Friday, July 31, 2020

7 Personal Strategies That Define Great Entrepreneurs

bill-gates-great-entrepreneurAs an angel investor in startups, I’m a believer that smart investors invest more in you as the entrepreneur than the next billion dollar solution you are pitching. Yet I find that most of you find it hard to make the case that you can be the next Elon Musk or Bill Gates. I’m not looking for words, but examples of how your habits and attributes have produced results, even before your startup.

In my experience, building a business is more about getting results than having the right dream, or the right technical skills. I want to see and hear that determination, never-give-up attitude, and focus that separate the exceptional entrepreneurs from the other ninety percent that ultimately fail or give up in the face of the big challenges that face every new business.

In this context, I recommend that you highlight in your investor pitch some key personal attributes and mindsets, such as the following, that will convince a savvy investor to believe you can deliver the business as well as the solution you are pitching:

  1. Highlight prior results from your early initiatives. Even if you are still in school, and never started a company before, strong entrepreneur candidates can point to projects they initiated, led, that produced significant results. Founders like Gates and Zuckerberg always had projects going, and even dropped out of school to start their big business.

  2. Relate a higher purpose to your business proposal. These days, customers expect to hear and see social and environmental value from a new business, rather than just a new technology or profit. Certainly, investors want to see a financially attractive opportunity and return projection, but also want entrepreneurs who can take it to the next level.

    For example, Patagonia founder Yvon Chouinard made it clear from the beginning that his company mission was to save the environment, not just be another outdoor clothing seller. He built an "activist company," and continues to lead and profit from that strategy.

  3. Give your examples of determination and problem solving. The startup road to a successful business is always a long one, with many unknowns to overcome. Even if you don’t have previous businesses to reference, relate examples of your problem solving ability and determination in other contexts. Highlight your growth and continuous learning.

  4. Demonstrate business acumen as well as technical. Many aspiring entrepreneurs are so focused on their technology, that they display no interest or credible understand of the financials and metrics of growing a business. This can be mitigated by introducing a partner with the necessary complementary skills and focus to balance the equation.

    Before looking for an investor, you or a partner need to demonstrate an understanding of the implications of startup valuation, revenue projections, break-even, and ROI. Ignoring these, or taking an unrealistic position, will kill even the best solution proposal.

  5. Practice excellent communication and listening skills. The ability to get your message across effectively, through story-telling, examples, and clear terminology is key, not only in convincing investors, but in attracting customers, vendors, and business partners. Great entrepreneurs know how to listen and learn effectively, as well as talk.

  6. Keep a positive perspective, even on competitors. Great entrepreneurs never degrade their competitors, and provide a positive outlook on all the challenges ahead. They position competitors as a base for their solution advantages, and an indication of existing market demand. They talk positively about how customers will appreciate value.

    For example, I often hear statements such as, “competitor x’s product is expensive and hard to use.” Real entrepreneurs highlight their positives by saying “compared to product x, our solution supports new environments, and still gets the job done faster and easier.”

  7. Show credibility as an industry influencer and leader. As an entrepreneur, you will have be able to deal with disparate views, and ultimately build solid people relationships in support of your efforts. Relate how you have been able to lead a team, and positively influence an organization to align with your beliefs. Leadership is tougher than invention.

As an investor, I see hundreds of innovative solution pitches, but only rarely do I see an aspiring entrepreneur who demonstrates the attributes outlined here, and can convince me that they could be the next Steve Jobs or Jeff Bezos. I urge you to take a hard look now at how you come across to peers and people in business. You may be the biggest hurdle to your own business success.

Marty Zwilling

*** First published on Inc.com on 07/16/2020 ***

0

Share/Bookmark

Wednesday, July 29, 2020

5 Due Diligence Tips Before You Invest In A Startup

startup-investment-entrepreneurAfter you have heard a few startup success stories, like Google, Facebook, and Microsoft, you may be tempted to invest some money yourself, maybe by pooling your funds with other investors who claim to have a great track record. My advice is to leave the investing in startups to the professionals (or friends and fools).

First of all, despite a few visible blowout successes, the odds of a payback from investing in startups is very low (that’s why VCs look for 10X returns to cover failures). Most investors agree the odds are better buying traditional public stocks, or even commodities. Even the hot new crowdfunding companies carefully don’t talk about their record of returns to investors.

Secondly, there are many scammers out there who look and act just like Bernie Madoff, even though he is safely tucked away in prison for the next 150 years. Most frauds are not on the scale set by Bernie, but even a few thousand dollars lost would hurt you and me as much as a few million did for some of his victims.

So what can you do, and what are the “red flags” to look for as you do your due diligence before pooling your money with other investors, or accepting money for your startup from investors? Here are some common sense tips:

  1. Get financial statements and verify. Every reputable investment firm is registered with FINRA and files regular reports with the SEC. Look for these and investigate thoroughly to check the truth of every statement about the company. Ask for references, and call or visit previous “successes” of the company to verify experience and satisfaction.
  1. Avoid “insider deals.” The Internet has just made it easier and faster for vultures to feed on investors tempted by the possibility of an “inside deal.” Someone you don’t know promises you an “inside” deal. Why would a stranger pick you out to make rich? Does that make any sense?

  1. Listen for “unnamed sources.” Run away if all current investments are with “sensitive” clients, who are unnamed or unable to be contacted. Remember the old newspaper publishing rule of “All facts must be verified by two independent sources.” People claiming to be unbiased may actually be paid promoters or company insiders.
  1. Any mention of “offshore.” Watch out if someone has a complex plan involving offshore bank financing or gemstones or oil leases in Iran to make you rich. Why get involved in a complicated scheme you don’t understand, when there are plenty of opportunities that are legal and you can understand?
  1. Sounds too good to be true. The age-old wisdom here is that if it sounds too good to be true, it’s probably not true. I continue to be amazed at the fact that the Secret Service still gets 100 calls per day from victims of the Nigerian unclaimed cash scam alone. What are these people thinking?

Here are a few questions you should ask that might allay any remaining qualms, or convince you to run immediately:

  • How much am I paying in commission or fees?
  • Has your source been involved in any arbitration cases or lawsuits?
  • How do they get paid? By commission? Amount of assets managed? Another method?
  • Has the firm ever been disciplined by the SEC or a state regulator?

Unfortunately, in the startup and investment business, we are trained to rely on networking, connections, and professional integrity for many decisions. Remember that people who run scams may be highly polished and sophisticated, and can wrap their con games in such an air of legitimacy it may be hard to see the truth.

Don’t assume you are safe now that Bernie is out of the picture. If you have evidence of fraud, don’t be too embarrassed to contact the Securities and Exchange Commission. If others had done this sooner, his clones wouldn’t be out there today looking to help you out (of your money).

Marty Zwilling

0

Share/Bookmark

Monday, July 27, 2020

7 Tips To Getting A Bank Interested In Your Startup

startup-bank-loanMany entrepreneurs are convinced that banks are not worth the effort for startups, especially early-stage ones that still don’t have a revenue stream, or collateral to back up their financing needs. A question I get from time to time is “Can I ever expect any backing from my bank for a great opportunity?” The short answer is that some banks will help, if you do your homework.

The first thing to remember is that banks only do loans – they don’t do equity investments like angels and venture capitalists (and vice versa). To get a loan, you generally need to satisfy their 3 C’s – credibility, capacity, and collateral. That traditionally translates to at least two years of positive cash flow, with enough assets or receivables to cover at least 80% of the loan.

If you don’t have that, there are things that you can do to compensate. All banks are looking hard these days to get back in the game, and certain ones, like Silicon Valley Bank, are more focused on small businesses. I found a great discussion with Mark Horn, a former Silicon Valley Bank senior vice president, published by Jill Andresky Fraser a generation ago but still relevant today, which outlines the issues I believe every startup must address when pushing the limits for a loan:

  1. A clear mission. You have to get past how great the product is to address clearly what your business rationale is, why it is different from the competition's, and why it will succeed. Be concise as well as complete. Show focus and your understanding that your company is something more than just a good idea.
  1. A winning product or service. Provide a simple yet complete description of your product or service and its competitive marketplace. Include any empirical evidence--including market research or technical analysis, if that's appropriate--in order to bolster your case about why you believe you will succeed.
  1. An impressive team. When we say 'team,' that's what we want to hear about: a group of people who are working with the person who had the original idea to give this company its market advantage, including salespeople and finance people. If you don't have a team on staff, then a banker is going to want to hear about outsourcing and advisors.
  1. Management with a strong track record. When describing each key person on your team, it's important to describe his or her employment history, with an eye toward convincing the banker that the person's experience will help your company achieve its goals. Here, too, focus on outside advisers as well as on key executives.
  1. Partnerships that lend credibility. Be comprehensive here. What a banker is looking for is validation of your idea. If you've succeeded in bringing savvy investors or corporate partners aboard, then that can be a pretty good sign that your idea can succeed in the marketplace.
  1. Money from other sources. This question gets to the heart of what bank financing is and isn't supposed to accomplish. Bankers do not contribute equity. What they're looking for is a situation in which others have already done that, so the bankers want to see the owner's money involved.
  1. A realistic cash plan. What any banker will want to know is, basically, how much money you've already raised and how quickly you've gone through it; how much you're currently spending; and finally, at what point you anticipate earning the revenues to sustain a positive cash flow.

Finally, remember that at almost any bank you will need to back up your financing pitch with audited financial statements, a well-thought-out business plan, credit check, and maybe even your personal tax returns as well. That's just reality.

In case you hadn’t noticed, the items highlighted by this banker are equally important to equity investors, so you need to do the work in either case. In the long run, bank loans are considered “less expensive” than giving up equity and giving up control, so a savvy startup should never skip this alternative.

Marty Zwilling

0

Share/Bookmark

Sunday, July 26, 2020

7 Costs To Consider Before Taking Your Startup Public

wall-street-ipoDespite the fact that the number of IPOs (Initial Public Offerings) for startups have continued to stay low, I still hear it touted often as the preferred exit strategy. I suspect the exuberance for an IPO is still being driven by the highly visible successes of a few companies several years ago, including Facebook, Yelp, and Twitter. Everyone dreams of becoming a billionaire overnight.

According to TheStreet, US IPO market results in Q2 2020 posted a strong bounce-back from Q1 with 58 IPOs, after a slow start due to the Covid19 pandemic. The numbers represent a 45% increase from the previous quarter’s tally, but a 14% drop from the same quarter in 2019. They are still nowhere near the rate required to match the yearly total of 486 hit way back in 1999.

Key drivers for the drop this quarter are the general negative numbers for Q2 earnings, and concerns about how quickly or slowly the world will emerge from the pandemic. Yet I believe the trend will continue at least flat as entrepreneurs become more aware of other considerations that make the IPO route less and less attractive. These include the following:

  1. Taking a company public is an expensive process. It will take many months and require endless amounts of time, money, and energy. According to a dated but still relevant study by PricewaterhouseCoopers, companies average $3.7 million spent directly on their IPO, in addition to underwriter fees of 5 to 7 percent of proceeds. It takes real money to find money.
  1. Make sure you can effectively use a big cash infusion. There is a big difference between needing a million dollars versus $100 million, or even a billion. New stockholders will expect to see rapid growth. You better have lined up a major international expansion, some major acquisition candidates, or a wealth of unfilled orders.
  1. There are real ongoing costs of maintaining a public company. You will need an experienced CFO, and the best legal and accounting help to comply with the audit requirements of the Sarbanes-Oxley Act. PwC estimates that public companies incur an average of $1.5 million in annual recurring costs as a result of being public.
  1. Exposure to increased liability risk. Public company executives are at civil and even criminal risk for false or misleading statements in the registration statement. In addition, officers may face liability for misrepresentations or speaking out in public and SEC reports. Executives shoulder new risks for insider trading and employment practices.
  1. The public company corporate culture may not fit you and your startup. Public ownerships usually lends prestige and credibility to your sales, marketing, and acquisition efforts, but it may work counter to your vision of saving the world. Most startup founders voluntarily exit or are pushed out, and the fun is gone. Analysts want escalating profits.
  1. Public companies bring new expectations of benefits. If you want to give stock options, or have already been giving them, the employees will love the liquidity of their options, and the thought of selling shares for a profit. On the other hand, “competitive” salaries will likely go up, and health and retirement benefits will jump to a new level.
  1. Market volatility usually hits public companies first. Private companies can often fly under the radar in turbulent times like the pandemic and recession. Public stockholders are more easily swayed by emotion and the activities of the crowd, rather than market conditions, and all performance numbers are public. Shareholders can jump ship quickly.

Before you forge ahead to an IPO, I recommend a thorough readiness assessment, to quantify the need, as well as to identify potential gaps within processes, areas needing internal controls, and positions requiring enhanced technical accounting skills to operate as a publicly-traded company.

The costs of an aborted IPO are sizable, and may not be deferred to a later period or offering. Along with the time and effort required, this can severely cripple your company for an extended period, not to mention your entrepreneur lifestyle.

While the wins can be big, I still see the IPO option as one to be considered only under exceptional circumstances, rather than as the default exit option. Your odds of hitting the lottery may be better.

Marty Zwilling

0

Share/Bookmark

Saturday, July 25, 2020

10 Steps To A New Venture That Can Change The World

startup-change-the-worldAs a startup advisor in this age of the entrepreneur, I see many more startups, but innovation is still hard to find. The most common proposals I hear are for yet another social networking site (200 on Wikipedia), or another dating site/app (over 1500 in the USA). Startups which display real innovation, such as alternative energy sources and new medical treatments, are still rare.

In my experience, finding real innovation in existing company environments is even tougher. Overall I like the principles in the classic book “Robert’s Rules of Innovation: A 10-Step Program for Corporate Survival,” by Robert F. Brands. He outlines the key steps which together spell INNOVATION, that I believe apply equally well to startups as well as corporate environments:

  1. Inspire. Whether we are talking about startups or corporations, innovation requires a leader who can inspire others to step into the unknown. Followers and linear thinkers need not apply. Inspiration requires a vision, and an ability to communicate it to others.
  1. No risk, no innovation. An entrepreneur looking for a sure thing will never innovate. Savvy investors tell me that startup founders who claim to have never failed are either lying or have never tried anything innovative. Failure is the best teacher.
  1. New product process. Innovation is not a random walk into the unknown. It starts with a vision, but benefits quickly from a structured process of idea generation, evaluation, prototyping, customer feedback, and success metrics. Set milestones and meet them.
  1. Ownership. A technical champion may drive a specific innovation, but the business leader has to own the result, in order to drive an appropriate business model, customer acquisition, support, and a growth strategy. Business risks are not just development risks.
  1. Value creation. Innovative technologies have no value until they are turned into solutions to real customer problems. Creating intellectual property, including patents, is the kay to long-term value and a sustainable competitive advantage.
  1. Accountability. Many innovations are jeopardized by team members and leaders who are hesitant to accept full accountability. This includes personal and team commitments to delivery schedules, quality assurance, manufacturing, and distribution requirements.
  1. Training and coaching. Proper hiring of people with a natural curiosity, open-mindedness, and ability to see the big picture is the way to create and enhance the right mind-set. Ongoing coaching from the top is essential to maintain the attitude and spirit.
  1. Idea management. Build and manage a pipeline of ideas. From time to time, include customers and sales members in ideation sessions. Make sure all team members have some connection with the product – has either used it, or sold it, or assembled it.
  1. Observe and measure. Tracking results are essential to optimal ROI. Product life cycles keep getting shorter and shorter, which mandates accelerated innovation cycles. Once a new product is launched, a key metric is the ratio of new product sales to overall sales.
  1. Net result and reward. Based on ROI, incentives should be developed for all participants. Reward your people. Frequently, the key motivator is less financial than it is recognition for a job well done. People are your best innovation resource.

Sustainable innovation is really the only sustainable competitive advantage. But innovation is hard, because people by nature resist change, and company cultures are most comfortable with status quo.

Yet survival in today’s world of rapid business change requires that you keep one step ahead of your competition. Innovation is what gives life to your business initially, and keeps it alive in the long term. Make sure your business can spell it.

Marty Zwilling

0

Share/Bookmark

Friday, July 24, 2020

6 Today Strategies For Creating The Next Killer Brand

apple_logoBrand loyalty is still critical for your business growth, but is becoming tougher and tougher to achieve and hold. According to studies, the alternative of acquiring new customers still costs you five to seven times more than retaining existing ones. But customers today are fickle, instantly aware of every new alternative, due to the Internet and social media, and not afraid to change.

Yet, as a business advisor, every entrepreneur I meet assumes that they are destined to become the next killer brand in their space, like Tesla is to all-electric vehicles, and Apple is to smart phones. They don’t realize how much it costs in time and money to get there, and only one out of a hundred large consumer product companies around the world have ever made it.

Despite the challenges, I encourage every business to really focus on achieving an exceptional brand image, because the payback is huge. In my experience, your first step should be to look beyond traditional marketing practices, per the following strategies:

  1. Make every customer experience a memorable one. Today’s customers demand to be more than satisfied with your price to be loyal. They need to remember their “total experience” as one that stands out – starting with how easy it was to find you, simplicity of the transaction, and superior service. They want to be your real advocate to others.

    At a Ritz-Carlton, for example, employees are authorized to spend up to $2,000 per guest to solve a guest issue or improve a guest's stay. Believe me, if I experienced that kind of memorable attention at a hotel, both loyalty and advocacy would be easy to understand.

  2. Every employee must exude passion and loyalty. All the marketing and pricing in the world won’t make your brand memorable if your employees don’t live and communicate that feeling. You need to build and reward a highly motivated and engaged front line. They are your greatest resource for generating brand loyalty in your customers.

    Toms shoes donates a pair for every one sold, and maintains employee passion and loyalty by giving their most effective employees international trips to assist non-profit partners in distributing shoes in interesting places like Nepal and Honduras.

  3. Appeal to all your customer senses all of the time. Focus on innovation in the design of your delivery and service, as well as your product. Visual appearance and taste still matter, whether it be food, clothing, or facilities. Make your customers pleased and excited when they think about your brand, and they will return often, bringing friends.

    Smart marketers call this the “five senses” strategy for improving customer experience and loyalty. Find ways to let your customer touch, hear, see, smell and even taste your product, even if only virtually, by analogy, or by providing snacks or rewards.

  4. Convert customer interactions into relationships. Even digital and virtual interactions can feel like real relationships, if customers hear names, commitments, and follow-up, rather than rules and requirements. Be responsive on social media, as well as every physical interaction, so that every customer feels a special sensitivity and connection.

    Businesses as potentially mundane as Apple Stores demonstrate the importance of a modern airy design, coupled with well-dressed and friendly salespeople who approach you with warm personalized welcome, and really listen to you without a sales pitch.

  5. Go beyond asking customers how they want you to improve. Certainly you need to listen to customer feedback, and fix existing problems, but the real challenge is to excite customer imaginations with products and services that they could not envision. Truly loyal customers are ones who trust you to lead them, rather than them having lead you.

    Very few customers are likely to envision a new concept, such as combining a computer with your watch. You have to excite their imagination, and entice them through clear customer value. They will reward you with brand loyalty and line up for the next step.

  6. Highlight only larger customer-focused initiatives. Not every change you make is worthy of hype in your marketing. Customers become bored or immune to constant harping on your latest incremental change, special sales, and internal changes. Your challenge is to create special events and exciting changes that lead to customer loyalty.

Let me assure you, these strategies are just the beginning. I see new and innovative brand initiatives appearing every day, but unfortunately from too few companies. Let me assure you that an exceptional brand image is far more valuable than adding a new product or more support. Now is the time to measure your brand loyalty, and figure out what it takes to move it up a notch.

Marty Zwilling

*** First published on Inc.com on 07/09/2020 ***

0

Share/Bookmark

Wednesday, July 22, 2020

5 Startup Stages And The Right Investors For Each One

startup-pitch-investorsTime is too precious to waste trying to close a deal with the wrong investors at the wrong time. Luckily, not all investors are looking for the same thing, so it pays to know what type of investors are most interested in what your startup brings to the table.

The key is understanding how potential investors see you, and especially how they view the maturity stage of your startup. For example, if you have a proven product, real revenue, a big potential market, and are ready to scale up the business, every investor will be interested. On the other hand, if you are a new entrepreneur, still in the idea stage, professional investors will only tell you to come back later when you have traction (customers and revenue).

Thus your startup maturity and growth stage is the primary key to success with potential funding sources. Different types of investors tend to specialize in capitalizing on businesses at different stages. Venture capital firms look for the most mature companies they can find, Angel investors typically deal a tier lower, while friends and family are most likely to help you get started.

It never hurts to start networking personally with all levels of investors early, but sending out teasers and business plans to every name you can find on the Internet is a waste of your time and theirs. It will be much more productive to categorize your startup in one of the following five stages, and limit your investor focus accordingly:

  • “I have a great idea and I need money to turn it into a business.” For investors, this is the idea stage, where you may have a great idea, but no plan, product, or customers, and probably no success record in this business domain. No professional investor will be interested at this point, so count only on yourself, friends, family, and fools for money.
  • “My invention and prototype works, but I need funding to continue.” Investors call this the seed stage, where money is required to build a market and a real product. Government grants and industry partners are you best bet here, but Angel investors might give you $250,000 to $1 million, if you have the right business case and credentials.
  • “The final product works great, and all the early users love it.” You are now entering the rollout stage, with money required for marketing, hiring a full-time team, and a production process. At this point, most Angel investors and a few early-stage VCs will be happy to talk, assuming you have the business model validated, and a large opportunity.
  • “It’s time to scale up and I need money to keep up with demand.” Congratulations! Every investor wants to be part of your growth stage, after your first $1 million in revenue. They call first investments at this stage the “A-round,” and often follow with a B-round through G-round. Growth stage investments from VCs are usually $5 million and up.
  • “The ride has been fun, but I need my money out to start the next big thing.” This is the exit stage for the entrepreneur, and for all earlier investors. The new investors you need at this stage are investment bankers, private equity, or competitors, to buy you out via merger or acquisition (M&A), or to go public with an Initial Public Offering (IPO).

Obviously, maturity and growth are a continuum, so the rules are never absolute. My message is that your startup will attract a different class of investors, as it passes through each stage, just as it has to supplement and tune the team, process, and product to keep up with the needs of a growing company and customer base. Tune your investor pitch and funding expectations accordingly.

Another good indicator of your real stage is the valuation you can set for your company at any given moment, to determine what portion of your equity an investor will expect of his money. Prior to the growth stage, your company valuation is limited to goodwill based on intellectual property and team experience, since you have no revenue. Future opportunity size doesn’t count in the early stages.

Contrary to popular opinion, all investor money is not the same. Friends and family believe in you, and only want to see you achieve success. Angel investors probably will know your business, and want to be mentors along the way. VCs normally come with the highest expectations of board seats, controlling votes, and milestones to meet.

Don’t sign up for one, expecting the other. If you want to avoid all these stage and investment considerations, you can always bootstrap the business (fund it yourself, and grow organically). Otherwise, be sensitive to first impression you leave on every investor, and the efficiency of your time spent on funding. You will enjoy the lifestyle a lot more when you find the right investor.

Marty Zwilling

0

Share/Bookmark

Monday, July 20, 2020

7 Startup Marketing Strategies To Bring In Customers

marketing-lead-generationContrary to popular opinion, viral marketing has not eliminated the need for old-fashioned lead generation to bring customers to a startup. Indeed, while the rules and technologies for lead generation have changed, Forrester and other experts still see it as the most effective way for businesses with limited budgets to maximize their return on marketing investment (ROMI).

One of these experts, David T. Scott, published a classic book that I recommend, ”The New Rules of Lead Generation,” highlighting the changes wrought by the internet and social media. His professional background includes having held marketing-executive roles at big companies as well as startups.

Here is my summary of the seven most successful lead-generation vehicles he and I still recommend today, despite the popularity of viral marketing: 

  1. Search-engine marketing.  For new product startups, search engine marketing (SEM) is still one of the most cost-effective and scalable lead-generation approaches. It’s also one of the most accountable, with in-depth data provided by search engines about performance. You can start an SEM campaign with as little as $50 today and get results very quickly.
  1. Social-media advertising. Social-media advertising relies on popular social media sites (such as Facebook, LinkedIn and Twitter) to generate leads through pay-per-click ads and tweets on sites that target customers in specific demographics. You bid on the amount you are willing to pay for a click or promoted tweet (such as $2), and a daily budget (like $1,000).
  1. Display advertising. To use online display ads to generate leads, you post ads on websites frequented by your target audience or ones with content related to the ad. Display ads on mobile devices, including video and audio, also offer a new opportunity to reach target customers.
  1. Email marketing. This one has been around a long time but still works well if your target demographic is well defined and you do your homework to buy or rent a top-quality mailing list. New technology allows for psychographic targeting (such as finding people who like to travel) and geotargeting (specifying a certain neighborhood) for improved response and spam avoidance.
  1. Direct mail marketing. Some consider direct mail very expensive or dead as a lead-generation tool. Yet it is more alive than ever before. Nearly $50 billion is being spent annually on direct mail, according to statistics, and the amount has been increasing each year. Compared with other methods, it does require the largest up-front investment, mostly for printing and shipping.
  1. Cold calling. This is still one of the best vehicles if your business has a small, well-defined purchasing audience as do government agencies or medical establishments. You need to first purchase or build a targeted list of clients from a trustworthy source, then refine it with some new tools, like LinkedIn and Gist, before contacting them with a good script.
  1. Trade shows. Such forums are still the best opportunity for you to meet face-to-face with people who should be interested in your products or services and to display your goods in person. Pick the right shows, start small and work hard ahead of time on your marketing materials, giveaway tchotchkes and booth staffing.

In all cases, it is crucial to set specific goals for each lead-generation campaign, keep track of the overall costs and measure the return on your marketing investment in terms of cost-per-action and cost-per-sale. Don’t hesitate to use small test projects to compare the results of multiple approaches.

Technology and consumer feedback have indeed changed the landscape. Telemarketing and robocalls, once a popular approach to lead generation, have been the subject of continuing legislation, which many believe will soon eliminate these options. The last thing a new business needs is to antagonize potential customers or become embroiled in controversy.

Plus lead-generation strategies can be updated by the flood of new technologies and software, including use of near-field and Bluetooth communications, QR codes, social check-in promotions, mobile search, mobile web, text, SMS, MMS and geolocation.

Whether you are an entrepreneur with a new startup, or even a more mature business charged with improving your growth and competitive posture, don’t fall into the trap of assuming that the new social media initiatives and focus on viral will mitigate your need to do proactive lead generation. How many of these lead generation techniques are funded in your business plan?

Marty Zwilling

0

Share/Bookmark

Sunday, July 19, 2020

10 Keys To Winning With Team Collaboration Leadership

achievement-agreement-collaborationThe reigning theory in business has long been that “alpha” leaders make the best entrepreneurs. These are aggressive, results-driven achievers who assert control, and insist on a hierarchical organizational model. Yet I am seeing more and more success from “beta” startup cultures, like Zappos and Amazon, where the emphasis is on collaboration, curation, and communication.

Some argue that this new horizontal culture is being driven by Gen-Y, whose focus has always been more communitarian. Other business culture experts, like Dr. Dana Ardi, in her classic book “The Fall of the Alphas,” argues that the rise of the betas is really part of a broader culture change driven by the Internet, towards communities, instant communication, and collaboration.

Can you imagine the overwhelming growth of Facebook, Wikipedia, and Twitter in a culture dominated by alphas? These would never happen. I agree with Dr. Ardi’s writing, that most successful workplaces of the future need to adopt the following beta characteristics, and align themselves more with the beta leadership model:

  1. Do away with archaic command-and-control models. Winning startups today are horizontal, not hierarchical. Everyone who works there feels they’re part of something, and moreover, that it’s the next big thing. They want to be on the cutting-edge of all the people, places and things that technology is going to propel next.

  2. Leaders of tomorrow need to practice ego management. They should be aware of their own biases, and focus on the present as on the future. They need to manage the egos of team members, by rewarding collaborative behavior. There will always be the need for decisive leadership, particularly in times of crisis, so I’m not suggesting total democracy.

  3. Winning contemporary startups stress innovation. Betas believe that team members need to be given an opportunity to make a difference – to give input into key decisions and to communicate their findings and learnings to one another. Encourage team-members to play to their own strengths so that the entire team and organization leads the competition.

  4. Put a premium on collaboration and teamwork. Instead of knives-out competition, these companies thrive by building a successful community with shared values. Team members are empowered and encouraged to express themselves. The best teams are hired with collaboration in mind. The whole is thus more than the sum of the parts.

  5. In the most winning companies, everyone shares the culture. Leadership is fluid and bend-able. Integrity and character matter a lot. Everyone knows about the culture. Everyone subscribes to the culture. Everyone recognizes both its passion and its nuance. The result looks more like a symphony orchestra and less like an advancing army.

  6. Roles, identities and responsibilities mutate weekly, daily, and even hourly. One of the big mistakes entrepreneurs make is they don’t act quickly enough. Markets and needs change quickly. Now there is a focus on social, global and environmental responsibility. Hierarchies make it hard to adjust positions or redefine roles. The beta culture gets it done.

  7. Temper self-esteem and confidence with empathy and compassion. Mindfulness, of self and others, by boards, executives and employees, may very well be the single most important trait of a successful company. If someone is not a good cultural fit, or is not getting it done, make the change quickly, but with sensitivity. Pain increases over time.

  8. Every individual in the organization is a contributor. The closer everyone in the organization comes to achieving his or her singular potential, the more successful the business will be. Successful cultures encourage their employees to keep refreshing their toolkits, keep flexible, keep their stakes in the stream.

  9. Diversity of thought, style, approach and background is key. Entrepreneurs build teams, not fill positions. Cherry-picking candidates from name-brand universities will do nothing to further an organization and may even work against it. Put aside perfectionism, don’t wait for the perfect person – he or she may not exist. Hire track record and potential.

  10. Everyone need not be a superstar. It’s about company teams, not just the individual. In case you hadn’t noticed, superstars don’t pass the ball, they just shoot it. Not everyone wants to move up; it’s ok to move across. Become their sponsor – onboarding with training and tools is essential. Spend time listening. Give them what they need to succeed.

Savvy entrepreneurs and managers around the world are finding it more effective to lead through influence and collaboration, rather than relying on fear, authority, and competition. I believe beta is rapidly becoming the new paradigm for success in today’s challenging market. Where does your startup fit in with this new model?

Marty Zwilling

0

Share/Bookmark

Saturday, July 18, 2020

7 Face-Saving Quotes For Entrepreneurs Ready To Quit

never-give-up-thumbs-upWhen I heard a friend and business mentor say, “Your startup won’t fail if you don’t quit,” I realized that every entrepreneur should adopt “never give up” as their mantra. Rather than quitting, there are always alternatives, like pivoting the business model or merging with new partners for support. Either could improve the statistic that half of startups fail within the first five years.

Nothing is more discouraging to aspiring entrepreneurs than the high failure rate. So why do most startups fail? Many experts have said for a long time that running out of money is not the primary reason. The number one reason seems to be that the founders just walk away. Of course, they may be out of money as well, but that is often more of an “excuse” than a reason.

Here are some common face-saving excuses that I hear from entrepreneurs abandoning their startup, along with some suggested alternatives to the hard stop and exit:

  1. “I’ve lost my passion. I’m not enjoying this anymore.” This suggests that you've become discouraged with your current business model, possibly because of an unanticipated problem or pivots you made to avoid a competitor or make more money. My suggestion is to morph the current business idea back into one than you can love and enjoy rather than your quitting and accepting an employee role that's not your preference.
  1. “My idea is just too far ahead of its time.” You probably realize that the leading edge is very near the bleeding edge, where only early adopter customers dare to tread. On the other hand, if you wait for competitors to get there first, you may be left in the dust with no customers. Yet if you already have some early adopters, that's a good indication that real marketing and education will likely bring your product or service mass acceptance. So hang in there and get busy. 
  1. “I can’t find any trustworthy investors these days.” If you can’t bootstrap the venture yourself, find a partner, friend or family member, rather than a professional investor to carry some financial weight. Otherwise, look for advances from distributors, vendors or even future customers. Try bartering services you have for something you need. I’ve seen countless creative solutions to the cash-flow problem by entrepreneurs who don’t quit.
  1. “The people on my team are not really committed.” We all make people mistakes or set employees' expectations too high. So you made some bad hiring or partner decisions. Now is the time to face up to these issues and reset your expectations or move out the people who don’t fit. The sooner it's done, the happier you all will be.
  1. “I just don’t have the business skills I need to compete.” Acquiring business skills is not rocket science; they can be learned on the job, as well as supplemented by coaching from an experienced team and advisors. If you knew all the answers, you would be bored and lose interest (see number 1).  Half the fun lies in the learning challenge, so don’t quit now.
  1. “It’s now obvious that there is no market for what I created.” It has never been enough to build a solution and then wait for people with the right problem to find you. There are a wealth of tools available today, relying on social media and marketing, to create or foster the market your company needs. Big markets never spring up fully grown out of the ether.
  1. “My company grew too fast, and the pressure and costs are killing me.” Perhaps it's time to reset your course to focus on business basics, so you can lighten your load. Or maybe it’s time to scale back and focus more on organic growth. But quitting right as your company is encountering success is foolish. Professional investors would love to help you scale your business

Most people agree that entrepreneurs learn more from their mistakes and pivots than they do from easy successes. Investors tell me that they are wary of funding an entrepreneur who refuses to admit any prior failure. So it’s smart to admit your struggles, rather than let them defeat you or drive you to excuses.

It's worth remembering that nothing really important is all that easy. Starting a business is just like building a new relationship; it takes work. At times you might feel like running your business is not worth all the effort, but just walking away is not very satisfying. Learning, solving some hard problems and achieving success are a lot more fun than failing. Why not make “never giving up” your mantra?

Marty Zwilling

0

Share/Bookmark

Friday, July 17, 2020

10 Startup Principles To Validate Fit Prior To A Plan

pensive-entrepreneurIf you are one of the new age of entrepreneurs who hates the thought of doing a business plan as a first step in starting your new venture you will love this message. More and more professionals agree that a better strategy is to explore and fine tune your assumptions before declaring a specific plan with financial projections based only on your dream and passion.

In the process, you may save yourself considerable re-work and money, or even decide that your dream needs more time to mature, before you commit your limited resources, or sign up with investors to a painful and unsatisfying plan.

In a classic book on this approach, “Beyond the Business Plan,” Simon Bridge and Cecilia Hegarty outline tradeoffs and recommends ten principles for every new venture explorer. Here is my edited summary of their ten principles, which I like and may convince you that you don’t need a business plan at all, or at the very least will help you write a better one later:

  1. A new venture is a means, not an end. A new enterprise should be pursued primarily to help you achieve your goals, like providing a better life for others, satisfying a passion of yours, or enjoying the benefits of a technology you have invented. In that context, it could be a social enterprise, or even a hobby, and a business plan may not be beneficial.

  2. Don’t start by committing more than you can afford to lose. New ventures are usually exploratory and risky in nature, so don’t let any business plan process convince you to commit more than you can risk as a person, if your exploration fails. Start with an effectual approach, which evaluates risk tolerance, and suggests more affordable means to an end.

  3. Pick a domain where you have some experience and expertise. Don’t handicap yourself by starting something for which you have to build or acquire knowledge, skills, and connections from scratch. No business plan will save you if you are just picking ideas at random, or copying others, just because the story sounds attractive.

  4. Carry out reality checks and make appropriate plans. Before a business plan has any validity, some work is required to validate that your technology works, a real market exists, and your assumptions for cost and price are reasonable. Don’t be totally driven by your own passions, the emotional enthusiasm of friends, or even third-party research.

  5. The only reliable test is a real one. Market research techniques for trying to predict the market’s response to a new venture can be costly and are often unreliable. Testing for real is the assumption behind approaches such as Lean Startup. It is also what explorers do – they go and look, instead of trying to predict from a distance what they will find.

  6. Get started and get some momentum. Too much hesitation will kill any new venture, as markets move quickly and difficulties mount. Getting started helps to generate momentum and the sense of having done something, which provides encouragement, more incentive to keep going, and can carry your startup over obstacles. Early perseverance pays off.

  7. Accept uncertainty as the norm. You will never remove all uncertainties, so accept them, and plan your activities in an incremental fashion. Too often, a business plan is seen as a mechanism for eliminating uncertainty, lulling the Founder into complacency. Eliminate major uncertainties before the plan, and update any plan as you learn.

  8. Look for new and best opportunities. Many useful opportunities are either created by what you do early, or are only revealed once you have started and can see out there. So keep your eyes open and respond to new customers, new markets, and new partnerships. You will also find that looking hard also eliminates opportunities that are not acceptable.

  9. Build and use social capital. Social capital is people and connections. No entrepreneur can survive as an island. Social capital is as important as financial capital for all ventures. As with all capital, you can use only as much as you have acquired to date. If you have no social capital, no business plan will likely get you the financial capital you need.

  10. Acquire the relevant skills. Three basic skill sets are required for successful delivery of almost every venture. These include financial management, marketing and sales, and the appropriate production ability. If you don’t have the relevant skills and knowledge, take the time to build them or find someone to partner with, before you attempt any business plan.

If you do decide after exploring these principles to continue building a conventional business, especially with investors and employees other than yourself, I’m still convinced that a business plan is a valuable exercise. You should do it yourself, to make sure you understand all the elements of the plan, and facilitate communication of the specifics to your team and to investors.

In essence, building a complete and credible plan is the final test of whether your venture has “legs,” meaning that the opportunity matches your resources, skills, opportunity, and a level of risk you are prepared to handle. The entrepreneur lifestyle is all about doing something you enjoy, without undue stress, uncertainty, and risk. Are you having fun in your new venture yet?

Marty Zwilling

0

Share/Bookmark

Wednesday, July 15, 2020

9 Stages to Building a Robust And Rewarding Business

businessman-staging-a-businessMany of the entrepreneurs like you that I have met in my role as a business advisor are really product creators versus business creators, convinced that a great product will generate a great business. Unfortunately, these two are rarely closely coupled, and navigating all the stages of building a business is typically the more challenging task. But I’m not one to rain on your parade.

Thus one of my first objectives as an advisor is to assess your current ability to navigate the stages of a new business, and then give you the guidance and direct assistance on what to anticipate and how to prepare for it. I found real confirmation of my approach, and much practical guidance in a recent book, “Entrepreneurial Leap,” by a friend and cohort Gino Wickman.

In the spirit of helping you avoid some of our own learning experiences with startups, I will paraphrase here the nine key stages that he and I both see most businesses going through in their evolution from a startup to a successful and stable entity:

  1. You can’t sustain a business without positive cash flow. Even though profit may not be your driving motivation, you can’t sustain any business without generating cash. In most businesses, this means selling something, and proving that your product or service has value. Don’t delegate this cash management stage to anyone else in the business.

  2. Make sure someone is managing people and operations. Entrepreneurs are typically focused on the big picture – creating a vision, purpose, and a long-term strategy. Building a business requires a stage of focus on execution and managing people accountability. Very few entrepreneurs can play both roles, so find a partner or hire an integrator to help.

  3. Build a business culture to match your core values. For the business to prosper, every employee, and your customers, must know and relate to your core values, such as product excellence, care for the environment, and personal integrity. These are the timeless principles that must guide all hiring, marketing, and execution decisions.

  4. Implement the key business metrices you will live by. This is the stage where you move from managing by your gut to managing by numbers. Identify the three most important metrics your business must hit every week to achieve growth goals. These will almost always be related to sales and marketing, since they must tie back to cash flow.

  5. Stay connected and engaged with your employees. A common entrepreneur mistake is hiding in your office, and assuming that everyone knows what is going on. People need to see and hear from you in a formal sense at least weekly, and you should practice “management by walking around.” Give constant feedback, and say “thank you” often.

  6. Build pivot plans early to recover from oversights. Every startup I know has had to pivot one or more times, no matter how certain they were of initial plan perfection. Thus you must constantly prepare for this stage by listening to customers, measuring customer value, and watching outside forces. Build change agility into all your processes.

    Every founder has a story about the pivot that made their business, such as Starbucks switching to selling coffee from expresso makers, and Flickr from an online game to photo sharing. There are also many more stories of companies that pivoted too late.

  7. Don’t try to do it all – capitalize on your strengths. Stay in your personal sweet spot. Your challenge is to hire help just before you reach capacity so you don’t stop growth. Each time, fill where you have the least interest and strength, so that over time you enter the stage of doing only the things you love, while using your talents to the fullest.

  8. Don’t let your business grow beyond your comfort zone. Too many entrepreneurs get so caught up in the challenges of growing their business, that they can’t stop, and the business gets away from them. This stage may eat all your profits, and your schedule makes you miserable. The answer is to learn to say “no” when you’ve had enough action.

  9. Increase you focus on coaching, training, and mentoring. Every one of you entrepreneurs should recognize the stage in your business where your greatest satisfaction can come, not from more growth, but from the opportunity to share what you have learned with those who follow, and may carry your legacy forward.

Bill Gates is an example of someone who is in this stage, and is now focused on using his insights and resources for the greater good, through philanthropy, speaking at TED forums, and helping many other entrepreneur organizations.

Building a business should be and can be as exciting a journey as inventing and building your product. I think you will find that both are hard, with each stage being challenging, rewarding, scary, exhilarating, and yet amongst the most satisfying of things you will have done in your life.

Marty Zwilling

*** First published on Inc.com on 06/26/2020 ***

0

Share/Bookmark

Monday, July 13, 2020

8 Team Member Types Test Your Entrepreneur Leadership

conflict-team-membersThe most valuable assets of a new startup are the people on the team, and the most challenging task of the entrepreneur and team leaders is to spend their leadership time and energy productively. Cash isn’t always the scarcest resource startups have to invest – more often it’s the leadership capital of under-experienced and over-stretched entrepreneurs and co-founders.

Most new startup founders start out by assuming they need to spread their leadership efforts evenly across all team members. They soon find that doesn’t work, and they fall back to dedicating their efforts to the performance issue or crisis of the moment. Unfortunately this often makes them enablers of team member bad behavior, and spiraling down to a dysfunctional team.

I found some guidance in the classic book, “Lead Inside the Box: How Smart Leaders Guide Their Teams to Exceptional Results,” by Victor Prince and Mike Figliuolo, two top thought leaders in the field of leadership development. While their experience and focus is more on large organizations, I was struck by how similar the considerations are to my experiences with startup teams.

The authors define a leadership matrix of four behavioral categories and eight team member subtypes. Every entrepreneur needs to take a hard look at their current startup team, based on the nature of each team member’s behavior, and future requirements, to assess their leadership challenge ahead:

  1. Domain masters. One of the most desired team member types for startups is the domain expert who is satisfied with their existing position and leadership. You count on these to deliver ongoing outstanding results. They require your lowest energy investment for the highest output. The challenge is to reward them well and not lose their loyalty.
  1. Rising stars. These team members are the ones who perform well in current roles, with minimum leadership, but they expect leaders to provide them with a stepping stone to larger roles and responsibilities. If they don’t see that happening, they are prone to leave your startup for better opportunities, or revert to a squeaky wheel or even a slacker role.
  1. Squeaky wheels. Team members who are capable of great results, but require an inordinate amount of hand-holding are often called squeaky wheels. An entrepreneur’s challenge with these is to wean them from their dependence on the leader, while continuing to generate solid results. Any other action will drive them to a lower category.
  1. Steamrollers. Some team members may get results, but at the high cost of damaging team morale and destroying the goodwill you and your team have accrued with others. Your challenge is to reduce the friction they are causing, while building their people skills and improving their ability to positively influence others. Their friction is usually toxic.
  1. Joyriders. These team members are always busy, and spend an inordinate amount of time at work, but focus on tasks they want to do, not tasks you need them to do. Your leadership task is to refocus their attention on their core responsibilities, and remove any possible distractions. Make sure they get rewarded for desired results, not time spent.
  1. Stowaways. We all know the team member who expends the bare minimum amount of effort required to keep getting paid. Stowaways need their leaders to engage them on a regular basis, and measure them against peers to make sure they are carrying their own weight. At the least, other members need to see you holding this person accountable.
  1. Square pegs. These are people who simply don’t have the skills they need to do the required job. The leadership challenge is to find the training or mentoring to fill the skill gap, or to find a new role that is a better match for the skills they do have. The leadership capital, and other costs to support square pegs is a huge startup resource drain.
  1. Slackers. At the bottom of the value chain are team members who have the skills to do the job, but lack the drive or motivation. The leadership challenge here is to unlock their motivation to apply themselves to their work, or remove them from your startup before they have drained the drive and energy from the rest of the team.

Effective team leadership, or leadership inside the box, is really only half the challenge that every entrepreneur faces. Equally important is leadership in the marketplace, with customers, outside partners, and industry thought drivers. The time and energy to do both is beyond most mere mortals.

It’s time to take a hard look inside your box to see if you are spending leadership capital there that you can’t afford.

Marty Zwilling

0

Share/Bookmark

Sunday, July 12, 2020

6 Keys To Successfully Addressing Investor Questions

questions-answers-askEntrepreneurs looking for investor funding often fail to realize that all money comes with strings. For example, if you have watched the Shark Tank TV series, you probably noticed that the Sharks always ask the entrepreneurs for their intended “use of funds.” Those who respond with one of the wrong answers, such as “I want to pay myself a salary,” usually go home empty-handed.

You may think this question is just an artifact of good television, but let me assure you that in my experience as an angel investor, it’s a standard “make or break” inquiry posed to every entrepreneur. Here are some guidelines that will help you with the right answers, not only in closing your next investment, but in planning when and how much money to ask for:

  1. Investors are most interested in helping you scale the business.  That means they normally only invest in startups with a working product that has already been sold to at least one customer for full price (beta tests, giveaways and best friends don’t count). They are willing to cover marketing, inventory and scaling, but not product development.
  1. Make your focus and priorities clear. A long list of everyday expenses is not helpful here. I recommend that you simplify your use to no more than three items or categories, with a percent allocation to each. An example might be 50 percent for marketing, 30 percent for inventory and 20 percent for staffing. Have backup charts for investors wanting more detail.
  1. Funding for founder salaries at this stage is a red flag.  Investors expect you to “bet on the future” with them. You may pay salaries to your team, but your salary should come from earnings, when they occur. Taking your cut before earnings exist implies that you are not willing to take the same risk of no return, as you are asking of investors.
  1. Make sure allocation amounts are reasonable.  These days, even viral marketing requires real money, for events and promotions. Startups whose marketing budget is trivial lose credibility and most likely the investment. Conversely, a huge marketing budget implies an intent to “spray and pray,” in hopes that something works.
  1. Use of funds must be tied to projected cash flow negatives. If you ask for a million dollars, your financial projections better show a negative cash flow approximating that number (with a 20 percent buffer). Investors are not interested in giving you money to keep in the bank for backup, for investing in real estate or a fancy new car.
  1. Tie use of funds to real traction milestones.  A valid milestone might be closing a specific big-name customer or channel, such as Walmart, or it might mean getting your first 100,000 social-media followers, by a given target date. Building a huge inventory before you have a confirmed customer is not a convincing strategy.

If you are really looking for research and development money, and you didn’t sell your last startup for $800 million, professional investors are not the place to start. Hopefully, you can find some friends or a rich uncle who believe in your potential. The other alternative is to find a strategic partner who knows the space well and will benefit from your solution.

Professional investors always look for a proven business model and an existing revenue stream to minimize the risk. Then they look at the people behind the model, the execution status and how they might get their money back. Your proposed use of their funds will be seen in these three contexts. They will look to your business plan for cash flows and specific return on investment projections.

In all cases, your goal must be to explain how the investment will help you scale up the business and become more profitable sooner. You should always be prepared to mention a plan B, if possible, to grow more slowly by reinvesting initial earnings over time. Confessing that you are in survival mode, desperate for money now, will not improve your odds with investors.

Whether it be in the context of a five-minute elevator pitch or a more formal presentation to professional investors, the projected use of funds should be summarized and prioritized into three “chunks.” These must remain focused on scaling the business.

Investors want to be convinced that your use of their money will maximize their returns in the first five years, as well as yours. After that, all you have to do is make it happen. Have fun!

Marty Zwilling

0

Share/Bookmark

Saturday, July 11, 2020

5 Keys to Moving From Entrepreneur Thinking To Action

entrepreneur-thinking-to-actionAs a mentor to aspiring entrepreneurs, I’m always surprised by the fact that some never seem to be able to that first startup going, while many others never seem to stop, starting their second or third initiative before the first one is fully hatched. I’m now convinced that serious entrepreneurs relish the startup process more than success. They enjoy the journey more than the destination.

If you think about it, most of the influential names in the entrepreneur world today, including Elon Musk and Richard Branson, have each started many companies, learning from each, and fully recognizing that not all are destined to be remembered. Others, like Jeff Bezos and Bill Gates, have one company, but are known for their frequent internal “startup” initiatives to foster growth.

The lesson here is that the right actions, follow-through, and commitments involved in starting a new venture are likely more important to ultimate success than honing the single ultimate idea, or getting the solution exactly right the first time. Here is my summary of key principles that you can follow to join that select realm of recognized and successful entrepreneurs:

  1. Thinking and talking won’t get you there – just do it. Starting something new is risky, no matter how many experts have reviewed it, or how much money you have. You can’t win a race that you never start. The key here is to gather the relevant facts, risks, and resources, make a decision, and move forward. Real entrepreneurs start experiments.

    A while back, one of my aspiring entrepreneur friends was trying to impress me with his expertise, by bragging that he had the idea for a couple of innovations before anyone else, but he just never got around to filing a patent before someone stole it from him. As an angel investor, you can bet I wasn’t convinced he would ever start his next proposal.

  2. Plan to learn from what doesn’t work, but never give up. Based on my experience, most startup failures occur simply because the founder gives up too soon, without exploring creative alternatives. More determined entrepreneurs take every step that fails as a new insight to success, pivots to a better alternative, and moves on toward success.

    Most people don’t remember that Bill Gates first software venture, called Traf-O-Data, was a dismal failure. As well, Jeff Bezos admits to having make an embarrassing number of bad investments, which he calls painful learning experiences, but he never gave up.

  3. Rally people behind a higher purpose, not just a product. The customer culture today responds best to a greater vision for improving society and the planet, which can easily sustain a constant stream of new products. Challenge your team, and your customers, with expanding their mindset, achieving personal goals, and changing the world.

    For example, renowned TOMS shoe company founder Blake Mycoskie continually made it clear that his most important goal was making life better for the less fortunate. Thus he donates a pair for every pair sold, and keeps his employees engaged by sending them internationally to work directly with constituents who can most benefit from the donations.

  4. Incent and reward new ideas with action, not more study. Counter the traditional business thinking that the key to long-term growth is repeatable processes and volume manufacturing. Today the key is building momentum, customization, and continuous innovation. Don’t let your team forget that you can’t have innovation without new actions.

    The best way to start is to enable employee decision making on customer satisfaction issues. For example, the hotel chain Ritz-Carlton, incents employees to try new ideas by allowing them to spend up to $2,000 per guest to overcome a particular problem.

  5. Spend more time nurturing partners and outside influencers. Too many early entrepreneurs go into stealth mode, or are unwilling to share what they know, for fear of ideas being stolen. The best are willing to share what they know, actively build partner communities, and constantly expand their realm through new learning and experiments.

    Elon Musk, while clearly in the lead with electric autos, recently announced that he is freely offering his battery intellectual property to partners and competitors, in order to expedite the development of the charging support network needed to expand the market.

Obviously, you need the confidence in yourself to make that first step. Here again, giving yourself a purpose and committing to that purpose is a good way to drive you to action. Practice by working to convince others to support you, and then follow you into action. Remember that everyone stumbles as they learn, so don’t be afraid to pick yourself up and try again.

It’s also important to surround yourself with smart people who can hone your vision, complement your execution skills, and drive you to action. Before you know it, you too will become the real entrepreneur and influencer that you always wanted to be. There is still plenty of opportunity out there for all of us.

Marty Zwilling

*** First published on Inc.com on 06/27/2020 ***

0

Share/Bookmark

Friday, July 10, 2020

10 Ways Entrepreneurs Limit Their Creative Potential

entrepreneur-creative-potentialEvery entrepreneur believes in their heart that their startup is more innovative and creative than their competitors. Yet none knows exactly where creativity comes from within, or how to pick and motivate the most creative people for the team. Most believe and follow one or more of the popular myths on business creativity, even though none of them have much scientific evidence.

Like most people, they think of creativity as something divinely-inspired, unpredictable, and bestowed on only a lucky few. A classic study based on intensive research, “The Myths of Creativity,” by David Burkas tries to demystify the processes and forces that drive innovation.

His research supports what I have always believed, that anyone with a practical and common- sense mindset, grounded in reality, with the proper training, can deliver creative and innovative new ideas, projects, processes, and programs. The first step is to resist the urge to limit your thinking to the following long-standing myths:

  1. Eureka myth. This myth arises from the fact that new ideas can sometimes seem to appear as a flash of insight. Research shows that such insights are actually the result of hard prior work on the problem, usually followed by time to incubate in the subconscious mind as we connect threads, before the ideas pop out as new innovations.

  2. Breed myth. The belief here is that creative ability is a trait inherent in one’s heritage or genes. In fact, the evidence supports just the opposite; there is no creative breed. People who have the confidence in themselves and work the hardest on a problem are the ones most likely to come up with a creative solution.

  3. Originality myth. This myth is fostered by the long-standing emphasis on intellectual property, making a creative idea proprietary to the person who thought of it. The historical record, and empirical research, shows more evidence that new ideas are combinations of older ideas, and sharing those helps generate more innovation.

  4. Expert myth. Many companies rely on a technical expert, or team of experts, to generate a stream of creative ideas. Harder problems call for more knowledgeable experts. Instead, research suggests that particularly tough problems often require an outsider’s new perspective, or people who don’t know all the reasons why something can’t be done.

  5. Incentive myth. The expert myth often leads to another myth, which argues that bigger incentives, monetary or otherwise, will increase motivation and hence increase innovation productivity. Incentives can help, but often they do more harm than good, as people learn to game the system.

  6. Lone Creator myth. This reflects our tendency to rewrite history to attribute breakthrough inventions and striking creative works to a sole person, ignoring supportive work and collaborative preliminary efforts. Creativity is often a team effort, and recent research into creative teams can help leaders build the perfect creative troupe.

  7. Brainstorming myth. Many consultants today preach the concept of brainstorming, or spontaneous group discussions to explore every possible approach, no matter how far out, to yield creative breakthroughs. Unfortunately, there is no evidence that just “throwing ideas around” is enough to consistently produce innovative breakthroughs.

  8. Cohesive myth. Believers in this myth want everyone to get along and work happily together to foster innovations, so we see “zany” companies where employees play foosball and enjoy free lunches together. In fact, many of the most creative companies have found ways to structure dissent and conflict into their process to better push the creative limits.

  9. Constraints myth. Another popular notion is that constraints hinder our creativity, and the most innovative results come from people with “unlimited” resources. Research shows, however, that creativity loves constraints, so perhaps companies should do just the opposite – intentionally apply limits to leverage the creative potential of their people.

  10. Mousetrap myth. Other people falsely believe that once we have a new idea, the work is done. In fact, the world today won’t beat a path to our door, or even find the door, on an idea for a better mousetrap, unless we communicate it to the world, market it, and find the right customers. We all know of at least one “better mousetrap” that is still hidden.

If these are indeed the myths of business creativity, then what are the true components? Teresa Amabile, Director of Research at Harvard, asserts that creativity is really driven by four separate components: domain expertise, a defined creativity methodology, people willing to engage, and company acceptance of new ideas. Where these components overlap is where real creativity happens.

Thus if you believe that your startup success really depends on more creativity and innovation than your competitors, it behooves you to spend the time needed to understand and nurture the components of creativity in your environment, and not blindly following the historic myths. How creatively are you pursuing innovation in your business?

Marty Zwilling

0

Share/Bookmark

Wednesday, July 8, 2020

8 Steps To Success With A Startup Board And Advisors

Board-of-AdvisorsMany startup founders I know avoid establishing a formal advisory board or board of directors for as long as possible, with the excuse that this is just another burden, or it has more risk than value to the founder. In my experience, just the opposite is true, since outside experts with the right experience can greatly reduce risk and improve the quality of your decisions in time of crisis.

Of course, if a board is set up just to appease investors, or just for window dressing, the value may indeed be minimal or even negative. You may be committed to running the leanest possible team, or convinced that you know the business better than anyone else, but all of us can use some help from time to time, especially in today’s world where things are changing quickly.

In the spirit of helping you avoid some of my own experiences with startup boards, I would like to offer some of my own “rules of thumb” for establishing at least an advisory board well before you sign up investors or ship your first product:

  1. Here is your chance to select your future boss. It’s not often that we in business get to pick the leader we want work for, so approach advisors with this in mind. Remember that a formal board can technically replace you, so make sure you choose only people you respect, who will set realistic objectives, and provide good business governance.

  2. Offer reasonable compensation to maintain focus and access. To show your commitment, and keep theirs, all board members should be compensated. A reasonable place to start is one percent of your company equity, plus actual expenses to cover travel and meeting attendance. A voluntary board sounds good, but is generally not effective.

  3. Start with a small number of board members. I suggest that a manageable number on a new board is either three or five members, including yourself. An uneven number works best to avoid tie votes, and a larger number just makes it that much more difficult to maintain relationships. Control board growth over time to match business growth.

  4. Make sure each member brings unique value to the table. Having friends or family members on the board, or habitual nay-sayers, is not productive. Your objective should be to select outside directors or advisors who have a wealth of expertise and experience, are not hesitant to speak up, with a positive intent of making your business a success.

  5. Look for boards members who have divergent views. If you expect that board members will always agree, or always support you, then you are destined for trouble. You need diversity and a broad demographic experience to prepare you for the range of customers in today’s markets, to balance your own views, no matter how experienced.

  6. Formalize the board process and meeting structure. I recommend that you schedule a formal board meeting on a regular schedule, probably quarterly, and make it clear that you will meet individually with each member as often as once a month. Adopt a written set of board rules and governance policies, and make sure everyone sticks to them.

  7. Ask for status feedback from the board after each meeting. It is your job as CEO to provide advance information and an agenda before each meeting, run the meeting, and ask for an assessment from each board member at the conclusion. Other committee or special assignments should be used as follow-up on specific issues to be resolved.

  8. Make sure board members know your organization. No board members should be allowed to be strangers to your business setup, how it works, and unrecognized by key members of your team. Arrange regular orientation sessions to provide updates, and set up get-acquainted meetings with your high-level managers on a regular basis.

In my experience, you can learn more about how to run and grow your business from your board members than from any other source, if you approach the process positively. On the other hand, a contentious or cavalier board relationship, can quickly end your career as CEO, or can lead to the downfall of your company. Thus this role needs to be taken seriously by all concerned.

Early in your startup’s life is the best time to build relationships with the key industry influencers you will need later to make your company an attractive acquisition to a partner, or take it public (IPO). You need board members who are these influencers, or know them well.

Be one of those highest performing entrepreneurs who know how to build the right board teams and relationships, as well as run and grow their company.

Marty Zwilling

*** First published on Inc.com on 06/24/2020 ***

0

Share/Bookmark

Monday, July 6, 2020

6 Tips For Entrepreneurs To Lock In On The Right Road

entrepreneur-businessman-road-to-successOne of the simplest questions I get from aspiring entrepreneurs, and ironically one of the hardest, is “How do I start?” I want to tell them to just start anywhere, but I realize that most have no idea where anywhere is. They just aren’t prepared for the life they want, and are really asking me how to learn to be an entrepreneur. It takes more than passion and a course on business basics.

We all come from the era where our society and education prepared us for the labor market, meaning working for someone else as an information professional, factory worker, or retail associate. Now change is driving an opportunity society, where the next step is undefined, and entrepreneurs are in the forefront of the wave of people whose best skill is learning how to learn.

A while back I found a great book, “America's Moment: Creating Opportunity in the Connected Age,” put together by a group of fifty current leaders from across American life, that points out well some of the tools that can help all of us learn how to learn in this rapidly changing world of new opportunities. I have adapted their key recommendations here for aspiring entrepreneurs:

  1. Business gamification and simulation. Learning doesn’t have to be all work. We know now that people learn from a younger age, and keep coming back for more, from sources that are entertaining and educational (edutainment). With new tools like ThriveTime Show and GamEffective, people of any age can learn to start or take their business up a level.
  1. Adaptive business advising and learning. Every business and every entrepreneur is at a different stage, so it’s time to seek out learning tools that can adapt to you, rather than the other way around. Universities and the marketplace are spawning tools like Brainly, which is a learning network or massively multi-player question and answer tool.

  1. Help entrepreneurs with constant learning. The wealth of online education offerings is a great start, but is not enough. Business advisors need to be ready to help at every stage, and I see it beginning to happen. Yet many new entrepreneurs are hesitant, perhaps out of fear or ego. If you are not constantly learning, you are falling behind.

  1. Mix business learning with doing. Entrepreneurs don’t need to know everything about business before they start. They do need the first few steps, and where to find the next steps. There is no standard course for this, but the answers are accessible online, if you know how to search, follow blogs, and interact with the relevant social media groups.

  1. Business financial aid alternatives. Crowdfunding is just the latest alternative for assistance to entrepreneurs who need help, supplementing the existing alternatives of loans, grants, angel investors, venture capital and many others. These days, if you can’t find money, you haven’t tried hard enough or maybe your idea isn’t a good one.
  1. Utilize business content curators and coaches. Potential resources available to entrepreneurs are enormous, but often under-utilized. The challenge is to find these just-in-time, including community and university startup incubators, accelerators, and advisors. Entrepreneurs should be monitoring online curator platforms and blogs.

In this new opportunity society, the personal traits for success have also changed from the industrial age and the information age. The days of long-term loyalty to an employer and methodically following direction are gone. Now the premium is on creativity, willingness to take a risk, and ability to keep up with change. Persistence and problem solving are sought-after virtues.

Nurturing these traits, and practicing incremental and continuous learning, are the best ways to start the life you want as an entrepreneur. Finally, before you start, you need to define what success means to you. It may include financial gain, but more likely the lasting satisfaction and happiness will result from your legacy of change in technology, or your impact on the social ecology of the world. If you can’t tell me where you want to go, I can’t really tell you how to start.

Marty Zwilling

0

Share/Bookmark

Sunday, July 5, 2020

10 Tips On Selling Yourself As Well As Your Startup

women-business-presentationToo many entrepreneurs I know still believe that that their great idea will carry the startup, and they may even minimize their own value, especially if they have introvert tendencies. Yet most investors agree that the “idea” is worth nothing alone, and it’s the entrepreneur execution that counts. That means that selling yourself is more important than selling your idea.

In the corporate world, experts have recognized for a long time that how people perceive you at work is vital to your career success. No matter how talented you are, it doesn’t matter unless managers can see those talents and think of you as an invaluable employee, or a game-changing manager, or the person whose name is synonymous with success.

In the entrepreneur world, your perception is equally critical, except the “managers” in this world are your investors, customers, vendors, business partners, and team members. Per a classic book by Dan Schawbel, “Promote Yourself: The New Rules For Career Success,” you can maximize these perceptions, which apply equally well to entrepreneurs as well as professionals.

Everyone needs to realize that whether it’s in the workplace or in the startup community, business is a new world today with new rules. Whether you are a new young Gen-Y entrepreneur, or a Baby Boomer who is struggling to stay relevant, here is a quick guide to some of the changes that Schawbel sees in the workplace requiring self-promotion, that I have updated for entrepreneurs:

  1. Your startup “idea” is just the beginning. Your startup idea only scratches the surface of what is required to build a successful business. Use the idea to kick-start your relationships with co-founders, investors, customers and business partners. Your ability to promote yourself and learn from these will determine your ultimate success.
  1. You are going to need a lot of skills you don’t have right now. A recent Department of Education study shows that soft (interpersonal) skills have become more important for success than hard (technical) skills. Entrepreneurs need leadership, teamwork, listening, and coaching skills, which you can learn from advisors and networking with peers.
  1. Your reputation is the single greatest asset you have. Your CEO title might be good for your ego, but in the grand scheme of things, what matters more is how much people trust you, whom you know, who knows about you, and the aura you give off around you. What other people think you can do is more important than what you have done.
  1. Your personal life is now public. With the Internet and social networks, things you do in your personal life can affect your success in a big way. Manage your whole image, rather than ignore it. Even the smallest things, like how you behave, your online presence or lack of it, and whom you associate with can help build your brand or tear it down.
  1. You need to build a positive presence in new media. There are plenty of benefits to new media, if you maintain a positive presence. Your online social networks enable you to build your reputation, connect with people who have interests similar to yours, find educational opportunities, and put you in touch with people who can help your startup.
  1. You will need to work well with people from different generations. Because the combination of economic need and increasing life spans is keeping everyone in the workplace longer, you will need to work well with people of all different ages. Each generation communicates differently, and has a different view of the marketplace.
  1. The one with the most connections wins. We have moved from an information economy to a social one. It’s less about what you know (Google search will help you in seconds), and more about whether you can work with other people to solve problems. If you don’t get and stay connected, you’ll quickly become irrelevant to the marketplace.
  1. All it takes is one person to change your life for the better. Remember the rule of one. All you need is that one investor, that one major customer, or that one distributor to keep you ahead of competitors. It’s up to you to get that key person on board to support your business. Self-promotion in the right way can make all the difference.
  1. Hours are out, accomplishments are in. If you want to grow your business, stop thinking about how many hours you work, and aim for more milestones and traction. Success is more results, not more work. Measure your results and promote them to every constituent. Help them to realize your value.
  1. Your startup is in your hands, not your investors or even customers. Be accountable for your own business success, and take charge of your life. Look for win-win business relationships, since people won’t help you if you are not helping them. If you aren’t learning and growing, you have nothing to promote and aren’t benefitting anyone.

The challenge for all entrepreneurs is to gain visibility and show value without bragging and coming off as self-centered. Take personal credit where credit is due, but also share the successes of the team and the business milestones with everyone. Success leverages success.

Now, how do you start? I like Schawbel’s recommendation to do one thing every day, like add a new skill, or build a new relationship that will advance you. Developing this “one step forward a day” habit will keep you current, make you feel more fulfilled and confident, and increase your ability to promote yourself. Are you promoting yourself today, or demoting your startup by default?

Marty Zwilling

0

Share/Bookmark