Friday, August 31, 2018

7 Growth Choices That Can Make or Break Your Business

growth iqMost of you new venture founders I meet as an angel investor seem convinced that starting the business is the hardest part. You look forward to the day when your business becomes self-sustaining, and settles into a long-term growth curve, ensuring financial success. Unfortunately, sustainability is proving to be a more and more complex challenge in this era of rapid change.

I’m sure you can all think of several examples of businesses that popped up quickly, with great business models, but then faded just as quickly. Examples would include Pets.com, Webvan, and Blockbuster. Most executives will tell you that sustaining top-line growth with bottom-line profitability is perhaps the most persistent and vexing challenge they face on a daily basis.

The problem, according to Tiffani Bova in her new book, “Growth IQ,” is that it’s never just one thing. It’s all about picking the right strategy, right deployment context, with the right combination of initiatives. As the Global Customer Growth Evangelist at Salesforce, with implementation roles at many other companies, she makes a host of relevant observations for every business owner.

Based on my own experience of many years in businesses of different sizes, I’ve prioritized a few of her top recommendations here:

  1. Make every total customer experience memorable. These days, customers remember the total experience with a company longer than they remember the price they paid. This experience includes browsing your website, social media interactions, the sales process, as well as your support and follow-up. Problems in any of these areas will stall growth.

  2. Focus on selling more to your existing customer base. According to the Harvard Business Review, acquiring a new customer is anywhere from five to twenty-five times more expensive than retaining an existing one. You need to talk regularly to existing customers, find what they like about you, and welcome them every time they show up.

  3. Accelerate growth by expanding into new geographies. Instant global communication now makes it easy to reach new markets without rethinking your entire product strategy. The work required here is a full analysis of the best markets to pursue, based on future growth projections of your customer segment, as well as those to avoid.

  4. Expand your product line, staying close to the core. Totally new and risky products will dilute your focus, and may confuse existing customers. For example, adding new but similar cosmetics is better than adding hair care or dermatology products. Another approach is to add services that are related to your current product line.

  5. Pursue strategic alliances and partnerships. Partnerships work to accelerate growth when the sum of the whole is greater than independent efforts. For example, you may have a product, but not a strong distribution channel. An alliance with a distribution organization enhances the value to existing and new customers of both your solutions.

  6. Find ways to work with your competition. This approach to growth, usually called “coopetition,” capitalizes on the unique strengths of close competitors for a win-win situation for both. For example, I once worked for a small software company selling a sophisticated enterprise workflow solution fighting a similar solution in the marketplace.

    We provided an industry-leading graphic development interface, but were not strong on modeling and simulation. Our competitor was strong on the simulation end. A friendly cross-recommendation alliance allowed both of us, as well as customers to win.

  7. Highlight your social and environmental commitment. Companies with a real commitment to a higher cause, such as TOMS Shoes, which provides a free pair to a person in need for every pair sold, have seen their growth accelerate dramatically.

From organic candy that promotes world peace, to reducing environmental pollution by eliminating plastics, there is no category that should be off-limits. These efforts also lead to a highly engaged workforce, which is also key to productivity and sustainable growth.

As your business matures, you can never be complacent about growth. The market and world is changing around you, and new competitors, sensing your traction, will be nipping at your heels. You need to explore all these growth choices and others, and plan experiments to measure their value and timing. A business that is not attracting new customers is dying. Don’t let it be yours.

Marty Zwilling

*** First published on Inc.com on 08/16/2018 ***

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Wednesday, August 29, 2018

7 Equity Crowdfunding Risks Feared By Many Investors

Crowdfunding_by_HQAlthough professional investors may discount the impact of crowdfunding, they can’t argue with the growth of this new industry in the last few years. According to statistics by Fundly, crowdfunding contributed $34 billion in funding last year around the world, including peer-to-peer lending. That exceeds the amounts contributed in the U.S. by either angel groups or VCs alone.

Yet crowdfunding is no panacea for hungry entrepreneurs and startups. According to Yahoo Finance, less than a third of crowdfunding campaigns currently reach their goals, and the rest have to return anything they do collect. Crowdfunding may look easy, via popular sites like Kickstarter and Indiegogo, but their cost in time, effort, and money by entrepreneurs is daunting.

In fact, there are many types of crowdfunding, including donations, reward, pre-orders, loans, and equity. Professional investors, and more serious entrepreneurs, are most interested in money for ownership of a portion of the business (equity), and equity crowdfunding is still a small portion of the total (less than 10 percent), but growing. It is this growth that concerns many investors:

  1. Startup valuations can’t be negotiated via crowdfunding. Neither the entrepreneur nor contributors from the crowd generally realize that high or poor valuations will likely hurt them later, when follow-on rounds are needed, and professional investors walk away. If you watch Shark Tank on TV, you will see that startup valuation negotiations are the most common reason that investors fail to sign up.

  2. Crowdfunding does not facilitate multiple funding rounds. Very few startups need only one round of funding. The infrastructure to manage thousands of shareholders in a single company, called the stock market for public companies, is missing. Crowdfunding stock owners cannot sell their stock, or buy more, increasing risk to all parties.

  3. Startup investors have no insight to management or governance. Startups are not required to have a formal Board of Directors, and can’t afford to implement many of the financial and operational controls required of public companies. Professional investors normally negotiate board seats and communication protocols to minimize this risk.

  4. Crowdfunding bypasses the due diligence process. Investors from the crowd have no opportunity to look at financial, operational, or management details before making a final investment decision. This could allow problems to be propagated to later investment stages involving professional investors, making investments more risky and expensive.

  5. The “unicorn” potential attracts unsophisticated crowd investors. People see recent equity investors making billions by getting in early, ala Facebook and Amazon, and may not be prepared for the high probability of losing everything. Professional investors typically are accredited to at least the $200,000 level, and understand the risks.

  6. Payoff after a liquidity event is difficult and unpredictable. Professional investors like to keep tight control of capitalization tables and all stock owners, to facilitate their own payoff when a sale, merger, or public stock offering is held. With crowdfunding and thousands of tiny investors, this information and processing capability are big unknowns.

  7. Challenges in crowdfunding will generate more regulatory costs. The new audit, due diligence, and liability implications from equity crowdfunding will likely be extended to all professional investors, thus slowing down all investments, and increasing the costs for angel groups and VCs. This will ultimate make the funding process harder, not easier.

As an angel investor myself, certainly I recognize that there is never enough funding to cover the requests of aspiring entrepreneurs, so more investors are always needed. Thus, I always recommend crowdfunding as an alternative to entrepreneurs who may be struggling to find conventional investors, or may not yet have evidence of widespread demand for their solution.

If you are an entrepreneur, I recommend that you evaluate existing crowdfunding platforms for a good fit to your goals and expectations. Selecting equity crowdfunding is likely to be the most difficult approach, so sticking with one of the other options may be a better solution. Remember that taking money from anyone is a serious commitment, and must be handled with caution and integrity to keep your future options open.

Marty Zwilling

*** First published on CayenneConsulting on 08/14/2018 ***

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Monday, August 27, 2018

8 Management Behaviors Drive Change Without Crisis

Elon_Musk_BFRIn this era of rapid market and technological change, I know I have to challenge my small business advisory clients to keep innovating and stay ahead of the game. As you can imagine, it is human nature to look for a stable and unchanging business process, after all the pivots and chaos of starting your business. Innovation driven only by crises is not leadership and growth.

For example, I’m even getting worried about Apple not showing the kind of innovative leaps that Steve Jobs was famous for. Per a well-known Apple evangelist, Guy Kawasaki, real innovation is a lot more than “simply making the iPhone smaller or the iPad bigger.” Apple needs a product that jumps to the next curve. Customers and analysts are always looking for innovation indicators.

These indicators are a mindset and actions that every one of us can develop and demonstrate, without any special birthright, genes, or advanced intelligence. I will suggest to you as a business owner and entrepreneur that focus on certain key behaviors will drive innovation without waiting for the next competitive crisis:

  1. Be outspoken in communicating proactive required change. Andy Grove was a master at this, with his well-known motto that only the paranoid survive. His mantra was built on evidence that the number of transistors on a chip doubles every 18 months, changing everything. He didn’t wait for competitors to prove current products obsolete.

  2. Always be looking “around the corner” for paradigm shifts. Other champions of innovation, including Elon Musk with SpaceX and Hyperloop, always seem to be building future opportunities from trends and technology turns. They have the courage to make bold decisions, often contrary to conventional market research and linear thinking.

  3. Tie your business to a higher social purpose for inspiration. I find that entrepreneurs who change ahead of the times usually start with the “big” vision of making the world a better place. If you, like John Mackey with Whole Foods, are driven by a cause, rather than just money, you may be bending the market rather than have it bend you.

  4. Create and maintain a sense of urgency for the future. Too many companies try to force a sense of employee urgency through deadlines and performance goals. The best companies, including Google, create urgency within their team by engaging them in the business, addressing personal needs and flexibility, and building win-win relationships.

  5. Isolate new product teams from decimation by daily crises. Today’s business teams are typically understaffed, so expecting them to create the next generation of innovations will not work. Make sure that new projects are an ongoing part of your business, with control of resources, and responsibility to deliver results, like other business components.

  6. Allocate funds for intrapreneurship and acquisitions. In addition to investing in internal new innovative ideas, every successful company regularly looks outside to buy innovation, and use it to change their business. IBM, for example, regularly buys about a dozen companies a year to supercharge their own innovation efforts.

  7. Create positions for exemplary talent from other disciplines. If your business hires only to fill existing openings, it is falling behind, and ripe for competitive crisis. You need to always be scouring your industry and universities for thought leaders and influencers, and working to attract them to your company with new and creative positions.

  8. Set metrics and rewards specifically for innovation. What would happen in your company if all bonuses were predicated on at least 20 percent of revenue coming from products launched within the last three years? People work on what they get measured on. Metrics can be used to change ingrained behavior, as well as build revenue.

These behaviors which accelerate innovation apply to you as a leader at all levels – from an entrepreneur with a small team, to every business executive in a large corporation, to the chief executive of a multi-national conglomerate. Every one of us must actively be inventing the future, rather than reacting to it. It’s a key part of working on the business, rather than just working in it.

Marty Zwilling

*** First published on Inc.com on 08/13/2018 ***

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Saturday, August 25, 2018

8 Steps To Starting A New Venture With Limited Funds

business-man-time-versus-moneyNow is the time to be an entrepreneur and create a business from your passion. The cost of rolling out a business has never been lower – it only takes a few hundred dollars to incorporate a Limited Liability Corp (LLC) online, create your own website, use social media to get attention, and you are in business. In the early Internet days, it would cost a million dollars to get this far.

On the other hand, everyone is doing it, so that means more competition, and the market and technology are changing faster than ever before. Thus you have to do your homework to stay ahead of the crowd. Those that do it right also have the unprecedented opportunity to join the elite ranks of 250 unicorns (relatively new companies with a current valuation of over $1 billion).

Even the homework is easier, with free and mobile access through the Internet to more business assistance sources, opportunity data, investors, and competitor details around the world. Yet, as an angel investor myself, I can attest that many potential entrepreneurs try to take shortcuts, or ignore the realities of business. I suggest the following sequence of startup preparation steps:

  1. Create a business entity early to isolate business efforts. Co-mingling personal and business funds and accounts creates legal risk and tax liability, and makes your efforts look like a hobby. These days you can create a C-corp or LLC online quickly at a low cost, to serve you well in signing partners, intellectual property, investors, and revenue.

  2. Prepare a pitch deck to document and share your plan. Advisors and investors need to see your whole story in as few as ten slides. Make sure you cover not only your solution, but also the opportunity size, competitors, financial projections, and team qualifications. A full business plan and financial modelling can come later to add details.

  3. Validate your solution with a prototype and real customers. Ideas are not enough to gauge business potential. You need something real that investors and customers can touch and feel. Most investors expect a minimum viable product (MVP) sold to at least one customer. Investment before that time must come from you, or friends and family.

  4. Build a following and start a brand through social media. The major social media platforms, including Facebook, Twitter, and Instagram, allow you to reach millions of customers around the world at virtually no cost. You need early customer advocacy and feedback before critical time and money are spent. This is the time for pivots as required.

  5. Participate in networking platforms and events for support. You need to recruit advisors, key partners, and cofounders well before approaching investors. In addition to local business meetings, this can now be done online through startup matchmaking sites, including CoFoundersLab, Founder2be, and StartupAgents, as well as LinkedIn.

  6. Build a quality team to complement your own skills. Building and running a business is not a solo task. Technical entrepreneurs need to surround themselves with people who have the financial, marketing, and operational experience in managing a business. A good team will likely consist of a mix of remote employees, freelancers, and contractors.

  7. Find investors through online platforms and crowdfunding. After starting with local investors acquired through warm introductions from friends and peers, you now have access to professional investors through online portals, including Gust and AngelList. A new online investor source is crowdfunding, with sites like Indiegogo and Kickstarter.

  8. Execute a pilot rollout before attempting to scale globally. A local pilot is a necessary move to test your manufacturing, operational, and marketing assumptions. Early pivots can be implemented here with minimal impact. In addition, global scaling will likely require additional investors, who will demand to see real revenue and customer demand.

With these steps, you really don’t need a rich uncle or a benefactor in Silicon Valley these days to start your own business, and keep ahead of the crowd. The resources online are tremendous, if used correctly, and even small startups can have the same global reach as the big guys. The challenge is to do it right the first time, since time is of the essence in these time of rapid change. That also means you need to get started today.

Marty Zwilling

*** First published on CayenneConsulting on 08/09/2018 ***

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Friday, August 24, 2018

6 Steps to High Performance - Start Your Own Business

young-steve-jobs-and-bill-gates-togetherMost of the people I know in business are just plodding along, working hard, and hoping that their natural talent, with a little random luck, will somehow keep them ahead of the crowd, and let them enjoy their life as well. They don’t realize that you can make your own luck as an entrepreneur, start your own business, and get an unprecedented opportunity to achieve your highest potential.

For example, Bill Gates was a great young programmer, who could have done well in any big company, but could never have become one of the richest men in the world if he hadn’t started his own company. Jeff Bezos had a good career on Wall Street, but never could have imagined his real potential, until he put his mind to creating Amazon as the largest retailer in the world.

In fact, I’m convinced that most employees in business are not living up to their real potential, while feeling overworked and underappreciated. They see others who are perceived as the high performers, and they are not quite sure what might be going wrong. I just finished a new book, “8 Steps to High Performance,” by Marc Effron, which provides some new guidance in this area.

Marc brings years of talent-management experience and science to the picture, which correlates well to my many years of practical experience in big companies as well as small. Here is my selection of his key steps that relate well to my view of starting your own business as a step in realizing your full potential:

  1. Set big goals to stretch your mind outside the possible. Goals have incredible power to focus and motivate you, and this positions you for higher performance. Bill Gates goal of a computer on every desk and in every home, so revolutionary at that time, no doubt pushed him to go beyond anything he could have accomplished as a great programmer.

  2. Lead with behaviors that drive your best performance. All behaviors are not created equal, from the standpoint of what you can contribute, and what your company values. We all have personality characteristics that give us a performance advantage in some situations. A startup allows you to create environments that highlight your advantages.

  3. Accelerate your own growth and learning curve. How many times have you told yourself that you aren’t learning anything new in this job? It’s up to you to ask for more training, more responsibility, or a new opportunity to put you back in learning mode. Top performers often create their own personal experience map to guide their development.

    Elon Musk is a great example of an entrepreneur who is always pushing himself into new learning opportunities – moving from PayPal to SpaceX, Tesla electric cars, Hyperloop, to OpenAI. The possibilities are endless, and his performance is mind-boggling.

  4. Increase the strength of your network of relationships. Who you know does matter in getting things done, and the strength of your relationship with them matters even more. You need a powerful network inside and outside of work. Spend your coffee time and lunches with your highest performing peers, rather than the best office gossips.

    Asking for mentoring, and being a mentor are both great ways to build relationships. Bill Gates often refers to his ongoing relationship with Warren Buffett as a mentor, and Mark Zuckerberg counted Steve Jobs as a key mentor. Make every relationship a win-win.

  5. Identify and seek the environments where you best fit. You have a specific career expectation, personality, and preferences, so it’s up to you to understand where you naturally fit today, and where that fit will be in three to five years with the company. As an entrepreneur, you have the flexibility to create and live in the environment of your choice.

  6. Avoid the performance fads that suggest easy answers. Being a high performer would be easy if every management guru and seminar could fix you. Many of these fads claim to make your life easier, quickly increase your performance, or give you instant self-confidence, but they are no substitute for you fixing yourself per the points above.

I’m convinced that these steps will help you to focus your efforts where they can have the most impact on your performance and your ultimate potential. The key is separating the factors that you can control (goals, behaviors, networks, and role) from those that you can’t (intelligence, socioeconomic background, etc.). Starting your own business is a great way to make this happen.

Marty Zwilling

*** First published on Inc.com on 08/08/2018 ***

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Wednesday, August 22, 2018

8 Challenges When Scaling Your New Venture Worldwide

worldwide-business-opportunitiesMarket opportunities for your new venture are now immediately worldwide, thanks to the pervasive access to the Internet and social media communication. But this doesn’t mean that you can treat the world as one big homogeneous market, ignoring the vastly different geographic cultures, economic, and political realities. Scaling worldwide is like hyperlocal on steroids.

Many businesses, large and small, have stumbled in this area. For example, Starbucks’ first efforts to expand to Israel and the Middle East failed miserably due to a totally different “coffee culture” there, not accommodated adequately. Even the venerable McDonald’s failed to recognize that in Bolivia, their price per meal was off the charts compared to indigenous alternatives.

Thus, as an advisor to small businesses and startups, I have put together my own list of strategy recommendations to get you off on the right foot, and keep you on track as you expand your business outside your local environment, and outside your country around the world:

  1. Don’t let experience in local markets drive global assumptions. Global expansion is never simply a multiplier applied to local results. Do your homework in each new market and validate it with a controlled experiment before spending big money on a rollout. In foreign markets, this may require feet on the ground, due to lack of available data.

  2. Check historical data for economic and political stability. Many international markets have a history of sudden or cyclic changes that could dramatically increase your risk, or cut your opportunity. This expectation of sudden change, or their inability to deal with economic shocks means that you should prepare backup plans to minimize the risk.

  3. Evaluate local transportation, energy, and financial services. These factors can totally change your customer value proposition, or your cost of doing business in that geography. In fact, you may need to tune your business model, such as the elimination of free shipping, or adding a customized support contract, to accommodate local issues.

  4. Factor in currency exchange costs and variability. Smart business owners have learned to lock in exchange rates, manage accounts receivables carefully, and engage local financial organizations who know how to manage transactions in this environment. Currency exchange considerations are especially critical in local contract negotiations.

  5. Accommodate the local cultural traditions and ethics. The local culture affects not only the decisions a business owner must make, but also how the customers view your business. Failure to accommodate these will cost you money could leave you red-faced. I recommend that you hire people in the local market to manage your business there.

  6. Investigate local alliances and partnerships. One of the most effective ways to expand your business and grow in unfamiliar markets is to join forces with another company of similar size and market presence that's located in a territory where you would like to be. Don’t forget to evaluate your competitors for “coopetition” alternatives that benefit both.

  7. Proactively engage a local expert to build a rollout strategy. The last thing you need in a new market is dealing with early mistakes and trying to repair a tarnished reputation. Uber and Airbnb have both been hurt by tough local barriers and labor laws which can have lasting consequences. Don't skimp on the cost of using overseas legal counsel.

  8. Enjoy the challenges and learning opportunities. International expansion is often seen as one of the best learning experiences for business owners, as well as an enjoyable travel opportunity for you and the family. Don’t forget that you are your most important business asset, and that your business must to be satisfying and fun.

Don’t look for any magic formulas to expand your business globally. The challenges are continually evolving and are, at their root, a product of social interaction, economic evolution, and political dynamics. It will always take smart business owners, armed with the latest knowledge, proper homework, and modern analytic tools, to minimize the risks and maximize opportunities.

Tapping into global markets, especially the large and under-developed ones, not only promises market growth beyond your most optimistic vision, but also empowers people around the world to share in a better economic future. It’s time to make the global opportunity part of your business plan today.

Marty Zwilling

*** First published on CayenneConsulting on 08/07/2018 ***

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Monday, August 20, 2018

7 Employee Practices That Will Make You A ‘Superboss’

boss-trust-yourselfEvery business executive and entrepreneur I know believes they are good or even great leaders, but as an advisor I often hear a different story from their team. You probably have a few stories of your own about a least favorite boss who was always too busy to listen, gave nothing but critical feedback, was prone to emotional outbursts, or simply was not really present in body and spirit.

I hear about many more who try to do all the right things, but just don’t seem to be the role model for leadership you crave, or be someone you would want to emulate. For example, entrepreneur Richard Branson, beyond his flamboyant and irreverent style, is known for seeming to viscerally understand the needs of his employees and being a conduit for fulfilling those needs.

I’m not convinced that anyone has to be born with a special set of genes to be recognized as a memorable leader. In fact, all managers and people in leadership positions just need to focus their efforts on their people versus themselves to get respect. Based on my experience, there are a few key people practices that can put you too in the super boss category. Here is my short list:

  1. Provide personal growth assistance beyond training programs. Help your employees build their individual strengths with customized coaching and special assignments. We all have strengths and weaknesses, and most of us as managers focus only on weaknesses. Be one of the few who highlight strengths with feedback, recognition, and new opportunities.

    In one of my own stints as an executive in IBM, I found that putting a high-potential employee on my own staff for a few weeks was highly motivating and taught me the realities of senior management responsibilities better than any class could.

  2. Inspire team members to set and achieve personal goals. Spend more of your time on personal as well as team communication, instilling confidence in people to set work goals that are consistent with their personal aspirations. Then provide the feedback, assistance, and rewards required to make these a win-win proposition for both you and them.

    For example, early in my career when I was seeking to increase my visibility, I had a great boss who asked me to lead an "extra credit" programming project that tested my ability, but ultimately gave me a huge boost with executives outside my area.

  3. Actively seek new opportunities for good employees. This may seem counter-intuitive to many managers who fear losing their best employees, since managers never seem to have time to focus on recruiting and mentoring new talent. They don’t realize that great team members will leave anyway, leaving only the least productive members.

  4. It's better to give exceptional team members a new opportunity than to wait for them to look elsewhere or be stolen by a competitor. Richard Branson was quick to allow one of his own employees take the lead with a new venture in Australia, even though it meant losing him on the home team.

  5. Make the task fit the person, rather than person fit the task. This is another aspect of capitalizing on strengths and satisfaction. In today’s rapidly changing market, it makes sense to let people find innovative ways to use their talent to help your business, rather than forcing them to do things the way they have always been done.

  6. Recognize depth of relationships as well as skill depth. In business, very little gets done by one person alone, so good connections and team building are critical to personal growth and success.

    You need to understand the cohort effect (experiences shared by a group), and mentor individual team members on how to initiate, manage, and utilize key relationships. I found in my career that an employee who knew how to work with other organizations could get twice as much done as a regular hardworking team member.

  7. Push people to rise to a challenge outside their qualifications. People are generally capable of much more than they will attempt by default, and great leaders look for signals to amplify that can lead to a win-win challenge. Formal qualifications should never be used as the limit of what you can expect from highly motivated team members.

  8. Be willing to create a position for exceptional new talent. The best business leaders are always on the lookout for new talent through networking, browsing social media, or acting as university liaisons. They don’t wait for openings on their team, and often create a new position to take advantage of special talent availability.

These days, you need regular change in any organization to maintain a level of innovation and creativity. What could be more satisfying than to be a cherished manager and lead a successful business?

Marty Zwilling

*** First published on Inc.com on 08/06/2018 ***

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Monday, August 13, 2018

7 Keys To The Investor Challenge For Your New Venture

box-of-hundred-dollar-billsAccording to the entrepreneurs I advise, the biggest challenge they typically face in starting a new business is funding. It consistently takes a huge amount of time and effort to find an investor you can trust, and that constrains your efforts in developing the solution you envision. People always expect that it should be easy to find investors, given their passion and excitement for the solution.

Yet according to recent data compiled by Fundable, 57 percent of successful entrepreneurs end up funding their startup, and that’s a good thing. If you want to run your own show, and not hand off a large chunk of future financial gains before you start, the only approach is to dip into your own resources, or even work for someone else a while and save until you are ready to break out on your own.

According to the same sources, another 38 percent get support from family and friends, so that leaves only five percent who rely on crowdfunding, banks, angels, or VCs. The hard work begins then, in finding a match for your domain and solution readiness stage, as well as an investor that matches your vision, values, and needs. Here are the steps I recommend to optimize your efforts:

  1. Prepare a killer pitch and backup materials prior to investors. Many entrepreneurs I know approach investors before they have a pitch. You only get one chance to make a great first impression, so you need ready answers to key financial and business issues. Do your homework on opportunity, competitors, financial projections, funding required, and hook investors the first time you can with an executive summary and ten-slide pitch.

  2. Request warm investor meetings from peers and advisors. The old cold call or broadcast email to anyone who has “investor” in their bio just doesn’t work. In my experience, an introduction from a mutual friend or business associate will double or triple your odds of closing a deal. In fact, advisors and peers are the ideal investor.

  3. Ask for help from people who really believe in your solution. Your advocates feel a real stake in your success, and will often do much of the legwork for you, if not becoming an investor themselves. In any case, they can expand your community of believers, which is a key to success in crowdfunding, or passing the due diligence of a professional.

  4. Participate in relevant industry events and thought-leader forums. You need all the visibility and credibility you can muster to attract investors, and working at this level will also give you valuable feedback on your strategy and solution. It’s also the place to meet future partners positively, and even competitors before they realize they should hate you.

  5. Schedule early high-profile customer calls for partnerships. As much as you need an investor, you need a few key customers to be your advocate and beta test site. These customers may also decide to fund you via royalty advances, or even a partnership. You benefit from their visibility, and they get personalized service and the features they need.

  6. Offer a realistic equity percentage to generate interest. Professional investors know that real help requires serious effort on their part. They will be turned off by single-digit equity offers and loan requests with low return potential. First-round funding requests should offer equity in the twenty to thirty percent range to justify serious ROI potential.

  7. Establish a positive and active relationship with investors. Investing in your venture isn’t a “fund it and forget it” scenario for any serious investor. In fact, investors will grow wary when there’s too much silence, or any effort to treat them as adversaries. Your reputation is dependent on sincere communications, inclusion, and common goals.

The ideal professional investor also changes as your startup matures. Angel investors typically are best for initial early-stage rollout funding, while venture capital firms typically are most valuable in later rounds, when you have real traction, higher valuation, and need larger investments for scaling the business across the country or across the globe.

Even if you decide to bootstrap or fund your own startup, the steps I recommend for preparation and execution are still valuable, since you are thus the key investor, and will benefit from the proper disciple on plan preparation, industry interaction, and customer involvement. Casual and random efforts can quickly turn your startup into an expensive hobby, rather than a business.

Marty Zwilling

*** First published on Inc.com on 07/27/2018 ***

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Sunday, August 12, 2018

5 Indications That You Can Survive Startup Failures

Steve-Jobs-resilienceYou can’t survive as an entrepreneur without resilience, because you are going to fail at least once, maybe multiple times. That’s the nature of trying something that’s never been done before. Resilience means not giving up, and being energized by what you have learned. As Thomas Edison said, "I have not failed. I have just found ten thousand ways that won't work."

If you need more evidence that great entrepreneurs survived through resilience, just look into the backgrounds of more recent entrepreneurs like Steve Jobs, Bill Gates, and Elon Musk. They all experienced multiple setbacks along the way, but they persevered to become some of the most well known and respected entrepreneurs of our time.

In a classic book on the subject, “Stronger: Develop the Resilience You Need to Succeed,” by George Everly, Douglas Strouse, and Dennis McCormack, these experts on the subject of human behavior and resilience outline five key factors of personal resilience, which I believe every aspiring entrepreneur should understand and develop before initiating a startup:

  1. Maintain active optimism. Optimism is the mindset to expect the best outcome from every situation. This gives entrepreneurs the capacity to pivot from a failing tactic, and implement actions to increase success. The key to building active optimism is observing how others were successful in similar situations, and believing you can do the same.

  2. Courage to take decisive action. Decisiveness mitigates adversity, helps you rebound, take responsibility, and promotes growth. Building decisiveness requires eliminating fear, procrastination, and the urge to please everyone. Practice making decisions as a positive learning experience. Understand that any decision is usually better than no decision.

  3. Let a good moral compass guide you. We all need a guiding light when adversity strikes. The four points of honesty, integrity, fidelity, and ethical behavior work best in business and personal life. Solidify your moral compass by setting virtuous goals, keying off the norm of inspiring peers, practicing self-control, and celebrating every successes.

  4. Show relentless tenacity and determination. Decide that giving up is simply not an option. Learn that tenacity is self-sustaining when persevering actions are rewarded. Find tenacious role models, and garner the support of peers and friends. Great entrepreneurs become tenaciously defiant when told they cannot succeed. Then they get it done.

  5. Gain strength from the support of others. Interpersonal support is believed to be the single best driver of human resilience. In business, this means that the people you surround yourself with are crucial – team members, advisors, investors, partners, and peers. Avoid toxic people like the plague. Practice active listening and show appreciation.

Very few entrepreneurs are born with the resilience needed. Yet, it is something any startup founder can acquire as an advantage in the ever-more-competitive business world. A good part of it is fighting the urge to revert back to our comfort zones, and fall back into old habits. From the pain of failure comes wisdom, from fear comes courage, and from struggling comes strength.

Resilience also comes from paying attention to your own needs and feelings. Entrepreneurs need to engage in outside activities that they enjoy and find relaxing, to keep their body and mind fit to deal with the unending challenges of every business. In addition, it’s important to have a higher level purpose in life, such as insanely great design, to guide your resolve and your decisions.

The Steve Jobs story of resilience is a classic example of a higher purpose, woven into the five factors above, ultimately leading to success. His elegant design decisions may have failed him initially at Apple, but he went on to hone them at NeXT and Pixar, and finally won his legacy by coming back to Apple with winning innovative designs for the iMac, iPod, iPhone, and iPad.

Steve never gave up, and that’s the essence of resilience. That’s what I look for as an angel investor in entrepreneurs, and that’s what everyone looks for in a leader. What have you done lately to build and demonstrate your resilience?

Marty Zwilling

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Thursday, August 9, 2018

8 Ways To Ensure That Your Website Is Winning For You

Conversion-rate-optimizationIt’s hard to be successful in any business when your customers can’t find you, or they find you and still can’t figure out whether your solution works for them. Thus I was surprised to see in a recent CNBC survey that 45 percent of small businesses still don’t have a website. These are missing a major opportunity to be found instantly via the Internet, locally and around the world.

Even more disappointing are other statistics that show most websites that do exist have a very low “conversion rate,” or ratio of visitors to the site versus ones who meet your goal of buying a product or signing up for a newsletter. In fact, very few website owners even track their website activity, or use Search Engine (SEO) or Conversion Rate Optimization (CRO) tools now available.

Highlighting the problem, and the solution, I just found a new book, “Making Websites Win,” by Dr. Karl Blanks and Ben Jesson. Their insights are based on their experience optimizing websites for hundreds of clients in 34 countries, and they provide many practical tips on how to easily double your own website conversion rate or more, including the following:

  1. Content must be written well, user-friendly, and credible. Usability problems kill conversions. By far the most effective technique for improving your writing is simply carrying out user readability tests on every piece of content, and really listening to feedback. Keep sentences short. For credibility, support facts with hard data and links.

  2. Tell people what you do, and make the benefits clear. Believe it or not, one of the biggest problems with many websites is that people can’t figure out quickly and easily what you really offer. Use plain language (no acronyms) on the first page and every page, to emphasize customer benefits, as well as product features. Skip the hyperbole.

  3. Provide irresistible offers to keep their attention. Even if your visitors can easily understand your value proposition, they may be turned off by the way the value is packaged and presented. Test your pricing and packaging options, and tune them regularly. Create a prominent and appealing offer or video to lock in a conversion.

  4. Recognize competitors but do not disparage them. If you don’t have a strategy for winning despite competitors, you are doomed. No company exists in a vacuum. Find your niche and highlight how your product meets the customer’s exact need, and is the best in the world. Make your solution and company symbiotic but better than competitors.

  5. Focus on lifetime customer value (LCV) versus transaction. Repeat purchases and referrals from friends are the fastest ways to grow your business. Furthermore, existing customers are the easiest to convert—provided they had a good experience the first time around. Use Net Promoter Score (NPS) to help you turn visitors into raving fans.

  6. Make it easy for a visitor to become a customer right now. In non-conversion exit surveys, visitors often report that they need to think about it and come back later. Such responses are common for purchases that seem complex and non-urgent. In such cases, remove the complexity, add the value of urgency, such as current discounts or specials.

  7. Use guarantees to remove visitors fear of commitment. A guarantee reduces the risk for the customer. A good guarantee acts as a kind of proof that your business is serious. It effectively says, “Our promise must be true. Otherwise we wouldn’t be in business.” Effective guarantees include: price-match, satisfaction, payment-deferral—even weather.

  8. Compensate for sales funnel elements outside of your control. If visitors have to go elsewhere, like financing, to close a deal, ensure that they are fully persuaded before they leave your website. Build a relationship, be memorable, and don’t rush them to leave. Meantime, get permission to edit those funnel parts that aren’t in your control.

I encourage every small business and entrepreneur to create a website early, and use these tips to make it more effective. The best websites are certainly not the most expensive, but do require thoughtful planning and regular updates. With some guidance from experts, and the many tools available, you can make your small business look better than your biggest competitor. Do it now.

Marty Zwilling

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

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Wednesday, August 8, 2018

10 Tips To Strategic Decisions Made Without A Crisis

strategic-decisions-no-crisisStrategic decisions set the overall direction for your business, whereas operational decisions set day-to-day operations. Unfortunately, most of the entrepreneurs who contact me for guidance only seem to work on strategic issues when they are in a crisis, such as losing a major distributor or being swamped with customer complaints. It’s a bit late when strategy becomes operational.

I recommend that every entrepreneur and business owner carve out some time every week for proactively work on strategy. I call it working on the business versus working in the business. Working on the business should not be done in the same ad-hoc crisis style as operational decisions. I suggest a more formal analysis and decision process along the following lines:

  1. Identify potential next business steps based on trends. Force yourself to step outside the box and come up with a half dozen innovative changes which might improve the business. Ask your team to prioritize these alternatives, based on costs and other impacts. Part of the intent here is to get buy-in from the team that change is not all bad.

  2. Challenge your team with strategic questions and issues. The process of asking and answering strategic questions is key to getting everyone to think beyond today. Every entrepreneur benefits from out of the box thinking. The “5 Whys” is another iterative technique used to determine the root cause of issues and stimulate in-depth thinking.

  3. Ask for analysis and feedback based on long-term impact. Often, beneficial changes will have a short-term cost to achieve market growth or competitive advantage. Investors, for example, usually want short-term profit distribution versus re-investing for the future. Thus every analysis needs to chart impact over the strategic timeframe, with risks.

  4. Look for objective and current data to support your analysis. Many crisis operational decisions are made from gut instincts and emotional reactions. Strategic decisions need to be based on statistically valid samples of complete and consistent data, relative to the decision at hand. The best analysis done on bad data will still yield a bad decision.

  5. Factor in previous results, best of breed, and known failures. Unlike operational decisions, strategic decisions require going beyond your own experiences to look at competitors, industry experts, and failures in the marketplace. Make sure you don’t repeat your own mistakes, or the mistakes of others before you. Quantify risk levels.

  6. Don’t allow analysis paralysis to hamper strategic decisions. Always identify your top objective for any specific decision, and use that to drive everyone to closure. Many business owners over-think key directional decisions, to the point where a change never gets made, or conditions have changed by implementation. Time is money in business.

  7. Make strategic decisions based on your values and goals. After listening to the opinions, suggestions, and ideas of others, strategic decisions have to be made by you, tempered by your vision. Don’t try to please everyone with every decision. You need to be comfortable with your business and your legacy. Only you will be held accountable.

  8. Every strategic decision needs a “Plan B” for backup. Contingency plans make sense in every case these days, since technology and market factors are moving fast. In all cases, there are factors involved that you can’t control, such as regulatory, economic, or environmental. Having a Plan B must never be shortcut for not doing proper analysis.

  9. Define metrics to assess roll-out progress and value. Tie your implementation to metrics that will allow you to determine whether or not your decision truly achieves your goal. Establish milestones that you can tie to your annual and quarterly objectives. If you track your progress against measurable targets, you can adjust tactics as necessary.

  10. Communicate strategic decisions to all, with implementation plans. Strategies loudly proclaimed, but without a specific roll-out plan, will be ineffective or will fail. Everyone has to understand what has to be done, how to do it, and who is responsible for each element. Your task is to manage the rollout, and make necessary adjustments.

In today’s business world, making sound strategic decisions is increasingly critical and difficult, primarily due to the current high levels of volatility, uncertainty, complexity and ambiguity in the marketplace. Thus it behooves every business owner to spend more of his or her time on strategic planning, and delegate more of the operational elements. Where are you on this split?

Marty Zwilling

*** First published on CayenneConsulting on 07/24/2018 ***

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Monday, August 6, 2018

7 Ways To Demonstrate Leadership In A Business Crisis

Business-crisis-leadershipWhen the business is struggling, most business owners I know feel like anything but a leader. They start second-guessing their own vision, and are prone to making snap decisions suggested by someone else, in lieu of their carefully crafted processes and metrics. Entrepreneurs who can keep their cool under fire are the long-term winners I look for as an experienced angel investor.

In fact, the best will probably tell you that entrepreneur struggles are the best leadership teachers in the long run. Sir Richard Branson, who has built hundreds of companies, is quick to note that his trails and failures have taught him the most about leadership, and may even have saved his life in other endeavors. The challenge is to anticipate and meet struggles in a productive way.

Effective leadership in a crisis does require a base level of stability and emotional intelligence, which I believe can be sensed by investors and the people around you, even if you don’t have any prior experience in this area. In addition, there are some practical strategies that I recommend, no matter how much you have previously learned or experienced:

  1. Act quickly when you see the team facing issues. When the business is struggling, you should expect anxiety on the team. Communicate with them immediately on the problem and strategy, rather than assume the less they know, the better off everyone is. You need to avoid emotion, don’t place blame, and be the role model for calm.

  2. Be visible, actively solicit and listen to team feedback. People need to know that it’s safe to express views, both positive and negative. Once you get beyond the negatives, most people have real contributions. Your front-line team can give you direct feedback from customers, such as pricing, quality, or support problems, with suggested solutions.

  3. Seek out advisors who will tell you what you need to know. You will get no real help from people in the organization who tend to tell you what you like to hear, or are always negative. Smart entrepreneurs build relationships with trusted advisors, both inside and outside the company, who can see the big picture and recommend practical changes.

  4. Take time to practice management by walking around. Direct contact with people at every level is the best way to learn, generate trust, get support, and expedite action. Don’t assume that your message to direct subordinates will be passed down the management chain, or that input from the team will get back to you by the same process.

  5. Don’t allow analysis paralysis to keep you from taking action. Encourage decisive action by all key players, and be the role model for what you expect. If everyone is accustomed to fixing problems with confidence, the business will prosper, struggles will occur less frequently, and customers will sense the integrity of an effective team.

  6. Eliminate any implied or actual penalties for missteps. Create a culture that encourages and rewards innovation and progress, with no stigma for failed experiments. Eliminate any contention between internal groups and functional areas, including sales, marketing, and development. Make sure everyone is willing and able to pull their weight.

  7. Negotiate alternatives with external partners and investors. New and existing partnerships can provide new sources of revenue, distribution, and support. Investors and major suppliers may be able to provide additional funding and credit to get you through the hard times. Your initiatives will also cement your own leadership perception.

With these strategies, you can feel like and look like the leader you want to be, even when times are tough and the business is struggling. In all cases, it does require that you put aside your ego, emotion, and pride, to listen carefully to the people who want to help, and don’t hesitate to make the critical decisions you have to make for your company, your team, and your customers.

These efforts will take you back to the reasons for taking on your own business in the first place – having full control of your destiny, being your own boss, and doing what you love. Don’t let the struggles, which come with every business, make you forget that.

Marty Zwilling

*** First published on Inc.com on 07/23/2018 ***

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Wednesday, August 1, 2018

7 Signals Of A Future Startup Founder From Corporate

Howard-Schultz-StarbucksWhile spending years in a big company as an employee and an executive, I heard many people talking about jumping the corporate ship, dreaming of being an entrepreneur, and totally in charge of their own destiny. Fortunately for many of them it was all talk and no action, saving them from a world of grief, since some simply didn’t have the attributes and mindset to be an entrepreneur.

I’m not saying success is rare, but the list of famous entrepreneurs who started their career in a big company is small. The list would include Howard Schultz, a marketer working for a Seattle coffee bean roaster when a trip to Milan convinced him to jump ship to create upscale espresso cafes that he found all over Italy; and maybe Steve Jobs, who started on the night shift at Atari.

I made the jump myself from IBM several years ago, and now have a satisfying startup advising small businesses and mentoring entrepreneurs. I’ve accepted the challenge of being a bit more positive on how you can make the leap and enjoy it. It’s not very helpful to just say the grass always looks greener on the other side of the fence. Here are some attributes I look for in you:

  1. Have a passion for a new idea or cause to change the world. Being unhappy with a current job is not really a good reason to become an entrepreneur. I look for interests and plans that ignite a fire inside you every day, solves a real problem in the marketplace, and can attract customers with money to spend. Focus on customer value in every job.

  2. Comfortable interacting with people on business subjects. Most technical people I know love to discuss and debate technology, but avoid business subjects, including finance and marketing, like the plague. They simply don’t have the interest, or confidence in their ability, in these areas. At least half of every entrepreneur’s realm is business.

  3. Confident and ready to make better decisions than your boss. If you can’t wait to control results yourself, and without emotion see dysfunction around you, your employee to entrepreneur potential is high. In fact, if you can capitalize on all that you learn in a big company, such as people management and infrastructure, you are even better prepared.

  4. Already have dependents and employees who look up to you. Jumping the corporate ship to entrepreneurship to escape conflicts with your team or management, or instability in your family, is a very risky move and not recommended. Good entrepreneurs need to be a role model in all actions and attitude that others want to follow, rather than avoid.

  5. Willing to accept setbacks and advice as learning experiences. Entrepreneurs have to be able to deal with rejections from investors, negative feedback from customers, and competitor issues without losing control or motivation. Every new business fill face setbacks, and making excuses or pointing blame to the company is not an option.

  6. Have a demonstrated aptitude for managing money and budgets. Managing cash flow correctly is key to the survival of every entrepreneur. Corporate experience can be very helpful in this regard, if you have had success in managing a budget for your project, department, or division. Otherwise think twice before jumping to a new startup venture.

  7. Can leverage a retirement fund or accumulated savings. I often recommend to aspiring entrepreneurs who have no money that they spend some time as a corporate employee first, to accumulate resources. Expecting an investor to fund you when you have no “skin in the game” and no product is a hard road, and will likely not happen.

Everyone who feels stuck in a rut at work, is recently unemployed, or is hanging on to an existing job and sanity for dear life, needs to take a hard look at themselves relative to these potential positives. If you can’t find an enthusiastic yes for most of them, perhaps it’s time to appreciate the positives of a regular weekly corporate paycheck for predictable work you know how to do.

Overall, it’s worth your while to turn every ‘no’ on these items into a ‘yes,’ even if you plan to stay in the corporate environment. Every company I know will pay a premium these days for people with entrepreneurial attributes. Make these attributes your strengths, whether you see a future in a corporate career, an entrepreneur, or just to prepare for the new gig economy that we all face.

Marty Zwilling

*** First published on Inc.com on 07/18/2018 ***

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