Saturday, April 30, 2022

7 Traits Advised For Adoption By Every Business Owner

Pierre_Omidyar_EbayIn my experience as a business advisor and angel investor these days, I seem to more frequently hear from entrepreneurs and business owners with “can’t-fail” or “get-rich-quick” ideas. In my view, these are the least likely to succeed, partially because the people behind them have the wrong expectations and traits. The instant gratification approach just doesn’t work in business.

In addition, I’ve always wondered why an inordinate number of successful businesses today were started by people born outside the U.S., including Sergey Brin (Russia) at Google, Elon Musk (South Africa) at Tesla, John W. Nordstrom (Sweden), and Pierre Omidyar (France) at Ebay. It seems like these emigrants would be least likely to succeed, with all their extra challenges.

Perhaps that’s why I was impressed with a classic book, “The Emigrant Edge,” by Irish immigrant and successful business executive, Brian Buffini. He details the natural disadvantages and advantages of emigrants, compared to native-born business leaders, and highlights seven common traits that we both believe should be adopted and practiced by every business owner:

  1. Develop and nurture a voracious desire to learn. In this rapidly changing world, there is no time for repeating the mistakes of others, or trying to repeat yesterday’s success. Successful immigrants have found that they need to go out of their way to meet and listen to others, have new experiences, and learn from different aspects of life and cultures.
  1. Maintain a “do-whatever-it-takes” mind-set. Life favors the persistent and the willing. It’s going that extra mile, and never giving up, that enables getting over the hump to success. Successful immigrants have been forced to get out of their comfort zone, do things they don’t necessarily want to do, take risks, and make difficult decisions.
  1. Feel a deep-seated willingness to outwork others. Those who come to this country with little more than hope to their name know that to get what they want they must work harder and longer than anyone else. With native born new entrepreneurs, I sometimes feel a sense of entitlement, or hear the search for how little one can work to find success.
  1. Demonstrate a heartfelt spirit of gratitude. Not only should we be grateful for small successes in our business, we should also be grateful for the setbacks because from these we learn more. Gratitude has the power to change your thinking from pessimism, to making a difference in the world. Immigrants know to be grateful for what they have now.
  1. Practice the boldness to invest in the future. Immigrants certainly can’t afford to let life’s many choices confuse them. If they have a desire to succeed, they have to be bold and focus on a desired outcome. That means forgoing short-term returns, and investing in themselves, their vocation, and in other people. They put in everything they have.

  1. Have the discipline and commitment to delay gratification. There’s no denying that instant access to most things is satisfying, but it has downsides too. Some business people develop the trait that if results are not immediate, it’s time to give up. Successful immigrants learn to sacrifice, and understand that slow and steady often wins the race.
  1. Remember always to appreciate every step of growth. Immigrants may have started with nothing, but everyone has grown from their beginnings. Sometimes these steps are so small that they are lost or unappreciated, when they should be remembered and celebrated. Successful people enjoy and appreciate the journey, not just the destination.

I’m convinced that every person who starts a business should think of themselves as an emigrant turned immigrant, or one who leaves a known home base, to more permanently settle in or create another, hopefully better place. Think of the seven traits outlined here as the “emigrant edge.”

The sooner you can unleash these traits in your life and your business, the sooner you too can experience business success.

Marty Zwilling

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Friday, April 29, 2022

6 Ways To Sustain Growth In A Maturing Global Market

View_of_Diamond_Exchange_CenterMost of you business owners I know are looking forward to the day when your product, team and processes begin to mature, and your business growth keeps tilting upward as you scale. You expect to relax a bit, and relish in the success that you see coming. Unfortunately, without your proactive efforts to counter predictable market challenges, early growth can quickly stall.

In my experience, there will always be growth challenges that you can’t predict, including new technologies, economic downturns, and political changes, but I’m talking here about changes in the market that every good business leader should anticipate, including the following:

  1. Your targeted customer segment has a limit. No matter how excited your initial customers appear to be, every market has a saturation point on new and repeat sales. Often times, business owners are enticed by early adopters, but fail to prepare for the early majority wave and late adopters. Always have a next segment in your sights.

    Of course, don’t forget to continually interact with your best existing customers, to find areas where you can increase customer value and squeeze out additional growth for your business. Offering customized products and personalized support are options often used.

  2. Penetrating new customer segments is not so easy. Stepping into unknown territories takes real customer acquisition marketing and new costs through social media, public relations, and advertising campaigns. Existing customer advocacy and word-of-mouth are no longer adequate to sustain growth. Start today with new customer acquisition efforts.

    In all cases, increasing your brand recognition is key, especially for international segments. The Internet has helped small and mid-sized companies compete on the global stage, so building an international brand is a realistic goal for more businesses.

  3. New generation of customers expect more service. The support currently provided by product service can become inadequate to satisfy new customers, as your growth and image becomes better known. Be prepared to create and train a dedicated support group that can keep up with your now large and growing install base of demanding customers.

    In fact, customers today look for a totally memorable shopping experience, from ease in finding your solution, through the buying experience, and including support. Real results show that new levels of customer experience may double your growth rate over time.

  4. Customers suddenly become very price sensitive. Early customers, with high passion and few alternatives, are willing to pay your price premium. Over time, continued growth demands that you be willing to offer discount options, and extra features to maintain your revenue growth curve. This calls for creative marketing as well as new cost reductions.

    I recommend that you look around you constantly for innovative pricing strategies, that may have evolved in other segments, but can be adapted to your market. Examples might include a “name your own price” option, free add-ons, or unlimited use terms.

  5. A new formidable competitor jumps into play. You may think you have the market locked up with your unique process, trade secret, or patent, but there are always ways for new players to grab your potential customers, or put the brakes on growth. Always be working on your next set of solution enhancements, or a new marketing campaign.

  6. Operational costs escalate as your business scales up. As your company scales into new market segments and new volumes, that single base location and small teams are no longer adequate. New real estate and office buildings were never in your plan. Start planning now for new operational costs, including people turnover, benefits, and training.

Every smart business owner knows they must resist that urge to rely totally on repeatable processes to assure continuous growth. In fact, quite the opposite, you should always be planning to re-invent your business, or at least introduce innovation on a regular basis. The pace of change in the market is increasing, and your ability to keep up is your key to sustained growth.

Marty Zwilling

*** First published on Inc.com on 4/14/2022 ***

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Wednesday, April 27, 2022

7 Considerations For Setting Your Bottom Line Balance

Planet_Over_ProfitIt’s always been tough to start a new business, even when the bottom line was just making a profit to stay alive. A few years ago, a second focus of sustainability (“green”) was added as a requirement for respectability. Now I almost always hear a third mandate - social responsibility. Entrepreneurs are now measured against the “triple bottom line” (TBL or 3BL) of people, planet, and profit.

The real challenge with the triple bottom line is that these three separate accounts cannot be easily added up. It’s difficult to measure the planet and people accounts in any quantifiable terms, compared to profits. How does any entrepreneur define the right balance, and then measure their performance against real metrics?

Lots of people are trying to help, with new twists on the age-old model of free-market capitalism that has driven businesses for the last 500 years. Current examples include Conscious Capitalism®, popularized by John Mackey, The B Team, founded by Sir Richard Branson, the 1% for the Planet organization, and the Benefit Corporation (B Corp) now available in 35 States.

In the interest of helping first-time entrepreneurs, as well as existing business executives, keep their sanity as well as their focus, I offer the following pragmatic suggestions for dealing with the triple bottom line requirements:

  1. Sort out your personal definition of success first. Starting and running any business is hard work, so the last thing you need is “success” with no satisfaction. If your primary dream is to help the starving people around the world, or prevent global warming, you might consider a nonprofit, academic, on government role, rather be an entrepreneur.
  1. Making a profit does not imply greed. Many young entrepreneurs seem to think that capitalism and making profit are dirty words. The reality is that you can’t help people or the environment, or yourself, if you don’t have any money. Businesses run by ethical people create value and prosperity based on voluntary exchange, while reducing poverty.

  1. Sustainability and social responsibility alone don’t make a viable business. As an angel investor, I see too many business proposals that are heavy on sustainability, but light on financial realities. Most customers today won’t pay you five times the cost of alternatives, just because yours is “green.”

  1. The whole can be greater than the sum of the parts. The real opportunity for entrepreneurs is to provide solutions that solve a problem better than the competition, while also providing sustainability and social responsibility. Conscious Capitalism companies, for example, historically have outperformed the S&P 500 index by a factor of ten.

  1. Responsibility and integrity are still the key. A responsible entrepreneur promotes both loyalty and responsible consumption by educating consumers so they can make more informed decisions about their purchases, based on ecological footprints, and other sustainability criteria. That’s a win-win business for the customer and the entrepreneur.

  1. Explore new forms of company ownership and profit sharing. There is no rule in capitalism that employees and other stakeholders can’t equitably share in the returns. In fact, there is plenty of evidence that these arrangements, such as with Whole Foods, are easy to implement, and pay big productivity, loyalty, as well as financial dividends.
  1. Begin tracking your positive social and environmental impacts. What you measure is what you get, because what you measure is what you are likely to pay attention to. Tracking can be informal, or you can follow a more formal system, like Global Impact Investing Ratings System (GIIRS). Even informal results can be your best advertising.

It’s a lot more productive and a lot less risky to start early in building your record of the positives on social, environmental, and people responsibility, rather than wait and hope never to be caught in an excessive profits scandal, child labor issue, or poor sustainability practice.

So while the bar for business success continues to go up, because we all now operate on a world stage, the entrepreneur “best practices” haven’t changed. Every entrepreneur needs to start with a strong vision, think long-term, communicate effectively, and always lead with responsibility and integrity. The days of success measured only by monetary returns are over. How does your business stack up against the triple bottom line?

Marty Zwilling

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Monday, April 25, 2022

10 Ways To Enlist Trust And Power For True Leadership

leadership_encourage_self_confidenceOne of the first harsh realities that every entrepreneur has to learn is that most of the things that are critical to startup success are outside of their direct control. Just because you dream it and build it, doesn’t mean they will come – that encompasses not only customers, but also investors, partners, team members, and even your own family. They won’t come if they don’t trust you.

In my experience, trust is the most powerful tool that an entrepreneur can wield, both inside and outside of his own realm of control. I’ve seen many examples of this in my own business life, and yet I gained a whole new perspective on how it works from a classic book by successful entrepreneur August Turak, titled “Business Secrets of the Trappist Monks.”

Turak first visited the monks for spiritual guidance, but realized as he talked to them about their business, that many of their secrets crossed over all boundaries. I was particularly struck by the lessons he gleaned on how to get and maintain trust. The best entrepreneurs I know seem to have learned every one of these, so start on these now if you want to survive among the best:

  1. Become trustworthy before you start a business. We are hard wired to seek out trustworthy people, and to test others to see who we can trust. But the first step is to be become trustworthy ourselves. Like attracts like, and if you invest early in becoming a person others can trust, business people who you can trust will be attracted to you.
  1. Keep your promises to yourself and others. The surest mark of a trustworthy person is one who keeps promises to others and to oneself, no matter how small or seemingly trivial these may be. Keeping promises to yourself is closely correlated with will power and self-control, and these virtues are essential to being business trustworthy.
  1. Under commit and over deliver. Make sure that you only make business commitments that you know you can keep. Many entrepreneurs over-commit because they are desperate to have business constituents like and respect them, yet the quickest way to lose respect is to fail to keep commitments.
  1. Be willing to make commitments. One of the stratagems of notoriously unreliable people is refusing to make promises in the first place, thinking that making no commitments relieves them of any worry about breaking them. People see through this strategy quickly, and will tag you not reliable and indecisive, as well as not trustworthy.
  1. Protect your personal brand. As a new startup, you the entrepreneur are the brand. Get in the habit of asking yourself, “How will this decision affect my personal brand?” Everything you do or don’t do affects your brand, and in the long run your trustworthiness is your most valuable asset.
  1. Avoid fuzzy commitments. Nothing undermines trust faster than ambiguity or soft commitments, through phrases like “I’ll try” or “I’ll do my best.” These are heard as attempts to stay off the hook, and furnish plausible deniability for anticipated failure. Don’t be afraid to write down what you expect, and what you are willing to commit to.
  1. Formalize business promise keeping. This simply means making it standard practice in your new startup of building a paper trail of contracts (no verbal contracts) between partners and vendors, customer transactions, and internal processes with team performance metrics.
  1. Never make people ask. If you make people hound you about a commitment, you have already lost half of your credibility. Nothing builds trust better than anticipating your obligations and delivering on them without being asked. A debt repaid before it is asked for reaps a huge dividend in trust.
  1. Communicate, communicate, communicate. No one can anticipate all risks and keep all their promises, but there is no excuse for a failure to communicate when contingencies arise, so there are no surprises. Lack of communication leads others to assume that you had no intention of keeping your promise, and were hoping no one would notice.
  1. Aim past the target. It is impossible to be trustworthy in business if you are unreliable in the other aspects of your life. The monks teach that trust is not a business strategy or tactic; it is the natural by-product of living for a higher purpose. If you have no higher purpose as an entrepreneur than to make money, you will most likely fail in your efforts.

In business, as in your personal life, an entrepreneur must offer his own trust before reasonably hoping to have it reciprocated. Don’t try to “game the system,” and don’t expect blind faith to save you. The power of real trust is that if your constituents trust that you can change the world, you probably will. Isn’t that why you signed up for this lifestyle in the first place?

Marty Zwilling

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Sunday, April 24, 2022

Looking At Startups By The Rules Of Natural Selection

business-natural-selectionThe good news is that a recent Kauffman Early-Stage Entrepreneurship (KESE) Index shows the highest level of new business activity recorded in the last two decades, and the cost of entry at an all-time low. The bad news is that it’s still a jungle fight for survival for entrepreneurs of all ages and demographics, with over 80 percent not having access to bank loans or venture capital.

In this context, it’s time for every business, not only startups, to take a fresh look at the basics of business success. Jamie Gerdsen, in his classic book of lessons on business change, creatively titled “Squirrels, Boats, and Thoroughbreds,” aims first at existing businesses, but I believe that most of his points, like his laws of the jungle, can be rewritten for startups, as follows:

  1. If you want to eat... I don’t believe in greed, but we all need to make enough money to eat. This means building a revenue stream, and tuning your business model to produce margins in the 50 percent range or above. I support being socially and environmentally conscious, but you can’t help anyone else if you don’t eat.
  1. If you want to survive... Survival means growth and scaling. Once you have a proven business model, you need to scale the business up quickly to stay ahead of competitors. These days, doubling your business volumes every year is the “norm” that investors and potential acquirers are looking for.
  1. If you want to be feared... Every startup needs a sustainable competitive advantage. In the jungle, it might be the strongest jaws, but in startups it’s more likely the strongest intellectual property. With no competitive advantage, startups with new ideas gaining traction are never feared, and are usually eaten for lunch as sleeping giants wake up.
  1. If you want to mate... In the business world, we call this finding the right strategic alliances. That means you have to stand out above the crowd, and aggressively pursue those candidates that can help you breed even more presence and power in the marketplace. Sitting quietly on the sidelines, waiting to be found, is a lonely world.

Every startup in the business jungle begins with a limited amount of three precious commodities – time, talent, and treasures. The smart ones have a plan for how they intend to spend these resources, and measure themselves against the plan. Otherwise they will likely look back later, and find that one or more of the laws of the jungle have been compromised:

  • Time – Start with a timeline of how much runway you have, with objectives and milestones mapped against the timeline. Time management is an art. Don’t waste precious time on the “crisis of the day,” in favor of strategically critical tasks. The best entrepreneurs work on making better time management a top objective.
  • Talent – Every startup needs talents to give the company value. In the beginning, the entrepreneur has to cover all talents, which is made more possible these days by the wealth of information available on the Internet, as well as books and online courses. Talent can also be outsourced, but surviving in the business jungle without talent is unlikely.
  • Treasure – Most entrepreneurs assume that treasure means funding. In reality, more important treasures often include intellectual property, the ability to innovate, and well-defined processes that can deliver great products and reach new customers more efficiently and effectively than competitors. Money is no substitute for these other treasures.

In summary, whether you are running a startup, a family business, or a famous brand like IBM, you are all part of the jungle. You can be a small tiger with big teeth, or an aging dinosaur. The laws of the jungle apply to all. It really is a world of survival for the fittest.

The jungle framework is a great one to set the right perspective. Startups which prosper and succeed learn the rules of the jungle early, don’t make excuses, and don’t look for any entitlements. Does your startup have an understanding of reality, a real sense of urgency, and the overwhelming drive to innovation to make you the king of the jungle any time soon?

Marty Zwilling

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Saturday, April 23, 2022

7 Challenges To Overcome When Building A Startup Team

startup-team-hireEvery startup lucky enough to get some traction gets to the point where they decide to hire some “regular employees” for sales, marketing, and administrative tasks. Then they are surprised to see productivity and creativity take a big dip. What they should be doing is hiring only “entrepreneurs,” meaning people who think and act as if this is their own business.

This commitment to hire people who think like entrepreneurs, or instill an “owner’s mindset” in every employee, should be a high priority in every business. It’s what every customer looks for in every transaction. Most people will tell you this is impossible, but I found a classic book, “Army of Entrepreneurs,” by Jennifer Prosek, where she seems to have actually accomplished this.

I like how she was able to motivate, train, and reward employees, including the implementation of an incentive program to get every member of the team actively involved in generating new business. She also identifies the typical myths against using this approach, and describes how to overcome each one:

  1. “Entrepreneurs are born, not made.” The reality is that all entrepreneurial skills are learnable skills. The entrepreneurial mindset is a function of motivation, priorities, and risk versus reward, all of which you set or enable by your leadership and example. Hire employees who have strong skills, with the motivation to learn new ones.
  1. “Employees will care only about work they create.” This is really an issue of the quality of the people you hire rather than the management or compensation system. The key is to hire people with the right mindset, and communicate it daily to your whole team, by your actions as well as your words.
  1. “Junior people shouldn’t be involved in new business.” This is the platitude of an obsolete corporate culture where you had to “pay your dues” in menial jobs before adding creativity or making decisions. In today’s marketplace, junior staffers are often the most intimately connected to the market, technology, and the customer network.
  1. “Employees will lose focus on their work.” Old management models encourage employees to optimize their own task, often at the expense of the overall company objectives. There is new evidence that people want to understand the bigger picture, and business growth financial incentives will increase productivity, rather than lower it.
  1. “Sales will be the organization’s sole focus.” Again, you get what you demand and reward. If sales are the only way to get rewarded in your organization, then sales will take precedence over other activities. Motivate for a spectrum of entrepreneurial behaviors, and you will see results.
  1. “We don’t need to reward lead generation.” For a startup, you don’t have a recognized brand to bring in the leads. All businesses need to proactively seek leads, rather than simply attract them, with the creativity and initiatives of every employee rewarded for every contribution.
  1. “There is too much risk associated with decentralized decision making.” When you have to move and change quickly to survive, centralized decision making is too slow. You become the bottleneck. If you train people properly, empower them, trust them, and they understand the business, your evolving business can become a revolution.

Every large company wishes they could harness the power of a thousand entrepreneurs within their employee ranks to re-create the exceptional business growth they once knew. Instead, for growth, most have resigned themselves to buying startups that exhibit these characteristics.

Thus, the last thing you need as a growing startup is a “regular employee.” Hire entrepreneurs like you, grow like an entrepreneurial company, and stand above competitors in the acquisition process to carry that fire forward. That’s a win-win for everyone in this new culture and new economy.

Marty Zwilling

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Friday, April 22, 2022

8 Management Mistakes Which Will Defeat Your Business

frustrated-facial-expressionEven entrepreneurs who have built many startups, or sold their last one for millions of dollars, know they make occasional people leadership mistakes. They know leadership is all about managing their own complicated, illogical, and fallible human foibles, as well as the people they depend on. These can trip up even the best, often at the cost of more than a good night’s sleep.

Thankfully, most mistakes won’t be as spectacular as the America Online merger with Time Warner for $350 billion, back in 2000, engineered by then superstar entrepreneurs Stephen M. Case and Gerald M. Levin. They apparently ignored all conventional wisdom and advisors, and struck a deal which crashed both companies, now a case study in many business schools.

By most accounts, this case exhibits almost all the lapses identified in a classic book by Dr. Nicole Lipkin, “What Keeps Leaders Up At Night.” She provides some great guidance, based on coaching experience and a doctorate in clinical psychology, on recognizing and resolving the most troubling management issues for leaders in all stages of an organization:

  1. I’m a good leader. So why do I sometimes act like a bad one? According to the evidence, good bosses go bad (temporarily versus the chronically horrible), for three overarching reasons – too busy to win, to proud to see, or too afraid to lose. Every leader needs to check and enhance his self-awareness to recognize and avoid these.
  1. Why don’t people heed my sage advice? Many people use the terms influence, persuasion, and manipulation interchangeably. But each carries its own specific meaning. Influence requires winning minds and hearts to inspire action. Persuasion intellectually stimulates a person to action. Manipulation is seen as insincerity, and it gets non-action.
  1. Why do I lose my cool in hot situations? Stress comes in two distinct forms: good stress and bad stress (distress). Managed effectively, stress is a good thing, leading to survival. But chronic stress and distress results in overreaction to non-life-threatening events. Schedule an on-going reality check with trusted advisors to know the difference.
  1. Why does a good fight sometimes go bad? A good fight in business is called healthy competition. Unfortunately, feelings of envy and inferiority can quickly turn healthy competition into a knock-down, drag-out fight between people and companies, turning a win-win situation into a lose-lose one. Check all your emotions at the gate.
  1. Why can ambition sabotage success? Every leader needs to balance ambition with humility, restrain one’s ego, treat others with respect, create positive impressions, and adopt a long-term perspective of success. Don’t let a “nearsighted” view cloud the “big-picture” view; success in the best interests of all. Contemplate your legacy to others.
  1. Why do people resist change? The brain’s hard wiring pre-disposes us to habitual behavior and decision making. We let biases influence our reaction to change and our ability to make decisions that cause change. To thrive you need to become more aware of biases and psychology behind your own and your people’s responses to change.
  1. Why do good teams go bad? Humans have always affiliated with groups and teams in order to survive and thrive. Group dynamics are not always good, including “us” versus “them” mentality, group conformity, social loafing, and emotional contagion. Leaders need to manage these dynamics to keep from falling prey to negative group behaviors.
  1. What causes a star to fade? When start performers fade, it’s almost always a failure to remain engaged with the people and the job. Smart leaders must constantly monitor the four essential elements of engagement: social connection, leadership excellence, aligned culture, and meaningful work and life. Engagement drives performance and satisfaction.

These questions should all be contemplated and understood by every entrepreneur and startup founder, starting on day one of their quest. Remember, we are all human, and we will make mistakes. The challenge is to learn from these, and just as importantly, learn from others who have been there before you.

So when you find yourself losing sleep at night, don’t get mired in the quicksand of self-pity and self-destruction. Every personal admonition of “What was I thinking?” should be followed with some objective analysis, maybe some help from a trusted ally, and a determination to get back on track and have fun. Being an entrepreneur is a lifestyle you must enjoy to be successful.

Marty Zwilling

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Wednesday, April 20, 2022

7 Keys To Creating A Productive Business Team Culture

business-office-friends-meetingsIn my experience, the right team culture is critical to every business and startup success, so every business leader wants to know how to create it. In reality, I’m convinced that none of us can “create culture” directly, but we can create an environment where the desired culture emerges. You do this by driving values, letting values shape behavior, and the behavior defines the culture.

I believe you must start by being a role model for strong personal values and purpose, as well as empathy for others, sustainable energy, and self-awareness. The next step is to effectively and continuously communicate through multiple channels, including walking-the-talk, email, and really listening to feedback. Be sure to encompass all your constituents, especially including customers.

The behaviors that you need to incent for the right culture to flourish can be summarized by the following principles that I recommend you follow:

  1. Create and maintain a sense of energy and purpose. Many leaders do this today by supporting and promoting a higher-level purpose, beyond profits, such as helping the disadvantaged, sustaining the environment, or Conscious Capitalism. Remember that actions speak louder than words, and your evident leadership role is the key here.

    Whole Foods, for example, has built their business with a commitment to natural and organic foods, and have a culture of loyal employees and customers, resulting in 500 stores worldwide. As a result, they recently were acquired by Amazon for $13.5 billion.

  2. Team members must feel motivated and enabled. That means they must believe in what you are trying to do, and feel they have the right tools, training, and reward system to do the job that needs to be done. Your role is to provide this enablement, through listening to their needs, and providing personal coaching and mentoring as required.

    Jeff Bezos, founder of Amazon, attributes much of his success to building a motivated and enabled team. He is always open to the ideas of his team, and even if he doesn't agree that an idea will work, he'll say so, but he often supports and funds it anyway.

  3. Always maintain the very best talent for your team. I find that many business leaders are “too busy” to focus on talent, so they hire interns, available family members, or the first candidate, without regard to talent, experience, or dedication. Of course, even the best talent needs communication, training, and support to create the culture you need.

    In my experience, a level of disagreement among highly talented team members is a sign of a healthy team culture, allowing a business to survive and win in this age of multiple disruptive trends. Sometimes the last thing you need are people who always say “yes.”

  4. Foster collaboration rather than competition. With the financial constraints on every business today, it is easy to convince marketing and development that they are competing for resources, rather than working together to offer the best solutions for customers. Even within teams, the culture must be collaborative rather than win-lose.

  5. Relationships are key to happiness and productivity. This must start with you really getting to know your team members, as well as partners and customers, and letting them get to know you. You can then facilitate relationships between team members, as well as with people who can help. Everyone and your business will benefit from this culture.

  6. Celebrate every success to include the whole team. In addition to individual rewards and bonuses, take the time and effort to include all teams in a public recognition of even small successes, including failures that resulted in learning. This fosters a positive team culture, and communicates company values that are important for everyone.

  7. Commit to delivering a positive customer experience. You can’t build a positive team culture, while taking obvious shortcuts on your solution quality or customer service. Stick with what you know best, and show your team how to do it better than anyone else. Your team culture will coalesce to support your direction and drive business success.

Today your team and company culture are more important than ever in driving strategy and value, not the other way around. With the Internet and social media, your culture is no longer just an internal thing, but extends broadly to customers, investors, and vendors. You are the key to all of these constituents working together to win, especially in an increasingly competitive world.

Marty Zwilling

*** First published on Inc.com on 4/6/2022 ***

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Monday, April 18, 2022

5 Stages of Disruption Denial Cause A Startup Dilemma

female-businesswomanHow many times have investors heard startups start their pitch by touting that their technology is “disruptive?” What entrepreneurs forget or don’t realize is that most customers are wary of all technology, educating the market on new technology is expensive, takes a long time, and people buy problem solutions rather than technology. Investors will likely wait for more traction.

The concept of disruptive technology was first introduced by Clayton M. Christensen in “The Innovator’s Dilemma” way back in 1995. Such technologies, like the digital camera and mobile phones, introduce such novel concepts that they displace existing technology quickly by societal standards. Unfortunately this “quickly” may be too slowly to save initial startups in the space.

In this time of rapid change, it’s easy to conclude that everyone is an early adopter, and we all tend to forget quickly the time and stages we go through while adapting to new technologies, and then loving them. It’s time to review the classic article on HBR “The Five Stages of Disruption Denial,” by Grant McCracken, comparing technology adoption to Kubler-Ross’ five stages of grief:

  1. Confusion. We don't quite get it. We sign up for the new app, or buy one of the new devices after we see our cool friends using it. We give it a whirl, and quickly complain that things were easier the old way. By this time, gurus are reassuring us that it is the greatest thing ever. But that doesn't help. We decide to wait another year for the next version.
  1. Repudiation. There are many people who don't get the new technology, and now social life is a little like a competition to show that we're not "falling for it." At this point, there can more social capital in saying that we don't like the technology than that we do. We all hear snappy one-liners like, "Twitter. What could I possibly say in 140 characters?"
  1. Shaming. This is when we are so persuaded that we're right and the new innovation is wrong that we are prepared to make fun of the credulous among us. "This Twitter thing. It's just a fad. Give it a couple of months and it will go away." We heard a lot of this sort of thing about Pinterest in the early days. Now it's valued at $15 billion.
  1. Acceptance. By this time, the innovation is taking off. The middle adopters are signing on. It is clear now even to late adopters (the great majority) that there is at least one useful aspect of the new technology, and it’s here to stay. Confronted by accomplished, irrefutable fact, the rest of us cave in, sign up, and brag about how modern we are.
  1. Forgetting. This is where we destroy the evidence, even in our own mind. Now we are inclined to act as if we always understood and approved of a world instilled with new innovation. One minute, we are too smart to be fooled by Twitter. The next we are fully on board. It's a like high school. We are captives of what Mark Earls calls "the herd."

In the old days, it typically took 20 years for this process to happen. Now it happens much faster, but it still takes longer that the survival lifetime of a struggling startup. Smartphone acceptance in the USA is now over 80 percent, only twelve years after the first Apple iPhone was introduced. There is other evidence that may be the new norm, and will be soon beaten.

Marketing guru Seth Godin mentioned in an article a while back that “it takes about six years of hard work to become an overnight success.” Mark Zuckerberg spent about 7 years and $150 million before Facebook became cash-flow positive. MySpace and several others, who arguably pioneered the disruptive social media technology, never really survived to enjoy it.

Too many of the entrepreneurs I know who highlighted their disruptive technology early ultimately ran out of money and had to shut down for being “ahead of their time.” They did everything right, but the market just wasn't ready. Sometimes this is just an excuse for other problems, but don’t forget the old investor saying: "being early is the same as being wrong."

Overall, I think more startups do fail by being too early to market than fail by being too late. This is probably a hard message to swallow, but it’s usually the second mouse that gets the cheese. What are you doing to avoid this trap with your disruptive technology?

Marty Zwilling

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Sunday, April 17, 2022

10 Attributes Of The Perfect Partner For Your Startup

perfect-business-partnerAs a long-time business advisor and angel investor, I’m a believer that “two heads are better than one” in building a new business. Very few entrepreneurs have the range of skills and experience to be the solution creator as well as business creator, or operational as well as sales leader. The challenge is to recognize and recruit that ideal partner match early with minimal cost and risk.

In fact, I would broaden the definition of partner from co-founder to “business partner.” The reason is that good attributes apply equally well to “external” partners, as they do to internal partners, like a co-founder or CTO. A good overall example is the synergy between Google co-founders Sergey Brin and Larry Page, as well as long-time Executive Chairman Eric Schmidt.

In all cases, the challenge is the same, of finding people that you can work with and enjoy in the business relationship. The relationship has to have trust, communication, and respect in order to work. Otherwise, like a marriage, it will be doomed to constant conflict, second guessing, and unhappiness. So the following traits have to apply to both sides of the partnership to work:

  1. Capable of working collaboratively. Some people are too independent to be partner material. If they or you find it hard to trust others, love to work alone, always have to be in control, or insist on micro-managing, it may be time for change or looking elsewhere.
  1. Neither partner needs to be managed. Good partners are people who are confident in their own abilities, and willing and able to make decisions, take responsibility for their actions, and able to provide leadership, rather than require leadership.
  1. All partners have compatible work styles. Most entrepreneurs work long hours and weekends to get the job done. If you team with a partner who likes to sleep late, and reserves the weekend for other activities, the partnership will likely not work.
  1. Agree on a common vision and commitment. It doesn’t take long to sense someone’s real commitment, or vision and desired outcome of a joint project. Is your project seen by both as an end in itself, or a means to another end? Conflicting visions won’t work.
  1. Believe in similar values and goals. If one of your core values is exceeding your customer expectations for quality and service, and your potential partner ascribes to the low cost, high profit mantra, a successful partnership is highly unlikely over the long-term.
  1. Operate with a comparable level of integrity. High levels of integrity are important in business, but more important is your level of comfort with your partner’s integrity. This is a critical element of a good relationship, but a tough one. This is probably the best place to apply your “gut” feeling.
  1. Brings complementary skills and experience. If both of you are experts at software development, even though one loves design and the other loves coding, that still won’t get the marketing done. Look at the big picture first of development, finance, and marketing/sales.
  1. Feels a real passion and love for their role. The passion has to be in the business context – meaning results oriented, customer oriented, and sensitive to competition. In many cases, experts with academic or research credentials are not good partners for a business venture.
  1. Believe in the same ethical and diversity boundaries. How the leaders of your company handle adherence to the spirit as well as the letter of the law will be seen by all employees, customers, and investors. Ethics and the view of personal boundaries should be explored fully.
  1. Carry minimal historical baggage. Partner decisions are more important than team member hiring decisions. Thus you should do the same or more due diligence on educational background, previous work, and references. Look impartially from all angles and do the follow-up on all relevant previous roles.

Beyond the core team of two or three startup partners, every startup should seek to “outsource” the rest of their strategic requirements to external business partners. It’s faster and cheaper than building a large team in-house, and usually more effective.

By using this checklist, you should be able to objectively match potential partners with your own needs and expectations. Then, as I always recommend, it’s time to establish a formal agreement or contract to cement the partnership. With that, you will have a strong foundation for success, as well as a great working relationship for the next thirty years.

Marty Zwilling

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Saturday, April 16, 2022

8 Aspects Of Team Well-Being Drive Business Results

adult-business-businesswoman-choicesEvery entrepreneur and business leader I know realizes that it takes a dedicated team to build and run a successful business, and nurturing that team is one of your most important priorities. Yet I find, as a mentor and outside consultant, that many of you focus only on working conditions and compensation as the key factors determining team engagement, health, and productivity.

I’ve always known it was much more complicated than that, but I have struggled over the years to pull together all the elements. Thus I was pleased to see a much more complete and broader perspective of employee support recommendations in a new book, “Employees First!” by Donna Cutting, who is a globally-recognized guru on employee culture and optimizing customer service.

Among the key factors which I believe are often overlooked, she emphasizes that you need to focus on all the dimensions of employee wellness, as originally defined by the Substance Abuse and Mental Health Services Administration and other experts. I will summarize these here, with my insights, for your review and implementation:

  1. Physical health. You probably already understand this dimension, which includes how well your team members observe healthy living habits, including nutrition, exercise, and rest, both at work and outside. In my experience, a healthy team is a prerequisite for a thriving business, innovation to meet market needs, and high customer loyalty.

  2. Emotional stability. This one relates to every team member’s ability to manage stress, control emotions, and cope with business and personal challenges. I find this one to be just as important as physical health, but often overlooked by business leaders and personnel managers alike. It is the key to coping with stress and adapting to change.

  3. Financial strength. Financial well-being is the ability of every team member to feel comfortable with the financial rewards provided by your business. They must manage to these daily, have savings plans in place, set financial goals, and stay on track to meet those. Of course, you as the business leader have a key role in making all this happen.

  4. Social interactions. Every person requires some level of positive human interaction with co-workers and others to be satisfied and productive. For you, this means providing a positive team culture, being a role model for good communication, and creating a support network of colleagues. This translates to better motivation, productivity, and collaboration.

    The recent pandemic and remote team members have made the focus on social even more critical. It is your responsibility to facilitate regular communication between team members and all constituents via all channels, including social media, email, and video.

  5. Spiritual connections. In business, this is all about the company values and purpose that give meaning and direction to your team. You need team members who understand and share these values, if you want commitment and accountability from them. Every team member wants to be part of a higher purpose than just survival and profit.

    For example, Blake Mycoskie, founder of TOMS shoes, set a higher purpose of donating a pair of shoes to the needy for every pair sold, driving a spiritual cause for employees and customers. Other studies have shown a return of up to 400 percent for this approach.

  6. Environmental safety. This begins with making every team member’s workplace a safe and enjoyable place to be, with a feeling of order and harmony. In my experience, it also extends to your solution’s positive impact on customers, and the greater world environmental issues, including global warming, toxins, and the culture of others.

  7. Occupational satisfaction. You as a business leader can greatly influence this factor by providing the resources and training to allow team members to do their job better, and appreciate the impact of their work. They also need to feel the rewards of doing the job well, including positive customer feedback and career advancement opportunities.

  8. Intellectual stimulation. Let your team members feel that they are constantly learning new things, and allow them to share their talents through coaching and mentoring assignments. Delegate decisions, and support their creative efforts through positive feedback and creative compensation. Ask for creative thinking, and listen to feedback.

You need to recognize that building and maintaining a highly productive and engaged team is quite different from creating and maintaining an innovative solution. Remember that team members are people first, not just another technical solution component. With the right product and the right team, you too can have a thriving and satisfying business for all concerned.

Marty Zwilling

*** First published on Inc.com on 4/1/2022 ***

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Friday, April 15, 2022

10 Reality Checks On How To Get From Idea To Delivery

innovation-mythsMost people think innovation is all about ideas, when in fact it is more about delivery, people, and process. Entrepreneurs looking to innovate need to understand the execution challenge if they expect their startup to carve out a profitable niche in the marketplace, and keep innovating to build and maintain a sustainable competitive advantage.

Everyone thinks they know how to make their innovation into reality, but I can’t find much deep research on the subject. At the same time, myths about innovation are commonplace in business. Vijay Govindarajan and Chris Trimble, in their classic book “The Other Side of Innovation: Solving the Execution Challenge” have done some good work on the execution side.

They take you step-by-step through the innovation execution process, in the context the ten most common myths about innovation, which I think makes their approach particularly instructive:

  1. Innovation is all about ideas. While it is true that you can’t get started without an idea, the importance of the Big Hunt is vastly overrated. Ideas are only beginnings. Without the necessary focus, discipline, and resources on execution, nothing happens.
  1. A great leader never fails at innovation. When it comes to innovation, there is nothing simple about execution. The inherent conflicts between innovation and ongoing operations are simply too fundamental and too powerful for one person to tackle alone.
  1. Effective innovation leaders are subversives fighting the system. Effective innovation leaders are not necessarily the biggest risk takers, mavericks, and rebels. The primary virtue of an effective innovation leader is humility. What you want is integration with real world operations, not an undisciplined and chaotic mess.
  1. Everyone can be an innovator. Ideation is everyone’s job, as are small improvements in each employee’s direct sphere of responsibility. Yet most team members don’t have the bandwidth or interest to do their existing job, and well as address major innovations.
  1. Real innovation happens bottoms-up. Innovation initiatives of any appreciable scale require a formal, intentional resource commitment. That requires the focus and resources from top executives to sustain, even initiate, relevant efforts.
  1. Innovation can be embedded inside an established organization. Some forms of innovation can be imbedded, like continuous product improvement, but discontinuous innovation is basically incompatible with ongoing operations.
  1. Initiating innovation requires wholesale organizational change. Innovation requires only targeted change. The first principle is to do no harm to existing operations. A common approach that works is to use dedicated teams to structure innovative efforts.
  1. Innovation can only happen in skunk works. Innovation should not be isolated from ongoing operations. There must be engagement between the two. Nearly every worthwhile innovation initiative needs to leverage existing assets and capabilities.
  1. Innovation is unmanageable chaos. Unfortunately, best practices for generating ideas have almost nothing to do with best practices for moving them forward. Innovation must be closely and carefully managed, during the 99% of the journey that is execution.
  1. Only startups can innovate. Luckily for entrepreneurs, many large companies are convinced that they must leave innovation to startups. Yet research suggests that many of the world’s biggest problems can only be solved by large, established corporations.

Everyone agrees that the goal of innovation is positive change, to make someone or something better. Entrepreneurs need it to start, and established companies need it to survive. The front end of innovation, or “ideating” is the energizing and glamorous part. Execution seems like behind-the-scenes dirty work.

But without the reality of execution, innovative ideas really have no value. Customers are interested in solutions, and investors want to see the money. Your real challenge as an entrepreneur is to create an innovative business, not an innovative idea.

Marty Zwilling

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Wednesday, April 13, 2022

5 Strategies To Help You Take Charge Of Your Own Life

self-coachingAfter many extended coaching sessions with entrepreneurs and small business owners, I’ve found myself wondering if my value-add was anything more than you could get by self-coaching. Of course, my years of experience in business gives me insights that you might not yet have, but I’ve found that the major value from coaching comes from getting you into the right mindset.

I still see some value from an external coach, but only after you make every effort to get yourself into a better mindset, and have a concrete idea of where you need specifics and an external perspective. The advantage of this approach is that it encourages you to take charge of your own life, as outlined in a new book, “Take Charge of You,” by David Novak and Jason Goldsmith.

In addition to feeling better about yourself, you may find that you are better prepared to face the unlimited number of future challenges every business brings, without a constant need for the time and cost of an external business coach. I agree with the key points that these authors outline for self-coaching, from their wealth of experience in business and performance coaching:

  1. Ask yourself the key questions every coach would ask. Like any coach would ask, you need to brainstorm and write down the short list of things that are getting in the way of your joy and satisfaction at work, as well as the single biggest thing that would grow your joy in business and personal life. Envision and focus on getting to that destination.

    For example, you may find out that being your own boss is a driving force in your life. Thus preparing for and making the tough business decisions will lead to more positive satisfaction and learning, rather than the negative burden you have felt up to this point.

  2. Open up to growth and refuse to prejudge yourself. Change your “nots” to “not yets.” Define your higher purpose, and prioritize what you value most in your business. Let these beliefs drive you to a “take charge” action, and shift your focus to the positives that will override the negatives that have been holding you back, and learning what you need.

    One technique that I have found useful in this regard is to practice reframing negatives into positives, by adding what it would take to make an “unlikely” into a likely outcome. It’s all about getting your mind thinking in a new way, and then following through to success.

  3. Do your homework to remove your own weaknesses. Kickstart your learning curve by asking for and listening to the insights of those around you, and including yourself. Switch your mindset into problem-solving mode. Use what your single biggest thing is telling you to overcome emotional barriers, and reframe your weaknesses as opportunities to grow.

    Another approach is to take a hard look at how you have handled roadblocks in the past. The more aware you are of where past instincts have led you, the more you will be able to shift your focus to where you need to go. It’s all about changing a negative mindset.

  4. Take incremental actions that approach your goals. Turn the insights you have gathered into a list of actions that will move you forward. Create a roadmap from the current reality to the desired destination. Track your progress with frequent milestones, metrics, and physically checking things off the list. Celebrate every step of progress.

    It’s amazing how much strength and positive incentive can be derived from small rewards and positive feedback, even from yourself. That’s just what you need to tackle the next big business issue now, rather than ignoring it or running away to wait another day.

  5. Commit to constant and consistent improvement. Build in positive motivation by constantly reminding yourself what matters, connecting with your future vision, and sharing your intent and progress with the team. Celebrate your wins, keep a flexible mindset, and raise your own bar often. It helps to partner with and coach others.

    Procrastination is the enemy you need to fight here. Don’t let discomfort, confusion, and distraction keep you from moving forward. Most often in business, any decision is better than no decision. Make a commitment to yourself to address all issues within a fixed time.

Following these recommendations will always help you find the strength to tackle the most important issues in your business, as well as your life. I’m convinced that there will still be room for business coaches like me, for more targeted issues where my experience will shortcut your solution. Believe me, having you start in the right mindset will be more productive for both of us.

Marty Zwilling

*** First published on Inc.com on 3/28/2022 ***

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Monday, April 11, 2022

9 Business Model Components For New Business Funding

business-model-canvas-for-fundingNew entrepreneurs are always looking for a shortcut in getting their venture story and plan across to investors, and closing on the funding they need. An effective tool I see used more and more, as a prelude to a more detailed business plan, is the Business Model Canvas, first introduced by Alexander Osterwalder back in 2008. It forces you to bridge the gap between idea and execution.

The canvas is a visual chart with elements describing your value proposition, structure, finances, and customers, to help companies identify and align business activities. Now I see in a classic book, “Business Models for Teams,” by Tim Clark and Bruce Hazen, an extension of this process to down inside the venture, for teams and individuals. It shows you how everyone works in synergy.

In my experience as a new business advisor, a business is nothing until people are aligned and work in sync. As a former angel investor, I look for this level of alignment and understanding in every funding presentation I hear. I look for evidence of the nine major elements of the model canvas, as paraphrased here from the author’s key points and how they apply to teams:

  1. Customer segments. A business without well-defined customers is never fundable. Valid customer segments must be quantified for every opportunity. Many businesses these days serve both paying and non-paying customers, such as Google and Facebook, who count on millions of non-paying users to attract advertisers, who really pay the bill.
  1. Value propositions. Think of value propositions as bundles of services or products that create benefits (value) for customers. The ability to deliver better value is the main reason why customers select one competitor over another. Value should always include not only functions, but also social, environmental, and emotional benefits as well.
  1. Revenue. Every business needs revenue to provide investor returns and offset costs. “Free” is not an attractive revenue model to investors. Popular revenue models today include recurring subscription charges, licensing, as well the traditional sale or lease model. Every team needs to understand how their activities relate to customer revenue.
  1. Costs. Every entrepreneur needs to know and communicate the total costs associated with their solution or product, including cost of goods sold, customer acquisition costs, capital costs, operational expenses, and partner costs. Every team and every individual should know their own cost contributions required to complete their activities.
  1. Key resources. Investors are looking for the sum of all assets that are truly essential for creating, communicating, selling, and delivering your value proposition. These normally include people, tangible property, intellectual property, and cash flow requirements. Secondary assets, such as desks and computers, can be ignored at the funding stage.
  1. Channels. Channels have to be identified through which a startup creates awareness, induces evaluation, enables purchase, and executes the delivery of the value proposition. Every team and every individual needs to know how they relate to, or are responsible for, specific customer relationships. Investors will demand clear channel definitions.
  1. Customer relationships. Today, businesses are all about customer relationships, not just transactions. Thus investors expect to hear about strategies and technologies that your company plans to use to manage all customer interactions, with the goals of attracting new customers, improving customer retention, and driving sales growth.
  1. Key activities. These are the important things the business must do to make a specific business model work, specifically creating, communicating, selling, and delivering value propositions. Then there is the follow-up to provide customer support and satisfaction. Entrepreneurs who can’t communicate specific activities are not ready for funding.
  1. Key partners. No startup or entrepreneur is an island. It takes partners to make a business work, normally including suppliers, marketing, channel, and distribution partners, as well as funding partners. Every partner has their own set of activities and required resources. Every startup looking for investment needs a solid partner story.

Beyond the investment, a major challenge that every entrepreneur faces is getting teams and every individual on the team aligned and committed to the overall strategy and plan. That step, commonly called the we-to-me translation, is another value of the business model canvas and its extensions. There are no shortcuts to funding, but it pays to use the tools that work. Try this one.

Marty Zwilling

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Sunday, April 10, 2022

7 Keys To Evolving Your Leadership To Sustain Success

from-smart-to-wiseMost of the entrepreneurs I have met are smart, but many are not always wise. That means they may show great insights into a new technology that has marginal business value, their passion may motivate team members more than customers, or they may allow themselves to be pulled over the ethical line in their success drive. Wise leaders are authentic, timeless, and enduring.

Of course, experience is the ultimate teacher of the differences between smart and wise. But none of us can afford to make that many mistakes, so it helps to understand the basic principles that are key to making wise, as well as smart, decisions. In their classic book on the subject, “From Smart to Wise,” Prasad Kaipa and Navi Radjou offer some great observations, based on their years of research and consulting experience with hundreds of leaders.

I’ve summarized their basic principles here, in the context of early-stage entrepreneurs and startups, in the hope of providing a head start, and fewer mistakes to recover from, for every entrepreneur:

  1. Broaden your perspective for your passion, to the greater good. Perspective is what defines us, and shapes our thoughts and actions. For technologists it drives the passion to take new ideas to new realities. Wise leaders tend to connect their worldview and ideas, to help everyone find a larger meaning in life. Steve Jobs espoused this principle.
  1. Act authentically and appropriately as your perspective changes. Wise entrepreneurs are sensitive to the context they operate in and fine-tune their actions accordingly, while continuing to serve their higher purpose. They never forget their moral compass, and maintain credibility by always bridging the saying-versus-doing gap.
  1. Learn to perform any role well, without forgetting who you really are. We all know a smart entrepreneur who wouldn’t give up the CEO role, and lost the company. Wise leaders give up an existing role when it is time. They willingly act as trustees or servant leaders in whatever actions and roles they accept. Bill Gates seems to fit this model.
  1. Expand horizons to make every decision win-win versus win-lose. Smart leaders tend to make decisions instinctively, based on their own experience, with little attention to the larger context. Wise decisions win in the long run for the broader purpose, as well as problem at hand. Don’t let practical execution or emotions sway strategic deliberations.
  1. Know when to hold and when to fold, with flexible fortitude. Many smart leaders tend to stick with a decision, without any re-alignment to a rapidly changing external context. Wise leaders show courage in following the context, and grace in letting go when appropriate. This flexible fortitude keeps them aligned with the long-term benefit.
  1. Act and lead with enlightened self-interest, to serve others. This world is now too complex for one entrepreneur to have all the resources and products needed to satisfy their customers. That means nurturing partnerships and cooperation with competition, for the greater good. It’s a move from pure self-interest to enlightened self-interest.
  1. Strive to create your own authentic path to wise leadership. First adopt the six leadership elements including perspective, action orientation, role clarity, decision logic, fortitude, and motivation. Then integrate these in your own path to wise leadership, building wise cross-functional teams, wise organizations, and wise communities.

Smart people impress us all with their intellectual power and uncanny ability to achieve their goals. But smartness alone is not always sufficient to keep entrepreneurs out of trouble and sustain their success. Wise entrepreneurs ultimately are the ones that create lasting value for both stakeholders and society.

Evolving from smart to wise requires nothing more than reflecting on the best practices of other wise entrepreneurs and emulating them appropriately in your own personal journey and roles. Now is the time to measure where you are along the path, and build the roadmap for your journey. Have you assessed your leadership style lately against these principles?

Marty Zwilling

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Saturday, April 9, 2022

8 Keys To Getting Team Decisions You Can Learn From

analyzing_brainstorming_businessStarting and running a company is a team effort. Yes, it takes a leader (entrepreneur), but you can’t do it alone, without a team. Maybe only you and a co-founder comprise the team at first, to provide key skills, back you up, and test your ideas. As the startup grows, the team has to be able to really push you in making growth decisions, rather than you pulling them along.

The responsibility for leadership rests on you as the founder or CEO, and your leadership style. Many entrepreneurs still fall back to the traditional “control” leadership paradigm, but I don’t see it working so well any more. I agree more with Dr. Roger Schwarz and his classic book, “Smart Leaders, Smarter Teams.” He outlines eight keys to an effective mutual learning approach as follows:

  1. State views and ask genuine questions. When you state your views and ask genuine questions, you are convincingly open and curious. Understand that curiosity doesn’t mean agreement, and all questions are not genuine. Recognize that rhetorical questions seek to make a point or make people do something, not come up with a real answer.
  1. Share all relevant information. All team members need all the right information, before they can make, understand, and implement forward-looking decisions. That means sharing timely information that doesn’t always support your view, or might upset others. You should disclose your feelings, and any limiting factors like privacy or legality.
  1. Use specific examples and agree on what important words mean. If you hear someone on the team using a word or term that you think is unclear to others, ask for a specific example. This usually requires naming real names, rather than “someone,” and asking what you really want to know, without generalizing the question.
  1. Explain reasoning and intent. Teams are hardwired to make meaning out of problems. When you share your reasoning and intent, you reduce the need for others to figure out reasons, or assume something is being withheld. Start every meeting with one or two sentences that explain what you want to talk about and why.
  1. Focus on interests, not positions. Positions represent specific solutions from a given team member, whereas interests are the underlying needs that drive people to their position. You need a decision that meets all key interests, in order to get total commitment to the best solution from the team.
  1. Test assumptions and inferences. Assumptions are conclusions with no information. Inferences are conclusions about things you don’t know based on things you do know. Avoid assumptions, and test every inference by checking it against behavior confirmed by someone else. Untested inferences are among the main reasons a team gets stuck.
  1. Jointly design next steps. When you jointly design next steps, you design them with others instead of for others. It increases the chance that you will get a genuinely workable solution and that the team will be committed to implementing it. Keep in mind that joint design doesn’t mean that you give up your prerogative of making the final decision..
  1. Discuss un-discussable issues. These are topics relevant to a solution that team members won’t address in the team, due to fear or compassion. Examples include disruptive actions of a team member or a boss. Leaders may start the discussion outside, but must address it, with respect, inside the team for mutual learning and resolution.

Where you as the leader may be part of the problem in the mutual learning process, it may be necessary to ask a third party inside the organization, or a consultant from outside the organization to facilitate the transformation, or the resolution of a tough change issue. True leaders know how to move out of the way to let others do what they do best.

The results are improved performance, stronger working relationships, and greater well-being for you, your team, and your company. In the long run, every entrepreneur needs to remember that it’s the team, with their broader range of skills and experience, that builds the leader’s success – and not the other way around. This rarely happens with total control leadership.

Marty Zwilling

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Friday, April 8, 2022

10 Ways Of Thinking That Brand You As An Entrepreneur

branded-as-an-entrepreneurMost people agree that entrepreneurs have to think differently and take risks to have much chance of building a successful business. Yet I have found that serious entrepreneurs usually go way beyond these platitudes in their actions and thinking, and often won’t volunteer their real views, for fear of alienating “regular” people, and being branded a fanatic.

In the classic book “The Entrepreneur Mind,” from serial entrepreneur Kevin D. Johnson, he outlines 100 essential beliefs, insights, and habits of serious entrepreneurs. Most of these are predictable, like think big and create new markets, but I found a few, like the ten below, that will likely raise the hackles of many people outside this lifestyle, and many “wannabe” entrepreneurs.

Yet, based on my own years of experience “in the business”, mentoring many entrepreneurs, and following stalwarts like Elon Musk and Jeff Bezos, even these potentially controversial mindsets ring true to me:

  1. All risk isn’t risky. Entrepreneurs surely understand the high probability of failure, but they don’t necessarily like to gamble. Instead, they take calculated risks, stacking the deck in their favor. They must have enough confidence in themselves, supplemented by expert knowledge, solid relationships, or personal wealth, to see the risk as near zero.
  1. Business comes first, family second. This view isn’t a selfish one, but a recognition by serious entrepreneurs that family well-being is dependent on the success of the business, not the other way around. This is why airlines ask you to put on your oxygen mask first. Should you forego closing a million dollar deal to attend a ball game with your son?
  1. Following your passion is bogus. Look for a good business model first. Your passion may be for a good cause, like curing world hunger, but it may not be a good business. In any young business, you inevitably find things that are not enjoyable, but need to be done, like cold calls or firing unproductive employees. Just doing fun things is a myth.
  1. It’s not about being your own boss. Great entrepreneurs aren’t interested in being bosses at all. People who crave the freedom to do what they want when they want generally make terrible entrepreneurs. In order to be a successful entrepreneur, discipline is a must, and accept your new bosses as investors, partners, and customers.

  1. Fire your worst customers. We have all had customers who take advantage of us, to the detriment of other good customers. The best entrepreneurs are quick to make the tough decisions to bypass bad customers, with proper respect, to minimize frustration, resource drain, and reputation loss. You can’t please everyone all the time.
  1. Ignorance can be bliss. It’s great to be highly familiar with the industry in which you plan to compete, but many times people see too many challenges, and never start. In other cases, entrepreneurs are opening up new business areas, so no one yet knows the challenges. Serious entrepreneurs trust their ability to beat a new path to the opportunity.
  1. You’re in no rush to get an MBA. If you are already an entrepreneur, more education, including an MBA, will only slow you down. Consider it a waste of time. If you plan to become an entrepreneur, and already have business experience or an undergraduate business degree, skip the two-year delay and cost of the MBA.
  1. You are odd, and it’s OK. Entrepreneurs, especially those in technology, usually don’t start out as well-rounded, well-adjusted leaders. In fact, being odd is quite the norm. According to other studies, attention-deficit disorder (ADD) is common, as well as host of other personality disorders. It’s actually cool to be a geek in this lifestyle.
  1. A check in hand means nothing. Every entrepreneur remembers their na├»ve days when that first customer check bounced. When you receive a new purchase order, a check, a verbal agreement, or even a written agreement, don’t get too happy and excited. Save the celebration until you have cold cash in hand, or the funds are verified.
  1. There’s no such thing as a cold call. If you are an elite entrepreneur, you don’t go into anything cold. With the Internet and a plethora of other resources, you can warm up any call quickly, and not waste your time or theirs. Doing your homework first is one of the best ways to get an advantage over your competition.

If you think Johnson is on the right track, see his book for 90 more challenging insights. Even if you disagree with some of these, try to open your mind to the value of the seemingly backward way of thinking required to be a great entrepreneur – others seek refuge, they take risks; others want a job, they want to create jobs; others follow the market, while they define the market.

Have you caught the entrepreneur bug yet? If so, prepare for a lifetime commitment, and learn from the elite. There is no turning back.

Marty Zwilling

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Wednesday, April 6, 2022

5 Reasons Why You May Not Want To Grow Your Business

alicia-bruce-pricingIt seems like every entrepreneur and business owner I meet is highly focused on fast growth to a large business, and becoming the next unicorn. They don’t realize the running a large business brings a whole new set of problems, and may not be all that much fun, compared to their small business role. If you enjoy your role today, I believe it makes more sense just to keep it that way.

You won’t often find that recommended by consultants, so I was pleasantly surprised to see the key points highlighted in a new book, “Self-Made Boss,” by Jackie Reses and Lauren Weinberg. These authors have enjoyed leadership positions in big companies, as well as small, and distill their advice from interviews with dozens of business owners of all sizes around the country.

As you look forward from where you are today, I recommend that each of you consider the following points that the authors and I all agree are key to your satisfaction, as well as your success in business:

  1. You love solution creation more than managing business. Most of you entrepreneurs have a passion for your solution, and some only see the business as a necessary burden. You need to realize that the business role, including financials, marketing, personnel, and team building, only grows over time and your creative role is reduced.

    I’m convinced that the reason for the high rate of startup failures, with well over half not lasting five years, is not that the solutions are not innovative, but that the entrepreneur focuses on the product, rather than the business of attracting and managing customers.

  2. No one else can do the solution delivery like you can. You may be able to train others to do the work you do, but they may not have your passion or unique quality. But the more you get involved with mentoring and training, the less time you have to enjoy the creative process. If you are the business, it makes no sense to stress over scaling it.

    Another reality I see is that some of you are micromanagers. If you can’t bear delegating any substantive decision to your team, then growing the business will become ever more stressful and non-satisfying. Keeping your business small is the right answer for you.

  3. You don’t want the big business challenges. Even a successful bigger business will bring additional responsibilities, new competition, and more demands on your time. You can look at these as learning opportunities, and enjoy the bigger financial returns, or see them as a larger burden, or an encroachment on your personal interest and satisfaction.

    For example, a whole new level of communication skills is required. Because you can no longer can you meet one-on-one with every constituent, you have to learn to use new communication channels, including public speaking, networking, and public relations.

  4. Your business model thrives on exclusivity. If you see your brand as a high-end boutique, bigger isn’t always better. As businesses grow, it becomes harder and harder to provide that high standard of personalized service. Before you find yourself in trouble, take a hard look at your growth strategy, as well as your personal needs and objectives.

    We are all jealous of the luxury brands, including Rolex and Armani, which thrive with their high profit margins and limited number of customers. At the same time, we know that their success is not totally having the best product, but also building relationships.

  5. You want to maintain a good work-life balance. Many of you small business leaders have care-giving responsibilities for loved ones, or simply prize the time you are able to travel and spend time with your friends and family. You need to decide whether you live to work, or work to live. Make these decisions proactively before a business crisis occurs.

    The new term I hear in this arena is work-life integration. The concept here is that your personal and professional lives don’t have to be competitors. If your passion is saving the environment, for example, you can make that your business as well as personal focus.

I have learned through real experience that starting a business is hard, and expanding it can be even harder, which is why you should consider staying small, and enjoy your life more. There is no shame in having a small business versus a large one, and in fact most of the small ones I know are able to treat their customers better, and maintain a more positive legacy as well.

Marty Zwilling

*** First published on Inc.com on 3/22/2022 ***

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Monday, April 4, 2022

10 Tips For A New Venture To Survive The Early Years

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

According to my experience and this Motley Fool article from a few years ago, the challenge is very real, with around half of all new businesses no longer existing after five years. The problem is that professional investors (angels and venture capitalists) want a proven business model before they invest, ready to scale, rather than the more risky research and development efforts.

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

  1. Accumulate some resources before you start. It always reduces risk to plan your business first. That includes estimating the money required to get to the revenue stage, and saving money to cover costs before you jump off the cliff. Self-funding or bootstrapping is still the most common and safest approach for startups
  1. Keep your day job until revenue starts to flow. A common alternative is to work on your startup on nights and weekends, surviving the valley of death via another job, or the support of a working spouse. Of course, we all realize that this approach will take longer, and could jeopardize both roles if not managed effectively. Set expectations accordingly.
  1. Solicit funds from friends and family. After bootstrapping, friends and family are the most common funding sources for early-stage startups. As a rule of thumb, it is a required step anyway, since outside investors will not normally consider providing any funding until they see “skin in the game” from inside.
  1. Use crowd funding. The most effective new way of funding startups is to use online sites, like Kickstarter, to request donations, pre-order, get a reward, or even give equity. If your offering is exciting enough, you may get millions in small amounts from other people on the Internet to help you fly high over the valley of death.

  1. Apply for contests and business grants. This source is a major focus these days, due to government initiatives to incent research and development on alternative energy and other technologies. The positives are that you give up no equity, and these apply to the early startup stages, but they do take time and much effort to win.
  1. Get a loan or line-of-credit. This is only a viable alternative if you have personal assets or a home you are willing to commit as collateral to back the loan or credit card. In general, banks won’t give you a loan until the business is cash-flow positive, no matter what the future potential. Nevertheless, it’s an option that doesn’t cost you equity.
  1. Join a startup incubator. A startup incubator is a company, university, or other organization which provides resources for equity to nurture young companies, helping them to survive and grow during the startup period when they are most vulnerable. These resources often include a cash investment, as well as office space, and consulting.
  1. Barter your services for their services. Bartering technically means exchanging goods or services as a substitute for money. An example would be getting free office space by agreeing to be the property manager for the owner. Exchanging your services for services is possible with legal counsel, accountants, engineers, and even sales people.
  1. Joint venture with distributor or beneficiary. A related or strategically interested company may see the value of your product as complementary to theirs, and be willing to advance funding very early, which can be repaid when you develop your revenue stream later. Consider licensing your product or intellectual property, and “white labeling.”
  1. Commit to a major customer. Find a customer who would benefit greatly from getting your product first, and be willing to advance you the cost of development, based on their experience with you in the past. The advantage to the customer is that he will have enough control to make sure it meets his requirements, and will get dedicated support.

The good news is that the cost for new startups is at an all-time low. In the early days (20 years ago), most new e-commerce sites cost a million dollars to set up. Now the price is closer to $100, if you are willing to do the work yourself. Software apps that once required a 10-person team can now be done with the Lean Development methodology by two people in a couple of months.

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

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

Marty Zwilling

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