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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Sunday, August 26, 2018

7 Reasons To Reconsider A Planned IPO Exit Strategy

alibaba-ipoDespite the fact that the number of IPOs (Initial Public Offerings) for startups have continued to stay low, I still hear it touted often as the preferred exit strategy. I suspect the exuberance for an IPO is still being driven by the highly visible successes of a few companies several years ago, including Facebook, Yelp, and Twitter. Everyone dreams of becoming a billionaire overnight.

According to Investor's Business Daily, even though IPOs in 2018 through July were up nearly 39 percent from last year, the total of 115 companies so far is still nowhere near the rate required to match the yearly total of 486 hit way back in 1999. The market for recent IPOs also remains extremely volatile, and as a result many of them are currently trading below their opening price.

Concerns over valuations being reset to a new normal, and a soft exit market, are seen as key drivers. Yet I believe the trend will continue flat as entrepreneurs become more aware of other considerations that make the IPO route less and less attractive. These include the following:

  1. Taking a company public is an expensive process. It will take many months and require endless amounts of time, money, and energy. According to a dated but still relevant study by PricewaterhouseCoopers, companies average $3.7 million spent directly on their IPO, in addition to underwriter fees of 5 to 7 percent of proceeds. It takes real money to find money.

  2. Make sure you can effectively use a big cash infusion. There is a big difference between needing a million dollars versus $100 million, or even a billion. New stockholders will expect to see rapid growth. You better have lined up a major international expansion, some major acquisition candidates, or a wealth of unfilled orders.

  3. There are real ongoing costs of maintaining a public company. You will need an experienced CFO, and the best legal and accounting help to comply with the audit requirements of the Sarbanes-Oxley Act. PwC estimates that public companies incur an average of $1.5 million in annual recurring costs as a result of being public.

  4. Exposure to increased liability risk. Public company executives are at civil and even criminal risk for false or misleading statements in the registration statement. In addition, officers may face liability for misrepresentations or speaking out in public and SEC reports. Executives shoulder new risks for insider trading and employment practices.

  5. The public company corporate culture may not fit you and your startup. Public ownerships usually lends prestige and credibility to your sales, marketing, and acquisition efforts, but it may work counter to your vision of saving the world. Most startup founders voluntarily exit or are pushed out, and the fun is gone. Analysts want escalating profits.

  6. Public companies bring new expectations of benefits. If you want to give stock options, or have already been giving them, the employees will love the liquidity of their options, and the thought of selling shares for a profit. On the other hand, “competitive” salaries will likely go up, and health and retirement benefits will jump to a new level.

  7. Market volatility usually hits public companies first. Private companies can often fly under the radar in turbulent times like the recent recession. Public stockholders are more easily swayed by emotion and the activities of the crowd, rather than real market conditions, and all performance numbers are public. Shareholders can jump ship quickly.

Before you forge ahead to an IPO, I recommend a thorough readiness assessment, to quantify the need, as well as to identify potential gaps within processes, areas needing internal controls, and positions requiring enhanced technical accounting skills to operate as a publicly-traded company.

The costs of an aborted IPO are sizable, and may not be deferred to a later period or offering. Along with the time and effort required, this can severely cripple your company for an extended period, not to mention your entrepreneur lifestyle.

While the wins can be big, I still see the IPO option as one to be considered only under exceptional circumstances, rather than as the default exit option. Your odds of hitting the lottery may be better.

Marty Zwilling

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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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Sunday, August 19, 2018

How To Find Money Based On Your New Venture Progress

business-angelTime is too precious to waste trying to close a deal with the wrong investors at the wrong time. Luckily, not all investors are looking for the same thing, so it pays to know what type of investors are most interested in what your startup brings to the table.

The key is understanding how potential investors see you, and especially how they view the maturity stage of your startup. For example, if you have a proven product, real revenue, a big potential market, and are ready to scale up the business, every investor will be interested. On the other hand, if you are a new entrepreneur, still in the idea stage, professional investors will only tell you to come back later when you have traction (customers and revenue).

Thus your startup maturity and growth stage is the primary key to success with potential funding sources. Different types of investors tend to specialize in capitalizing on businesses at different stages. Venture capital firms look for the most mature companies they can find, Angel investors typically deal a tier lower, while friends and family are most likely to help you get started.

It never hurts to start networking personally with all levels of investors early, but sending out teasers and business plans to every name you can find on the Internet is a waste of your time and theirs. It will be much more productive to categorize your startup in one of the following five stages, and limit your investor focus accordingly:

  • “I have a great idea and I need money to turn it into a business.” For investors, this is the idea stage, where you may have a great idea, but no plan, product, or customers, and probably no success record in this business domain. No professional investor will be interested at this point, so count only on yourself, friends, family, and fools for money.
  • “My invention and prototype works, but I need funding to continue.” Investors call this the seed stage, where money is required to build a market and a real product. Government grants and industry partners are you best bet here, but Angel investors might give you $250,000 to $1 million, if you have the right business case and credentials.
  • “The final product works great, and all the early users love it.” You are now entering the rollout stage, with money required for marketing, hiring a full-time team, and a production process. At this point, most Angel investors and a few early-stage VCs will be happy to talk, assuming you have the business model validated, and a large opportunity.
  • “It’s time to scale up and I need money to keep up with demand.” Congratulations! Every investor wants to be part of your growth stage, after your first $1 million in revenue. They call first investments at this stage the “A-round,” and often follow with a B-round through G-round. Growth stage investments from VCs are usually $5 million and up.
  • “The ride has been fun, but I need my money out to start the next big thing.” This is the exit stage for the entrepreneur, and for all earlier investors. The new investors you need at this stage are investment bankers, private equity, or competitors, to buy you out via merger or acquisition (M&A), or to go public with an Initial Public Offering (IPO).

Obviously, maturity and growth are a continuum, so the rules are never absolute. My message is that your startup will attract a different class of investors, as it passes through each stage, just as it has to supplement and tune the team, process, and product to keep up with the needs of a growing company and customer base. Tune your investor pitch and funding expectations accordingly.

Another good indicator of your real stage is the valuation you can set for your company at any given moment, to determine what portion of your equity an investor will expect of his money. Prior to the growth stage, your company valuation is limited to goodwill based on intellectual property and team experience, since you have no revenue. Future opportunity size doesn’t count in the early stages.

Contrary to popular opinion, all investor money is not the same. Friends and family believe in you, and only want to see you achieve success. Angel investors probably will know your business, and want to be mentors along the way. VCs normally come with the highest expectations of board seats, controlling votes, and milestones to meet.

Don’t sign up for one, expecting the other. If you want to avoid all these stage and investment considerations, you can always bootstrap the business (fund it yourself, and grow organically). Otherwise, be sensitive to first impression you leave on every investor, and the efficiency of your time spent on funding. You will enjoy the lifestyle a lot more when you find the right investor.

Marty Zwilling

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Saturday, August 18, 2018

10 Keys To Delivering Innovation As An Entrepreneur

medical_health_medicineAs a startup investor in this age of the entrepreneur, I see many more startups, but innovation is still hard to find. The most common proposals I hear are for yet another social networking site (over 200 exist), or another dating site (over 2500 in the US alone). Startups which display real innovation, such as alternative energy sources and new medical treatments, are still rare.

In my experience, finding real innovation in existing company environments is even tougher. Overall I like the principles in the classic book “Robert’s Rules of Innovation: A 10-Step Program for Corporate Survival,” by Robert F. Brands. He outlines the key steps which together spell INNOVATION, that I believe apply equally well to startups as well as corporate environments:

  1. Inspire. Whether we are talking about startups or corporations, innovation requires a leader who can inspire others to step into the unknown. Followers and linear thinkers need not apply. Inspiration requires a vision, and an ability to communicate it to others.

  2. No risk, no innovation. An entrepreneur looking for a sure thing will never innovate. Savvy investors tell me that startup founders who claim to have never failed are either lying or have never tried anything innovative. Failure is the best teacher.

  3. New product process. Innovation is not a random walk into the unknown. It starts with a vision, but benefits quickly from a structured process of idea generation, evaluation, prototyping, customer feedback, and success metrics. Set milestones and meet them.

  4. Ownership. A technical champion may drive a specific innovation, but the business leader has to own the result, in order to drive an appropriate business model, customer acquisition, support, and a growth strategy. Business risks are not just development risks.

  5. Value creation. Innovative technologies have no value until they are turned into solutions to real customer problems. Creating intellectual property, including patents, is the kay to long-term value and a sustainable competitive advantage.

  6. Accountability. Many innovations are jeopardized by team members and leaders who are hesitant to accept full accountability. This includes personal and team commitments to delivery schedules, quality assurance, manufacturing, and distribution requirements.

  7. Training and coaching. Proper hiring of people with a natural curiosity, open-mindedness, and ability to see the big picture is the way to create and enhance the right mind-set. Ongoing coaching from the top is essential to maintain the attitude and spirit.

  8. Idea management. Build and manage a pipeline of ideas. From time to time, include customers and sales members in ideation sessions. Make sure all team members have some connection with the product – has either used it, or sold it, or assembled it.

  9. Observe and measure. Tracking results are essential to optimal ROI. Product life cycles keep getting shorter and shorter, which mandates accelerated innovation cycles. Once a new product is launched, a key metric is the ratio of new product sales to overall sales.

  10. Net result and reward. Based on ROI, incentives should be developed for all participants. Reward your people. Frequently, the key motivator is less financial than it is recognition for a job well done. People are your best innovation resource.

Sustainable innovation is really the only sustainable competitive advantage. But innovation is hard, because people by nature resist change, and company cultures are most comfortable with status quo.

Yet survival in today’s world of rapid business change requires that you keep one step ahead of your competition. Innovation is what gives life to your business initially, and keeps it alive in the long term. Make sure your business can spell it.

Marty Zwilling

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Friday, August 17, 2018

7 Lead-Generation Tactics Thrive On Limited Budgets

lead-generation-strategiesContrary to popular opinion, viral marketing has not eliminated the need for old-fashioned lead generation to bring customers to a startup. Indeed, while the rules and technologies for lead generation have changed, Forrester and other experts still see it as the most effective way for businesses with limited budgets to maximize their return on marketing investment (ROMI).

One of these experts, David T. Scott, published a classic book that I recommend, ”The New Rules of Lead Generation,” highlighting the changes wrought by the internet and social media. His professional background includes having held marketing-executive roles at big companies as well as startups.

Here is my summary of the seven most successful lead-generation vehicles he and I still recommend today, despite the popularity of viral marketing: 

  1. Search-engine marketing.  For new product startups, search engine marketing (SEM) is still one of the most cost-effective and scalable lead-generation approaches. It’s also one of the most accountable, with in-depth data provided by search engines about performance. You can start an SEM campaign with as little as $50 today and get results very quickly.

  2. Social-media advertising. Social-media advertising relies on popular social media sites (such as Facebook, LinkedIn and Twitter) to generate leads through pay-per-click ads and tweets on sites that target customers in specific demographics. You bid on the amount you are willing to pay for a click or promoted tweet (such as $2), and a daily budget (like $1,000).

  3. Display advertising. To use online display ads to generate leads, you post ads on websites frequented by your target audience or ones with content related to the ad. Display ads on mobile devices, including video and audio, also offer a new opportunity to reach target customers.

  4. Email marketing. This one has been around a long time but still works well if your target demographic is well defined and you do your homework to buy or rent a top-quality mailing list. New technology allows for psychographic targeting (such as finding people who like to travel) and geotargeting (specifying a certain neighborhood) for improved response and spam avoidance.

  5. Direct mail marketing. Some consider direct mail very expensive or dead as a lead-generation tool. Yet it is more alive than ever before. Nearly $50 billion is being spent annually on direct mail, according to statistics, and the amount has been increasing each year. Compared with other methods, it does require the largest up-front investment, mostly for printing and shipping.

  6. Cold calling. This is still one of the best vehicles if your business has a small, well-defined purchasing audience as do government agencies or medical establishments. You need to first purchase or build a targeted list of clients from a trustworthy source, then refine it with some new tools, like LinkedIn and Gist, before contacting them with a good script.

  7. Trade shows. Such forums are still the best opportunity for you to meet face-to-face with people who should be interested in your products or services and to display your goods in person. Pick the right shows, start small and work hard ahead of time on your marketing materials, giveaway tchotchkes and booth staffing.

In all cases, it is crucial to set specific goals for each lead-generation campaign, keep track of the overall costs and measure the return on your marketing investment in terms of cost-per-action and cost-per-sale. Don’t hesitate to use small test projects to compare the results of multiple approaches.

Technology and consumer feedback have indeed changed the landscape. Telemarketing and robocalls, once a popular approach to lead generation, have been the subject of continuing legislation, which many believe will soon eliminate these options. The last thing a new business needs is to antagonize potential customers or become embroiled in controversy.

Plus lead-generation strategies can be updated by the flood of new technologies and software, including use of near-field and Bluetooth communications, QR codes, social check-in promotions, mobile search, mobile web, text, SMS, MMS and geolocation.

Whether you are an entrepreneur with a new startup, or even a more mature business charged with improving your growth and competitive posture, don’t fall into the trap of assuming that the new social media initiatives and focus on viral will mitigate your need to do proactive lead generation. How many of these lead generation techniques are funded in your business plan?

Marty Zwilling

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Wednesday, August 15, 2018

7 Excuses For Giving Up Instead Of Persevering To Win

never-stop-tryingWhen I heard a friend and business mentor say, “Your startup won’t fail if you don’t quit,” I realized that every entrepreneur should adopt “never give up” as their mantra. Rather than quitting, there are always alternatives, like pivoting the business model or merging with new partners for support. Either could improve the statistic that half of startups fail within the first five years.

Nothing is more discouraging to aspiring entrepreneurs than the high failure rate. So why do most startups fail? Many experts say that running out of money is not the primary reason. The number one reason seems to be that the founders just walk away. Of course, they may be out of money as well, but that is often more of an “excuse” than a reason.

Here are some common face-saving excuses that I hear from entrepreneurs abandoning their startup, along with some suggested alternatives to the hard stop and exit:

  1. “I’ve lost my passion. I’m not enjoying this anymore.” This suggests that you've become discouraged with your current business model, possibly because of an unanticipated problem or pivots you made to avoid a competitor or make more money. My suggestion is to morph the current business idea back into one than you can love and enjoy rather than your quitting and accepting an employee role that's not your preference.

  2. “My idea is just too far ahead of its time.” You probably realize that the leading edge is very near the bleeding edge, where only early adopter customers dare to tread. On the other hand, if you wait for competitors to get there first, you may be left in the dust with no customers. Yet if you already have some early adopters, that's a good indication that real marketing and education will likely bring your product or service mass acceptance. So hang in there and get busy. 

  3. “I can’t find any trustworthy investors these days.” If you can’t bootstrap the venture yourself, find a partner, friend or family member, rather than a professional investor to carry some financial weight. Otherwise, look for advances from distributors, vendors or even future customers. Try bartering services you have for something you need. I’ve seen countless creative solutions to the cash-flow problem by entrepreneurs who don’t quit.

  4. “The people on my team are not really committed.” We all make people mistakes or set employees' expectations too high. So you made some bad hiring or partner decisions. Now is the time to face up to these issues and reset your expectations or move out the people who don’t fit. The sooner it's done, the happier you all will be.

  5. “I just don’t have the business skills I need to compete.” Acquiring business skills is not rocket science; they can be learned on the job, as well as supplemented by coaching from an experienced team and advisors. If you knew all the answers, you would be bored and lose interest (see number 1).  Half the fun lies in the learning challenge, so don’t quit now.

  6. “It’s now obvious that there is no market for what I created.” It has never been enough to build a solution and then wait for people with the right problem to find you. There are a wealth of tools available today, relying on social media and marketing, to create or foster the market your company needs. Big markets never spring up fully grown out of the ether.

  7. “My company grew too fast, and the pressure and costs are killing me.” Perhaps it's time to reset your course to focus on business basics, so you can lighten your load. Or maybe it’s time to scale back and focus more on organic growth. But quitting right as your company is encountering success is foolish. Professional investors would love to help you scale your business

Most people agree that entrepreneurs learn more from their mistakes and pivots than they do from easy successes. Investors tell me that they are wary of funding an entrepreneur who refuses to admit any prior failure. So it’s smart to admit your struggles, rather than let them defeat you or drive you to excuses.

It's worth remembering that nothing really important is all that easy. Starting a business is just like building a new relationship; it takes work. At times you might feel like running your business is not worth all the effort, but just walking away is not very satisfying. Learning, solving some hard problems and achieving success are a lot more fun than failing. Why not make “never giving up” your mantra?

Marty Zwilling

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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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Saturday, August 11, 2018

10 Success Strategies Without Requiring Alpha Leaders

Alpha-business-leadersThe reigning theory in business has long been that “alpha” leaders make the best entrepreneurs. These are aggressive, results-driven achievers who assert control, and insist on a hierarchical organizational model. Yet I am seeing more and more success from “beta” startup cultures, like Zappos and Amazon, where the emphasis is on collaboration, curation, and communication.

Some argue that this new horizontal culture is being driven by Gen-Y, whose focus has always been more communitarian. Other business culture experts, like Dr. Dana Ardi, in her classic book “The Fall of the Alphas,” argues that the rise of the betas is really part of a broader culture change driven by the Internet, towards communities, instant communication, and collaboration.

Can you imagine the overwhelming growth of Facebook, Wikipedia, and Twitter in a culture dominated by alphas? These would never happen. I agree with Dr. Ardi’s writing, that most successful workplaces of the future need to adopt the following beta characteristics, and align themselves more with the beta leadership model:

  1. Do away with archaic command-and-control models. Winning startups today are horizontal, not hierarchical. Everyone who works there feels they’re part of something, and moreover, that it’s the next big thing. They want to be on the cutting-edge of all the people, places and things that technology is going to propel next.

  2. Leaders of tomorrow need to practice ego management. They should be aware of their own biases, and focus on the present as on the future. They need to manage the egos of team members, by rewarding collaborative behavior. There will always be the need for decisive leadership, particularly in times of crisis, so I’m not suggesting total democracy.

  3. Winning contemporary startups stress innovation. Betas believe that team members need to be given an opportunity to make a difference – to give input into key decisions and to communicate their findings and learnings to one another. Encourage team-members to play to their own strengths so that the entire team and organization leads the competition.

  4. Put a premium on collaboration and teamwork. Instead of knives-out competition, these companies thrive by building a successful community with shared values. Team members are empowered and encouraged to express themselves. The best teams are hired with collaboration in mind. The whole is thus more than the sum of the parts.

  5. In the most winning companies, everyone shares the culture. Leadership is fluid and bend-able. Integrity and character matter a lot. Everyone knows about the culture. Everyone subscribes to the culture. Everyone recognizes both its passion and its nuance. The result looks more like a symphony orchestra and less like an advancing army.

  6. Roles, identities and responsibilities mutate weekly, daily, and even hourly. One of the big mistakes entrepreneurs make is they don’t act quickly enough. Markets and needs change quickly. Now there is a focus on social, global and environmental responsibility. Hierarchies make it hard to adjust positions or redefine roles. The beta culture gets it done.

  7. Temper self-esteem and confidence with empathy and compassion. Mindfulness, of self and others, by boards, executives and employees, may very well be the single most important trait of a successful company. If someone is not a good cultural fit, or is not getting it done, make the change quickly, but with sensitivity. Pain increases over time.

  8. Every individual in the organization is a contributor. The closer everyone in the organization comes to achieving his or her singular potential, the more successful the business will be. Successful cultures encourage their employees to keep refreshing their toolkits, keep flexible, keep their stakes in the stream.

  9. Diversity of thought, style, approach and background is key. Entrepreneurs build teams, not fill positions. Cherry-picking candidates from name-brand universities will do nothing to further an organization and may even work against it. Put aside perfectionism, don’t wait for the perfect person – he or she may not exist. Hire track record and potential.

  10. Everyone need not be a superstar. It’s about company teams, not just the individual. In case you hadn’t noticed, superstars don’t pass the ball, they just shoot it. Not everyone wants to move up; it’s ok to move across. Become their sponsor – onboarding with training and tools is essential. Spend time listening. Give them what they need to succeed.

Savvy entrepreneurs and managers around the world are finding it more effective to lead through influence and collaboration, rather than relying on fear, authority, and competition. I believe beta is rapidly becoming the new paradigm for success in today’s challenging market. Where does your startup fit in with this new model?

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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