Wednesday, October 31, 2018

Make Yourself A Key Sustainable Competitive Advantage

businessman-competitive-advantageThe most successful entrepreneurs and business owners I know are humble, and they don’t have an inflated sense of self. When you have some success behind you as a manager, executive, founder, or CEO, it’s easy to become less open to the advice and signals around you, and believe you should just continue doing what you are doing to keep climbing. It’s a recipe for disaster.

The only “sustainable competitive advantage” in business is self-awareness. I was struck by this assertion in a new book, “The Messy Middle,” by Scott Belsky, who has spent more than a decade leading in the worlds of technology, design, and startups. I come from the same world, with an additional decade advising entrepreneurs, and I enthusiastically confirm his view.

We both have found that the “messy middle,” with its ups and downs, is the hardest and most crucial part of any bold venture, and that’s where you need to come to grips with your true self. Here are some key points for benchmarking your own sense of self, and the self-awareness of those around you, with a bit of guidance on how to get to the next level and capitalize on it:

  1. At a peak or valley, you are not your greatest self. When things are going well, ego can get the best of you. When times are tough, insecurities normally run rampant. Maintaining a realistic perspective is your promise or peril. Effective advisors and boards are most helpful in these times, when the tough questions are less apparent but critical.

    Most successful business leaders, including Richard Branson and Bill Gates, regularly called on their mentors, Freddie Laker and Warren Buffett, to test their perception of the right questions to ask, and the right issues to tackle.

  2. Understand your feelings to recognize what bothers you. Whatever triggers your frustration or irritates you is rooted in the core value you haves, something you strongly stand for or against. For example, one of my core values is timeliness for completed work and meetings, so I may judge people and results harshly when they violate my limits.

    But now that I have made myself aware of this tendency, I can mitigate my quick judgment to recognize valid delays, and look at results for their real value.

  3. The less defensive you are, the more potential you have. Being open-minded while receiving constructive feedback is challenging. Do you immediately try to explain yourself, go on the offensive, or try to avoid conflict at all costs? Self-awareness helps you achieve balance between these tendencies, and be open to insights from others.

    For example, I once worked for a startup CEO who desperately needed money from a venture capitalist, but became totally defensive when the VC suggested that my CEO might be better in the chief marketing role, in favor of a more experienced CEO. The result was a broken deal, and ultimately a failed startup, instead of a win-win business.

  4. Understand the sources of your own negative tendencies. The leaders I admire most have invested a great deal of time understanding their own psychology and learning from their past patterns and difficulties. They don’t hesitate to get help from executive coaches, Meyers Briggs training, or other peer groups, such as the EO Network.

    Understanding the sources of your own negative tendencies also helps you make sense of others’ behavior, and support them to maximize their contribution and loyalty. Discussing your flaws openly invites others to do the same.

  5. Dispel your sense of superiority and primary contributor. With any success, we are liable to overestimate the role we played in it, and underestimate the role of other, and luck. This can alienate people around you who deserve credit, resulting in you becoming more isolated and paranoid, or starting to believe you are actually superior.

    The challenge is to integrate humility into your life. It could be a sense of greater good that keeps you humble, a partner who keeps you grounded, or an insatiable sense of curiosity that keeps you inquisitive. Always give credit for your wins to all those involved around you, and be the first to take responsibility for losses.

Ultimately, self-awareness is about being the best competitor and the best leader that you can be, always making sound judgments, and effectively engaging with your team, partners, and customers. In business, you are usually many decisions away from success, but always one decision away from failure. Make every one count.

Marty Zwilling

*** First published on Inc.com on 10/17/2018 ***

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Monday, October 29, 2018

Effective Marketing Today Begins With A Conversation

conversation-marketingAs a long-time advisor to small businesses and startups, I still find many who think marketing is still primarily broadcasting your message to as many customers as possible, hitting them again and again, until it sticks. They don’t realize that customers today are looking for relationships, meaning two-way conversations with your business. They ignore all else as just plain noise.

Customer conversations are easy today, through responding to customers on social media, web live chats, and interactive applications on mobile devices. In fact, your marketing costs using this approach may be far less than the traditional television, newspaper, and email campaigns. Yet even conversation marketing has to be done right to get customer attention and have an impact.

I found the rules and expectations nicely illustrated in a new book, “Conversation Marketing: How to Be Relevant and Engage Your Customer by Speaking Human,” by one of the experts in the new digital marketing strategies, Kevin Lund. He offers a wealth of examples that I second from my experience on how to get started and do it right, as well as real guidance on what NOT to do:

  1. Don’t pay attention to customer input. In great marketing, as in real life, starting the conversation is just the beginning. You have to focus and listen to what the potential customer is saying during the conversation to fully understand their message and needs. We all know people who don’t listen while we are talking. Don’t let your business be one.

    For example, it’s easy to get so focused on selling the product you have, that you miss the customer desire for free shipping, or personalization, or colors you don’t have. Instant empathy and positive responses will make new customers your best advocate, bringing customer friends and repeat business you can’t get with traditional marketing.

  2. Talk about your products, not your customer. Nobody wants to listen to someone drone on about how great they are. Yet, throughout the decades, common advertising copy has been a description of product features and benefits, with a nod to what it will do to enrich the customer’s life. Don’t let your conversation marketing do the same thing.

    A successful content marketing strategy turns traditional advertising on its head by first asking customers to tell you what they need, only then bringing up what your business offers to meet those exact needs. Pull in customers with questions, rather than pushing answers.

  3. Try to close on a sale transaction too early. As with all relationships that you want to last, preparing for a close must be done with patience and two-way conversations. Old-fashioned marketers feel the pressure to produce an immediate return on investment (ROI), and prefer the billboard approach to closing. Do less pitching and more teaching.

  4. Offend or talk down to your potential customers. The best content marketing is tuned carefully to the desired customer set or demographic. That means than one size probably doesn’t fit all – if your audience is millennials, the questions you ask and the language is different from what boomers expect. Be sensitive to geographic and cultural implications.

    What constitutes a ‘basic assumption’ depends on your audience. If, for example, you’re writing a blog post aimed at professional investors, you don’t need to stop and explain what an entrepreneur is to them. Don’t offend customers by getting too personal for certain cultures in your attempts to understand what it takes to be memorable.

  5. Don’t have credible data to support factual content. We have all had conversations with a know-it-all who makes questionable statements, causing us to lose trust now, and for the long term. Make sure your content can withstand even the most critical scrutiny, and doesn’t come across like marketing hype or unsubstantiated claims.

    For example, we have all seen weight loss and exercise products that claim to evaporate some number of pounds and inches in the first week, without any reference to a real study supporting these assertions. Credibility is key in relationships, so pick your influencers well. The safer way is to let your advocates and their friends share their facts.

Conversation marketing will help you connect your business to the hearts of your customers for the long term, not just to their minds for a single transaction. They want a sense of personal value and a relationship before they act. You can’t deliver that with a one-way monologue.

Marty Zwilling

*** First published on Inc.com on 10/15/2018 ***

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Sunday, October 28, 2018

7 Ways College Degrees Can Expedite Startup Success

Entrepreneurs_Event_at_College_of_DuPageA popular myth these days is that finishing college only dilutes your entrepreneurial instincts, and the best of the best, including Bill Gates, Steve Jobs and Mark Zuckerberg, dropped out early to hasten their success. I agree with Robert E. Litan, former VP of research at the Kauffman Foundation, that these are exceptions to the rule, rather than a model to emulate.

Some people even believe that entrepreneurs must be born with the right genes, and no element of education is relevant. While I do agree that many attributes of a good entrepreneur, such as curiosity, confidence and determination, are largely determined by early-life experiences, a good education is critical in understanding the elements of creating a business and wooing customers.

In my view, the most effective entrepreneurs are those with a background of an array of real-life experiences, both positive and negative, as well as good academic and coaching activities. In fact, failure has been shown to be a better teacher than success, so parents and schools who protect their charges from any failures may not doing them any favors in the long run.

While we all know a few good entrepreneurs who dropped out of school, the Internet is full of stories on many more who capitalized on at least four years of college, including Sergey Brin and Larry Page of Google, Chad Hurley of YouTube and Bob Parsons of GoDaddy.

A more important question, then, for an aspiring entrepreneur, should be what to study in college for maximum value, rather than whether to drop out or stay. Here are my thoughts on the right focus at a college or university:

  1. Take entrepreneurship courses, but major in a more specific discipline. Depth in a specific business area, such as marketing or accounting, is important in understanding the internal and external processes of a business. Entrepreneurship is more about pulling all the elements together, making change happen and building relationships.

  2. Practical business courses are better than an advanced degree or MBA. Starting a business is not rocket science. A breadth of understanding of common business principles, such as management, personnel and finance, is more important than a depth of knowledge in a technical area. Don’t forget business writing and communication.

  3. Get involved in startup-business incubator activities with peers at school. Most universities have formal incubator and business development organizations that focus on coaching, grant writing and technology licensing. These present a huge opportunity to take your first steps as an entrepreneur with minimal risk and maximal support.

  4. Produce a real business plan for critical feedback from outside investors. It’s important to go well beyond the passionate idea stage. Writing a business plan is the only way to determine if you even understand what your dream is all about. Once you graduate, the feedback will cost much more, and it’s too late to take one more course.

  5. Extend your networking into peer interest groups outside your school. Start with your school connections with peer universities around the world. Then branch out to local business groups. Peers won’t be able to help you much in finding external investors, co-founders with prior experience and industry connections for distribution and marketing.

  6. Find summer internships and part-time work in your field of interest. You can’t really learn all you need to succeed in any business domain from textbooks. The idiosyncrasies of supplier relationships, distribution and pricing are just as important as the generic elements of time and money management. Get real experience early.

  7. Incorporate your first business before you graduate. It’s never too early to stop studying and start doing it for real. You will learn the most by facing the tribulations of establishing an LLC and dealing with insurance, personnel and tax issues. Remember, it’s the learning that counts, not the size of the bet or the ultimate success of your first try.

The best thing you can learn in school is how to learn -- fast and effectively. In the real world, change occurs very rapidly, so all the specifics you memorized from textbooks will likely be obsolete by the time you need them. Your academic credentials will have very little value as well. The value is in your ability to get new credentials in your business faster than your competitors.

If you are already in Harvard, and have proven that you learn quickly, then feel free to drop out and change the world. For the rest of us, a bit more practice before jumping feels like a better bet. We need all of you at your best.

Marty Zwilling

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Saturday, October 27, 2018

5 Key Elements Of A Winning Business Strategy Today

idea-plan-strategy-successDoes your business have a visible positive strategy, or do your customers and employees still see your primary focus as closing more sales and killing competitors? Certainly that has been the strategy of many companies, and has worked in the past, but today’s customers and workers are looking for more. They want relationships, positive experiences, and a win-win for society.

With the pervasive and instant communication of social media and the Internet, businesses can no longer hide behind the mask of their own hype, either inside the company or outside. The right positive strategy is integral to claiming leadership as well as making it happen.

I just reviewed the classic book, “The Strategic Leader’s Roadmap,” by Harbir Singh and Michael Useem from the Wharton School, which provides some specific steps along the way. I believe these steps are especially critical to the success of entrepreneurs who are rolling out new businesses today. It all starts with setting the right company strategy, including these elements:

  1. Inspirational statement of purpose and direction. The old mission statements declaring your intent to be the “low-cost provider” is no longer a motivating vision for employees or customers. Engaging visions today include elements of social and environmental responsibilities, as well as economic returns to constituents.

  2. Market and customer positioning. Clearly focusing on the right market and customer profile sets your competitor differentiation. It starts with understanding the drivers of customer excitement in advocating your solution, and ways to strengthen relationships. When customers are excited, your team becomes more engaged and productive.

  3. Customer and employee value propositions. What are the company’s solutions and practices that will be seen as win-win value by all constituents? Your managers and everyone on your team needs to understand how their actions and leadership relate to value provided. The strategy must drive leadership so that leaders can drive the strategy.

  4. Competitive and leadership leverage. A good strategy provides opportunities for internal actions and leaders to optimize and extend a firm’s competitive advantage. This requires effective communication of intent, flexibility in implementation, and positive rewards for innovation and initiative in improving customer experience and quality.

  5. Constant restructuring for future advantage. A strategy that does not evolve as the market changes is a losing strategy. The internal team must see a reward in fostering change and leadership, and customers must be energized by new and improved processes, practices, and solutions. The best strategies are dynamic, rather than fixed.

A positive business strategy allows you to lead strategically by mastering the elements of both, separately and as an integrated whole. The authors argue that strategic leadership is an acquired capability that can and must be mastered by managers at all levels. It needs to extend to the firm’s directors, as well as investors. Everyone has to think and act strategically.

Another growing force for strategic leadership is the evolution to globalization. New companies are automatically global in reach and visibility, which makes a lack of strategy more impactful, since there is no move to an alternate environment for correction and restart. You need to get it right the first time, or there may not be a next time.

Above all, no company can afford to confuse strategy with tactics. Strategy is the “what” part of the equation, and tactics are the “how” activities. Every business, especially startups, have limited resources to implement tactics, so they need to be totally clear on the strategy first. Even if you could unleash unlimited tactics, the results would be confusing and non-productive to employees and customers alike.

Business success is an elusive target – with over fifty percent of new businesses continuing to fail in the first five years. We are also seeing an increasing number of former leading businesses disappear from the scene, including Blockbuster, Kodak, and Sharper Image. Start with a focus on strategy, and keep it there. Maybe it’s time to check yours with your employees and your customers, and see how positive it is today.

Marty Zwilling

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Friday, October 26, 2018

7 Strategies To Create Your Own Market And Win Bigger

Elon_Musk's_Tesla_Roadster_1New technology markets and paradigm shifts have traditionally been bad bets when seeking investors, since these were known to take decades to develop, and cost lots of money. For example, consider how many years it took for the market to move from radio to television, or fully accept personal computers on every desktop. The leading edge was too often the bleeding edge.

Yet now I believe the evidence is clear that the world has changed. Many customers now actively seek out new technologies, rather than wait for many others to try it first. Technology is changing faster than ever, and new things usually work when they are released. Steve Jobs proved it with the iPhone, and Elon Musk can’t produce his electric cars fast enough to keep up with demand.

Bold entrepreneurs now can credibly talk about entirely new markets, such as the Internet of Things (IoT), genetic modifications, and privatized space travel. However, such changes don’t yet happen automatically, so it still takes proactive strategies and key actions to create new demand where none exists. Here are the specifics that I recommend to improve your odds of success:

  1. Sell the market concept before building a product. Today, with instant and pervasive Internet communication, you can sell your vision via blogging, crowdfunding, and videos before you spend big money building prototypes and pivoting as you learn. This will prep and size the market, and greatly increase your chances of getting it right the first time.

  2. Highlight positive social and environmental impacts. For example, if your new product reduces pollution or world hunger, this adds immediate value and confirms a positive long-term strategy for customers today. Too many founders still focus their product design and selling efforts only on direct paybacks to the customer.

  3. Incent your team to continually think “outside-the-box.” You set the limits and the culture for your team, based on how you reward creative thinking, or penalize people for failed experiments. It starts with hiring the right people, and building relationships with the right experts, analysts, and investors. Then you really listen to what they have to say.

  4. Work to build a compelling story around your new idea. Customers need to see personal and social benefits around a new solution, not just a new technology. The change must also include long-term benefits, as well as short-term. A compelling story can make or break your ability to differentiate your solution from dozens of others.

  5. Use social media and the media to build demand for change. New markets don’t just happen, or create themselves. People need to be influenced and educated to change consumption habits, expectations, and buying patterns. Product messaging and branding need to follow later, after the initial demand has been built. Concept marketing is critical.

  6. Build momentum with an integrated marketing campaign. All the elements of change required for the new market must be addressed consistently, not just the product elements. A successful campaign must not only capture people’s imagination but must have the right integration to move people to a new frame of reference and new thinking.

  7. Acknowledge and position competitors around you. It may sound counterintuitive, but when you are creating a new market, competition helps legitimize it and increases the size of the pie. Position competitors positively around you, and continue to find ways to keep yourself ahead of the crowd, with both product offerings and thought leadership.

Elon Musk, for example, opened all his battery patents to competitors, with the expectation that this would expand the market as well as build the support infrastructure for his Tesla electric car market. He highlighted the positive environmental aspects, as well as the high performance remote maintenance elements of his new technology. New markets don’t have to be disruptive.

Thus new entrepreneurs have a new alternative to the tried and true approach of linear thinking, cost reduction, and more new features. Maybe it’s time for you to step out of your comfort zone, think more broadly, and pursue a new market legacy for maximum fun and profit.

Marty Zwilling

*** First published on CayenneConsulting on 10/10/2018 ***

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Wednesday, October 24, 2018

Even the Best Startup Solutions Need Modern Marketing

modern-marketingAs a long-time advisor to aspiring entrepreneurs, and a technology fan myself, I still meet dozens of techies with great solutions who assume they don’t need marketing to change the world. They subscribe to the myth that “if we build it, they will come.” In fact, with today’s information overload, modern marketing is the key to raising even the most innovative solution above the crowd.

Let me be clear – I’m not talking about the old-fashioned “push” marketing, where you broadcast your message louder and more incessantly than others to get above the din. I’m talking about using the new digital channels of blogging, social media, and influencers more creatively to “pull” people to your solution, and make them advocates. This is the new art and science of marketing.

In fact, you need to understand that marketing itself has changed, as much as all the other elements of business. I see these changes summarized well in a new book, “Marketing Flexology: How to Outsmart Change and Future-proof Your Career,” by Engelina Jaspers. She points out changes and new approaches, based on her thirty-year career in technology advertising.

She clarifies, for example, that one of the things that hasn’t changed in marketing is the need for a compelling call-to-action (CTA), but implementation alternatives can now be more creative. As an entrepreneur, your technology and your solution may be very impressive, but customers and partners won’t get your message unless they are presented with the following key elements:

  1. Documented tangible personal benefits from your solution. In my experience, the goals communicated by most change initiatives are either overly lofty, uninspiring, or nebulous. Don’t forget to add a call to action, such as buying the product or accepting a proposal, and emphasize the personal benefits acquired for taking the requested action.

    For example, the Square credit-card-reader technology business for smart phones touts the ability for almost anyone to accept credit cards transactions anywhere – something that was previously out of reach before Square came along. This can be easily quantified to show how any taxis and other vendors can increase their customer base and revenue.

  2. Clear direction and priority on how to achieve results. Talking about abstract issues, or listing dozens of new features is not effective today. On the contrary, limiting the number of options marketed and using direct, simple, and actionable language will make your message stand out, and increase the probability of real visibility and success.

    Take a look at the Vanguard investment management site, and you immediately see language like “See why Vanguard is right for you” and “See how a Vanguard advisor can help” to quickly prioritize customer needs. Another approach is a specific actionable statement, such as stop doing X, and start doing Y and Z. Be specific.

  3. A sense of urgency instilled to take action now. Deadlines and time limits make people act quickly rather than think too much, wait too long, or simply not respond. Scarcity also works to convey a sense of urgency. Another powerful motivation is the fear of missing out (or FOMO). Create a sense that you may be missing something exciting.

    A good example of this would be something like “call before December 1st to get a free 30-day trial!” Not only have you stated the action you want the user to take (call deadline), but you have also provided them with a reason why they should take that action (a free trial). Obviously this applies to technology and non-technology solutions.

  4. Creativity in making the communication memorable. Something could look great on paper, or may sound great, but the only way you’ll absolutely know for sure if something will work for your solution is if you test it out. I recommend trying different experiments, but being creative with them. Try to think outside the box on every marketing message.

    For example, Warby Parker eyeglasses cleverly uses an interactive quiz and gamification to guide people down the purchase funnel. The Missguided e-commerce site in the UK often uses hip language to appeal to a young, digitally-savvy and pop-culture-loving audience, to make their visit memorable and suggest a need to return again.

Every entrepreneur needs to realize that marketing is now key to success on every new venture, no matter how compelling the technology. In addition, you need to understand that modern marketing practices have changed, now requiring more creativity and agility, no matter what background and training you come from. Keeping up with this change is critical to your survival.

Marty Zwilling

*** First published on Inc.com on 10/10/2018 ***

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Monday, October 22, 2018

7 New Venture Scenarios That Rarely Attract Investors

high-risk-for-fundingIf you aren’t willing to take some risk as an entrepreneur, then don’t expect any gain. Yet everyone has limits, and every investor implicitly has similar limits on what makes a startup investable, or one to avoid at all costs. If you need investors, it’s important that you understand their filters, and even if you are funding your own efforts, you need to recognize the red flags.

Of course, every risk level can be mitigated by a good plan that addresses the issue, offers a credible action plan, and will convince you, as well as investors and customers, that what looks like a risk to many is actually a sustainable competitive advantage for your startup.

Nevertheless, we can all benefit by understanding a collective view from investors on the high-risk elements that every new business has faced historically based on the team, as well as in the marketplace. Here is my perspective on the highest risk elements, from my years of working with investors and watching startups come and go:

  1. All the co-founders are first-time entrepreneurs. A strong team has one or more executives who have run a startup before in the current business domain. Even top big-company executives are considered high-risk in a startup environment. The challenges are as different for them as a jewelry store owner now building medical devices.

  2. Your startup is in a high-failure-rate business sector. These historically have included work-at-home, restaurants, telemarketing and social-service providers. On the Internet, I am wary of one more search engine provider, clones of existing social-media sites, and yet another new dating site. You need a big differentiator in these arenas.

  3. Products requiring changes to government regulations. Things such as driver-less cars and new medicines are far more than a technology challenge. They require exhaustive and money-consuming tests and trial periods, followed by bureaucratic approval cycles that can take forever. If you have deep pockets, these ultimately can be very lucrative.

  4. Huge ramp-up time and money required. For new car companies such as DeLorean and Tesla, designing and testing the product is only the beginning. Huge investments are also required to ramp up manufacturing, build a distribution network, and provide the support infrastructure. New drugs usually fall in this category, due to side-effect testing.

  5. Niche or low growth-rate businesses opportunities. Investors are looking for large opportunities (greater than a billion dollars) with double-digit growth rates. Others may indeed make good family businesses, but are usually deemed worth investment. These are ones you need to bootstrap, crowdfund or pitch to friends and family.

  6. Marginal legality or public image. Don’t expect investors to line up for your new online gaming site, adult entertainment or quick sources of cash. Professional investors put great value in their integrity, so they won’t risk it by making investments that some people would view as in poor taste. These may traditionally have high returns, but are still high risk.

  7. Off-shore or foreign-country based. Every country has their own unique business requirements and customer culture. Thus investors in one country do not assume that they know what works in another country, even if it sounds good locally. If you want U.S. investors, for example, it may be worthwhile to set up an office in New York City or Silicon Valley.

No entrepreneur should consider any of these challenges as hard barriers, but they do need to be aware of higher risk perception, and include their mitigation strategy in their business plan for all to see. I encourage you to be proactive on these issues, rather than saying nothing unless questioned. Responding to a challenge will always make you look defensive, and many people will walk away without asking.

It’s also not smart to switch from a domain you know and love to a perceived lower-risk business that you know less about, or have no passion for, just because it may be more attractive to investors. Passion and commitment can overcome many risks, and these will also drive you to expand your scope of options for funding and implementation, leading to success.

If you are a true entrepreneur, you will find that a reasonable level of risk is necessary to incent you to go beyond the status quo of an existing problem. But in all cases, it pays to keep your eyes wide open, and do your homework on the pitfalls that others before you have faced. Only then can you enjoy the journey, as well as reach the destination.

Marty Zwilling

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Sunday, October 21, 2018

7 Keys To Timely And Compelling New Venture Progress

business-accomplishmentsOne of the most important skills for every entrepreneur is timely and effective decision making. In a startup, any decision is better than no decision. One of the primary roles of every founder is to solve problems, make a decision, and manage the decision to results. The best entrepreneurs relish this role, while others struggle mightily and ultimately lose their health and their company.

In fact, there is much evidence that these same skills are a key to happiness and success in every area of your life and career. I found the book, “Master Your Time, Master Your Life,” by noted speaker and productivity expert Brian Tracy, who highlights decision making and problem solving as one of the most critical determinants of your success in everything you do.

Since I’m not a life coach, I can’t comment on the broader implications, but in my role as advisor to many startups, I do often find myself recommending a focus on many of his key points, which I will paraphrase here:

  1. Think in terms of action. Action starts with absolute clarity on the goals you want to achieve. Thus I always recommend that you document and clarify, first to yourself, the results you see in your vision of a new venture. Having a great idea is necessary, but not sufficient, to create a great business. Success in business is all about actions, not ideas.

  2. Assume there is always a solution. To solve problems, you need confidence that there is a solution and that you can find it. Without this confidence and determination to make a decision, you will likely fall victim to the malaise of excuses. Everyone needs the growing momentum of solving small problems to incent them to “change the world” with their idea.

  3. Expand your definition of the problem. In business, as in life, most problems have multiple dimensions. The more you understand the scope of a problem, the more likely you are to arrive at the right definition, which will lead to the correct solution. In fact, there are always multiple solutions, so a better definition always leads to a better decision.

  4. Separate symptoms from real constraints. In a new venture, much time can be wasted attacking symptoms rather that the real constraints holding your business back. The right first step is to go back to your goals to focus on the real limiting factors when you encounter problems with sales, growth, profitability, market share, or costs.

  5. Use brainstorming for a range of solutions. Harried entrepreneurs too often jump on the first solution that comes to mind, rather than looking for the best solution. Many techniques have been developed, such as brainstorming, to expand your thinking and identify up to twenty solutions for a given problem. The best will not be first on your list.

  6. Assign responsibility for results. It’s amazing how many business problem-solving meetings end with a clear, agreed-upon decision, but two weeks later the problem still exists. This represents a lack of responsibility assignment or acceptance, or lack of follow-up. Your job as entrepreneur or executive does not end with picking a solution.

  7. Work to enhance your problem-solving skills. Problem-solving skills need constant tuning as your position of responsibility improves, and your business becomes more successful and visible to competitors. Even the best entrepreneurs find more experienced and skillful mentors to help them improve, and explore new tools to conquer problems.

In all cases of business problem solving and making decisions, another important skill is your ability to think about priorities, both before you act and while you are acting. The best entrepreneurs have the ability to focus on the really important issues, and say no to all the other requests vying for their time. Thus they effectively accomplish vastly more than the others.

If you are looking to move up in your business career, or looking to adopt the lifestyle of an entrepreneur to take control of your time and your life, make sure that you follow the steps outlined here for success, self-esteem, and real happiness. Life is too short to be unhappy in your work.

Marty Zwilling

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Saturday, October 20, 2018

8 Key Skill Sets Required For Success In Your Startup

bulletin-board-stickiesIn my experience in large businesses as well as years of advising startups, I see far too much focus on product skills, and too little on people and process skills. In my view, this focus on the wrong skill set is the primary reason why over half of new businesses fail in the first five years, and only one out of a hundred startups get their requested funding from professional investors.

In fact, there is much evidence that the same principles separate success from mediocrity in most of the disciplines in business. I recognized this as I was reading the classic book, ”The Only Sales Guide You’ll Ever Need,” by Anthony Iannarino, who is an international sales leader and expert on optimizing results. His focus is on sales, but I see the same skills needed for entrepreneurs.

His top eight required skill set elements for sales don’t even mention product skills, and match my view of the right skill set for successful entrepreneurs, with only a few priority changes:

  1. Creating and sharing a vision. Storytelling and projecting a vision are foundational skills that are required from the first moment in starting a business. The old myth that “if we build it, they will come” has not worked for a long time. The best visions begin in the future, describe how to get there together, touch on emotions, and work in your values.

  2. Diagnosing and understanding the customer problem. This means all business people, especially entrepreneurs, need to get beyond the presentations and the experts, to actively listen to real customers. They need to ask customers the difficult questions, and really understand costs versus benefits, as well as competitive alternatives.

  3. Opening relationships and creating opportunities. Whereas providers used to control information, the Internet has given customers access to more information and more choices than ever. They demand interactive relationships with you, and depend on the relationships you have with their friends. Relationships are the new keys to opportunities.

  4. Producing results with and through others. You can’t build a business or sell alone. You have to lead and motivate many others with the right skill set to make it happen. To do this, you call upon your storytelling, negotiating, and change-management skills, all the while demonstrating your unswerving accountability. It’s up to you to clear the way.

  5. Asking for and obtaining commitments. Building a company and selling are all about gaining commitments. While it’s true that you can go too far too fast when asking for funding or asking for an order, all too often fear and timidity keeps entrepreneurs from going far enough fast enough. Offering more value is the key to a quicker close.

  6. Negotiating and creating win-win deals. When dealing with customers or partners, only win-win deals make sense. It’s all about value for both parties, and good negotiation is highlighting value. Great entrepreneurs are able to think on their feet, and are always prepared. Highlight the points of agreement, rather than hammer on the differences.

  7. Understanding business essentials and creating value. Product leadership alone might have been enough in the past, but today people are looking at a bigger picture. They want a business that is ethical, understands sustainability, and provides leadership that goes beyond profitability for shareholders. Value is far more than cost versus price.

  8. Building consensus and helping others change. Consensus and change are hard. These require building a team that can work together, identify the obstacles to change, deal with conflicting interests, and overcome the challenges to change. Great entrepreneurs create and sell a compelling case for change, and lead that change.

Put simply, your personal and people skills are the difference that makes the difference, more so than the product or service you bring to the table. It takes discipline, initiative, a positive attitude, and the ability to communicate and be accountable to set your business apart from the million others that have equal access to your customers. Make them remember you and appreciate the added value.

Marty Zwilling

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Friday, October 19, 2018

7 Push-Backs That New Venture Founders Must Overcome

push-back-on-ideasIn business, and in your personal life, the ability to anticipate and overcome criticism is one of the biggest differentiators between leaders, who make things happen, and followers, who may have great ideas but never seem to get things to go their way. In fact, leaders are not remembered for their dreams, aspirations, or intentions – they are remembered because they achieved results.

In my role as an advisor to entrepreneurs, I often find founders who have such conviction and passion for their new idea, that they can’t believe anyone could challenge it. They bristle quickly when investors or even potential customers raise issues with real value, competition, risk, and sustainability. The reality is that important change is always challenged, so you need to expect it.

The best entrepreneurs and business professionals learn to anticipate these push-backs before they happen, and respond calmly and effectively. I like the specifics on how to do this in the classic book, “The Agenda Mover: When Your Good Idea Is Not Enough,” by leadership expert Samuel B. Bacharach, Cornell Professor and cofounder of the Bacharach Leadership Group.

Bacharach details seven possible criticisms that every leader with a good idea should anticipate, and provides guidance on how to overcome each. I’ll paraphrase a few of his key points here, with comments from my own experience in business:

  1. Your new idea is too risky. A new idea is a step into the unknown, and always represents some risk. Rather than arguing the level of risk, a better strategy is to highlight the size of the reward. Then mobilize your support for these rewards through testimonials, input from experts, and traction. Increasing your credibility will reduce the perceived risk by all.

  2. The idea will only make things worse. Resistors often make the argument that while the idea seems fine on the surface, something later is certain to turn things upside down. This usually means that your message needs clarification to offset generalized qualms. Narrow your focus through specific case studies and quantify value and results.

  3. This idea won’t change a thing. When faced with this type of “paternal” criticism, the best path is to again ground your case in very specific examples to show that while the idea might not be a total paradigm shift, it will at least represent a significant change in cost or return. Negotiate the time and resources to do a trial, and measure results.

  4. You don’t know the issues well enough. The main goal of this type of criticism is to challenge your ability to lead and question your credibility. The antidote to such criticism is usually less passion and more facts to show that you have done your homework, assembled expert validation, and are interested in full disclosure and opposing views.

  5. You’re doing it all wrong. “The way it’s always been done” may work well for routine repetitive tasks, but it never applies to new ideas. This argument is actually attacking your ability to execute, rather than the idea. To offset this criticism, you need to highlight your prior experience, the expertise of your team, and the quality of your advisors.

  6. It’s been done before. This sort of resistance is predicated on the assumption that there is historical knowledge or past experience that makes your idea irrelevant or doomed to failure. This can be countered best by a proactive comparison of specific elements of your new idea to past practice and experience. Burst the balloon of generalities.

  7. Someone has ulterior motives. This challenge is one of trust, implying some hidden agenda or self-serving motivation for you and your allies, such as huge financial rewards or positions of power. The best strategy here is to not to over-react or be defensive, and highlight specific value to customers. This is where real leaders let others do the talking for them.

In all cases, the key words for countering criticism and moving things forward are anticipate, mobilize, negotiate, and sustain. Anticipate the agenda of others, mobilize your resources, negotiate buy-in and support, and get things done to sustain momentum in your campaign.

Don’t allow yourself to get involved in an escalating competition of egos, which can make others think that your ego is more important than seeing your idea come to fruition. True leaders in business with million-dollar ideas, like Bill Gates and Elon Musk, don’t stop until they have billion-dollar results. Where do you fit in this spectrum?

Marty Zwilling

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Wednesday, October 17, 2018

8 Tips For Quantifying Traction In Your New Venture

Vehicles-Drag-Race-tractionWhat is the definition of traction for a business startup today? According to most investors I know, traction is some clear evidence that the “dogs are eating the dog food” – usually meaning that you have at least one customer paying full price for your solution. If your phone app or service is free, then the number of users or downloads better be impressive and growing exponentially.

Another term often mentioned is “momentum,” or growing visibility and advocacy within your customer set. This can happen through early marketing, independent of whether you have yet delivered a single product, proven your business model, or have any real customers. Most great crowdfunding campaigns, for example, are the result of momentum built through social media.

Unfortunately, your personal assessment that you have traction probably won’t be convincing to potential investors and partners, so it’s important that you create and track your progress against some metrics. Here are some of the key specifics for credibility and acceptance as you create and use these metrics:

  1. Itemize investment levels from you, insiders, and family. Professional investors expect traction discussions to begin with the size of your own investment, in money and time, plus support received from friends and family. Next would be the level of support from key insiders who would clearly benefit from the success of your solution.

  2. Define metrics on customer feedback and user counts. Early examples of traction for any solution, especially free ones, would include website traffic, number of blog comments, likes, downloads, and active user rates. Investors are wary of initial surges due to friends, family, and early adopters, so sustainable growth rates over time are key.

  3. Count connections with experts, media, and influencers. You need outside advocates who will back your assertions of traction and valid metrics. Relationships with recognized and influential bloggers, relevant media, and industry analysts are priceless. Traction with these people usually is indicative of later traction to come with customers.

  4. Assemble a credible inside advisory board and partners. Investors and potential partners measure your credibility by the quality of your advisors and peer partners. If Elon Musk is an advisor to your transportation startup, that is major traction, even without a product or revenue. Who you know is still often more important than what you know.

  5. Build an experienced technical and executive team. A sure sign of no traction is a lone inexperienced entrepreneur looking for an investor. You need a well-rounded team, including technical, financial, marketing, and operational experience, and your ability to attract the right people is a strong indication of fundability and traction.

  6. Demonstrate key customer prospect evidence of interest. If you don’t have revenue, it definitely is valuable to have orders, letter of intents, value testimonials, or even calls returned and email responses. While these may not be advertised publicly, they should be celebrated internally and highlighted informally to potential investors and partners.

  7. Show validation data for business model key elements. One important measure of traction would be a metric on how many of the key business model elements have been proven, with actual data or multiple experiments. These would include cost of customer acquisition, cost of leads, sales channel, cost of goods, and pricing strategy.

  8. Quantify progress against generic growth constraints. In every industry there are known barriers to traction, including regulatory approvals, safety standards, and clinical trials. These need to be listed as a metric, with breakthroughs counted and resolution times projected. Investors need to see your accomplishments, and the barriers ahead.

Without measures like these, you will likely hear the most common rejection from investors – “Come back when you have more traction.” Be aware that there is no magic threshold of user signups or customer revenue that will assure success. It all depends on the overall level of perceived risk, your credibility, and the size of the potential opportunity.

It’s up to you to define what traction means in your new venture, and then show your progress against these measures. Your level of passion is no substitute for some real data and analysis. In reality, all traction metrics are for you as the business owner, to measure your progress and growth in your new venture. Don’t be fooled by your own hype.

Marty Zwilling

*** First published on CayenneConsulting on 10/04/2018 ***

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Monday, October 15, 2018

6 Story Attributes Will Highlight Your Business Pitch

business-woman-telling-storyThe biggest challenge for every entrepreneur and every startup today is to get noticed and remembered in today’s information overload. The number of entrepreneurs worldwide is huge, starting an estimated 50 million new businesses per year, or 137,000 per day. Every one of these probably has a unique story, but in my years as a startup advisor I only remember hearing a few who capitalized on their story.

The impact of a memorable story was highlighted for me recently as I reviewed the classic book, “Sell With A Story,” by Paul Smith, who is an expert trainer on increasing business results through storytelling. His focus is primarily on improving the results for traditional sales professionals, but I’m convinced that the same principles are equally critical for entrepreneurs selling their startup to investors, strategic partners, and customers.

I say that because I’ve heard too many abstract pitches about the next paradigm-shifting technology, which I can’t relate to, and only a couple with stories that really grabbed me. The best story I remember related the family impact of devastation wrought by Alzheimer’s disease, leading to the development of a mitigation process, and I am now fully committed to this effort.

I learned from Smith that a memorable story doesn’t have to hit you personally, but it does have to include six key attributes to raise it above the standard sales pitch, or new venture problem statement, opportunity sizing, and value proposition. These attributes include the following:

  1. Specific moment-in-time indication. Most entrepreneurs were incented to start their venture at a specific moment they remember well, so telling the story of when and how this happened is a natural. The result will always have more impact than merely outlining a new technology, cutting costs, or tackling a known problem, such as world hunger.

  2. Place where it happened. A memorable story needs to start with location specifics to make it real. Stories relay events, and these events have to happen somewhere. The words can be simple, like “I was meeting with a customer in Boston,” or “When my home was devastated by a tornado.” It’s even acceptable to make up a place with a “what if.”

  3. Every story needs a main character. This should be obvious, but much of what passes for “a story” these days are things like elevator pitches or product descriptions that have no characters at all. In the context of new venture stories, the character would most likely be the entrepreneur, a potential customer, an investor, or all of the above.

  4. The obstacle or the painful need. This is the villain in the story, which should be the problem you are solving. If could be a disease you are designing medicine to combat, missing data that your solution provides, or a safety risk in a common process. The explanation of your solution, financial return, and the rollout comes later.

  5. A worthy goal. The main character in a story must have a specific goal, ideally one that is appreciated or even noble in the eyes of the listener. These days, it’s not cool to have a primary goal of making lots of money, but it is smart to include evidence that the new venture is sustainable as a business, and will provide a satisfying return to constituents.

  6. Something has to happen. Statements about your product’s amazing capabilities or your service commitment, or testimonials about how awesome your company is, are generally not stories because they don’t relay events. They are just someone’s opinion about impact which still belong in marketing collateral, but won’t make you memorable.

If possible, every entrepreneur should craft a unique story, or tune their story, for different audiences, such as investors and customers, to convey your values and your commitment in their specific context. Add emotion, surprise, dialogue, detail, data, and other elements to make your story fresh and effective. Always close stories with succinct lessons and recommended actions.

A compelling story is best used as a “grabber” to get people’s attention and make your venture and brand memorable, but it doesn’t replace any of the new venture basics, such as the business plan, investor deck, or financial model. It can be your competitive advantage over peers and existing players, and it is fun to do. How prepared are you to tell your best story?

Marty Zwilling

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Sunday, October 14, 2018

Businesses Need Employee Engagement More Than Process

engaged-employeeThe days of leadership without engagement are gone. With interactive social media and video everywhere, everyone needs to feel they have a relationship with their leaders, and every brand needs leader personification for customers to relate. Soon you won’t be able to name a business as one of your favorites if you can’t personally visualize and relate to company leadership.

In the same way, great entrepreneurs and company leaders should no longer rely on faceless and nameless processes to drive business strategy and innovation to stay competitive. The old way doesn’t work, and results more than ever in slow decision-making, lack of real connection with employees, and ignorance of what customers really want.

The new principles of engagement, as well as the dysfunctions of the old, are well illustrated in the insightful classic book, “Why Are There Snowblowers in Miami?” by Steven D. Goldstein. He speaks from a wealth of personal experience in private equity, as well as top executive positions at American Express, Sears, and Citigroup.

He found the dysfunctional engagement that sent snow blowers to his store in Miami every year. As a result of this incident and many others, he defined five key engagement principles which resonate with me as just as relevant for new business founders as mature business executives. Here is my adaptation of his engagement principles for all the aspiring entrepreneurs I advise:

  1. Learn to adopt an outsider’s perspective. Every entrepreneur, even though confident in his domain, needs to fight complacency in a world that changes almost daily. You need to look at everything through fresh eyes, continually ask questions not usually asked, and actively listen to contrary views. No change means you are falling behind as a leader.

  2. Interact with employees and customers on a regular basis. Authentic communication at all levels and encouraging feedback is how you find out what is really going on. More meetings in your conference room won’t get to the truth as well as simply talking to people who interact with customers directly. Never be too busy to talk to real customers.

  3. Focus on two or three pertinent metrics in any situation. Keeping it simple is the best course. No one can remember your top ten priorities and measurements. Unbundle projects into smaller elements, and personalize the top couple of metrics for each team. These simplified targets are crucial to motivating a team, and getting the focus you need.

  4. Help people know more, so they can do their job better. Knowledge is power, and good information flow and collection tools are of the utmost importance. Information that is relevant and timely needs to be shared widely and efficiently. It’s also important to share the evaluation insights, and to tie the next action steps directly to current results.

  5. Accept that whatever speed you are going is too slow. Time is the enemy in today’s global marketplace. Follow the guiding motto of Andy Grove at Intel, “Only the paranoid survive.” It’s vital to get quick wins, learn rapidly from failures, and get comfortable with constant change. Waiting is never an option, as competitors will always be moving.

In the same fashion, these engagement principles must be applied to customers. More and more, I see evidence that customers want to be pulled to your company by engagement, rather than feel that you are pushing yourself on them. There are a multitude of opportunities through social media to engage your customers, as well as getting out of your office into the marketplace.

Customer business leadership through brand icons, such as Ronald McDonald and Aunt Jemima, is fading fast. Customers as well as employees want to relate and engage with real people as leaders, and business leaders need to interact with real employees and customers to stay vital and current.

As an entrepreneur, you need to start this focus early, with the same passion you currently apply to your new idea and solution. Have you taken a hard look recently at where you are spending most of your time?

Marty Zwilling

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Saturday, October 13, 2018

7 Ways To Be A Great Manager And Leader For Your Team

i-am-the-bossOne of the things I’ve learned in working with aspiring entrepreneurs is that managing and leading a team is a scary venture into the unknown for many people, even if they have worked as a business professional for years. Having worked in my own career on both sides of the fence at various times, I recommend that everyone practice thinking like the boss in every role to prepare.

This will improve your effectiveness in your current role, and give you a head start towards a future role, such as startup founder, where you are the boss. You will find that the same key principles apply in both situations, and that every business professional has a boss, and should be a leader in their own domain to others with less experience and expertise.

I found some good insights and details on this approach in the classic book, “How To Be A Great Boss,” by Gino Wickman and RenĂ© Boer, who speak from years of experience working with leadership teams of both small and large companies. Here is my summary of their key principles on being a great boss, which I will characterize here as applying to any business professional:

  1. Surround yourself with great people. As an entrepreneur, executive, or team member, you are most impacted by the people you gather around you. The smartest team members and the smartest bosses spend more time with people who are smarter in the relevant domain than they are. Then when you have to hire people, you will pick the best.

  2. Make more effective use of your own time. We all know bosses and peers who are always too busy, but never seem to get much done. Make sure that person is not you. Free up time for others by eliminating low priority tasks, and delegating items to the right people. Work on habits that improve your productivity, and find better tools every day.

  3. Understand both leadership and management. In business, leadership consists of creating the vision and direction, while management is primarily about gaining traction to achieve it. You don’t have to be a boss to be a leader or a manager. You should be practicing both in every role, and there will be no surprises as your career evolves.

  4. Train yourself to follow leadership best practices. If you practice all the key elements of leadership in every role, you will make a great team member or a great boss. These elements include giving clear direction, providing tools and training to the right people, getting out of the way, walking your own talk, and reflecting regularly on the big picture.

  5. Focus on demonstrating accountability for your actions. Accountability is everyone’s obligation, to accept responsibility for their activities, and to disclose your results in a transparent manner. Accountability cannot be imposed on you by a boss or entrepreneur – it’s a practice that you must learn to impose on yourself to be effective and appreciated.

  6. Develop productive relationships with people around you. Effective relationships, inside your business and outside, are critical in every professional, management, and leadership role. The most productive people get things done by working in concert with others, not demanding actions and results, but by orchestrating win-win relationships.

  7. Learn to deal effectively with people who disappoint you. While highly productive relationships lead to success, dysfunctional relationships make you a poor employee and a bad boss. People issues cannot be solved by avoidance or edict. If you surface and manage relationship issues early with respect and minimum emotion, you will be seen as a good team member and a good boss.

Thus, putting yourself in your boss’s shoes to see what they see, and act as you would expect them to act, is the best way to assure success in your role today, or prepare you for the startup founder role you dream about. In fact, the best team members and managers I work with always see themselves as their own boss. Try it – you may find and train that great boss you never had.

Marty Zwilling

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Friday, October 12, 2018

7 Tips To Test Your Idea As A Part-Time Entrepreneur

part-time-jobMany experts will tell you that you can’t succeed as a part-time entrepreneur, as any good startup will require a 100 percent commitment of your time and energy. But not many of us have enough savings to live for a year or more without a salary, fund the startup, and still feed the family. Thus I often recommend that entrepreneurs keep their day job until the startup is producing revenue.

Of course, if you have investors anxious to give you money, or a rich uncle to keep you afloat, there is nothing wrong with a dedicated and full commitment to the startup, with commensurate more aggressive milestones and growth expectations. We all understand the risk of competitors quickly closing in, and market factors changing before we can roll out our solution.

For those of you who do decide to keep your day job, here are some pragmatic recommendations I espouse on how to make the most progress in your startup, while simultaneously juggling your other critical family and employer roles. In fact, these suggestions have tremendous value, even if you are dedicated and committed full-time to your new startup:

  1. Find a co-founder who can keep you balanced. Two co-founders, both working part-time are actually better than one founder full-time. You both need the complementary skills, ability to debate alternatives, and the tendency to keep each other motivated, that neither could match working alone. One still needs to be the agreed final decision maker.

  2. Schedule fixed times and days for the startup, working with the team. Building a startup is hard work, and requires discipline to get it done. Working part-time doesn’t mean all working randomly alone. Commit to a regular weekend time and a couple of specific nights per week where you meet with the team and focus only on the startup.

  3. Get better at saying ‘no’ to your friends. Learning to manage your own time is critical. Everyone around you enjoys adding things to your schedule, and reducing their to-do list. The key is learning to say no without offering a long list of excuses, or whining about how busy you are. It’s never possible to satisfy everyone, so be true first to your own priorities.

  4. Set realistic milestones and take them seriously. It’s easy for part-timers to make excuses that other priorities caused you to miss milestones, but predictable results and metrics in this mode are even more critical than for full-time members. Use the 80/20 rule to maximize productivity – get 80 percent outcome from 20 percent of focused efforts.

  5. Select a business idea that has a longer runway. Some startup ideas are dependent on a rapidly emerging fad, or have many competitors fighting for a limited market. You can’t move fast enough on a part-time basis to win in these areas. On the other hand, if you have a new technology, with patent applied for, maybe you more time to get it right.

  6. Prepare yourself for a longer journey to success. Seth Godin is famous for saying that the average time for overnight success in a startup is six years, even working full-time. Like any startup solution, the first version will likely be wrong, and require one or more pivots. Learn to look for small indications of success to keep you motivated.

  7. Make learning your full-time vocation. No matter how many full-time, part-time, and family commitments you have, you always need to carve out time for learning new things. Learning is not stealing from any employer, and it prepares you for all your futures. Don’t wait for anyone to pay your way to class, or give you time off for training. It won’t happen.

The advantage of quitting your day job early is that it removes all excuses, and all qualms from you and others, that the new startup is only a hobby. There is nothing that drives an entrepreneur like being hungry, dependent on the outcome, and seeing mounting debt. Without self-discipline, many aspiring entrepreneurs find that a single focus is the only way anything ever gets done.

There is certainly additional risk associated with working a paying job during the day, and working on your startup nights and weekends. First is the risk to your health and family life, which if you lose these, all the business opportunity in the world doesn’t matter.

Then there is the risk of antagonizing your current employer by missing deadlines, reduced productivity, or even getting embroiled in a legal conflict of interest or intellectual property ownership rights. I suggest it’s best to be up-front with your employer, with an honest commitment that your startup work will not impact company commitments or results.

Potential conflict of interest issues with a current employer should be explored openly, and resulting agreement documented, to preclude the possibility that you might lose everything later as your startup succeeds. On the positive side, your employer may like what you have in mind, and become your first investor and biggest supporter.

If your conclusion after all these pros and cons is that the risk is too high for you, you probably need to keep your day-job long-term, and give your startup idea to someone else. There certainly isn’t anything wrong with a regular well-paid job and career, with health-care benefits, and a competitive retirement plan. But the entrepreneur lifestyle is still more fun, even part-time.

Marty Zwilling

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Wednesday, October 10, 2018

10 Ways Entrepreneurs Find Money To Start A Business

money-to-start-a-businessOne of the most frequent questions I get as a mentor to entrepreneurs is “How do I find the money to start my business?” I always answer that there isn’t any magic, and contrary to the popular myth, nobody is waiting in the wings to throw money at you, just because you have a new and exciting business idea.

On the other hand, there are many additional creative options available for starting a business that you might not find for buying a car, home, or other major consumer item. If you have the urge to be an entrepreneur, I encourage you to think seriously about each of these, before you zero-in on one or two, and get totally discouraged if those don’t work for you.

Of course, every alternative has advantages and disadvantages, so any given one may not be available or attractive to you. For example, professional investors put great priority on your previous experience in building a business, and they expect to own a portion of the business equity and control for the funds they do provide. These are tough for a first-time entrepreneur.

Thus it is always a question of what you qualify for, and what you are willing to give up, to turn your dream idea into a viable business. Here is my list of the ten most common sources of funding today, in reverse priority sequence, with some rules of thumb to channel your focus:

  1. Seek a bank loan or credit-card line-of-credit. In general, this won’t happen for a new startup unless you have a good credit history, or existing assets that you are willing to put at-risk for collateral. In the US, you may find that the Small Business Administration (SBA) can get you infusions of cash without normal backup requirements.

  2. Trade equity or services for startup help. This is most often called bartering your skills or something you have for something you need. An example would be negotiating free office space by agreeing to support the computer systems for all the other office tenants. Another common example is exchanging equity for legal and accounting support.

  3. Negotiate an advance from a strategic partner or customer. Find a major customer, or a complimentary business, who sees such value in your idea that they are willing to give you an advance on royalty payments to complete your development. Variations on this theme include early licensing or white-labeling agreements.

  4. Join a startup incubator or accelerator. These organizations, like Y Combinator, are very popular these days, and are often associated with major universities, community development organizations, or even large companies. Most provide free resources to startups, including office facilities and consulting, but many provide seed funding as well.

  5. Solicit venture capital investors. These are professional investors, like Accel Partners, who invest institutional money in qualified startups, usually with a proven business model, ready to scale. They typically look for big opportunities, needing a couple of million dollars or more, with a proven team. Look for a warm introduction to make this work.

  6. Apply to local angel investor groups. Most metropolitan areas have groups of local high-net-worth individuals interested in supporting startups, and willing to syndicate amounts up to a million dollars for qualified startups. Use online platforms like Gust to find them, and local networking to find ones that relate to your industry and passion.

  7. Start a crowdfunding campaign online. This popular funding source, where anyone can participate, per the JOBS Act in the US, is exemplified by online sites like Kickstarter. Here people make online pledges to your startup during a campaign, to pre-buy the product for later delivery, give donations, or qualify for a reward, such as a tee-shirt.

  8. Request a small business grant. These are government funds allocated to support new technologies and important causes, like education, medicine, and social needs. A good place to start looking is Grants.gov, which is a searchable directory of more than 1,000 Federal grant programs. The process is long, but it doesn’t cost you any equity.

  9. Pitch your needs to friends and family. As a general rule, professional investors will expect that you have already have commitments from this source, to show your credibility. If your friends and family don’t believe in you, don’t expect outsiders to jump in. This is the primary source of non-personal funds for very early-stage startups.

  10. Fund your startup yourself. These days, the costs to start a business are at an all-time low, and over 80% of startups are self-funded (also called bootstrapping). It may take a bit longer, to save some money before you start, and grow organically, but the advantage is that you don’t have to give up any equity or control. Your business is yours alone.

You can see that all of these options require work and commitment on your part, so there is no magic or free money. Every funding decision is a complex tradeoff between near-term and longer-term costs and paybacks, as well as overall ownership and control. Yet with the many options available, there is no excuse for not living your dream, rather than dreaming about living.

Marty Zwilling

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Monday, October 8, 2018

7 Strategies To Avoid the Curse of Business-As-Usual

business-as-usual-oxymoronAs a long-time advisor to entrepreneurs and business owners, I rarely find someone who doesn’t proclaim that the business world is changing rapidly, with new technology, new customer expectations, and new cultures. Yet, I’m still frustrated by the number of business owners that haven’t updated their business-as-usual practices. In my mind, these are killing their businesses.

For example, I still find businesses asking you to print, sign, and return documents by mail in lieu of digital signatures or email. Others still routinely have phone hold queues for customer contact that can last up to an hour, with no alternative options. Yet in my talks with these executives, they are unaware of the issues, or have no idea how to change processes at the rate of change today.

If you are one of these owners who wants to do the right thing to survive and delight your customers, but doesn’t know where to start, I am here to recommend some best practices that I see successful companies, and many startups, who have focused on this issue. Here is my prioritized list of best practices that I recommend to get you back on track:

  1. Focus on building an engaged and empowered team. It takes a well-rounded and motivated team to run a competitive business today. These are your eyes and ears, in daily contact with customers, who are as committed to delighting customers as you are. They have to be energized and able to adapt as the market and competitors demand.

  2. Define stretch goals and challenge your team to deliver. Traditional mission statements are not enough. You need to communicate quantified and updates goals quarterly, including the metrics to assess progress and success. For buy-in and commitment, make sure the team has an integral role in setting goals and rewards.

  3. Optimize your customer feedback and listening channels. These days, customers expect to be able to build a relationship with a business through two-way communication. Make sure your channels are open and responsive, through social media, websites, and easy access to executives. Use experiments with them to evaluate potential changes.

  4. Track competitors and influencers for trends and ideas. Even if your performance has improved dramatically, other businesses may be moving faster or tracking closer to cultural changes and market trends. One of the biggest justifications for business-as-usual is ignoring competitors and not comparing your processes to industry best-of-breed.

  5. Foster a learning and change culture in employees. The best companies have found that it’s important to constantly prepare team members for moving to the next level, through mentoring and training, rather than trying to keep them in their current role. The alternative is that the best leave, and your average skill level and motivation go down.

  6. Plan to upgrade all processes without waiting for a crisis. Waiting for a crisis, like a revenue shortfall, or customer dissatisfaction, is a sure way to disaster. Competitors are looking for a soft spot to step in, and customers have instant access to better alternatives through friends and reviews on the Internet. Once gone, customers won’t be back.

  7. Disrupt your own solutions before someone else does. Too many businesses have their “cash cows,” which they refuse to touch with pricing or new features until it is too late to recover. Intel’s Andy Grove famously argued that chip technology doubled every 18 months, so he planned on replacing his products on that schedule, despite sales.

Business as usual is an easy habit to fall into, and a hard one to change once it is entrenched. If you establish these recommended best practices early, and apply the necessary discipline to keep them going, your chances of success are good. You will also find your business to be a lot more satisfying and self-sufficient. That’s a win-win for both you and your customers.

Marty Zwilling

*** First published on Inc.com on 09/25/2018 ***

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Sunday, October 7, 2018

6 Powerful Drivers Shared By Successful Entrepreneurs

Steve-Jobs-StanfordIn my experience mentoring new entrepreneurs and aspiring business leaders, I see far too many who seem to be driven by all the wrong reasons. Everyone seems to espouse extrinsic motivations, such as getting rich, having power, and fulfilling parent dreams, when in fact a focus on satisfying internal interests and desires will likely lead to more success, as well as satisfaction.

I’ve had the pleasure of working with a couple of the best-known entrepreneurs of our time, and read about many more in the updated version of the classic book, “Discover Your True North,” by Harvard leadership expert and best-selling author Bill George. He makes a convincing argument that the best leaders and entrepreneurs follow their intrinsic rather than extrinsic motivations.

He emphasizes the value of finding a way to align your strengths with your intrinsic motivations, which he calls the sweet spot. Some of the most effective sweet spots and intrinsic motivations for today’s entrepreneurs would include the following:

  1. Making a difference in the world. When Bill Gates acted on his dream of putting a computer in every home and on every desk, he had no idea of the fortune it would bring to him, since he wanted only to make a difference. Extrinsic motivations often work against entrepreneurs by leading them to set unrealistic and overwhelming goals.

  2. Find personal meaning from building a business. In his book, “The Art of The Start 2.0,” Guy Kawasaki exhorts entrepreneurs to focus on making meaning, not money. He has said many times that if your vision for your company is to grow it just to flip it to a large company or to take it public and cash out, "you're doomed.” Do it for meaning.

  3. Satisfaction of doing something great. Steve Jobs summarized his intrinsic motivation in 2005 at Stanford in a talk titled “How to Live Before You Die.” He said, “Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.”

  4. Personal growth and accomplishment. To be a successful entrepreneur, one can never stand still. The best entrepreneurs enjoy the journey as much as the destination. They have a thirst for knowledge that helps them in their business, as well in their own personal growth. That synergy creates a sweet spot that maximizes their impact.

  5. Seeing the real value of one’s beliefs. When asked why he created Facebook, Mark Zuckerberg replied “It's not because of the amount of money. For me and my colleagues, the most important thing is that we create an open information flow for people. Having media corporations owned by conglomerates is just not an attractive idea to me."

  6. Helping others achieve their goals. If you want to achieve your goals, help others achieve theirs. Great entrepreneurs keep your eyes open for other businesses in a related space that can complement theirs. Elon Musk has opened up Tesla car battery patents for use by anyone, which obviously will benefit his business as well as theirs.

Most entrepreneurs will tell you that once they discovered the real purpose for their efforts, they found a new sense of commitment and leadership which allowed them to really inspire and empower others, as well as direct their own actions. At this point they can make the strategic decisions they need to really make a difference, enjoy satisfaction, and leave a lasting legacy.

Many have found that initial failure is one of the best teachers in this regard. I counsel new entrepreneurs to expect failure, and wear it as a badge of pride, rather than trying to hide it. In fact, most investors are wary of anyone who claims to have never failed, reading that claim as an indication of too much caution, or not able to face their own reality.

The primary message here is not to hide your real motivation from yourself, your team, or your investors. You can’t fool them all for very long, and you won’t be happy trying. If you can’t find any intrinsic motivations for what you are doing now, it’s probably time to take a hard look at your lifestyle and your future. Life is too short to be unhappy and unfulfilled for any part of it.

Marty Zwilling

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Saturday, October 6, 2018

10 Keys To Reducing The Risk The Second Time Around

business-riskEntrepreneurs who experience success with their first startup are often amazed to realize that the risks and fears of doing it right the second time go up, rather than down. Encores are tough, especially in the high-risk world of startups, yet every entrepreneur I know can’t wait to start over and do it again. Sometimes their haste or ego causes them to ignore basics, and they fall hard.

Every startup success is a function of great people, products, and profits. But there is no magic formula on how to bring these together a second time, but I did see some good insights on the parameters in a classic startup business parable, “Endless Encores,” by Ken Goldstein, who advises startups and has built corporations in technology, entertainment, media, and e-commerce.

I have pulled together here a few of our joint recommendations to every entrepreneur and startup that I advise. These work the first time, and are required every time for success:

  1. Seek extraordinary people and revere talent. In the heat of the battle, when you have the least time and money to attract the best, it’s easy for an entrepreneur to settle for who is available, rather than who can bring real value and innovation to the business. Repeat leaders think more about talent, while short-term leaders worry first about output today.

  2. Hire for character, competency, and compatibility. Hiring is the single most important thing you do as a leader, and firing is second. It’s more than filling an open slot on your team. You start with skills, but then you have to delve deeply into motivation, trust, ambition, chemistry, and experience.

  3. Diversity on your team expands thinking. Hiring people who are just like you may eliminate revolts, but it won’t get you outside your own box. Creativity requires constructive conflict, a willingness to collaborate, dealing with failure, and boundless iteration. Solution and business model innovation require pushing the limits.

  4. Self-demanding beats boss-demanding every time. Startup successes are never perfect. Too many entrepreneurs are their own worst enemy, trying to do everything right the next time. Remember to embrace pragmatic goals and solutions, and accept a little bit of luck and assistance along the way. Perfectionists never win in the startup business.

  5. Leapfrog products invent and reinvent markets. Incremental product ideas do not change markets. It takes a paradigm shift, like autos to airplanes. On the other hand, making the user experience easier, richer, and more pleasant, as Apple has done repeatedly, can reinvent existing markets. Focus on the customer for repeated success.

  6. Eat your own dog food. If you don’t, why should they? The basic premise is that if a startup expects paying customers to use its products or services, it should expect no less from its own team. There is no better way to get quick and honest feedback on strengths, weaknesses, and usability. Even encore startups should expect to pivot to get it right.

  7. A business model is not an after-thought. Passion and ego are no substitute for a business model that makes sense. Some entrepreneurs are so enamored by their first success that they inherently believe that their next idea will make even more money. If your solution is free, or you lose money on every sale, it’s hard to make it up in volume.

  8. Strategy is charting a course, not making a move. Implementing a strategy doesn’t force the answer you want, so it pays to map out the alternatives and envision the possible as well as the problematic. Markets change rapidly these days, so the strategy that brought you success the first time, may lead to your demise the second time.

  9. Recurring revenue is the foundation for growth. Everyone loves the subscription model, since transaction costs exclude the cost of acquiring a new customer. Investors love this and other recurring revenue models because they facilitate growth through scaling. Sometimes repeat entrepreneurs forget that they must acquire new customers.

  10. Use cash wisely, as if it were out of your own pocket. Every new startup has extensive cash flow out, before any flows in. Serial entrepreneurs, with new bigger ideas, often forget that part of the equation, and are caught short. Repeating successfully means the same focus and due diligence on cash you had the first time around.

Thus the path to repeat success in business is to utilize what you learned from your first experience, and subvert any illogical fear of being exposed as a fraud or a lucky accident. If you have been able to “bring the crowd to its feet” with the success of your first venture, the principles outlined here could bring you endless encores.

Marty Zwilling

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