8 Essential Attributes of a Successful Mindset

It’s easy to declare yourself an entrepreneur, but it’s not so easy to convince investors, your team and customers that you are that special one to fund and follow. If you don’t consistently display the right entrepreneur mindset traits, people won’t follow and business success will likely elude you. And don’t even think you can fake the important attributes once the going gets tough.

Business success begins in the mind of the startup founder and the team. A winning startup is built by an entrepreneur as an embodiment of who you really are rather than an artificial façade built on the myths around Steve Jobs and Mark Zuckerberg. As a startup investor and mentor, I look beyond the façade to find these eight keys traits in the mindset of every entrepreneur.

1. Vision of providing real customer and social value. I still see too many startups driven by founders who have a solution looking for a problem. It’s not enough to invent a new technology because you can, want to be your own boss or see an opportunity to get rich, unless these are preceded by an innovative vision of solving some real-world problem.
   
   
2. Confidence substantiated by desire, preparation and experience. A strong success motivation is a good starting point, but I want to see evidence of an ability to execute. Everyone knows of a dreamer who can display passion but doesn’t have the mindset of discipline and skill building to traverse the long journey from idea to business success.
   
   
3. Sets realistic goals with milestones and metrics to gauge progress. Building a new business is essentially turning a vision into a financially self-sustaining operation that provides satisfaction and value to both the customer and the entrepreneur. That requires quantifiable objectives with measurements to assure forward progress and completion.
   
   
4. Willing to endure personal sacrifice to make it happen. Aspiring entrepreneurs with a success mindset are willing to commit personal funds and time and give up other enjoyable activities in the interest of assuring the completion and success of the new venture. Investors call this a willingness to put “skin in the game," and they won’t invest without it.
   
   
5. Effectively builds relationships inside and outside the company. No entrepreneur can succeed as the Lone Ranger. Relationships with others are required to build a team, nurture customers and complement individual strengths. The best relationships are based on personal integrity, good communication and giving more than receiving.
   
   
6. Demonstrates the ability and determination to overcome obstacles. People see this persistence and problem solving ability as a sign of commitment and as an indicator of long-term success. The best entrepreneurs recognize that a new business is a journey, not a destination, and they get satisfaction from conquering challenges along the way.
   
   
7. Accepts full responsibility and accountability. Too many entrepreneurs are quick to make excuses, look for shortcuts, and refuse to acknowledge the many risks. As a startup founder, you need to realize that the “buck stops with you,” even if the economy falters, the market changes or a major competitor appears at the worst possible moment.
   
   
8. Clearly enjoys the work, the challenges and the people. Entrepreneurs who are seen to be rarely having fun are rarely successful. The best are clearly comfortable with their chosen business domain, the team around them and their customers. They also find time to balance their work against family expectations and outside relaxation activities.
   

Most experts agree that we all possess the right traits at some level, but a few may be buried deep in the subconscious, or blocked by insecurity, negative thoughts and lack of confidence. The first step in unblocking and highlighting these attributes is to understand what people are looking for as attributes that lead to business success.

Successful entrepreneurs possess many of the desired attributes, developed to phenomenal levels -- far beyond those of the average person. So before you decide to start a new business, take a hard look at your own mindset. You may profit most from surfacing and strengthening your winning mindset first before starting on the business.

Marty Zwilling

*** First published on Entrepreneur.com on 01/20/2016 ***

Getting A Software Patent Is Valuable But Frustrating

For a software startup, a patent can be the intellectual property providing the key competitive advantage, or it can be an expensive non-defensible bureaucratic nightmare -- or both. I still generally advise software startups to file a patent as a barrier to entry from competitors and to increase their valuation by investors, but every entrepreneur needs to understand the tradeoffs.

Most experts agree that the software patent process is in disarray, and you can find a long Wikipedia article on the debate, as well as many strong views from key industry players. Some argue to simply eliminate software patents, while others put their hopes in U.S. patent reform legislation and an international Patent Cooperation Treaty to mitigate the challenges.

1. Every business is global, but patent rules differ around the world. There is no such thing as a world-wide patent. There are at least five major international jurisdictions, and the protection you receive in each depends on meeting the unique required rules and on whether that jurisdiction has any meaningful enforcement mechanism or intent.

2. The patent application and approval process is expensive and slow. Even if you start with the U.S. and the European Union to cover the largest opportunities, startups who can’t do the work themselves should count on spending $10,000 per patent per area and up to four years for final approval. That’s more than a lifetime in today’s technology.

3. Patent offices can’t keep up with software technology. It’s impossible for any patent jurisdiction to keep staff up to speed and qualified to validate significant innovations in a complex and rapidly changing technology, where trivial innovations are not obvious. The standard issue patent duration is 20 years, which is far too long in the software business.

4. The patent application process has become a legal negotiation. The reason that lawyers get large fees for patent filings is that legal negotiation and strategy have become more important than technical merit. Patent lawyers know how to frame claims broadly, with legal wording, to negotiate the success of some at the expense of others.

5. Patents can become a commodity for buying and selling. Some companies called patent trolls purchase or license software patents to build a portfolio that they can sell to the highest bidder or use to hold startups hostage due to limited resources through royalties and litigation. Rather than protection, this can be seen as a tax on innovation.

6. Patents are counter to open source initiatives and free software. The free and growing open source software community, which covers most mobile and web apps, oppose software patents as impeding or prohibiting the distribution of free software. By definition, patents limit the commercialization rate and range for a new innovation.

7. All patents require public disclosure. This is positive, in educating the public by making them aware of an unknown or non-obvious software invention. On the other hand, it can be negative to an entrepreneur inventor who needs more time to capitalize on a competitive advantage or wants to benefit from licensing or sale of the patent.

8. Unlike hardware, software is already covered by copyright. Copyright intellectual property protection is already given automatically and immediately without the need to register the copyright with a government. Copyright, on the other hand, only protects expression which can be reworked substantially to hide theft without changing function.

In any case, I believe maximum protection for your intellectual property should always be sought by entrepreneurs to increase their sustainable competitive advantage and increase their valuation to investors and potential acquirers.

The smart ones continue to judiciously apply for patents but only in the jurisdictions where the opportunity is greatest, using their own resources to keep the costs down and limiting their claims to only the most defensible and valuable. It pays to understand the tradeoffs, but it doesn’t pay to let an emotional debate stand in the way of your business success.

Marty Zwilling

*** First published on Entrepreneur.com on 01/15/2016 ***

8 Initiatives To Make Your Customers Loyal Advocates

If you can’t provide a memorable customer experience, your startup won’t survive very long these days. According to many observers, we can thank or blame technology for these higher expectations, providing information at the speed of light, leading everyone to expect more. You now need more than loyalty from your customers -- they need to be your best advocates.

In case you don’t understand the urgency, just be aware that according to a recent Forrester report, nearly 95 percent of your competitors are saying that providing a good customer experience is their top strategic priority. The bar is being raised, so every entrepreneur needs new initiatives just to stay in the ballgame. Here are some key ideas to get you started:

1. It all starts with the right people on your team. Make sure you only hire top-notch employees who can relate to the demographics of your customers, and make sure they share your vision and expectations. The days of pushing new and marginal performers into customer service are gone. Every job on your team drives your customer experience.
   
   
2. Personally listen and interact with customers regularly. Some entrepreneurs are so focused on their technology, they assume their customers think the same way. If you and key members of your team haven’t talked to a real customer this month, you have missed some evolving needs and shifting expectations. Lost customers provide the best input.
   
   
3. Promote by example a superior customer experience mindset. A mission of superior customer service is more than words in the board room or words in front of customers. It must be written down, with measurable team objectives, validated by metrics and compared against competition. Most importantly, your actions speak louder than words.
   
   
4. Be a visible role model for customer urgency versus emergency. Many startup founders are great at putting out fires at the expense of urgent customer priorities. Customer-centric leaders display a calm but visible urgency for improving the customer experience during all stages of business evolution and growth. Culture growth follows the leader.
   
   
5. Aim your customer experience at their hearts. Emotional connections are often more valuable than money in building loyalty, differentiation and an exceptional customer experience. Move from customer friendliness to customer charisma. A business with charisma gives the customer something very special, and they want to tell others about it.
   
   
6. Make your customer experience fun for all constituents. A business that is not employee-friendly will not be customer-friendly. All processes need regular updates, so a non-punitive feedback mechanism is important. One approach is to give frequent rewards to your team and special discounts and exclusive promotions to your best customers.
   
   
7. Provide coaching and mentoring as well as training. Formal training for the team is just the beginning, not the end. Customer-centric founders have found that interactive coaching and mentoring by experienced peers is more effective and positive in keeping everyone up to speed on trends, competition, customer demands and technology.
   
   
8. Give team members and customers incentives to improve the experience. Engage team members in creating the experience as well as fixing problems. Encourage and motivate them with the freedom to do their jobs by providing bonuses and giving credit along the way for every contribution. Engage your best customers in the process as well.
   

Maybe you still remember the days when competitive advantage was all about economies of scale, advertising power and service versus price. Today, with instant low price search, ordering via smart phones and unfiltered online reviews everywhere, the advantage has shifted to companies who can make the whole customer experience positive.

If you wait for poor experience reports before you start, it’s probably too late to recover.

Marty Zwilling

*** First published on Entrepreneur.com on 01/14/2016 ***

10 Proactive Ways to Build Engagement From Your Team

Every business wishes that all their employees were star performers, but wishing doesn’t make it happen. Some coaches and leaders seem to have the magic for bringing out the best in everyone. Research has shown that it isn’t magic, but a focus on engaging people in their work, so that their work triggers the same emotions as play does for you.

Some of you cynics may think that such a thing isn’t possible, but Shawn Kent Hayashi, who has worked for years with entrepreneurs as well as Fortune 500 giants, argues otherwise. In her classic book “Conversations for Creating Star Performers,” she offers ten strategies I believe will leverage work activities into game-changing moments for team members and your company:

1. Build awareness of expectations. Conversations about what effective performance looks and sounds like are an obvious strategy, but too often found missing. No team member knows what they don’t know, so regular communication from leaders is key.
   
   
2. Understand individual motivators. Star performers are always people who have aligned their work to their values so that they are passionate about what they are doing, and the work will feel like play. Great leaders align the values of work to their team.
   
   
3. Capitalize on the strengths of each team member. When hiring or inheriting new team members, it’s important to discuss their strengths, development areas, and blind spots early. Always try to align people’s roles to their natural talents and interests.
   
   
4. Help team members develop a plan for their future. Take the time to develop individualized development plans for every team member, as a joint effort. Focus should be on current strengths, blind spots, where they want to go, and how to get there.
   
   
5. Make new skill development an ongoing priority.  Survival in today’s fast-moving business world requires continuous learning and broadening of your skills. You will need to be inspiring and connect the dots to show the benefits of new abilities.
   
   
6. Get people unstuck and back on track. People don’t get back on track unless they know there is a problem. It’s up to you to give the tough feedback, without emotion, while keeping it in context. Then, with clarity, provide the next steps to get back on track.
   
   
7. Support team members in being accountable.  Communicate the measurable results expected, and get a commitment for specific action steps and timeframes. Remember that you must role model and reward accountability to get it from your team.
   
   
8. Provide real feedback on their performance. Performance feedback works and is appreciated when it is done often, and in the context of specific accountable actions. Once per year discussions, only when there is a problem, don’t work.
   
   
9. Celebrate successes and even small steps. Always affirm and reward team members often, and criticize infrequently. Experts say it takes five positive interactions to dilute one negative, if we want the relationship to thrive. Create a positive emotional wake.
   
   
10. Develop future leaders early. Successful competition in the marketplace is correlated to a company’s ability to attract, retain, and develop talent. Develop a deep talent pool and it’s never too early for succession planning. This forces you to think about how team members can grow to satisfy their long-term objectives and yours.
    

A strong and positive business culture is instrumental in bringing out and retaining stars. Top executives and leaders set the culture, but every manager’s actions and interactions with top performers and every team member solidify and drive that culture.

During the recession a few years ago, it was easy to conclude that you have other priorities, and team members would perform at their best to keep their jobs. But keeping a job and top performance at the job are two different things. Now, as business confidence builds, it’s time to double-check how you’re treating all your potential star performers. They will love it or leave it.

Marty Zwilling

*** Published on IvyExec.com on 01/20/2016 ***

7 Ways Due Diligence Helps Before Final Commitment

Most entrepreneurs work long and hard to get a handshake agreement from an investor, and then tend to relax and wait for the check to clear. What they don’t realize is that about half the investment deals fail to close at this stage, including mergers and acquisitions, during the due-diligence process. The same is true of Dragon’s Den and Shark Tank investments you see on TV.

Remember that investors at this stage have heard primarily from the founder, and only reviewed written business plans and collateral. Due diligence is going the next step, to meet and interview all key members of the team, visit the business location and follow-up with early customers and advisors. Everyone expects a few flaws, but serious undisclosed issues will likely kill the deal.

For entrepreneurs, due diligence may seem like a mysterious process, with secret formulas and tricky questions, to give investors leverage. In fact, it’s really just an in-depth common-sense analysis of key success parameters of any startup to assess the risk before final commitment. Here are seven key elements of the business that are typically included in the evaluation.

1. Team synergies, commitment and depth. A dysfunctional team will jeopardize even the best of plans. A smart investor will normally interview all key team members and look for evidence of commitment to the same goals, depth of skills and experience and respect for all constituents. Undisclosed skill gaps or agendas can stall your investment.

2. Customer and market interaction. Investors will test your relationship with real customers, based on the data you provide. Existing and potential customers echoing your passion can be your best support, while no customer interaction or interest can likewise be a huge negative. It’s smart to contact and prep all customers before investors call.

3. Solution readiness and quality. This element is usually called technical due diligence and typically consists of a day with your engineering and marketing team led by internal team leaders. This is really an assessment of the team and internal processes as well as the product. Related discussions include intellectual property status and plans.

4. Competitive positioning and barriers to entry. For this element, investors normally look for an outside expert to validate your analysis of competitors and positioning. Again, you need to head off any surprises by making sure you have mentioned all key competitors and thoroughly prepped the investor team on your strategy and direction.

5. Business structure and financial risks. Be prepared to present a detailed cap table, identifying by percentage all owners, investors and debtors. Any unusual financial risks, including contingencies, large contracts, recent bankruptcies or credit denials on the part of any owners must be disclosed. The business structure should be clear and simple.

6. Track record of setting and meeting milestones. Investors have found that results to-date in a startup are very indicative of future results. Entrepreneurs who set milestones for their team, and consistently meet or exceed the commitments are much more likely to do the same with invested funds. No milestones set or most not met is a huge red flag.

7. Skeletons in the closet. No investor likes to be surprised in their due diligence by non-disclosed individual or startup tax problems, regulatory issues or negative publicity, either currently or in the last five years. Your best defense to any negative is early full disclosure, followed by a credible explanation, no excuses and many positives since.

Based on my own experience as an angel investor, I’m convinced that surprises rarely are any intent by the entrepreneur to defraud or even mislead potential investors. More often, it’s simply an innocent lack of disclosure of current relationship and operational issues which could raise investor qualms about the health of the business, despite a huge opportunity and a great product.

The best entrepreneur strategy for due diligence is to be as open and transparent as possible. Current issues and shortcomings should be disclosed in the most positive way to investors, before issues are exposed as surprises during the diligence process. Even one negative surprise implies others waiting to be found and will kill your integrity as well as sour the deal.

It’s always fair to ask the comparable questions of an investor to avoid surprises in that direction. Taking on an investor for a startup is a long-term partnership or marriage, so both sides need the same level of trust and commitment. It’s nice to start with a little mystery in a relationship, but neither side likes surprises during the honeymoon or later.

Marty Zwilling

*** First published on Entrepreneur.com on 01/08/2016 ***

Is Your Startup Growing Too Quickly For Cash Flow?

In the new business world, many entrepreneurs are so excited with large initial orders that they don’t anticipate the cash flow challenges that can quickly kill their startup. According to the D&B Small Business website, 90% of small business failures are caused by poor cash flow. Cash is king when it comes to the financial management of a growing company, so diligence is required.

Good cash flow management, in simple terms, means understanding every inflow and outflow of cash, and never delegating this function. In principle, you must delay every outlay of cash as long as possible, while incenting everyone who owes you money to pay it as rapidly as possible. Surprises are unanticipated lags between these two events, as well as unplanned cash outlays.

Over the years, I have identified ten key principles and disciplines that every entrepreneur must understand and practice to minimize surprises and failures in this area:

1. Failure to document cash flow projections is a disaster. No matter how small your company is today, there are more moving financial parts than you can manage dynamically in your head. Of course, you can’t predict everything, but writing down what you know will identify existing problems sooner, and allow other team members to help.
   
   
2. You can be on budget, and still run out of cash. In the real world, spending seems to happen fast, and money coming in happens slowly. Thus your monthly budget may balance, but if planned income comes later than planned expenses, you have a short-term cash flow surprise shortage. Neither banks nor investors will help you on this one.
   
   
3. Your startup may be profitable, but broke. Profits don’t necessarily translate into cash. You can make profits without making any money, since the first priority of most startups is to reinvest everything back into the business for growth. There are lots of accounting tricks to make you profitable, but it takes real cash to pay the bills.
   
   
4. Seasonal sales fluctuations eat cash. Fluctuating sales means more inventory is required to cover the ups and downs. Every dollar in inventory is a dollar less in cash available, maybe even two dollars less if your gross margin is 50%. If you try to vary the number of employees to match, that costs even more cash for hiring, firing, and layoffs.
   
   
5. Unanticipated expenses and emergencies drain cash. The chance of unanticipated expenses, in my experience, is close to 100%. It could be a natural disaster, like a flood or wind storm, or loss of key personnel, equipment failure, or a major customer complaint on the Internet. Every startup has an unplanned pivot, and these all drain cash.
   
   
6. New businesses don’t get “normal” terms. It’s easy to forget that your new office rent asks for first, last, and security; new utilities require an escrow account; and new vendors want immediate payment for the first couple of months, before they offer the normal net 30 terms. On the other side, your new customers expect a free trial period.
   
   
7. Sales volumes are still ramping up while marketing expenses are at max. In the early days of a new business, and every time you make changes, sales volumes slip just when you need them most to cover the extra marketing expenses and new infrastructure. Your old “cash cows” are dying, while the new ones are still being fed heavily.
   
   
8. Even good customers don’t always pay on time. The Kauffman Foundation reports that late payments are among the biggest challenges facing startups. According to FundBox, 64 percent of small businesses wait well beyond their contracted terms for payments. If they are dealing with distributors, that wait can easily be four or five months. One way to defer some of these costs, as outlined by ProOpinion, is to provide alternative compensation methods (equity or compensation based) to your new employees.
   
   
9. Higher than anticipated growth has put you in cash flow hell. The faster you grow, the more cash you need, to build product, facilities, staff, and service. These are “up front” costs that can’t wait the four or five months before the sales and revenue catch up. If you can’t deliver to match the growth, your house of cards comes tumbling down.
   
   
10. Bankers and investors hate negative surprises. If your execution doesn’t include the expected cash flow management, investments can get withheld, and executives lose their jobs. I recommend that you buffer your initial requests for funding by 25%, and then add a line of credit, to cover contingencies and minimize the chance for negative surprises.
    

Then there are the founders that overreact. They pay just the smallest bills and let the rest slide. Or they stretch out all payments until vendors complain, reduce your discount, or eliminate your credit. If payroll is late, morale and confidence go down, the good people leave, and your startup spirals into the ground. For all these reasons, it’s worth your focus to temper your growth and prevent cash flow surprises.

Marty Zwilling

 Disclosure: This blog entry was sponsored by ProOpinion and I received compensation for my time, but the views expressed here are solely mine.

When Will Siri Make That Dinner Reservation for You?

Every time I use Apple Siri or Microsoft Cortana, I’m frustrated by how little these services provide as the personal assistants they claim to be. Answering simple information questions is a start, but I expect a personal assistant to make an airline reservation, book a table at my favorite restaurant or even order a gift online that my wife would like. Why are these things so difficult?

This idea was first formalized about 15 years ago by Tim Berners-Lee, the man who (really) invented the World Wide Web. He called his dream the Semantic Web (or Web 3.0), meaning that it could learn and interpret the user context just as human personal assistants do. Natural language processing tools, such as Siri, need these capabilities to make them viable assistants.

Of course, you have to trust a personal assistant not to share user context and personal data with the wrong people. Yet I don’t see many users worrying about the wrong people accessing their smartphone personal text messages online or someone stealing their dinner reservation.

Certainly there is a risk, and everyone needs to make their own risk versus reward tradeoffs.In trying to understand why this huge entrepreneurial opportunity seems to be technically challenging or difficult to sell in the market, I have assembled the following list of five key requirements that are relevant to the realm of online virtual personal assistants:

1. Easy and effective communication ability. In order to carry out requested tasks, a personal assistant has to first understand what is requested, both written and verbal, in the context and language of the requestor. According to a recent article, current tools still miss around 8 percent of spoken words and do very poorly on the context.
   
   
2. Display an engaging and intelligent personality. All personal assistants realize that requestors have different moods and personalities, so they need to be respectful, courteous and sometimes assertive. I still find the current tools to be unintelligent, flat, boring and way behind the technology and marketing curve of what is possible today.
   
   
3. Environment and context savvy. A good assistant constantly improves their knowledge of the world around the requestor, so they know quickly what is really being requested and what the acceptable outcomes might be in the requestor context. This is where all current tools fail -- by not honing a local database to learn from and frame each request.
   
   
4. High value-added skills and productivity. Today’s personal assistants seem focused on expediting the Internet search process and simplifying text-intensive device control commands on your smartphone or tablet. The real value from personal assistants comes from being able to complete outside tasks like ordering products or making reservations.
   
   
5. Provide convincing integrity, security and privacy. This seems to be a big hurdle in user acceptance, but I haven’t yet heard of Siri or Cortana sharing any personal search requests with outsiders. I believe the standards work now implemented for the exchange and protection of medical and personal health information should mitigate this concern.
   

According to Gartner, less than 40 percent of American consumers today use the free personal assistant services on their smartphones on a regular basis, and the best projections are that this could double by the end of 2016. To me, that suggests a major opportunity for additional products, free and fee, incorporating a new level of focus on the principles outlined above.

I do see a few startups edging into this space, including Assistant, HER and Alfred. To date, most of these are highly focused on one task, like trip planning or maintaining your calendar. Thus you would need dozens of these assistants, all with their own personality and limitations, to keep up with one human personal assistant. It’s no wonder that customers see no solution yet.

Hopefully you can now imagine all the fertile ground this opens for aspiring entrepreneurs. If you are looking for that magic million dollar idea, it may be time to build a plan around this one. But don’t wait too long, because the din for a virtual personal assistant on the Web and on your device is getting louder and louder. Catch the wave soon, or get drowned when it hits!

Marty Zwilling

*** First published on Entrepreneur.com on 01/06/2016 ***

9 Actions Make You A Leader People Want to Follow

Startups provide business leadership with new products, services, and new revenue models, but leadership startups can only be built by entrepreneurs who are leaders themselves, and incent leadership in the team around them. Leadership which incents other people to be leaders is called “contagious leadership.”

John Hersey, in his classic book “Creating Contagious Leadership,” describes nine required skills or habits for inspiring a contagious leadership culture within a startup, as well as within other types of businesses, or even life in general. He and I believe that leaders have to make the overt decision to acquire these skills, and don’t have to be born or trained into them:

1. Spotlight leadership acts of others. This is the habit of focusing attention, directly or indirectly, on leadership efforts and accomplishments of another team member or group. For managers and non-contagious leaders (contained leaders), the spotlight seems to always be on themselves.
   
   
2. Cultivate positive character qualities. Contagious leaders have a habit of highlighting effective choices about “how” things were accomplished, and not just “what” was accomplished. It’s not just about the numbers, but how character played a role, and who made the right decisions along the way.
   
   
3. Provide in-depth recognition. Don’t just articulate specific actions that deserve praise. Contagious leaders tell Harry why and how he did a good job, whereas managers and contained leaders just say “Good job, Harry.”
   
   
4. Emphasize strengths, leading to greatness. Conventional managers focus on people’s shortcomings and point them out as often as possible. Contagious leaders nurture the habit of recognizing others strengths, and help them extrapolate these to greatness.
   
   
5. Communicate often and effectively. The habit of constantly exchanging information, thoughts and feelings openly and honestly builds morale, enhances productivity, and fosters contagious leadership. Too many managers “tell ‘em only what they need to know and not a moment before they need to know it.”
   
   
6. Provide an unobstructed vision. Contagious leaders foster the habit of focusing actions on a clear and sensory-rich picture of the desired result. Managers tend to have only a vague picture of where the company is going, so they are unable to share a coherent vision with others.
   
   
7. Really touch people’s lives. Nurture the habit of truly knowing your most valuable asset – people. Managers avoid any real, deep involvement. Most don’t know if the people reporting to them are married or single, or anything about them. Contagious leaders know their people personally and do things for them, not because it’s good for business, but because they truly care.
   
   
8. Passionately support your people. Managers are always controlled, rather than being fully committed and willing to take a risk. Contagious leaders are quick to support their team, and always stick up for them, even in the face of adversity.
   
   
9. Mentor a permission mentality. Contagious leaders mentor their team to always assume they have permission to do things their way. They try to extend the concept of contagious leadership, rather than constrain it. Managers want a staff of imitators and followers. They want people to do what they want, and to do it their way.
   

In summary, leaders are not the same as managers. Managers focus on the process, while leaders focus on the people. Leaders influence people to make things happen, rather than tell people to make things happen. Contagious leaders create a culture that inspires everyone to be fully engaged in the startup. The result is that your whole startup will be a leader.

Marty Zwilling

*** Published on IvyExec.com on 01/12/2016 ***

6 Prerequisites For Turning Your Passion Into Profits

I meet many entrepreneurs with a real passion for their new idea, but unfortunately they don’t all realize that passion is necessary but not sufficient fuel to turn their idea into a successful business. The result is that far too few really great innovations ever get implemented -- or last more than a moment in the marketplace.

First of all, passion needs to be surrounded by a host of other personal attributes necessary to survive the rigors of the long, hard journey to success. These include confidence, commitment and a determination to succeed. In addition, there is a key set of execution principles that consistently separate the wannabe entrepreneurs from the Mark Zuckerbergs of the world.

1. Reality check your potential for building a business. Some people are passionate inventors or idea generators but really have no interest, skills or money for a business. Take an honest look at your motivation, resources and relationships before initiating a startup. The best use of passion may be finding someone else to build the business.
   
   
2. Seek evidence of market opportunity to balance your passion. Just because you believe everyone needs what you have doesn’t mean it’s true. These days, there are over 150 credible market-research companies online sizing opportunities, including Nielsen and Gartner. If none of them mention your idea, it may not be a business.
   
   
3. Double check the arithmetic on your business model. Put aside the rose-colored glasses of your passion, and ask a financial expert to validate the total costs required to build the business as well as realistic sales volumes and growth. It helps to document a total business plan rather than rely on your total recollection of all essential elements.
   
   
4. Buffer your resource estimates by at least 20 percent. No amount of passion and startup planning will make everything work exactly right the first time. Assume you will need multiple iterations and multiple pivots costing more money and time than you anticipated. More passion may mean more opportunity, but it also means more risk.
   
   
5. Interact with real customers to validate passion in their feedback. Use social media and live customers to eliminate any reality distortion in your internal perception of value. Develop marketing content and communicate with trusted advisors and employees to make sure the right message can be delivered with clarity and integrity.
   
   
6. Plan for an extended effort, continued learning and personal balance. A business is a journey -- not a quick sprint. Don’t set up such a frenzied schedule that you will burn out after a few weeks or even a few months. The average overnight success for a startup takes six years, say marketing expert Seth Godin. And he is an optimist.
   

According to a recent analysis, entrepreneurs around the world have visions for over 300 million companies per year, but only a third ever get started. Other U.S. Labor Statistics data suggests that half of the ones actually started are gone in five years. Just imagine the potential impact of millions of unrealized innovations -- if only these execution principles were diligently followed.

Of course, an even more important driver of passion than success is happiness and satisfaction with the lifestyle. Despite the failure of many entrepreneur initiatives, other data continues to indicate that entrepreneurs as a whole are the happiest and most satisfied business people on the planet -- well ahead of corporate professionals who make more money and have bigger titles.

Thus, passion is a good thing, and it can be your competitive advantage, but only if you don’t let it lead to a self-reinforcing spiral of choices and actions that result in critical business miscalculations and missteps. Don’t wait until it’s too late to recover -- or realize after the fact that you didn’t even see it coming.

Marty Zwilling

*** First published on Entrepreneur.com on 01/01/2016 ***

7 Skills to Thrive, Not Just Survive, in Any Career

Career growth in today’s fast moving environment requires all the skills that we normally ascribe only to entrepreneurs -- ability to adapt, change, be innovative, resilient and stay in constant learning mode. The days are gone when you were able to focus on a specific skill set in school and hone that expertise into a satisfying career for the rest of your working life.

Business career growth and success now requires thinking like an independent entrepreneur, even if you have chosen to climb the corporate ladder. Here is my list of critical skills that are second-nature to every successful entrepreneur and I believe are equally valuable to corporate professionals and executives today.

1. Accept change as the only constant in business. Conforming to the way things have always been done in a company is a career killer as well as a company killer. For entrepreneurs, change is the door to opportunity, so be proactive and make it happen. Assume your role needs to change every couple of years, or you are falling behind.
   
   
2. Develop and continually refine your competitive advantage. Entrepreneurs know that no competitive advantage means failure. Corporate professionals don’t realize that peers are their career competitors, so they get annoyed if another one is treated as ahead of the pack. Always be working to learn and demonstrate a clear skill lead in your domain.
   
   
3. Demonstrate an ongoing sense of urgency on every task. It’s easy for professionals in a large organization to become complacent. Entrepreneurs understand that every aspect of customer satisfaction and business requires a sense of urgency to win. Change in a corporate environment can also happen quickly, so always keep a sense of urgency.
   
   
4. Don’t be hesitant to take calculated risks. In the world of an entrepreneur, taking no risk is the riskiest thing you can do. Too many corporate professionals believe that taking no risk is the smartest thing to do. No risk means no gain in today’s world. Calculated risks are those with a low downside potential, but offer a large opportunity on the upside.
   
   
5. Proactively seek out new career opportunities. Many professionals feel that if they do a good job, someone above them will seek them out for a better position. Entrepreneurs know that even the best new businesses don’t get found without effective marketing, testimonials and positioning work. Smart corporate professionals make their own luck.
   
   
6. Build more and better relationships outside your domain. Good entrepreneurs know that who you know is often more important than what you know, especially as you look for new opportunities. Entrepreneurs continually expand their network of advisors and experts. Professionals trying to win on a solo basis are destined to be lost in the shuffle.
   
   
7. Approach your career as an unfinished work in progress. Approach each day as an opportunity to learn new things, and grow into a changing role. Entrepreneurs know that their current solution is really a beta for the next one, and if that change takes too long, the business fails. Smart professionals never get comfortable with the status quo.
   

In every case, entrepreneurs understand that their success depends on a successful interaction with the environment around them, including economic, cultural and social issues. Corporate professionals often see themselves in a narrow tower, and become less sensitive to any outside forces. Everyone needs to think purposefully about how and where they choose to live and work.

I’m convinced that all members of the human species were originally born as entrepreneurs, and the skills and instincts that served them well to be survivors are still valuable today, whether you are managing a business or managing a career. If career growth and job satisfaction are your objectives, just pretend that you are an entrepreneur and your career is your business.

Your real challenge is to thrive -- not just survive.

Marty Zwilling

*** First published on Entrepreneur.com on 12/30/2015 ***

10 Actions That Will Transform You From Good To Great

Everyone recognizes a great leader when they work with one, but most leaders don’t know what to look for in themselves that will drive that perception by others. In my experience, there is no magic gene involved, just simple good habits executed consistently and convincingly until everyone around you wants to follow your example.

This leading by example is easy to say, but not so easy to put into action. Most leadership gurus, including John Baldoni, have provided recipes, like his classic book, “Lead By Example: 50 Ways Great Leaders Inspire Results.” The points are great, but can be made even simpler and more actionable by adapting then to the world of the entrepreneur:

1. Demonstrate character. In the dictionary definition, character is said to be “the stable and distinctive qualities built into an individual’s life which determine his or her response regardless of circumstances.” Steve Jobs of Apple had character, and the people around him knew what he stood for in good times as well as bad.
   
   
2. Be accountable for your actions. Things don’t always work, and it’s easy to blame someone else, the poor economy, or just bad luck. Thomas Edison made no excuses for ten thousand light failures. Challenged by his contemporaries, Edison soberly responded: “I have not failed. I have just found ten thousand ways that won’t work.”
   
   
3. Check your ego at the door (and keep it there). For leaders, this is often evident in the willingness to be coached, by outside experts or by your own team. We all know too many people who won’t listen to any advice from anyone. That’s just hubris, and it doesn’t inspire anyone.
   
   
4. Promote resilience. There is no shame in getting knocked down; it’s getting back up that matters. In a startup, pivots and problems will happen. Learn to anticipate change, bounce back stronger, and teach others to do the same. Dean Kamen, while still struggling with the Segway Human Transporter, holds 440 other device patents.
   
   
5. Get in the habit of asking questions but do not expect easy answers. That includes taking a hard look in the mirror, and facing reality. Howard Schultz, who grew Starbucks to 13,000 stores by 2008, decided to step back in as CEO when the economy was killing his stores, and refocus everyone on the customer. Now he has over 20,000 stores.
   
   
6. Manage around obstacles. We’ve all seen the leader who is struggling to keep the business alive by tackling the daily obstacle. No one is looking around the corner to see the next one. Richard Branson, now worth about $4.2 billion, offers this advice: “Obstacles and challenges are healthy for everyone.” He is always looking ahead.
   
   
7. Drive innovation. Great businesses these days start with innovation. Entrepreneur examples include Larry Page and Sergey Brin at Google, who turned a new search technology into a tool that most of us couldn’t live without. Encourage everyone on the team to think and act creatively. Good ideas can come from anyone at any time.
   
   
8. Encourage dissent about issues but promote civility around people. Receptiveness to dissent allows for corrective feedback to monitor ineffectual practices, poor and unfavorable decision making, and insensitivity to team needs and desires. This is positive, but a loss of civility more than negates all these positives.
   
   
9. Create a winning culture. Leaders drive values, values drive behavior, behavior drives culture, and culture drives performance. High performance makes new leaders. This is the self-reinforcing circle of excellence every company needs for success. Winning business cultures, like at Apple, are set from the top.
   
   
10. Teach others “the how.” Then get out of the way and let people do their jobs. Great leaders are mentors to everyone on their team. Effective leaders are not afraid to “get their hands dirty” working with the troops. Bill Gates of Microsoft, even late in his career, wasn’t afraid to jump in and write some code to illustrate a point.
    

The quickest way to great results is to build a great team, and let it multiply your productivity. Using the actions described here as a model, take a look in the mirror to see how well you are leading by example.

Marty Zwilling

*** Published on IvyExec.com on 01/05/2016 ***

7 Ways to Bootstrap Your Business to Success

Most first-time entrepreneurs seem to believe the myth that they need a minimum of a half a million dollars to start a business. At least that is usually the lowest number I see requested from our local angel investment group. In reality, over 80 percent of successful new businesses are self-funded for much less -- often as little as $10,000. I’m convinced this also reduces risk.

Starting a new business on a limited budget without investor involvement is called bootstrapping, and it’s the only way to go if you don’t want to spend months on the investment pitch preparation and delivery circuit. Also, with bootstrapping, you won’t have the added pressure and risk of an investor boss hanging over your shoulder and second-guessing your every move.

Over the years, I’ve accumulated a list of common startup practices from entrepreneurs who have managed to avoid the ironic pain and suffering of comfortably starting a business with a large cash stash from a rich uncle or a vulnerable investor.

1. Stick to a business domain you know and love. Starting a new business in an area where you have no experience, just because it appears to have great potential, is a recipe for failure. There are unwritten rules in every business, and your lack of insider’s knowledge will cost you dearly. Good connections can get things done for very little cash.
   
   
2. Find team members to work for equity rather than cash. People working with you need to understand their failure means startup failure, rather than expect money up front. Managing employees and contracts is difficult and expensive, and new entrepreneurs aren’t very good at it anyway. Equity is your best assurance of commitment and focus.
   
   
3. Build a plan around your budget, rather than around your wishes. Entrepreneurs who start without a plan spend more money. Likewise, those who feel compelled to keep up with the popular media will spend most of their time courting investors. Most investors agree that too much money leads to poor spending decisions and lack of controls.
   
   
4. Defer your urge to find office space until you have customers. Remote startup team members are the norm today and can be very productive with smartphones, video and the high-speed Internet. Office space costs money up front, requires equipment, staffing and travel expenses. With a website, your business can look as big as any competitor.
   
   
5. Ask for advance on royalties and vendor deferred payments. If your solution has real value, future partners will jump on discounted future royalties, and many vendors and existing partners will understand your cash flow challenges. You may also be able to barter your services to offset theirs. It never hurts to ask. Practice your sales skills early.
   
   
6. Negotiate inventory management with suppliers and distributors. For many products, suppliers or distributors will direct ship your product to eliminate your inventory. For services, don’t be afraid to ask for a retainer up front to offset your costs. Business terms are negotiable, but new entrepreneurs with plenty of cash don’t bother to ask.
   
   
7. Choose a business model to optimize your revenue flow and timing. Popular examples include monthly subscription fees and optional service fees, versus one-time product sales. Another is the use of an ecommerce site, rather than retail, to facilitate product sales seven days a week, around the clock and around the world.
   

One of the biggest ways to reduce your budget and your risk is to use social media, which essentially is free, to find our whether you have an attractive solution, before you invest your time and limited resources in creating the product or service. Social media is also an invaluable and inexpensive marketing approach, since no one buys a solution they can’t find or don’t know anything about.

A limited budget can be viewed as your biggest constraint, or as an incentive to do things more creatively. With startups, there is a big premium on creativity and innovation. Big competitors are quick to copy a conventional solution with minimal risk. Let a limited budget be your driver to winning, rather than a curse.

Marty Zwilling

*** First published on Entrepreneur.com on 12/25/2015 ***

*** Russian translation provided by Akhmad Karimov ***

Smart Startups Don’t Try To Satisfy Every Customer

Let’s face reality -- no one can satisfy all the people all the time. In business, this means an entrepreneur who never says no to any customer is doomed to a hard life and some expensive mistakes. Many people will argue that total customer satisfaction is paramount, but I’m a pragmatist who believes that treating everyone the same really means treating all of them poorly.

For example, I have known several sincere technology entrepreneurs who were so busy adding and updating features for their product to satisfy early adopter requests, that they ended up with a bloated, hard to use, late to market and expensive solution which really satisfied no one in their primary market demographic. That’s not a happy situation for real customers or the business.
Thus, I have developed some guidelines that I believe will help you know when it’s appropriate to go all-out for a customer, and know when it’s better to say no with conviction and finality.

1. Everyone who expresses interest is not necessarily a customer. Everyone on your team needs to be trained to recognize prospects who match your target customer set. You can garner more goodwill by directing other prospects to the right business, rather than hard-selling them on your solution, or trying to bend your solution to fit their needs.
   
   
2. Proactively find the customers that you can surprise and delight. Use interactive social media and targeted marketing to go after the customers that you want and need. Those entrepreneurs who wait for customers to randomly find them will be disappointed by the match, and find themselves always playing catch-up with customers who don’t fit.
   
   
3. Playing favorites is good business and good customer service. Your best customers are the key to your success, and they need to feel special and be treated special. No one wants to feel like one lost in a crowd. If a customer feels special, they will return more often, and will recommend you to friends. The result is a win-win deal for both of you.
   
   
4. Every business needs boundaries and discipline to deal with outliers. When a customer steps outside these boundaries, it’s time to say no, with a logical explanation and no emotion. Just as you deal with wrong team members, it’s sometimes necessary to fire customers who have stepped out of bounds or refuse to accept your help.
   
   
5. Focus on your core competency and beating competitors. When customers try to drag you away from your core expertise, it’s time to say no. On the other hand, if it takes some extra effort to show customers how you stand out from competitors, you should say yes with conviction. Here is your opportunity to under-promise and over-deliver.
   
   
6. Don’t be afraid to raise your prices as you add special services. Your best customers will appreciate new and special services, and will understand the need to charge for them. Bad customers will have less sensitivity to your needs and will likely move on to other commodity-priced alternatives. Help them find that new provider.
   
   
7. Eliminate services that you can’t support well or are being misused. Simply say no to customer requests that you can’t satisfy well on time every time. Every business learns from experience and reviews that certain offerings aren’t working, but they hesitate to remove them for fear of upsetting existing customers or driving away potential new ones.
   

The key to success in saying no is to recognize the wrong customers for your business before their expectations absorb more of your limited resources than they contribute. In the worst case, you can lose the right customers by redirecting your strategy and resources in an attempt to satisfy the needs of the wrong ones.

Successful businesses focus on satisfying and delighting the right customers and redirecting the wrong ones to the right place before they get hurt or hurt your business. Both of these objectives require that you understand the strengths and goals of your business, and your entire team is trained and motivated to achieve the same objectives.

Success is being able to say no to a customer -- and still have both of you walk away happy.

Marty Zwilling

*** First published on Entrepreneur.com on 12/23/2015 ***