5 Ways To Engage The Right People In Your New Venture

In my work with new and aspiring entrepreneurs, I find that most struggle with putting together a written business plan, often pointing out that someone they know started a business without anything written down. My experience is that the discipline of documenting a plan will improve your likelihood of addressing all the right issues, as well as finding the right partner or investor.

It’s no secret that the rate of failure of new business startups may be a high as ninety percent, so we all need all the help we can get, validating the opportunity, clearly positioning against competitors, projecting financials, and planning all the necessary marketing and operating activities. I recommend the following short list of deliverables to keep you on a winning track:

1. Create a new business overview brochure. Starting a new business starts with selling everyone, including yourself, on the viability and specifics of your idea. Just talking and waving your arms doesn’t do it. Most people will be engaged by a single-page double-sided glossy executive summary, and offer support or the right people to move forward.

   Whether you are looking for partners, investors, or future customers, you need to show a level of professionalism and leadership very early that will draw people to your idea. It can pay big dividends as this stage to get help from an experienced business advisor.

2. Two-minute video highlighting you and your idea. Even people who read will be impressed with a video clip these days, as an introduction to you, showing your passion and commitment, and highlighting your business focus and direction. Be sure to net out the opportunity and the solution in the first thirty seconds. Make it light, but factual.

   For details and examples, check out these directions and suggestions. You really need at least a prototype product or customer to make the video come alive. Think of it as an infomercial. You don't need special lighting or equipment; keep it concise and simple.

3. PowerPoint pitch for investors and partners. This section is especially important if you intend to attract outside investors or strategic partners. In my experience as an angel investor, the perfect pitch length is ten slides, outlining the business problem, your solution, opportunity sizing, competition, and financial projections for the next five years.

   Remember, investors or interested in acquiring a piece of your company, so keep the focus on the attractiveness of the company, rather than the product. Make sure you can cover all the material in as little as ten minutes – investors are easily bored.

4. Prepare a business plan 20-page document. No matter how much you enjoy talking, you don’t have time to reach all the people who need to know, with the right level of detail, what you can put in a document. This document must cover all the content discussed earlier, with details to make it come alive without you talking to fill in the gaps.

   If you are an entrepreneur who doesn’t feel comfortable writing, there are many advisors, investment attorneys, and independent contractors who are available to help, for a fee. Review some examples to assure you have all the proper legal disclosures and content.

5. Validate your financial assumptions with a model. I always recommend the creation of a simple Excel spreadsheet with your projections of revenue, cost, and other major financial elements over the first five years of your new business. You will likely need this work to properly answer potential investor questions, and test your own assumptions.

   The real objective here is convince both you and potential investors that the business is financially viable and lucrative over the long term. There are plenty of guidelines and sample models available on the Internet, so don’t be intimidated by the terminology.

While the completion of all of these items entails a lot of work, I assure you from experience that the results are worth it, to minimize the probability of a serious business failure and bitter disappointment on your part, and the confidence of people who believe in you.

In my years of work with new businesses, I’m more and more convinced that having the idea is the easy part – the real work, and ultimate success or failure, is in the execution. If you want to stand out above the crowd, my advice is to focus early on all five of the business plan elements outlined here, and enjoy the fruits of your labor for many years to come.

Marty Zwilling

*** First published on Inc.com on 12/14/2019 ***

6 Building Blocks Make Amazon A Global Market Leader

Every new business dreams of growing from a startup to a global market leader in a few years, like Amazon.com, but that goal is elusive. As a mentor to entrepreneurs, I often get asked for the magic that has made Amazon the world's most valuable brand, from a total unknown only twenty years ago. My simple answer is that they keep their focus on customers, rather than technology.

Thus I was pleased to see the evidence confirming that perspective in a new book, “The Amazon Management System,” by Ram Charan and Julia Yang. They present a convincing story that every entrepreneur has the same potential, but most get sidetracked and bogged down by their technology, competitors, and internal organization. Jeff Bezos has kept his focus on customers.

Of course, it’s never quite that simple, but I really like the authors outline of the six key building blocks that have driven Amazon growth since their early days, to keep their current market value hovering around a trillion dollars. In my view, every startup in today’s world would do well to adopt a management system with the same key objectives:

1. Start with a customer-obsessed business model. At Amazon, Jeff Bezos leads a relentless drive to invent dramatic new ways to delight customers, not waiting for customer demands or competitors to show the way. These days, speed of delivery, rate of change, and automation are key, so these elements get attention for every customer.

   For example, when delivery costs and delays were still a major online sales hurdle, Amazon Prime membership was invented to offer free next day shipping. It has proven to be a huge customer growth engine, and now has over 100 million members globally.

2. Practice continuous bar-raising for your talent pool. Contrary to popular belief, I’m convinced that business success is more of function of the right people, rather than the right idea. Amazon extends this concept to continuously and proactively seek better talent as they learn more from results. They find more and better owners and builders.

   In their recruiting process, they actually have a key insider designated as a “bar raiser” involved in ever interview, to make sure that the bar is never lowered due to any bias or pressing business urgency. They help hiring managers raise the bar for every interview.

3. Incorporate AI-powered data and metrics systems. Jeff Bezos is a man of numbers, and he deals in large volumes, with quick turnaround, so he relies on the latest data technology. While others level off with a certain level of automation, Amazon continuously raises the bar on data analysis, just like they do on talent, and measure the return.

   When they need a new fulfillment center, they pick the best location by simulating all the orders and predicting an optimum location. Their pricing algorithm crawls the Web daily, and adjusts prices to always match the lowest price found anywhere, offline or online.

4. Make your company a ground-breaking invention machine. Most entrepreneurs who have built thriving companies settle into a protective and defensive mindset, clinging to core competencies of the past. New inventions bring risk and cost, and they don’t see other companies using them until it is too late. The cost of being late is hard to recover.

   For example, few consumers recognize that Amazon has a subsidiary, Amazon Web Services (AWS), that has invented over 165 computing services for business customers, including new ones every month, that have become crucial to its continued growth.

5. Insure high-velocity and high-quality decision-making. Bezos categorizes all decisions into two types: 1) Those that are irreversible – requiring deliberation and consultation, and 2) changeable, reversible –best made quickly by high judgment small groups or individuals. Most decisions fall in group two, and Bezos stays out of this loop.

6. Forever reinforce and espouse your Day-1 culture. Normally, in the beginning most organizations function with speed, nimbleness, and a risk-acceptance mentality. Later, complexity and layers creep in, characterized by slowness, rigidity, and risk aversion. Bezos sees Day-2 thinking as leading to stasis, irrelevance, decline, followed by death.

In my view, Amazon illustrates that the world of business management has evolved, from command and control being dominant, to one designed for speed, agility, and scale in serving customers. Customers are now the drivers of your ability to survive and thrive in business.

People at the top and all levels, like Jeff Bezos, with an understanding and commitment to these values, are the key to success in every company today, more so than any management and delivery system. As an entrepreneur, how well do your values align with these? Your future satisfaction and success likely depends on your answer.

Marty Zwilling

*** First published on Inc.com on 12/12/2019 ***

8 Steps To Making Good Decisions In Life And Business

Despite many years of advising aspiring entrepreneurs and people in business, I continue to be surprised by the number of people who wait for decisions to be made by default, or allow others to make decisions for them. I assure you that this approach is not the road to happiness, and certainly not the route to optimal decisions. Making no decision is rarely the best approach to life.

For example, I know people who would love to have their own business, rather than be tied to another they don’t fully understand or believe in. Yet, starting a business requires much more than a gut feeling of interest or desire. Every successful new business requires focused work – targeting a specific opportunity, sizing the potential and resources required, and defining success.

None of these elements can be completed primarily by gut instinct, no matter what your background, as clearly argued by Gleb Tsipursky in his new book, “Never Go With Your Gut.” He calls himself a disaster avoidance expert, and bases his recommendations on years of working with and studying large companies, as well as small. My own experience supports his key points:

1. Identify the need for a decision to be made. This point may seem obvious to some, but I find that many people have no trouble suggesting what others should do, but have trouble recognizing the need for a decision in their own life, especially when it’s not an emergency. The result is lost time, and the window of opportunity may have passed.

2. Gather relevant information from multiple sources. Of course, your experience and gut instinct are relevant, but should never be used alone. These days, everyone has easy access through the Internet to an infinite variety of facts, insights, and analyses, which can be used improve the accuracy and timeliness of any decision. Do some homework.

3. Decide on your relevant goals driving this decision. Each of us is different, so never let the goals of your friends or family make your decision for you. This world is full of unhappy, and often ineffective, people in the wrong position. Generally, there are three types of goals: based on time, interests, and long-term objectives. Always follow yours.

4. Develop clear decision criteria to evaluate options. Here is another point where your gut should be only one input. The decision criteria in any setting are those variables or characteristics that are important to you in life. For most people these criteria would include relevant finances, experience, interest, and satisfaction. Minimize compromise.

5. Generate viable options that can achieve your goals. This is the brainstorming step, so go for ones that solve your underlying challenge, and don’t judge options just yet. In my experience, the optimal choice almost always involves out-of-the-box thinking and innovation. That’s what successful startups are all about. Your gut may not be creative.

6. Weigh the options and pick the best of the bunch. When weighing options, try to keep your gut feel out of the picture. Minimize the impact of personalities, relationships, and internal politics on the decision. Don’t be afraid to mix and match parts of different options as seems best suited to the situation at hand. It’s time to make a decision.

7. Move immediately to implement the option you choose. Ensure clear communication around the decision’s enactment, and accept full accountability for implementation. Think about how your decision can go wrong, and move to guard against these failures. Some people seem to be able to make decisions, but never get around to implementation.

8. Evaluate the implementation process for follow-up. A perfect implementation of a new business, or any new idea, rarely happens the first time, so be prepared for multiple iterations and revisions. Make this a positive learning process, rather than looking at it as a series of failures. Don’t let your gut derail you before successful implementation.

In reality, a first-rate decision making process like this one is a discipline that is teachable and learnable, and it goes far beyond gut instinct. Unfortunately, in my experience as an angel investor and business consultant, I see leaders at all levels of large companies as well as small, who skip some of the critical steps of this model, leading them to slow growth or even bankruptcy.

In my view, any decision is better than none, and a good decision process is critical to making the best decision for you today. Maybe it’s time for you to take control of your life, and learn to make good decisions, rather than trying to live by someone else’s view of your world. Remember, practice make perfect, and skip the shortcuts.

Marty Zwilling

*** First published on Inc.com on 12/06/2019 ***

10 Positive Signs For Starting Your Own Business Now

With the current strong economy I’m seeing a continued resurgence of entrepreneurial spirit, and more startup activity than ever before. I believe the days of the “job work” mentality are thankfully waning, with more people looking to get satisfaction by making the world a better place, rather than just tolerating brain-numbing work to fund enjoyment elsewhere.

According to current Kauffman Indicators of Entrepreneurship, the share of new entrepreneurs who started businesses to pursue opportunity rather than from necessity now exceeds 86%, more than 12 percentage points higher than ten years ago at the height of the last recession. In addition, young businesses that are still active after one year continues to hover at nearly 80%.

There is additional encouraging news for aspiring entrepreneurs on many fronts, just in case you are thinking about joining the existing ranks:

1. Valuations of successful startups have hit an all-time high. An unprecedented number of startups, 427 at last count, are now valued above $1 billion, according to CB Insights. Three of these, JUUL Labs, Didi Chuxing, and Toutiao have already passed $50 billion. Thus a record number of entrepreneurs (and team members) are getting rich.

2. Initial Public Offerings (IPO) are back as an exit strategy. Statistica reports that almost 20 percent more companies went public in 2018 versus 2017. The median deal size is back over $100 million. Investors are showing an increased appetite for new stocks, with a good percentage of deals pricing above the marketed share price range.

3. Funding for early-stage startups is more available than ever. Last year 300,000+ American angels invested an estimated $25 billion in more than 70,000 startup deals. Crowd funding is setting new records worldwide, with $17 billion from North America alone, and VCs poured another $100 billion more into small growth companies last year.

4. Cost of entry for a startup is at an all-time low. I can remember when creating a web site for eCommerce could easily require a million dollar investment. Now you can create a web site for almost nothing - and be on your way with your latest invention or personal services. Smartphone apps can be built for less than $10K, so who needs an investor?

5. Startup incubators and accelerators are popping up everywhere. Business incubators were all the rage before the dot-com bubble (700 for profit, many more non-profit). After the bubble burst and the recession, more than 80% of them disappeared. Now they are back in every community, with the best even waving money at graduates.

6. The world is a now single market, both homogeneous and heterogeneous. Entrepreneurs now can think globally about the opportunity, from day one but start locally. This approach, popularly known as “glocalization,” means you design and deliver global solutions that have total relevance to every local market you plan to attack.

7. Social media is a boon for entrepreneurs and startups. With the key social media platforms today, an entrepreneur can tune a product, build a brand, and grow the business with very low cost and a high interactivity never before possible. The elements include communications, mobile platforms, and location-based services.

8. Large corporations have lost their ability to innovate. Conglomerates, which were the engines of growth and vitality in the twentieth century, have proven themselves unable to innovate, and have a tarnished public image due to financial woes and poor management. Most now routinely buy startups for new technology and new products.

9. Women are a growing force as entrepreneurs. According to the latest Women’s Entrepreneurship Report, overall female rates have continued to increase and the gender gap has narrowed. Women inherently should have an advantage, since women already control over 70% of household income and $20 trillion of consumer spending.

10. Baby Boomers are joining the fun in record numbers. The percentage of startups created by entrepreneurs between the ages 55 and 64 continues to grow more than any other age demographic. Driving forces include their need to work and stay energized for the longer life expectancies, as well as the opportunity to give life to long-held dreams.

Looking ahead, Forbes predicts that in 2020 the supply of VC money will still be quite robust—with over $100 billion in investments across more than 10,000 deals. They also suggest that a business valuation discipline has returned to the Valley. The investment thesis has shifted from “growth at all costs” to “growth with fundamentals.”

The image of an entrepreneur is at an all-time high, so why would you continue to work in a job that you hate, or provides no satisfaction? Step into a new entrepreneur era where the definition of “work” is something you love. It’s never too late to start, but don’t forget the fundamentals.

Marty Zwilling

10 Ways Owners Often Jeopardize Their Business Growth

When you are starting a new business, every resource is precious, including time, funding, and people. Yet we can all look back, after the fact, and realize that we could have been more memorable. Obviously you can’t go back for a do-over, but you can certainly learn from your mistakes as well as all our successes. Most challenges you have are not unique to your business.

In the interests of helping you work smarter and last longer, I would like to offer my top ten list of key resource drains to avoid in early businesses and startups, based on my years of advising entrepreneurs and my own business experience:

1. Expanding your product line too quickly for scaling. It’s always tempting to think that more product variations will satisfy more customers and lead to new sales. The problem is that more SKUs dramatically increases complexity and cost, when you can least afford it. My advice is to focus and sell more of what you do best, rather than adding new things.

2. Buy too much inventory too soon to get unit costs down. Inventory is a balancing act, but I see too much inventory much more often than too little. Unit costs are important, but don’t forget about the cash flow hit, extra storage costs, and the probability of obsolete inventory due to necessary updates or pivots. Use multiple small orders at first.

3. Lack of attention to team and process productivity. Some chaos is normal in every new business, but many wait far too long before they install metrics based on “best practices,” and fail to attack obvious bottlenecks with a vengeance. You may be the main problem, insisting on making every decision, and hiring cheap helpers rather than help.

4. Poor communication and visibility from the top. As the business operation and the team grows, regular and effective communication from key personnel is critical. New businesses often burn excessive resources working on the wrong things, or doing things the wrong way. Daily updates from the top and documented processes are critical.

5. People with the wrong tools or no training. As your business starts to scale, you can’t do everything manually anymore. Make sure people have the right tools, and know how to use them, for accounting, inventory tracking, and planning. Too often I see businesses of some size still using spreadsheets for inventory, or post-it notes for problem tracking.

6. Measuring time worked rather than business results. It’s no secret that some people are more productive than others, due to skills, training, or commitment. We all know team members who work long hours, but are short on measurable output. Be sure to attach employee bonuses and even overtime opportunities to measurable business results.

7. Ineffective and expensive marketing campaigns. The most cost-effective marketing approaches have changed; from catalogs to web sites, and from television commercials to social media. Yet I still see expense budgets based on traditional channels, with no strict metrics on cost of customer acquisition by channel, or lifetime customer value.

8. Excessive support and return activities. Support-intensive products and high return rates can sink even the best run business. Support costs and return rates need to be regularly benchmarked against industry norms, and aggressive root cause analysis done to isolate the problem. Excessive resources required in this area are rarely recognized.

9. Outsourcing services that could be done in-house. There is always a need for highly skilled or capital-intensive services, such as legal and manufacturing, that should be outsourced. But I often see premiums being paid for social media monitoring, standard accounting, and facilities mgmt. Outsourcing is an expensive solution for poor planning.

10. Inadequate focus on hiring and people development. Where hiring seems to always be associated with a crisis, I rarely see an adequate assessment of candidate skills, culture, and future potential. This results in time and money lost due to high turnover, low productivity, and skill mismatches. Make employee management a proactive process.

In reality, there are an infinite number of ways to jeopardize the future of your business, but these are common ones I see that are often invisible to the business owner or founder. We all know that small businesses mush operate without a cushion, so unrecognized waste can easily lead to death.

In this age of new technology and new learning, you need to constantly be on the lookout for new tools and data to optimize your business. How much time have you spent recently working on the business, rather than in it?

Marty Zwilling

*** First published on Inc.com on 11/26/2019 ***

5 Factors That Set Your Best Startup Funding Strategy

With the advent and popularity of crowdfunding platforms, including Kickstarter and IndieGoGo, as a winning alternative for funding your new venture, I find that many aspiring entrepreneurs are confused about the need to ever seek a professional angel investor. I think it’s great to have more options, but I still see each one having a place, so don’t be too quick to limit your alternatives.

To refresh your memory, angel investors are typically high net worth individuals, accredited by the SEC and willing to invest their own money in a high-potential startup for a share of the ownership. See the popular TV show, Shark Tank, for a glamourized version of how they work, and what to expect in negotiation. In the real world, most angels are regular business people like you and me.

Crowdfunding, on the other hand, opens the investment door online to almost anyone who is willing to bet on a new product or service with an investment, typically for a chance to be first in line for the offering, and willing to forgo any equity or management position in the company.

In my role as a small business consultant and mentor to many entrepreneurs, I recommend the following key considerations for the best strategy to pursue for outside funding, if you choose not to fund the business yourself:

1. Consumer products and trends need market validation. If your new startup is addressing a consumer need, such as a new gadget or food service, then crowdfunding response can give you the ultimate validation of a large-scale market, as well as full funding. Alternatively, with minimal response, you need to rethink your business plan.

   For example, many of you remember the Pebble 'Smartwatch', which raised over $20 million and made crowdfunding real. Yet overall more than two-thirds of crowdfunding campaigns do not meet their monetary goal and have to return anything they do collect.

2. Business-to-business products need professional investors. If your target customer is a business, rather than a consumer, I recommend you skip crowdfunding as poorly applicable. This is the realm of the angel investor, who wants to own a piece of the new business, and probably knows how to run it and wants a seat on the Board.For B2B startups, every investor expects to see a proven business model, with a working prototype, and preferably a real customer or two. They don’t get excited by early stage research, development, or marketing hype. Crowdfunding is not the best platform here.

3. Consider the need for multiple rounds of funding. Most startups need more money than they anticipated, to grow and expand their business, after development and rollout. Professional investors understand this need, and are prepared to support it, unless crowd funding was the first round. Investors are very wary of unknown owners and valuation.

   Facebook, for example, may seem like a reasonably simple consumer application. Yet it required fourteen rounds of investment totaling many millions, before it became profitable enough to fund its own growth, and reach a current market valuation of over $500 billion.

4. Compare the time frames and costs of alternatives. In most cases, a crowdfunding campaign can be rolled out more quickly, and earlier in the development cycle than a campaign to find professional investors. On the other hand, crowdfunding platform fees cost more than finding investors; as much as five to ten percent of the money you need.

5. Early visibility can be a curse or a blessing. For very competitive environments and disruptive products, you may want to limit your visibility before a high-profile rollout. You can do this by targeting specific investors, with non-disclosure agreements, but crowdfunding will require early and broad public marketing efforts of your timeframe.

   On the other hand, early marketing may increase your brand’s acceptance, and the crowdfunding platform may be the low-cost way to spread the word. If your campaign is funded quickly and generously, this also sends a very positive message to customers.

In reality, the most successful funding decision I still see is called ‘bootstrapping,’ or self-funding. Even today, the majority of successful businesses are bootstrapped or funded in the initial stages by the founders or bank loans rather than outside cash injections. The smart entrepreneurs I see evaluate all the alternatives, and pick the one that makes the most business sense for them.

Marty Zwilling

*** First published on Inc.com on 11/21/2019 ***

How Smart Entrepreneurs Don’t Hesitate To Seek Help

While starting a new business always involves tackling many new challenges, I’ve personally found myself reluctant to ask for help. I suspect it’s a function of pride and confidence in my own problem solving abilities, but my hesitation has definitely cost me time and money. Thus, in my consulting with entrepreneurs, I always encourage them to get more comfortable asking for help.

I found some good guidance on this subject in a new book, “The Leader You Want To Be,” by Amy Jen Su, a managing partner in an executive coaching and leadership development firm. She suspects, like me, that no self-respecting entrepreneur wants to seem weak, needy, or incompetent, and none of us like to feel indebted to someone we see as a peer or a competitor.

Of course, there are good ways and bad ways to ask for help. We have all been frustrated by some who are constantly taking and never giving, or people who seem to always ask trivial or generic questions. Here are five concrete tips on doing it right, which I am paraphrasing from the author:

1. Do your homework first, and ask for help on specifics. Most experienced business people love to help, but they don’t have the time or interest to give you a course on basic business concepts, like the need to be competitive. If possible, you should always couch your questions around a specific case, leading with the options you know or have tried.

   For example, I will admit that my least favorite question from an aspiring entrepreneur is “Where do I start?” I get much more satisfaction, and can provide more realistic help, in steering you through specific pricing, organizational, or competitive challenges you face.

2. Clearly identify key constraints around your request. In business, we all have to deal with real constraints around every unknown, such as a limited budget, not enough time, and fickle customers. I would like to give you my best answer to your question, without first having to ask you a dozen questions before I even understand the context.

   With my IBM software product background, I could talk at length about competing with other players with big brands, but your problem may be a wealth of small competitors with no brand. I don’t want to waste your time, or mine, solving the wrong problem.

3. Don’t assume that no one could possibly help you. Believe me, there aren’t many business challenges or problems that haven’t ever been seen before, in some context. You can cause yourself a lot of work and pain if you assume that nobody could possibly have knowledge or insight on this issue, or at least point you in the right direction.

   Sometimes asking peers in a different business can actually improve your chances of getting some real help. Bill Gates, for example, readily admits to asking Warren Buffett for insights, and vice versa, and these two are clearly not in the same business domain.

4. Start by helping others, and they will return the favor. Not only will this activate the spirit of reciprocity in them, but you will be surprised by how much you learn in the process of helping others. Some of the best business leaders have found that collaboratively working on a problem with your peers yields the best solutions.

   There are several business peer groups, including Entrepreneurs' Organization (EO), with a stated purpose of providing guidance to peers, in a risk-free environment. With a small time investment on your part to help others, you may be the biggest beneficiary.

5. Practice by asking for help from your own team. Not only does this process yield better results than relying only on your own knowledge, but it makes you more comfortable with asking for outside help. In addition, it creates a culture where asking for help is seen as a strength and encouraged, rather than a weakness to be penalized.

Based on my own experience in business, I’m more and more convinced that asking for help, if done correctly and strategically, is actually a sign of strength, rather than a weakness. In this complex and rapidly changing world, it’s impossible to know everything you need to know, and smart business people build real two-way connections with people who have been there first.

If you make asking for help a learning experience, rather than a search for excuses or a perceived weakness, you will find that the best feeling of comfort is less stress and more success in your business and your life.

Marty Zwilling

*** First published on Inc.com on 11/19/2019 ***