10 Ways To Prepare For Competitors You Don’t See Yet

When you are starting a business with an exciting new idea, it’s easy to dismiss potential competitors as not being in the same space, or too fat, dumb, and happy to be concerned that you even exist. I hear it all the time as an angel investor, but I also see that same naïve or cavalier attitude come back to haunt entrepreneurs once they really get out in the marketplace.

“Sleeping giants do wake up,” I always say, to remind new business owners that nobody cares what you do when you are not a threat, but when you get some real traction with customers, competitors will come out of the woodwork with a vengeance. Therefore it behooves you to ask yourself these ten key questions, and formulate concrete answers, before even entering the fray:

1. What “secret sauce” does you bring to the problem? A strong work ethic is great, but patents and intellectual property are critical. You need quantified value for customers to see, feel, and pay for. Fuzzy words, like “improved usability”, “paradigm shift,” and “breakthrough technology” won’t convince investors, customers or deter competitors.

2. Have you lined up the stakeholders who drive success? Stakeholders are key people impacted, and leaders who influence key people. For example, early adopters may be easily sold online, but new technology product success really hinges on adoption by mass demographics, more likely associated with distributors and brand name retailers.

3. Do you have all the key deliverables for maximum impact? The last thing you need in a new business is a false start, where you can’t deliver on a seasonal deadline, volume manufacturing, or support. Deliverables and the resources you have on board are two sides of the same equation. Make sure all the elements are aligned before you commit.

4. What metrics should you use to measure success? Define both hard data and soft (anecdotal) metrics on the new solution, as well as on the productivity of you team. That means you must know the current state of competitors against the same metrics, before you can assess progress or success. Make sure the team has buy-in, and is motivated.

5. Are your financial projections consistent with current realities? It’s important to separate optimism and dreams from market possibilities. Ask yourself, “If I were an investor, would I support this effort, given the costs and traction to date?” Just because Google sales hit $1.5 billion in 4 years doesn’t mean any other new business can do it.

6. Do you have the business discipline to prevent scope creep? Making last-minute enhancements to a solution without additional time or resources is called scope creep. It takes a strong team and strong leadership to manage it. What works is a documented change request process, as well as quantification of resources and incremental return.

7. Is your business plan complete and documented? If your business plan isn’t written down and approved by all key players, it’s probably not complete. Calibrate the plan with the financial and people resources available to deliver it. Keep the plan simple, focused, and up to date as you learn more from early experiments and early customer feedback.

8. Do you have a model to predict funding requirements? Without adequate funding and people to support your efforts, you will be faced with trade-offs that lead to cash flow problems and a burned-out team. What works is creating a financial business model, using credible advisors, with a reserve buffer of at least 25 percent for contingencies.

9. Are you prepared to hire and train team members required? Most innovative solutions require new ways of working, including new knowledge, skills, mind-sets, behaviors, relationships, and processes. You need to provide adequate time, step-by-step job aids, training, and a hiring process to cover critical aspects of the new plan.

10. Do you have a contingency plan to mitigate risk? A key aspect of mitigating risk is to first identify the competitive risk elements early, and build contingency plans, in case the risks materialize. Then establish trigger points to clarify when contingency plans need to be activated. This will speed up pivots and remedial actions and minimize damage.

Even if you believe there are no competitors today for what you are planning to deliver tomorrow, you still need all these questions answered. If the opportunity you are addressing is large, there are most likely several potential competitors, not yet visible, who will be there working against you near your rollout. Waiting for one of them to find your gaps before you do can kill your dream.

Marty Zwilling

*** First published on Inc.com on 07/17/2017 ***

10 Entrepreneur Shortcuts To Be Avoided At All Costs

Starting a new business is a long, hard process, and I can’t blame any founder for looking for shortcuts. I’ve taken a few myself, and I know how much work they can save, as well as how painful some can be in retrospect. When you are trying new things, there are plenty of new problems to go around, so why would you want to re-experience the pain of others?

As a new business advisor and angel investor, I have assembled my own favorite list of shortcuts to avoid, in the hope of saving you from learning these lessons the hard way:

1. Be satisfied with verbal or handshake partner agreements. This shortcut to avoid hard discussions and signed documents leads to more dysfunctional businesses and broken relationships than you could imagine. Early partners often drop out due to differences, but they don’t forget your original promises when you go public or hit it big.

2. Wait until you have investors before incorporating your business. This is the classic “chicken and egg” problem of which comes first. I assure you that most investors will not take you seriously if you don’t have a real company, so you may wait forever.

   I recommend starting early with a cheap and simple Limited Liability Corporation (LLC), and converting later to a C-Corporation, if required. This protects your personal assets from liability immediately, and allows you to avoid being taxed on your founder shares.

3. Count on family members and friends to grow the business. In the heat of scaling the business, it’s tempting to skip the cost and time of finding qualified job candidates, and enlist those close at hand, without paying them a competitive wage for the hard work and commitment you need. Remember the old adage that you get what you pay for.

4. Reduce stress by hiring people who don’t challenge you. Very few people are experts in all facets of a new business, including finance, sales, marketing, and operations. The best strategy is to hire people who are smarter than you (in their domain), and allow you to learn from them, rather than the other way around. Moderate business conflict is constructive and should be embraced.

5. Retain maximum equity by requesting minimal funding. Of course, you shouldn’t give away ownership, but squeezing yourself to failure, benefits no one. Size your funding requests to cover the next 18 months, and then buffer the amount by at least 25 percent. Things cost more than you expect, and cash-flow problems often are not recoverable.

6. Focus on products and customers, and trust your accountant. New business owners should be signing every check, and managing every expense. The accountant may accurately record every transaction, but only you can make the strategic tradeoffs on marketing costs versus customer revenue, product quality versus support, and so forth.

7. Maintain required control by not delegating decisions. Effective delegation is a skill that must be learned early by every business owner. There just are not enough hours in a day as the business grows for you to make every decision. To get business growth, you need team growth and loyalty, driven by letting them make decisions and do their job.

8. Refusing to pivot from your initial business strategy. The strength of every new business is that it has no legacy, and being small, can adapt quickly and easily to new information and new customers. Your initial strategy will be wrong, no matter how carefully you worked it out. Refine your strategy at least quarterly, and relish changes.

9. Spend all your time putting out fires, rather than planning. It takes effort and focus to drive the business, rather than let the business drive you. In every business there are crises every day that can prevent you from seeing the more important issues – including customer acquisition costs, competitive challenges, and new market opportunities.

10. Never taking the time to enlist and learn from advisors. Too many business owners are convinced that listening to an advisory board or Board of Directors is a waste of time and money. As a result, they repeat the mistakes of peers, and also tend to repeat their own mistakes. Advisors and mentors enhance the learning and effectiveness of even the best business leaders.

I’m sure all you experienced business owners can add one or two more key items to this list. The reality is that making mistakes is a necessary part of every successful business growth effort, as long as you avoid the mistakes of others, and don’t keep making the same mistakes over and over again.

The other extreme shortcut is never trying anything new, which is always a mistake in business. You can’t win if you don’t try to push the limits. Work hard, but work smart.

Marty Zwilling

*** First published on Inc.com on 07/14/2017 ***

7 Motivations Found In Business That Get Things Done

Why do some people you know at work consistently get things done, while others never seem to finish anything? It’s certainly not all about intelligence, skills, and training. Some of the best-prepared people I know are the least productive, and they are quick to offer the excuse that they are idea people, perfectionists, or easily distracted. Most experts agree the real key is motivation.

In other words, highly motivated people will solve problems, learn new approaches, and deliver results on a far more timely and consistent basis than co-workers whose motivation is lacking or somewhere else. In a new book, “What Motivates Getting Things Done,” clinical psychologist Mary C. Lamia, PhD, explores the different motivations that drive people to pursue excellence.

Lamia argues that the most productive people learn first to interpret the messages from their own emotions, and secondly, pay more attention to the motivational style of key people around them, to be less annoyed and more synergistic with their efforts. From my own experience, I see many of the same key motivators in highly successful business people, including the following:

1. Stimulated by the act of completing a task. Most often, these people are the ones who keep detailed task checklists, and get great satisfaction from crossing off each item as it is completed. The best task-driven people are motivated by the task itself. In other words, all business people, like others, are the most productive when they love their work.

2. Motivated by meeting every deadline. These are the business professionals who have a natural default mode of starting immediately on every task, with the goal of finishing early for extra credit and extra satisfaction. If there is no deadline, they may make up one just to manage to it. While generally this trait is seen as positive, potential negatives include too much multitasking, appearing pushy, and not enough focus on quality.

3. Need to avoid shame anxiety and fear of failure. Some highly successful people are actually procrastinators, and are driven by anxiety and low self-efficacy to start late, but work overtime to prove themselves. Active procrastinators are motivated by last-minute time pressures to complete on time. Passive procrastinators eventually give up or fail.

4. The power of positive recognition from others. While some are motivated by their own negative qualms, others are motivated by positive feedback and incentives from peers and managers. They produce results because it gets them accolades and rewards, and more motivation. In this respect, you are the key to their productivity and success.

5. A perfectionist’s pursuit of excellence in all things. The behaviors that people refer to as “perfectionistic” range from a healthy inclination to get things done very well to never-complete behaviors based on unrealistic standards and dreams. Obviously, business leaders must nurture the healthy side of perfectionists, and be selective in hiring.

6. A strong emotional commitment to personal goals. People who set personal business and professional goals are more highly motivated to produce results and find success. Workers who see business work as a necessary evil, or a path to a paycheck, are not motivated to measure business results, no matter what incentives you provide.

7. Willingness and ability to learn quickly from mistakes. In business, there are so many unknowns that some failure is inevitable. The key to productivity and success is what you make of your failures. Successful people are motivated to learn from failure, and follow up quickly with changes, while others play the victim and look for excuses.

The author Lamia makes an interesting note that humans are a marvel of evolution in not being solely motivated by positive emotions. Some are strongly motivated, and even driven to success, by the desire to turn off negative emotions, including fear of failure, shame, anger, and disgust. The challenge is to understand yourself and others around you to capitalize on these emotions.

Deadlines and results are just two of the many metrics you must use in business to measure yourself and others on motivation and productivity. There is no substitute or excuse for not getting things done in business. The long-term viability of your business and your career depends on it.

Marty Zwilling

*** First published on Inc.com on 07/12/2017 ***

8 Big-Company Habits That Don’t Work In A New Venture

When I hear executives and professionals in larger businesses talking about their dream of going out on their own to start a new company, I always cringe. I have been there and done that. They and I never realized how hard it is to break the big-company habits and conventions. If you are going to do it, don’t wait too long. The longer you wait, the more traumatic the decision will be.

First, the list of excuses for waiting gets longer and longer over time – need to work on my resume, broaden my experience, enhance my skills, save a larger nest egg, and maintain a stable income until the children are gone. Second, the list of non-entrepreneurial habits that you pick up in a large corporation gets bigger and harder to break. These include the following:

1. Executives rely on staff to do the real work. Leaders in an enterprise soon forget how to write contracts, manage cash flow, or even how to schedule their own time and events. It’s easy to grow accustomed to saying “My staff will contact yours to work out the details.” In a new business, that luxury isn’t affordable, so key things may never get done.

2. Professionals get dependent on big company perks. They assume that every business role comes with health insurance, a subsidized retirement plan, and maybe a company car or first-class travel. The longer you wait to start your own business, the higher the default burn rate, and the less happy you will be to take a financial step down.

3. Expect to manage the team rather than be a part of it. In a new business, you are an integral part of every team, and the only member of many. Managing is not considered part of your workload. That’s a whole different mindset and skill set from the one you learned in a big enterprise. Small businesses require collaboration and walking the talk.

4. Relish being the expert within a limited vertical domain. Entrepreneurs need to enjoy being a generalist, rather than a specialist. In a new business, there will not be an IT team to configure your computer, a procurement department for supplies and contracts, or even a personnel specialist for hiring and firing. You must be all of these and more.

5. Rely on training courses and coaching for new roles. In a startup, you can’t afford to spend the time or the money for out-house training, so self-learning from the Internet and unpaid advisors is the norm. There are no in-house experts or training organizations to rely on. Thus big-company executives tend to under-estimate learning costs in a startup.

6. Ability to attract top talent and offer near-term compensation. Entrepreneurs find it much harder to attract equity partners, compared to offering a premium salary to industry experts and people with highly relevant experience. Betting on the future is never as attractive to most professionals as an existing successful company and real cash today.

7. Measure their worth by the size of their office and salary. Even the best new business owners often take no salary for the first couple of years, and use a cluttered back room for their office, if they have one at all. After too many years in a big company, that’s an unacceptable step backwards for many. Self-worth and self-confidence suffer.

8. Social status becomes tied to recognized brand or role. Once you work for a prestige brand or carry a big title, it’s hard to be associated with a tiny business. Your extended family and social friends may still expect you at the country club, or ask you to join them on international vacations. Even your spouse won’t understand the new social norms.

So when is the best time to make the leap from a big corporation to a new business? My scan of the literature and talking to investors would indicate a few years of experience in a large organization (two to five years) is a good thing, while twenty or more years before founding your own venture will stack the cards against you.

Unless you are really young at heart, if you haven’t made the leap by the time you are in your early 40s, those habits you have picked up with your experience in a big company will be evident to you, your team, and to investors. Not to mention the fact that if you are accustomed to a big-company culture and lifestyle, you will likely not be happy or never risk the step to a startup.

So if you really want to start your own business, don’t wait too long. Old habits die hard, so the longer you wait, the harder it will be to make the jump, and your odds of success go down. In addition, if you change your mind, going the other way is always a lot easier.

Marty Zwilling

*** First published on Inc.com on 07/10/2017 ***

6 Ways To Learn From Failure, And Beat Success Odds

Aspiring entrepreneurs and new business owners often ask me for a secret formula for success, and they seem surprised when I tell them there isn’t one. In my experience, every new business is best handled as a series of experiments, from which smart founders learn a winning strategy, after some mistakes. In fact, that culture of learning as you go is my secret to business success.

For example, you probably never knew that both Facebook and YouTube started out as dating-site experiments, but pivoted to something more unique when that experiment failed due to an apparently over-crowded market.

In today’s rapidly changing world, there are no sure-fire winning ideas, and experiments within clearly defined parameters are the only way to gauge the potential of emerging opportunities. Investors often argue that founders learn more from failed experiments, so don’t be afraid to wear your failures with pride, in support of what you have learned.

In fact, I just finished a new book, “Winning from Failing,” by business development and sales productivity expert Josh Seibert, which extends this principle as well to large corporate organizations seeking to improve their productivity and success. He and I both believe that the key to high growth in any company is a learning culture, led from the highest executive levels.

Everyone agrees that establishing and maintaining a company-wide learning culture is not so easy. It requires an ongoing commitment and effort from top executives and leaders at every level, with a focus on the following key principles:

1. Incenting everyone to step outside their comfort zone. Innovation in building the business is just as important as in building the solution. Yet, by default, most team members stay within the realm of “what has always worked,” rather than stretch the limits. Leaders need to reward experiments, rather than demand fixed processes.

2. Eliminate any drama and penalties from failed experiments. Many managers and entrepreneurs love to play the game of persecutor, rescuer, and victim, on every initiative that doesn’t go exactly as planned. In any of these roles, or by penalty, the manager discourages team members from taking anything positive from the learning opportunity.

3. Encourage a strong learning culture to improve accountability. Organizations with a strong learning culture inevitably have a strong parallel culture of accountability. These are two sides of the same coin, and both lead to improved productivity and innovation. Accountability must be demonstrated from the top, and rewarded rather than penalized.

4. Hire based on learning experiences rather than skills only. One question most interviewers never ask is for evidence of what you have learned from previous failures, as well as successes. This identifies “potential,” or the ability to adapt to and grow into more complex roles and changing environments. Potential is enhanced in a learning culture.

5. Establish mentoring and coaching relationships. Both are an important part of every learning culture. Mentoring is a less formal arrangement for long-term career guidance, while coaching is a more formal association focused on improvements in behavior and performance in the current job. These roles can be equally beneficial for both parties.

6. Clearly assign development responsibility and measure results. For every learning initiative, including training, mentoring, and coaching, someone has to be responsible for the actual work to get it scheduled and track results. Many executives give lip service to people development, but don’t allocate the necessary time or resources to be effective.

Once a learning culture is established, the fear of failure and retribution is removed, and people will move forward with confidence on a regular basis into uncharted territory. In today’s rapidly changing environment, that is the only formula any company can adopt to achieve long-term viability and success. It’s up to you to make it happen.

Marty Zwilling

*** First published on Inc.com on 07/01/2017 ***

Great Businesses Focus On Solutions, Not Technologies

Even though I love technology, I always cringe when an entrepreneur starts an angel investor pitch to me by touting his new technology. They have forgotten that new technologies are perceived by most customers as causing more pain than the problems they eliminate. I chastise these startups to highlight the solution created by the technology, rather than the technology.

I usually get pushback about the success of all the great technology companies, like Intel and Apple. Let me be clear – technology and market-driven need not be mutually exclusive! The best companies find a way to drive the market with a solution based on their technology, rather than push their new technology as the solution for the marketplace.

Yet we all know that many customers delay their adoption of the latest software platform, and avoid new hardware, for a year or two until all the “kinks” are worked out of them. In reality, new technology alone is often assigned a negative value, as startups push out alpha and beta products earlier and earlier in the competitive rush.

Of course, there are always a few early adopters who love change and need to have the latest technology, but early adopters don’t make the market. Here are a few thoughts on a process that will keep you on the right track for the majority of your real customers:

• Continually get real customer input. Is your product tempered with actual market and customer feedback? Everyone's personal perspectives and interests are different, so the key is starting from market problems, and going from there to technology - not vice versa. One good way to get this input is by providing a customer support forum, which asks for input, and also lets customers help each other.

• Focus on user pain points. What are the major points of pain experienced by the users of your product or service? Users with no pain who say “nice to have” will not likely endure change for your product. For example, Xerox emphasizes the user multitasking capability for busy offices of their new printer family, rather than the new technologies.

• Keep it simple and easy to use. Are the user problems being solved in the simplest possible way, with the fewest possible features, or have many features been thrown in, just because the technology can deliver them? Users want to know how your new digital printing workflow software helps you automate everyday operations, not how many features it has.

The easiest way to start this process is by starting from the market drivers and working forwards, not backwards. Don’t make the mistake of looking at market needs or requests as an afterthought to verify what's already been planned or built.

Companies that are market-driven are externally focused: they identify opportunities and then capitalize on them. Technology-driven companies are internally focused: they identify what is possible with the technology and then look for customers who might like the results.

Market-driven also means knowing the overall dynamics and forces in the marketplace and understanding how those forces might impact the business – marketing and sales driven. A technology-driven business is driven by engineers. A great company finds a balance between these two forces, but makes the business side the driver.

In fact, technology is neither intrinsically good nor intrinsically bad. We all know that very few customers will buy technology, simply for the sake of technology. Technology tools and platforms are hard to sell, because the people who love and understand them are not usually the decision makers, or the budget owners.

But how do you manage “disruptive” technologies, where people don't even know they have a need? Many entrepreneurs are convinced that they have the greatest invention ever, and others will believe when they see it. Investors know better, since dramatic changes in technology historically take a long time and lots of money go gain a foothold – with a few rare exceptions.

If you are looking for external investors, my advice is to take a hard look at your business plan and investor presentation. If they highlight your technology first, you will likely be tagged as a solution looking for a problem. Start by quantifying a customer problem, and show how you are using technology innovatively to solve this problem. That’s market-driven technology providing solutions, and every investor and customer will want a piece of that action.

Marty Zwilling

*** Published by Xerox Small Business Solutions on 07/06/2017 ***

10 Unconventional Management Techniques That Work

I’ve been a manager in business for many years, and like most of you, I’ve also had my share of bad managers, as well as a few good ones. As a result, I’m certainly convinced that engaging, retaining, and developing people for maximum performance is one of the toughest jobs you will ever have. I’m also convinced that the conventional wisdom for best practices isn’t always right.

I was pleased to find a new book on this topic, “Managing to Make a Difference,” by Larry Sternberg and Kim Turnage, which manages to highlight some of the more pragmatic but unconventional insights on how to get better results, and still grow the respect of your team. Here are ten tips which may surprise many of you, but I have found to be real difference makers:

1. Go ahead, get close to the people you manage. New managers are generally taught not to build personal relationships with direct reports – in case you have to discipline them later. I believe that a relationship makes it more likely they will trust your guidance, including corrective behavior, before anyone needs to resort to disciplinary action.

2. Don’t get involved in mediating relationship conflicts. In my experience, this is definitely an area where “no good deed goes unpunished.” Managers often get sucked into relationship conflicts by trying to “manage” employees, instead of encouraging direct communication. Focusing on problems only magnifies negativity in your organization.

3. Tolerate undesirable behaviors if results are solid. If a person is a top performer, but always late to meetings, or takes extra time off, it’s not smart to come down hard on annoying behaviors. This may be seen as favoritism, but I believe earned favoritism based on superior performance will be seen by others as a good thing and emulated.

4. Kick butt to motivate a sense of urgency. In these days of feel-good incentives and only positive feedback, there are still times to let people know strongly that their work approach is unacceptable. Kicking butt cannot and will not increase people’s ability to perform better, but it can be very effective when they are not giving their best effort.

5. Solicit volunteers for unpopular tasks. Most managers assume that unpopular tasks have to be dictated or rotated. In reality, the volunteer approach can be more effective, since you might be surprised by an unknown interest, or the appeal of a benefit, such as doing the task from home. Volunteers will always be more engaged and more committed.

6. Invest more of your time with top performers. Personnel people talk primarily about spending time with and coaching poor performers. Yet top performers are the most responsive to coaching, and can leverage your help much more effectively. It’s also the only way to key your best performers challenged, or from being recruited away.

7. Consider firing someone as the most caring thing to do. In the vast majority of cases, when an employee is not succeeding, he or she knows it long before you do. Extending their time in that situation is not compassionate, diminishes self-esteem, and the stress often causes health problems. Let them go to find a better fit, with real job satisfaction.

8. Don’t chase hearsay, rumors, or gossip. When someone gives you third-party information, it is almost always incomplete, out of context, or biased. Any attempts by you to “verify” this information, takes valuable time, with results equally unreliable. Even worse, people follow your example, causing greater damage to productivity and morale.

9. Take action on legacy employees. Contrary to popular belief, doing nothing is not the easy way out. Be thoughtful and compassionate, but deal with the challenge head-on. Carrying them, or allowing them to continue with no change until retirement, kills your credibility, as well as the productivity of the entire team. Taking no action hurts everyone.

10. Focus on hiring people who can replace you. I have always sought to hire people I can learn from, rather than time training. It is easier to move up in your career when you have members on your team who can smoothly transition into your role. In addition, that kind of reputation tends to attract additional high-performing people to your organization.

I find that too many managers get so focused on business goals, and their own personal agenda, that they lose sight of the individual needs of their employees. Managers you remember and respect, even if their approach is unconventional, are the few who focus on making a difference in the lives of the people they manage. That’s a win-win opportunity that we should all strive for.

Marty Zwilling

*** First published on Inc.com on 06/19/2017 ***