Wednesday, December 11, 2019

10 Outside Staffing Quotes True Entrepreneurs Avoid

office-no-virtual-staffingThese days, it is almost impossible to find a small business where everything is done at the home location, by full-time employees. We are in the age of outsourcing, by any of many popular names, including subcontracting, freelancing, and virtual assistants. These approaches allow your startup to grow more rapidly, save costs, but costly mistakes can lead to business failure.

There are many books written on this subject, but this classic by Chris Ducker, “Virtual Freedom,” manages to pack a lot more practical guidance into a small space that many others I have seen. He is regarded by many as the number-one authority on virtual staffing and personal outsourcing, and is himself a successful entrepreneur based in the Philippines.

I was impressed with his summary of the top ten outsourcing mistakes made by entrepreneurs, followed by real guidance on how they can and should be avoided. In terms of quotes I hear too often, here is my interpretation of the most common mistakes, which every entrepreneur should avoid at all costs, before these assume that outsourcing will be their salvation:

  1. “With outsourcing, we won’t need many managers.” Contractors and freelancers, like any other business, manage their own internal processes, but they can’t manage your business. Don’t over-manage remote workers, but don’t expect them to manage your business. Hire and train your own managers for internal and external work projects.
  1. “With the high-speed Internet, our workers can be anywhere in the world.” Labor rates are lower in some countries, but culture and language match are the real keys to productivity. Countries near you may be in the same time zone for easy communication, but lack the skills you need. As with real estate, it’s still about location, location, location.
  1. “Let’s cut costs by outsourcing all from this point forward.” Some entrepreneurs get outsource-happy to save costs and begin outsourcing everything and anything that lands on their desks. Ideal outsourced tasks are outside your core competency, can be specified in detail, and managed with quantified deliverables and checkpoints.
  1. “Fixed price bidding is the only effective outsourcing model.” Getting a fixed price bid works for well-defined short-term projects, like blogging or programming. But trying to use it on call centers, affiliate marketing, or even data entry probably won’t be effective. Do your research with peers, and check the alternatives on every project. Be flexible.
  1. “Fair compensation is the lowest price we can negotiate.” Outsourcing won’t work if you don’t keep the virtual team happy. Unhappy workers will do a poor job, so cheap is not a good deal. Fair compensation is normally something higher than the market price at the outsourcing location, but lower than you would have to pay in your location.

  1. “I expect everyone working for me to adopt my culture.” The outsourcing team will always try to adapt to your situation, but success depends on their cultural work ethics, time constraints, social status, language quirks, and an overall attitude. Adapting to culture goes both ways, and training is the key. Recognize and embrace differences.

  1. “Current workers will manage the outsourcing as I grow.” Don’t set up outsourced projects under a professional who doesn’t want to manage, or is simply unavailable to the different work hours, or insensitive to cultural differences. Virtual teams need a lot of stability and structure, extra communication, standard protocols, and contingency plans.

  1. “My IT budget will go down as remote users use their own tools.” When you sign up remote workers, you’ll start to rely heavily on collaborative tools, Internet bandwidth, and new data security tools. You will need to invest more in training your own team, and increase your capital budget for new hardware and software. Don’t get caught off guard.

  1. “Utilization and personal growth of virtual employees is not my problem.” Some entrepreneurs view their outsourced employees as temps, or as a cheap way to staff the company during its startup phase. You should never hire internal or external staff based solely on what they can do now. Bored and unmotivated teams are never cost-effective.

  1. “I’ll outsource software development, since I don’t understand it.” Entrepreneurs need to know every component of their business at a management level, or have a cofounder who does. Relying totally on a virtual team implies they are managing your company, not you. If you don’t know where you are going, you probably won’t get there.

In summary, an entrepreneur should never approach outsourcing as an inexpensive and easy method of offloading work. With modern technology, and worldwide reach, it should be seen as an important tool for building an efficient, lean, and competitive business, optimized to give you more time for strategic focus.

As every entrepreneur quickly learns, their time is a scarce resource, and it can’t be outsourced. To grow the business, every entrepreneur needs to spend more time working on the business, rather than in the business. How many hours a day are you working on your company? Maybe it’s time for some smart outsourcing.

Marty Zwilling>

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Monday, December 9, 2019

5 Factors That Set Your Best Startup Funding Strategy

crowdfundingWith 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 ***

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Sunday, December 8, 2019

6 Considerations For Going Public Via Reverse Merger

With the current strong economy, as an active startup mentor, I’m seeing a new surge of entrepreneurs and startups, with the commensurate scramble for funding. There just aren’t enough angel investors and VCs to go around. Thus I’m getting more questions on new mechanisms, like crowd funding, or going public through the side door as a reverse merger.

A reverse merger is the acquisition of an already public company (usually a dormant shell) to avoid the Initial Public Offering (IPO) process and cost, to quickly get your startup on a public exchange for fund raising through visibility and selling stock. It sounds like a great way to raise money, but here are some of the challenges you need to consider before trying it:

  1. Make sure the shell you choose is squeaky clean. The image of shell companies has long been tarnished by true stories of lawsuits and “pump and dump” schemes. I recommend you work only with financial and broker organizations who have done the due diligence required, and who have a track record of success.

  1. It takes real money to get into the game. The cost of the shell, plus the cost of navigating the process, can add up to a half-million dollars, depending on the shell company, according to LawCast, a law firm based in West Palm Beach, Florida. This approach is thus not viable for entrepreneurs already out of money.

  1. Being a public company isn’t cheap or easy. Is your startup really ready to play in the corporate world? It better be an established company, with millions of dollars in annual revenue and profits, following generally accepted accounting, reporting, and audit procedures. A survey from a while back sets the burden at up to $2.5M a year.

  1. Increased jeopardy and less fun for the entrepreneur. The increased exposure and opportunity of a public company comes with a higher risk to you and your Board with severe civil and criminal penalties for regulatory mistakes and non-compliance. These looming constraints can turn your startup dream into a nightmare, all to increase funding.

  1. Reverse mergers may not get your startup on the Nasdaq. Most public shells ready for sale are not listed on a national securities exchange, but are instead traded in a less glamorous setting, such as the OTC Bulletin Board. Of course, they can be renamed and moved, but that may negate the cost and time advantages originally sought.

  1. Make sure that your team can motivate shareholders. The reverse merger process itself doesn’t raise any capital. That still requires a business team and story that continually motivates stock brokers and public stockholders. You may no longer have the option of investing all earnings into growth, or servicing your special corporate cause.

Yet reverse mergers are not all bad. Even the New York Stock Exchange did one with the acquisition of Archipelago Holdings via a "double dummy" merger way back in 2006 in a $10 billion deal to create the NYSE Group. Some people believe that reverse shell mergers may soon become the preferred IPO approach for emerging high-growth companies.

In fact, the number of companies taking the side door into a public exchange seems to be getting larger, and it has become the legal but still controversial and risky choice for Asian companies seeking to go public in the American market. Being public makes the company more visible to shareholders and potential acquirers, and provides a presumption of future liquidity.

Other than raising money, the reverse merger may be the quickest way to get you to other benefits of a public company. These include the ability to offer meaningful stock options to employees, the use of liquid shares to purchase other companies, and the credibility and public access to information you need to attract key customers and suppliers.

In summary, a reverse merger, or going public through the “normal” IPO process should never be seen as just a way to fund your startup. It is a strategic decision that may indeed attract more funding, but also will likely change the culture and focus of your company, and your role from an entrepreneur to a corporate executive. What price are you willing and ready to pay for funding?

Marty Zwilling

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Saturday, December 7, 2019

How Smart Entrepreneurs Don’t Hesitate To Seek Help

business-people-talkingWhile 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 ***

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Friday, December 6, 2019

10 Financing Alternatives For Your Next New Venture

Desert-Crater-Valley-DeathThe “valley of death” is a common term in the startup world, referring to the difficulty of covering the negative cash flow in the early stages of a startup, before their new product or service is bringing in revenue from real customers. I often get asked about the real alternatives to bridge this valley, and there are some good ones I will outline here.

According to a well-researched Motly Fool report, the challenge is very real, since around half of all businesses fail in the first five years. Only one-third make it past their tenth anniversary. The problem is that professional investors (angels and venture capital) want a proven business model before they invest, ready to scale, rather than early projections and product development.

My first advice for new entrepreneurs is to pick a domain, such as online web sites and smart phone apps, that doesn’t have the sky-high up-front development costs. Leave the world of new computer chips and new drugs to the big companies, and people with deep pockets. For the rest of us, the following suggestions will help you survive the valley of death:

  1. Accumulate some resources before you start. It always reduces risk to plan your business first. That includes estimating the money required to get to the revenue stage, and saving money to cover costs before you jump off the cliff. Self-funding or bootstrapping is still the most common and safest approach for startups
  1. Keep your day job until real revenue flows. A common alternative is to work on your startup on nights and weekends, surviving the valley of death via another job, or the support of a working spouse. Of course, we all realize that this approach will take longer, and could jeopardize both roles if not managed effectively. Set expectations accordingly.

  1. Get a loan or line-of-credit. This is a most viable alternative if you have personal assets or a home you are willing to commit as collateral to back the loan or credit card. In general, banks won’t give you a loan until the business is cash-flow positive, but there are notable exceptions. Nevertheless, it’s an option that doesn’t cost you equity.
  1. Solicit funds from friends and family. After bootstrapping, friends and family are the most common funding sources for early-stage startups. As a rule of thumb, it is a required step anyway, since outside investors will not normally consider providing any funding until they see “skin in the game” from inside.
  1. Use crowd funding to build reserves. The hottest new way of funding startups is to use online sites, like Kickstarter, to request donations, pre-order, get a reward, or even give equity. If your offering is exciting enough, you may get millions in small amounts from other people on the Internet to help you fly high over the valley of death.

  1. Apply for contests and business grants. This source is a major focus these days, due to government initiatives to incent research and development on alternative energy and other technologies. The positives are that you give up no equity, and these apply to the early startup stages, but they do take time and much effort to win.
  1. Join a startup incubator. A startup incubator is a company, university, or other organization which provides resources for equity to nurture young companies, helping them to survive and grow during the startup period when they are most vulnerable. These resources often include a cash investment, as well as office space, and consulting.
  1. Barter your services for their services. Bartering technically means exchanging goods or services as a substitute for money. An example would be getting free office space by agreeing to be the property manager for the owner. Exchanging your services for services is possible with legal counsel, accountants, engineers, and even sales people.
  1. Joint venture with distributor or beneficiary. A related or strategically interested company may see the value of your product as complementary to theirs, and be willing to advance funding very early, which can be repaid when you develop your revenue stream later. Consider licensing your product or intellectual property, and “white labeling.”
  1. Commit to a major customer. Find a customer who would benefit greatly from getting your product first, and be willing to advance you the cost of development, based on their experience with you in the past. The advantage to the customer is that he will have enough control to make sure it meets his requirements, and will get dedicated support.

The good news is that the cost for new startups is at an all-time low. In the early days (25 years ago), most new e-commerce sites cost a million dollars to set up. Now the price is closer to $100, if you are willing to do the work yourself. Software apps that once required a 10-person team can now be done with the Lean Development methodology by two people in a couple of months.

The bad news is that the valley’s depth before real revenue, considering the high costs of marketing, manufacturing, and sales, can still add up to $500K, on up to $1 million or more, before you will be attractive to angel investors or venture capital.

In reality, the financing valley of death tests the commitment, determination, and problem solving ability of every entrepreneur. It’s the time when you create tremendous value out of nothing. It’s what separates the true entrepreneurs from the wannabes. Yet, in many ways, this starting period is the most satisfying time you will ever have as an entrepreneur. Are you ready to start?

Marty Zwilling

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Wednesday, December 4, 2019

8 Attributes Shared By Most Successful Entrepreneurs

Business-woman-writingMaybe starting a new business isn’t your passion, but in these days of rapid change, where everyone is dealing with uncertainty, I believe that thinking and acting like entrepreneurs will help you get ahead in any profession. In simple terms this means taking control of your life, going after something you love to do, and taking action. Stop letting life decisions happen to you.

As a long-time mentor to aspiring entrepreneurs, I’ve been convinced for some time that good entrepreneurs have the right mindset, and the right attributes, to be good at anything they want. Starting a new business is actually one of the toughest things that anyone could aspire to, since it always involves making decisions and progress in uncharted territory, with no one to follow.

So how do good entrepreneurs do it, and what do they do that everyone can learn from? I saw some good insights in the classic book “Own Your Future,” by Paul B. Brown, who has been studying and writing about business leaders for many years for Forbes, BusinessWeek, and Inc.

He offers a collection of lessons regarding how entrepreneurs think and act, which relate equally well to almost any profession or lifestyle. I’ll summarize a few of his principles here as examples, and I’m adding a few from my own experience:

  1. Use act, learn, build, and repeat to move forward in increments. The entrepreneurial approach is to decide what you want, take a small step toward that goal, pause to see what you have learned, build off that learning, and iterate the process. Other people often seem to bounce around randomly, and be the unhappy victims of other people’s actions.

  1. Embrace smart risks, but don’t be reckless. Smart entrepreneurs work extremely hard to find smart risks, like really large opportunities, but limit potential losses, because they know that success is an iterative learning process, with many pivots required. Other people never take risk, or let their passion overcome them to bet the farm on a long shot.

  1. Avoid overthinking yourself, leading to no action. When the future is unpredictable, as it is today, action trumps thinking. Action leads to evidence, in your job or in the market, which is the best fodder for new thinking. If all you ever do is think, you can gain tons of theoretical knowledge, but none from the real world, and make no real progress.

  1. Nurture relationships with people who can really help. Entrepreneurs build listening relationships with peers, mentors, and investors who may not even be social friends, and ask them the hard questions they need grow their business. Other people think relationships are only for personal and social use, and only mention work while venting.

  1. Find and sell your unique competitive advantages. Successful entrepreneurs focus on amplifying their strengths, while many people focus on eliminating their weaknesses. Everyone needs to sell themselves with the same fervor that entrepreneurs sell their product or service. If you don’t highlight your competitive advantages, no one else will.

  1. Focus on problems you can solve and who is your target. A key step in selling yourself or your product is to identify your customer, and focus on value that you can deliver to that customer. Don’t discourage yourself by broadcasting your value to the wrong people, or not doing your market research on the problem they need solved.

  1. Always see the glass as half-full, rather than half-empty. Maintaining and projecting a positive attitude is critical to career and personal progress, as well as business growth. How many people do you know that always focus on their setbacks, rather than their progress? Every hiring manager, as well as investor, reads your attitude carefully.

  1. Generate energy, rather than sucking it out of others. Your actions must always create positive energy for those around you, or people will hasten to get away from you and your business. Entrepreneurs learn this early, to keep their team and customers motivated. You need to do this, to keep your lifestyle and your career moving forward.

I assure you that if you follow these principles in your current career, and think like an entrepreneur, you will advance more quickly, get more done, and be a happier person. According to a classic article and many others, entrepreneurs running their own business still rank themselves happier than all other professions, regardless of how much money they make.

More career planning and more education is not always the answer, especially when the future is as unpredictable as it is now. Embrace entrepreneurial tactics, assume control of your lifestyle and career, and take action today to assure your own success. Are you still hesitating?

Marty Zwilling

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Monday, December 2, 2019

7 Questions To Test Your Potential As An Entrepreneur

Potential-entrepreneur-questionsAs a mentor to aspiring entrepreneurs, the most common question I get is, “I want to be an entrepreneur -- how do I start?” The obvious answer is that you need an idea first, but I’ve come to realize that the process is really much more complex than that. Many people with great ideas never make it as entrepreneurs, and true entrepreneurs can make a business out of anything.

The first myth you have to get past is that having the right idea will make you an entrepreneur. In fact, even implementing the idea into a solution doesn’t make you an entrepreneur. According to my definition and Wikipedia, an entrepreneur is someone who builds a new business. Based on my experience, creating the solution is usually the easy part of starting a successful business.

So before you quit your day job, task all your friends and investors for money, or max out your credit cards to design and build a product, I recommend that you seriously contemplate the following more basic questions:

  1. Are you prepared to adopt the entrepreneur lifestyle? Starting a new business is not a job, but an adventure into the unknown, similar to Columbus setting out to find the New World. It’s a big step into a new lifestyle, like getting married after being single for many years. Yet startup founders are often lonely, since no one else can make their decisions.

  1. How strong is your passion for people and business? You have to enjoy working with people -- partners, customers, investors and more -- as well as products to start a business. You have to embrace making decisions and the responsibility of setting milestones, measuring progress and celebrating the victories and defeats.

  1. Are you confident and disciplined in facing tough challenges? Starting a business at home or on the Internet is hard work -- not a get-rich-quick scheme. You will be operating outside of any proven realm, no mentor can give you the answer, and it won’t help to blame anyone else for missteps and environmental changes you can’t predict.

  1. How familiar are you with the contemplated business domain? Remember that the grass always looks greener on the other side of the fence. It may make more sense to work for a similar startup before charging ahead on your own. The ultimate best teacher is failure, but a less painful one is getting related work experience and training.

  1. Which business model best suits your mentality? Some people love to deliver services, where personal acumen is tested every day. Others love technology and products, to be replicated and sold while you sleep. If something totally new is not your forte, you can always buy a franchise, acquire an existing business or be a consultant.

  1. Have you mapped out a realistic plan? Few entrepreneurs can assimilate and hone a complete plan in their head. That’s why I believe the process of writing down your plan is more valuable than the result. Also, a written plan multiplies your ability to communicate to constituents, and facilitates parallel feedback. Money is not a substitute.

  1. What is your funding situation and alternatives? Fundraising is stressful and difficult, which is why 90 percent of successful entrepreneurs choose bootstrapping (self-funding). Too much money too early kills many startups, according to investors. There are always non-cash alternatives, such as recruiting partners with equity and bartering services.

After asking yourself these questions, and finding yourself still determined to be an entrepreneur, you will have already started. From there, it’s a simple matter of forging a trail to success, and conquering all the problems and challenges that are sure to surface. Starting a business is a marathon, so you have to make an overt decision to enjoy the journey as well as the destination.

Marty Zwilling

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Sunday, December 1, 2019

8 Steps Every Leader Must Take To Deal With Setbacks

610068249As a business owner in this age of rapid technological change, with the surge of worldwide competitors, setbacks and adversity are virtually guaranteed. Based on my years of experience mentoring and advising entrepreneurs, you need to attack problems and challenges with a mindset of success, or it is unlikely that you or your business will survive.

I found that view confirmed for a wide range of leadership situations in a classic book, “The Mindset of Success,” by Jo Owen. He is a serial entrepreneur and founder of several successful startups, as well as a consultant to some of the world’s largest organizations. I like his outline of eight steps every leader should take in dealing with setbacks, which I have expanded here for entrepreneurs:

  1. Take control of the situation, rather than play victim. When you can’t control everything, control what you can, and move forward in offense rather than backward in defense. In business, when growth eludes you, it may seem like you have no choice but to cut prices and people, when you could be finding better customer fits and more value.
  1. Suppress you own emotions and feelings. If you get angry or upset, and adopt a victim’s mindset, your little cloud of gloom will spread like a major depression across the rest of the office. Separate the event from your reaction, and be accountable for your own feelings. At minimum, you must learn to wear the mask of leadership – cool, calm control.
  1. Stay positive and believe in yourself. The best business leaders convince themselves that they can find a way through any adversity. They see challenges as an opportunity to learn and grow, rather than an opportunity to fail. They see others ahead of them as role models, not as competitors. They focus on their strengths, not their weaknesses.
  1. Step back and broaden your perspective. When you are faced with the daily dose of problems and challenges, it pays to step back and contemplate your successes along the way, reflect on the fact that others are in more dire straits, and imagine the best possible outcome. Then you can focus on what is needed to make this happen and get on with it.
  1. Draw on your experience and input from others. Drawing on experience helps to build perspective, but it also should give you some hints about what will work and what will not work in your current situation. Don’t try to be the lone hero – it pays to listen to other members of your team, who may be closer to the customer, and have better insights.
  1. Find a way to laugh in the face of misfortune. Humor is a good way to keep perspective as well. Laughter helps you stay mentally healthy, and makes you feel good, even after the laughter subsides. Humor helps you keep a positive, optimistic outlook through remembering fantastic recoveries, marketplace surprises, and failed competitors.
  1. Remember the end goal, but be adaptable on how to get there. The best leaders know that you can’t sail straight into the wind; you have to tack and jibe to make any progress. In the business sense, adaptability means being open to new product innovations and marketing concepts, and agile when conditions abruptly change.
  1. Don’t be afraid or too egotistical to seek help. Don’t wait for help to come to you, or be convinced that only you can solve the problem. Business is not rocket science – others have been there before you and learned from it, and every business leader I know is more than willing to share their experience on what works, and what doesn’t work.

I’m convinced that building a successful business from a new idea is a marathon, not a sprint. Success requires deep reserves of stamina and patience to overcome setbacks. In my days as an angel investor, if I heard an entrepreneur claim to have never failed, I would conclude that he was not innovative, or he was lying. Every good entrepreneur I know has pivoted at least once.

The more directly you face adversity in business, the better you become at dealing with it. Thus adversity is not be avoided; it is to be embraced. It is your chance to change the world as an entrepreneur, and leave a lasting legacy like Steve Jobs and Bill Gates. How often have you stepped up out of your comfort zone in business when someone else stepped back?

Marty Zwilling

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