Monday, September 16, 2019

How Idea People Can Transform Into Visionary Leaders

The_Summit_2013A popular approach for aspiring entrepreneurs these days seems to be to corner anyone who will listen, with a pitch on their current “million dollar idea.” The initial monologue usually ends with the question “How much money do you think this is worth?” In my opinion, ideas are a commodity, and are really not worth much, outside the context of a visionary leader who can execute.

Over the past couple of decades, experts have perfected the art of brainstorming and other idea-generation techniques. Executives and investors are now increasingly exposed to a wealth of ideas. The result is that ideas are no longer in short supply, and no longer a differentiator in competition.

Visionary execution, on the other hand, is not so common. A visionary is someone who can make sense out of the wealth of ideas, and weave together a plan for implementation that will make a difference in the world. Elon Musk, for example, likely receives thousands of ideas from friends, but he has been able to focus a few of these into initiatives that demonstrate real innovation.

What separates an idea person from a visionary leader? Most experts agree that a visionary leader not only has ideas, but also has a vision of where these ideas can lead, with strong core values, key relationships, and demonstrates innovative actions, as follows:

  1. Commitment to core values. Visionary leaders radiate a sense of energy, strong will, and personal integrity. This usually results in a focus on multiple related ideas, leading to real innovation, rather than bouncing from one idea to the next, looking for the Holy Grail.
  1. Positive inspirational communication. People with vision usually start by communicating an inspirational picture of the future, and then integrating individual innovative ideas into this fabric, and show how to get there. The best ones can make the impossible look easy, so everyone, including investors, line up to commit.
  1. Build strong relationships with strong people. Great relationships are key to every leader. They see people as their greatest asset, and listen as well as talk. Theirs is not the autocratic style of leadership, which tells people what to do and dominates them, but a style which treats partners, investors, and customers as family.
  1. Willing to take bold actions. These actions somehow always seem to embody a balance of rational (right brain) and intuitive (left brain) functions. Visionaries are often “outside the box” of conventional approaches and move toward long-term change and innovation. They are proactive and anticipate business change, rather than reactive to events.
  1. Radiate charisma. People with a real vision can communicate ideas with almost a spiritual charisma that energizes people around them to go a step beyond normal boundaries, to solve a technical problem, sign on as a team member, or invest resources, when conventional wisdom would suggest otherwise.

Every investor wants to fund the true visionary leader, but the truth is that these people often don’t need funding, or don’t ask for it. The best investor pitch, then, is to sell the vision with such conviction that people want to be a part of it, with their money, their skills, or whatever they can bring to the table.

But not every entrepreneur has to be a visionary. There is still plenty of room for incremental improvements, and creativity in providing solutions to short-term problems. This is really the realm of bootstrapped startups, and a small segment of the angel investor community that is looking for a “quick hit” with a quick return.

So my message to entrepreneurs is to tune your approach and your expectations accordingly. I’m always impressed with entrepreneurs who pitch how they plan to bootstrap an idea, but if you need a million dollars, you better be able to communicate and lead with a vision.

Marty Zwilling

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Sunday, September 15, 2019

10 Tips On Managing An Overwhelming Business Workload

managing-business-workloadOne of the most common complaints I hear from entrepreneurs is that they are overwhelmed by the workload and stress of starting their company. Then there are the additional challenges of balancing the demands of family and friends. Having too much on your plate can turn your dream into a nightmare.

Some people will tell you to just get a bigger plate, meaning hire some help. But with the pressures of the economy, and limited access to outside funding, we all know this isn’t always possible or appropriate. I recommend the opposite, or getting things off your plate that shouldn’t be there in the first place.

In reality, many entrepreneurs are their own worst enemy, trying to do everything, working inefficiently, and imagining things that need doing which will never happen. Here are some tips on how to look at work, make some hard decisions, and keep your health and sanity:

  1. Maintain a big picture perspective. It’s easy to be overwhelmed by day-to-day details, to the degree that they all seem like big items, driving up your imagined workload. Take a few minutes each day to reflect on your real goals, and eliminate items which don’t relate.

  1. Set realistic deadlines. The more your workload grows, the greater is your temptation to set unrealistic deadlines for yourself. This results in poor quality work, which generates more work to fix previous efforts. Allow some buffer on every item.

  1. Prioritize the work items. Relentlessly reprioritize your list and complete them in order, resisting the urge to skip over the tough ones. The longer that high-priority items stay on your list, the more stress you will feel, and consequences will add new items.
  1. Keep a written to-do list. Most people can’t manage more than five items in their head, and when your list gets longer, it seems infinite. Write it down, but even then, keep it to the top ten priority items or less. Multiple pages of work items won’t get done anyway.

  1. Block out time for priority work items. Don’t allow your day to be monopolized by distractions and the crisis of the moment. Close your door, or move to another location where you will not be interrupted so that you will complete the top item on your list today.
  1. Count the completions. At the end of each day, check off, count, and celebrate your positives. A sense of progress is important here. Look positively at your progress as a glass half full, rather than half empty.
  1. Take a break to recharge. Even a few minutes each hour to relax will re-energize you. Regular non-work breaks, like a trip to the gym, or time with family will be ultimately more productive than slugging it out all night on a given problem. Get a good night’s sleep.
  1. Discuss the tough ones with a mentor. Don’t be afraid to discuss your challenges with a trusted friend, or business advisor. This will clarify the issue in your own mind, and let you see it from other angles. You need to stop and regroup when you hit a brick wall.
  1. Stay in control of your emotions. Stress is a normal part of life. Don’t let it lead to anger and frustration, or loss of productivity. We can choose how we handle tough situations, and the best approach is always to stay calm and in control.
  1. Eliminate phantom work items. These are items that you never intend to do, and probably don’t need, but you carry them on your list because of guilt or direction from someone else. You can’t complete an item that you don’t understand.

Wearing all the hats required to initiate a startup is tough in the best of situations. Then your business really starts to take off, and it gets even more challenging. As an entrepreneur, you need to seriously apply the discipline of these principles early and always to survive, and hopefully even enjoy the journey.

Marty Zwilling

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Saturday, September 14, 2019

8 Strategies To Avoid The Entrepreneur Arrogance Trap

Cigarette-Man-SmokeIn my years of mentoring entrepreneurs, a problem I have seen too often is low self-esteem, and over-compensating through arrogance and ego. These entrepreneurs find it hard to respect customers or team members, and their ventures usually fail. As a team member, low self-esteem leads to low confidence, poor productivity, and no job satisfaction. Fortunately, both can be fixed.

Organizational change expert Paul Meshanko, in his classic book “The Respect Effect,” explores the human science behind these issues, confirming that people with a healthy self-esteem perform at their best and treat others with respect, getting their best. All of us shut down when disrespected. He assures us that anyone can train themselves to get on track to stay on track.

With my insights to focus on entrepreneurs, I like Meshanko’s eight steps to help build business self-esteem and avoid the ego trap, which support a broad range of attitudes and behaviors that are individually and organizationally beneficial to startups as well as mature companies:

  1. Identify the qualities and skills most closely linked to your idea of success. Current research is conclusive that self-esteem is linked to our sense of competence in the areas that are important to us. As you look at your entrepreneur goals, make sure you are following your own definition of success that gives you pride and passion in its pursuit.

  1. Identify your current strengths and establish plans for improving. Once you have clarified your personal definition of startup success, examine where you currently are relative to where you want to be. Whatever your goals, there are few things more esteeming than knowing you’re making progress toward your picture of success.

  1. Be on the lookout for new opportunities to grow your talents and experiences. Part of our sense of self-worth comes from the belief and confidence that we have the ability to grow the business both today and in the future. Entrepreneurs have a natural base for adventure and curiosity, and should relish trying new things each day to stretch them.

  1. Identify and redirect unhealthy competition and comparisons. Make you the base, not others. Your sense of worth should not be determined by other startups, or what you think peers expect of you. Competition sabotages teamwork and leaves feelings of isolation and alienation. Use others as a source of inspiration, rather than envy.
  1. Forgive yourself for past mistakes and poor decisions. From a rational point of view, berating ourselves for past startup failures makes no sense. Free up your energy to be spent on more productive activities, and learn from past efforts. The great entrepreneur Thomas Edison said that every wrong attempt discarded is another step forward.
  1. Hold yourself completely accountable for your actions, decisions, and outcomes. The legitimate place for short-term guilt and remorse is making these lead to some type of behavior change. Failing to hold yourself accountable sends subtle messages that may damage others self-esteem, and it doesn’t promote lasting confidence or competence.
  1. Develop a pattern of self-talk that validates your worth and abilities. Each of us has developed a way of interpreting and explaining the business world around us. It’s important that our stories neither damage us nor free us from blame. We should continue to feel worthy, accountable, and capable, with a mindset that allows us to continue to follow our entrepreneurial passion.
  1. Focus on what you can control, not what you can’t. Our short-term destiny is not always in our control. What we can do is make a commitment to do our best in whatever entrepreneurial environment we find ourselves. We can also make sure we build strong relationships with successful business leaders in advance of our needing their wisdom.

For every entrepreneur, a healthy self-esteem, leading to self-confidence, is critical to a constrained ego and more success, since every startup is entering uncharted territory, and must take risks to seize a new opportunity. Not all entrepreneurs have a background to start from a position of strength in this area, but all have the ability to learn and the passion to succeed.

In my experience, the most common cause of entrepreneur failure is giving up too early, rather than running out of money. Are you selling yourself short on your own potential, and not working on your own self-esteem, thus jeopardizing your business success and job satisfaction?

Marty Zwilling

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Friday, September 13, 2019

10 Academic Courses To Kickstart Your Business Career

Harvard_University_Academic_HoodsI’m sure that every one of us who has been out in the business world for a few years can look back with perfect hindsight and name a few college courses that we should have taken. What’s more disconcerting to me is that I can name a few that aren’t usually even offered, resulting in more than a few students graduating ill-prepared for the real business world!

I won’t even try to cover here the ones you didn’t find for your personal life, like managing personal finances and credit. But on the business side, here is my list of useful courses that we wish existed, but as far as I know, still aren’t generally available:

  1. Basic Office Politics. Office politics involves the complex network of power and status that exists within every business, large and small. Don’t you wish that someone had prepped you on how to read the body language, interpret office gossip, and when to hit the delete key on your email rather than the send key?
  1. Business Email and Texting. Writing in business is not the same as in an academic environment. In school, you're taught to stretch weak ideas to reach your document page limit. The business world expects exactly the opposite. The challenge is to communicate your idea in one page, and close the deal quickly. As for business texting – use sparingly.
  1. Touch-Typing for Business. How many hours a day does the average professional and executive today spend hunched over a computer keyboard “hunting and pecking”? Throughout a career lifetime, just think of the return on that investment. Any symbols you can’t find on a typewriter, like smiley faces, should never be used in business.
  1. Business Dress for Success. “You are what you wear” works in business, just like it did in high school. But no one tells you the business norms, so some continue to come to work in jeans, baseball caps, tattoos, flip-flops and expect to be treated as executives. A basic benchmark is to dress better than the executives who hold the positions you want.
  1. Demystifying Employee Logic. Another term for this is how to be a skeptic. Understand the ways people can mislead deliberately or accidentally with numbers, bad logic and rhetoric. There's some untruth hidden in 99 percent of everything you're told. Can you find it, and do you know how to respond?
  1. Business Budgets and Benefits. The focus here would be on the actual nuts and bolts of how things get budgeted and financed in business. This will pay big dividends in getting your favorite project funded, or justifying your own salary, or negotiating a bonus. The tenets of entitlement do not apply.
  1. The Art of Selling and Closing Business. We can find tons of "marketing' courses in colleges and universities but everyone must think that “selling” is intuitively obvious. The art of selling is complex blend of relationships, persuasion techniques, negotiation, and knowledge. Follow-up and persistence are a rare natural phenomenon.
  1. Root-Cause Problem Analysis. Business professionals need to analyze problems from a big picture perspective. Most classes in college focus on a narrow area of interest, which just teach students to focus on problems through one lens. That's how unforeseen consequences stay unforeseen, and happen repeatedly in business.
  1. Maximizing Business Productivity. In the office world there is always far more work than there is time to do it. You need to be able to figure out what not to do, and how to not do it, by organizing and prioritizing, and still impress your boss with your thoroughness. Productivity is much more than doing everything faster.
  1. Job Hunting Basics. People need realistic expectations about how much effort and time it takes to get just about any job. Atrocious resumes and social network antics will kill your career. The difference between job descriptions and accomplishments seems to elude most business professionals.

The real problem for many of these, I suspect, is finding qualified instructors to teach. Until then, the best alternative I can recommend is to sign up for job internships at every opportunity, while still in school. You might find on-the-job experiences more valuable than all your other courses, or you might change your major.

Amazingly, it seems that people in business are more highly educated these days, but less well prepared than ever before. What’s another course that you wish you had taken in school, but didn’t realize was missing until too late? There’s another generation right behind us that needs to know.

Marty Zwilling

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Wednesday, September 11, 2019

6 Founder Actions That Can Kill A Promising Business

founder's-syndromeIn my experience as an advisor to entrepreneurs, business startup founders most often point to a shortage of funds as the primary cause of their startup failure. Yet I often see evidence that points right back at the founder or business owner, attempting to maintain excessive power and influence over of the effort, leading to a wide range of problems and a dysfunctional team.

In fact, this problem is so common among business startups, that is has been tagged with the name “founder’s syndrome” or “founderitis.” I experienced a case of this firsthand a few years ago as a supporting executive in a promising startup that unfortunately didn’t survive. I’ll mask some specifics here to protect the people involved, but I suspect you will easily get the key indicators:

  1. Autocratic leader who sets arbitrary goals with no input. Every business founder needs to have a vision and ambitious objectives, but needs to elicit real validation and buy-in from the team before embarking on an high-risk journey. Key elements of every startup challenge include timeframes, costs, people required, and technical realities.

    For example, in our case we were all told that the product had to be developed in six months, with a large list of innovative features. The founder ignored multiple push-back efforts from key members of the team, and suggested more commitment as the solution.

  2. Co-founder and advisors are picked from loyal associates. Some founders seem more concerned about surrounding themselves with cheerleaders than people who have complementary skills, and the confidence to stand up and be heard. Prior friendship and a compatible personality for them are key attributes, rather than expertise or experience.

    In my situation, the founder brought with him a couple of loyal business associates from a prior business, into a new business arena, where they had no direct experience. Since he and they had been successful in the previous business, all assumed success in this one.

  3. Founder minimizes the focus on formal plans and reviews. This founder is an outspoken opponent of “bureaucracy” and prefers to be able to change priorities on a daily basis. He or she tends to rely on their gut and prior experience, and is skeptical of written plans and processes. Project reviews are “ad hoc,” based on the latest crisis.

    In our case, on a positive note, the founder did meet regularly with new potential customers. Unfortunately, each visit raised at least one new requirement for the product, which resulted in required feature additions, development reviews, and new priorities.

  4. Weekly staff meetings become working crisis sessions. Rather than getting status reports on plan progress and jointly developing near-term strategy, the founder is more interested in deep dives into perceived bottlenecks and rallying the troops to get back on schedule. Top managers grow accustomed to getting their marching orders for the week.

  5. Founder gets more defensive, talking more than listening. A successful startup requires a strong leader who listens, questions, and learns from the team. It’s hard to learn anything while talking and defending your position. A clear symptom of founder’s syndrome is more excuses, more demands, and more direction without input.

    At this point the organization becomes more and more dysfunctional, as team members lose their drive and motivation, frustrated by apparently not being heard or appreciated. The level of productivity goes down, people stop communicating, and more crises occur.

  6. Leaders become more and more frustrated and paranoid. Defensive talk and excuses start to become personal, questioning the motives of staff members, advisors, and investors. Loyalty and commitment disintegrate, and key members of the team begin to desert the ship in mentally and physically. The startup is now doomed to failure.

In many cases, a founder with this syndrome is not evident in the beginning. Most founders start with a sincere intent to be a great leader and communicator, but the pressures of running an emerging business can bring out a whole new set of traits, despite his or her best efforts.

Therefore, if you are looking to join a startup, or invest in one, I recommend that you beyond a quick inspirational interview or two with the founder, before making a decision. Look at past history, and talk to peers and other advisors who may have seen this founder under stress.

If you are a founder, and find this article taped to your desk chair, it might be time to take a hard look at yourself in the mirror. Your team can’t change you, but you can change yourself, and become the founder of the thriving startup you always dreamed about.

Marty Zwilling

*** First published on Inc.com on 08/28/2019 ***

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Monday, September 9, 2019

New Entrepreneurs Are Rebuilding Our Business Engine

business-millennialsLarge corporations and conglomerates, the engines of growth and vitality in the twentieth century, have lost their edge and their image. They have proven themselves unable to innovate, and they have lost more jobs than they create. My friends who “grew up” with lifetime careers in General Motors, Exxon Mobil, or even IBM, are now often too embarrassed to even mention it.

On the other hand, everyone wants to be an entrepreneur. We can all aspire to grow companies like Google, Facebook, and Apple, which have the aura of fun, while still improving your lifestyle and offering the dream of untold riches.

In his classic book “The 3rd American Dream,” thought leader Suresh Sharma summarizes the large corporate accomplishments of the 19th and 20th centuries, and then lays out the potential of a new entrepreneurial business ecosystem for the 21st century. His focus is on entrepreneurs in America, but what he says applies to every other country as well.

I agree with Sharma that it’s time to move on to a new way of thinking, living, and doing business, especially after the relatively recent demoralizing recessionary times. This next frontier lies in building enterprises as an entrepreneur, rather than waiting for innovation and opportunity from large corporations. They have become a by-product of innovation rather than the cause of it:

  1. Conglomerates grew from industrialization, not innovation. Most of their new claims to innovation are acquired through mergers and acquisitions from the entrepreneurial pipeline. Internal corporate processes thwart innovation due to inherent inefficiencies of scale, high overhead, and the risk of impact on the corporate bottom line.
  1. Existing technologies have been “commoditized” globally. Many countries have learned to make products cheaper and better. Competitive advantages are rapidly vaporizing on these. Having only a large capital base and distribution channels, with no innovation, is not a sustainable business model.

  1. Large corporations no longer create jobs in their home location. There is no shortage of data to support the assertion that the old large corporations have lost more jobs than they’ve created at home. Outsourcing and manufacturing “offshore” have become the norm. Entrepreneurs growing companies create more value and more jobs.
  1. Non-industrial large organizations cling to outdated business models. Financial institutions, for example, count on pure capital plays without innovation that can disappear quickly. Government bail-outs do not promote innovation. These companies usually end up going extinct, like Lehman Brothers, WorldCom, and Enron.

The new corporate model is a distributed entrepreneurial model. Customers today demand products and services personalized or tailored to local needs with embedded quality of life services. Scaling is done first by customer alliances through social media, and later by distributed joint ventures and coopetition. We need the new wave of entrepreneurs to facilitate:

  1. A new era for manufacturing enterprises. New emerging manufacturing technologies (e.g., digital and 3D printing) in small shops or a town’s industrial and innovation hub can bring manufacturing back home. The new twenty-first century corporation can be born virtually anywhere. Single-node factories may be home-based with a global market.
  1. New goldmine of innovations and technology. Universities and other R&D groups have created a large number of new inventions and innovations, mostly lying dormant on the shelves of our researchers and labs, waiting to be commercialized by aspiring entrepreneurs, with minimal up-front costs for licensing.

  1. Next wave of economic expansion. The time is ripe for the new entrepreneurial dream. People are emerging from recent economic disasters with a new appetite for change, and making the world a better place. Gen-Y is approaching the business world with solid personal goals, and expect to create something that is creative, fun, and rewarding.

  1. The cost of entrepreneur entry is at an all-time low. With e-commerce, Internet, and smartphone apps, anyone can be an entrepreneur today for a few hundred dollars, without a huge investment, bank loans, venture capitalists, or Angels. With the global market, the growth opportunity is huge, starting local and scaling at any pace.

If you are already in the entrepreneur lifestyle, you probably realize that it’s hard work and very risky. Nobody said it would be easy, but nothing that is easy satisfies for long. The days of easy and safe jobs in the large corporate world are over, and certainly not very satisfying either.

We need this new generation of entrepreneurs who relish the challenge and the opportunity of rebuilding our business engine to fit the culture and the global needs of the twenty-first century. What’s holding you back from jumping on the wave?

Marty Zwilling

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Sunday, September 8, 2019

Some Good Startups Don’t Qualify For Equity Investors

Bill_and_Melinda_GatesAngel investors and venture capitalists don’t make equity investments in nonprofit good causes. The simple reason is that it’s impossible to make money for investors when the goal of the company is to not make money. Yet as an active angel investor, I still get this question on a regular basis, so I’ll try to outline the considerations in common-sense terms.

A nonprofit organization is generally defined as an organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals. Examples include charitable organizations, trade unions, and public arts organizations. In the US, a nonprofit is technically any company who qualifies as tax exempt through IRS Section 501(c).

Obviously, these companies still need money to get started, or finance growth, just like a for-profit company. What options do they have available to them, since they can’t sell a share of the company (no equity investment)?

  1. Individual and institutional philanthropy. For a nonprofit, bootstrapping is self-funding from donations and fund-raising. The advantage is no time and effort is spent searching and preparing for the other alternatives, and no repayment terms or collateral are required. There is no discussion of equity, or return on investment.
  1. Loans from a bank or other financial institution. Non-profits can apply for a bank loan or line-of-credit, just like any other individual or company. However, like anyone else, they will first need some collateral, or someone to guarantee the loan, and some evidence of a viable business, like receivables and inventory.
  1. Personal loans from individuals, employees and board members. Personal loans are certainly an option, but should be avoided if possible. As in any company, they can lead to employee problems, or messy legal issues. A nonprofit can also issue bonds to board members and members as a way of borrowing funds from those same people.
  1. Government grants. The grant source often gets overlooked, but it should be a major focus these days when relevant due to the Obama administration initiatives on alternative energy and healthcare. The down side here is that real work is required to put in a winning application, and the award may be a long time in coming.
  1. Private endowments. This is a funding source for nonprofits that is made up of gifts and bequests subject to a requirement that the principal be maintained intact and invested to create a source of income for an organization. Endowments are usually limited to a specific area of interest by a philanthropist, and have many qualifications, so be careful.
  1. Bartering services. Bartering occurs when you exchange goods or services without exchanging money. An example would be getting free office space by agreeing to be the property manager for the owner. This could work to get you legal or accounting services, but won’t get you cash to pay employee salaries.

Hopefully you can see from this list that the people and processes involved in financing a nonprofit have little in common with angel investors, or the venture capital process. You still start the process with a business plan, but then you look for a philanthropist rather than an investor.

Some nonprofit entrepreneurs think they can skip the whole plan, rather than just the sections on valuation, equity offered, and exit strategy. All other sections, starting with a definition of the problem and the solution, opportunity sizing, business model, competition, executive team, and financial projections, are just as critical for nonprofits as for-profits.

A nonprofit is still a business, maybe even tougher than for-profit to run successfully, so the best angel is a great entrepreneur at the helm for fund-raising, as well as operations. In addition, the best nonprofits turn out to be the angel, rather than require one. That’s a higher calling.

Marty Zwilling

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Saturday, September 7, 2019

8 Indications Of An Entrepreneur Sought By Investors

entrepreneur-sought-by-investorsAn entrepreneur is literally “one who creates a new business.” The best new businesses are ones that have never been done before, so mastering creativity and recognizing creativity are key skills and mindsets. But how does one recognize and nurture creativity in a person or team?

In researching this question, I reviewed a classic book by Bryan Mattimore, “Idea Stormers: How to Lead and Inspire Creative Breakthroughs,” which details eight attributes of the most creative people, which seem to match the mindsets of some of the best entrepreneurs I know. Investors like me look for these in the people they fund, and you should be looking for them in yourself:

  1. Forever curious. Endless curiosity is the number one indication of the creative mindset. It allows entrepreneurs to challenge what is already “known” to extrapolate that to an original idea. Curiosity infuses you with the determination needed to figure out or learn how to turn an original or innovative idea into a reality.

  2. Always open to new things. Thinking this way can be viewed as quieting the opinions of the judgmental mind long enough to allow the creative mind the time and space it needs to generate interesting insights, associations, and connections. This opens creative possibilities, rather than categorizing new things into self-limited dead-ends.

  3. Embrace ambiguity. This is the capacity to entertain contradictory or incomplete information without discomfort and anxiety. To the creative mindset, contradictions are an invitation to more focused creative thought, to resolve the paradox, and derive a new un-ambiguous potentially great idea.

  4. Finding and transferring principles. There are two parts to this mindset. First is the mental habit or discipline of continually identifying the creative principles inherent in an idea in a given context. The second part is adapting the principle to another context to create a new idea. It’s the ability to work from the specific to the general.

  5. Searching for integrity. This is the desire to discover, and the belief that there exists, an insight or connection that will unite seemingly disparate elements into a single integrated whole. When it happens, it’s exciting and magical, and it feels absolutely, positively, and completely right. Integrity doesn’t need to explain itself.

  6. Knowing you can solve the problem. This is the confidence that you can tackle the difficult, even seemingly impossible challenges, with inevitable dead-ends, to make a creative breakthrough. As with a success mentality, knowingness is the persistence to make creativity a self-fulfilling prophecy.

  7. Able to visualize other worlds. This is the most imaginative mindset, with the ability to visualize whole new worlds and everything in them. It’s the province of game designers and creators of new social media platforms. It’s imagining original themes, people with new roles, and things with unique designs.

  8. Think the opposite. Some of the most creative entrepreneurs (and teenagers) always seem jump to opposite end of the spectrum from conventional wisdom. But many times, to think differently and creatively, you have to think illogically. Logic and common sense have a habit of leading us to the same conclusions.

Of course, it normally takes more than the right mindset to master the creative mind. Smart entrepreneurs leverage their startup creativity with techniques like involving everyone early and often, ideation, and attending to the details. Professional facilitation also helps. Most often, it’s a long hard road from a good idea to successful innovation.

The most creative entrepreneurs create more value and wealth, not only in physical products and services, but also in their intangible assets such as their brand, reputation, network and intellectual property. Of course, they are always looking to free up time and money for their next big idea. That’s really the best indication of a true entrepreneur.

Marty Zwilling

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Friday, September 6, 2019

10 Keys To Making Money By Investing In Entrepreneurs

making-money-puzzleInvesting in entrepreneurs and startups is a fun but different world from investing in conventional stocks, bonds, and commodities. First of all, it’s more of an investment in people than in a business, since the startup is usually an idea barely half-baked when they need your money. Secondly, the risk is very high, since as many as 90 percent of startups fail within a few years.

On the plus side, it’s an opportunity to get in early and really help make things happen that will change an industry, or change the world. It’s an opportunity for that “big bang” return of 10X to 100 times your initial investment, like early investors in Google, Microsoft, and Apple. Finally, it’s an opportunity to “give back” what you have learned in your own career for the next generation.

Today most startup investors still register with the SEC as “accredited” investors before they buy any startup equity in the U.S. This requires a simple signature that you have a net worth of at least $1M or have made at least $200K each year for the last two years. These requirements for equity investing have been relaxed only a bit, with caveats, with recent crowdfunding changes.

With all these considerations, I recommend the following steps and strategies for any investors newly interested in startups:

  1. Build a balanced investment portfolio. Just like a seasoned stock investor would never put all his investible resources into a single stock, don’t put all your money into startups. Begin with perhaps 5-10 percent of your total investment base, and be prepared to lose it all. The growth target should be 5-10 times your initial investment in five years.

  2. Start in a business domain you know well. Since there are no bellwethers like Apple or IBM in the startup arena, your best bet is to pick one in a business area you know well. Don’t be fooled by thinking that social networks are hot, so you should invest in the next startup you see in that realm. Remember that 9 out of 10 startups fail in every realm.

  3. Fund an entrepreneur you know and trust. In the business, this is called investing at the first tier for startups - “Friends, Family, and Fools (FFF).” Most entrepreneurs start asking for money from this tier, when they have very little more than an idea. Here you are definitely betting on the person, rather than the idea, but the upside potential is huge.

  4. Join an existing angel investor group. This is the second tier of startup investors, and offers the comfort of working with more experienced investors with similar interests, to help gather and vet startup investment proposals. Some of these groups also offer you the option of putting your money into a multiple-startup fund to spread your risk.

  5. Diversify your total investment across several startups. Angel investment amounts per startup per investor usually range from $25K to $250K. These may be aggregated by an angel group up to about $1M for an angel round. If a startup needs more than this in a single round, they should talk to venture capitalists, who invest institutional money rather than their own personal money.

  6. Use the surge of crowdfunding sites for small amounts. The hottest new way of investing in startups to go to popular online sites like Kickstarter and IndieGoGo. There you can get in for as little as $20, or even less. Typically these are used only for non-equity rewards or pre-orders, but the crowdfunding implementation does allow equity investments with many restrictions.

  7. Participate as a mentor in local startup incubators. Incubators are a great place to learn about potentially great startups, and participating as a mentor helps you learn which ones are a good fit for you. The best known ones, like YCombinator, started by Paul Graham in Silicon Valley, and TechStars, located in Boston, provide excellent networking to investors, and on-site technical leadership, which can make your investment less risky.

  8. Do your homework before investing. Public companies with stock usually have industry analysts and SEC filings to give investors a quick view of the company stock value. Startups are private companies with no common document filing requirements. Thus it is incumbent on every potential startup investor to ask for and read their business plans, current financial statements, and investor presentations.

  9. Invest locally and take an active role. Most angel investors only invest in companies and people local to their geography. Skip international and other opportunities you can’t touch and feel. Many negotiate a board seat for themselves as part of the investment term sheet. This allows them to ask for and get regular updates from the company, and allows them to have a say on how their money is used.

  10. Think long-term. It’s a lot easier to buy stock in a startup than it is to sell it. Once invested, you should expect no return until the first “liquidity” event in 3-5 years, maybe longer. Liquidity events include merger or acquisition (M&A), or Initial Public Offering (IPO) when the stock goes public. There is no “startup stock exchange,” so you can’t sell the stock at will.

In summary, investing in startups can be very rewarding, both financially, and in your ability to really help someone who needs help. But it’s always a risky proposition, probably well beyond the risk of the commodities market, since there are so many unknowns and few controls.

My advice to new startup investors is to start slowly, stick to business areas that you know well, and put more weight on your assessment of the entrepreneur and the team, than on the idea. Successful startups are all about the execution. You don’t want to end up on the wrong side of that equation, but you do want a bite of the next Apple.

Marty Zwilling

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Wednesday, September 4, 2019

8 Keys To Business Success For Entrepreneur Introverts

Mark_ZuckerbergIt really is possible for an introvert to succeed as an entrepreneur, even though you can’t expect to start and build a business alone. You need to build business relationships with partners, team members, investors, and of course customers. In fact, all you need to do is follow the model of some famous self-proclaimed introverts, including Elon Musk, Mark Zuckerberg, and Bill Gates.

As an introvert myself, I remember worrying that I could never be comfortable giving a sales pitch, or networking to find clients. Yet I soon found that knowledge is power, and a little training and determination goes a long way toward removing the qualms. In fact, I’m now convinced that many extraverts rely too much on their “gift of gab” to hide a lack of depth. It doesn’t work in business.

Based on my recent experience as an angel investor, and advisor to new business owners, I now recommend that all entrepreneurs, especially introverts, learn and practice the discipline they need to build and nurture relationships with key constituents through the following activities:

  1. Formalize a mentoring relationship with someone you trust. Every entrepreneur, especially an introvert, can benefit from the perspective of another business person, ideally one who has prior experience in the domain you are about to enter. Asking someone to be your mentor is not a sign of weakness, and most mentors love to help.

  2. Turn existing connections into productive relationships. We all know some people through friends, family, and social connections. Do your homework to determine which of these might be able to help, and make a sincere effort to turn these connections into win-win business relationships. That means proactively finding common exchanges of value.

  3. Actively expand your business networking activities. This doesn’t mean randomly attending every networking event you can find, but it does mean joining and actively participating in a couple of entrepreneur groups in your area, such as a local business incubator, Entrepreneurs' Organization (EO), or The Indus Entrepreneurs (TiE).

  4. Increase your visibility and expertise in your domain. These days, by starting a blog or publishing on the Internet, you don’t have to be a social butterfly to get supporters and be recognized as an influencer. By helping others, and participating in online debates and industry events, you will find that productive relationships emerge naturally with peers.

  5. Develop and practice your business vision and story. This message, usually called your elevator pitch, should be a short and compelling description of your your startup, that can be delivered with conviction in the time it takes to ride up an elevator with a potential investor or partner. It should end by asking for the next step in the relationship.

  6. Use personal discipline to step outside your comfort zone. Entrepreneurs can’t be innovative or successful without taking business risks, so practice the discipline of stretching your personality, as well as business norms, on a regular basis. Speak out in meetings, or say what’s on your mind, even when it makes you feel uncomfortable.

  7. Capitalize on your strengths, and forget weaknesses. Many introverts are afraid to take the lead, knowing they have weaknesses. For example, you may be good at active listening, analyzing data, and making logical decisions. These and other strengths may actually give you a competitive edge over your more extroverted constituents.

  8. Surround yourself with allies who have complementary skills. In business, I always say that two heads (or more) are better than one. If your strength is technology, find a partner who can complement you with marketing and financial skills. Each of these allies will also bring their own network, growing yours, and multiplying your power and growth.

As a technologist at heart, I am particularly disheartened to see so many bright but introverted engineers who never get their business off the ground, due to pride or fear in getting the help they need, or not having the professional relationships with others to overcome business hurdles.

Now is the time to take a hard look your own personality and strengths, as well as the number and quality of your current business relationships. Don’t let any easy excuses keep you from achieving your full potential.

Marty Zwilling

*** First published on Inc.com on 08/20/2019 ***

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Monday, September 2, 2019

Real Entrepreneurs Must Make Good Decisions Quickly

woman-decision-makingEvery so often a promising entrepreneur seems to freeze in the oncoming headlights and gets run over by his competition. Why is it that his idea which seemed so fundable only months ago fails to attract investors today? The team is the same. The company's market is the same.

The only change might be a visible new competitor, or another economy downturn, resulting in investors holding their money, and that makes all the difference. Herein lies a key principle of decision making - “Any decision is better than no decision.”

Even better than any decision is a good decision made quickly. What separates good decision-making from bad decision-making? H.W. Lewis, author of the timeless book “Why Flip A Coin? The Art and Science of Good Decisions,” summarizes good decision making as:

  • Identifying all reasonable actions.
  • Listing the potential consequences of each action and the utility of each consequence.
  • Evaluating the probability that each action will lead to a given consequence.
  • Choosing the action quickly which has the best expected outcome or positive contribution.

These points may sound obvious, but the process is certainly contrary to the popular “shoot from the hip” approach that is practiced by some entrepreneurs. The idea here is following a process can actually force you to think. You don't have to do it perfectly to stay ahead of the game.

Beyond not thinking, another failure is not really knowing what you want to achieve through the decision. This is a problem with many product-based companies. Their goal is to create profitable products, but too often they don’t research what their customers really want, and what they are willing to pay. It's difficult to create a high-demand product by guessing.

In all cases, be sure to distinguish between ideas and opportunities. A business idea is not a business opportunity until it is evaluated objectively in the context of a specific business plan. I like focus, but if you focus too early on only one business idea without a plan, you are more likely to become attached to it, and lose your objectivity.

Some entrepreneurs seem to know instinctively that a certain product or service has great potential for success. This comes from much industry experience, and is not irrational. On the other hand, many unsuccessful would-be entrepreneurs are unsuccessful precisely because they were irrational, so avoid that pitfall.

Decision-making in the face of risk is one of only a handful of unique characteristics that successful entrepreneurs possess. After all, the very nature of a true entrepreneur is one that embraces risk. Often this risk-taking is mistaken in part to be “the reason” the entrepreneur succeeds in their business.

Some decisions involve risk, at times a great deal of it, but there are a greater number of decisions that can be thought through and analyzed to determine on some basic facts, whether or not they are good or bad ideas. Smart entrepreneurs always use facts, when they have them, rather than their gut.

If you are someone who never uses your gut, and exhaustively researches a purchase prior to making it, you are most likely not cut out to be an entrepreneur. This type of decision making, careful and cautious, is certainly a great attribute to have in the corporate business world, but it’s a killer in startups.

Making no decision doesn’t work in any business. So your first test here is to see if you can decide which category of decision maker you best fit. The headlights are approaching…

Marty Zwilling

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Sunday, September 1, 2019

10 Keys To Surviving From A Startup To An Enterprise

enterprise-organization-chartEarly-stage entrepreneurs rightly keep their focus on creating an innovative product or service. After celebrating success at that level, they often find themselves ill-prepared to move to the next stage, for scaling their business into a high-performing enterprise. That’s where I see too much entrepreneur burnout, growth plateaus, and founders being replaced, to their chagrin.

By definition, second-stage ventures generally have 10 to 99 employees and/or $750,000 to $50 million in revenue, and see that as just the beginning. Of course, not every entrepreneur wants to tackle this challenge. According to one study a while back, only 45% of founders plan to exit after stage one, and my guess is that less than half the remainder survive the next stage in their own company.

If you are one of the many entrepreneurs who aspire to get beyond the “art of the start,” there are some proven principles to follow. In his classic book, “Second Stage Entrepreneurship,” Daniel J. Weinfurter, talks about making the leap a couple of times himself, and the perspective he gained from many years of consulting with other companies who have done the same.

I like the ten steps he outlines, which I characterize here as follows:

  1. Seek major capital infusion. Very few startups are cash-rich enough to self-finance aggressive second-stage growth. They need a large infusion from venture capitalists, private equity, bank loans, or mezzanine financing. Of course, that means a new level of risk, giving up some control, and a new business plan. There is no free lunch.
  1. Install a real board of directors. Most entrepreneurs are mavericks, and their passion drove their new business. But to scale the business, they need the complementary expertise, experience, connections, oversight, and new capital connections of a formal board of directors. Recruiting, compensating, and engaging the board is a critical priority.
  1. Focus on creativity more than smashing competitors. To achieve second-stage growth you need to stay at the top of your creative game, more than a focus on beating competitors. Growth is more than simply repackaging existing products, and adding bells and whistles or slick incentives. Keep delivering something new and fresh.
  1. Hire more help than helpers. Smart staffing is a key step to ensure your success at the second stage. In addition to fresh products, you need people smarter than you for real help, with the right combination of skills, experience, and passion to foster and manage new growth. You don’t have the bandwidth to keep filling positions with more helpers.
  1. Switch your attention from product development to sales. Second-stage growth usually requires a formal sales model, an experienced and disciplined sales team, and a well-defined process to meet your new goals and demands. These only come with the proper training, investment in tools, and focus on customer relationships.
  1. Managing business growth is more than metrics. You can hire the best salespeople, have great products and define good metrics, but without decisive and innovative managers, the sales organization will not reach its full potential. Leaders are needed to coach each salesperson, keep the team on message, and spur new growth and goals.
  1. Separate marketing from sales for further leverage. In the second stage, marketing and sales are highly specialized functions. Marketing shapes the concept, branding, packaging, pricing, and positioning. Sales builds relationships, translates needs, makes proposals, and closes the deal. The skills required are complementary, but not the same.
  1. Optimize the total customer experience. Successful second-stage companies often create an entire organization devoted to one-on-one relationships with their customers, not just customer service for exceptions. Delivering a superlative experience is the only way to get truly loyal clients, repeat business, and expansion through social networks.
  1. Build a winning culture and make it pervasive. In these rapidly changing times, in your own rapidly evolving company, culture will be the rudder that guides your path in a fashion that is consistent with your vision and values. Reinforce the values and operating principles with clear behaviors and guidelines to keep the culture healthy and thriving.
  1. Separate management from leadership, and provide both. Leadership is the quality that inspires people to do their best every day. Management guides people in what needs to be done, by creating sustainable and repeatable systems, with education and guidance to make sure all efforts are productive. Neither is effective without the other.

Many startups are family businesses, and these don’t need to be grown into large enterprises. Yet the steps outlined here still have value in building a business that lets you enjoy the entrepreneur lifestyle, and lets you work “on the business” once in a while, rather than “in the business” 24 hours a day, 7 days a week.

On the other hand, if you aspire to be the next Bill Gates or Steve Jobs, these principles for aggressive growth to the enterprise level are absolutely required for survival. It really is a decision to grow and have fun, or die. Are you enjoying your entrepreneur lifestyle today?

Marty Zwilling

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Saturday, August 31, 2019

10 Realities Today Cause Startups To Bypass An IPO

ipo-risk-vs-rewardIn the old days, every entrepreneur dreamed of easily taking their startup public, and making it big. Today the rate of startups going public (IPO – Initial Public Offering) is up from the dead zone, but is still half the rate back before 2000. Smart entrepreneurs are just now starting to look at this option again, due to its unpredictability and the challenges of running a public company.

According to a recent Ernst & Young global report, the first half 2019 global IPO activity slowdown continued, following an unusually quiet Q1 2019 as ongoing geopolitical tensions and trade issues dampened IPO sentiment. Today around 90 percent of successful startups are still acquired by bigger companies, as the safer and preferred method of growth and funding.

The reasons are a lot more complex than the meltdown of key investment banks in the US a few years ago, so don’t expect a big change in the numbers soon, even with recent stock market rallies. In my view, the key reasons that IPOs have lost their luster from an entrepreneur and investor perspective include the following:

  1. The US IPO process is still stumbling. Too many startups have experienced early financial losses and technical glitches, like Uber and the Zynga IPO a while back, which antagonized individual investors and startup executives as well. In addition, most ordinary investors are convinced that IPO rewards only go to insiders.
  1. Going public is an expensive process. Typical costs for startups today range from $250,000 to $1 million, even if the offering does not go through. In addition, huge amounts of executive time are required, as well as hits to key operational, accounting, and communication processes. The M&A alternative looks simple by comparison.
  1. Constant pressure to increase earnings. Because public shareholders usually take the short-term view, they want to see constant rises in the stock's price so they can sell their shares for a profit. Thus, there is tremendous pressure to increase current earnings, and little appetite for strategic investments.
  1. Startups going public are laid open to competitors and critics. Startups are typically run by a couple of executives who are reluctant to disclose via the prospectus and SEC reports all the decision-making criteria, operational financial details, and compensation formulas. With thousands of shareholders, dealing with critics is an onerous challenge.
  1. Complying with Sarbanes-Oxley requirements is a heavy burden. Public companies of any size must comply immediately with the full reporting requirements of the SEC. There is no accommodation for smaller public companies, who can’t be competitive in their space with the new accounting, documenting, and reporting processes required.
  1. Public companies are always at risk for takeovers. Friendly or hostile takeover attempts are just a couple of the many ways that company founders sense a loss of control of their own destiny. The board of directors, as well as public stockholders, are no longer part of the inside team focused on the founder’s vision to change the world.
  1. Increased liability risk exposure. Public company executives and directors are at civil and even criminal risk for false or misleading statements in the registration statement. In addition, officers may face liability for misrepresentations in public communications and SEC reports. Executives are also at risk for insider trading and employment practices.
  1. Violent market swings usually hit public companies first. Private companies in less-relevant market segments 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, than real market conditions.
  1. Startup founders don’t fit in a public company. Most just don’t enjoy all the challenges of communicating to analysts, placating demanding stockholders, and keeping up with legal reporting requirement. They know they can be quickly tossed aside for not maintaining the right image and the right relationships with people they don’t like.
  1. The image of large public companies is negative. In the last few decades, the paternal image of large multi-national company leaders like Thomas Watson at IBM and Henry Ford is gone. Now the mistakes of large companies like Enron and BP have set a new image of public companies as being led by greedy and uncaring executives.

These negatives have largely overshadowed the potential IPO positives of increased capital for the startup, possible huge increase in personal net worth, broader access to investors, market for their stock, the ability to attract top-notch professionals, and the peer prestige of running a public company.

Thus most startups I know don’t even mention the IPO exit option, when applying for angel funding, and most angel investors will react negatively if you do mention it. As best, you should reserve this option for later stage VC discussions, once you have a well-proven business model, large market following, and substantial revenue.

More importantly, make sure first that you really want to give up the entrepreneur lifestyle for the challenges of a public company executive. I’m betting that Mark Zuckerberg of Facebook fame still has second thoughts from time to time, despite being worth $68 billion as a result.

Marty Zwilling

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Friday, August 30, 2019

5 Ways Writing a Book Will Kick-Start Business Growth

writing-a-bookWhat every entrepreneur needs more than anything else, after they have built an innovative new product or service, is visibility, credibility, and trust by customers, potential employees, and future business partners. In my experience as a business advisor, one of the best ways to get all of these, is to publish a book on the technology, the journey, or some relevant lessons learned.

Your book need not be a best-seller, and it probably won’t make you any money directly, but it’s the best business card you could ever imagine. In addition, the discipline of producing it, like writing a business plan, will help you immensely in understanding the key elements that drive you and your business. Yet, most good business people I know agree, but don’t know where to start.

I had the same problem before my first book, but I find that all the information you need these days is easily found on the Internet, or in a good book on the subject, like the new one I just finished, “How to Self-Publish Your Book,” by Dr. Jan Yager. Whether you choose to self-publish (my favorite approach), or work with a publisher, all the guidance you need is in this book.

I often hear the excuse that writing a book takes precious time away from building and running your business, which you cannot afford. In fact, it does take time, but in my view brings far more value than many of the things you might otherwise be doing, including expensive advertising, extensive networking, or email blasts. Key value elements of a good book include the following:

  1. Publishing a book defines you as an influencer and authority. Everyone realizes that writing a book is not easy, and shows you have made a real commitment, can get things done, and are willing to take a position. Customers pay extra, and inherently gravitate to people they view as leaders, rather than others just pushing advertising and web content.

    I can tell you from my own experience as an advisor to new entrepreneurs, that my first book, “Do You Have What It Takes To Be An Entrepreneur,” did more for my credibility and leads as an advisor than all the marketing and networking I had done previously.

  2. The book itself raises your visibility through media coverage. Once you have a book, media coverage can come from book reviews and academic discussions, as well as from you and your customers. The book can also give you access to speaking engagements, television interviews, special events, lecture halls, and people’s minds.

    Even for self-published books, you get visibility through the Amazon website worldwide, Google searches for related topics, book reviews, and various online catalogs. If you use a publisher, they may add more visibility with press releases and book-signing events.

  3. Having a book gives you instant credibility with clients. People who hire consultants and coaches look for evidence of external credibility, such as reviews and referrals, to back up their own judgement of your marketing interactions with them. If you sell to other business organizations, a book is a huge asset in reducing their perceived selection risk.

    For high-potential clients, it’s well worth your investment in handing out a personally signed copy of your book, in lieu of the standard business card. It makes customers feel special, and gives you the opportunity to highlight your broad experience and credentials.

  4. Being an author will attract top-notch talent to your business. Potential team members and partners who excel are attracted to leaders and influencers. Successful businesses require the best people to deliver your vision and services one step better than the competition. They see you as a role model for their own career development.

    A good example of this impact is Tony Hsieh, who wrote his own book, as well as one about the culture he was building at Zappos. These books became one of his best recruiting tools, and still are a great lead generation source for his businesses.

  5. A book can provide the bridge to an enhanced career. Writing a book and debating it with key people may give you the confidence and desire to become a conference speaker, business school professor, or executive in another field. In that fashion, it also serves as an enhanced resume, highlighting your skills, expertise, and vision.

Another good reason for writing your book today, using self-publishing, is that it is consistent with the entrepreneur lifestyle. No more struggling with big publishers to meet their expectations and long production cycles – you can make your book innovative and get it done on your terms and timeline. That means you can integrate the work with your own business schedule and objectives.

In fact, a few smart entrepreneurs publish their book first to test the waters for their business idea to follow, and build an early following of potential customers. That’s just another innovative business model worth considering. What’s holding you back from starting today?

Marty Zwilling

*** First published on Inc.com on 08/15/2019 ***

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Wednesday, August 28, 2019

7 Delusions About Business Ethics Limit Future Growth

Ethical-Moral-EthicsNew entrepreneurs tend to focus only on getting the product right, and assume that the right culture and ethics will come later simply by hiring good people. In fact, they need an early focus on developing their moral compass, as well as setting the right ethical tone. Building an ethical business is more than just compliance and meeting legal requirements, and it has big paybacks.

One 11-year classic study of over 200 companies, detailed in “Corporate Culture and Performance,” found that those working on their culture improved revenue by 516%, and increased net income by 755%. Conscious Capitalism, a popular business movement which includes a large focus on culture and ethics, claims returns 10 times higher than the S&P 500.

One of the keys to setting the right ethical tone is understanding and avoiding the myths and pitfalls of others. I saw a good summary of these in a classic book, “Ethical Leadership,” by Andrew Leigh, an expert in this area. I like his specifics for business leaders on improving and sustaining the best company cultures, and his summary of the cultural myths facing new business leaders:

  1. It’s easy to be ethical. This myth ignores the complexity surrounding ethical decision making, particularly within business organizations. Ethical decisions are seldom simple. For example, people often do not automatically know that they are facing an ethical choice. Any given individual may not recognize the moral scope of the issues involved.
  1. Business ethics are more about religion than management or leadership. Behind this myth lies the confused belief that ethics are a means of altering people’s values. The reality is different. An ethical culture deals with managing values between the individual and the company, to best handle the inevitable conflicts that crop up in every business.
  1. Hire only ethical people, so further time on business ethics is not needed. This is usually an excuse for not developing ethical policies and practices. These can be as simple as how to handle customer over-payments, or more complex in how to handle the choices every employee may face between conflicting customer and company interests.
  1. Business ethics are best left to philosophers and academics. Deal with this myth by sharing with colleagues some of the highly practical tools for making sense of the issue – such as ethics audits, behavior codes, risk strategies, targeted training and leadership guidance. Business ethics is a discipline that must be practiced every day by everyone.
  1. Ethics can’t be managed. While codes of behavior do not guarantee an ethical culture, they do clarify desired behavior and articulate for employees what is expected of them. Every business has complex and diverse dilemmas which are not specifically covered in documented procedures, so employees need clear values leadership for guidance.
  1. We’ve never broken the law so we must be ethical. Many perfectly legal actions can still be deeply unethical. As an example, companies often realize that faulty products are slipping out, but they delay a recall, sighting that strictly legal requirements are being met. Unethical behavior can even with something low key which initially goes unnoticed.
  1. Unethical behavior in business is just due to a few ‘bad apples.’ In reality, most unethical behavior in business happens because the environment tolerates it, usually through benign neglect. When it comes to ethics, even good people tend to be followers, and if told to do something, they will do it, without considering the ethical implications.

Company ethics are a prime example of where you and your company only get one chance for a great first impression, and if you lose it, it’s almost impossible to regain. Don’t follow the examples of institutions in the recent financial meltdown, or certain oil companies working offshore, or the many smaller company examples we have seen in our own neighborhoods.

Every business, new or old, needs to remember that an ethical culture, or lack of it, shows in the actual behavior and attitudes of all team members, rather than just in policy documents and videos from the top. A successful business is far more than a good product and a good business model – it’s equally about projecting and executing with a great culture. Can you vouch for the culture and ethics of your company, from top to bottom?

Marty Zwilling

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Monday, August 26, 2019

6 Myths On Starting A New Business That Can Kill You

Business-misconceptionsStarting a new business is fraught with challenges, and none of us has the bandwidth to kill them all. As an advisor to business owners, and an occasional angel investor, my job is to separate the actual challenges from the common misconceptions that distract many promising entrepreneurs while building the leadership team required for your solution, marketing, and finance success.

I remember first seeing a good summary of these risk-reduction myths a while back in a classic book, “How to Start a Business & Ignite Your Life,” by Ernesto Sirolli, PhD. With his wealth of business experience and expertise as a top economic development consultant, he confirms my own view that the top five myths in starting a new business commonly include the following:

  1. You have to be able to do every job in your business. In reality, it is important to know the basics of all roles, but it’s counterproductive to try to be an expert or attempt to micro-manage every task. It is more important to find and nurture team members who have the right expertise, and have them respect and appreciate their work, as well as yours.

    For example, if you start a new business with a software product you developed, you really need to know the basics of marketing and finance, but you will probably never be the expert in marketing and finance you require. Partner with experts who share the risk.

  2. Business success is all about having a winning idea. In my experience, finding a good idea is the easy part. It’s the execution that’s hard. I have seen too many great ideas fail due to poor execution, and less impressive ideas succeed due to an innovative business plan, implemented and managed by the right team of entrepreneurs.

    Witness the number of seemingly simple or stupid ideas that have become million dollar businesses, thanks to some creative marketing or innovative financials. Of course, if you have a great idea AND a great execution, your company may well be the next unicorn.

  3. You have to pay big salaries to get top-notch help. In my experience, the people who will best drive your business are ones who share your long-term vision, and are willing to work for a share of the business or delayed compensation, rather than a high salary in the short term. Most business partners I know take little or no salary in the early years.

    In fact, finding the right partners requires building the right relationships, more than negotiating a contract. A good business partnership is more like a marriage, where success depends more on relationship synergy than any financial expectation.

  4. “Staying small” is a positive strategy for your business. In fact, staying small does not protect you from the risks of growth, and makes it harder to survive, due to fewer economies of scale, no help from investors, and an easier target for competitors. Unless your company is a hobby or side project, I recommend a strategy that assumes growth.

  5. Sharing your business ownership increases the risk. Very few entrepreneurs have the skills and bandwidth to adequately cover all the business bases of product, marketing, and finance. Thus finding a complementary partner or two will dramatically increase your chances of success. Trust is required, so build relationships slowly.

    Business founders who are paranoid of other people, or have an ego that demands total control, are doomed to a life of isolation and frustration. Their lack of trust and sharing will be noted by employees, vendors, and customers, and the business will suffer.

  6. More money would solve all your startup problems. Every investor I know will tell you that many startup businesses fail due to having too much money too early. They try to grow too fast, stop looking for innovative solutions, or try to buy their way into markets or partnerships. Money is necessary, but not sufficient to reduce the risks of a business.

In business, if you take no risks, don’t expect any rewards. Smart entrepreneurs do their homework to mitigate known risks, by talking to peers and advisors, and avoid approaches which are known to be problematic or counterproductive.

My advice to every new business owner is to never be reluctant or embarrassed to seek assistance, but do so with prudence and optimism. There are many of us who have gone there before you, and want to make your path easier than ours. With our help and your own commitment, this can be the best of times for both you and your business.

Marty Zwilling

*** First published on Inc.com on 08/09/2019 ***

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Sunday, August 25, 2019

7 Traits Of Today’s New Business Innovator And Model

Elon_Musk_at_a_Press_ConferenceIn the beginning all businesses are just people playing out an idea. It’s never the other way around – there is no idea so big that it doesn’t need people to make it succeed. Investors know this, hence the saying “Bet on the jockey (founder), not the horse (idea).” A great jockey is a great role model.

Like it or not, everyone looks to the entrepreneur as the jockey role model in a new business. Typically this energizes new startup founders, but some struggle trying to live up to their own, as well as everyone else’s expectations. In reality, nobody really expects anyone to be superhuman, but it can feel like that.

We certainly wouldn't expect superhuman behavior from the people looking to us for guidance, nor would we want them to expect flawless behavior from themselves. If not flawless behavior, what characteristics and actions do they look for? Here are some frequently mentioned ones:

  1. Demonstrate confidence and leadership. A good role model is someone who is always positive, calm, and confident in themselves. You don't want someone who is down or tries to bring you down. Everyone likes a person who is happy with how far they have come, but continues to strive for bigger and better objectives.
  1. Don’t be afraid to be unique. Whatever you choose to do with your life, be proud of the person you've become, even if that means accepting some ridicule. You want role models who won't pretend to be someone they are not, and won't be fake just to suit other people.
  1. Communicate and interact with everyone. Good communication means listening as well as talking. People are energized by leaders who explain why and where they are going. Great role models know they have to have a consistent message, and repeat it over and over again until everyone understands.
  1. Show respect and concern for others. You may be driven, successful, and smart but whether you choose to show respect or not speaks volumes about how other people see you. Everyone notices if you are taking people for granted, not showing gratitude, or stepping on others to get ahead.
  1. Be knowledgeable and well rounded. Great role models aren't just "teachers." They are constant learners, challenge themselves to get out of their comfort zones, and surround themselves with smarter people. When team members see that their role model can be many things, they will learn to stretch themselves in order to be successful.
  1. Have humility and willingness to admit mistakes. Nobody's perfect. When you make a bad choice, let those who are watching and learning from you know that you made a mistake and how you plan to correct it. By apologizing, admitting your mistake, and accepting accountability, you will be demonstrating an often overlooked part of being a role model.
  1. Do good things outside the job. People who do the work, yet find time for good causes outside of work, such as raising money for charity, saving lives, and helping people in need get extra credit. Commitment to a good cause implies a strong commitment to the business.

True role models, like Richard Branson of Virgin Group and Elon Musk with Tesla, are those who possess the qualities that we would like to have, and those who have changed the way we live. They help us to advocate for ourselves and take a leadership position on the issues that we believe in.

We often don't recognize true role models until we have noticed our own personal growth and progress. That really implies that it takes one to know one. Thus, if you are asking the question, that may mean you are well along the road to being that role model already. Don’t stop now.

Marty Zwilling

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Saturday, August 24, 2019

How New Ventures Can Avoid Conventional Media Costs

superbowl-advertising-metlife-stadiumThe power and influence of paid media advertising, including print ads, TV commercials, radio, and even online digital campaigns is waning, in favor of unpaid earned and owned messaging from your website, social media, key market influencers, and existing customer word-of-mouth. But startups need to remember that even zero paid media doesn’t mean that marketing is free.

The case for zero paid media as the new marketing model was highlighted in the classic book, “Z.E.R.O.” by Joseph Jaffe and Maarten Albarda, both experienced marketers working with new companies, as well as larger firms. They advocate investing in their new framework, where the Z.E.R.O. initials take on meaning as follows:

  1. Zealots, disciples, and influencers. New products and startups often require a culture shift to drive acceptance, which can best be accelerated by zealots or a visible chief disciple, like Steve Jobs. Other sources stronger than paid media today include key social media influencers, such as “mommy bloggers” and popular YouTube events.
  1. Earned media. This is media exposure from a neutral third-party, such as an unpaid news story on your product or service to highlight innovations or social value. This exposure is highly credible, since you don’t control the message, and extremely valuable since it is not viewed as part of any advertising context.
  1. Real customers. Marketing media content from real customers in real time is now commonplace via sites like Yelp, Foursquare, and online reviews. This word-of-mouth media source is also highly credible and valuable, since it comes from “peer” customers, rather than you as the source, or any paid source.
  1. Owned media. This includes your website, blog, and presence on social media platforms, including Facebook, Twitter, Pinterest, Tumblr, Instagram, and many more. These usually provide a customer’s first impression of your offering, and should not be blatantly self-promotional, but instead informative, educational, and even entertaining.

As I mentioned, this framework is powerful, but none of these elements are free. A while back in a blog article, I pointed out that none of these justify a startup business plan with little or no budget for marketing. All require planning, deliberate actions, and quality content and event creation which will likely absorb all the savings from reduced paid media campaigns.

In any case, reframing the conversation from paid media marketing to the new framework requires a balance, and measurements along the way to better manage return on investment. In the book, Jaffe introduces three new sets of metrics for gauging progress:

  • Medium-term metrics. This is essentially a series of interim forecasts not dissimilar from mile-markers in a marathon race that advise whether it’s time to pick up the pace or slow down to smell the roses. Examples include counting members of an advocacy program, app downloads, tenured customers, or subscribers to an e-mail list.
  • Long-term sales. We often talk about short-term sales and long-term relationships in mutually exclusive terms. They are polar opposites in terms of their time frames, but how about building a bridge of compromise between them? Whereas every short-term initiative is akin to a traditional campaign, the long-term sales effort is the commitment.
  • Short-term wins. Accountability is not optional, as it’s still important to have something to show for your efforts quickly. Only this time, consider the large “W” (big win), the small “w” (small win) or in some cases even the small “l” (small loss), which represents failing fast or failing smart, insights, lessons, learnings, or pleasing initial results.

I’m not suggesting that paid media channels should be seen as dead to young companies, since even the revolutionaries, like Google, Facebook, and Apple, still rely on paid media to optimize their own efforts. And paid media are hardly standing still, continually figuring out ways to be more effective, using big data and other innovations to get more customer attention.

Thus while I see startups quick to jump on the zero paid media bandwagon (for budget reasons), I recommend a balance. First, go for that earned and owned media channel, using the same budget parameters you might have previously allocated for paid media. Later, you can lower the budget as the metrics show results, or apply the remainder to paid media as a follow-on step.

In all cases the tone and resources must be focused on capturing today’s customers, who are looking for engagement and connection, rather than the traditional loudest noise. Z.E.R.O. marketing is not zero marketing.

Marty Zwilling

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Friday, August 23, 2019

8 Actions To Ignite Engagement For You And Your Team

Engaged-Team-Business-MeetingBased on my own experience as a business professional, employees who are not seriously engaged in the business should be totally obvious to everyone, including the manager or CEO. Yet many managers and executives seem to ignore the situation, or have no idea how to fix it. The result is that the performance of whole team is degraded, and the business suffers as well.

For example, in one assignment my desk was near another professional, and I could not help but overhear this person on the phone discussing personal business most of the time, despite the fact that he always complained of being overworked, and missed most of his project deadlines. I and many others reported him regularly, and we were all frustrated that nothing was ever done.

I might have been convinced that this was a rare exception to the norm, until I saw some Gallup survey reports showing that 68 percent of employees are not fully engaged at work. From my experience as a business professional, and later years as an executive, I’m convinced that all of us, especially management, have a role in fixing the problem, with actions including the following:

  1. Top management must be the role model for engagement. That means a visible and timely acknowledgment from the top to change “business as usual,” with specific actions to improve the culture and resolve known issues. Asking HR to fix the problem won’t work. Don’t be the manager who can’t be found, or is “too busy” to focus on engagement.

  2. Provide positive feedback and rewards to engaged employees. Take daily time to provide genuine and specific feedback on things done well, as well as items needing attention. Praise alone, especially in front of peers, is one of the most powerful engagement motivators. Monetary awards and bonuses are good, but not sufficient.

  3. Add a higher purpose to your vision and shared values. Today, every employee wants to feel a sense that they are bringing more than profit to a company – they want to feel a sense of positive contribution to the environment and society as well. For example, Whole Foods and Patagonia raise engagement by focusing on health and sustainability.

  4. Measure your investment in engagement as an asset. Too many companies think of employee development efforts and benefits as an expense that must be minimized. They don’t recognize that employees drive customer growth, improve productivity, and drive company success. They, like you, are the key assets of every thriving business.

  5. Share business realities and issues with employees. Keeping employees in the dark on business problems and customer issues is a sure way to lose their trust and their engagement in the business. You cannot ask workers to take on more responsibility, without demonstrating full transparency and treating them as a key part of the team.

  6. Hire and mentor people who show engagement in prior roles. People willing to engage are actually more valuable than those with deeper skills or prior experience. After the hire, the keys are mentoring and continuous training, as well as providing growth opportunities to retain the best. The result is a culture of engagement and performance.

  7. Promote a more collaborative leadership style. Of course, top leaders must retain the final say, but efforts to work collaboratively will encourage and reward engagement, and expose the ones who are not engaged. When employees feel they are not heard, or have no say in the business, they have no incentive to take risks or do their best work.

  8. Admit and demonstrate that you have learned from them. Active listening is the key message here. You can’t learn while you are talking, or not engaged yourself. Great leaders have found that mentoring works both ways, and taking the time connect to each employee, over lunch, or outside of work, will pay big dividends in their engagement.

Indeed, I find that many employees are also overwhelmed by the rate of change they see in business today, making them hesitant and fearful of fully engaging. Sometimes the best thing you can do is not to try to force them to change, but simply be there for them as they struggle to change themselves.

Engagement in business is largely about relationships, just as it is in your non-business life. How good is your relationship with your employees, and how hard are you working on making it better?

Marty Zwilling

*** First published on Inc.com on 08/08/2019 ***

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