8 Key Ingredients to a Profitable Consulting Business

Most of the guidance you see for entrepreneurs is aimed at those who are selling a product (Apple, Tesla, Xiaomi), or selling a service (Uber, Airbnb, Snapchat). Yet, according to statistics from the Small Business Association (SBA), over half of new businesses offer something else - personal professional services, including consulting, business coaching, and advisory services.

The challenges for making money and survival in these professional services worlds are different, maybe even tougher. The “product” value is difficult to quantify, the costs are nebulous, and entrepreneurs have to clone themselves to scale the business. Many are reluctant to really “market” themselves, and have trouble differentiating their offerings to clients, except by price.

If you are already running a business in this category, or thinking about one, I recommend a new book, “The Profitable Professional,” by Kelly Clifford. From his own successes and failures in this domain, he explains how the rules and customer expectations have changed in today’s world, and he offers some practical guidance on how to survive in this new world.

Based on my own years of experience in this space, I would like to highlight a critical subset of his key ingredients for success, to save you from the frustrations and setbacks we both have felt:

1. Implement real competitive differentiation. If your business card and website come across as just another advisor, consultant, or accountant, then don’t be surprised if price is the only focus. Internally, you also need to do things differently to rise above your peers. This includes how you find leads, close clients, and minimize free work or rework.

2. Shape your business by design, not by default. Announcing that you are a consultant, and hoping demand will set your focus, is not a good strategy. Focus on your passion and your vision of what you want to accomplish, and make that come alive in the design and delivery of everything you do. Picking a niche is another good way to focus.

3. Proactively build relationships with target clients. Passively waiting for transactions only makes you a commodity. Clients need to see you as a trusted value add, rather than just a service provider. Use your knowledge of evolving needs and technology to add more value than competitors, and introduce clients to each other to build partnerships.

4. Use visibility and social media to pull clients in. The days of a hardworking introvert hiding in the back room are gone. In addition to relationships, today’s clients want to see you and your expertise on videos online, industry conferences, and social media to feel the trust for differentiation. They expect reviews and testimonials from other clients.

5. Set pricing to assure both revenue and profit. Unless you have deep pockets, you won’t survive without an adequate margin, including all the costs of running a business and staying current with technologies and market changes. Flexible business models, including value-based pricing, bundling, and custom proposals are the places to begin.

6. Be targeted in marketing and lead generation. Just like product marketing, professional services requires a clear profile and demographics of your ideal client. To check your return on marketing investment, you need to define metrics and a formal process to evaluate progress and cost tradeoffs. Don’t forget seminars and events.

7. Raise the conversion rate with effective follow-up. Successful professionals today know they can’t work only from memory. They use customer relationship management systems (CRM) for more effective tracking and data. They match individual customer preferences, whether it be voice, email, texting, or social media, to close deals.

8. Maximize repeat business with existing clients. Just as with product marketing, it can cost five times as much to attract a new customer, compared to getting more business from current ones. It pays big dividends to make realistic promises and over-deliver the first time, and then follow-up to check for follow-on opportunities every three months.

Even with all these done right, don’t expect your professional services business to match the triple-digit growth targets of billion-dollar product startups. Your service is not a product that can be replicated by a machine, and sold at night while you sleep. As a result, you won’t attract the investors who could fuel that kind of growth, or scale as quickly as they may demand.

Yet, I find the delivery of professional services to be one of the most satisfying and fulfilling types of entrepreneurship, where you can actually build relationships with customers, see directly your impact on the world, and have some fun at the same time. For me, that’s the definition of success.

Marty Zwilling

*** First published on Inc.com on 02/09/2017 ***

7 Lessons On How To Avoid A Quick Business Failure

Most budding entrepreneurs don’t realize that nine out of ten startups fail within 24 months. They only see and remember the recent new entrants in the billion dollar valuation club, including Uber, Airbnb, and Snapchat. While last year was not a banner year for new businesses, the startup rate is still about one per minute, so you need more than luck to improve your odds of success.

I’m sure you understand that every new business starts with passion, and maybe even some deep domain experience, to fully appreciate a painful market need, with a large and growing set of customers with money for your solution. A lot fewer have experience with the challenges and complexities of launching a startup. Fortunately, there are a wealth of resources out there to help.

One resource that’s worth your time is a new book, “The Ultimate Start-Up Guide,” by a couple of entrepreneurs and marketing experts who have been there, Tom Hogan and Carol Broadbent. They offer a wealth of lessons and war stories, including strategies to avoid seven of the most common ways that startups fail, which I will paraphrase here from my own experience:

1. Resist the urge to build it just because you can. This is a common challenge for technical entrepreneurs, who are fascinated by what they can do with a new technology, and are revered by peers for their expertise. The irony is that the average customer is afraid of any new technology, needs time, and may have a different view of the problem.

2. Add a buffer to your funding calculations. Money for new ventures is always harder to come by than you expect, so you tend to underestimate real requirements, or assume everything will go right the first time. I recommend that you double your time estimates to raise money, and buffer the amount needed by at least fifty percent. You will still be short.

3. Keep your solution and your mission focused. After listening to customers, experts, friends, and your own dreams, it’s critical and difficult to narrow your focus to a solution and customer set that you can satisfy with limited startup resources. Don’t try to be all things to all people. It’s important to do one thing well, rather than many things poorly.

4. Don’t assume your great solution will sell itself. “If we build it, they will come” only works in the “Field of Dreams” movie. In this age of information overload and the Internet, even the best solution needs marketing to get noticed. Plan and budget for all the channels of marketing, including social media, digital content, video, and traditional.

5. Find co-founders to complement your expertise. Successes via a single dictatorial founder are even more rare than billion dollar valuations. We all have strengths and weaknesses, so you need to find partners and team members who can fill in your gaps. If your strength is technical, find someone who has strengths in business and finance.

6. Assign high priority to team chemistry and culture. It’s one challenge to round up the talent you need, but quite another to mold them into a team that works well together, trusts each other, and is aligned with your values and priorities. Without these key elements, you will find that a dysfunctional team won’t last even the minimum 24 months.

7. Never under-estimate or ignore the competition. If you really believe that you have no competition, then you haven’t looked, or there is no market for your solution. You need to know and use the competition as your benchmark, not to degrade them, but to highlight your competitive advantages to customers and investors. Position your barriers to entry.

Even with all these strategies, don’t be devastated if you fail on your first startup. In today’s culture, most investors are forgiving of failure, or actually see failure as an advantage the second time around, if you are humble and willing to share a few lessons learned. Even Travis Kalanick, founder and CEO of Uber, filed for bankruptcy in his first startup, but obviously never gave up.

So if you want to improve your odds of joining the billion dollar club of new startups, don’t count wholly on your unique perspectives, or your personal amazing skills. I recommend that you scan the world around you for as much guidance as you can get, and then quit dreaming and start executing. You don’t have to make the billion dollar club to be a success.

Marty Zwilling

*** First published on Inc.com on 02/06/2017 ***

6 Strategies to Keep Your Business Self-Sustaining

Every new business owner looks forward to the day when their business becomes self-sustaining, and settles into a long-term growth curve that will assure financial success, as well as a lasting legacy. Unfortunately, in this age of vacillating customer trends and a wealth of new competitors scratching and clawing for a piece of the action, long-term growth requires constant focus.

In fact, many pundits argue that the long-term downfall of your business is inevitable, pointing to the fact that less than 15 percent of Fortune 100 companies have been able to sustain real revenue growth for more than a decade, and we are surprised regularly by catastrophic setbacks in bellwether companies, including General Motors, Kodak, Lehman Brothers, and Pan Am.

Others insist you can survive only if you take frequent and aggressive measures to keep a step ahead of the pack. For example, in a new book, “If You’re in a Dogfight, Become a Cat!,” Leonard Sherman, executive in residence at the Columbia Business School, suggests that you should stay out of the competitive dogfight and continually redefine the game on your own terms.

Sherman and others suggest six specific strategies for breaking away and staying ahead of the pack, and I believe every business owner should implement at least one of these on a quarterly basis:

1. Target customers poorly served by current offerings. The new strategy here is to focus on unmet new customer needs, rather than enhancing the offering you have – product, price, promotion, and place (4Ps). Competitors generally attack you on the 4Ps, so you need to find new territory like a cat, rather than rely only on dogfight survival.

2. Focus on different performance attributes. Another strategy is to find new performance attributes that relate to unmet consumer needs, and lead your message with these. This is called breakout positioning, rather than mimicking competitors. One approach is reverse positioning, or “dumbing down” your product for a new audience.

3. Substantially change the what, where, and how. This strategy is called breakaway positioning, since it is intended to redefine how consumers see the product, by borrowing features drawn from an entirely different product category. For example, Swatch defined their new category of watches as fashion accessories, rather than timepieces.

4. Use disruptive technologies to alter the value chain. Another powerful strategy is often called the Blue Ocean strategy, meant to conjure up the image of uncharted open waters rather than bloody red oceans with sharks fighting. Disruptive technologies, such as the smartphone, totally changed the value chain for cameras, video, and software.

5. Expand the market to new domains. New domains would include attracting business customers as well as individuals, taking your online business into retail, and diving into verticals. This strategy opens up new growth opportunities without the dogfight of taking territory away from existing competitors. It also forces you into new innovative thinking.

6. Plan to disrupt your own business regularly. Before the inevitable dogfights have diminished your growth and profitability, and sapped your resources, rally the business with a new “big bang” disruptive initiative, like Apple’s highly successful iPad disrupted their own personal computer offerings. This will make your current competitors irrelevant.

These strategies embody the three imperatives that Sherman and other experts advocate for effective growth strategy formulation: continuous innovation, meaningful differentiation, and total business alignment. These may sound straightforward, but they can be deceptively hard to implement, perhaps why so few companies consistently outperform the market.

The reality is that you can never relax in business, or rest on your laurels, but it’s a lot more fun when you are driving the boat, rather than being constantly pummeled by the waves of your competitors. The holy grail of long-term profitable growth requires constant attention and effort, but I believe it is within the reach of every business.

Marty Zwilling

*** First published on Inc.com on 02/01/2017 ***

How To Get Step-By-Step Assistance For Your Startup

It seems like every day I hear from an aspiring entrepreneur who doesn’t know where to start, or doesn’t have the time or expertise for all the mechanics of starting a business based on their great idea. While I can route them to hundreds of resources on the Internet for individual pieces of this task, I never found an online platform that integrates all the required activities, until now.

David S. Rose, who literally wrote the book on Angel Investing, and is the long-time CEO of the Gust platform for bringing together investors and startups, just announced Gust Launch as a “Company as a Service” solution. His intent is to automate and simplify the process of creating and funding a startup, to minimize the mistakes that often jeopardize a high-growth startup.

In the interest of full disclosure, David has been a friend of mine for many years, but I have no financial interest or affiliate relationship with any of his companies. I did touch base with him recently to catch up on his activities and expectations:

Marty: What was the key driver that motivated you to create Gust Launch?

David: Gust Launch was born out of the realization that founding and running a high-growth startup is much, much more complicated (and expensive) than any first time entrepreneur ever realizes. I found this out the hard way with my first venture-funded startup over twenty years ago, and it's something that every other serial entrepreneur will immediately confirm.

Marty: How does Gust Launch relate to your existing Gust online platform to connect investors to growing startups?

David: Gust Launch leverages the power of Gust (the world’s largest startup platform, already used by some 500,000 companies and thousands of investment groups and accelerators) taking many of the things in my recent New York Times best seller, The Startup Checklist: 25 Steps to a Scalable, High-Growth Business and turning it into an automatic, software as a service solution.

For the entrepreneur who wants to found a high-growth venture, it makes the startup process a single click. Starting as low as $99/month, we incorporate the venture as a Delaware C corporation, serve as its Registered Agent, file for its tax number with the IRS, register with its home state, handle all post incorporation legal setup, open its bank account, provide online cap table management, and offer the ongoing legal and document services necessary to keep everything accurate, coordinated, and investor-ready.

Additional services can be added on as the business grows including accounting and bookkeeping, tax preparation and filing, and soon, hiring services such as easy onboarding of employees and contractors, as well as fundraising and seed round financing support. We are proud to say it was the most up-voted find on Product Hunt the day it launched.

Marty: How are you splitting your time these days between the many roles and activities that I know you are involved in?

David: I’m fundamentally an entrepreneur, which means that I have voluntarily forgone any semblance of work/life balance. I spend about 150% of my working hours as the full-time CEO of Gust, and with the other 100% I serve as Chairman Emeritus of New York Angels, Managing Director of the AREA Accelerator, Managing Partner of Rose Tech Ventures, and keep up a pretty full speaking, teaching and writing schedule.

Marty: How do you see the climate and opportunity for startups in New York for 2017?

David: The New York City tech scene has exploded from absolutely zero in the 1980s to the point that last year Accenture named New York the world’s #1 city for innovation and entrepreneurship.

Today, there are over 20,000 New York City-based startups who have created profiles on Gust or on Digital.NYC, New York City’s official online hub for tech and startups, and that number continues to explode. No one disputes that NYC is the second-largest startup center after Silicon Valley, but what’s interesting is that in many months last year it grew even faster than the West Coast.

Marty: What is the best advice you could give to someone contemplating a startup?

David: Being an entrepreneur is tough. Really, really tough. The entrepreneurial life is one of challenge, work, dedication, perseverance, exhilaration, agony, accomplishment, failure, sacrifice, control, powerlessness…but ultimately, extraordinary satisfaction.

It will be without question the hardest thing you will do in your life, and it is absolutely critical that you find personal joy and fulfillment in the process of entrepreneurship, in which case the economic success of your venture will be simply the icing on the cake.

Marty Zwilling

7 Key Actions to Align Business Elements For Change

New business owners are rightfully proud of the changes they bring to the market, so they readily admit that change is good. Yet these same entrepreneurs often quickly get set in their ways, and find themselves resisting changes to their own business, and begin to fear further customer change in their domain. Change is no longer seen as an opportunity, but as a big risk and cost.

I know we all hate risk, but I’m a big believer in the old adage – “No risk, no reward!” The challenge in business is manage risk, or take calculated risks, rather than blindly step into every risky unknown. One of the key ways I have found to calculate the business risk of a change, is to look for an alignment of interests across the range of constituents required for success.

The constituents of every business success go far beyond customers – they include employees, partners, investors, vendors, and may even include competitors. Every change requires an alignment check, and probable realignment, of some of these forces. For you as a business person leading the charge, I recommend the following principles for managing alignment:

1. Proactively make change happen, rather than react. You can’t win by always being in recovery mode. With the speed of change today, you need to develop a culture that loves change, build the ability to quickly realign into your organization, and reward members of the team who come up with ideas, and are instrumental in making them happen.

2. Regularly update and re-publish your vision and direction. On a quarterly basis, you need to re-assess your original vision, to make sure it is consistent with new realities. If the world is changing direction, you need to realign your thinking. Just as importantly, you have to bring all constituents along, or the business will be fragmented and left behind.

3. Review all business components for every re-alignment. Too many businesses handle change on a piecemeal basis – maybe they update the product, but don’t look at the revenue model, or the selling process. Nearly half of small businesses today still don’t have a website, despite a majority of people looking there for search, sale, and support.

4. Every change requires extra communication to constituents. It’s twice as hard to change an image in someone’s mind than it was to get the image there is the first place. That means all realignments require over-communication, in multiple medias – video, voice, documents, and actions. Don’t assume a simple press release will be enough.

5. The fastest way to change a business is to bring in new blood. Most successful business owners have learned that you usually need to seed change and realignment with new people. Even with good people, there is an existing team member confirmation bias that works against change. You always need to look for new skills and experience.

6. Plan to replace some tools and processes. It’s a bad strategy to assume that all existing processes and systems must be updated, rather than replaced to accommodate a market change. In reality, the costs in maintenance and usability are very high to do things the old way as well as the new. Always evaluate new tools and new systems.

7. Pick metrics to measure change implementation and results. Plan ahead to measure the results you expect from the realignment, as well as the extent of the change process. You will always hear the negatives and problems during a change, which can easily hide any positive results, or how near you are to success in the process.

Even with all the right planning and flexible systems, it takes the right people to make change happen – starting at the top. Consider what Steve Jobs had to do to change Apple from a computer company to consumer electronics, or how Howard Schultz changed all the rules of selling coffee with Starbucks. Every aspect of these business had to be realigned.

As much as change is good for new businesses, it is absolutely required for the long-term survival of existing businesses. Witness what resistance to change did for Blockbuster Video and Kodak. Also, real change takes more than the one person at the top – it takes the engagement of all team members internally, as well as external constituents. Are all your stars aligned for change?

Marty Zwilling

*** First published on Inc.com on 01/24/2017 ***

10 Top Rules For Marketing In Today’s Digital World

Viral marketing and word-of-mouth are not enough these days to make your product and brand visible in the relentless onslaught of new promotional media out there today. Innovation in marketing is perhaps more important than product innovation. Yet in the business plans I see, the marketing content and budget are smaller than ever.

More than just spending, you need to create an “experience” in this digital age which sets you apart from the banner ads, email blasts, and old-school websites out there today. According to a classic book by Rick Mathieson, these have morphed into a digital universe of augmented reality, ‘advergames’, and virtual worlds – that are highly personalizable and uniquely shareable.

His title “The On-Demand Brand: 10 Rules for Digital Marketing Success in an Anytime, Everywhere World” characterizes the challenge of demanding attention from a new generation of consumers who want what they want, when they want it, and where they want it. Here are the new marketing rules I support:

1. Insight comes before inspiration. Innovative marketing starts with customer insights culled from painstaking research into who your customers are, and how they use digital media. Then it’s time to innovate through the channels or platforms that are relevant.

2. Don’t repurpose, re-imagine. Digital quite simply is not for repurposing content that exists in other channels. It’s about re-imagining content to create blockbuster experiences that cannot be attained through any other medium.

3. Don’t just join the conversation, spark it. Create new online communities and customer forums, rather than joining existing ones. Ask why it should be, and why customers should care. Then give them a reason to keep coming back. Keep it real, social, and events-based.

4. There’s no business without show business. Remember Hollywood secrets. Your brand is a story; tell it. Accentuate the personalizable, own-able, and sharable. Viral is an outcome, not a strategy. Make people passionate or emotional and they will buy. Look to the movie screen to see what you won’t soon forget.

5. Want control? Give something away. Several companies, including Mastercard, Coca-Cola, and Doritos have let customers build commercials and design contests, with big rewards for the customer and for the company. That’s giving up control, with some risk, to get control.

   Another approach you may remember was American Family Publishers setting revenue records with their sweepstakes and Ed McMahon showing up at the doorstep of multi-million dollar winners with an oversized check and a bottle of champagne. This strategy made AFP a household name and engaged countless people to participate.

6. It’s good to play games with your customers. Games are immersive, but shouldn’t be just a diversion. They need to drive home the value proposition. Don’t forget to include a call to action leading people to the next step of the buying process.

7. Products are the new services. Startups need to realize that products are the jumping-off point for building relationships with customers. Digital channels enable you to turn products into on-demand services that help customers reach their goals, and add value.

   For example, if you sell printers, you can start with cost-saving device optimization. Then offer document analytics capabilities, innovation and automation for better document security, productivity and sustainability.

8. Mobile is where it’s at. In addition to thinking of mobile as a new advertising distribution platform, remember it’s far more powerful as a response, or “activation mechanism,” to commercial messages we experience in other media – print, broadcast, and more.

9. Always keep surprises in-store. Social retailing is the new approach, where real-world shopping allows customers to connect with friends outside the store, and try on virtual versions of fashions friends might recommend. Be sure your in-store services add value.

10. Use smart ads wisely. The new generation of “smart advertising” enables the creation of an Internet banner ad to fit each viewer’s age, gender, location, personal interests, past purchase behavior, and much more. The trick is to do this without being invasive.

Remember everything you do, or don’t do, in the digital world is visible to your customers, and everything they say about you is visible on demand, all over the world. That means marketing can no longer be an afterthought, or something you can postpone until later, when you have more resources. Without effective and innovative marketing, you won’t have a successful business.

Marty Zwilling

*** Published by Xerox Small Business Solutions on 01/30/2017 ***