Seven Easy-to-Pick-Up Skills All Great Leaders Have

I have met several young people in business recently who believe that they are natural born entrepreneurs, and actually seem to feel that traditional training and experience may be a detriment to their success in this new world. I concede that some natural born disciplines do exist, but more often I tend to agree with Peter Drucker, who said “It’s not magic, it’s not mysterious, and it has nothing to do with genes. It’s a discipline, and like any discipline, it can be learned.”

On the natural born side, some entrepreneurs seem to have a strong vision and the ability to inspirationally lead others. It is this vision that is the beacon to drive the right people behavior, leading to the success of the business. If you don’t feel a vision in your heart, or if you don’t have the strength to inspire people, entrepreneurship is probably the wrong road for you.

If you feel you do have the vision characteristics, you can still benefit from some learnable skills and disciplines that improve the success and impact of every entrepreneur. Here are some of the key ones you may not have, assembled from an old interview with Herb Kelleher of Southwest Airlines and other executives:

1. Ability to set priorities and focus on goals. Many people allow themselves to be driven by the crisis of the moment. Personal discipline is the key word here. Set yourself some priorities and goals, and live by them.

2. Able to identify important issues. Some people call this common sense; others call it “street smarts.” In the normal startup environment, there are multiple forces competing for your attention every day, and you need to learn to delegate or ignore many. It relates back to experience and knowledge, more than genes.

3. Conviction to be a passionate advocate. When you believe in something enough to turn your passion into action, you have become an advocate. That power and voice is then used to persuade others to make the correct decision. An effective advocate requires conviction, usually acquired during related first-hand experience or training.

4. Broad knowledge and experience. Experience allows one to tackle challenges with confidence in a given area. Broad knowledge facilitates the same success in other business areas. Entrepreneurs need this, because their challenges are across the spectrum from technical to legal, operational, financial, and organizational.

5. Active listening skills. Above all, the ability to listen and understand the real meaning of what people are saying (and not saying) is paramount, because the most important information never arrives in reports or email. Some people pick this up from experience, and others find classroom courses most helpful in setting the focus.

6. Sound judgment. I don’t think anyone is born with sound judgment; it has to be learned, but can be started at a very early age. Every entrepreneur must have the capacity to assess situations or circumstances shrewdly and to draw proper conclusions.

7. Pleasant skepticism. Skepticism is not doubting, but applying reason and critical thinking to determine validity. It’s the process of searching for a supportable conclusion, as opposed to justifying a preconceived conclusion. It is a learned skill.

These all revolve around the larger theme of team building. In short, to succeed, the entrepreneur must see and articulate a vision in order to attract and motivate a team, then be able to identify the key issues, challenge the views held within the team, and make judgments from among the varying perspectives in the team.

Every entrepreneur enters the game with a unique combination of genes and skills. If the things mentioned here feel natural to you, and you are young at heart, have a healthy curiosity and zest for life, the entrepreneurial world may have a place for you, too. Give it a try. If you are having fun, you probably have what it takes.

Marty Zwilling

*** Published on IvyExec.com on 10/27/2015 ***

10 Questions to Assess Your Motivational Skills

Motivated teams are the key to success at every startup, yet I still know entrepreneurs who gave an inspirational speech to kick off the quarter but haven’t been heard from since, or don’t realize that their actions are often more demotivating than inspirational. The result is a huge loss in productivity and morale and potentially the death of a promising startup.

In the spirit of continuous learning and improvement, I offer the following questions for a self-assessment of your current motivational habits as a startup leader and entrepreneur:

1. Has anyone ever accused you of micromanagement? Team members need to feel trusted and valued, and micromanaging communicates the opposite. Founders who are prone to manage every detail of their businesses will ultimately kill themselves as well as lose the support of team members. Learn to delegate key tasks and give credit.

2. How often do you communicate or redirect team priorities? Some leaders expect the team to read their minds on priorities, so they never provide the written and verbal guidance that we all need to feel we are contributing. Others can be heard shouting new priorities on an hourly basis. Both habits are very demotivating.

3. Does the team know where you are and why? You can’t be an absentee entrepreneur and expect the team to stay motivated. Great motivators are visible at the front and lead by their actions. Hiding in your office or mysteriously traveling all the time on unknown missions are sure ways to cause the focus of your team to disperse as well.

4. How often do you reward initiative and problem-solving? Some entrepreneurs have a bad habit of taking personal credit for all improvements and innovations at their startups. If you penalize or ignore employee initiatives, you can be certain that they won’t be repeated, and motivation for more conventional performance will suffer.

5. Are all team members fully qualified and trained for their roles? Entrepreneurs are perennially short on cash, so they tend to hire less expensive and less experienced team members. Yet most founders are overworked, so they have no time and budget for coaching and training. Team members not confident in their roles lose motivation quickly.

6. Is initiative and accountability driven by fear or reward? Recognition in front of peers is the strongest motivator, and berating team members in private or public is the biggest demotivator. Check your use of rewards vs. penalties, with the negatives including emotional outbursts at no one in particular, a lack of feedback and veiled threats.

7. How often are meetings interactive and productive? If you dread the thought of wasted time in meetings, chances are that your team members feel the same way. Team members are also demotivated by one-way discussions, haphazard participation and arbitrary decisions. Structure every meeting at the start and summarize them at the end.

8. Are key milestones set jointly with the team and maintained? If you have a habit of declaring milestones or changing them based on the crisis of the day, don’t expect the team to remain motivated. Similarly, if the team isn’t aware of the milestone and the value behind it, they are unlikely to deliver. Communication and buy-in are the keys here.

9. Are you too busy to relate to team members on a personal level? Everyone needs to hear a personal anecdote once in a while or see you go out of your way to make someone’s day. Maybe it’s time for a party at your house to unwind, or an afternoon off with the team to attend the ball game.

10. What have you done lately to proactively enhance individual goals? If it annoys you when team members ask about their next promotion or talk about other job opportunities in the industry, you have motivational problems in the making. You need to build a habit of proactively seeking employee interests and suggesting follow-up steps.

If you feel qualms about your answer to any two or more of these questions, or if you found this column on your chair, it’s time to rethink your focus on motivation. No matter how confident you are in your own abilities, you can’t build and run a business alone. You need your army pulling you ahead, rather than holding you back.

Marty Zwilling

*** First published on Entrepreneur.com on 10/21/2015 ***

5 Keys to Rebounding From a Failed Business Strong

If you boast of never having a business that failed, most investors will assume that you have never tried anything innovative or you simply haven’t faced the truth. According to many reports, about half of startups fail in the first five years. What investors look for is that you wear your failure as a badge of courage and can talk positively about what you have learned.

In fact, the willingness and determination to overcome the risks of a new venture is one of the first criteria that defines an entrepreneur. Close behind that is the ability to rebound from setbacks or failures, extract lessons learned and forge ahead with renewed determination and confidence. Here are some specific recommendations to keep you on the right track:

1. Failure is not the end, but the start of a new beginning. Generations of successful entrepreneurs, including Thomas Edison, categorized every failure as an experiment, and each one told him successfully what didn’t work. Despite a thousand light-bulb filaments that failed, he is remembered as one of the most success entrepreneurs of the century.

2. Don’t expect startup failures not to hurt. Every human grieves over a loss. Some never recover their confidence, and others continue to fall back on excuses, such as “I was a victim of the recession,” or “My investors forced me to make some bad decisions.” After a few months, the best entrepreneurs are back in the game with a better plan.

3. Startup failures are not personal condemnations. Economic condition changes and high investor expectations are real but normal challenges facing every startup. You have not been singled out for testing, and being overrun does not indicate a character flaw preventing you from being a successful entrepreneur.

4. See competitors as big opportunities, not monsters to fear. Don’t forget to ask how you are better, and don’t allow yourself to be counted out. Competitors may have scale and size on their side, but they usually aren’t nimble and tuned in to the latest trends. Every entrepreneur has strengths, but too many ignore them and fear their weaknesses.

5. Fall back on your values for strength and direction. Successful entrepreneurs are comfortable doing business in a changing world. They use their moral compass to get them back on track after a setback and keep them pointed in the right direction. Investors, customers and partners follow entrepreneurs who are honest and caring.

A successful rebound requires learning from each iteration. The biggest mistake of all is doing the same thing over and over again and expecting a different outcome. Here are some key elements to look for and plan to capitalize on for the next iteration:

• A deeper level of understanding of the market. Now you know how the market has changed, what new customers are not looking for or where competitors are not so vulnerable. Write these down, and build a new plan which capitalizes on every insight.

• New levels of business acumen for startups. Building a startup is not like running a mature business. Now you know some key parameters of cash flow, marketing metrics and investor expectations. Technology has changed, as well as tax regulations and social implications.

• You have more relationships, and know how to build new ones. Strong relationships lead to successful businesses. These include your relationships with industry players, investors, distribution channels and your own team. Use the ones that work, and build the new ones you need to make the next iteration more positive.

For successful entrepreneurs, every failure makes them stronger in spirit and capability, not weaker. It’s fair to be humbled by failure, such that you become a better listener, more supportive and more decisive in the face of business challenges. Don’t let the destination be your only measure of satisfaction. Entrepreneurs who enjoy the journey are always winners.

Marty Zwilling

*** First published on Entrepreneur.com on 10/16/2015 ***

5 Elements of Leadership You Can’t Succeed Without

Many entrepreneurs forget that their success is more about helping other people than about personally becoming famous, or overcoming the odds and getting rich. A successful business has to satisfy customers with a strong team, by helping them solve problems, save money, or experience more pleasure. That means more focus on helping others achieve their goals.

How and why this is true was brought home to me a while back in the classic book, “It’s Not About You: A Little Story About What Matters Most in Business,” by Bob Burg and John David Mann. This is a fictional story about how an aggressive young M&A executive comes to realize that his aggressive style is actually making it harder to reach his goals.

He concludes that there are five leadership elements that include him, but are not always about him, that lead to success. These are lessons that every entrepreneur should take to heart:

1. Hold the vision. Many entrepreneurs are able to come up with a vision, but far fewer are able to hold on to it through thick and thin, and communicate it effectively and continuously to their team and their customers. Keep your eyes on where the company is going, especially when nobody else does. Watch your use of personal pronouns.

2. Build your people. Give people on your team the means, authority, and the motivation to do the job, you will be surprised at the value delivered. Make sure that the essence of your influence is pull, not push. See people for who they are, realize what they can be, and help to take them there.

3. Walk the talk and do the work. Most startups begin their life as “one-person shows” that over time evolve to teams of people, interacting with customers and vendors. By virtue of the growing workload and stress, too many entrepreneurs isolate themselves from the hands-on as the team builds. Don’t forget to be a mentor as well as a leader.

4. Stand for something. What you have to give, you offer least of all through what you say, and in greatest part through who you are. Competence and character are most important, and visible to everyone. I believe in the old saying: “If you don’t stand for something, you’ll fall for anything.”

5. Share the mantle of leadership. The best way to increase your influence is to give it away. Don’t get stuck thinking that you are the deal. Let others lead in their own area of expertise, and your power will be expanded many-fold.

As early-stage entrepreneurs, it’s natural for you to focus on you – what you’re doing, what you want, and what you need. As the business evolves, you must expand your focus beyond yourself to motivating the team and delivering value to customers. At that stage, you are still important, but it’s not about you anymore.

One mistake many entrepreneurs make, especially with online businesses, is a fundamental misunderstanding of how interesting they need to appear to others. Yes, you are a fascinating person. You know how to bootstrap a business, build it from nothing, and burn sweat-equity for long hours to push your dreams to reality. Your business brand needs to quickly supersede you.

Online businesses have removed the convenience of geographic connections. Today, remote relationships are far more important. The best way to turn someone into your devoted fan is to go out of your way to make them feel important. Put yourself first by putting others first as well. It really isn’t about how great you are but how you make others great.

What have you done for your team and your customers lately? How did you make your product manager shine in the last meeting? Being an entrepreneurial success is not about grabbing information and power, it’s about helping others succeed.

Marty Zwilling

*** Published on IvyExec.com on 10/20/2015 ***

10 Ways An Entrepreneur Can Build A Winning Culture

If an entrepreneur can’t build a culture of excitement and commitment at a startup, the chances of long-term success are negligible. It simply doesn’t matter how great your solution is. Every investor knows this. That’s why they insist on spending a day with your team as part of the due diligence process. A winning culture is easy to see, and a culture of fear and desperation is hard to hide.

As a mentor to entrepreneurs, I often get asked what you can do to build the right culture. The simple answer is effective communication and leadership. Here are 10 specific recommendations that I believe will help every founder put this into practice.

1. Don’t hesitate to verbalize your dream to team members daily. Written mission statements and a passionate quarterly pitch to the team is not enough. Team members have to hear from you daily and see your enthusiasm during individual discussions, to the point that they are repeating your story to others. That’s how a culture is solidified.

2. Demonstrate a consistent set of personal values and priorities. People believe what they see more than what you say, and they tend to imitate what you do. Thus investors look for consistency between you and your team on values and priorities. If there is no consistency, there is no culture.

3. Customize your organizational structure based on individuals' strengths. There is no rule that marketing needs to report to the founder, or that every startup needs a chief operating officer. Some of the best startup cultures have no hierarchical reporting, yet everyone knows who drives each of the initiatives. Culture is not defined by job titles.

4. Focus on hiring the right people, and deal quickly with mismatches. Skills and experience are necessary in hiring, but finding a match in values and culture is equally important. Mentoring and training programs need to be put in place early. Entrepreneurs who are too busy for people never get the culture they envision.

5. Foster innovation in process as well as products. Technology can be used to facilitate customer support and sales, as well as enhance your product. Investors look for innovation in all areas of the business and all levels of the organization, from top to bottom. Winning cultures incent and reward innovation as well as business results.

6. Visibly link your standards to industry best practices. By default, teams look only inside the organization, and tend to compare their performances to their own previous records or other internal groups. Comparisons should always be with competitors and customer expectations of excellence. Cultures that excel measure only against leaders.

7. Create opportunities for continuous learning. A winning culture is filled with people who love to learn. They need opportunities to do new work and try out new roles, as well as have access to training updates in their current positions. Successful leaders are good coaches and mentors, as well as being on the lookout for personal learning opportunities.

8. Sponsor internal events to build team synergy. Events need to be inspirational as well as directional. These will build the culture you need, but also give you an opportunity to observe where you need more focus. Make sure each one highlights your values, recognizes the right team members and involves customers and outside experts.

9. Make your startup a winning place to work. Promote your culture and innovations through social media and the press to make the team proud of their jobs. This pride will be sensed by customers and vendors, since everyone wants to buy into a winner. Winning in business is all about building momentum, and capitalizing on that progress.

10. Define a legacy for yourself and your company. A legacy is a larger purpose than improved business growth or profits. As team members buy into that legacy, day-to-day slights and issues become less critical, and maintaining the culture and focus becomes the priority. This focus has the potential to double or triple your business growth.

The right culture doesn’t happen overnight, and it’s especially hard to change once it is set. Thus it’s especially important to start early, long before that first investor schedules a visit, and long before your first customer puts the team to the test. Your business's growth and success depends on it.

Marty Zwilling

*** First published on Entrepreneur.com on 10/14/2015 ***

8 Myths Technologists Believe That Sink Businesses

Most technologists have little interest in the mechanics of starting and building a business. That’s why I recommend that they find a co-founder who loves business challenges, including marketing and finance. I usually envision a 50-50 ownership split for their efforts, but every engineer believes the technology side deserves the majority share.

In fact, an entrepreneur friend of mine, who made millions on her marketing expertise, asserted recently that most inventors fail in business because they refuse to believe that any business expertise or experience is worth more than 5 percent in partner equity. If you consider yourself a technologist, you probably believe and may be propagating one of the following myths:

1. The first priority for funding should be to develop the technology. Outside investors are most interested in scaling a proven business model, not research and development. Thus it’s a waste of time for most entrepreneurs to be looking for investors until they have a product and some customer revenue. Most founders bootstrap product development.
   
   
2. Fabulous solutions require great technology. Business success requires customers to see a solution as exciting, and they rarely care about the technology behind it. I exhort entrepreneurs to keep it simple, start with a minimum viable product (MVP), and test it out with early customers. The best technologies are barely visible and low cost.
   
   
3. New technology is so exciting it sells itself. The reality is that consumers and businesses alike are afraid of new technologies, due to the learning curve, potential quality problems and side effects. This fear can easily override their fear of the problem the technology aims to solve. Business people know how to downplay the technology and market the value of the solution.
   
   
4. Marketing is a necessary evil to mask poor technology. In today’s world of information overload, everyone relies on marketing and social media to find solutions to match their needs. Even the best technical solutions often fail due to lack of good marketing. The right marketing efforts can cost as much as the technology.
   
   
5. You can’t build a business case until the technology is finalized. In fact, building a business case, starting with market opportunity and customer segmentation, is the only way to know what you can afford to spend on the technology. Technology that can’t be sold for a profit or appeals only to early adopters is not a viable business.
   
   
6. Patents are not worth the effort, since big companies will win. Intellectual property is a business issue, not a technical issue. Patents can raise startup valuation by investors by as much as a million dollars, and will attract acquisitions rather than copycats. Patents can apply to innovative user interfaces, processes or a new technology algorithm.
   
   
7. Business efforts should start only after the product is right. Business experts often now recommend that entrepreneurs start their marketing first to confirm that they have real customer interest and an appealing product concept. Elegant implementations may be too expensive or too complex for non-technical customers.
   
   
8. Perfecting the technology early removes most business risk. It’s true that inventions can’t be scheduled, but it’s equally true that customers can’t be invented. The ultimate risk is trying to sell a solution that customers don’t need or want.

All this doesn’t mean that a great technologist can never be a great entrepreneur, but it does suggest that business skills are as key to startup success as technical skills. Very few people have both, but there are some notable exceptions, including Mark Zuckerberg of Facebook and Elon Musk, founder of Tesla Motors, SpaceX and others. The odds are still against you being the next one.

The alternative is to find a co-founder who can provide the business acumen, as Bill Gates did with Steve Ballmer for Microsoft, and Google did by bringing in Eric Schmidt. I’m personally a technologist, and I’m always disappointed when good technology languishes on the sidelines for 20 years in denial of business realities. Don’t let a few myths stop you from changing the world.

Marty Zwilling

*** First published on Entrepreneur.com on 10/9/2015 ***

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5 Ways To Safely Sample The Entrepreneur Lifestyle

If you think you are the perfect fit for the entrepreneur lifestyle, but you’re not yet sure if you’re ready to start your own, then I recommend that you take a job with an existing startup first to validate the culture realities against your dream. Without risking all your life savings, you may find that corporate desk you have as an alternative is a lot more satisfying.

Running or working for a startup is more of a lifestyle than a career choice. Be prepared for chaos, long hours, and small paychecks in the short-term. Founders stock, and stock options, will be worth nothing for the first several years, if not forever. The fun is the long-term potential of changing the world, and maybe even hitting it big financially.

So here is a rational hedge strategy I recommend, and see playing out every day in Silicon Valley and other startup hubs. If you have a spouse and kids, one of you needs to keep a solid job at a dependable large company like Intel, Apple, or HP. That one will provide the stable base income, medical and dental benefits for all, and the schedule flexibility to administer your kids’ activities.

The partner most obsessed with the startup lifestyle tests the water by going to work in an early-stage startup, similar to one they might hope to start someday. Here are some thoughts on how you can find that perfect test environment, and some recommendations along the way:

1. Look for startup job openings. Check Craigslist first, since most new ventures don’t have the money for executive search firms and the major job listing sites. If the startup has its own website, that is the next place to look. As with any job search, always play to your strengths, and stick to business domains and roles you already know.

2. Hang out where entrepreneurs meet. There are many organizations which cater to entrepreneurs, including The Indus Entrepreneurs (TiE) and local startup incubators. Get to know the people there, and ask them for pointers to new ventures that are still in the formative stage. Your best job leads will come from other entrepreneurs.

3. Explore investor websites and conferences. Most Angel groups and VCs advertise the startups they have recently funded, with pointers to startup websites, sometimes including open positions. Investor conferences are also a good place to keep up with what is going on, get to know some potential investors for you, and find what is hot.

4. Search online startup platforms and crowdfunding sites. There are a wealth of sources today for startups, including Gust, VentureLoop, AngelList, and KickStarter. Typically you can browse them by region or technology to find founders. Use LinkedIn to check for a fit, and craft personal resume emails and letters to make your case.

5. Kick your networking up a notch. Every geographic area has entrepreneur networking activities, such as startup weekends and tech meetups. There are many networking groups on FaceBook, LinkedIn, and others social media sites, which can help you increase your odds of finding a match early.

Once you find a startup that seems like a good fit, it’s still important to do some of your own due diligence. Every startup has a unique culture, driven by the founders, so talk to as many people in the organization as you can. Unfortunately, some startup teams are almost as dysfunctional as some families, and you need to avoid these.

As much as possible, make sure you understand the risk and the challenges ahead. Build yourself a list of specific questions, like the following, and get the answers, both informally and formally as you interview and make the rounds:

• Do you feel strongly about the product or service?
• How much money has been invested so far?
• What is the startup cash burn rate per month?
• Are more investment rounds required (runway)?
• Who gets stock options, and how many?
• When is cash-flow-positive anticipated?

Now it’s time to make a decision about working for a startup. Believe me, this one is a lot easier and less risky than the decision to start your own. But if you believe that you can drive the next big thing, and you are not afraid chaos and constant pivots, a startup is the place to work. It’s the best way to test your appetite for the lifestyle, and the best way to prepare for starting your own venture.

Marty Zwilling

8 Practices to Promote Urgency Within Your Startup

The business world is changing ever more rapidly these days. If you see a need or a big opportunity but don’t act fast enough, the opportunity will pass or a competitor will get there before you do. Customers and opportunities don’t wait. If your startup culture doesn’t include a sense of urgency, your probabilities of long-term success are miniscule.

Some of you may remember MySpace, which came early to social media, but lost the lead to Facebook by evolving too slowly, many analysts say. Other examples often mentioned include Hashable and MapQuest. A sense of urgency won’t save a bad idea or the wrong team, but the good news is that it will fail faster, allowing people to move on quickly to more productive opportunities.

A culture of urgency does not mean a hyperactive reaction to the crisis of the moment. It does mean a proactive and ever-vigilant plan to keep moving forward with the market and stay ahead of competition, even if you must make your own products obsolete. As an advisor to entrepreneurs, I recommend the following practices to build and nurture an urgency culture:

1. Be a visible role model for urgency vs emergency. We all know the harried startup founder who is great at putting out fires. Better startup leaders display a calm but visible urgency for scaling the business, designing the next product generation and attracting customers just out of reach. Culture follows the leader.

2. Demonstrate the positives of urgency to the team. Make urgency a positive by highlighting the value to your company for getting the right things done, and publicly rewarding empowered team activities. Don’t let false urgency add fear and stress, or be a de-motivator. Emergencies are problems, whereas urgencies are opportunities to win.

3. Exhibit urgency in your personal operating style. That means consistently delivering on personal commitments and deadlines, and showing up for work on time. Don’t be seen as wasting your or other people’s time on casual conversations, or long, drawn-out meetings. Get to the key point quickly and encourage everyone to do the same.

4. Communicate milestones and wins to all constituents. People on the team need to see progress, investors relish growth and customers love brands that appear to be on the forefront of a wave. People never get tired of being thanked for their contributions. A sense of urgency will blossom and contribute even more.

5. Tie internal measurements to marketplace data. Many internal teams are content to measure their productivity against their own prior periods, while competitors and market changes may set whole new benchmarks. Constantly urge urgency with external market data, competitor announcements and innovative approaches from outside.

6. Translate emergency implications into urgency. Once a crisis has been resolved, convene the team to address the longer term changes required to prevent recurrence. These root-cause analyses are often forgotten in the heat of the next problem. Smart entrepreneurs focus on turning emergencies into the next opportunities.

7. Set an urgency tone in hiring, feedback and training. Perfectionism, skepticism and complacency are the antitheses of urgency. Don’t hire people with these attributes, and remove or retrain them quickly, before others are infected and your credibility is lost. Promote and generously reward people delivering stretch results and innovations.

8. Get the team engaged in urgency. Just talking and reading about it is not enough. Plan team events and games where urgent physical actions are rewarded. Produce a video with potential viral impact and bring in your best customers for a brainstorming session and lunch with your team.

When was the last time you walked the halls of your startup and palpably felt that sense of urgency that will keep your business in the forefront of a rapidly changing marketplace? Maybe it’s time to check your own leadership style and practices to see you are sending the right messages to your team. Try to squeeze it in before you get tied up handling the next crisis.

Marty Zwilling

*** First published on Entrepreneur.com on 10/7/2015 ***

8 Types of Investors That Entrepreneurs Need to Avoid

Don’t assume that all investors are the same, just because their money is always the same color. Every entrepreneur should do the same due diligence on a potential investor that smart investors do on their startups. Check on their track records, values and management style. Taking on an investor is a long-term relationship, like getting married, that has to work at every level.

Let’s just say that every investor is different, without trying to define what is good or bad for you and your startup. Investors are human and subject to human tendencies, whether they are your rich uncle, an angel investor with personal funds or a venture capital investor with institutional money. Here is a summary of some key investor stereotypes that generally need to be avoided:

1. Investment sharks. I’m not talking about the Shark Tank TV show, but some might say the panel fits the definition. While the majority of investors are looking for a win-win deal, there are investors who like to prey on entrepreneurs who have little financial experience, don’t read the term sheet or are simply desperate for a deal. Seek out advisors to help you avoid these investors.

2. Investors who love to litigate. We all know that startups don’t have money to fight in court, so it’s easy for a few unscrupulous investors to jump to the conclusion that intimidation and lawsuit threats can improve their returns and control after the money changes hands. Here is where checking the track record pays off. Don’t assume you will be the exception.

3. Imperial investors. These are investors with such massive egos that they expect to dictate both the terms of the investment as well as all future strategic decisions of your startup. Unless you are preparing to work for Donald Trump someday, I recommend that you skip this investor in favor of a more equal partner.

4. Legal eagle investors. Negotiating terms is normal before the investment, but once the check is cashed, you don’t want to be second-guessed on every action. Be wary if the term sheet is a document longer than your business plan. Violation of abstract clauses may be used as a way to push you out, take over the company or pull the investment.

5. Academic coach investors. Coaching should be expected and appreciated, but you don’t have time for constant tutorials on how to run a business. A good advisor and mentor will tackle questions and then offer key insights. If an investor spends more than a day at your office before the check is written, it may be time to check your patience meter.

6. Pretend investors. These are “wannabe” investors who don’t have the means, or former entrepreneurs who don’t want to leave the arena. They always have one more issues to investigate or another set of questions, but never bring the checkbook. After a rational allocation of your team’s time, ask for a definitive close and be willing to walk away.

7. Investors without a clue. Many wealthy people make poor startup investors. They have long forgotten (or never knew) the challenges faced by a startup business. Many great real-estate people and doctors fall into this category. A synergistic long-term relationship in your business is not likely. Ask them for an introduction to wealthy business friends.

8. Investors for a fee. These are people who rarely invest their own funds, but promise to find the perfect match and live off a percentage of the action and preparation fees. They may be licensed investment brokers or consultants cold-calling real investors. The challenge is performing due diligence on the real investor.

Proactively seek out and build relationships with investors who interest you, rather than passively wait for potential investors to approach you. Finding investors is best done by talking to peers and attending networking events. Cold calling or emailing strangers will likely get you a sampling of all the eight stereotypes defined here.

Finally, you need to learn what investment terms make sense for your startup and craft your own term sheet, rather than rely on one being presented to you. Start with some legal advice from a source you trust. Do your homework and networking, but don’t chase investors like a one-night stand and expect it to lead to a mutually beneficial long-term relationship.

Marty Zwilling

*** First published on Entrepreneur.com on 10/2/2015 ***

Building A Sustainable Business Is More Than Profit

I may be a bit old-fashioned, but I have always looked at a business first for its potential ability to be self-sustaining, and provide reasonable profits to feed my family, my lifestyle, and my retirement. Then secondly, I look for it to be a business I can enjoy, with the potential to change the world. Today, these top priorities of many entrepreneurs seem to have reversed.

I used to think this purpose phenomenon was primarily associated with Gen Y (Millennials), who grew up in a world of plenty. Now I see it also in Boomers, like Bill Gates, who have the longevity to enjoy a second career, this time prioritizing the purpose they may have sought in their youth. Even Generation X leaders, like Elon Musk, seem to be focusing more on purpose.

Thus I feel obligated as a startup mentor to look harder at how entrepreneurs can achieve the purpose objective, while still build a sustainable business. Thus I should not have been surprised by a recent book by Aaron Hurst, “The Purpose Economy.” He argues that the next generation of corporate business and even the political economy is emerging based on the creation of purpose.

He starts by debunking the key myths that most successful business people in my generation have long held as facts. I will paraphrase his debunking of the key myths here:

1. You need a non-profit cause to have purpose. After survival is assured, it’s a natural human urge to find a higher calling, or purpose, to give self-satisfaction. Many people incorrectly pursue this as a destination, or cause, rather than a direction. Purpose isn’t a cause; it is an approach to work and serving others. Think of it as a verb, not a noun.

2. Seeking purpose is a luxury that most can’t afford. Purpose is a universal need, and even those with meager means still make it a priority. Purpose is not a luxury only for those with money and security. According to Atlantic magazine a while back, even the poorest Americans donate 3.2% of their income to charity, while the wealthiest donate an average of 1.3%.

3. Finding your purpose should come as a revelation. Too many people expect their life’s calling to hit like a bolt of lightning. But for most it comes from living life awake and seeking new experiences, not as a revelation from above. Most of us will work 40 or more years, so we have plenty of time to find how we most enjoy contributing.

4. Only big impact types of work generate purpose. What we do is not nearly as important as how we do it, and what attitude we bring to the work. The truth is that you can find purpose in any job, if you approach it correctly. People in all walks of life see their work as a calling, or merely as a job, depending on their psychological traits.

5. Work accomplishing a purpose must seem easy to you.  With athletes, the relationship between pain and gain is clearest, but the same holds true of doing any work where we are experiencing high levels of purpose. Purpose will inspire and drive you to work even harder, give more of yourself, but make you feel better in the end.

Thus Hurst argues that purpose is for everyone, regardless of profession or socio-economic status. It is not about a cause or something that we discover by revelation. It is a challenging and rewarding journey.

It’s also not related to the business model, or type of business you might start. Your business doesn’t have be a non-profit or Benefit Corporation (B-Corp) to embody purpose. In fact, there are several business organizations that are intended to help you find and foster your purpose, including Conscious Capitalism® movement led by John Mackey, The B Team, led by Sir Richard Branson, the 1% for the Planet organization, but none of these are really required for purpose.

Thus, I’m convinced that it’s time to recognize the pursuit of purpose as a real and positive trend, which extends into and from the economy and markets that entrepreneurs serve. Every entrepreneur needs to take a hard look at their own business culture and goals, to see how well they have adapted and capitalized on this trend. Now you should have more fun at work, get more satisfaction, and be more successful at the same time. Are you there?

Marty Zwilling

7 Guidelines For Entrepreneurs To Do The Right Thing

Most entrepreneurs I know want to do the right thing for their businesses, as well as themselves, but they are not always sure what that means. Does it mean the right thing from a customer perspective, societal impact, maximizing business returns or personal benefit? The good news is that none of these need be mutually exclusive, according to recent studies of market trends.

Companies that have focused on sustainability and social responsibility, in addition to ethical business practices, such as Patagonia and Zappos, claim more than three times the return of average companies over the last 10 years. Another article indicates that 80 percent of customers continue to base some portion of their buying decisions on their perceptions of the company’s ethics.

In reality, even if you and your business are doing the right thing, the challenge is to make it visible and convince customers and people inside your company that you have personal integrity, strong moral values and always act ethically. Here are seven specific actions I recommend to get the right message across:

1. Consistently communicate values before goals. Make it evident that your values drive your business goals, rather than goals driving values. Communicate personally and interactively with your constituents, both inside and outside the organization. Don’t allow anonymous and impersonal messages to go out, and always ask for feedback.

2. Build an organizational culture based on ethics. This starts with hiring the right people, and giving them the training and support they need on a regular basis. It also means rewarding people for making the right decisions on social responsibility, sustainability and adherence to ethics. You must be the model of the culture you want.

3. Manage your company based on long-term priorities. By demand, entrepreneurs are crisis managers, and can be busy reacting 24 hours a day to urgent short-term issues. Entrepreneurs who do the right thing are able to balance their priorities, including both business and personal, and focus their priorities on long-term goals and values.

4. Set the bar high on standards. Doing the right thing means never accepting “good enough” or making excuses for lapses. Apply the same high bar to product quality, employee satisfaction, social responsibilities and customer service. Don’t let day-to-day demands take the reins and drag you off course.

5. Provide leadership to your team for doing the right thing. It’s impossible to train the team on every possible contingency, but it is possible to set the right tone and define ethical guidelines. This is real leadership, and requires constant communication, motivation, recognition and accountability. Be a coach, rather than a dictator.

6. Personally collect and accept customer and employee feedback. These interactions cannot be filtered by others, or brushed off as not representative of reality. Great business leaders always find the time to talk directly to both customers and employees, and realizes the importance of both to the long-term impact of the business.

7. Continually refine your values and goals based on changes in the world. Society and every marketplace is changing more rapidly these days, so it’s easy to get distracted and out of tune with reality. Be especially sensitive to emerging “quality of life” issues for customers, employees and yourself, and tune your business focus to address these.

The worst assumption you can make is to assume that doing the right thing will always come naturally, and that all your constituents will see and understand what your intent is. It’s important to learn from peers, advisors and mentors that the required mindset must be combined with specific actions, including the ones outlined above, before value can be harvested.

How long has it been since you made a real assessment of your business's culture and the model you project? Make doing the right thing your competitive edge today, and the key to your long-term success. It’s a lot more fun and satisfying than fighting the latest crisis every day.

Marty Zwilling

*** First published on Entrepreneur.com on 9/30/2015 ***

10 Keys To Improving Your Business Time Management

Many entrepreneurs fantasize about days longer than 24 hours, convinced that their new venture could change the world, if they just had more time. They don’t realize that a more viable solution is to get more done per existing hour, rather than creating more hours. We all know at least one person who is always “very busy” and works plenty of hours, but generates few significant results.

Every person, no matter what their passion, needs to revisit the principles of time management from time to time. However, this topic is particularly critical to business owners, who struggle with challenges and crises every day that they didn’t anticipate. Effective time management skills are often the best competitive edge.

I found some new insight and direction on this subject in a classic book by Jan Yager, Ph.D., “Put More Time On Your Side.” Dr. Yager is a real guru on this subject, having been a productivity coach, trainer, and author for many years, and still found time to squeeze out over 30 books, including five related to this subject.

Here are my recommendations for taking her top ten points in accelerating time management productivity from the conceptual level to the practical level for entrepreneurs:

1. Overcome procrastination to achieve your priorities.  All too often, we spend too much time on startup ‘emergencies,’ and put off ‘urgencies’ for another day. The best way to recognize this problem is to track daily where your time is really spent. This can help to force you to stay ‘on task’ rather than mindlessly working the issue of the moment.

2. See a deadline as something empowering, rather than negative. A realistic product deadline will motivate you, so stop setting unrealistic deadlines, which discourage you or even ‘shut you down.’ Learn to use time-saving strategies, including delegation to team members, freelancers, or technology. Sometimes the right answer is to revise the goal.

3. Respond right now rather than wait to the last minute. It’s never good to let a team member or customer request be ignored until the last minute. If you are the right person, handle it now, or pass it on to the right person immediately. Ignored requests lead to crises, animosity, and projects that get off-track, and even startup failures.

4. Seize opportunities in the marketplace. One of the greatest benefits of improved time management is that it allows you recognize and follow-up on unexpected opportunities or pivots that could come your way. In the startup world, these can make all the difference in closing on a key new customer, or capitalizing on a new business partnership.

5. Determine where email and social media add value.  Keep a check on your web browsing habits, and limit your daily time spent or delegate these activities. If you find your attention distracted from the task at hand by headlines or new videos, it may be time to shift to another platform that does not highlight these distractions.

6. Find and use preferred individual contact methods. If someone lets you know that they hate phone calls, respect that. If email is your preference, communicate that to your team and contacts, perhaps minimizing office interruptions. You need to learn how to use the latest technology, like smartphones, to make you more productive and mobile.

7. Get a neutral eye review before submitting critical work.  Have you ever proofed your own letter or contract several times, only to find an embarrassing error later? It’s usually more efficient and effective to have a trusted team member make the last pass to save your time, and possibly add content and details that you overlooked.

8. Learn to say ‘no’.  None of us have the time to do everything. Learn how to say ‘no’ politely and tactfully without feeling guilty about it. Being able to feel comfortable with what you say ‘yes’ or ‘no’ to will help you to broaden your options and empower you to spend your valuable time on things with the biggest payback to your startup.

9. Get products out the door and shipped.  You know you are making progress when you get things out the door. If closing customers is your priority, proposals completed and delivered is the key. Programmers and engineers are famous for always needing more time to hone the product before it’s ready to ship. No products mean no business.

10. Look outside your business domain for new solutions. Too many of us get stuck in the rut of looking to our own experiences and skills for solutions to business challenges. Instead, don’t be hesitant to talk to your investors, board advisors, or peers in other industries for alternate approaches, new techniques, and direct outside help.

I hope you realize by now that your day will never have more than 24 hours, and “I didn’t have enough time!” will never be a valid entrepreneur excuse for any business partner, customer, or investor. Time management is a learnable skill, but it takes continual focus. How many of the concepts presented here do you use on a regular basis?

Marty Zwilling

7 Seed-Stage Funding Sources To Finance Your Startup

Even if you work every day in the world of new-venture funding, as I do, the options are confusing, and their meanings seem to change on a regular basis. I challenge any entrepreneur, for example, to define the difference between "seed-stage" and "early-stage" financing. Yet, knowing this distinction is important.

Remember, you have only one chance to make a great first impression, so it helps to know the lingo when dealing with investors. Asking for early-stage money before you have customers and revenue will likely kill your credibility with real investors.

Seed-stage, meanwhile, is technically that critical period when you need funding to do solution- and business-model development, to prove that your new product or service works, before you try to sell it to customers. Most investors won’t touch a first-time entrepreneur at this stage.
Luckily, there are some new entrants and approaches to seed-stage funding -- if you know whom to ask -- that can supplement the friends, family and bootstrapping approaches traditionally recommended. Here they are:

1. A crowdfunding campaign. Crowdfunding is rapidly becoming the major source of funding for seed-stage startups. According to recent statistics, there are already over 500 website crowdfunding platforms, such as Kickstarter, available; and over $5 billion was raised this way last year. For those of you without a rich uncle, crowdfunding can work.
   
   
2. A seed-stage “super angel.” This is a relatively new term loosely applied to angels who invest their own money in a portfolio of startups (typically 20 or more) and are willing to lead multiple rounds, usually starting with a seed round. Ron Conway, of SV Angels, and Reid Hoffman, LinkedIn's founder, are names often mentioned in this category.
   
   
3. A micro venture capital firm. Micro-VCs, by definition, are firms that invest institutional money (meaning other people’s money) in projects that are at the seed stage or are too small to attract the attention of more traditional venture capitalists. Currently, there are about 250 micro-VC firms, including such notable names as Mike Maples of FloodGate Fund.
   
   
4. A “genesis” venture capital round. A new VC seed market has been emerging, especially over the past five years: It usually appears in the form of a prototypical seed round of $1 million to $1.5 million and is normally syndicated from one to three institutional seed investors or larger VC funds. These funders often offer convertible notes, rather than the traditional priced equity.
   
   
5. Business accelerator funding. Business accelerators like YCombinator and TechStars are sometimes able to help startups looking for seed-stage funding. Most accelerators provide small seed investment in the range of $25,000, as well as mentoring, workspace and professional services, in exchange for an equity stake in the company.
   
   
6. Startup incubator seed funding. While an accelerator offers a specific program to startups for a fixed period of time, usually 90 days to four months, incubators tend to be more open-ended. Yet, they often provide similar small seed investments, similar to those of accelerators. Many municipalities offer these to facilitate local new business development.
   
   
7. Corporate seed funds for startups. Finally, many more mature companies, including Intel, Google and FedEx, offer seed funding to promising startups working on innovative technologies which might be good acquisition candidates later.
   

Finding funding at the right time is the entrepreneur’s conundrum, since most founders believe that they wouldn’t even need an investor if they already had an existing product and proven business model. On the other hand, investors only want to provide money for scaling a proven business model, which is on an order of magnitude less risky than implementing and proving a new and innovative solution.

Ironically, the new, relative abundance of seed-stage opportunities has led some experts to warn startups of a phenomenon known as the series-A crunch, or shortage of early-stage or later investments.

My recommendation to entrepreneurs is that they still look for startup funding one step at a time, from an idea in their heads, to a real product (seed stage), to a scalable business (early stage), to the success they deserve (IPO or acquisition). If you're one of them, don’t second-guess yourself into never starting.

Marty Zwilling

*** First published on Entrepreneur.com on 9/25/2015 ***

Build Your Business By Accentuating Your Positives

Most of the entrepreneurs I know realize they have some bad habits, like maybe procrastination or not listening well, so they focus on dropping these. New studies indicate that a more productive approach would be adopting new good habits and behaviors that clearly move your business forward, like good time management and implementing customer recommendations.

These two approaches may sound similar, but actually require different skill sets. For example, learning to stop smoking may leave you with a gap to fill, but finding activities that remove your urge to smoke really gets you where you want to be. I recommend the following six techniques for capitalizing on good habits from the classic book “The Compound Effect,” by successful entrepreneur and writer Darren Hardy:

1. Set yourself up to succeed. Any new habit has to work inside your life and lifestyle. If you want personal healthy think time at a gym, don’t find one that is thirty miles away, because you won’t go. For better time management, tell everyone that you will be closing the door to your office during specific times of the day, and ask for their support.

2. Think addition, not subtraction. Instead of focusing on what you have to “sacrifice,” think of what you can “add in” to improve your business effectiveness. For example, most founders find that adding good customer discussions has a more satisfying payoff than just eliminating expensive marketing consultants.

3. Go for a public display of accountability. Put your commitments of a new good habit, like rewarding good performance, on public display by announcing a recognition event to be held each week in the office. Now you will be motivated to follow through, and the whole team will give you the positive feedback you need to keep it going.

4. Find a success partner. There are few things as powerful as two people locked arm in arm marching toward the same goal. If your bad habit is staying late at the office, link with one or more of your other key executives to retire to the gym at 5pm sharp three times a week. You will all get out of the office, feel better, and make more decisions.

5. Use both competition and camaraderie. There is nothing like a friendly contest to whet your competitive spirit and immerse yourself in a new habit with a bang. It’s easy in a new business to inject a fun rivalry and a competitive spirit into improving your marketing programs, or improving production cycles.

6. Celebrate each small step of success along the way. All work and no play is a recipe for backsliding. You’ve got to find little rewards to give yourself every week or every day, even something small to acknowledge that you’ve held yourself to a new behavior. Measure results and promise yourself a real pot of gold at the end of the rainbow.

Change is hard. That’s why so many people don’t either give up their bad habits, or adopt new good ones. Successful entrepreneurs are the extraordinary ones that make the changes anyway. They just do it, and keep doing it, and the magic of compounding rewards them handsomely.

Another challenge is that your brain is not designed to make you happy. It is programmed to seek out the negative and optimize survival, and is always watching for signs of “lack and attack.” That’s why every entrepreneur spends so much time worrying about failures, lack of customers, and competition. We have to teach our minds to look beyond these, through discipline and being proactive about what we allow in.

But learning and discipline without execution is worthless. In the big picture, the habits you develop and nurture shape your destiny. Little everyday habits will take you either to the life you desire or to disaster by default. Spend more time instilling good ones, and the bad ones will disappear for lack of attention, making you a more savvy and successful entrepreneur.

Marty Zwilling

9 Entrepreneur Leadership Principles Worth Practicing

Entrepreneurship is all about leading – leading customers to a new product or service, leading a startup team to peak performance, and leading a new business to the market opportunity, while providing maximum return to stakeholders. Most entrepreneurs feel they have innate leadership talents, but struggle with how to nurture these abilities and measure their effectiveness.

Since I believe that a large part of leadership is personal confidence and initiative, I was drawn to a classic leadership book by Robert S. Murray, “It’s Already Inside.” His focus and belief is that anyone can nurture their innate leadership abilities, to achieve business and life success. The key is learning from the life lessons of others, something you never get in classrooms.

He hits many of the key lessons that I have learned from my own experience, and feedback from great leaders, in both large businesses as well as startups. These include the following:

1. Practicing authentic leadership versus fake leadership. Authenticity requires honesty, self-awareness, and a selfless perspective. Authentic entrepreneurs lead through the power of personal influence, rather than coercion. Fakers rely on position, authority, and manipulation – leading to short-term gain and long-term loss.

2. It all starts with a vision, but you have to execute. Vision provides direction so your startup won’t just flail about. As you communicate your vision to stakeholders, you will strengthen your own belief and get buy-in from them. But above all, leadership is defined by action. You have to execute to succeed, so trust yourself and start moving forward.

3. The importance of critical thinking. Critical thinking is the ability to think clearly, rationally, reflectively, and independently. Critical thinking is not just accumulating information, and should not be confused with being critical of other people. Entrepreneurs need to practice critical thinking to be leaders, rather than following conventional wisdom.

4. Leadership comes with building and nurturing the right team. Entrepreneurs not only have to pick the right team members, but have to continually communicate the vision, tasks required, and provide mentoring and feedback to each member. Don’t focus on the product, and assume the team will come along by osmosis.

5. Pretend to be a customer or client of the business you lead. Successful entrepreneurs practice stepping back to look at their business the way customers see it for the first time. It obviously helps to ask new customers what they see. Then it takes humility to swallow your pride and your biases, and make improvements regularly.

6. Coaching and mentoring are key to the leadership role. A good leader will make sure that each person is getting exactly what they need for their role and their maturity. Depending on the individual, the entrepreneur may look like a dictator, a high school coach, a mentor, or a country club host. People ignored see no leadership.

7. The importance of listening well. More entrepreneurs need to practice leadership by walking around (LBWA), and truly listening to the people on their frontline, as well as listening to customers, partners, investors, and vendors. It’s hard to listen while you are talking, and many people seem adept at listening without really hearing anything.

8. Time for solutions versus problems. It’s easy to become so overwhelmed by the day-to-day problems of running a business that you have no time to work on solutions or strategy that will give you greater leverage and long-term success. Ask each member of your team to be the CEO of his own problems, and you will take time for the solutions.

9. Know when to overreact or under-react. Real leaders stay in control of their emotions, and use reactions to highlight a point. For example, startup leaders should probably overreact to values violations, and under-react to the next crisis. Always reflect before you react. You don’t learn that in the classroom.

World-class entrepreneurship will never be learned totally in the classroom. It takes hard work, lots of practice, and lots of mistakes. It takes focus to become both a student and a teacher of leadership. You will soon be amazed by how things start to fall into place, despite what you don’t know. That’s the innate leadership coming out. Enjoy it.

Marty Zwilling

*** First published on IvyExec.com on 10/02/2015 ***

5 Unpleasant Startup Surprises and How To Recover

By definition, every startup is predictably unpredictable, since new solutions have no proven track record, startups are usually building a new market, and the world around them is changing faster than ever. Yet, as an advisor to startups, I see some common disasters, and recommend some anticipation and recovery moves that can save every entrepreneur some painful time and money.

Five major elements of every business include your people, product, opportunity, money and marketing. While every entrepreneur needs to remain upbeat and optimistic on all of these, it is also smart to anticipate the worst case scenarios that are possible with each. Prepare ahead of time to prevent or head them off quickly, before it is too late, as events unfold:

1. Key people let you down. In all startups, one of the key concerns and biggest disaster potentials is the loss or lack of commitment from principal players. The first rule to remember is the old saying, “an ounce of prevention is worth a pound of cure.” Hire carefully and slowly, with an overriding focus on skills, experience and commitment.

   Don’t rely on friends, family and interns. They may come cheaply but will likely cost you dearly when times get tough. When people problems arise, it is critical that leaders act quickly to visibly fix them, rather than ignore the problem or carry under-performers in lieu of replacing them. Use experienced recruiters to assess and strengthen your team.

2. The solution fails to come together. Innovative products and services always take longer to develop than anticipated, and quality problems pop up where least expected. Delivery and cost milestones are missed, which derail marketing and rollout plans, de-motivate the supporting organizations, and drive costs into worst-case scenarios.

   Even though invention can’t be scheduled, detailed planning does work, both on the product side and the business side. Written product specifications and business plans pay big dividends. Bring in expert advisors and mentors to set initial goals, and build recovery plans. Make sure all new development is buffered, rather than stretch-oriented.

3. The market changes faster than your startup. No matter how certain you are that your solution matches the market need, you probably missed it to some degree on first entry, or the market changed while you were building your product. Startups are all about change, but entrepreneurs can be slow to change, due to passion and stubbornness.

   Assume your startup will have to pivot at least once, so don’t let your team be caught off guard and devastated. Smart entrepreneurs have metrics for assessing their progress against milestones and regularly communicate new insights to the team. Update your plan at least once a month. Don’t wait for a crisis to drive change.

4. The money runs out before revenues start. Almost every startup underestimates their costs, and waits too long to raise more money or implement “Plan B.” Managing cash-flow must be the number one priority of every entrepreneur. Write every check personally, rather than relying on a bookkeeper or administrative help.

   Again, expert advance planning is the key here for assessing the likely costs, as well as managing payables and receivables. Don’t allow your startup to “fail by success,” meaning too many orders delivered and inventory required for big customers, before their long payment cycle kicks in. To prevent this, build a buffer and line of credit.

5. Word-of-mouth marketing doesn’t work. No matter how great your solution, it takes real marketing effort, content and investment to get attention these days. Many entrepreneurs assume everyone will feel their passion, and find and promote their solution with the same zeal as their friends and family.

   Thus every business plan needs specifics on cost and content for marketing, with measurements to assess progress. Innovation and creativity are just as critical for marketing as they are for solution development. Don’t wait for your worst case scenario where no customers show up, and expect that slashing the price will solve the problem.

Experienced entrepreneurs have learned that unpleasant surprises are the way of life in a startup, and a big part of the satisfaction is beating the challenges. It’s a lot more fun, and much less risky, to learn from the worst case scenarios of others rather than paying for every mistake every time.

Marty Zwilling

*** First published on Entrepreneur.com on 9/23/2015 ***