Monday, February 26, 2018

7 Steps For Counseling Employees Who Need To Change

we-have-always-done-it-this-wayAs an advisor to entrepreneurs and new business owners, I’ve long observed that one of the toughest challenges is people change management in the team. It’s an area where you typically have little experience and training, and dealing with needed change is fraught with emotions on both sides. I have found that my years in a big company have paid huge dividends in this area.

For new business leaders who are unfamiliar and uncomfortable with people management, I try to offer an easy to understand process for dealing with situations where a team member or direct report needs to change. I found some help in this regard in a new book, “Power Your Tribe,” by Christine Comaford, who has been a business leadership and culture coach for the past 30 years.

Among other insights, she outlines a seven-step counseling process, called a feedback frame, for tough situations, which I will paraphrase here. I believe it will facilitate both you and any team member communicating to get a shared positive understanding of the requirement for change and resolution:

  1. First, before diving into specifics, set the stage. As a manager or executive, your pent-up emotion makes it tempting to open with an attack, which immediately puts everyone on the defensive. Instead, you should start with a summary of your goals and objectives for the role, and emphasize the need for a collaborative turnaround plan.

  2. State directly observed data examples and behavior. Only then should you describe specific behaviors that must change, and provide your specific examples so the team member can “step into” the past scenarios. Avoid any hearsay or anonymous sources, since these are likely not entirely accurate, and will provoke emotional debates.

  3. Quantify the impact on the project and other people. Examples might include instances where the team member missed a deadline, causing the project to fall behind, or poor responses to a customer resulting in lost business. These hurt the company, as well as the specific employee reputation. If not obvious, state the correction required.

  4. Ask for problem acknowledgment and playback. You will make no progress until the team member agrees that there is a problem in their work or behavior, and the problem now must end. If you don’t have agreement yet, it’s time to go back to step one. You need this common understanding before the employee will engage in finding a solution.

  5. Create a plan together for a specific time period. I recommend a time period of 30 to 90 days where you agree to meet weekly to track progress. Make the plan very specific in terms of what you need to see and when you’ll know the outcome is what you wanted. Clearly state the consequences if the turnaround doesn’t occur (lost job or demotion).

  6. Overtly check understanding at this stage. Clearly communicate your conviction that a positive resolution is possible and desirable, which will make the consequence irrelevant. Believe it or not, I find team members often still don’t fully understand why they need to change, or why the specifics you ask for are important to the team and the business.

  7. Jointly celebrate small steps and milestones. Launch the plan, and look for every opportunity to acknowledge and reward progress, rather than focus only on failures. Make sure that all concerned see the behavior change also. Verbal feedback should be supplemented by a written weekly summary to the employee, to prevent surprises later.

If you think these steps are a lot of work, you are right, but it’s the most important work you can do for your business, and well as for your team members. The health and success of your business is totally dependent on the health and productivity of your team. Managing the product and the processes is only half your job as an entrepreneur, or less. The rest is building the team.

Obviously, this task is easier if you hire and nurture the right people, to minimize these situations in the first place. You need resilient teams in these turbulent times, so it is well worth your time to understand what it take to maintain a team with the emotional agility to adapt to market changes and customer feedback. Of course, as the leader, it all starts with your own ability to change.

Marty Zwilling

*** First published on on 02/13/2018 ***



Friday, February 23, 2018

8 Keys To Migration From A Consultant To A Freelancer

consultant-vs-freelancerBeing a consultant is a role that works with big companies, but I have found that it doesn’t get much traction in small businesses and startups. The image of a self-proclaimed expert who can generate a report, make a great presentation, and leave you to do the implementation, is just not attractive when you don’t have a staff, and you are already overloaded with the crisis of the day.

I learned this the hard way, when I left IBM a few years ago to share what I had learned with the exciting world of startups in Silicon Valley. I found out that they weren’t looking for consultants, and were even a bit leery of anyone who had spent time in the world of big business. Startups need outside experts who can do the work, as well as relate to the challenges of a new business.

Luckily, I had always been a “hands-on” professional, and I had learned the pragmatics of people leadership, marketing, management tools, and funding. Thus I quickly dropped any mention of consulting, and was able to find some challenging roles. Over the years since, I have honed my own list of rules for those of you who wish to migrate from big business to this new world:

  1. Re-focus your efforts from consulting to freelance. Freelance or contract work implies an execution role, versus an advisory role. In startups and small businesses, there is always a need for a hands-on project leader or interim executive. Freelancer is the modern term for someone with expertise who is not seeking a long-term commitment.

  2. Promote yourself with a title to match your expertise. Simply defining yourself as a marketing specialist, designer, or project leader minimizes the stigma of the consultant role. Specialists and certified professionals are already seen as experts who do the work, rather than just make recommendations for others. Use social media for more visibility.

  3. Adopt a project-based revenue model with metrics. Agreements based on projects to be completed, rather than an hourly rate, put the focus on quantifiable business outputs versus time spent. For example, a marketing project would be the number of leads generated or ad impressions, instead of recommendations for improving the process.

  4. Market yourself and work at all organizational levels. Leadership by example works at all levels of a company. It is not limited to the realm of the top executive or board of directors, who could bring in consultants for studies and analysis. Freelancers can justify their cost based on more direct return on investment calculations at all operational levels.

  5. Treat every business as a customer, not a client. A client relationship suggests that the consultant is in charge, whereas the customer designation recognizes the more modern model of the customer in control. It also highlights all aspects of required customer service, satisfaction, testimonials, and referrals to friends in the business.

  6. Be responsive to all modes of modern communication. Many consultants have been hard to contact between scheduled meetings, due to their use of formal communication processes. It’s time to adopt your customer’s favorite mode of communication, whether that be texting, phone calls, or social media, and not limit your responses to office hours.

  7. Adapt your style to the new business work models. If your customer’s dress code or decision process is informal, you should adapt yours to fit in, rather than continue to act and look like an outsider. If the startup team is distributed around the world, your challenge is to meet their process requirements, rather than expect them to meet yours.

  8. Above all, deliver results rather than recommendations. PowerPoint presentations are not business results. If your customer needs service and support procedures, then your deliverables should include customized creation, implementation and training, rather than simply recommendations on what to include.

Remember that as a freelancer, you are the brand, and you can’t rely on your big company name or relationship. You need to use the modern vehicles for promotion and relationship building, including a professional web site, social media, and industry conferences to show your expertise, credentials, and connections. That need to market yourself hasn’t changed since consulting.

Another positive is that the number of small businesses and startups makes your opportunities an order of magnitude larger than the number of big companies, and also includes them. Another positive I found is that it’s more fun to actually do a job, rather than just make recommendations. What could be more satisfying than having fun, and making money at the same time?

Marty Zwilling

*** First published on on 02/08/2018 ***



Monday, February 19, 2018

8 Smart Tips To Soliciting Friends And Family Funding

piggy-bank-fundingIt’s great to start with a big dream as you contemplate a new business, but finding the money you need takes more than dreaming. As an advisor to young entrepreneurs, I find that many are a bit naïve about how the investment process really works. For example, I just read an otherwise impressive business plan last week from a first-timer who asked for $10 million to get started.

In my first working session with this entrepreneur, I suggested ways to break this request into stages or tranches, based on showing traction, with the first amount in a more affordable range of $50 thousand or less. Even with that, you should expect your first seed investment from friends, family, or business associates, who know your capabilities and believe in you more than the idea.

In fact, according to a classic article on Fundable, and other statistics, friends and family are still the major funding source for new ventures, investing over $60 billion annually, more than all professional sources combined. Of course, the average beginning amount per startup is low, and usually in the form of a convertible loan, rather than an equity investment.

Large amounts from professional investors come later, when you have proven yourself, and are ready to scale the business. To me, this is a logical step function, and confirmation that the right founders are always more important than the right product. Yet, even with friends and family, as well as professional investors, you need to approach them right to be viewed as the right people:

  1. Ask for a specific amount based on a specific milestone. Shy introverts may be great technologists, but they won’t be entrepreneurs until they learn to respectfully ask for funding, after nurturing relationships, and practicing their elevator pitch. Waiting for someone to offer you a gift with no specific objective is likely to be a long wait.

  2. Be prepared with a formal agreement and a thank you. The vehicle of choice is most often a convertible note, which is really a loan with a specified duration and interest, with an option to convert it to equity when professional investors come in later. Review with an attorney to make sure the terms are fair. This shows respect and professionalism.

  3. Pitch your personal investment and commitment to date. Friends and family are quick to differentiate between a passionate hobby and a sincere effort to change the world. Show them that you have done your homework with industry experts and potential customers, and convince them you are not asking for charity or a donation.

  4. Get started first on your own time and money. We all know people who are good at talking, but never seem to risk anything or find time to get started on the implementation. Every good entrepreneur needs to invest skin in the game, to show credibility and leadership to others. Even family investors want to be followers, not the leaders.

  5. Be sensitive to the limits your friends can afford to lose. In other words, don’t be greedy, and remember that you value relationships with these people even if your startup fails. Ask for the minimum amount you need to reach a significant milestone, with some buffer for the unknown, rather than the maximum amount you can possibly squeeze out.

  6. Communicate your plan and the risks up front. Remember that no investment is a gift, and everyone who buys in deserves to hear what you plan to do with their investment, and expects regular updates from you along the way. Be honest with naïve friends and trusting family members, since more than 50 percent of startups fail in the first five years.

  7. Focus first on friends with relevant business experience. A wealthy uncle may seem like an easy mark, but a less wealthy friend who has connections and experience with startups in your domain can likely help you more than any amount of money. Remember that you are looking for success, not just money to spend.

  8. Tie investment return to revenue rather than a fixed date. Rather than set a date-driven repayment schedule, tie investment returns to a percentage of new product revenue, or a plan to convert the debt to equity. Use the minimum viable product concept to get revenue early, and allow market and product pivots at minimal cost.

In my experience, if you can’t find any friends or family willing to take the plunge with you early, or you have none of your own skin in the game, professional investors will likely take that to mean they shouldn’t be risking any money on you later.

In any case, I’ve never seen a new venture yet that couldn’t be started for less than $10 million. The challenge for every entrepreneur is to come up with creative ideas for financing, to match their innovative solution. Every investor I know believes funding creativity is what separates successful entrepreneurs from the dreamers. First impressions are everything in this business.

Marty Zwilling

*** First published on on 02/06/2018 ***



Friday, February 16, 2018

7 Strategies For Anticipating Future Customer Trends

technology-future-trendsThe market is changing so fast these days, and if you are not planning a solution today for tomorrow’s customers, you may be setting yourself up for failure and don’t even realize it. There are always new competitors who are planning their arrival tomorrow. As an angel investor, I routinely toss business plans that focus too much on today, and don’t talk about tomorrow.

As an example, I was just reading a plan for a new dating app with a tagline of moving users quickly from the virtual world into the real world of offline dating. That may be a boon to dating today, but if your business is making money from apps, it seems like your success will convince users that they no longer need your product tomorrow. Tomorrow is never mentioned in the pitch.

I was happy to see a real focus on preparing for tomorrow highlighted in a new book, “Start a Successful Business,” by Colleen DeBaise, who has made a career of studying and writing about entrepreneur challenges. She offers seven ways that business owners can identify and evolve with future trends, which I agree with and amplify here:

  1. Take advantage of industry research and trend reports. I often hear entrepreneurs who seem to rely wholly on their own passion, and the view of a few friends. With today’s Internet instant access to all the latest reports and white papers of industry experts, there is no excuse for not staying current with outside perspectives, to temper your own views.

  2. Regularly follow reviews and influencers in your industry. Of course, you may not have the time or desire to read through every document in your space, but it’s not so hard to find and follow some key influencer blogs on social media. These experts will curate the information, point to the best sources, and summarize implications for you.

  3. Use tools and analytics to identify trends and directions. There are many free generalized tools, including Google Trends, which can be used to track customer behavior in looking for things that don’t exist yet. In addition, most advanced CRM systems will help you analyze your specific customers for directional behavior.

  4. Make it a point to surround yourself with smart people. An easy way to connect with people you can learn from, and keep your pulse on where things are heading, is to hire team members who are smarter than you in complementary business areas, including marketing and sales. Spend more time with people who can help, rather than be helpers.

  5. Build and listen to an effective group of advisors. Find mentors and advisors who have more relevant business experience, insist you see things that aren’t on your radar, and spot what’s coming around the corner. A good advisor will tell you what you need to hear, not what you want to hear. You don’t need friends and family as business advisors.

  6. Ask the right questions, and listen to your customers. Don’t be afraid to ask current customers what’s on their wish list, and what they see as future needs in their areas. Beware of linear thinking on their part, so it’s your job to expand their scope with ideas outside the box, and ask them for a view of the business several years down the road.

  7. Learn to accept, and even schedule change regularly. The alternative is to be into the mode of playing catch-up, which can cause you to make mistakes in execution, or even get there too late. Sometimes you have to kill the cash cow, or make personnel updates before the crisis, to assure long-term business health.

I once served on the Advisory Board of a technical software executive who refused to believe that his product was no longer competitive, and insisted that sales and marketing were no longer doing their job. Unfortunately, we were unable to convince him to initiate a broad product upgrade, until the damage was severe. Thus no amount of input will help, if you are not listening.

In today’s market, it takes more than listening to stay ahead of the crowd. It takes initiative, a mindset of planned obsolescence and innovation, and a concerted effort to “see around the corner,” to see things that your customers will need, even if they don’t realize it yet. What have you done lately in your business to survive against the next Steve Jobs?

Marty Zwilling

*** First published on on 02/01/2018 ***



Friday, February 9, 2018

7 Myths That Kill Many Businesses Before They Start

Colonel-SandersYou don’t have to be a new venture advisor like me to hear all the excuses for not starting your own business. I’m sure all of you have friends who are not happy in their employee roles, and are not shy about complaining, but never seem to get around to doing anything about it. They can cite all the myths about being too old to change, not having the money, or no business degree.

They ignore the fact that Colonel Sanders was 62 when he franchised KFC, Steve Jobs started Apple in his garage, and Michael Dell and several others dropped out of school to build billion dollar businesses. Unfortunately, sorting out facts from excuses in the new venture arena has always been difficult, and today’s information overload has made it that much harder.

To organize my thoughts, I found a new book, “Burn the Business Plan,” by Carl Schramm, who speaks from experience founding five companies, working major corporate roles, and being an active venture investor. Among many other insights, he offers a perspective on several myths of entrepreneurship, which I can now paraphrase and prioritize based on my own experience:

  1. A real startup needs investors to get off the ground. In fact, research by Fundable shows that less than one percent of all startups are funded by venture capital and angel investors. Bootstrapping allows you to maintain full control of your startup strategy, retain maximum equity, and avoid the time delay and energy spent to attract outside investors.

  2. You need a business degree to start a venture today. The real value of a college education is in learning how to learn, since markets and business models are changing so fast. Business strategies are best learned from experience. In today’s world, more successful entrepreneurs have built on degrees in engineering rather than business.

  3. Working in a corporate world reduces your startup potential. On the contrary, early corporate training courses, potential future customer contacts, and getting real world marketing experience all are extremely useful for budding entrepreneurs. In addition, a regular paycheck and benefits help you build up resources before and between startups.

  4. Most successful entrepreneurs are young and crazy. According to the Kauffman Foundation and other studies, the average entrepreneur is actually thirty-nine years old, and the success rate of entrepreneurs over forty is five times higher than that of entrepreneurs under thirty. The percentage of startups created by entrepreneurs in the 55 to 64 age demographic is now growing faster than any other.

  5. You need quirky and more unheard-of ideas to succeed. The idea that novel products with minimal value to customers will somehow start a new trend is simply false. There is no substitute for market analysis, customer interaction, and attacking a real problem. Disruptive market changes take more time and money, and have the highest failure rate.

  6. Most successful startups spring from local incubators. An incubator may get you over initial hesitations, by connecting you with peers, advisors, and guiding you through the process of setting up a business. I find that most good founders proceed faster on their own, with less drain on their time from peers and programs, and no equity dilution.

  7. All successful businesses start with a business plan. In reality, Microsoft, Apple, Google, Facebook, and many others achieved success before they had business plans. The majority of startups, who don’t seek outside investors, most often choose to explore alternatives in real time, without a written plan to guide them or slow them down.

On this last point, I happen to believe that business plans, independent of investors, still have value in forcing new entrepreneurs to think through many key elements of their idea often initially overlooked – including the real size of the opportunity, cost of operations, and viable competitors. I have found that experienced entrepreneurs, who may least need plans, routinely create them.

Overall, there is no doubt in my mind that the image of an entrepreneur is at an all-time high, and the cost of entry is at an all-time low. So why would you continue to work in an employee role that you hate, and make excuses or believe the myths the keep you from starting your own business? It’s never too late to step into a new role where the definition of “work” is something you love.

Marty Zwilling

*** First published on on 01/23/2018 ***



Monday, February 5, 2018

5 Ways Today’s Market Allows Startups To Scale Faster

airbnb-brand-scalingAs an active angel investor, I’m accustomed to hearing entrepreneurs pitch their expectation to quickly create a new dominant brand, based on their disruptive technology. In the past, such statements have been credibility red flags, since “everyone” knows that a dominant brand takes decades to establish and scale. Only recently, I realized that times are rapidly changing.

Most of you probably recognize the brand names AirBnB, Instagram, and Slack, all of which are less than ten years old. These are companies that not only have a familiar brand, but carry from five to 35 billion dollar valuations. Of course, in a world which spawns over a half million startups every month, these accomplishments are very rare, but they are happening like never before.

The question that I and every investor have been asking is “What are the critical factors that are fueling the recent rapid scaling of consumer brands in today’s marketplace?” I just finished a new book, “Shortcut Your Startup,” by the entrepreneur brothers Courtney and Carter Reum, and I like their summary of five critical changes in the market that every entrepreneur should capitalize on:

  1. Pervasive computer usage is now the great equalizer. We are all more reachable through powerful and mobile personal computer devices, and the world is more and more connected with the Internet of Things (IoT). Whether our business is a startup or a multi-national brand, through platforms like Amazon, giant players have no special advantage.

  2. Brands are speaking through rather than to consumers. As a result of social media and mobile platforms, consumers have created a sharing economy – sharing their opinions, and speaking out to companies as well as their peers, rather than listening to brand advertising. Brand scaling is driven by customers, not by business, large or small.

  3. Tools allow marketing in a much more targeted way. In the past, marketing budgets were focused on high-traffic channels, with minimum focus on demographics. Today as companies use tools to collect massive amounts of data on desired consumers, brands are able to increasingly market to very specific groups of people, at less cost.

  4. Getting online traffic is less expensive and more real time. While brand building used to be dominated by larger well-capitalized companies, today startups can afford to get their products in front of qualified leads around the globe at a fraction of the cost and in much less time. Building a big retail presence, or buying Super Bowl ads, is not required.

  5. More capital is available for scaling and brand building. With the growth of angel investing in the last decade to venture capital levels, and the more recent crowdfunding to match both combined, there is more capital available for growth than ever before. Brands can fund operating losses in order to scale faster and acquire market share.

Today, time is your scarcest resource in a new venture. I can almost guarantee that if you’ve observed a market need, others have noticed it as well. Thus it is imperative that you get to market quickly, adapt to your customer demands, and scale before the market changes, or new competitors appear. The cost of time is increasing, and less time increases your odds of success.

As an investor, I also know that the longer you take to scale and reach a dominant brand position, the more capital your business will need, and the bigger your exit will have to be for anyone to make real money. Investors measure their success by looking at the internal rate of return (IRR). VCs know that a one-year difference in timeframes can be the determinant of success or failure.

The realities outlined here are as relevant to veteran entrepreneurs looking for new ways to boost performance as they are to aspiring entrepreneurs ready to take their first leap of faith. It’s obvious to me that the pace of business change is accelerating, with no respite in sight.

Although the cost of entry is low and anyone can play, not everyone should do it. First you need to take a hard look at yourself, to see if you find the challenge exhilarating or crushing. Time is of the essence.

Marty Zwilling

*** First published on on 01/18/2018 ***