Wednesday, October 21, 2020

5 Key Recovery Strategies Counter Economic Downturns

startup-economic-downturnEvery dark cloud has a silver lining. Driven by the current pandemic, smart entrepreneurs of all ages are jumping into the fray with new ideas, new recovery strategies, and discarding outmoded business models. I see it most in the newest generation of entrepreneurs (Gen-Y), who were shocked out of entitlement into action by an economic downturn.

Donna Fenn, in her book from the last decade, “Upstarts! How GenY Entrepreneurs are Rocking the World of Business,” was one of the first to predict that Gen-Y would lead the charge, bounce back from the recession at that time, and be big winners. She describes a new generation of entrepreneurs that is highly collaborative, quick and alert when it comes to new technologies, and hell-bent on changing the world in general.

Upstarts! examines and analyses this entrepreneurial revolution to reveal critical lessons every Gen-Y entrepreneur and marketer must learn. But the insights I see from her book and elsewhere are equally applicable to startup founders of all ages, and businesses of all ages. Here are five key recovery strategies that both of us recommend to all of you:

  1. Pursue repeat business. It's far less expensive to nail down repeat business from your existing customers than it is to land new ones. Now is the time to reap the benefits of those good customer relationships that you've been cultivating. Viral marketing campaigns to lure new customers will cost you big money.
  1. Focus on your core competency. Examine every cost center in your business. Maybe it’s time to outsource that call center operation, or complex manufacturing setup. Look for operations that are hogging resources without generating significant revenue. With a concentrated point of focus, your company might be well positioned for growth this year.
  1. Snap up top talent. Past layoffs at big companies usually means more great employees on the market now for newer companies. Examine your pool of higher-paid contractors and freelancers. Now is the time to bring on board those people who would have been inaccessible in a better economy.
  1. Respond rapidly to market shifts. The pandemic has almost certainly had a profound impact on your customers: they may have altered their purchasing habits, or found themselves with entirely different needs. It's your opportunity to respond to those shifts. These are chances to broaden your product line, change distribution, offer new services.
  1. Look for hidden sources of revenue. Sometimes your best source of new revenue is right under your nose, like services revenue in support of your products. One entrepreneur in Fenn’s book had a proprietary technology to efficiently manage vendors which works so well that she is now marketing it to other companies for a transaction fee.

Most companies I know agree that the pandemic has taught them the art of laser-like focus, and compelled them to make better decisions, to become more frugal, and to initiate systems and procedures that will help position them make an economic recovery. Simply deciding to lay low and “tough it out” was never a winning strategy.

I agree with Fenn that a recession or pandemic is actually a good “wake-up call” for many in the new generation – it has forced them to face the reality of hard knocks. Similarly, it should be a wake-up call for the rest of us, or we will be overrun by young entrepreneurs with their burning desire to control their own destinies.

But I’m convinced that you don’t need to be an “Upstart!” to capitalize on hard times. Use your experience and your expertise to lead the way, or you will be left in the dust. The first step is to execute your own recovery strategy. Or don’t you even have one?

Marty Zwilling

0

Share/Bookmark

Monday, October 19, 2020

How The Reality That Entrepreneurs Face Is Not Fair

Guy KawasakiMost of the time, I’m all about providing encouragement and inspiration to entrepreneurs. They need it and they deserve it, because entrepreneurs are the lifeblood of our economy. But every so often, I try to give them a reality check, just to keep their feet on the ground and their nose to the grindstone.

A few years ago, I enjoyed one of Guy Kawasaki’s first books, “Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition.” In his classical humorous and cynical style, he could reset your dreaming in a moment. Here is a sampling of ten themes from the book that I think are just as relevant today as they were then:

  1. The reality of starting. It’s not going to get better – it already is. Startup folks are like medieval monasteries: always convinced that paradise is just ahead or that things only recently got worse.

  1. The reality of raising money. The closest real-world analogy to raising money is speed dating. That’s right: In five minutes, people decide if they are interested in you, just as in bars and nightclubs. This isn’t right, and it isn’t fair, but it is reality.

  1. The reality of planning and executing. If you think raising money was the hard part, you’re in for a surprise. Raising money is easy and fun. The real work begins when you have to deliver the results you promised.

  1. The reality of innovating. Many people think that innovation is easy: You sit around with your buddies and magical ideas pop into your head. Or your customers tell you what they need. Dream on. Innovation is a hard, messy process with no shortcuts.

  1. The reality of marketing. Everybody wants to do the fun stuff: shuck and jive with the beautiful people, and create fun marketing campaigns. More accurately, marketing is the process of convincing people that they need your product. That’s not so easy or fun.

  1. The reality of communicating. Entrepreneurship is an outward-focused activity. It requires that you communicate with others in all the modern modes. Every one is a skill you need to master. All it takes is reading this book and practicing for twenty years.

  1. The reality of competing. If you don’t compete with anybody for very long, it may mean that you’re trying to serve a market that doesn’t exist. The question of defensibility is one of the toughest for an entrepreneur to answer. A good answer is not to stop moving.

  1. The reality of hiring and firing. These are black arts for most people. Few people are trained for either, and most depend on their gut. They believe they won’t make hiring mistakes, so will never have to fire anyone. Wrong; and mistakes hurt people and you.

  1. The reality of working. In the beginning, startups are like a clean sheet of paper: nothing but opportunity and upside with a chance to make meaning and change the world. Then the reality of work sets in. Building a success is hard – damn hard, actually.

  1. The reality of doing good. At the end of one’s life, you are measured not by how much money you made, but by how much you’ve made the world a better place. Successful entrepreneurs often switch to non-profits and social entrepreneurship for real impact.

Of course, there is much more, but I think you get the idea. I also hope these themes don’t send a totally negative message, because the book is funny as well as thought provoking. I do believe we all need reality checks to face our challenges head-on, so that we can deal with them and survive, rather than just float along in the clouds until our dreams evaporate.

Marty Zwilling

0

Share/Bookmark

Sunday, October 18, 2020

10 Principles For Surviving Hard Times In Any Startup

Devil-in-business“The devil in the details” is a quote that we have all heard, and clearly applies to startups, where success in the long run is all about execution. But for you as an entrepreneur trying to get started, the devil is really in your mind, where you must prevent drifting, and maintain that confidence, commitment, and passion, to achieve your business dream.

This is highlighted well in the classic book finally published just a few years ago, “Outwitting the Devil,” annotated by Sharon Lechter. It was written way back in 1938, by the famous author of “Think and Grow Rich,” Napoleon Hill. It was too controversial to publish then, due to religious connotations, but still has key lessons for every entrepreneur today.

The premise of the book is an interview with the Devil, where he admits that he dwells in idle minds, and finds it easy to control the minds of drifters. Drifters are people who do little or no thinking for themselves, and allow themselves to be influenced and controlled by other people and circumstances.

In an interview, the Devil confesses that all people need only follow some key principles to outwit him (adapted a bit here for entrepreneurs):

  1. Do your own thinking on all occasions. Pursue your own dreams and your own thinking. Listen to others input, but make your own decisions. For success, entrepreneurs have to overcome any human tendencies toward laziness and indifference, which lead to procrastination and drifting.
  1. Decide what you really want from your business. Set your goal, and create a plan for attaining it. Be willing to sacrifice everything else, if necessary, rather than accept permanent defeat. Drifters chase a business idea for all the wrong reasons, and then give up easily, like get rich quick, or to please someone else.
  1. Analyze temporary defeat, no matter of what nature or cause. Extract from it the seed of an equivalent advantage. In business, it’s commonly accepted that you can learn more from failure than from success, if you choose to learn.
  1. Be willing to give before you receive. Other entrepreneurs and investors will more readily help you, if you have helped them first. In addition, you dramatically increase your odds of success if you learn the business domain first, before you try to lead in it.
  1. Recognize that your brain is a receiving set. Curb your output, and be an active listener, by providing feedback, an optimistic attitude, motivation, and a concern for people. A key part of receiving input is listening to what is not said.
  1. Recognize that your greatest asset is time. This is the only thing except the power of thought which you own outright, and the one thing which can be shaped into whatever material things you want. Budget your time so none of it is wasted.
  1. Recognize that fear generally is a filler. Fear rushes in to occupy the unused portion of your mind. It is only a state of mind, which you can control by filling the space it occupies with confidence and passion in your ability to overcome obstacles.
  1. When you ask for help, do not beg. Take full responsibility, and don’t be the victim. Make sure you earn any help provided, and don’t forget to properly thank your benefactor. In a startup, there is no entitlement to funding, or to a second chance.
  1. Recognize that business is a cruel taskmaster. Either you master it or it masters you. There is no half-way or compromising point. Never accept from a business anything you do not want. You can refuse, in your own mind, to accept it and it will make way for the thing you do want.
  1. Remember that your dominating thoughts attract. To become the master of your destiny, you must learn to control the nature of your dominant, habitual thoughts. By doing so, you will be able to attract into your life anything you choose. Your thoughts create your reality.

I couldn’t help but think that these points are still so relevant today in our own pandemic recovering economy, even though they were written during a comparable challenge over 70 years ago. I guess we all should take comfort in the fact that even though we live in a world of constant change, some things about human nature will always be the same.

Can you outwit the Devil today to succeed in your dream?

Marty Zwilling

0

Share/Bookmark

Saturday, October 17, 2020

5 Generators Of Customer Pain Conducive To Startups

wildfires-in-CaliforniaOne of my favorite sayings is “Real change doesn’t happen until the pain level gets high enough.” There aren’t many of us who love change, just for the opportunity to learn something new, and even we won’t pay much for it. Entrepreneurs who search for real pain points, and build solutions around them, have the best chance of changing the world.

In my opinion, real pain points for most people do not include a new user interface for Facebook, a new programming platform for app development, or a new size smart phone. So why do I see some many funding requests for products along these lines?

As an alternative, if you are an entrepreneur looking for the next big thing, where should you look? Here are some key drivers that will likely lead you to a fundable idea:

  1. A business crisis. The impact of the current pandemic on small businesses and staffing is causing us all pain, and forcing new ways of thinking. Maybe we haven’t seen the results yet, but there are thousands of startup opportunities to offer new alternatives and services, to replace those destroyed by the crisis.

  1. Some kind of natural or man-made disaster. The hurricanes in the Gulf, the wildfires in California, and the monsoon floods around the world, all suggest that real opportunities for change are needed in climate control, forest management, and building design. Usually, people pay to relieve pain before buying luxury items.
  1. When the world gets smaller. When globalization or technology shrinks distances (Internet), painful missing needs become evident, and opportunities abound. Other countries can provide e-commerce with different business models, outsource manufacturing at low cost, and a huge market for new products.
  1. The impact of global instability. Unpredictable forces, such as unrest in the Middle East and China, can quickly change energy cost equations, or availability of critical products. Many of the current opportunities in alternative energy are the result of these forces, as well as the lack of effective government coalitions to conserve other resources.
  1. Truly “disruptive” technologies. I hear this term every day, wrongly applied to new social media site, or a new productivity tool. I’m looking for things like the next Internet, nuclear batteries, or a technology to cure cancer. Recent “paradigm shift” technologies, like the new electric vehicles, still spawn major opportunities.

Of course, there are caveats to every opportunity. Many of the biggest and most obvious ones have non-business and non-technical hurdles, including the following:

  • Government regulations. New medical initiatives and new energy alternative technologies can be delayed or bogged down for years by existing bureaucracies and irrelevant political agendas.
  • Existing infrastructure. Companies with huge existing install bases and infrastructures, such as oil companies or auto manufacturers, often present major roadblocks to the implementation of alternative solutions outside their control.
  • People are slow to accept change. Change is hard for most people. Therefore, it takes time, sometimes whole generations, of education, communication, and incremental proof to get momentum going and overcome old fears.

Professional investors know all of these too well, and are sometimes hesitant to fund any innovation that is deemed to be too disruptive. Of course, you can choose to play it safe with more incremental, modest innovations, There’s nothing wrong with modesty. That’s the great thing about being an entrepreneur. You get to choose your pain.

Marty Zwilling

0

Share/Bookmark

Friday, October 16, 2020

9 Principles Especially Critical For A Micro-Business

home-micro-businessToo many of you business owners think success only means being the next Amazon, or you stress yourself out trying to be everything to every customer. In reality, the opportunities are greater for starting with a micro-business, ideally from your special expertise or passion, with fewer than five employees, and just enough sales to comfortably support you and your team.

This type of business has long been primarily run out of the home, well before COVID-19 made that a necessity, and it still works to keep the costs of operation down. In time, many businesses outgrow their meager beginnings, to become major enterprises, comparable to the current giants Amazon and Apple. These are proof that you don’t have to start with the mindset of a giant.

Yet my years of advising entrepreneurs and small businesses has taught me that you do have to follow some basic principles and operational strategies, even to get a micro business off the ground. Key ones in my mind include the following:

  1. Build your business around what you know and love. I still hear people determined to start a business as a path to an easier life, or a way to make some money on the side. From my experience, these drivers are fraught with risk and unhappiness. Think first about where you have a natural advantage, or a unique insight or critical purpose.

  2. Keep the initial scope within bootstrapping limits. Just because you want to start a business doesn’t mean you are entitled to outside equity, loans, or crowdfunding. These only make your startup riskier, and add stress you don’t need. By spending only within your means, and re-investing the money you make, you will more likely enjoy success.

  3. Meticulously manage cash inflow and outflow. Cash flow is the nemesis of every business, particularly small ones. Don’t delegate this task to another family member or accountant. Understand and write down every expense, and budget for required costs, especially initial inventory and accounts receivable delays. Details are important.

  4. Learn to use basic business financial tools. One of the most useful tools for any small business is Excel or Google spreadsheets, for monthly profit-loss statements and operational tracking. You need to see quickly both positive and negative trends, and understand whether the fluctuations are caused by customer or internal needs.

  5. Take advantage of bartering and less-than-new equipment. You don’t need the latest-and-greatest computers or office furniture to get the job done well. Put the message out that you are willing to trade a little extra work for something you really need. Be creative in negotiating work agreements with vendors and even initial customers.

  6. Limit the scope and focus of your initial offering. You must learn quickly when to say no, as well as when to say yes. Customers will always want to stretch your limits, and it’s tempting to agree to things which may be outside your realm of expertise. Attempting to deliver these can kill you, both in quality of your solution and time to completion.

  7. Get in the habit of documenting all agreements and terms. In my experience, this is what separates a business from a hobby. Hobbyists tend to work informally with like-minded people. Skip the complex contracts by lawyers, but at least use an email to confirm terms and conditions to all parties. It’s good communication and good business.

  8. Don’t forget to do continuous marketing and networking. There is an old saying in business that what you know is not as important as who you know, and who knows you. You have to find your customers, and people who can help you – they won’t find you. Count on spending 50 to 75 percent of your time marketing and networking.

  9. Pay attention to competitors, and differentiate your offering. The quickest way to fail is to be just “one more” consultant or assistant. Every business solution has competitors and alternatives. Define your “secret sauce” or intellectual property, and advertise it as well as protect it. Be prepared to update it regularly as customers and trends change.

Businesses that start in the home are becoming more and more the norm. The Small Business Administration reports that over 50 percent of small businesses are now home-based. Yet these can fail just as quickly as any other, if basic business principles such as the ones outlined here are not followed.

Make the effort to do it right, and you too can enjoy the journey as well as the destination.

Marty Zwilling

*** First published on Inc.com on 10/02/2020 ***

0

Share/Bookmark

Wednesday, October 14, 2020

10 Key Principles For Managing Your Time In Business

work-time-managementEvery startup founder 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 time management to put you back in control of your life.

We all know someone who always professes to be stressed out and “so busy” that they never have time for anything – yet they never seem to get things done. The real reason is that these people don’t manage their time well. They waste too much on low-priority busywork, procrastinating on higher priority but tougher tasks, resulting in last minute crises, and failure to complete the critical work that people are really expecting of them.

I still remember the classic book on this subject by Dr. Jan Yager, called “Creative Time Management for the New Millennium.” She preaches that “Managing your time well means managing your life well. People who handle their time well do it creatively. They practice creative time management by taking control of their time and therefore their life.”

Here are ten of her key principles and mine:

  1. Set goals. In business, this means create a business plan before you start. I’m still amazed by the number of entrepreneurs I meet who have no business plan, or who haven’t updated their plan for years. If you have no goals and milestones, you can’t measure progress.
  1. Be proactive, not just reactive. Doing things before the deadline is looming reduces stress and gives you a sense of being ahead of the game. For a startup, this means starting your networking before you need money, or building the website before the business is ready to open.
  1. Prioritize actions. The secret is to identify what really needs to be done in each day. If you look closely at how you spend your days you will probably find that there are many things that aren’t really that important, but take a lot of time. Skip those.

  1. Keep your focus. Everyday interruptions in your new business can be a key barrier to managing your time effectively and, ultimately, a barrier to your success. Close the door to your home office, or turn off the phone when you have work which needs to get done.

  1. Create realistic deadlines. A realistic schedule takes several things into account. You need to spend time working, eating, sleeping, doing chores, running errands, and spending time with family. Unrealistic deadlines create stress, rework, and unhappiness.

  1. Plan and delegate. Strive to understand the relevant capabilities of team members, and then deliberately schedule tasks, delegating to the right people to get tasks done within deadlines. Even an entrepreneur can’t do everything personally.
  1. Don’t procrastinate. Some entrepreneurs actually sabotage themselves by putting obstacles in their own path that take more of their precious time. They often choose paths that hurt their performance. This represents a profound problem of self-regulation.
  1. Be a pragmatist, not a perfectionist. A proven path to success in business is to get something out, and iteratively improve it. A new product or service will never be perfect in a rapidly changing world, so don’t delay.
  1. Balance your life. When life is busy, or all your energy is focused on a special project, it is all too easy to find yourself “off balance,” not paying enough attention to important areas of your life. This causes inefficiency and stress, and your work is not fun.
  1. Do it now. In my opinion, this is the most important element of time management. Too many people procrastinate, worry, and defer, rather than just do it. Divide and conquer what you have to do. Now, not tomorrow.

Take back control of your time and your life. We are not all endowed with brilliance, good looks, or lots of money, but we each get the same number of hours every day. Use them effectively to get your startup going, and have some fun in your life. Start with item #10.

Marty Zwilling

0

Share/Bookmark

Monday, October 12, 2020

How To Find Support Resources For Your Startup Stage

photo: © www.StefanoBorghi.comSome 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 a long 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

0

Share/Bookmark