Monday, May 10, 2021

6 Ways To Extend Creativity To All Areas Of Business

think-outside-the-boxMost aspiring entrepreneurs believe their initial idea and inspiration requires the most important creative thinking. Experienced entrepreneurs will tell you that the initial idea is the easy part, and it’s the later implementation, and the competitive business marketing that are the real creative challenges.

There is a tough balance here to achieve, since a large portion of starting and running a business requires analytical, logical thinking. In fact, our education and training to logically associate related concepts reduces our ability to add the creative side, even though we were all born without that bias. Maybe that’s why “thinking outside the box” is so rare.

While looking for guidance on how to be more creative in growing a business, I came across Michael Michalko’s classic book, “Creative Thinkering,” which clearly applies to business as well as personal environments. With his insights, I offer the following recommendations on how to nurture and build your creative business capabilities:

  1. Look for familiar patterns in unrelated subjects. Due to learned habits and routines, new ideas default to be similar to old ones. Creative thinkers get results by combining dissimilar subjects, like investors and competitors. I find that startups looking for funding often never even think of asking strategic partners, rather than just venture capitalists.
  1. Change the way you look at things, and the things you look at change. Stereotyped notions block clear vision and crowd out imagination. Sometimes it’s helpful to imagine contradictory approaches, or working with opposites. Many businesses have found that raising the price of a product to give it status can win more customers than a price war.
  1. Think the unthinkable. We all need ways to unstructure our imaginations to explore the outer limits of alternatives, so that we can go beyond the typical solutions. In business, this may be as simple as replacing a product line that is still profitable, or a recent startup making a takeover bid for a large company. Creative people at Facebook are likely working on this one right now.
  1. Intention is the seed of creative thinking. Intention has a way of bringing to our awareness those things that our brains deem important. One way to prime for creativity is to generate an awareness of what you want to accomplish. If you study the Amazon 1-click patent long enough, you’ll likely find something of your own worth patenting.
  1. Change the way you speak, and you change the way you think. Many entrepreneurs focus on deficiencies, and phrase their thoughts and ideas with negatives, such as no, never, and don’t. Make a conscious decision to become a positive-thinking person by creating positive speaking patterns. Ten customer referrals is better than “no complaints.”
  1. You become what you pretend to be. Attitudes influence behavior, but behavior also influences attitudes. Reality has often been shown to conform to beliefs, whether they be positive or negative. In business on the Internet today, it’s easier than ever to pretend to be a large and mature company, and successful startups don’t have to pretend long.

Brainstorming, ideation, thinking outside the box, disruption, creative thinking – whatever you want to call the process of developing successful new business approaches – is something that must explore every day in your business. You have to let go of things that are holding you back, and take chances in business, especially after that first great idea.

You cannot will a new idea. But you can train your imagination, like a muscle with regular exercise, to conceptually blend dissimilar concepts from different contexts, leading to original ideas and insights. How long has it been since you have conceived and implemented a really creative idea in your business?

Marty Zwilling

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Sunday, May 9, 2021

6 Techniques For Kickstarting Time Management At Work

work-management-kickstartOne of the toughest challenges of an entrepreneur in building a startup is the fact that there are so many things that you don’t know how to do, or don’t like to do. Things like raising money, building a business plan, or hiring and firing people. These aren’t fun, especially for a visionary. That’s when the curse of procrastination steps in.

The result is that certain things just never seem to get done. Jan Yager, in her classic book, “Work Less, Do More” talks about procrastination as a primary obstacle to efficient time management. She describes how you can grow so busy doing everything but what you should be doing, that you’re unaware that you’re failing to address what’s really fundamental to your success.

I haven’t met an entrepreneur yet who can honestly say they haven’t felt this challenge. Here are some techniques I espouse from Jan and others for conquering procrastination:

  1. Plan your daily activities in advance. Make whatever it is you’re avoiding the very first task you do on a given day. Don’t start the day by checking e-mail, surfing the Internet, or reading the newspaper. Get a priority task done first every day, then take a break or do some low priority work that you enjoy more.
  1. Set up a personal reward system. Pick a reward that will be a real motivator, something you truly want but have been denying for yourself. For example, as soon as you complete your financial projections, you can call your business partner to skip out for that round of golf he keeps mentioning.
  1. Try creative procrastination. If you are finding your top priority to be too daunting, try tackling the second or third most important items on your to-do list. You will accomplish all your day’s priorities, but in a different order. That’s better than substituting a trip to the doughnut cart.
  1. Arrange for gaps in your schedule. Build space into your schedule so you actually have some free time that will still permit you to get the priority project done without the tendency to put yourself down or engage in the self-criticism that too often accompanies procrastination.
  1. Face the truth head-on. Take a few minutes to contemplate why you are delaying something. What does the postponement provide? What will it take to get you to act now? Write down the real deadline. Maybe it’s time to hire an expert, or assign the task to someone else on the team. Move the ball.
  1. Define a period without distractions. Make a resolution to turn off the phones for the first hour of a day, or close the door to your office to discourage interruptions. Do not let anyone distract you from your priority tasks during these periods.

A closely related malady to procrastination is the well-known “Parkinson’s Law” – all work will expand to fill the time allotted. When you add procrastination, people tend to start things too late, and then miss the deadline, no matter how far in the future it is set.

Psychologists assert that procrastinators actually sabotage themselves. They put obstacles in their own path. They actually choose paths that hurt their performance, and avoid success in life. It represents a profound problem of self-regulation.

If you are a chronic procrastinator, or your business partner is one, becoming a successful entrepreneur is unlikely unless things change. You can change yourself, using the techniques described above, perhaps combined with cognitive behavioral therapy. Believe me, it’s worth it for your personal well being, as well as that of the business. Start now.

Marty Zwilling

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Saturday, May 8, 2021

10 Tips For Entering The Startup Community This Year

finding-a-jobThese days I see a surge of new startups as businesses seem to be recovering from the pandemic. If you are not starting one yourself, the next best thing is joining one as a partner, or as an early employee. It takes much the same preparation to make you the best entrepreneur, or the best job candidate. Of course experience is the best teacher, but you need to get the job to get the experience.

According to Ford R. Myers, a noted career coach, and author of the classic book, “Get The Job You Want, Even When No One’s Hiring,” many job seekers and career changers make the mistake of halting all their efforts as summer approaches, believing that nobody will be hiring until early fall. He and I believe that these next few months are the perfect time, especially with the pandemic, for starting a new career.

Here are some tips from both his perspective and mine to stave off the coming summer “brain drain” and focus on the next step of employment, or starting a whole new career as an entrepreneur:

  1. Create and control your Internet image. Whether it's LinkedIn, YouTube, or Facebook, you need an online presence. No online presence may brand you as “old school,” and not startup material. Carefully monitor the "personal brand" you're building on the Internet to keep it positive.
  1. Perform an internal career audit. Now is a perfect time to take an honest look at your career -- where you've been, where you are today, and where you'd like to go. Identify new goals based on your own definition of career success and then take action.
  1. Invest in career coaching. A qualified career coach can help you get totally clear on your objectives, differentiate you from the competition, market you effectively, get the offer, and negotiate the best compensation. Don’t assume it’s a luxury you can’t afford.
  1. Actively work the network. Spring and Summer are the best times of the year to make new connections and find new startups, with outdoor activities and sports. Contrary to popular belief, business networking is not all done at investor receptions and conferences.
  1. Follow-up with existing connections. Make new connections through your network, and always follow up with people you've already met. I’ve never met an executive or professional yet who didn’t enjoy being asked to share his expertise and views, and most will then remember you as someone who really cares.
  1. Update your career "tool kit." Most job seekers still use only their resume as the cornerstone of their search. But there are many other items you should have in your "career tool kit" – good online profiles, accomplishment stories, positioning statement, contact list, professional references, letters of recommendation, and more.
  1. Tune your business fashion sense. Fashion trends in startups are more relaxed and modern than you may see in large enterprises. It may be time to update your apparel to prevent the impression that you are stuck in the past and may have a difficult time adjusting to the startup world. It also will boost your own confidence level as well.
  1. Volunteer or seek internships. There are many volunteer opportunities available during this time of year. This is a good way to get practical job experience, help people, and to meet other professionals who may be able to recommend you.
  1. It is better to give than to receive. The fastest and most effective strategy for getting help is to offer help to others. Ask the people in your network who they might like an introduction to or if there is any way that you can be of assistance to them.
  1. Become an opportunity magnet. Always think and speak positively, and never say anything negative. This will help you to become an opportunity magnet -- poised to attract, interview and "hire" your next employer.

The most important thing is to get out there and work the territory. If you adopt a defeatist attitude or wait for the job to find you, startup founders and peers will quickly see this, and you will be defeated. Startups are hard work for everyone, so enthusiasm, confidence, and a can-do attitude are essential to success. The harder you work at it, the luckier you will get.

Marty Zwilling

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Friday, May 7, 2021

7 Principles For Being A Wise Business Decision Maker

wise-decision-makerAs a mentor to aspiring business owners. smart people stand out to me with intellectual power and depth of knowledge on many subjects. The tougher question is whether you are also wise, in the sense of cultivating the right relationships, understanding team dynamics, and keeping to the correct side of the ethical line to maintain the trust of team members and customers alike.

Of course, if you are new to the challenges of business, it’s especially hard to anticipate correctly and react wisely to complex business situations. Unfortunately, in today’s world where time is of the essence, none of us can afford to make all the mistakes personally and learn from them, so I always try to recommend some key strategies for moving more quickly into the wise category:

  1. Keep your eye on the big picture, to temper your passion. If your passion is a new technology, make sure you understand how it fits into the existing social culture, the environment, and political realities. Wise business leaders know how to communicate their solution’s value in the context of this world view, and make decisions accordingly.

    A few years ago I had the privilege of working with Dr. Roy McAlister, a genius and the inventor of hydrogen engines for automobiles. Yet he has had minimal business success, not being able to overcome customer qualms, infrastructure, and political implications.

  2. Stay aware and sensitive to the perspectives of others. Wise business leaders never forget that they need other people’s support and help to make things happen. For progress, it may be necessary to curb your ego and self-dependence. That means you must be authentic and do things appropriately, based on their perspective, not yours.

    For example, after Yvon Chouinard founded Patagonia, he wisely recognized a growing interest in helping the environment, and capitalized on it by dedicating a percent of sales to environmental needs. This locked in engagement from his employees and customers.

  3. Be willing to adapt quickly as conditions change. I find that some of the smartest entrepreneurs are the most reluctant to accept new realities, and unwisely keep charging down a road now leading in a new direction. Steve Jobs was a victim of this mentality in the early days of Apple, pushed out of his early CEO role before he could make it great.

  4. Look for ways to make everyone a winner with you. Some leaders have to prove they are right and others are wrong, whereas wise leaders seek ways to strategically satisfy all parties. Learn to plant the right seed, and instead of convincing people they're wrong, find common ground and persuade them that what they really want is your desired outcome.

  5. Learn to let go of small things and hold on to strategic. Being willing to concede and learn, without giving up on your direction, is indicative of a wise leader. You can be in charge, without always being in control. Learn to delegate the operational decisions, to give you time to manage strategic ones. Keep yourself aligned with long-term goals.

  6. Act in the interests of expanding the total market. In business, just leading your company is not enough. Sometimes, to scale the market you need drive expansion by co-opetition or fostering common platforms. Elon Musk offered his battery patents free to all takers in order to expand the electric car market, and provide a common infrastructure.

  7. Understand and exercise political judgement. Wise leaders read the viewpoints, emotions, and power positions of others, through monitoring their everyday verbal and nonverbal communication. These leaders also carefully consider timing—when to make a move or to discuss issues, or mobilize other leaders to focus on common objectives.

My goal here is to help you evolve from smart to wise by providing the guidance and insights from the successes and failures of others before you, to reduce your learning time and pains. Also I’m convinced that smartness alone is not enough to assure success. We need wise leaders to create the maximum lasting value for society, as well as shareholders. You too can be one of these.

Marty Zwilling

*** First published on Inc.com on 04/23/2021 ***

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Wednesday, May 5, 2021

6 Action Stages To Get From Your Dream To A Business

goal-setting=businessBefore you, as an entrepreneur, can hope to successfully start a new business, you need to set some goals and milestones to lead the way. It’s easy to talk in the abstract about all the possible applications for a new technology, but you don’t have a viable business plan until you have specific targets on what you will produce, when, and how.

Yet many people avoid these specifics out of fear of the unknown, or set some totally unreachable goals. I’m a believer in having a healthy disregard for the impossible, but it does help to have a structured path to get there. Only when you have conceptualized your idea into realistic goals can you move on to prepare an implementation plan.

Yet even the best entrepreneurs are not sure why they succeed or fail. As a result, they blame failures on the wrong things, and are surprised when they can’t reproduce successes. Heidi Grant Halvorson, Ph.D., in her classic book “Succeed: How We Can Reach Our Goals,” gives six great recommendations around goal setting in general, and I’ve adapted them to the startup environment as follows:

  1. Formalize your goals. Setting a goal requires the conceptualization of an idea into structured thought, and formalizing that thought into one or more goals. For a startup, that formalization is a business plan. It’s hard to know when you have arrived, if you have never figured out and declared where you are going.
  1. It’s about execution. Most of the time, startup founders know what needs to be done to reach a goal, but just don’t manage to actually do it. Focusing on execution is essential for success, whether it be for business or personal goals. Action trumps thinking, especially when the future in uncertain.
  1. Seize the moment. Given how busy most entrepreneurs are, and how many goals they are pursuing at once, it’s not surprising that most routinely miss opportunities to act on a goal, because they simply fail to notice the opportunity. Startups who move swiftly get traction with customers and investors.
  1. Know what to do. Once you’ve seized the moment, you’ve got to figure out exactly what you’re going to do with it. This is why experience in your business domain, and experience running a startup are so valuable to investors. Everyone can learn, but it takes time, and goals are jeopardized by time in this rapidly moving world.
  1. Put your shields up. Goals require protection – distractions, temptations, and competing goals can steal your attention and your energy, and sap your motivation. Entrepreneurs need to focus on creating value for their customers and investors, and be sure to spend time on critical business issues, rather than the current crisis.

  1. Know how you are doing. Achieving a goal also requires careful monitoring. If you don’t know how well you are doing, you can’t adjust your behavior or your strategies accordingly. Check your progress frequently against milestones and financial projections of the business plan.

When you create goals in business, no matter how unrealistic they might seem, you are deciding that they are possible and that you are going to find a path to meeting them. To make this happen, you need all the motivation you can muster, and all the guidance from experts, to achieve success in these goals, and achieve your long-term dreams.

It probably means stretching beyond your comfort zone, by developing creativity if you are mainly practical, and mastering the art of execution and organization if you are mainly creative. Also, you need to really believe that you can achieve your goal, even if it’s taking longer than you planned. Don’t concentrate so hard on reaching your goal that you lose sight of why you set it in the first place. Enjoy the ride.

Marty Zwilling

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Monday, May 3, 2021

7 Strategies For Making A Mentoring Relationship Work

business-mentor-relationshipI’m a big fan of mentoring in business, and have been at different times on both the contributing and receiving end of the process. These days, I seem to often hear from entrepreneurs who are struggling to find a mentor, or complaining about their lack of effectiveness. Like any other relationship, it takes work on both sides to make mentoring work.

Most entrepreneurs view a mentor as someone older and more experienced who takes the time to personally give guidance, advice, and takes an emotional investment in your success. They don’t think about this process requiring an investment on their part, both in nurturing the relationship, and really listening, without being defensive, to advice given.

Brian Tracy, in his classic book “Earn What You’re Really Worth,” solidifies my ideas on how mentoring, as well as other personal development activities, can quickly increase anyone’s value and income in business. Here are some key points on how to find and utilize the right mentor, which I have adapted specifically for entrepreneurs:

  1. Set clear objectives for yourself in your business growth. Decide exactly what it is you need mentoring on before you start thinking of the ideal person to work with. A successful financial executive probably isn’t a good mentor for building and executing a great marketing strategy. If you don’t have an objective, you won’t know when you arrive.
  1. Work, study, and practice continually to solidify the guidance. The very best mentors are the most interested in helping someone who is willing to learn and grow quickly. That doesn’t mean you should accept any guidance blindly, but it does mean no time making excuses, and an honest effort to understand and implement action items.
  1. Don’t ask for too much time or make a nuisance of yourself. Remember, the best mentors are busy people, and they may be opposed to someone trying to take up a lot of their time. The best approach is to ask for small focused blocks of time, maybe just ten minutes, in private, and be prepared with real issues to discuss.
  1. When you meet with a mentor, you should lead the discussion. Your mentor should not be driving your business, or expected to provide critical feedback on actions taken or missed. It’s most effective if the entrepreneur proposes the agenda and drives for specific insights, but never forgets to press the mentor for broader or related implications.

  1. Remember the difference between a mentor, a friend, and a coach. Expect a mentor to tell you what you need to hear, not like a friend who may tell you what you want to hear. A business coach is focused on helping you with generic skills, whereas a mentor’s aim is to teach you based on specific situations. The same person can’t be all of these.

  1. On a regular basis, send a note to communicate progress and current tasks. There is nothing that makes a potential mentor more open to helping you than your making it clear that you are following through, and the help is doing you some good. This is also a good way to hand out and follow up on assignments to your mentor.
  1. Keep the relationship positive and productive. If a mentor proves to be unresponsive or on a different wavelength, bow out of the relationship immediately. Be aware that mentors are usually in a business position that can hurt you as well as help you, so don’t waste their time or antagonize them.

When you consciously and deliberately seek out a mentor, you must look for someone who genuinely cares about you as a person and who really wants you to be successful in your venture or your career. That emotional involvement and genuine concern for you are the keys to real mentor contributions.

Some people will say that they need to make all their own mistakes, in order to learn from them. Yet there is plenty of evidence that the fastest way to business success is by piggybacking on the counsel of men and women who have already spent years learning how to succeed. If you can’t make a mentor relationship work, I worry about the rest of your business as well.

Marty Zwilling

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Sunday, May 2, 2021

7 New Venture Strategies Improve The Odds Of Survival

business-survival-oddsI’m always looking for evidence of early startup characteristics that might be predictors of long-term success. Every investor has his own list, usually based on his own very small sample, or simply his gut feeling. Of course, we would all like to have a magic list based on more definitive tracking of many real startups over time.

In that context, I came across an old study of 27 startups featured in Inc’s annual “Anatomies of a Start-up,” done for “The Journal of Business Venturing,” and published by George Gendron in Inc Magazine. As it turned out, 17 of the 27 companies were still in business seven years later, which is at least double that of other studies. The points all still ring true today.

To determine what factors made a difference, the researchers compared the 27 companies using numerous variables. Of all those variables tested, only seven proved to be reliable predictors of survival. Here is my own net of those seven habits:

  1. Founder is ready, willing, and able to learn. We have all known entrepreneurs whose egos are so large that they can’t be bothered listening to any advice from friends or experts, and they insist on doing things their way. Effective entrepreneurs are always open to learning, no matter what their prior experience.
  1. Seek out established suppliers and channels. The challenge of a creating a new product or service is tough enough, without insisting on a new supply chain, and a new distribution channel. The most effective startups focus on their core competency, and work hard to pick the best of the rest for partners.
  1. Pays close attention to new potential competitors. Effective startups are never comfortable just because the features they plan for rollout in six months are ahead of what competitors have now. Things move fast in the startup world, and real competitors never stand still. Reassess new entrants and competitors every month.
  1. Spend more time on initial positioning. Like the old saying, you only get one chance for a great first impression. Overcoming a bad image, or even changing a non-image, takes lots to time, money, and effort. Your initial business identity can make or break your startup.
  1. Do your homework on minimal capital requirements. Usually that means have a Plan B and Plan C, just in case your initial source doesn’t materialize, or takes much longer to finalize that you expected. Running out of capital in midstream is a brick wall that can derail even the best plans.
  1. Offer customized products or services. It’s very difficult for a startup to jump quickly to the volume required to sustain them as the low-cost producer. Big gorillas with deep pockets find it hard to scale products that are designed or produced to order.
  1. Choose a large market in a growth industry. By definition, a growth industry has a history and an outlook of at least double-digit annual growth. A large market means at least $500 million in potential sales if the company is asset-light, and $1 billion if it requires plenty of property, plants and equipment.

This study jibes with other academic research in showing that no single factor is a reliable predictor of success, but taken together they do add up to a considerable advantage. In my view, a necessary but not sufficient first predictor of success is the habit of building a plan.

It’s the plan building process that provides the value, and gives you real insight into your market, your customers, and the competition. After that, it’s all about learning and execution. If you see a startup with the execution habits listed above, that may be the horse you want to bet on, and ride to the finish line.

Marty Zwilling

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Saturday, May 1, 2021

8 Key Startup Drivers Bring Pleasure As Well As Sweat

startup-pleasure-and-sweatI’m fully convinced that both inspiration and perspiration are always required in a startup. Yet many people seem to be stuck on one end or other of this equation – all perspiration with no dream, or all inspiration with no reality. Success is the right balance of both for fun and profit.

Aspiring entrepreneurs ask me why their great idea hasn’t sold; they talk about it endlessly, and they expect others to do the development, finance, and marketing work for them. Those at the other extreme don’t look up from the grindstone long enough to notice whether all their work is producing sweat equity or just sweat.

Starting a business may be fun, but it’s not easy. No matter how many times you’ve done it – the stresses are tremendous. It can also be very inspiring, as you watch your dream morph into reality, or as you feel each little element of success:

  1. Watch your team develop new skills. There is nothing more inspiring than seeing the results of your mentoring and leadership. Your own learning should be the biggest inspiration of all.
  1. Your solution fills a real market need. Truly satisfied customers are a joy to every business person. Watching the orders come in, or the product moving off the shelf, is the feedback you have been looking for.
  1. A business model that works. You have figured out how to undercut your competitor’s price, and still hold your margin. Taking that first salary after a long dry spell is an inspiring moment, and a great celebration with friends.
  1. Love that sustainable competitive advantage. Working on that unique design, or completing the breakthrough for an innovative patent, are moments of inspiration that you will never forget, especially if they become your competitive edge.
  1. Bask in the success as it happens. Maybe it’s that first customer testimonial, or that first congratulations from someone you respect, or seeing your story in the newspaper. You knew all along that you could do it.

Of course, never forget those ongoing perspiration items that seem to haunt you every day:

  1. Create intellectual property. Incorporate, register your domain name, trademarks, and copyrights, then patent if possible. Reserve the same names on the leading social networks and blogs.
  1. Marketing is top priority. Start even before the product is ready. Word of mouth advertising and viral marketing cost big bucks these days so budget for it. It takes leverage, effort and money to get in the public eye and stay there.
  1. Reign-in expenses. Review every expense with a miserly hand. Do not delegate this task! Make every effort to do things “in house”, rather than rely on outside services, accountants, and law firms.

Though innumerable factors are a part of every success, it’s arguable that the ratio of effort to inspiration can make the difference between just spinning wheels, on the one hand, and ideas that never come to fruition, on the other.

Some say the Internet is a metaphor for our brains. Both are networks. Maybe inspiration is feeding your brain as much information as possible and then figuring out how it connects when the time comes. Perspiration is the lubrication to keep your senses open to all the possibilities.

Marty Zwilling

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Friday, April 30, 2021

7 Ways To Elevate Your Team Engagement and Happiness

business-team-happinessBased on my own long experience in business, team satisfaction, engagement, and productivity continues to be a challenge. According to consistent feedback over the past several years, even in the best companies, employees seem stuck at less than 40 percent happy and "fully engaged.” That’s a huge opportunity for productivity in your business, as well as your team well-being.

Yet I still see many companies focusing on what I believe are ineffective approaches to turning this productivity challenge around, including stricter processes, more metrics, and financial incentives to improve motivation.

I believe the real solution is more aligned with the strategies outlined in a new book, “Put Happiness To Work,” by Eric Karpinski, who has been successfully bringing positive psychology tools and cultural transformations to the workplace for many years. He puts the need and focus on employee happiness through the following strategies:

  1. Provide authentic appreciation for positive results. Authentic appreciation means regular and personalized expression of gratitude in real time. This is more powerful than any bonus or reward at the end of a period. My advice is for you to make it a habit to provide positive feedback to someone daily, and often in the presence of team peers.

    This strategy is particularly important, and particularly challenging, in today’s world of team members working remotely, where it’s easy for them to be “out of sight and out of mind.” Remember that feedback is only a text or phone call away, and much appreciated.

  2. Improve team social connections to drive happiness. Everyone is wired for social connection and has a fundamental need to feel like they belong before they will fully engage. Make sure your employees feel psychologically safe with you. Your challenge is then to connect personally with each, and foster that connection among team members.

    A good social connection usually begins with an initiative by you to reach outside of the work environment, and talk about common interests, such as sports and family. This shows that you care about them as a person, and allows you to focus on positives.

  3. Acknowledge stress and proactively provide support. By recognizing and explaining the value of a stressful project, you can make your team feel important and positive, rather than fearful and negative. You shift their mindset and yours to achieving success and productivity, rather than surviving a threat. The result is real engagement and results.

  4. Help people uncover and apply their strengths. Most people don’t recognize their own strengths, and need your help, as well as strength assessment tools, to capitalize on them. Playing to your strengths improves your overall engagement and productivity, as well as satisfaction and happiness. Strive to practice strength-focused leadership.

  5. Show people the meaning and purpose of their work. Every study shows that people are really engaged in their work, if they feel that it has value and purpose. You must start this process by sharing your own values and priorities, and explaining how you see the work values relate to the bigger picture of customer satisfaction and a better future for all.

  6. Embrace negative emotions as a prelude to positives. Everyone has negative emotions in new environments or when pushing the limits, so acknowledge these as necessary. Help your team members eliminate uncalled-for or gratuitous emotions, caused by internal fears, and show compassion and support to get real engagement.

  7. Enhance intrinsic motivation through coaching. Coaching works both at the employee-manager level and the peer-to-peer level to connect people to resources that can help them believe in themselves, connect to resources, and find internal motivation. Getting peers to help others also is a great source of satisfaction and engagement.

When adopting and rolling out the strategies outlined here, it is important to focus on one at a time, rather than overwhelming people with too much all at one time. Remember that you have to be a good role model, reinforce the progress along the way, and never forget to recognize and appreciate the efforts of every individual.

With that, I am confident that you will shortly see improvements in individual and team engagement, as well as productivity. Maybe more importantly, you will see a greater sense of satisfaction and happiness in the workplace. Life is too short to spend a major portion of it just plodding along on the treadmill we now call work.

Marty Zwilling

*** First published on Inc.com on 04/16/2021 ***

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Wednesday, April 28, 2021

6 Ways To Improve Your Odds Of New Business Success

key-to-new-business-successAlmost every entrepreneur and new business owner I mentor is certain that his/her idea has a very high probability of success, and all find it hard to believe that ninety percent of startups ultimately fail. They always ask me for the key reasons that other people fail, but because I’ve seen so many different situations, I’m have been reluctant to generalize the failure patterns.

Thus I was pleased to see my own insights covered in a new book, “Why Startups Fail,” by Tom Eisenmann, a Harvard Business School professor, who has mentored many more entrepreneurs, and authored more than a hundred HBS case studies from real-world startups. I realized that he and I see several common patterns that account for a large percentage of new venture failures.

I paraphrase these for you here, not as a deterrent to you moving forward with your new venture, but as a guideline for how to do it better, avoiding the high risk elements, and enjoying the challenge and ultimate success of your innovative initiatives:

  1. Make sure you have a robust, well-rounded team. If you are the hot-shot technical innovator that invented your solution, make sure you have an equally adept business and marketing expert to complement your skills. “If we build it, they will come” doesn’t work in today’s worldwide information overload. It takes the right team to build a great business.

    For example, I believe Bill Gates would have failed without his partners Steve Ballmer and Paul Allen. Bill Gates was the technical genius, but Steve Ballmer, from Procter & Gamble, ran the business side of the equation. Paul Allen was the technical visionary,

  2. Test the viability of your business parameters. I recommend a trial run with an experiment or MVP (minimum viable product), at full price and cost, before the big bang launch, risking your investment money and a major time commitment. Pivot early, as required, to tune your features and marketing to meet the market and technical realities.

    I once met with an entrepreneur who had developed a new algae strain to cure world hunger and make him rich. He seemed to ignore the fact that hungry people have no money, and governments rarely pay. Even non-profits need income to run a business.

  3. Look for validation from your mainstream customers. No matter how passionately you believe that everyone needs one, and positive feedback from friends and early adopters (false positives), before you invest in scaling the business, make sure you set and meet good metrics in cost of customer acquisition, recurring sales, and margin.

    With my software background at IBM, I’m well aware that technical early adopters value more and more features, and are able to deal with complexity. Typical consumers, on the other hand, value simplicity and usability, and are turned off by features they don’t use.

  4. Gather your resources before scaling the business. Growing too fast kills many new ventures, due to staffing costs, inventory, and funding delays. The focus of key leaders has to change from driving innovative initiatives to replicating repeatable processes and tuning the overall product cycle. Mergers and acquisitions also require new skills.

  5. Needed help can be your biggest burden. You need the funding and support, but venture capitalists can be very demanding, and set high targets. You need advisors and a board of directors, but they require regular communication and reporting, a strategic plan, and discipline. A growing team needs skilled managers and an HR organization.

  6. The market is unpredictable and changes fast. The repeated bold innovations needed for long-term growth and sustainability are fraught with risk. Culture and environmental changes come quickly, or take longer than anticipated, as the number of markets you must service increases. You need predictable miracles and moonshots for success.

Despite all these challenges, and the angst that comes with them, almost every new venture founder, failed or successful, interviewed by Eisenmann and myself insist that they have no regrets, and can’t wait to do it again.

Thus I continue to urge aspiring business owners to get off the sidelines and into the race. It’s an amazing ride, and there is no satisfaction like creating something out of nothing. The world needs more entrepreneurs to envision and create the needs we haven’t even thought about yet.

Marty Zwilling

*** First published on Inc.com on 04/15/2021 ***

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Monday, April 26, 2021

9 Crucial Elements Of Every New Venture Funding Pitch

shark-tank-entrepreneur-pitchAs a long-time advisor to entrepreneurs and occasional angel investor, I often see and hear innovative product pitches that sound exciting, but are missing one or more of the key business elements that investors deem critical for funding consideration. We all hate to see your proposal rejected, when a bit more effort and homework could expedite your startup funding and rollout.

Of course, you can find these elements embodied in many of the business plan templates and tools out there, such as the Business Model Canvas. But in addition I’ve always found it helpful to provide a simple checklist for new venture founders and new business owners to make sure they have covered all the key bases correctly, including the following:

  1. Define and focus on a single customer segment. The business proposals I see often target multiple unrelated segments, such as consumers, enterprises, and government. No new venture can muster the resources and expertise to attack all these opportunities concurrently, so I recommend a clear and quantified focus on one to maintain credibility.

  2. Quantify your value proposition for customers. “Nice to have” and “improved usability” are not value propositions that people spend money or endure change for. Quantification of value in terms of dollars or time saved is much more attractive. Social value, such as providing the latest fashion trend, are secondary but also important.

  3. Provide initial and long-term sources of revenue. “Free” is not an exciting business model for investor interest. Every business, including non-profits, need a viable source of revenue to cover the costs of operation and sustainability. The most attractive revenue model today for services is subscriptions, and for products it is sales and support.

  4. Show a cost margin of at least fifty percent. Projecting a low cost margin, with a commitment to low overhead and hard work, is not convincing. Investors know that operational and employee expenses are always higher than anticipated, not to mention customer acquisition costs, capital expenses, and ongoing competitive initiatives.

  5. Identify your intellectual property or “secret sauce.” Unfortunately, startups with an innovative product but no protection are quickly overrun by larger competitors with more resources. Competitor resources include larger cash assets, trained staffs, an existing customers, and a known brand in the market. Patents are a good place for you to start.

  6. Specify a primary customer channel for sales. Today the most common and successful channel for new ventures is online e-commerce. Trying to distribute initially through wholesale and retail, as well as online, is very risky from an investor perspective. Other viable channels would include licensing, contracting, white labeling, and services.

  7. Actions for a memorable customer experience. Modern customers are sensitive to the total customer relationship, including shopping, transaction, service, and support. You need to convince investors that you will excel in this area, as well as attract more new customers, maintain existing customer loyalty, drive repeat business, and grow sales.

  8. Convince me that you understand your competition. I recommend that you pick your three major competitors, and highlight your advantages over each, without degrading any of them. No investor will believe that you have no competition, or that you can succeed in a market already populated with dozens of competitors. Outline your key activities to win.

  9. Highlight the strengths of the entire team and partners. Most investors admit that they invest in the people, as much as the solution. Make sure they understand why you and your team are the right people to make this business a success. The same applies to your advisors, your partner relationships, and your leadership activities in the industry.

After highlighting all these elements, don’t forget to ask for the order. You need to specify what investment amount you need, how you intend to use it, and what percent of your equity you are willing to give up to get it. Everyone needs to feel you are proposing a win-win opportunity. Use your passion and conviction, as well as these specifics, to make my day as well as yours.

Marty Zwilling

*** First published on Inc.com on 04/13/2021 ***

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Sunday, April 25, 2021

7 Ways Fun At Work Leads To Innovation And Creativity

fun-in=the-officeI’m convinced that people who have fun at work are more innovative, as well as happier. I don’t have any big scientific studies to prove this, but in my considerable business experience, I haven’t seen many successes come out of a group of fearful pessimists or unhappy people.

As I was looking through the literature, I did find evidence that many strong business leaders, like John D. Rockefeller, knew how to laugh at themselves. Humble leaders with this trait seem to create cultures that don't take themselves too seriously; cultures willing to take risks; cultures capable of creating and supporting a greater number of ideas.

Current popular startups, like Foursquare, with their break-up music and "Slow Jam Fridays" are a model of this new fun world. I can postulate several reasons why laughing and having fun at work might be linked with creativity and innovation. Here are a few:

  1. Escape the inhibitions. Laughing tends to remove inhibitions. Under the spell of inhibition, people feel limited and stuck. This is what we refer to when we say “thinking outside the box”. Encourage everyone to be open to new ideas and solutions without setting limiting beliefs. Innovation is more about psychology than intellect.
  1. Willing to make mistakes. People who take themselves too seriously are afraid to be seen failing. Failure while having fun is not usually seen as life-threatening. Expect that some ideas will fail in the process of learning. Rather than treating the mistakes as failures, think of them as fun experiments.
  1. Reset to a positive attitude. Under the pressure of a difficult problem, or if you are stuck on something, nothing innovative is likely to emerge. Do something fun to shift your thoughts back to the positive. Come back to the work problem with a fresh and more creative mind.
  1. Productive group activity. In teams, people feed off each other. A “downer” in a group takes the whole group down, whereas a fun person can bring the whole group to a more productive and innovative plane. This allows the group to “suspend disbelief” and really brainstorm new alternatives.
  1. Likely to be seen. Successful people surround themselves with people they enjoy and respect. If you are unhappy, or take yourself too seriously, you are less likely to get the attention and trust of people who can make a difference, or even recognize your innovative ideas.
  1. Likely to be heard. Communication effectiveness is the final hurdle for creativity and innovation. No matter how great your idea is, it won’t happen if it is not heard. People like to listen to fun people, and they close their mind to all the rest. If you want to be heard, write down the message and deliver it in a positive tone.
  1. Be perceived as a leader. By definition, people who project negativity are not going to be perceived as leaders. Nobody will charge a hill led by someone who says it can’t be done, or someone who emphasizes the risk of death.

Some people seem to want to make fun an enemy of business. I believe you will accept that premise only at your own peril. Fun is all about creativity, innovation, play, experimentation, progress, and seeing real things come to life. The most innovative people don’t see any dichotomy between work and fun.

So I encourage you to go out of your way this season to nurture fun at work, as well as passion and motivation. Learn to pay attention to laughter. Where there is laughter, there is an idea that holds people's interest. If you don’t take yourself too seriously, the pleasant by-product is that work becomes more enjoyable, and your innovative side will be more visible.

Marty Zwilling

*** Spanish translation provided by Laura Mancini ***

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Saturday, April 24, 2021

5 Paths To Snag That Key Leader For Your New Venture

startup-key-leaderIf you are a young startup founder, how do you find that CEO or other executive for your “dream team” to close on funding or complement your skills to kick start your company? It makes logical sense to scour the job boards, engage an executive recruiter, or scan the networking sites like LinkedIn for a good array of candidates, and then interview the ones with the best resumes.

But in fact, that’s just the beginning. To complement local face-to-face networking, you can always use one of the many online matchmaking sites that have sprung up in the last few years, like CoFoundersLab and Startbee (think eHarmony™ for entrepreneurs, or Match.com meets LinkedIn).

There you can connect with thousands of potential executives and partners, or find a planned meetup in a city near you. Also, trusted advisors and experienced investors should be polled for good candidates. Sure, some executives are found from resumes, and relationships can be built online, but trust and executive chemistry are hard to deduce from a resume or quick meeting.

From the candidate perspective, the ideal executive is much more likely to sign up for your job if he knows and trusts you, versus just meeting you online or through the interview process. In all cases, never lose focus on finding someone who can meet the following top objectives, adapted from some old advice by Jeff Richards to startup CEOs:

  1. Build the team. The CEO must focus on key management team hires and assume a few mistakes which need to get fixed. A great hire can make a company, but a single bad one can break it. As one company Chairman says, "The common elements I see in first time CEO's: a) they don't hire fast enough, b) they don't fire fast enough, and c) they don't manage their board and investors well."
  1. Provide effective leadership. Remember that leadership is both upward, as well as downward to direct reports and employees. A good CEO provides leadership to the Board of Directors, company investors, and stockholders. There are several books written on this subject. A good place to start is the classic "The Effective Executive - The Definitive Guide to Getting the Right Things Done", by Peter Drucker. In it, he says "Management is doing things right; leadership is doing the right things."
  1. Create and sell a financial model. Even with a good CFO, your CEO is the top fund raiser. It's important that the CEO define alternatives and have a very clear view on how he will use the proceeds, including the option of not raising any outside capital at all. The CEO is the check and balance on the constant parallel pushes for more development, more marketing, and more growth.
  1. Craft an operational plan and make it work. Most founders are product guys. They need an operational CEO who knows the market and the marketing game. He must nail down a sales process that fits the domain and economy. This includes the tactical as well as the strategic. The CEO needs to know how to qualify and close deals, as well as who to sell to, why do they buy, pricing, and what your strengths are against the competition.
  1. Communicate company values and culture. Make certain you as the founder and the CEO are on the same page on mission, company values, exit strategy, and workplace model. Disconnects on how employees are treated or decisions will be made can be disastrous, especially with family-owned or closely held ventures.

Executive recruiters are the old-fashioned fallback, if networking doesn’t work out, but find one who has long-term relationships with many experienced candidates and business executives. I have found that most startups and small businesses can’t really afford to go this route (the average fee for a CEO is in the $40,000 ballpark).

So get out there and network today, online and offline, so you can be one of the lucky ones who has been nurturing a relationship with some candidates and executive recruiters before the real need arises. Your investors will love you, your company will prosper, and the new executive will be a hero. Everybody wins.

Marty Zwilling

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Friday, April 23, 2021

8 Tips For How And Why To Say ‘No’ To Most Requests

business-just-say-noEntrepreneurs have to know when and how to say ‘no,’ and be good at delivering the message. All startup leaders are besieged with requests for their time, attention, talent, money, or influence, and sometimes even good requests won’t fit into the time and energy you have available.

Startups require focus, so you need to say ‘no’ to some things, in order to do the important things well. This is really the principle of displacement, which dictates that everything you do rules out other things that you don’t do. It’s impossible to do everything.

For most of us, having to say ‘no’ somehow feels like a rejection, so we hate to do it. Instead, too many entrepreneurs just say ‘yes,’ and regret it afterward. So here are some tips that I have accumulated over the years that can help you say the right thing the right way:

  1. Give yourself time to think. Before responding with an enthusiastic ‘yes’ that you never meant, or a cryptic ‘no’ that will ruin a relationship, ask for time to mull it over. It’s acceptable business practice to say that you need to check your calendar first, or pass the request by other principles before deciding. Commit a date for the final decision.

  2. Explicitly evaluate the pros and cons. First, make sure you understand the full implications of a simple yes or no response. Every ‘no’ answer reduces the likelihood of another opportunity along the same lines, while every ‘yes’ answer increases your workload and the probability of burnout on your long list of critical items.

  3. Listen to your gut. Sometimes we say ‘yes’ because we love the excitement of a new idea, when our instinct is telling us that it implies many complex issues that we are not prepared to deal with right now. It’s a fact that our brain often stores relevant information that we might not be able to vocalize right now. Trust your judgment.

  4. Negotiate a return consideration. Often people asking for favors don’t realize or consider the cost, so you shouldn’t hesitate to ask for a reciprocal favor. It may make that person re-think their need for your help, or you may actually get more than you give.

  5. Make the ‘no’ a function of your constraints. Emphasize that the rejection has more to do with your priorities, budget limitations, and workload, rather than any inherent flaw in their request. In this context, encourage a return discussion as some specific point in the future, or with some specific variation.

  6. Lead with positives when saying no. Mute the sting of rejection by rewarding the person for being aggressive and creative, while not directly accepting the contract or proposal. It may even be appropriate to give some reward, such as access to an alternative opportunity, or recognition in front of peers, to encourage the source.

  7. Pick the right time and place. Pick the least stressful time of the day, or a private place where you can talk sincerely, and give full attention to any questions or discussion. Watch your body language and tone to eliminate the guilt and fear that often make the ‘no’ response harder on the sender than the receiver.

  8. Be logical, calm, and concise. Choose your words wisely to avoid confrontation and a defensive or emotional reaction, but make sure the answer is clear and understood. No one wins when you say ‘no’ so softly or ambiguously that the other party reads it as a ‘yes’ or even a ‘maybe.’ Skip the detailed explanations.

People have learned the art of asking, so you need to learn the art of saying ‘no.’ Rid yourself of the fallacy that you must say ‘yes’ to be viewed as a leader. If the request presents a moral dilemma to you, your code of ethics should allow you to refuse, rather than lie to the other party, or agree to something you can’t deliver. Just say ‘no,’ and smile as you say it.

Marty Zwilling

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Wednesday, April 21, 2021

6 Ways To Increase Your Thinking Power On Key Issues

entrepreneur-deep-thinkingStartups and entrepreneurs are drowning in the information overload, where the volume of data created is like a new Library of Congress every 15 minutes. That creates a huge gap between data and meaning, and makes quick decisions and action ever more difficult. We all need to take a little more time to think.

On the other end of the spectrum, some people “over-think” things to the point of inaction. Acting without thinking, and thinking without action, are both deadly to a startup. The challenge is to find the right balance, and to make the thinking deep and reflective thinking.

In his classic book, “Consider: Harnessing the Power of Reflective Thinking In Your Organization,” Daniel Patrick Forrester talks about how some successful entrepreneurs, like Bill Gates, former CEO of Microsoft, force some think time in their schedule by abandoning the office for a cabin in the woods every few months for some reflective thinking. Others simply reserve an hour every morning for private thinking, despite a densely packed schedule.

What are the issues and questions that these successful leaders reflect on within their own organizations, and related to their own behavior? Here are some key areas for reflective thinking, from my perspective, based on the research from Mr. Forrester:

  1. Think before you assert control. While none of us can stop the flow of data and the creation of content that swirls around us, we can control how we structure the moments that arise and our responses. As leaders, the control we assert in problem solving sets a tone that will be followed by the whole organization.
  1. Give full attention very selectively. Now we work in a state of giving our “continuous partial attention” to issues before us. While not all matters require deep thought, we find the ones that do are afforded equal footing with ones that don’t. We must come to a conclusion about the consequences of giving only partial attention to top initiatives.
  1. Carefully select communication methods. If email or text messaging is the default way you interact, then you have already declared where it sits in your hierarchy. While technology allows for speed and immediacy, it doesn’t usually convey the texture and empathy of face-to-face interaction that is key to many important issues.
  1. Recognize the limited value of disconnected short dialogues. In many ways, problem solving has devolved into a series of dialogues that take place across digital transmissions with occasional face-to-face interactions. Failure to think deeply about forward-looking events and big ideas will come at a cost.
  1. Book time to compose your thoughts. With the tethering to technology that happens to us throughout the course of a day, it is clear that we treat time with our thoughts as a low-level priority. Even if you can’t book a week away to thin, it isn’t hard to book a meeting with yourself, when you are off-limits to everything but your thoughts.
  1. Reflect carefully before delivering messages. When people demand immediacy from you, do you consider how the people on the other end will receive it, before you dash off a message? Sometimes multiple crafting and editing iterations are required as you think about the ramifications. Is an electronic message even the right answer?

Think-time and reflection don’t just happen when we are alone. Startups will inevitably engage in discourse and dialogue through meetings. You need to insure effective discourse in meetings (“thinking out loud”) by making sure there are no negative consequences to dissent and debate. Otherwise meetings will be perceived as a waste of time by the people who count.

While technology and the Internet allow you to act and react more quickly than ever before, you need more than ever to consider decisions reflectively before making them. In addition to solving problems the right way, make sure you are solving the right problems.

Marty Zwilling

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Monday, April 19, 2021

6 New Venture Funding Rejections And How To Recover

funding-request-rejectedNew entrepreneurs often seem to confuse viability with fundability. Certainly a non-viable business should be not fundable, but many viable businesses are also not fundable. Thus when an investor declines your funding request, you need to curb your anger and understand the real reason for this outcome.

In my experience, here are the most common issues that cause funding requests for potentially viable businesses to be rejected, in priority order:

  1. Inadequate business plan. Some investors say half the ideas pitched to them don’t have any plan at all, even though some have great potential. Other entrepreneurs skip just a couple of the elements outlined in my original article, “These 10 Key Elements Make a Business Plan Fundable.” Investors know that first-time entrepreneurs who start a business without a good written plan almost always fail. Don’t take this shortcut.
  1. Inexperienced team. Investors bet on the team, more than the business plan. Your business model may be very attractive, but if you are new to this, you may not be fundable. If you can find a partner who has deep domain knowledge and a track record of building businesses, I can assure you that your luck will improve.
  1. Business domain is high risk or not squeaky clean. Certain business sectors have historical high failure rates and are routinely avoided by investors. These include food service, retail, consulting, work at home, and telemarketing. Also, don’t expect investor enthusiasm for your gambling site, porn site, gaming, or debt collection business.
  1. Opportunity is not large or growing. Investors are looking for a large and growing market, to offset the huge risk of funding a startup. Rules of thumb include an opportunity projection that exceeds a billion dollars, with at least double-digit growth. Smaller numbers may easily make a viable business, but won’t attract investors.
  1. No sustainable competitive advantage. The market may be large and growing, but you need some “secret sauce” or intellectual property to keep the big guys from jumping in, once they get the picture. Sleeping giants do wake up, and investors hate to see their money used to build a market for Microsoft, IBM, or Procter & Gamble.
  1. Financial projections are too conservative or too optimistic. Investors won’t fund people who won’t push the limits, or inversely won’t recognize business realities. More rules of thumb. Your five-year revenue projections better reach at least $20M, but should not exceed Google’s actual revenues of $3B in the fifth year.

Don’t expect a straight answer on your rejection reason from most angels or venture capital people. They will probably tell you all looks good, but come back later, after you have finished the product, signed up a few customers, or reached some other future milestone. This is called “not burning any bridges,” in case you start to show traction and they want back in the deal.

Thus you need an experienced advisor who can do his own analysis of your plan, and follow-up informally with all investors to give you the real reason for your rejection, so you can fix it. I find it completely disheartening to see founders banging their head against the same wall over and over again with every investor, without even realizing their problem.

There were more than 800,000 startups last year, and only a small percent received investor funding. In fact most of the others avoided all these rejections by simply using their own money (bootstrapping), or using the old standby funding source of friends, family, and fools.

Even if you don’t intend to “run the gauntlet” of external investors, it will be worth your while to navigate your startup into a category that is both viable and fundable. Isn’t your personal risk just as important as investor risk?

Marty Zwilling

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Sunday, April 18, 2021

Can Your New Venture Pass The Scrutiny Of Investors?

investor-due-diligenceIf your startup is great enough to get a term sheet from angel investors or a venture capitalist, the next step for the investor is to complete the dreaded due diligence process. This is the last step of the process, where surprises in the evaluation of the management team, documentation, and personnel problems can derail the investment.

Some startups do nothing to prepare for the due diligence process, assuming the people and business plan documents will speak for themselves. Others stage elaborate “training” sessions, to “assure” that everyone tells the same story. The right answer is somewhere in between.

I believe that proactive preparation for due diligence is a bigger job than the work for investor meetings, because your whole team is involved, not just you as the CEO. If there are financial anomalies, or someone on the team doesn’t know the current strategy, or is unhappy with you or the company, the investment will be jeopardized.

Even if you feel that all is well, here are some thoughts and actions I would strongly recommend:

  • Whole team must know the plan. Make sure the Business Plan and all related documents are current, synchronized, and in the hands of every key employee. If everyone gives a different story, you have no story.
  • Personnel situation is stable. Ask everyone to update their resume, and personally call probable references, so there are no surprises. You need to brief the investor ahead of time if there are career anomalies or personnel situations that could be a problem.
  • Don’t surprise the team. Call a company meeting to communicate what is happening, and why. This is a good time for the CEO to present the final investor charts, and answer any questions from employees. All need to know who will be there and what you expect.
  • Contact key vendors and existing customers. Explain that they may be called, and use the opportunity to check their satisfaction with your company and your product. Again, if you find problems you can’t fix, be up-front with the investor to avoid a surprise.

Depending on the availability of staff and needed information, the due diligence process generally takes 2–6 weeks to perform. During this time or earlier, you should also be doing your own due diligence on the investor, as suggested in a classic article on avoiding problem investors.

Here is a quick summary of the priorities normally covered by the due diligence process:

  1. Evaluation of key players. This is the highest priority item. As a starting point, an investor will ask for resumes of the “key players,” and will then follow-up to verify that executives are experienced, honest, and committed. That means questioning each of these key players, and calling references or prior associates.

  1. Validation of product. This will cover the technology, the current state of development, and customer satisfaction. Is it something consumers need or simply want, does it work, and is it ready to ship? What are the “kinks” or certifications that need to be resolved? If the product is in customer hands, expect some customers to be interviewed.
  1. Size of the market. Having a great product or service is not enough. One of the criteria for a good investment is a large and fast growing “potential market.” Investors will talk to their own experts on the size of the potential market and the expected growth rate. They will also assess trends in the market and how current economic, political, and demographic conditions relate.

  1. Sales and marketing strategy. This will involve an analysis of the company’s distribution channels, advertising, and pricing strategy. An investor will try to get an independent reading on competition, barriers to entry, price sensitivity, and what percentage of the market your company can expect to capture.

Remember, once investors contribute money to a company, a long-term relationship is created. Unlike a marriage, however, it may be very difficult, if not impossible, to get a divorce. Your objective is not only to survive, but also to make it an enjoyable win-win relationship.

Marty Zwilling

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Saturday, April 17, 2021

10 Entrepreneur Actions To Grow Beyond A One-Man Show

fashion_male_beautifulSuccess in a startup is not possible as a “one-man show.” An entrepreneur has to engage with team members, partners, investors, vendors, and customers. In my experience, the joy of positive engagement is sometimes the only pay you get in an early startup. Amazingly, many successful startups are built on this basis alone, with almost no money.

I will talk here primarily about building the internal team of a startup, but the same principles apply outside to your “extended team” and customers. I recommend the ten practical steps outlined by Bob Kelleher, in his classic book “Louder Than Words,” from his many years of experience in corporate environments. These are easily adaptable and equally relevant to the startup environment:

  1. Link high engagement to high performance. Don’t confuse engagement with satisfaction. The last thing you want is a team of satisfied but underperforming people. Kelleher defines engagement as “the unlocking of employee potential to drive high performance.” Set and reinforce high performance goals.
  1. Demonstrate engagement at the top. Leaders must demonstrate support for an engaged culture by personally living their company’s values. Then engage team members in tough decisions. In today’s recessionary times, leaders have large shadows – and team members are watching everything they do!
  1. Engage operational leaders first. Studies show that if one’s line manager is disengaged, his/her employees are four times more likely to be disengaged themselves. To stay engaged, I always practiced “management by walking around.” There is no better way to find out how engaged the rest of the team really is. It works at all levels.
  1. Focus on communication at all levels. If you neglect to articulate a clear vision of the future, expect only a minimum of energy to make it happen. Successful leaders provide robust communication, built on clarity, consistency, and repetition. It always amazed me as a leader how many repetitions were required before everyone heard the message.
  1. Individualize your engagement. Today’s leaders must tailor their communication approaches, rewards, and recognition programs to the unique motivational drivers of each employee. Communication must be tuned to the different generations, diverse groups, and each individual.
  1. Create a motivational culture. Long-term motivation comes from people motivating themselves, but you have to create the right culture. Leaders are more apt to get the discretionary extra effort of their team when they create a culture of empathy and concern about team members as real people!
  1. Facilitate and use feedback. For open and honest communication, your practices must include the means for that to happen. Entrepreneurs need to ask team members what they think, and then act on the feedback. The bases of feedback may be a suggestion box, social media, town hall meetings, or “open doors” all the way to the top.
  1. Reinforce and reward the right behaviors. Employees are incredibly motivated by achievement and recognition, more than money. Money can cause disengagement if team members perceive unfairness. On the other end of the performance spectrum, there must be consequences if you expect behavior to change.
  1. Track and communicate progress. Leaders need to reinforce progress real time and frequently, by telling their team members what is expected, how they’re performing, and where they fit in. These are key both for alignment of priorities and engagement.
  1. Hire and promote the right behaviors. Sometimes teams don’t have an engagement issue, so much as a hiring issue – hiring the wrong behaviors and traits to succeed in the startup culture. Also, promote only people who exemplify the behaviors that are most important to your success.

Always remember that your actions speak louder than your words or any written policies. Maximizing team engagement is the key to capturing that extra discretionary effort that separates winning startups from losing ones. This is a never ending responsibility that starts on day one. Are you living these steps today and every day?

Marty Zwilling

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Friday, April 16, 2021

8 Ways New Venture Founders Create Whole New Markets

Tesla-in-spaceThe ultimate compliment that any entrepreneur can get is that they can “see around corners.” This is a statement that they are willing and able (and successful) at projecting market and technology turns, not just straight-line innovations. They have the courage to make bold decisions, often contrary to conventional market research.

Elon Musk with Tesla and SpaceX may be the most current example of this phenomenon, but others often mentioned include Richard Branson (Virgin Group), Joe Costello (Cadence Design), and Howard Schultz (Starbucks). Most of you could suggest one more, but not many.

Seeing around the corner does not mean closing your eyes and jumping into the unknown. We can all point to the casualties from that approach. Great entrepreneurs seem to all exhibit a common set of attributes which go well beyond the basic skills required to be an entrepreneur:

  1. “Larger than life” personality and presence. Richard Branson’s adventurer escapades are legendary, and Steve Jobs made new product presentations an experience, as well as a sales pitch and an education. Joe Costello was known to dress up as Frankenstein and the Riddler for company functions, and wasn’t afraid to laugh at himself.
  1. Strive for breathtaking design, as well as function. Great entrepreneurs remember that great design motivates and excites customers, often even more than function. Design is not just about making things look pretty. It gives a product structure and style, and makes it memorable and unique.
  1. Practice learning as an action sport. Entrepreneurs who depend on the ‘traditional’ learning process (schools, formal classes, practice problems, and risk-free iterations) are doomed in breaking the paradigm. The best entrepreneurs attack learning like a sport, savoring the challenge, and practicing it every day.
  1. Possess extraordinary passion and energy. Visible passion is a quality that helps successful entrepreneurs choose their direction, attract clients, investors, and success. They also remember that energy is a resource that must be renewed, so they treat themselves well both physically and emotionally.
  1. Believe there is no such thing as a crazy idea. For real entrepreneurs, crazy is a compliment, and the new market may be just around the corner. Besides, many of the most commonly used items today, like disposable razor blades, were deemed crazy ideas before their inventors made a fortune.
  1. More to business than dollars and cents. Entrepreneurs who see around corners usually start with the “big” vision of making the world a better place. Guy Kawasaki talks about making your product a “cause,” rather than just focusing on how much money you can make, and considering social entrepreneurship for maximum impact.
  1. Not afraid to kill the cash cow. Holding back on promising new businesses to maintain old ones is the bane of many entrepreneurs. Unfortunately, playing defense is easier than playing offense. Steve Jobs didn’t hesitate to kill the iPod in favor of the iPhone and iPad, which moved the market to a whole new level and kept competitors at bay.
  1. Build a great team and nurture them. The best entrepreneurs know that investors invest in people, not ideas. Customers buy from people, not companies. With a team of the best people, the sum is greater than the parts, so your chances of surviving the walk around the corner are optimized. Surround yourself with people smarter than you.

But all these attributes don’t mean that anyone should expect to get it right every time, or certainly not the first time. All the entrepreneurs mentioned here have had their share of failures and false starts. The key is learning from a failure, and having it increase your motivation and focus, rather than de-motivate.

My advice to the entrepreneur looking to earn the ultimate compliment is to first sharpen your view by tackling a more modest straight-line objective, and bouncing your bigger visions off people who have been there and done that (peers, investors, and competitors). Use those reflections for a sneak peek around the corner before you leap.

Marty Zwilling

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Wednesday, April 14, 2021

6 Keys to Attracting Customers Based On Social Needs

fashion-beauty-modelAs a logical and data-driven business advisor, I have long focused on facts, technology, and quantifiable pain in guiding entrepreneurs. Yet, these days, I am seeing overwhelming evidence that customer buying decisions, especially with consumers, are often based on emotional and psychological factors, including passions from others, your experience, and social relationships.

For example, my dictate that entrepreneurs need to find a “painful” problem to solve (such as high cost, low productivity) to attract customers, doesn’t really account for many successful startup businesses today, including top social media platforms, dating sites, and new fashions. I now offer the following additional guidelines for how to attract customers and position your product:

  1. Find the latest social trend, or even create it. Consumers seem desperate these days to not be left behind as the crowd moves on. They depend on their favorite social channels and peers on social media to make emotional decisions for them, rather than rely on any kind of “cost-benefit” analysis. I see this even extending into business-to-business.

    For example, the sharing economy is a trend that has resulted in many successful businesses, including Airbnb and Uber. I more often hear of Airbnb rental decisions based on “local flavor” and “hospitable hosts” than any cost advantage or special features.

  2. Nurture relationships with popular social influencers. Most consumers now use their online access from smartphones and tablets to interact with social networks, product reviews, and monitor the videos of culture influencers around the world. These perceived authoritative sources create a community who follow their lead, based on psychology.

    Most experts agree that these people now create and grow more trends than classic push advertisements. By focusing your marketing activities on key individuals known to wield influence in your target customer market, you can deliver a more "authentic" message.

  3. Play to exclusivity, uniqueness, and personalization. Everyone wants to be different, somehow, to stand out in the crowd that they choose to join. Your challenge is to positively influence decisions on your offering by defining its availability as limited, selectively offered, and guaranteed to improve status. All of these tend to override cost and usability.

    Facebook, as an example, credits its early success to initially limiting membership exclusively to Harvard students, and gradually expanded access to other colleges and the world. Other startups use technology to provide personalized products to all customers.

  4. Build positive relationships with potential customers. Customers more than ever want to do business with people they know, respect, and trust, and implicitly allow these factors to override cost and other features. For you, this means get out there and meet your customers, build a relationship via social media and commit to a purpose beyond profit.

    Blake Mycoskie, founder of TOMS shoes, set a higher purpose of donating a pair of shoes to the needy for every pair sold, and found that the return was far greater than the cost of donated shoes. Other studies have shown a return of up to 400 percent for this approach.

  5. Highlight benevolence to customers and society. Every business leader tries to deal fairly with everyone, such as refunding a return from a dissatisfied customer. But these days, it can pay big dividends to go above and beyond to make people happy or benefit society. Your customers will feel obligated to pay it forward, and repay you with loyalty.

    At every Ritz-Carlton, employees are authorized to spend up to $2,000 per guest to solve a guest issue or improve a guest's stay, no matter what the cause. If I experienced that kind of benevolence at any business, I would be an advocate and loyal to the utmost.

  6. Declare your values and unfailingly practice them. Consumers have a long memory, and will test your consistency, based on prior experiences and feedback from peers. A single bad or inconsistent experience will jeopardize their brand loyalty, and a history of positives will generate real “value” that rises above cost and other decision criteria.

Yet don’t assume that any of these will override the basic need of every business to be self-sustaining via revenue to meet expenses over time. I still find entrepreneurs who are passionate about doing good and satisfying customers, but forget to focus on a business model that generates a financial return. The objective of every business must be to do both for all to win.

Marty Zwilling

*** First published on Inc.com on 04/01/2021 ***

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Monday, April 12, 2021

10 Tactics To Shorten Your Race To Cash-Flow Positive

cash-flow-positiveAs I’m sure you are aware, surviving that first couple of years as a new business is a huge challenge, waiting for cash flow to turn positive. In my experience as a business advisor and occasional investor, many of you won’t make it that far, succumbing to the high costs of getting those first customers, funding an initial inventory, and building an operational support process.

Of course, it helps to pick a business model that minimizes these costs, such as e-commerce to minimize initial staff and facilities, or professional services, where you are the initial product. After you have sold your first company for several hundred million, you can then afford to challenge Elon Musk on the next line of electric vehicles, or Apple with a new and better smartphone.

For the rest of us, I’ve accumulated the following additional practical strategies for surviving the scale-up challenges, and making your business profitable and sustainable:

  1. Enlist an experienced advisor to project real costs. Don’t let your passion and “can-do” attitude convince you that you can overcome all financial realities. I’m a big fan of first creating a real business plan, with five-year financial projections, to convince yourself and investors that you have done your homework. The advisor will give you real credibility.

  2. Assess your resource potential before you start. Surprisingly, I still find many aspiring entrepreneurs who assume that if their idea is good enough, funding will appear. There is a reason that ninety percent of startups are still self-funded, and most of the rest have major contributions from friends and family. Build your plan around resources you know.

  3. Start networking for funding before the crisis. Even if you intend to bootstrap the business, or have an anticipated funding source, it pays to start early in lining up an alternative. When the cash crunch hits, or other alternatives change, it’s too late to start looking, and you won’t have any leverage or credibility to negotiate the terms you want.

  4. Join a startup accelerator or structured peer group. The real value of these groups is the relationships you can build with key people who can help you later, as well as the early learning from the incubator organization. These can be a key source of funding connections, vendor contacts, and potential partners during your rollout and scaling.

  5. Negotiate bartering deals versus cash contracts. Don’t underestimate the advantages of providing your products and services in exchange for access to facilities and equipment you need to grow. Especially today, when more companies are willing to work through outsourcing, freelancing, and contracting. Everyone wins with this approach.

  6. Nurture current income sources as long as possible. Contrary to the advice of Mark Cuban, don’t quit your current job until the new business is cash-flow positive. Startups always take longer to get started than anticipated, so jumping in with both feet too early will dramatically increase your risk of running out of money with no buffer available.

  7. Actively seek out government and local incentives. Especially in these times of pandemics and economic initiatives, SCORE and other government agencies are likely to help you if you plan ahead. These programs don’t usually ask for equity, and they are particularly targeted to the early stages of your business to facilitate growth and survival.

  8. Negotiate a line-of-credit with a financial institution. Even if you don’t intend to use it, a line of credit is a great backup for unanticipated scaling costs, such as inventory. It’s another backup that can be arranged much more readily before a crisis, is more often available than a loan, and doesn’t usually cost money until and unless it is really used.

  9. Consider partnerships or joint ventures with competitors. This approach, often called “coopetition,” works best when you find someone who has complementary products, rather than direct competitors. In these cases, you both win by expanding the market. Use this strategy to fill gaps in your product line without great new cash outflow.

  10. Use “white label” or custom contract for extra income. White labeling is custom branding your product for a particular customer, to keep committed resources busy. You see these labels at grocery stores all the time. Similarly, a custom contract for a big customer can get you over a growth gap, without diluting your brand in the market.

In the minds of most business consultants, the challenge of surviving as a business until you make a profit is so great that this stage is often labelled the “valley of death.” It’s the time when your invention or innovation gets transformed into a viable business, or you have nothing. I’m counting on your diligence, as well as your passion, to make it happen for you.

Marty Zwilling

*** First published on Inc.com on 03/29/2021 ***

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