These 8 Disciplines Define A Fundable Entrepreneur

Aspiring entrepreneurs often ask me what to do first when starting a business. Let me assure you, there is no absolute right or wrong, but there is real value in doing things in a sequence that minimizes the risks, optimizes your efforts and generates the best “first impression” on potential investors. Just don’t try to sell your business to investors before it is well established.

A popular approach these days seems to be for founders to regale investors early with a pitch touting the newest “million-dollar idea.” In fact, ideas are a commodity and by themselves won’t generate any funding interest, outside the context of a leader who can execute. Instead, entrepreneurs need to focus first on execution disciplines and timing. Here are my recommendations for establishing the right sequence:

1. Nail down a specific problem and solution before incorporating. You shouldn’t try to create a business that hasn’t yet been defined. The name and the type have to fit, or expensive rework will be required later. The date of incorporation is the official start date for your business, so progress from this point will be scrutinized by investors. On the other end of the spectrum, a solution without a company will be seen as a hobby.

2. Start with the simplest legal entity, to minimize liability and taxes. In the United States, this is a limited liability corporation, or LLC. A C-corporation is more complex and expensive, and is recommended only if you expect to pitch to professional investors who demand preferred stock, or to more than 100 potential shareholders. Don’t put your family assets at risk by assuming that a sole proprietorship or partnership will cover your business needs.

3. Build your time line and momentum quickly after your business' start. Your credibility as an entrepreneur is at stake. Even new entrepreneurs should be able to move from an idea to a legal entity within a couple of months, finalize their business plan in the new few months after that and have a prototype solution built within six more months. Efforts that take years, or have many starts and stops, will not generate investor confidence.

4. Find a partner and core team early to supplement your expertise. Very few individuals have the skills and energy to build a startup alone. If your strength is technology, find a co-founder who has a comparable strength in business, finance or marketing. A strong team has more credibility with investors than does a great idea by itself.

5. Register some intellectual property to provide a barrier to entry. A large portion of your competitive advantage and your potential value to investors is the size of your intellectual property portfolio. Entrepreneurs who have no patents, trade secrets or trademarks are usually deemed non-fundable and non-competitive.

6. Demonstrate a concentrated focus on customers early on. Investors look for entrepreneurs who are customer-centric, rather than technology-centric. Even before you build a product, you should be interacting with potential customers in person, and through social media. Accumulate customer advocates, testimonials and “letters of intent.”

7. Ship a minimum viable product quickly, test the market and iterate. Startups that operate in stealth mode until their solution is perfect usually acquire customers and investors very slowly. You should assume that your first offering will likely need tuning, so nurture a culture and process for improvement and iteration from the very beginning.

8. Prepare for investor attention once you are ready to scale the business. Seeking investors before you have a business plan, or a product or even a few customers, is premature unless you have built previous successful businesses. Fundable entrepreneurs have a proven business model and are ready to scale up the business.

Of course, your milestones and timing may vary due to personal constraints or technology requirements. The key is to communicate variances clearly while highlighting momentum. Do things in the right sequence, and show the results that you have achieved. For investors, it’s all about confidence in the entrepreneur. Confidence lost early can never be regained.

Marty Zwilling

*** First published on Entrepreneur.com on 11/20/2015 ***

9 Business Leader Bad Habits That Sabotage Results

After working with dozens of entrepreneurs, I’m still amazed that some seem to be able to do the job easily and effectively, always in control, while others always seem to be struggling, out-of-control, and fighting the latest crisis. I am more and more convinced that it is the right business behavior that leads to success, rather than some exceptional intelligence or training.

In that context, entrepreneurs should carefully review the points made by Denny F. Strigl, former CEO of Verizon Wireless, in his classic book, aptly named “Managers, Can You Hear Me Now?” He outlines the behavioral habits he has seen in managers who are successful, versus the bad habits of ones who struggle. These habits apply even more directly to entrepreneur and startup leadership:

1. Failure to build trust and integrity. Poor leaders often fail to build trust initially, or they erode trust during daily interactions and operations. Without trust, there can be little cooperation between team members. This results in little risk taking, diminished confidence among employees, and a loss of communication throughout the company.

2. Focus on things that don’t really matter. Entrepreneurs who struggle spend too much time focused on things that don’t really matter. If it doesn’t fit into one of the Four Fundamentals: growing revenue, getting new customers, keeping the customers they already have, or eliminating costs, they should rethink what they are doing.

3. Shirk accountability and role model. Founders need to realize their behavior is in a “fishbowl” and thereby highly visible for the team to see and imitate. What the founder says and does in stressful situations sends a signal to imitate that behavior, even when they are not under stress. Poor performers thrive in an unaccountable work climate.

4. Fail to consistently reinforce what’s important. Managers often stress a particular message or a program for a couple of weeks, and then assume everyone gets it. When they change their message too often, team members become confused about what’s important. People perform best when what they hear is consistent and frequent.

5. Over-rely on consensus decisions. Some founders go too far to become consensus builders. This takes too much time in our super-competitive environment, and the result of a total buy-in is usually a watered-down version of the original decision or action they intended. Informed decision-making is not the same as consensus decision-making.

6. High priority on being popular. The first priority of a founder is to deliver results, rather than building friendships. Happy team members don’t necessarily bring you stellar results, although stellar results almost always bring you a happy team. Good managers don’t worry about shaking up the status quo, and realize that change is never initially popular.

7. Get caught up in their self-importance. Many founders fail because they get caught up in the “aura” of their position, and seek recognition and glamour for themselves. They love to give speeches to groups and in places that don’t really matter. These people seldom see what is causing their own demise in their attention to “all-about-me.”

8. Put their heads in the sand. Many founders struggle because they only want to hear good news. Team members quickly learn to report positives, while hiding problems. As a result, productivity suffers, employee morale decreases, and targeted results are missed. Encourage open, honest, direct, and specific communication always.

9. Fix problems, not causes. Don’t fix a problem without addressing the reason the problem occurred. The most common excuses given include lack of time to immediately address the cause, lack of resources to address the cause, or problem is outside of their control. Good managers always find the means to fix the cause.

In order to stop struggling and start delivering, entrepreneurs need to close the gap between what they know and what they do. Avoid the bad behaviors outlined here. Do the good things, day in and day out, until your behavior becomes habit for both you and your team. This can out-perform pure intelligence and lead to real success and positive results from everyone on the team.

Marty Zwilling

*** Published on IvyExec.com on 11/27/2015 ***

6 Reasons Startups Should Skip the Big-Bang Launch

Big-bang hard launches make sense for large enterprises like Apple or Microsoft, who are building on existing revenue streams and have the resources for lavish events, Superbowl ads and large inventory buildups. But for startups with limited resources and experience, I always recommend a soft launch or toe-in-the-water approach in a local market -- and scale up later.

In fact, for startups, it usually makes sense to announce your solution on social media and blogs even before you have built the first one. Think of it as an inexpensive way to do some real market research -- which big companies can’t do, for fear of getting an antitrust violation for announcing vaporware to impede the market. Smart startups are already doing it on crowdfunding platforms.

Then it’s time to evaluate response and feedback, make the necessary plan pivots, and try it again. Iterating this process, until you see some real traction, is far less risky and expensive than the big-bang rollout. Let me summarize the advantages of this to your startup:

1. Immediate real customer feedback. Startups which insist on operating in stealth mode in fear of competitor response miss the more important customer response. In addition, with today’s fast moving market, the whole environment can change in the year or more you are hiding out to get the solution and your total infrastructure built.

2. Small real revenue today is better than large later projections. All investors want to see real evidence that the dogs will eat the dogfood before they give any credibility to your hockey-stick projection curves. Funding to support a rollout is much harder to procure than funding to support a scale up, after an initial hint of success.

3. Maximum agility for required pivots. It’s amazing to most entrepreneurs how fast their little startup can become a battleship, hard to turn in a storm. Executing multiple iterations while very small is critical for anyone with a limited budget and runway. Startups need the agility to test various business models and positioning messages.

4. Partners and distribution channels will take you seriously. In many business arenas, brand-name partners and distribution are a prerequisite to scaling the business. A validated early customer following will get their attention, and allow you to negotiate the support you need in time for the real business surge.

5. Build your audience and the product at the same time. With social media and inexpensive website tools, you can build momentum in the marketplace without the need to spend money on a big-bang rollout. With these tools, it’s easier to measure impact and progress and make required changes than trying to measure big-bang results.

6. Time to train and prepare staff to deal with customers. A soft launch is less stressful to the team and lets them more gradually re-acclimate from a development environment to a delivery environment. It takes time to learn how to do customer service, interviews and demonstrations. A few missteps can totally destroy your big-bank launch.

But an iterative rollout or soft launch should never be used as an excuse for poor planning or an untested solution. Especially with a minimum viable product (MVP), every feature included must be high-quality, documented well and properly marketed. Free give-away products and beta tests are not the same as rollouts -- you get no validation of the business model.

In any launch, it’s important to have the right training and controls in place to prevent a visible marketing or delivery disaster. Customers have long memories, and they can spread the word very fast with social media, so negative reviews can easily be non-recoverable. It is much smarter to make a few people very happy than to leave many people or even a few unimpressed.

Most of the superstar companies we know like Facebook and Google have never had a big-bang rollout. They started slowly, in limited areas such as one university or city, and then expanded slowly, based on customer demand and resources available. Even big brands like McDonald's and Walmart entered the scene one store at a time.

Yet some entrepreneurs find it hard to resist the urge to get their product or service into the hands of a large number of people at one time. They are so certain that customers are poised and waiting that they forget the costs of a hard launch -- and the risks of a highly visible failure. It’s one of the few times in a startup when it actually pays to be less aggressive. Proceed with caution.

Marty Zwilling

*** First published on Entrepreneur.com on 11/18/2015 ***

7 Criteria For Selecting an Entrepreneur-Confidant

Most entrepreneurs are too stubborn to seek a mentor for guidance: They have so much confidence in themselves and their ideas that they don’t see the need to ask anyone for advice. The best entrepreneurs, however, actually claim multiple mentors: Mark Zuckerberg relied on Steve Jobs at Apple and Washington Post chief executive Donald Graham, almost 40 years his senior.

Mentoring does not happen by accident, or require large stipends. Both parties have to be proactive in making the relationship work, and the communication and learning have to go both ways. The best mentors are confidants who have already "been there and done that," yet are looking forward to learning from someone whom they respect, and who often is from another generation or industry.

1. Select mentors to fill your strength gaps. If your strength is technology, perhaps you need a business mentor. Friends, family and subordinates are not good candidates. It’s plausible to have more than one, but not likely that you have the bandwidth for more than two. Mentors tell you what you need to hear, while friends tell you what you want to hear.

2. Look for street smarts rather than book smarts. Anyone with knowledge can help you, but real-world experience is usually the best teacher. Age is irrelevant, but, normally, experienced retired executives have more time and interest in helping new, aspiring entrepreneurs. Busy top current executives may be interested but not available.

3. Take your time to build a personal relationship. Good chemistry is a key to a productive mentor-mentee relationship. Initial mentor exchanges should be face-to-face, rather than by email, texting or phone only. Full communication is critical, including body language and context, to build the trust and credibility required for maximum value.

4. Look for someone with a legacy of business success. A renowned college professor or a brilliant psychologist may seem like a good prospective mentor, but these people can’t offer you the pragmatic advice and guidance you will need as an entrepreneur. Think about what you personally want to achieve in business, and look for someone who has already achieved it.

5. Find a mentor who is willing to learn as well as advise. The healthiest and most sustainable mentor-mentee relationships are ones where each party adds value to the other’s life. Both people need to be genuinely interested in the other, and willing to share elements of their private lives as well as their business strategies.

6. Look for someone who has personal characteristics you admire. If you are shy and introverted, for example, seek out someone who is an extrovert. Good mentoring is not limited to words and advice. Style and body language can be just as motivating and instructive. Observing habits that instill trust and credibility is a learning opportunity.

7. Develop and share your vision of what success means to you. Choose a mentor who can relate to your own, personal vision. Some entrepreneurs want to be financially independent and others want to change the world, while others see "success" as a balanced family life. The best mentor must understand that equation, and align his or her advice with your objectives.

In any case, don’t expect a mentor to make your decisions for you, or relieve you of the task of doing the proper research into issues and opportunities. Obviously, too, he or she should never be used as an excuse for a failure you've had; your mentor should never be the target of an emotional barrage because you've had a bad day. If you don’t take responsibility for your own actions, no mentor can or will help you.

The best way to choose and treat a mentor is to look ahead and put yourself into that role. Given the business success you expect to come from your experience as a mentee and businessperson, you yourself will likely be asked to be a mentor somewhere down the road.

So embrace your search for the right mentor. And, once you do select this confidant, choose someone who can prepare you to "pay it forward," just as he or she is paying it forward to you. That way, we all get a payback.

Marty Zwilling

*** First published on Entrepreneur.com on 11/13/2015 ***

7 Key Maxims of a Mindset Focused on Growth

Based on my experience advising entrepreneurs, I’m convinced that success is often more a mindset than a specific set of skills or intelligence. The mindset I’m looking for is one that sees challenges as exciting rather than threatening, setbacks as learning opportunities and that effort and perseverance will overcome any obstacle. Most experts call this a growth mindset.

Of course, that mindset has to translate into a set of specific actions that other people recognize as going above and beyond the fixed mindset. A fixed mindset is when entrepreneurs believe their abilities and market are fixed, and the challenge is to make the best of the hand already dealt. Here are key maxims that I believe indicate a growth mindset rather than a fixed mindset:

1. A need to learn from customers, rather than educate them. Technologists, in particular, are prone to building solutions looking for a problem. Successful entrepreneurs start with a customer problem, and develop a solution, rather than the other way around. They build a startup culture of working for customers rather than pushing a product.

2. Develop market insights and a growth vision far beyond today. This is commonly called understanding the big picture, or the ability to see around corners. It is a mindset that customer needs are constantly changing, and the entrepreneur’s job is to anticipate and contribute to that change, rather than just react to it. Market change is opportunity.

3. Don’t try to solve all the world’s problems in one solution. The most successful customer solutions are sold as simple and focused, such as in Apple’s iPhone 5 TV ad, rather than a complex solution to a host of problems. A mindset of simplicity is what it takes to overcome a customer’s natural fear of change and new technology.

4. Foster leadership and accountability at all levels of the company. A company culture of initiative and collaboration breeds new strategies, processes and innovations that are driven by customer input, rather than by autocratic management from the top down. An entrepreneur mindset of integrity and honesty is required to make this happen.

5. Partnering with customers, rather than acting as a supplier. Founders with a growth mindset engage their customers and vendors in a win-win partnership. This increases customer loyalty, facilitates problem-solving and allows you to anticipate what customers need even before they know they need it.

6. Replace “push” marketing with value-added “pull” marketing. The basic objective of the pull-marketing mindset is to proactively demonstrate value and expertise, so that when potential customers are ready to purchase, your company relationship is “top of mind.” Traditional push marketing is losing effectiveness due to information overload.

7. Manage by metrics rather than by crisis and emotion. A success mindset starts with setting “stretch” objectives for yourself and your team, based on market needs, with the confidence that everyone grows from looking ahead and pushing the limits. Progress must be measured to allow for corrections and the opportunity to celebrate success.

Other indications of an entrepreneur with a growth mindset include a priority on coaching and employee growth, a willingness to accept negative feedback as an opportunity to learn and greater use of outside relationships to stay tuned into market and technology changes. They contribute time to outside causes, and see their company as part of the greater ecosystem.

All of these maxims expand an entrepreneur's image and the impact of his or her company on the marketplace, which in turn accelerates success. There is no room in business today for entrepreneurs who are worried about how smart they are, how they’ll look or what a mistake will mean. It’s time to step up the game by adopting a growth mindset. Anyone can.

Marty Zwilling

*** First published on Entrepreneur.com on 11/11/2015 ***

6 Key Principles Drive Startup Change Leaders Today

One of the business ironies that many entrepreneurs have learned the hard way in the past is that ideas which are truly disruptive carry the highest risk of failure, take the longest to gain traction, and thus are the least likely to get external funding. So some entrepreneurs stick with incremental solutions, avoiding more transformational or adaptive solutions implying disruptive change.

In the past, only a few entrepreneurs, like Steve Jobs and Bill Gates, maintained the passion, patience, and determination to accomplish disruptive change in the marketplace. Today with the growing number of disruptive technologies available, like cloud computing, wireless sensors, Big Data, and mobile devices, an incremental solutions mindset is no longer enough to win.

John Sculley, in his classic book “Moonshot!: Game-Changing Strategies to Build Billion-Dollar Businesses” argues that every entrepreneur now needs to think and act like one of those elite entrepreneurs who could go the extra mile and cause disruptive change. He coins the term “adaptive innovator” for the required mindset to characterize the required focus.

I strongly support the key principles he outlines as required to drive the mindset to make business leaders successful in this new world, both in established companies as well as startups. I have summarized or paraphrased the points here, to add my own focus and experience with new entrepreneurs and startups:

1. Be forever curious and an optimist. Adaptive innovator entrepreneurs are inspired by what’s possible, but focus on what’s probable. Great entrepreneurs aren’t just dreamers, they are doers. They wake up each day re-energized and optimistic, curious about the world around them, but always committed to getting real things done.

2. Unpack your best ideas. Unpacking an idea is about taking deep dives into it; twisting and turning it to see the concept in different ways. The deeper your dive into an idea, the more creative will be your insights. Ideas without context are just a commodity. Context comes from experience. Trying and failing is an experience building-block to get context.

3. Learn more every day in layers. Let every new bit of learning spark your curiosity to build a new layer of knowledge, which will then drive another layer of learning. Thinking visually can help. Listen for insights from others, and follow-up on every reference to spark new learning. It’s the reverse of peeling layers off an onion.

4. Never give up in finding a better way. Steve Jobs was never satisfied, and kept pushing himself and everyone around him. He kept raising the bar. At Apple, when a product actually shipped, against unimaginable timelines, even the most talented and skeptical on the team were amazed at and empowered by what they had accomplished.

5. Prepare incessantly and daily. The best athletes are naturally gifted, but even they train constantly and invest hours of practice every day. It’s no different for the best adaptive entrepreneurs. The most formidable tools of the adaptive innovator are smart personal productivity aids to help realize your dream. Learn to use these tools effectively.

6. Put the customer at the center of your business concept. As you consider a really transformative business concept, leverage your domain expertise and create a customer experience never realized before in that industry. Couple this with automation and technology to offer a disruptive solution. The customer, not the technology, is in control.

Sculley correlates many of these principles to the lessons he learned and insights from his failures at Apple, as well as his entrepreneurial successes before, during, and after Apple. We both agree that the marketplace and pace of technology have changed since the days that Jobs and Wozniak started Apple, so the entrepreneurial and investor mindset has to change as well.

If you are a new entrepreneur, you can still choose to “play it safe” with incremental innovation to improve your initial funding chances, but getting funding won’t be very satisfying if you can’t compete, and lose it all. It’s time to adopt the adaptive innovator entrepreneur mindset principles listed above, capitalize on the game-changing new technologies, and go for the gold.

Marty Zwilling

8 Initiatives That Can Supercharge Your Startup

How many times have you heard or suspected that a certain entrepreneur was just lucky? Without fully discounting that random good things sometimes happen, I’m a firm believer that great entrepreneurs make their own luck. The smart ones get some extra support early on critical decisions, and work a bit harder on issues that are common startup killers.

As a member of the advisory board for several startups and a mentor to other entrepreneurs, I’ve accumulated my own list of strategies and recommendations on where “going the extra mile” can save you from disaster or supercharge your startup for maximum growth under any circumstances. Here are a few:

1. Surround yourself with help rather than helpers. Helpers do what you tell them, but you need help from people smarter than you and can do what you need in areas outside your expertise. Helpers may be cheaper and quicker to find, but they cost you dearly in managing, coaching and error recovery. Team strength trumps team size every time.

2. Manage outgoing cash flow personally. In the heat of a thousand daily crises, it’s too easy for an entrepreneur to delegate expense management. The objective is not to delay payments, but to avoid the expense or capital payment altogether, by working in house, bartering for services or just doing without.

3. Cushion your investment requirements. Do your homework to realistically size development, marketing and staffing requirements, and then increase the number by 50 percent. Subtract the amount you are able to contribute to find the amount you will need from investors. Don’t wait for the first cash-flow crisis to start talking to investors.

4. Assume your initial strategy will be wrong. That means you need to maintain a mindset of constantly adapting to the realities you see. Those entrepreneurs who build a plan then put their head down and charge will find themselves with flat growth and no resources or energy to recover. Smart entrepreneurs always have a plan B.

5. Be stingy with your energy and time. Don’t be afraid to say “no” with a smile on your face. Saying yes to everyone will kill you. Keep some reserves for a focus on the urgent priorities of strategy, attracting customers and beating competitors, rather than the crisis of the moment. Learn how to delegate, seek outside help and balance your life.

6. Choose advisors as carefully as your executives. A good business advisor who is an expert in your domain and has built a startup like yours is often more valuable than any C-level executive. Resist the temptation to be defensive, and don’t assume you are somehow smarter than the competition. Actively listen to mentor and customer feedback.

7. Register intellectual property early. If you can’t find anything innovative in your user interface, process or algorithms, you need to think again and add something for a competitive barrier to entry and increased valuation. Any intellectual property will help, including trademarks, copyrights and domain names. No proprietary content is death.

8. Start marketing before you have a product to sell. With today’s social media and crowdfunding platforms, you can effectively test the waters before you build. If you see no traction, it may be time to pivot before you spend time and money on something that is not going to work. Great marketing is often more important than a great product.

No matter how great your idea, remember that building a successful business is all about speed. Make decisions, get things done and move forward. In most cases, any decision is better than no decision. Any startup that is not moving forward faster than competitors and the market is idling.

Above all, don’t count on luck to make your startup successful. There is no substitute for non-emotional realistic goals, productive relationships, good planning and hard work. Super-focused entrepreneurs build supercharged startups, which turn into successful businesses. How solid is your plan to get lucky?

Marty Zwilling

*** First published on Entrepreneur.com on 11/06/2015 ***

7 Indicators Of Business Traction You Should Celebrate

Every entrepreneur is quick to tell friends and potential investors about his or her vision of changing the world, about all the customers who have expressed an interest, and about all the other investors who are lining up to get a piece of the action. As an angel investor, I really prefer to hear evidence of credible traction today, not how great things could be in the future.

As a serious entrepreneur, you have more invested than any outsider, so you should be looking for the same evidence and not believing your own hype. Yet I hear the same story so often that I wonder if entrepreneurs really understand what they should be celebrating, and how to measure their progress against these expectations:

1. How many real customers do you have today? Beta customers, free signups, customers expressing interest and your family and friends don’t count. You should be counting only those people who fit your target customer demographic and paid full price for the product or service, without any prior connection to you or the business.

2. Is your customer-acquisition rate accelerating? Especially for free or freemium products, the rate of new signups is critical. Disregard that initial surge that might have come from early adopters or a huge initial marketing effort. If the ongoing acquisition rate is slow, and not trending upward, it may be time for a pivot or a reality check for your targets.

3. Are you penetrating or skimming your target segment? Some entrepreneurs are convinced that they have real traction when in fact they are only getting new customers from expansion to new geographies, segments or products. This is not a viable long-term strategy. Penetration levels in pilots below 1 percent may not indicate traction.

4. Is revenue per customer or transaction size increasing? Real traction is usually indicated if the average transaction size or rate per customer is increasing, and customer lifetime value (CLV) in increasing. This indicates real customer loyalty, rather than a predominance of test buys or high customer turnover. Margins should be increasing.

5. Is customer acquisition cost going down? As customer acceptance and awareness goes up, the cost and time to acquire new customers (CAC) will come down. The formula is a simple one: dividing the total costs associated with acquisition by total new customers, within a specific time period. Increasing costs means you are losing traction.

6. What is your acceptance by major consumer outlets? Featured visibility or signed contracts with name brand players and distributors, such as Home Depot or Amazon, almost always indicate traction. Each of these should be celebrated, but can also test your scalability due to high inventory requirements, slow payables and harsh terms.

7. Are you reviewed positively by online media and industry analysts? It’s never too early to build relationships with industry analysts, influential blogs and the media. In this arena, it’s possible to show real traction even before you ship a product through heightened anticipation and pre-orders.

In the final evaluation, traction is the key driver for your business valuation, and is needed to attract investors, partners or a public stock offering. Your challenge as an entrepreneur is to generate traction and at the same time choose the right metrics to quantify and sell that traction to your team and to outsiders. For all practical purposes, if you can’t or don’t measure it, it doesn’t exist.

Many entrepreneurs feel they need to spend more money to increase traction. In fact, the right solution in the right market will get traction at minimal cost, so that should be your target. Traction “purchased” by a huge marketing spend may indicate a business that is not sustainable in the long term. Smart investors and acquisition candidates heavily discount these efforts.

While the traction term may be overused by investors, it is a key concept that every entrepreneur should understand for assessing their own valuation and the level of uptake by customers that they are seeing on their business. Once a business is beyond the idea stage, it’s time to spend less time on vision, and more time on traction. What traction have you celebrated lately?

Marty Zwilling

*** First published on Entrepreneur.com on 11/04/2015 ***

The Top 4 Wrong Reasons to Seek Investors

A popular myth these days is that successful entrepreneurs must attract investors to get their businesses going, when the reality has been that more than 80 percent of new businesses are started and grown with no outside investment at all. In fact, there is plenty of evidence that too much money can undermine a startup more quickly than squeezing pennies.

The cost of entry to entrepreneurship is lower than ever, due to smartphone apps and powerful free tools to create websites and ecommerce offerings. Yet many entrepreneurs rely on expensive outside services and outside money, rather than do the networking for a co-founder or two who have the right skills to work for equity. Bootstrapping not only reduces cash needs, but increases commitment.

Many of the best entrepreneurs I see find themselves besieged by investors, and have actively turned them away, at least until they reach a point of valuation and scaling where they don’t have to give away a lion’s share of ownership and control. Here is a summary of the top four wrong reasons I see for looking for investors:

1. A desire to start with an impressive infrastructure. Some entrepreneurs think a new brand is all about having plush offices for displays and visitors and an upscale address. They forget that the product or service makes the brand, not the environment. With most solutions, infrastructure cost is overhead you don’t need.

2. You don’t want to risk your own money on development. The first question from most investors is the size of your own investment. If you won’t risk your own money, they question your commitment to the project. If you claim to have no financial resources or savings, investors might suspect your strategic planning ability or financial acumen.

3. The need to hire staff immediately. Creative and determined entrepreneurs always find ways to get people to work for equity, barter services or share later revenue rather than pay cash up front. Salaried staff will never have the commitment of co-founders that depend on the success of the startup.

4. A desire to roll out on a massive scale. Most startups need to pivot at least once, so you need a limited rollout territory with a minimum viable product to keep the costs of corrections in line. Hitting a broad market initially with multiple fully-featured products and a huge marketing campaign is a recipe for disaster that bootstrapped startups never try.

Indeed, there is a time and place in every new venture where even a bootstrapping entrepreneur should consider bringing on investors. These would include the following:

• You have a proven business model. Once you have a complete offering, with real revenue from real customers, it’s time to ramp up the business. You need extra cash for inventory, marketing and a real operations team, and investors can calculate the return and risk. Organic growth at this stage may be non-competitive.

• The solution requires expensive equipment or processes. If your medical solution requires long clinical trials or your product requires injection molding or special fabrication equipment, it’s time to look for an investor. Even here, an alternative solution is to partner with a related vendor or potential big customer for equity or royalty advances.

• You need investors' domain knowledge and management expertise. Famous investors bring value just for their credibility and name recognition in the marketplace. If one of the top venture-capital firms invests in your startup, your potential for success will be boosted by the association. Medical expert investors can be worth more than the money they invest.

Another good reason for skipping investors is to shorten the whole startup cycle. Most entrepreneurs don’t realize that finding an investor can add months to the process and require huge amounts of your time during the critical development and go-to-market period of your startup. In this rapidly changing marketplace, your opportunity can quickly evaporate or be grabbed by competitors.

Thus finding investors early is most often the hard way to get your startup off the ground quickly. Bootstrapping continues to be the preferred approach, giving you maximum ownership, control and agility. Isn’t that why you chose the entrepreneur lifestyle in the first place?

Marty Zwilling

*** First published on Entrepreneur.com on 10/30/2015 ***

4 Communication Hacks to Entice Customers

Entrepreneurship is more about building a business than inventing a product. It’s more about the quality of the execution, rather than the quality of the idea. Most importantly, it’s more about being a proactive leader who connects to customers and the team deeply, rather than a bright light that struggles to be seen amidst the glare of a million other bright lights.

Achim Nowak, noted business coach and author, in his classic book “Infectious: How to Connect Deeply and Unleash the Energetic Leader Within,” talks about how technology today allows entrepreneurs to communicate at a furious pace. They exchange more emails, texts, and tweets every day. Yet many know less and less about how to really connect, and get people to commit to their business or product.

I’ve seen this all too often in my own work with startups. More noise always means more hours a day working, but it doesn’t necessarily mean more business or more productive connections. Nowak talks convincingly about how successful entrepreneurs connect deeply with others at the highest of four levels, with less effort and more results:

1. Level one: Talk at the social level. Talk is the first of four levels of communication. It is the surface of many business experiences, and some people never get beyond this level of relationship. They don’t engage with a measure of skill and ease at this level, which inhibits any resonation at a deeper level. You need to move past this level quickly.

2. Level two: Connect through personal power. Entrepreneurs have personal knowledge and strengths that can get them past the social level in connection. These should include professional position, existing relationships, specific expertise, professional appearance, and passion for your cause or business. Use them effectively.

3. Level three: Shape the intent of the connection. Great connectors don’t just fall into conversations; they carefully shape them with conscious intent and tone. Action verbs are key to creating powerful intents, and they unleash forward-moving velocity. Don’t waste your precious time, or theirs, on long boring conversations at lower levels.

4. Level four: Energy conquers all. Energy and passion is the realm where all resonating connections truly unfold. If an entrepreneur doesn’t have it, or doesn’t show it, he or she will never be able to build deep connections and commitments from customers, partners, or team members. Everyone recognizes the visible and verbal queues of energy.

Entrepreneurs who understand how to connect with people on all four levels are able to shape conversations with effortless grace and create infectious connections that are the key to business success in this age of relationships.

For many business people, the hardest part of establishing relationships effectively is dumping old habits, and learning to ignore some old myths and common beliefs. Here are a few of the things you probably need to unlearn, according to Achim, for better business as well as social connections:

• You need to find common ground fast. Common ground is, in many ways, a wonderful thing, but is irrelevant when it is forced. Take your time to discover common ground, and relish the many things that you do not have in common.

• Avoid charged topics. In today’s media-saturated world, being comfortable discussing current and controversial topics is critical. In business, having the confidence to disagree, explore points of conflict, and learn new points of view builds real relationships.

• Don’t show the cracks. In reality, not taking any risks in showing the personal cracks guarantees that you will be viewed as a business robot that nobody really wants to work with. The power of a vulnerable moment is a powerful connection.

• Don’t get stuck with a loser. Some business people are so busy looking for the right connection, afraid of losers, that they are never really in any relationship. It is far more powerful to really connect with a few key people than to skim the surface with many.

• I will, I will, I will be perfect. The notion of perfection negates the wonders of all that is not perfect, such as the beauty of an awkward moment, the thrill of the unrehearsed encounter, and the delicious learning of solving a business problem.

Today, more than ever, people buy based on connections, and commit based on relationships, no matter how great the technology is behind your product. In addition, we are all human, and we need good relationships to be healthy and happy. Maybe it’s time to take a hard look at your people connections, and use these tips to kick your results up a notch.

Marty Zwilling

*** Published on IvyExec.com on 11/05/2015 ***

8 Reasons Young at Heart Entrepreneurs Lead the Way

Surviving as an entrepreneur requires unbridled passion, enthusiasm and a certain naiveté in the face of many unknowns. Young people are more accustomed to facing a new world each day, so they don’t worry about it, and usually actually relish the new adventure. Once the rest of us reach a certain age, we know too many things that can go wrong, so we avoid the path entirely.

Of course, entrepreneurs of any age can be young at heart and equally fearless, and still able to use their greater experience as an advantage. These are the people that every smart investor seeks, but rarely find. Thus every investor also looks hard at the young entrepreneurs who are striving to achieve things that no one else thought possible, and exhibit the following characteristics:

1. Ability to rebound quickly. This resilience to recover quickly from a setback, pivot and charge ahead again is invaluable for an entrepreneur. The startup path is strewn with aspiring entrepreneurs who give up at the first tough challenge, are quick to make excuses or burn themselves out in stubborn desperation on a broken objective.

2. See the best parts of life are still ahead. Young people who look forward with anticipation rather than dread make the best entrepreneurs. They see the potential for changing the world as a great experience and are determined to enjoy the journey as well as the destination. They have no legacies to protect or past accomplishments to live up to.

3. Can give total focus to the business. Entrepreneurship is best started before the financial burdens of family and keeping up with peer success weigh heavily. Young entrepreneurs don’t miss the responsibilities of success, as they have never been there. There are fewer distractions from prior commitments and relationships.

4. Have boundless optimism and energy. Young entrepreneurs are convinced that every day they are creating a business that will improve the future of our country, communities and families. They are confident that their power to focus 24 hours a day will overcome technological and political barriers, and surpass the old guard of existing competitors.

5. Willing to think differently. As people age, they tend to get stuck in traditional modes of operation and thinking. It’s becomes harder to think creatively. To build a successful new startup, with new challenges and new competitors every day, it’s important to be the model for your team of how to think outside the box.

6. Live and work unconventionally. Invention and creativity cannot be scheduled. The realities of new product development may require living on ramen noodles and sleeping on a cot in the back room for a week. Young entrepreneurs are not yet ingrained with the corporate habits of long meetings, regular work hours and free weekends.

7. Enjoy multi-cultural relationships. In this age of the Internet, the world is a smaller place, so young people have grown up aware of the diversity around them. They have learned from and interacted with multiple cultures online through social media and at school. Diversity is a key to innovation and maximizing new business opportunities.

8. Satisfaction is not connected to money. Young idealism associates happiness with a lifestyle, rather than a reward. The entrepreneur lifestyle has the lure of future money, but more immediate satisfaction in the daily learning, new relationships and stature in an exciting community of peers. Satisfaction is making your own decisions and mistakes.

None of these are a total substitute for street smarts and book smarts. Investors look for aspiring entrepreneurs, young or young at heart, who can sell themselves well, have good negotiating skills, are problem-solvers and have a broad educational background. Don’t forget to highlight the experience you have accumulated in all of life’s domains.

If you are an aspiring entrepreneur with the perspectives outlined above, the future is bright. It’s time to enjoy your advantage and step out confidently to change the world. The rest of us are waiting expectantly to see what you can do. Don’t disappoint us.

Marty Zwilling

*** First published on Entrepreneur.com on 10/28/2015 ***

8 Problem-Solving Practices Give Startups Success

If you find problem-solving to be energizing, you could be the next great entrepreneur. On the other hand, if facing unforeseen problems annoys you and causes ongoing stress, don’t quit your day job. Creating an innovative new business is guaranteed to test your skills, patience and determination, and you need to derive satisfaction from the journey, as well as the destination.

Contrary to a popular myth, problem-solving is a talent that can be developed. To do it well requires a focus on several key activities and practices, including the following:

1. Maintain a positive attitude, since startup problems are normal. If you feel angry or exhibit a negative attitude to the team about problems, you will jeopardize the potential success of your startup. Successful problem-solving is often more a state of mind than any particular skill or process.

2. Remember that learning requires listening more than talking. The first challenge for many aspiring entrepreneurs is to put aside their passionate advocacy long enough to acknowledge an existing problem. That means practicing non-defensive listening to key advisors, team members and customers. You can’t solve a problem if you don’t see one.

3. Openly communicate about each problem and commit to fix it. Entrepreneurs who solve problems well don’t hide them from their teams or make excuses and publicly take responsibility for a timely resolution. It’s smart to outline initial actions, but not so smart to promise any specific solution until you have had time to investigate the source.

4. Don’t hesitate to call in an experienced advisor or mentor to help. Very few startup problems are unique. An experienced advisor, board member or investor has seen them all. You can save yourself countless hours of frustration and failed efforts by swallowing your pride, asking for help and following expert suggestions.

5. Follow a disciplined analysis before jumping to conclusions. Make sure you have all the facts, as well as insights from relevant sources and outside experts. Don’t let your passions and emotions drive you to a quick judgment, and remember that there are always at least two sides to every question. Practice active listening to get all input.

6. Track every problem. Problems become crises when affected people hear nothing or sense that no attention is being paid to the issue. Thus a visible system is required for reporting to all relevant parties, which also keeps your focus on the problem until it is resolved.

7. Set deadlines and measure and pay for performance. Remember the old adage that you get what you pay for. If everyone is incented to find new customers, there will be little focus on resolving problems with current ones. Make sure there are metrics for problem counts, resolution time and revenue impact.

8. Analyze issues to prevent similar problems. Usually it pays to dig deeper on lost sales opportunities and negative customer reviews to resolve a deep-seated product deficiency or delivery channel issue. Make sure processes are updated, training is improved or priorities are communicated as required.

The best entrepreneurs understand that solving problems is what a business is all about. Of course, problem-solving is required for scaling and continued business growth. It never ends.

Thus every aspiring entrepreneur needs to develop a problem-solving mindset, and learn to enjoy both the problem and the solution. That mindset will help you develop and survive as a person as well, and build better organizations and communities. Isn’t it time you started celebrating problems rather than complaining about them?

Marty Zwilling

*** First published on Entrepreneur.com on 10/23/2015 ***