Friday, November 29, 2019

6 Hard Questions That Every Entrepreneur Must Answer

Hard-entrepreneur-questionsAs a mentor to many aspiring entrepreneurs, I challenge them to think beyond what I call linear extensions to a current trend, such as another “easier-to-use” app for smartphones, a new dating site for pets, or another niche social network. In my experience, these startups usually find the field crowded with competitors, making it hard to get any attention, and most drift into obscurity.

On the other end of the spectrum are ideas that truly represent a disruptive technology, or could lead to real social or environmental change. Examples I have seen include atomic battery technology, or how marine algae could help feed the world. Unfortunately, all of these may be fraught with high technical risks and political change required, which also often leads to failure.

Obviously, where you need to be is somewhere in the middle, and certain that you are the right person with the right resources to win. I encourage every entrepreneur or new business owner to ask themselves a set of hard questions to validate their idea and fit, before they put their heart, much hard work, and money on the line. These questions should always include the following:

  1. How realistic is your business opportunity today? Your idea may indeed be a worthy cause, like feeding the hungry, but hungry people rarely have any money, and third-world governments are not a viable market. On the other hand, if you can find ten or more similar existing competitors, your chances of being found by even a large market is small.

  2. Why doesn’t this product or service already exist? The right answer to this question is that you bring some new intellectual property to the table – like a patent or other secret sauce. After years of working with smart entrepreneurs, I’m convinced that most good ideas have already been tried, and you need to focus on your unique execution potential.

  3. Do you have the resources to build a business? Building a product, as well as a business, takes money and people. Do you have the skills and interests to overcome problems, lead people, and find partners and funding? Most businesses require a team of people with diverse skills, all with a success mindset and commitment to common goals.

    In the real world, evidence indicate the vast majority of new ventures are self-funded, or bootstrapped. Attracting external investors takes much time and effort, and forces you to pay home to their interests. In all cases, people management and leadership are key.

  4. Should this be a non-profit or for-profit business? The difference relates to how you expect to get funding. Traditional investors are not interested in non-profits, no matter how good the cause, since there will be no financial return on their investment. Non-profits rely on philanthropists and donors. Also evaluate the values of desired customers.

    In my experience, non-profits are also harder to run and grow, since money is always short, internal salaries and skills may be low, and the customer set is often driven by emotional decisions rather than financial value. Great social entrepreneurs are rare.

  5. What will you do if you get no traction on this idea? Smart entrepreneurs think proactively about a “Plan B” or obvious pivot before a crisis and they are out of money. This will incent earlier thinking outside the box, and help you get metrics in place to track progress, or lack of it, along the way. Keep alternative business models on the table.

    For example, if you have a new calendar-scheduling app, it would be tempting to target consumers as your primary market, because there are so many of them, compared to businesses. Yet business have real budgets and a clear need, so may be easier to sell.

  6. Why are you the right person to do this now? No matter how great the potential, if you are starting a business for the wrong reason, failure is likely. The right reason would be to bring value to customers, with a strong conviction that you are uniquely qualified to make it happen. Think twice if you are trying to escape a problem, get rich, or satisfy others.

Of course, there are no magic formulas for entrepreneurial success, since every new business inherently has many unknowns. My goal is to give you a way to bound these risks, and perhaps be better prepared with some alternatives. More success is better for all of us – business owners, investors, and certainly customers.

Marty Zwilling

*** First published on on 11/15/2019 ***



Friday, November 22, 2019

8 Techniques For Shining A Light On Your Blind Spots

burmese-elephant-blind-menMost of us have blind spots in our ability to build a business, due to lack of experience, too much ego, over-confidence, or unjustified faith in a subordinate. Only a few of the entrepreneurs I have worked with in a decade of consulting are smart and humble enough to recognize that they don’t know what they don’t know, and have an effective process for shining a light on their blind spots.

For instance, I find that tech entrepreneurs are often so blinded by their shiny new technology that they fail to anticipate the infrastructure and political changes which gate the business. Auto engines that burn hydrogen are a great technology, and would appear to be a great business, but getting service stations around the world and new safety legislation has already taken decades.

Every successful leader has to learn how to act with a visible confidence and faith in their own abilities, and that of their team, while remaining aware of their own biases and blind spots. They need to actively avoid the hazards that come with overconfidence and excessive optimism. The best leaders accomplish this by asking good questions and really listening to the feedback:

  1. Don’t preface your questions with your own assumptions. I find that team members are often reluctant to challenge their leaders, and will tend to concur or just keep any counter-views to themselves, thus avoiding conflict that could impact their career. Never state your position first, when asking for input from others before a hard decision.

  2. Always use directed questions and insist on direct answers. Smart leaders are quick to cut off attempts to redirect the discussion, or evade the question, to cover a lack of knowledge or feign support. The best strategy is to narrow the question until you get a specific response or a clear indication that they have no relevant input.

  3. Insist on facts and specifics to support all opinions. Be sure to separate speculation from facts, and act only on facts. It’s fair to start with what people think they know, as long as you use that to zero in on corroborating evidence and real examples. Blind spots are easily covered by opinions and speculation, but real facts are hard to counter.

  4. Restate what you are hearing for confirmation. To confirm understanding, and push people to provide more information, it pays to paraphrase back from a different perspective their conclusions and recommendations. This often leads to follow-on questions that expose the real blind spot that either of you may be unaware.

  5. Push alternative views limits, to check for side effects. If I suggest your technology needs validation in the market before scaling, it’s fair to ask how long and how expensive that test could be. That’s really a form of risk management, as well as a learning opportunity. Risk management in the face of unknowns is the primary job of a leader.

  6. Expand every dialog by asking open-ended questions. Yes-or-no questions may appear to be more efficient, but usually these don’t surface the new information that may help a leader to realize what he doesn’t see or understand. Strong leaders actively seek out people who have opposing views, with the intent to overcome their own biases.

  7. Look honestly at your track record on similar issues. If this issue reminds you of your previous failures, it may indicate one of your blind spots. If these cases, I recommend some extra due diligence and soul searching, to make sure you are not about to go down the same road again. Smart leaders learn from their mistakes, and don’t repeat them.

  8. Regularly question and listen to a trusted advisor. Even industry titans like Bill Gates and Warren Buffett have mentors and advisors, and they use them often to search for blind spots in their own thinking. Often an outside perspective, especially if rooted in a different industry, will give you the insight you need to make a smart leadership decision.

Today’s business world is more complex than ever, and the international elements make it all the more challenging. I always recommend that you lead with your strengths, and recognize that we all have blind spots. Surround yourself with people who have strong complementary skills, rather than less experienced people who will tell you what they think you want to hear.

The result will be fewer blind alleys, fewer required pivots, and a clearer view of your business potential and legacy. In business, it’s always less painful to get it right the first time, than to be in crisis and reactive mode most of the time.

Marty Zwilling

*** First published on on 11/11/2019 ***



Monday, November 18, 2019

5 Ways To Increase Your Agility In The Face Of Change

As a business and entrepreneur advisor, I have no trouble getting owners and managers to agree that change is happening faster and faster in the consumer and technology world, requiring them to keep their business more agile, just to keep up. The challenge is that too many are confused on what that means for them, and what it takes to make their business competitively agile.

I just finished a new book, Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption, by Leo Tilman and Charles Jacoby, which has helped me net out the key principles for businesses to become more agile. These authors, and I agree, define agility in business as the ability to detect and assess changes in the competitive world in real time, and then take decisive and effective action.

We also agree that agility enables a business to stay healthy and outmaneuver competitors by seizing new opportunities earlier, better defending against threats, and acting as a well-orchestrated and empowered whole on innovative initiatives.

The book brings a wealth of examples to the picture, based on author strategy consulting with major companies, governments, and the military. In their experience and mine, the essence of business agility is embodied in the following five principles:

  1. Early detection of change and the need for change. This may seem obvious, but most small business leaders are so busy with current issues, and running the business today, that they spend very little time or resources looking for customer culture changes, analyzing new technologies, or political and economic realities that will impact them.

    Crisis-driven agility is not enough today. You need time and resources looking ahead for change. Perhaps failure to look ahead was not the primary reason for the demise of Blockbuster and Kodak, but I see it happening to smaller businesses every day.

  2. Effective assessment of change drivers and alternatives. It starts with everyone being encouraged to look for the surprising or unexpected, and not being penalized for bringing bad news. Sometimes you need to use outside consultants and listen to your advisors, before the crisis, to overcome cognitive biases and evaluate response options.

    Often the answer may be a quiet change in marketing strategy, or adding a new demographic, but real change may require a bigger response. Apple, as an example, has made agility and new markets their brand image, as well as their source of growth.

  3. Timely response with smart risk-taking and innovation. Cohesion and team unity are integral to timely agility, expedited by a willingness to take and share risks. These imply a special brand of people leadership and a culture of trust throughout the business. Often I find that small businesses slow down as they grow, and become more risk-averse.

    Jeff Bezos and Amazon are an example of continuous growth, where you can see how far and fast constant change, innovation, and risk taking can take your business. They started with a focus on books, but expanded online access to cover almost everything.

  4. Culture of purposefulness and decisiveness. Every business needs a strategic purpose, vision, and values that are regularly updated, visualized, and clearly communicated by senior leaders to everyone in the organization. True agility also requires a willingness and ability to make decisions and execute in stride, at all levels.

    Examples of business today who have focused on a higher purpose and values includes Whole Foods and Patagonia, where evidence indicates that their average return, brand image, and growth are much greater than other companies in their space.

  5. Sustaining a will to win, with a bias toward the offense. Agility requires a mindset and culture grounded in the competitive will to win that encompasses what is called a bias toward offense rather than defense. It’s the only way to avoid losing. Team members look up and down the command chain for role models and positive direction in this regard.

    If you think of successful entrepreneurs, including Elon Musk and Richard Branson, you will find them primarily in offense mode. Both are capable defenders, but spend most of their efforts pushing new limits in aerospace, advanced technologies, and new markets.

In summary, both the authors and I see agility as the overarching quality which encompasses many important other more specialized business traits, including adaptability, resilience, flexibility, and dynamism. If you intend for your business to survive and thrive in today’s world of rapid change and global competition, it’s time to start now making agility your leadership strength.

Marty Zwilling

*** First published on on 11/04/2019 ***



Monday, November 4, 2019

6 Steps To Move From Inspiration To Business Reality

new-business-ideasAs a new business advisor and occasional investor, I get approached regularly by people who have a dream or a new business idea, and are looking for support and money to make it a reality. They are usually short on specifics required for execution, so I have to tell them that the idea is the easy part – and the real challenge is execution, even if someone gives you the money.

Based on my experience and data from the field, over seventy-five percent of new startups fail, even with venture backing. The number is much higher for those who choose to go it alone, without help. I say this not to discourage you from acting on your idea, but to encourage you to anticipate the work required to get you from inspiration to a sustainable and satisfying business.

Thus, I’m more impressed with entrepreneurs who ask me to review their implementation plan, rather than listen again to their idea. There are lots of resources available for the challenge of that activity, including the Internet and mentors like me. In my experience, the key steps I look for always include the following:

  1. Testing the idea against customers who have money to spend. Just because you think it’s a great idea doesn’t mean there is a business opportunity. I suggest you use social media, blogging, crowdfunding, or documented research to quantify a real demand from people who can afford it, and don’t have a better alternative already out there.

    I love good causes and social entrepreneurs, but a recent pitch to me about eliminating world hunger with a new product (harvesting algae at low cost) seemed to forget that really hungry people don’t have any money. Even a non-profit needs income to operate.

  2. Build a credible business implementation plan to quantify costs. Some dreams sound great, but may not yet be viable or proven with today’s technology. Others may be so exciting that you will find multiple competitors fighting for the same space. Writing down key parameters will force you solidify the specifics, and mentally commit to them.

    I recommend a ten-slide pitch to start, reviewed by friends and advisors, to be expanded to a ten-to-twenty-page business plan with opportunity sizing, cost and price details, competitors, marketing and sales strategy, financial projections, and resources required.

  3. Make sure your solution is defensible and unique. Unfortunately, I see good startups fail simply because they don’t have the resources or intellectual property to stay ahead of copycats or big players who see the potential as soon as you step into the marketplace. Any startup with no patents, trade secrets, or other secret sauce is very high risk today.

    Even a provisional patent will hold your position for a year, can be done by your team at low cost, and will at least incent big competitors to buy your idea rather than just steal it. Most investors will not even look at you until you have a defensible solution to offer.

  4. Prepare your marketing story for customers and investors. I haven’t seen a new idea yet that was so intuitively obvious that it would sell itself. Start by developing an “elevator pitch,” that you can deliver in thirty seconds to hook a potential customer or investor. Present at trade shows and network with your ten-slide pitch to build your following.

    For inspiration, I recommend you watch a few episodes of the Shark Tank TV series, where entrepreneurs pitch their wares, looking for an investment and national visibility for their product or service. Reach out with creative videos to influencers in your domain.

  5. Make the product or service come alive. Well before launch, as well as after, all the preparations have to be in place to deliver and support your solution. This means staffing and delivering the business legally as an LLC or corporation, completing a website and business licensing, and arranging for manufacturing, distribution, and support.

  6. Implement a strategy for growth and improvement. For a business to be sustainable in this era of rapid change, you need a strategy and plan for continuous innovation, new products, and expanding your customer base. This is the point where you must manage to metrics, work on the culture of the organization, and look for partner-based growth.

Now you can see why you, as well as advisors and investors, should never judge business potential by the idea alone. In fact, the common element in all these steps is “you.” As a result, smart investors will tell you they invest in the jockey, not the horse (people, not ideas). A great vision and dreaming about a great idea, without implementation, won’t make a business.

I believe totally in the old adage that a successful business is really one percent inspiration, followed by ninety-nine percent perspiration. How much execution perspiration are you prepared to expend along the steps outlined above to make your dream come true?

Marty Zwilling

*** First published on on 10/21/2019 ***