get on track to stay on track.

With my updates to focus on entrepreneurs, I like Meshanko’s eight steps to help build business self-esteem and avoid the ego trap, which support a broad range of attitudes and behaviors that are individually and organizationally beneficial to startups as well as mature companies:

  1. Identify the qualities and skills most closely linked to your idea of success. Current research is conclusive that self-esteem is linked to our sense of competence in the areas that are important to us. As you look at your entrepreneur goals, make sure you are following your own definition of success that gives you pride and passion in its pursuit.

  2. Identify your current strengths and establish plans for improving. Once you have clarified your personal definition of startup success, examine where you currently are relative to where you want to be Whatever your goals, there are few things more esteeming than knowing you’re making progress toward your picture of success.

  3. Be on the lookout for new opportunities to grow your talents and experiences. Part of our sense of self-worth comes from the belief and confidence that we have the ability to grow the business both today and in the future. Entrepreneurs have a natural base for adventure and curiosity, and should relish trying new things each day to stretch them.

  4. Identify and redirect unhealthy competition and comparisons. Make you the base, not others. Your sense of worth should not be determined by other startups, or what you think peers expect of you. Competition sabotages teamwork and leaves feelings of isolation and alienation. Use others as a source of inspiration, rather than envy.

  5. Forgive yourself for past mistakes and poor decisions. From a rational point of view, berating ourselves for past startup failures makes no sense. Free up your energy to be spent on more productive activities, and learn from past efforts. The great entrepreneur Thomas Edison said that every wrong attempt discarded is another step forward.

  6. Hold yourself completely accountable for your actions, decisions, and outcomes. The legitimate place for short-term guilt and remorse is making these lead to some type of behavior change. Failing to hold yourself accountable sends subtle messages that may damage others self-esteem, and it doesn’t promote lasting confidence or competence.

  7. Develop a pattern of self-talk that validates your worth and abilities. Each of us has developed a way of interpreting and explaining the business world around us. It’s important that our stories neither damage us nor free us from blame. We should continue to feel worthy, accountable, and capable, with a mindset that allows us to continue to follow our entrepreneurial passion.

  8. Focus on what you can control, not what you can’t. Our short-term destiny is not always in our control. What we can do is make a commitment to do our best in whatever entrepreneurial environment we find ourselves. We can also make sure we build strong relationships with successful business leaders in advance of our needing their wisdom.

For every entrepreneur, a healthy self-esteem, leading to self-confidence, is critical to a constrained ego and more success, since every startup is entering uncharted territory, and must take risks to seize a new opportunity. Not all entrepreneurs have a background to start from a position of strength in this area, but all have the ability to learn and the passion to succeed.

In my experience, the most common cause of entrepreneur failure is giving up too early, rather than running out of money. Are you selling yourself short on your own potential, and not working on your own self-esteem, thus jeopardizing your business success and job satisfaction?

Marty Zwilling

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Sunday, September 24, 2017

10 Business Skills That Require Remedial Training

school-of-businessI’m sure that every one of us who has been out in the business world for a few years can look back with perfect hindsight and name a few college courses that we should have taken. What’s more disconcerting to me is that I can name a few that aren’t usually even offered, resulting in more than a few students graduating ill-prepared for the real business world!

I won’t even try to cover here the ones you didn’t find for your personal life, like managing personal finances and credit. But on the business side, here is my list of useful courses that we wish existed, but as far as I know, still aren’t generally available:

  1. Basic Office Politics. Office politics involves the complex network of power and status that exists within every business, large and small. Don’t you wish that someone had prepped you on how to read the body language, interpret office gossip, and when to hit the delete key on your email rather than the send key?

  2. Business Email and Texting. Writing in business is not the same as in an academic environment. In school, you're taught to stretch weak ideas to reach your document page limit. The business world expects exactly the opposite. The challenge is to communicate your idea in one page, and close the deal quickly. As for business texting – don’t do it.

  3. Touch-Typing for Business. How many hours a day does the average professional and executive today spend hunched over a computer keyboard “hunting and pecking”? Throughout a career lifetime, just think of the return on that investment. Any symbols you can’t find on a typewriter, like smiley faces, should never be used in business.

  4. Business Dress for Success. “You are what you wear” works in business, just like it did in high school. But no one tells you the business norms, so some continue to come to work in jeans, baseball caps, tattoos, flip-flops and expect to be treated as executives. A basic benchmark is to dress better than the executives who hold the positions you want.

  5. Demystifying Employee Logic. Another term for this is how to be a skeptic. Understand the ways people can mislead deliberately or accidentally with numbers, bad logic and rhetoric. There's some untruth hidden in 99% of everything you're told. Can you find it, and do you know how to respond?

  6. Business Budgets and Benefits. The focus here would be on the actual nuts and bolts of how things get budgeted and financed in business. This will pay big dividends in getting your favorite project funded, or justifying your own salary, or negotiating a bonus. The tenets of entitlement do not apply.

  7. The Art of Selling and Closing Business. We can find tons of "marketing' courses in colleges and universities but everyone must think that “selling” is intuitively obvious. The art of selling is complex blend of relationships, persuasion techniques, negotiation, and knowledge. Follow-up and persistence are a rare natural phenomenon.

  8. Root-Cause Problem Analysis. Business professionals need to analyze problems from a big picture perspective. Most classes in college focus on a narrow area of interest, which just teach students to focus on problems through one lens. That's how unforeseen consequences stay unforeseen, and happen repeatedly in business.

  9. Maximizing Business Productivity. In the office world there is always far more work than there is time to do it. You need to be able to figure out what not to do, and how to not do it, by organizing and prioritizing, and still impress your boss with your thoroughness. Productivity is much more than doing everything faster.

  10. Job Hunting Basics. People need realistic expectations about how much effort and time it takes to get just about any job. Atrocious resumes and social network antics will kill your career. The difference between job descriptions and accomplishments seems to elude most business professionals.

The real problem for many of these, I suspect, is finding qualified instructors to teach. Until then, the best alternative I can recommend is to sign up for job internships at every opportunity, while still in school. You might find on-the-job experiences more valuable than all your other courses, or you might change your major.

Amazingly, it seems that people in business are more highly educated these days, but less well prepared than ever before. What’s another course that you wish you had taken in school, but didn’t realize was missing until too late? There’s another generation right behind us that needs to know.

Marty Zwilling

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Saturday, September 23, 2017

It’s Time For A New Way Of Thinking About Business

way-of-thinking-about-businessLarge corporations and conglomerates, the engines of growth and vitality in the twentieth century, have lost their edge and their image. They have proven themselves unable to innovate, and they have lost more jobs than they create. My friends who “grew up” with lifetime careers in General Motors, Exxon Mobil, or even IBM, are now often too embarrassed to even mention it.

On the other hand, everyone wants to be an entrepreneur. We can all aspire to grow companies like Google, Facebook, and Apple, which have the aura of fun, while still improving your lifestyle and offering the dream of untold riches.

In his classic book “The 3rd American Dream,” thought leader Suresh Sharma summarizes the large corporate accomplishments of the 19th and 20th centuries, and then lays out the potential of a new entrepreneurial business ecosystem for the 21st century. His focus is on entrepreneurs in America, but what he says applies to every other country as well.

I agree with Sharma that it’s time to move on to a new way of thinking, living, and doing business, especially after the relatively recent demoralizing recessionary times. This next frontier lies in building enterprises as an entrepreneur, rather than waiting for innovation and opportunity from large corporations. They have become a by-product of innovation rather than the cause of it:

  1. Conglomerates grew from industrialization, not innovation. Most of their new claims to innovation are acquired through mergers and acquisitions from the entrepreneurial pipeline. Internal corporate processes thwart innovation due to inherent inefficiencies of scale, high overhead, and the risk of impact on the corporate bottom line.

  2. Existing technologies have been “commoditized” globally. Many countries have learned to make products cheaper and better. Competitive advantages are rapidly vaporizing on these. Having only a large capital base and distribution channels, with no innovation, is not a sustainable business model.

  3. Large corporations no longer create jobs in their home location. There is no shortage of data to support the assertion that the old large corporations have lost more jobs than they’ve created at home. Outsourcing and manufacturing “offshore” have become the norm. Entrepreneurs growing companies create more value and more jobs.

  4. Non-industrial large organizations cling to outdated business models. Financial institutions, for example, count on pure capital plays without innovation that can disappear quickly. Government bail-outs do not promote innovation. These companies usually end up going extinct, like Lehman Brothers, WorldCom, and Enron.

The new corporate model is a distributed entrepreneurial model. Customers today demand products and services personalized or tailored to local needs with embedded quality of life services. Scaling is done first by customer alliances through social media, and later by distributed joint ventures and coopetition. We need the new wave of entrepreneurs to facilitate:

  1. A new era for manufacturing enterprises. New emerging manufacturing technologies (e.g., digital and 3D printing) in small shops or a town’s industrial and innovation hub can bring manufacturing back home. The new twenty-first century corporation can be born virtually anywhere. Single-node factories may be home-based with a global market.

  2. New goldmine of innovations and technology. Universities and other R&D groups have created a large number of new inventions and innovations, mostly lying dormant on the shelves of our researchers and labs, waiting to be commercialized by aspiring entrepreneurs, with minimal up-front costs for licensing.

  3. Next wave of economic expansion. The time is ripe for the new entrepreneurial dream. People are emerging from recent economic disasters with a new appetite for change, and making the world a better place. Gen-Y is approaching the business world with solid personal goals, and expect to create something that is creative, fun, and rewarding.

  4. The cost of entrepreneur entry is at an all-time low. With e-commerce, Internet, and smartphone apps, anyone can be an entrepreneur today for a few hundred dollars, without a huge investment, bank loans, venture capitalists, or Angels. With the global market, the growth opportunity is huge, starting local and scaling at any pace.

If you are already in the entrepreneur lifestyle, you probably realize that it’s hard work and very risky. Nobody said it would be easy, but nothing that is easy satisfies for long. The days of easy and safe jobs in the large corporate world are over, and certainly not very satisfying either.

We need this new generation of entrepreneurs who relish the challenge and the opportunity of rebuilding our business engine to fit the culture and the global needs of the twenty-first century. What’s holding you back from jumping on the wave?

Marty Zwilling

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Friday, September 22, 2017

8 Coaching Myths To Avoid In Building Your Team

team-coaching-mythsBusiness productivity is all about having the right people, even though I’m bombarded daily with online tools and mobile apps that promise to solve every problem with automation and data. In reality, business success and satisfaction is about doing the right things at the right time, which requires leadership and coaching. But coaching doesn’t always work the way you expect.

In fact, I’m a strong proponent of coaching and mentoring in the workplace, but I recognize that these efforts can only go so far in eliminating your human resources problems, and increasing team morale and performance. Some managers work too hard on fixing the weaknesses of the people they have through coaching, rather than enhancing the strengths of the right people.

Most companies still operate around a set of related coaching myths I saw described well in a new book, “The Power of People Skills,” by Trevor Throness. Trevor is a veteran coach who has helped hundreds of entrepreneurs, organizations, and business families across the country. He knows well when it works, and when it doesn’t.

For example, he says that he has never yet worked with someone who succeeded because they had a well-honed set of strong weaknesses. I have paraphrased here his summary of the most common coaching myths:

  1. Coaching is to help people manage their weaknesses. Everyone has weaknesses, including your star employees. The focus of coaching should be to capitalize and extend their strengths, not manage their weaknesses. Coaching is helping a person increase self-awareness and adjust their role to take better advantage of their greatest strengths.

  2. People’s basic weaknesses will change if they’re coached. In reality, if you like the basic package of who your employee is now, know that they will get better with coaching and training. If you don’t like today’s package, all your effort, time, and money will not turn them into a different person. People can change themselves, but you can’t change them.

  3. Coaching will fix the behavior of stubborn, poor performers. A good test of your poor performer is to mention the possibility of receiving coaching. If their ears perk up, and they express interest, maybe there’s hope. If you see no enthusiasm, don’t waste your time with elaborate, ongoing coaching efforts that go beyond the basics.

  4. Tough coaching conversations damage relationships. Ironically, more often than not, just the reverse is true, if the conversation is direct and without undue emotion. Superstar leaders are able to have difficult conversations without making enemies. They earn trust and loyalty because they’re willing to tackle these issues, without being judgmental.

  5. Successful coaching suggests making sweeping life changes. Typically, sweeping changes are short-lived. Real change happens more gradually and takes more enduring effort. A successful coaching engagement is more like a marathon that a sprint. All it takes is someone committed to getting a little bit better each and to finishing the race.

  6. All age generations can be coached the same way. If you use the same approach with every age group, you will miss the mark for all. Members of different generations tend to view the workplace differently. The best leaders and companies adapt the role and guidance to the people they have, rather than expect people to adapt to assigned roles.

  7. The person with the best qualifications wins every time. Skill is needed, but if you have to weigh skill against culture fit, choose fit every time. Hire for fit; train for skill. People who are bright, people-savvy, and eager to learn and grow are always a good fit. Look for natural-born leaders with drive, vision, purpose, and a focus on the customer.

  8. Personal life changes need not be allowed to impact work. At the end of the day, your personal and professional lives are the same life. If your work life is going badly, your loved ones feel it at home, and vice versa. The best leaders don’t dodge personal issues, but add coaching to minimize the work impact, and adapt roles where possible.

Effective coaching starts with sitting with each of your team members, helping them identify their greatest strengths, and brainstorming with them about how they can capitalize on strengths. Coaching is not pouring time into people who are not interested in growing, not pleasing customers, or not moving ahead. Focus on people coaching, and the tools will do the rest.

Marty Zwilling

*** First published on Inc.com on 09/07/2017 ***

*** Polish translation provided by Marie Stefanova ***

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Wednesday, September 20, 2017

6 Funding Sources For Good Causes, Without Angels

Investing_moneyAngel investors and venture capitalists don’t make equity investments in nonprofit good causes. The simple reason is that it’s impossible to make money for investors when the goal of the company is to not make money. Yet as an active angel investor, I still get this question on a regular basis, so I’ll try to outline the considerations in common-sense terms.

A nonprofit organization is generally defined as an organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals. Examples include charitable organizations, trade unions, and public arts organizations. In the US, a nonprofit is technically any company who qualifies as tax exempt through IRS Section 501(c).

Obviously, these companies still need money to get started, or finance growth, just like a for-profit company. What options do they have available to them, since they can’t sell a share of the company (no equity investment)?

  1. Individual and institutional philanthropy. For a nonprofit, bootstrapping is self-funding from donations and fund-raising. The advantage is no time and effort is spent searching and preparing for the other alternatives, and no repayment terms or collateral are required. There is no discussion of equity, or return on investment.

  2. Loans from a bank or other financial institution. Non-profits can apply for a bank loan or line-of-credit, just like any other individual or company. However, like anyone else, they will first need some collateral, or someone to guarantee the loan, and some evidence of a viable business, like receivables and inventory.

  3. Personal loans from individuals, employees and board members. Personal loans are certainly an option, but should be avoided if possible. As in any company, they can lead to employee problems, or messy legal issues. A nonprofit can also issue bonds to board members and members as a way of borrowing funds from those same people.

  4. Government grants. The grant source often gets overlooked, but it should be a major focus these days when relevant due to the Obama administration initiatives on alternative energy and healthcare. The down side here is that real work is required to put in a winning application, and the award may be a long time in coming.

  5. Private endowments. This is a funding source for nonprofits that is made up of gifts and bequests subject to a requirement that the principal be maintained intact and invested to create a source of income for an organization. Endowments are usually limited to a specific area of interest by a philanthropist, and have many qualifications, so be careful.

  6. Bartering services. Bartering occurs when you exchange goods or services without exchanging money. An example would be getting free office space by agreeing to be the property manager for the owner. This could work to get you legal or accounting services, but won’t get you cash to pay employee salaries.

Hopefully you can see from this list that the people and processes involved in financing a nonprofit have little in common with angel investors, or the venture capital process. You still start the process with a business plan, but then you look for a philanthropist rather than an investor.

Some nonprofit entrepreneurs think they can skip the whole plan, rather than just the sections on valuation, equity offered, and exit strategy. All other sections, starting with a definition of the problem and the solution, opportunity sizing, business model, competition, executive team, and financial projections, are just as critical for nonprofits as for-profits.

A nonprofit is still a business, maybe even tougher than for-profit to run successfully, so the best angel is a great entrepreneur at the helm for fund-raising, as well as operations. In addition, the best nonprofits turn out to be the angel, rather than require one. That’s a higher calling.

Marty Zwilling

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Monday, September 18, 2017

8 Attributes Of The Most Creative Startup Founders

creative-business-peopleAn entrepreneur is literally “one who creates a new business.” The best new businesses are ones that have never been done before, so mastering creativity and recognizing creativity are key skills and mindsets. But how does one recognize and nurture creativity in a person or team?

In researching this question, I reviewed a classic book by Bryan Mattimore, “Idea Stormers: How to Lead and Inspire Creative Breakthroughs,” which details eight attributes of the most creative people, which seem to match the mindsets of some of the best entrepreneurs I know. Investors look for these in the people they fund, and you should be looking for them in yourself:

  1. Forever curious. Endless curiosity is the number one indication of the creative mindset. It allows entrepreneurs to challenge what is already “known” to extrapolate that to an original idea. Curiosity infuses you with the determination needed to figure out or learn how to turn an original or innovative idea into a reality.

  2. Always open to new things. Thinking this way can be viewed as quieting the opinions of the judgmental mind long enough to allow the creative mind the time and space it needs to generate interesting insights, associations, and connections. This opens creative possibilities, rather than categorizing new things into self-limited dead-ends.

  3. Embrace ambiguity. This is the capacity to entertain contradictory or incomplete information without discomfort and anxiety. To the creative mindset, contradictions are an invitation to more focused creative thought, to resolve the paradox, and derive a new un-ambiguous potentially great idea.

  4. Finding and transferring principles. There are two parts to this mindset. First is the mental habit or discipline of continually identifying the creative principles inherent in an idea in a given context. The second part is adapting the principle to another context to create a new idea. It’s the ability to work from the specific to the general.

  5. Searching for integrity. This is the desire to discover, and the belief that there exists, an insight or connection that will unite seemingly disparate elements into a single integrated whole. When it happens, it’s exciting and magical, and it feels absolutely, positively, and completely right. Integrity doesn’t need to explain itself.

  6. Knowing you can solve the problem. This is the confidence that you can tackle the difficult, even seemingly impossible challenges, with inevitable dead-ends, to make a creative breakthrough. As with a success mentality, knowingness is the persistence to make creativity a self-fulfilling prophecy.

  7. Able to visualize other worlds. This is the most imaginative mindset, with the ability to visualize whole new worlds and everything in them. It’s the province of game designers and creators of new social media platforms. It’s imagining original themes, people with new roles, and things with unique designs.

  8. Think the opposite. Some of the most creative entrepreneurs (and teenagers) always seem jump to opposite end of the spectrum from conventional wisdom. But many times, to think differently and creatively, you have to think illogically. Logic and common sense have a habit of leading us to the same conclusions.

Of course, it normally takes more than the right mindset to master the creative mind. Smart entrepreneurs leverage their startup creativity with techniques like involving everyone early and often, ideation, and attending to the details. Professional facilitation also helps. Most often, it’s a long hard road from a good idea to successful innovation.

The most creative entrepreneurs create more value and wealth, not only in physical products and services, but also in their intangible assets such as their brand, reputation, network and intellectual property. Of course, they are always looking to free up time and money for their next big idea. That’s really the best indication of a true entrepreneur.

Marty Zwilling

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Sunday, September 17, 2017

Tips On How To Approach Tough Decisions In Business

tough-decisionEvery so often a promising entrepreneur seems to freeze in the oncoming headlights and gets run over by his competition. Why is it that his idea which seemed so fundable only months ago fails to attract investors today? The team is the same. The company's market is the same.

The only change might be a visible new competitor, or another economy downturn, resulting in investors holding their money, and that makes all the difference. Herein lies a key principle of decision making - “Any decision is better than no decision.”

Even better than any decision is a good decision made quickly. What separates good decision-making from bad decision-making? H.W. Lewis, author of the old classic book “Why Flip A Coin? The Art and Science of Good Decisions,” summarizes good decision making as:

  • Identifying all reasonable actions.
  • Listing the potential consequences of each action and the utility of each consequence.
  • Evaluating the probability that each action will lead to a given consequence.
  • Choosing the action quickly which has the best expected outcome or positive contribution.

These points may sound obvious, but the process is certainly contrary to the popular “shoot from the hip” approach that is practiced by some entrepreneurs. The idea here is following a process can actually force you to think. You don't have to do it perfectly to stay ahead of the game.

Beyond not thinking, another failure is not really knowing what you want to achieve through the decision. This is a problem with many product-based companies. Their goal is to create profitable products, but too often they don’t research what their customers really want, and what they are willing to pay. It's difficult to create a high-demand product by guessing.

In all cases, be sure to distinguish between ideas and opportunities. A business idea is not a business opportunity until it is evaluated objectively in the context of a specific business plan. I like focus, but if you focus too early on only one business idea without a plan, you are more likely to become attached to it, and lose your objectivity.

Some entrepreneurs seem to know instinctively that a certain product or service has great potential for success. This comes from much industry experience, and is not irrational. On the other hand many unsuccessful would-be entrepreneurs are unsuccessful precisely because they were irrational, so avoid that pitfall.

Decision-making in the face of risk is one of only a handful of unique characteristics that successful entrepreneurs possess. After all, the very nature of a true entrepreneur is one that embraces risk. Often this risk-taking is mistaken in part to be “the reason” the entrepreneur succeeds in their business.

Some decisions involve risk, at times a great deal of it, but there are a greater number of decisions that can be thought through and analyzed to determine on some basic facts, whether or not they are good or bad ideas. Smart entrepreneurs always use facts, when they have them, rather than their gut.

If you are someone who never uses your gut, and exhaustively researches a purchase prior to making it, you are most likely not cut out to be an entrepreneur. This type of decision making, careful and cautious, is certainly a great attribute to have in the corporate business world, but it’s a killer in startups.

Making no decision doesn’t work in any business. So your first test here is to see if you can decide which category of decision maker you best fit. The headlights are approaching…

Marty Zwilling

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Saturday, September 16, 2017

10 Steps To Investing Successfully In New Ventures

investment-successInvesting in entrepreneurs and startups is a fun but different world from investing in conventional stocks, bonds, and commodities. First of all, it’s more of an investment in people than in a business, since the startup is usually an idea barely half-baked when they need your money. Secondly, the risk is very high, since as many as 90% of startups fail in the first five years.

On the plus side, it’s an opportunity to get in early and really help make things happen that will change an industry, or change the world. It’s an opportunity for that “big bang” return of 10X to 100 times your initial investment, like early investors in Google, Microsoft, and Apple. Finally, it’s an opportunity to “give back” what you have learned in your own career for the next generation.

Today most startup investors still register with the SEC as “accredited” investors before they buy any startup equity in the U.S. This requires a simple signature that you have a net worth of at least $1M or have made at least $200K each year for the last two years. But these requirements have been relaxed with the Crowdfunding JOBS Act implementation in 2016.

With all these considerations, I recommend the following steps and considerations for investors newly interested in startups:

  1. Build a balanced investment portfolio. Just like a seasoned stock investor would never put all his investible resources into a single stock, don’t put all your money into startups. Begin with perhaps 5-10% of your total investment base, and be prepared to lose it all. The growth target should be 5-10 times your initial investment in five years.

  2. Start in a business domain you know well. Since there are no bellwethers like Apple or IBM in the startup arena, your best bet is to pick one in a business area you know well. Don’t be fooled by thinking that social networks are hot, so you should invest in the next startup you see in that realm. Remember that 9 out of 10 startups fail in every realm.

  3. Fund an entrepreneur you know and trust. In the business, this is called investing at the first tier for startups - “Friends, Family, and Fools (FFF).” Most entrepreneurs start asking for money from this tier, when they have very little more than an idea. Here you are definitely betting on the person, rather than the idea, but the upside potential is huge.

  4. Join an existing angel investor group. This is the second tier of startup investors, and offers the comfort of working with more experienced investors with similar interests, to help gather and vet startup investment proposals. Some of these groups also offer you the option of putting your money into a multiple-startup fund to spread your risk.

  5. Diversify your total investment across several startups. Angel investment amounts per startup per investor usually range from $25K to $250K. These may be aggregated by an angel group up to about $1M for an angel round. If a startup needs more than this in a single round, they should talk to venture capitalists, who invest institutional money rather than their own personal money.

  6. Use the new Crowdfunding sites for small amounts. The hottest new way of investing in startups to go to popular online sites like Kickstarter and IndieGoGo. There you can get in for as little as $20, or even less. Typically these are used only for non-equity rewards or pre-orders, but the JOBS Act does allow equity investments with many restrictions.

  7. Participate as a mentor in local startup incubators. Incubators are a great place to learn about potentially great startups, and participating as a mentor helps you learn which ones are a good fit for you. The best known ones, like YCombinator, led by Paul Graham in Silicon Valley, and TechStars, located in Boston, provide excellent networking to investors, and on-site technical leadership, which can make your investment less risky.

  8. Do your homework before investing. Public companies with stock usually have industry analysts and SEC filings to give investors a quick view of the company stock value. Startups are private companies with no common document filing requirements. Thus it is incumbent on every potential startup investor to ask for and read their business plans, current financial statements, and investor presentations.

  9. Invest local and take an active role. Most angel investors only invest in companies and people local to their geography. Skip international and other opportunities you can’t touch and feel. Many negotiate a Board Seat for themselves as part of the investment Term Sheet. This allows them to ask for and get regular updates from the company, and allows them to have a say on how their money is used.

  10. Think long-term. It’s a lot easier to buy stock in a startup than it is to sell it. Once invested, you should expect no return until the first “liquidity” event in 3-5 years, maybe longer. Liquidity events include merger or acquisition (M&A), or Initial Public Offering (IPO) when the stock goes public. There is no “exchange,” so you can’t sell the stock at will.

In summary, investing in startups can be very rewarding, both financially, and in your ability to really help someone who needs help. But it’s always a risky proposition, probably well beyond the risk of the commodities market, since there are so many unknowns and few controls.

My advice to new startup investors is to start slowly, stick to business areas that you know well, and put more weight on your assessment of the entrepreneur and the team, than on the idea. Successful startups are all about the execution. You don’t want to end up on the wrong side of that equation, but you do want a bite of the next Apple.

Marty Zwilling

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Friday, September 15, 2017

7 Effective Approaches For Navigating Office Politics

office-politicsRunning a business would be so much easier if we didn’t have to deal with office politics. Every business professional not only have to deal with their own office politics, but also with those in their customer offices, vendors, and partners. According to some sources, 47 percent of workers feel that office politics take away from their productivity, and is one of the top 10 stressors.

Yet “Basic Office Politics” is one of those required college courses that, as far as I know, still doesn’t exist. We all have to learn the hard way all the tactics to use and avoid to be productive within the complex network of power and status that exists within every business, large and small. In my own case, it took me many years of trial and error to find some paths through the swamp.

Fortunately, today there are some good books around to get you started, including “How to be an Even Better Manager,” by Michael Armstrong. His handbook on business skills has been the textbook for business professional through all its ten editions, and has been translated into twenty-one languages. Here are his key points and mine on how to capitalize on office politics:

  1. Identify the political players and stakeholders. We all start out naively assuming that all business leaders make decisions based wholly on fact and merit. The first challenge is to develop your “political sensitivity” – observe and ask questions about how things are done in your business, where the power bases are, and who has hidden agendas.

  2. Learn how to keep political players comfortable. Every individual and leader has their comfort zone – behaviors, values, attitudes, fears, and drives that result in productive relationships. Actions outside these comfort zones will likely lead to feuds, hidden decisions, excessive arguing, counter-productive lobbying, and back-biting.

  3. Build your cases to align with decision makers. Before coming and launching a fully- fledged proposal at a committee or in a memorandum, it’s smart to test opinion and find out how key people will react, This enables you to anticipate counter-arguments and update your proposal to answer objections and to accommodate political realities.

  4. Work the network of key people on decisions. Facts and merit don’t make decisions – people make decisions. Just as you do your homework on the facts, also it pays to do your homework by visiting the players in a given situation. Effective management is the process of harmonizing individual interests with the goals of all business stakeholders.

  5. Identify the gatekeepers and norms for action. Focus your powers of persuasion on the right people, and the right issues. Politically insensitive business people often try to steam-roll others with emotion, a barrage of facts, or a claim of high-level support. In fact, a political approach is often the best solution where clarity of goals is not absolute.

  6. Support others as often as you ask for support. Successful businesses are run by building relationships, and every relationship is a two-way street. If you are viewed as always demanding support, but never giving it, your effectiveness will be greatly reduced, even when you are right. Always communicate the win-win element in every decision.

  7. Be prepared to stand firm and lose some deals. When your integrity and values are at stake, do not fold. Everyone needs to see that you do have strong principles, and are not merely compliant with the whims of a political power center. Even the most powerful influencers don’t win every battle, and need to show that they are still part of the team.

There are obviously occasions when a subtle or indirect appeal, rather than a direct attack will pay bigger dividends in highly-charged political situations. It is never legitimate or appropriate to tread on other people’s faces, or revert to buck-passing, memoranda wars, or back-stabbing.

In summary, whether you hate it, admire it, practice it, or avoid it, office politics is a fact of life in every company and organization. Whether you learn it in school or in real life, office politics is not rocket science, but something that you need to master to assure your own success. Complaining about it won’t help.

Marty Zwilling

*** First published on Inc.com on 08/23/2017 ***

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Wednesday, September 13, 2017

10 Steps To Scaling Your Startup Toward A Fortune 500

Crossing_Growth_ChasmEarly-stage entrepreneurs rightly keep their focus on creating an innovative product or service. After celebrating success at that level, they often find themselves ill-prepared to move to the next stage, for scaling their business into a high-performing enterprise. That’s where I see too much entrepreneur burnout, growth plateaus, and founders being replaced, to their chagrin.

By definition, second-stage ventures generally have 10 to 99 employees and/or $750,000 to $50 million in revenue, and see that as just the beginning. Of course, not every entrepreneur wants to tackle this challenge. According to one study a while back, only 45% of founders plan to exit after stage one, and my guess is that less than half the remainder survive the next stage in their own company.

If you are one of the many entrepreneurs who aspire to get beyond the “art of the start,” there are some proven principles to follow. In his classic book, “Second Stage Entrepreneurship,” Daniel J. Weinfurter, talks about making the leap a couple of times himself, and the perspective he gained from many years of consulting with other companies who have done the same.

I like the ten steps he outlines, which I characterize here as follows:

  1. Seek major capital infusion. Very few startups are cash-rich enough to self-finance aggressive second-stage growth. They need a large infusion from venture capitalists, private equity, bank loans, or mezzanine financing. Of course, that means a new level of risk, giving up some control, and a new business plan. There is no free lunch.

  2. Install a real board of directors. Most entrepreneurs are mavericks, and their passion drove their new business. But to scale the business, they need the complementary expertise, experience, connections, oversight, and new capital connections of a formal board of directors. Recruiting, compensating, and engaging the board is a critical priority.

  3. Focus on creativity more than smashing competitors. To achieve second-stage growth you need to stay at the top of your creative game, more than a focus on beating competitors. Growth is more than simply repackaging existing products, and adding bells and whistles or slick incentives. Keep delivering something new and fresh.

  4. Hire more help than helpers. Smart staffing is a key step to ensure your success at the second stage. In addition to fresh products, you need people smarter than you for real help, with the right combination of skills, experience, and passion to foster and manage new growth. You don’t have the bandwidth to keep filling positions with more helpers.

  5. Switch your attention from product development to sales. Second-stage growth usually requires a formal sales model, an experienced and disciplined sales team, and a well-defined process to meet your new goals and demands. These only come with the proper training, investment in tools, and focus on customer relationships.

  6. Managing business growth is more than metrics. You can hire the best salespeople, have great products and define good metrics, but without decisive and innovative managers, the sales organization will not reach its full potential. Leaders are needed to coach each salesperson, keep the team on message, and spur new growth and goals.

  7. Separate marketing from sales for further leverage. In the second stage, marketing and sales are highly specialized functions. Marketing shapes the concept, branding, packaging, pricing, and positioning. Sales builds relationships, translates needs, makes proposals, and closes the deal. The skills required are complementary, but not the same.

  8. Optimize the total customer experience. Successful second-stage companies often create an entire organization devoted to one-on-one relationships with their customers, not just customer service for exceptions. Delivering a superlative experience is the only way to get truly loyal clients, repeat business, and expansion through social networks.

  9. Build a winning culture and make it pervasive. In these rapidly changing times, in your own rapidly evolving company, culture will be the rudder that guides your path in a fashion that is consistent with your vision and values. Reinforce the values and operating principles with clear behaviors and guidelines to keep the culture healthy and thriving.

  10. Separate management from leadership, and provide both. Leadership is the quality that inspires people to do their best every day. Management guides people in what needs to be done, by creating sustainable and repeatable systems, with education and guidance to make sure all efforts are productive. Neither is effective without the other.

Many startups are family businesses, and these don’t need to be grown into large enterprises. Yet the steps outlined here still have value in building a business that lets you enjoy the entrepreneur lifestyle, and lets you work “on the business” once in a while, rather than “in the business” 24 hours a day, 7 days a week.

On the other hand, if you aspire to be the next Bill Gates or Steve Jobs, these principles for aggressive growth to the enterprise level are absolutely required for survival. It really is a decision to grow and have fun, or die. Are you enjoying your entrepreneur lifestyle today?

Marty Zwilling

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Monday, September 11, 2017

10 Negatives That Still Make Going Public A High Risk

ipos-are-high-riskIn the old days, every entrepreneur dreamed of easily taking their startup public, and making it big. Today the rate of startups going public (IPO – Initial Public Offering) is up from the dead zone, but is still half the rate of 15 years ago. Smart entrepreneurs are just now starting to look at this option again, due to its unpredictability and the challenges of running a public company.

According to a recent Ernst & Young global report, the first half of 2017 was the most active first half by global number of IPOs since 2007. Yet they still see warning lights in many geographies around the world, due to political uncertainties. Today around 90 percent of successful startups are still acquired by bigger companies, as the safer and preferred method of growth and funding.

The reasons are a lot more complex than the meltdown of key investment banks in the US a few years ago, so don’t expect a big change in the numbers soon, even with recent stock market rallies. In my view, the key reasons that IPOs have lost their luster from an entrepreneur and investor perspective include the following:

  1. The US IPO process is still stumbling. Too many startups have experienced early financial losses and technical glitches, like Groupon and the Zynga IPO a while back, which antagonized individual investors and startup executives as well. In addition, most ordinary investors are convinced that IPO rewards only go to insiders.

  2. Going public is an expensive process. Typical costs for startups today range from $250,000 to $1 million, even if the offering does not go through. In addition, huge amounts of executive time are required, as well as hits to key operational, accounting, and communication processes. The M&A alternative looks simple by comparison.

  3. Constant pressure to increase earnings. Because public shareholders usually take the short-term view, they want to see constant rises in the stock's price so they can sell their shares for a profit. Thus, there is tremendous pressure to increase current earnings, and little appetite for strategic investments.

  4. Startups going public are laid open to competitors and critics. Startups are typically run by a couple of executives who are reluctant to disclose via the prospectus and SEC reports all the decision-making criteria, operational financial details, and compensation formulas. With thousands of shareholders, dealing with critics is an onerous challenge.

  5. Complying with Sarbanes-Oxley requirements is a heavy burden. Public companies of any size must comply immediately with the full reporting requirements of the SEC. There is no accommodation for smaller public companies, who can’t be competitive in their space with the new accounting, documenting, and reporting processes required.

  6. Public companies are always at risk for takeovers. Friendly or hostile takeover attempts are just a couple of the many ways that company founders sense a loss of control of their own destiny. The board of directors, as well as public stockholders, are no longer part of the inside team focused on the founder’s vision to change the world.

  7. Increased liability risk exposure. Public company executives and directors are at civil and even criminal risk for false or misleading statements in the registration statement. In addition, officers may face liability for misrepresentations in public communications and SEC reports. Executives are also at risk for insider trading and employment practices.

  8. Violent market swings usually hit public companies first. Private companies in less-relevant market segments can often fly under the radar in turbulent times like the recent recession. Public stockholders are more easily swayed by emotion and the activities of the crowd, than real market conditions.

  9. Startup founders don’t fit in a public company. Most just don’t enjoy all the challenges of communicating to analysts, placating demanding stockholders, and keeping up with legal reporting requirement. They know they can be quickly tossed aside for not maintaining the right image and the right relationships with people they don’t like.

  10. The image of large public companies is negative. In the last few decades, the paternal image of large multi-national company leaders like Thomas Watson at IBM and Henry Ford is gone. Now the mistakes of large companies like Enron and BP have set a new image of public companies as being led by greedy and uncaring executives.

These negatives have largely overshadowed the potential IPO positives of increased capital for the startup, possible huge increase in personal net worth, broader access to investors, market for their stock, the ability to attract top-notch professionals, and the peer prestige of running a public company.

Thus most startups I know don’t even mention the IPO exit option, when applying for angel funding, and most angel investors will react negatively if you do mention it. As best, you should reserve this option for later stage VC discussions, once you have a well-proven business model, large market following, and substantial revenue.

More importantly, make sure first that you really want to give up the entrepreneur lifestyle for the challenges of a public company executive. I’m betting that Mark Zuckerberg of Facebook fame still has second thoughts from time to time, despite being worth $71 billion as a result.

Marty Zwilling

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Sunday, September 10, 2017

7 Action Items For Introverts Starting New Ventures

introvert-business-ventureYou can’t win as an entrepreneur working alone. You need to have business relationships with team members, investors, customers, and a myriad of other support people. That doesn’t mean you have to be a social butterfly to succeed, or introverts need not apply.

It does mean that you need to look, listen, and participate in the business world around you, and network through all available channels, like business-oriented social networks online (LinkedIn), local business organizations (Chamber of Commerce), and events or conferences in your school or industry.

I hope all this seems obvious to you, but I still get a good number of notes from “entrepreneurs” who have been busy inventing things all their life, but can’t find a partner to start their first business, and others trying to find an executive, an investor, or a lawyer.

What these people need is more relationships, not more experts, more blogs, or more books. So I thought I would drop back to some essentials in building and nurturing business relationships (most of these apply to personal relationships as well):

  1. Build your network. These are people of all levels that have been there and done that, meaning people who know something that you need to know. See my article from way back “Entrepreneurs Learn Best From Business Networking” on how and where to get started. You don’t need a thousand friends, but a few real ones can make all the difference.

  2. Give and you will receive. Relationships need to be two-way, and can’t be just all about you. If you are active in helping others with what you know, they will be much more open to help you when you need it. The more you give, the more you get in return, both literally and figuratively.

  3. Work on your elevator pitch. This is a concise, well-practiced description of your idea or your startup, delivered with conviction to start a relationship in the time it takes to ride up an elevator. It should end by asking for something, to start the relationship.

  4. Don’t skip all business social settings. Face time is critical, even with the current rage on social networks, phone texting, and email. Studies show that as much as 50-90% of communication is body language. That’s usually the important relationship part.

  5. Nominate someone as your mentor. Build a two-way relationship with several people who can help you, and then kick it up a notch with one or more, by asking them to be your mentor. Most entrepreneurs love to help others, and will be honored to help you.

  6. Cultivate existing allies. These are people who already know and believe in you, but may not be able to help you directly in your new endeavors. But don’t forget that each of these allies also has their own network, which can be an extension of yours, if you treat them well.

  7. Nurture existing relationships. We all know someone who claims to be a “close friend,” but never initiates anything. They never call, they never write, and wait for you to make the first move. If you don’t follow-up on a regular basis with someone, there is no relationship, only a former acquaintance.

On the positive side, many attributes of an introvert lead to better business decisions, such as thinking before speaking, building deep relationships, and researching problems more thoroughly. Mark Zuckerberg, Facebook founder, is currently the most famous introvert entrepreneur, so don’t let anyone tell you it can’t be done.

One of Mark’s secrets seems to have been to surround himself by extroverts like COO Sheryl Sandberg, and people who have a complementary energy. But working alone doesn’t get you very far. It takes a team to win the game of business, so take a look around you to see how you are doing so far.

Marty Zwilling

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Saturday, September 9, 2017

7 Cultural Myths That Can Destroy Your Moral Compass

moral-compass-appNew entrepreneurs tend to focus only on getting the product right, and assume that the right culture and ethics will come later simply by hiring good people. In fact, they need an early focus on developing their moral compass, as well as setting the right ethical tone. Building an ethical business is more than just compliance and meeting legal requirements, and it has big paybacks.

One 11-year classic study of over 200 companies, detailed in “Corporate Culture and Performance,” found that those working on their culture improved revenue by 516%, and increased net income by 755%. Conscious Capitalism, a recent business movement which includes a large focus on culture and ethics, claims 3.2 times the return of other companies over the last 10 years.

One of the keys to setting the right ethical tone is understanding and avoiding the myths and pitfalls of others. I saw a good summary of these in a recent book reissue, “Ethical Leadership,” by Andrew Leigh, an expert in this area. I like his specifics for business leaders on improving and sustaining the best company cultures, and his summary of the culture myths facing new business leaders:

  1. It’s easy to be ethical. This myth ignores the complexity surrounding ethical decision making, particularly within business organizations. Ethical decisions are seldom simple. For example, people often do not automatically know that they are facing an ethical choice. Any given individual may not recognize the moral scope of the issues involved.

  2. Business ethics are more about religion than management or leadership. Behind this myth lies the confused belief that ethics are a means of altering people’s values. The reality is different. An ethical culture deals with managing values between the individual and the company, to best handle the inevitable conflicts that crop up in every business.

  3. Hire only ethical people, so further time on business ethics is not needed. This is usually an excuse for not developing ethical policies and practices. These can be as simple as how to handle customer over-payments, or more complex in how to handle the choices every employee may face between conflicting customer and company interests.

  4. Business ethics are best left to philosophers and academics. Deal with this myth by sharing with colleagues some of the highly practical tools for making sense of the issue – such as ethics audits, behavior codes, risk strategies, targeted training and leadership guidance. Business ethics is a discipline that must be practiced every day by everyone.

  5. Ethics can’t be managed. While codes of behavior do not guarantee an ethical culture, they do clarify desired behavior and articulate for employees what is expected of them. Every business has complex and diverse dilemmas which are not specifically covered in documented procedures, so employees need clear values leadership for guidance.

  6. We’ve never broken the law so we must be ethical. Many perfectly legal actions can still be deeply unethical. As an example, companies often realize that faulty products are slipping out, but they delay a recall, sighting that strictly legal requirements are being met. Unethical behavior can even with something low key which initially goes unnoticed.

  7. Unethical behavior in business is just due to a few ‘bad apples.’ In reality, most unethical behavior in business happens because the environment tolerates it, usually through benign neglect. When it comes to ethics, even good people tend to be followers, and if told to do something, they will do it, without considering the ethical implications.

Company ethics are a prime example of where you and your company only get one chance for a great first impression, and if you lose it, it’s almost impossible to regain. Don’t follow the examples of institutions in the recent financial meltdown, or certain oil companies working offshore, or the many smaller company examples we have seen in our own neighborhoods.

Every business, new or old, needs to remember that an ethical culture, or lack of it, shows in the actual behavior and attitudes of all team members, rather than just in policy documents and videos from the top. A successful business is far more than a good product and a good business model – it’s equally about projecting and executing with a great culture. Can you vouch for the culture and ethics of your company, from top to bottom?

Marty Zwilling

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Friday, September 8, 2017

Are You Involved With Business, Or Fully Committed?

involved or committedIn my role as advisor to small businesses, I often think of the old joke, “In a bacon-and-egg breakfast, the chicken is very involved, but the pig is committed.” Some business owners claim to be committed, but seem quick to look to someone else to make the hard decisions, or some external factor to blame for challenges. On the road to success, the buck always stops with you.

Some argue that success is all about being "blessed with talent" or even just lucky. Billionaire Mark Cuban writes on his blog that it took an incredible amount of commitment and work to benefit from his luck. When starting his first company, he routinely stayed up until two in the morning reading about new software, and went seven years without a vacation.

Even after many years running his company, retiring, and returning, Starbucks CEO Howard Schultz still gets into the office by six in the morning and stays until seven PM. Schultz then talks to overseas employees even later at night from home. He goes into the office on Sundays and reads emails from his thousands of employees on Saturdays. That’s commitment.

On the other hand, I often hear from “wanna-be” entrepreneurs who dream of being their own boss, and working their own hours by running their own business. Let me assure you, if you don’t have the mindset to fully commit to all the rigors of owning a business, you will be happier taking orders, and a paycheck, from someone else.

From my own experience, for your own calibration, here are some indications of what I believe truly committed means for a business professional and leader today:

  1. Actively proclaims leadership and responsibility. The most successful business owners are not hesitant to ask for advice, but would not dream of letting someone else make the final decision. They only blame themselves when things go wrong, but are quick to try again, and never give up. They don’t like to share rewards or responsibility.

  2. Demonstrates ongoing passion for the business. Committed owners love their idea, and you can hear the commitment in their voice and dedication. Often they connect their work with a higher purpose, such as changing the world, rather than just making money. My challenge as advisor is to help them find facts and structure to validate their passion.

  3. Does not seek repeated confirmation of value. In business, count on it being lonely at the top. If your psyche is one that needs regular positive feedback, and a commensurate paycheck to stay motivated, you need to find a real job rather than an entrepreneurial one. The best businesses are innovative, which means venturing into the unknown.

  4. Gives priority to business demands over social. If you find yourself unable to clear your head of work-related thoughts at the end of the day, that’s commitment. Social relationships are important, and you do need to blank out work from time to time, but if social priorities are at the top of your list, you won’t enjoy the business owner role.

  5. Gets satisfaction from solving business challenges. Some people need a predictable schedule, for personal reasons or just peace of mind. Entrepreneurs need to be flexible, and assume there will be long working hours. If you are annoyed rather than exhilarated at the unpredictable schedule at your business, you may be involved but not committed.

  6. Never finds time or interest in a real vacation. Most business owners I know can’t remember the last time they had a “real” vacation (without bringing their work along). This may not be healthy, but it illustrates the level of commitment of your competitors in the marketplace. Many see trade shows or business expositions as their vacations.

  7. The thought of retirement suggests boredom. Most employees involved with a business are working hard, but are looking forward to retirement. The most committed entrepreneurs wouldn’t think of retiring, even if they made millions from the current project. They enjoy work too much to retire, and can’t wait to start their next venture.

These characteristics are not a statement of right or wrong, but just different strokes for different folks. The next time you have the urge to chuck your day job and jump to your dream role, remember to test yourself first against these principles of commitment. It’s a hard landing, and a big climb back up the cliff, if you change your mind after the jump.

Marty Zwilling

*** First published on Inc.com on 08/18/2017 ***

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Wednesday, September 6, 2017

7 Ways To Be The New Venture Leader Investors Seek

RichardBransonSanDiego8Jul13In the beginning all businesses are just people playing out an idea. It’s never the other way around – there is no idea so big that it doesn’t need people to make it succeed. Investors know this, hence the saying “Bet on the jockey (founder), not the horse (idea).” A great jockey is a great role model.

Like it or not, everyone looks to the entrepreneur as the jockey role model in a new business. Typically this energizes new startup founders, but some struggle trying to live up to their own, as well as everyone else’s expectations. In reality, nobody really expects anyone to be superhuman, but it can feel like that.

We certainly wouldn't expect superhuman behavior from the people looking to us for guidance, nor would we want them to expect flawless behavior from themselves. If not flawless behavior, what characteristics and actions do they look for? Here are some frequently mentioned ones:

  1. Demonstrate confidence and leadership. A good role model is someone who is always positive, calm, and confident in themselves. You don't want someone who is down or tries to bring you down. Everyone likes a person who is happy with how far they have come, but continues to strive for bigger and better objectives.

  2. Don’t be afraid to be unique. Whatever you choose to do with your life, be proud of the person you've become, even if that means accepting some ridicule. You want role models who won't pretend to be someone they are not, and won't be fake just to suit other people.

  3. Communicate and interact with everyone. Good communication means listening as well as talking. People are energized by leaders who explain why and where they are going. Great role models know they have to have a consistent message, and repeat it over and over again until everyone understands.

  4. Show respect and concern for others. You may be driven, successful, and smart but whether you choose to show respect or not speaks volumes about how other people see you. Everyone notices if you are taking people for granted, not showing gratitude, or stepping on others to get ahead.

  5. Be knowledgeable and well rounded. Great role models aren't just "teachers." They are constant learners, challenge themselves to get out of their comfort zones, and surround themselves with smarter people. When team members see that their role model can be many things, they will learn to stretch themselves in order to be successful.

  6. Have humility and willingness to admit mistakes. Nobody's perfect. When you make a bad choice, let those who are watching and learning from you know that you made a mistake and how you plan to correct it. By apologizing, admitting your mistake, and accepting accountability, you will be demonstrating an often overlooked part of being a role model.

  7. Do good things outside the job. People who do the work, yet find time for good causes outside of work, such as raising money for charity, saving lives, and helping people in need get extra credit. Commitment to a good cause implies a strong commitment to the business.

True role models, like Richard Branson of Virgin Group and Elon Musk with Tesla, are those who possess the qualities that we would like to have, and those who have changed the way we live. They help us to advocate for ourselves and take a leadership position on the issues that we believe in.

We often don't recognize true role models until we have noticed our own personal growth and progress. That really implies that it takes one to know one. Thus, if you are asking the question, that may mean you are well along the road to being that role model already. Don’t stop now.

Marty Zwilling

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Monday, September 4, 2017

6 Symptoms Of A Dysfunction That Can Kill Your Dream

businessman-founders-syndromeFounders almost always cite lack of money as the reason for failure, but if you look deeper, I believe the reason is more often about dysfunctional people and leadership. Sometimes it comes right back to the founder, in terms of a malaise often called “founder’s syndrome.” A few years ago I was intimately involved with a promising startup that taught me about this issue.

I’ll be short on specifics here, to protect the guilty, but I hope you get the idea. It’s not a disease, but it can kill your startup. You can find a more complete discussion of founder’s syndrome on Wikipedia, but here are a few of the “symptoms” I observed in the founder and CEO in this case:

  1. Advisors and staff hand-picked from friends and connections. Personality and loyalty are apparently the key criteria, rather than skills, organizational fit, or experience. The executive is looking more for cheerleaders, rather than people with real insights and ideas.

  2. Reacts defensively and talks constantly. Sometimes it's time for quiet listening rather than talking. A strong and confident leader will always realize that a defensive response before the input message is complete does not impress investors, nor anyone else on the team.

  3. Staff meetings are for one-way communication. This founder holds staff meetings only to report crises, rally the troops, and get status reports on assignments. There is no concept here of team strategy development, and shared executive agreement on objectives.

  4. With no input and no “buy in” from the team, sets extremely ambitious objectives. These objectives are set based on the desires and dreams of the founder, with no recognition of technical realities, costs, or time required.

  5. Over time, becomes more and more isolated and paranoid. The first clue is some veiled comments about the motives of staff members, advisors, and investors. These become more specific as the situation gets more dire, to the point where key members begin to desert the ship in disgust.

  6. Highly skeptical about planning, policies, and advisors. Claims "they're overhead and just bog me down." The founder perception is that his experience is more applicable than the input of others, and formal planning and policies are just a way of introducing unnecessary bureaucracy.

In the beginning, we all found our startup founder to be dynamic, driven, and decisive. He had a clear vision of what his organization could be. He seemed to know his customer's needs, and was passionate about meeting those needs. Just the traits one would expect for getting a new organization off the ground. However, he had other traits, including the ones listed above, which became major liabilities.

The undoing of the company began when a potential investor, after months of search, was ready to put up $1 million, but made it clear that his firm would likely need to replace the founder with someone with more credentials and experience in this industry. With that revelation, the founder killed the investment deal, and every other potential deal which raised the same issue.

Of course, no situation is this simple. There were product development problems, pricing problems, and early customers who demanded more features and delayed contractual payments. The ultimate result was a startup founder who exhausted his personal funds, drained the investments capability of friends, and drove away the team one by one.

For me, this is a most frustrating and difficult problem for any advisor or team member to deal with, since communication and learning can only occur when someone is open and listening. If any of you out there have seen this, or have some experience or ideas on how to deal with this situation effectively, let me know. You can be a hero if you have the cure.

For all you founders out there, if you find this article anonymously taped to your computer, it might be time to take a hard look at yourself in the mirror. We can’t change you, but you can change yourself. It could save your startup!

Marty Zwilling

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