Saturday, September 24, 2022

8 Sure Signs That Your Leadership Style Needs Tuning

leadership-lessonsMost entrepreneurs assume that success is dependent on their product expertise, coupled with some knowledge of how to run a business. In fact, I have found from personal experience and mentoring that both of these are necessary, but not sufficient, for building a business. Successful entrepreneurs today must practice human-centered leadership to compete and win.

There are many leadership styles out there that may have worked well in the past, including authoritarian and paternalistic. But in this new age of relationships, these often work against your business. There is more and more evidence that a more human-centered or heart-centered leadership yields the best results with your team and with customers in the long run.

As top business consultants and leading proponents of this leadership style, Susan Steinbrecher and Joel Bennett, in their classic book “Heart-Centered Leadership: Lead Well, Live Well,” do a good job on the details of why and how this approach leads to greater satisfaction and well-being for the team, and by extension, to the bottom line profit and impact of the business.

Here are some examples from their book and my experience of the many indicators, challenges that entrepreneurs will probably recognize, which highlight the value and need for increased focus on the human element:

  1. Collaborative team sessions seem to drag on. Entrepreneurs often complain about the amount of time wasted in meetings, because one of the team members just wants to be heard, or feels that what he or she has said is not valued. Great leaders learn to listen actively to conversations, so people don’t hold up progress just to be understood.

  1. Disruptive office politics start to show. Startups with weak directives, poor communication, and ineffective cultures are breeding grounds for negative interpersonal dynamics. Office politics are really about self-interest and self-esteem. Heart-centered leaders create engaged teams that are too highly motivated to waste time on politics.
  1. Investments and acquisitions fail. Failure is often not due to fiscal irresponsibility or lack of due diligence. Business-to-business relationships usually fail because the leadership team underestimates the impact and the importance of recognizing the human element. Effective entrepreneur leaders focus on getting people needs satisfied early.

  1. Team conflicts become personal fights. A conflict and a fight are not the same thing. The best entrepreneurs understand their people and embrace constructive conflict for steering through the maze of innovation and change common to every startup. Toxic relationships are emotional, often personal, disagreements which are counter-productive.

  1. Demand for coaching, counseling, and discipline training is high. The most-used workplace training programs are really about matters of the heart. Managers need training in coaching, counseling, and discipline because they resist or have difficulty communicating with team members. Punishment at work is not a motivator to change.
  1. Difficulties retaining key employees. Top team members rarely quit the company. More often than not they quit their boss. All too often, quitting is a response to a perceived lack of leadership or appreciation by key executives. Human-centered leaders connect with each team member at a personal level to assure ongoing commitment.

  1. Evidence of crossing the line ethically. If entrepreneurs show only an exclusive focus on the bottom line, team members may convince themselves that they have to bend the rules to be successful, which can easily lead to lying, cheating, and stealing. Leaders need to focus on a human-centered culture in their actions, as well as every message.

  1. Customer relationships culture is slipping. Your startup can’t sell and compete on the strength of your customer relationships, if the business culture in your startup is not human-centered. That startup culture has to come from the beginning and from the top, meaning heart-centered leadership from the entrepreneur.

There is an increasing body of evidence that teams and leaders focused on the human element not only live well, but are winning in their profit-making objectives as well. Examples of exemplary companies practicing this model include Starbucks Coffee and the Whole Foods. Both of these are human-centered businesses that boast high growth, high loyalty, and low employee turnover.

How evident in your leadership style is your commitment to personal understanding, open-mindedness, authenticity, trust and integrity? If you haven’t tried it, or you aren’t getting the feedback from your team than you want, maybe it’s time to take a hard look in the mirror. It’s never too late to learn.

Marty Zwilling

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Friday, September 23, 2022

5 Key Initiatives Define The Ultimate Startup Leader

Leadership-keys-minMost aspiring entrepreneurs are convinced that the strength of their initial idea somehow defines them as a leader, as well as the success potential of their derivative business. In my experience, it’s a lot more complicated than that. It takes leadership ability, as well as a good idea, to make a successful entrepreneur, and great leaders evolve from key leadership decisions along the way.

Fortunately, basic leadership and entrepreneurial skills can be acquired from experience and training. If you don’t have the entrepreneur leadership attribute or interest, but want to be an “idea person” or inventor, then I recommend that you find a partner with the requisite skills to implement and run the business from your idea.

Yet we all know that there is a big gap between good entrepreneurs and a great business leaders. Great leaders seem to make the right pivotal decisions at every critical point along the way. I’ve never been able to clearly define those key points, and what separates the good from the great at these points.

So I was happy to see Julia Tang Peters, in her classic book “Pivot Points,” tackle this issue. She concludes from her work with many modern business leaders, including CEOs Bud Frankel (Frankel & Company) and Glen Tullman (7wire Ventures), that there are five pivotal decisions that propel certain entrepreneurs to be gifted leaders:

  1. The launching decision. At some point an idea captures your imagination and creating a business becomes more than just about income. You define goals that rivet your attention, galvanizing you to turn dreams into reality. The launching point establishes the platform on which every potential entrepreneur becomes an actualized entrepreneur.
  1. The turning point decision. This is the confluence of your willful decision to do more, and the pressing need to take action. It unleashes an extraordinary verve to take the idea or business to the next level. It tests your capabilities and capacity in various ways, stretching them far beyond your comfort zone and requiring total commitment.
  1. The tipping point decision. Here you are catapulted into leading and working on the business, as distinctly different from the work of mastering your subject and working in the business. At this point you will have built a team whom you trust with substantive responsibilities, freeing you to hone the art of leading, inside and outside the business.
  1. The recommitment decision. Now is the time when you as the leader look at where you are and where you want to go, knowing the need to renew the commitment or leave. For many this happens during disruptive change, like being acquired or being the acquirer. For others, it’s a personal decision to balance family life, or do something different.
  1. The letting go decision.  The ultimate test of leadership is letting go at a time of strength so that others can carry on the work. It may be a hold’em or fold’em business situation, or simply time to plan for succession. This decision point is the most emotionally challenging, since letting go is pivotal in defining the terms of the entrepreneur’s legacy.

I’m certain that an understanding of these points will equip you with the knowledge you need to take the right path on decisions when it matters most. The world is full of high-achievers and high expectations, but without the proper framework for turning entrepreneurial determination into real leadership accomplishment, you risk going nowhere.

I agree with Peters that entrepreneurial leadership is not all about people traits or characteristics, but often about the choices they make at key decision points along the way. Of course, skills in decision-making are not enough alone to make a great entrepreneurial leader. Here are some of the other characteristics I look for:

  • Willing to listen, and will address skeptical views.
  • Always an evangelist and a good communicator.
  • Willing to question assumptions and adapt.
  • Proactively sets metrics and track goals.
  • Ties rewards to performance results.
  • Aggressively takes smart risks.

So a great idea is necessary but not sufficient to make you a great entrepreneur and a great leader. Work on the right characteristics, and think hard about those five key pivotal decisions that can make or break your satisfaction and your legacy. It’s more fun when you are the entrepreneur leader you want to be.

Marty Zwilling

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Wednesday, September 21, 2022

6 Marketing Accelerators For Boosting Business Growth

business-growthThe days of “if we build it, they will come” are gone. Great marketing is required to generate revenue and grow every business, especially new businesses which have no brand recognition nor loyal customer base. Yet, as a business consultant, I still find many of you business leaders relying primarily on your technology, word-of-mouth, or location to attract necessary customers.

For example, many investors I know tell me they look for business plans that allocate the largest portion of a requested investment to marketing, but most often see the top “use of funds” to be further product or service development. I also look for a commensurate portion of the plan describing the specific innovative marketing deliverables, beyond the traditional marketing items.

Usually these are described as revenue growth drivers, as outlined in a new book, “The Revenue Accelerator: The 21 Boosters to Launch Your Startup,” by Dr. Allan Colman. He is a business executive and consultant with three decades of marketing and real business growth experience. I will paraphrase here for you some of his key recommendations, with my own insights added:

  1. Make your personal brand totally memorable. In this age of instant communication through the Internet and social media, people remember personal images more than a product or service name. You must use self-promotion early and often through viral videos, blogging, and industry leadership, to establish credibility with your customers.

    Of course, you can’t possibly brand yourself if you don’t know who you really are. Now is the time for you to take a realistic assessment of your strengths and weaknesses, what you love doing, and your own personal dreams. Pull your customers into this picture.

  2. Show customers how you bring more value to them. This means you need to listen first to your customers, feed back what you heard they want and need, and convert these needs to your values. Dig deep to get beyond the best price or best service, to find a higher cause or unique benefit that they can remember and be happy to advocate.

    Another way to add value is to use today’s online digital technology to remember their preferences, simplify their interactions with your business, customize your offerings to match their interests, and make them feel special. The possibilities are endless.

  3. Build relationships with constituents and customers. Building more relationships is the most effective marketing you can do for long-term business growth. Relationships provide credibility for your brand, as well as referrals and advocacy that you can’t buy with traditional marketing. Seek out people who are already known in your space.

    For example, Bill Gates shared a mentoring relationship with Warren Buffett that increased the credibility of both, although their business domains were quite different. Oprah Winfrey was helped in her career by her relationship with Barbara Walters.

  4. Allocate resources to handle bumps along the way. Don’t assume that all your first marketing initiatives will work. Proactively use metrics and customer feedback before a crisis hits, to recognize when a pivot or product adjustment is required. Businesses that operate with no margin for recovery are doomed go get a bad image, if not total failure.

    I have worked with several new business owners who were convinced that no one could match their offering, only to be surprised by how fast competitors appeared. The smart ones were already working on new features, and able to counter competition quickly.

  5. Solicit complementary partnerships and alliances. No new business is ready to show strengths in all areas needed for growth and positive brand recognition. Be ready to complement your strengths by partnering with a complementary co-founder, distributor, or even an established competitor. Always test the relationship before signing a contract.

  6. Follow up and follow through with existing customers. Keeping existing customers satisfied is an ongoing challenge, but a critical marketing strategy. Continuing loyalty and repeat business are key to growth and a top brand image. I recommend that you meet with customer executives regularly and solicit customer feedback after each transaction.

Many new business owners find the toughest hurdle to get over is not building an innovative solution, but selling it, and exponentially scaling the business. To accelerate revenue and profit growth, you need innovative marketing strategies that go well beyond conventional advertising and distribution. I recommend you follow the principles outlines here to take the lead and hold it.

Marty Zwilling

*** First published on Inc.com on 9/7/2022 ***

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Monday, September 19, 2022

5 Keys To Achieving Memorable Competitive Distinction

best-buy-productEvery entrepreneur believes that their product or service is memorable, and that every customer will quickly see the advantage over competitors. Yet true product differentiation in the eye of the customer is rarely achieved. According to an old but still relevant survey by Bain & Company, 80% of businesses believe they have differentiated offerings, but only 8% of customers agree.

Even back then, experts projected that businesses with truly differentiated offerings had only an 80% chance of long-term success, compared to ‘me-too’ companies with a 20% chance. In my view both of these numbers have come down recently. Differentiation is still a key requirement for a successful startup rollout, and but it must be sustainable to keep ahead of new competition.

Since I’m a fan of real-world feedback, I was intrigued by the insights on differentiation in the classic book, “Roadside MBA: Back Road Lessons for Entrepreneurs, Executives, and Small Business Owners,” by Michael Mazzeo, Paul Oyer, and Scott Schaefer. As well as having great academic credentials, these guys traversed the USA getting lessons from real small businesses.

Here are a few of their conclusions relative to product differentiation, supplemented by my own recommendations from recent experience and other experts:

  1. Work on perceptions, as well as reality. It doesn’t do you any good to be different, if your customers can’t perceive the difference, or you don’t tell anyone about it. The days are gone for the “if we build it, they will come” mentality. Marketing and target customer relationships are always required, no matter how obvious the differentiation is to you.

    Of course, working on perception can backfire if the differentiation reality isn’t there. Remember the old saying, “You can put lipstick on a pig, but it’s still going to be a pig.” Like a damaged reputation, a discredited differentiation is extremely difficult to turn positive.

  2. Quantify the difference for your customers. Use numbers to make your offering the clear alternative. Fuzzy marketing terms like easier to use, lower cost, and higher quality are not effective differentiators, since they have been overused to the point of having no meaning.

    Real data and customer testimonials say it best, such as get it done in half the time, or half the cost, or comes with a 5-year warranty. In my experience, numbers less than 20% are not enough, since small numbers are not likely to overcome the inertia and learning curve required of most customers.

  3. Focus on customers you really care about, and who care about you. Trying to be all things to all people never works. Identify your target customer segment before you finalize your differentiation. For example, customers with high disposable income will likely respond better to unique features, rather than a lower cost.

    One business visited on the road had successfully implemented a product-differentiation strategy to appeal to the 20% of their clients who were the most profitable, and discourage the 80% who were more costly. They noted that customers’ loyalty grew with their real preference for the unique product features offered.

  4. Customize to differentiate, but do it efficiently. The new generation of customers expect to get what they want, when they want it, customized to their taste. So customization is an important differentiation strategy, but be sure to strike a balance between the revenue potential of the effort, versus the costs required to execute.

    We have moved from the era of mass customization to collaborative customization. Today, differentiated companies enable customers to determine the precise product offering that best serves that customer's needs. For example, MakeYourOwnJeans encourages customers to tailor-make jeans dynamically per their specifications.

  5. Define a unique selling proposition (USP), and keep it simple. Complex or highly technical selling propositions are not good differentiators, since they will likely not grab people’ attention or be remembered by most customers. A good example is Dominos Pizza “We’ll deliver in 30 minutes or less, or it’s free!”

Successful product differentiation requires a conscious and continuous effort, including listening on the right social media channels, being consistently helpful to your customers, and continuous innovation. But the results can put you in that coveted 8% that customers remember for real fun and profit. Isn’t that why you signed on to the entrepreneur lifestyle in the first place?

Marty Zwilling

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Sunday, September 18, 2022

8 Reasons That Startups Need To Think Like An Invader

think-like-soldiersWinning customers as an entrepreneur in a startup has many parallels to a young army trying to penetrate some formidable new and unfamiliar territory. You need a strategy as well as a goal, and you need to pick your battles well. Even in this age of purpose before profits, a business won’t survive by pretending there are no competitors out there to worry about.

I’ve long been aware of the 2500-year-old, but still current, masterwork on military strategy by Sun Tzu, “The Art of War,” but never thought very relevant to business startups. But Becky Sheetz-Runkle, in her classic book for small businesses, “The Art of War for Small Business,” gave me a whole new perspective.

In the context of offering some inspiring examples of small business success, she includes some timeless business lessons that I believe every startup entrepreneur should take to heart and follow in practice. As examples, I offer my interpretation of some of the key lessons here:

  1. Scout the territory first and pick your battles. A smart general going into battle always does the research first on the lay of the land, including critical high points that have the most value, before charging into the fray. Too many startups rush into battle early, assuming any progress will somehow give them the competitive advantage.

  1. Prepare thoroughly and strike fast. Lining up your resources is critical, but so is time to market. Some entrepreneurs get bogged down in planning and never get to the point of action, often called analysis paralysis (i.e. ready-aim-aim-aim-aim-aim...). A good general makes sure his troops are trained and prepared, and are not hesitant to act.

  1. Capitalize on strengths and shore up weak points. A winning military leader always knows the weaknesses of his troops, as well as the strengths. Entrepreneurs likewise must be able to recognize and leverage the competencies of the current team, while providing the backup and direction to minimize weaknesses in selecting target markets.

  1. Attack competitor weaknesses and be alert for opportunities. Every competitor, like every army, has weak points, and every territory has ready opportunities. Entrepreneurs must seek these out, pivot as required, and lead the team into battle. Small wins and some penetration builds momentum and bolsters morale for that major assault.

  1. Limit your focus to key objectives on a single front. No startup or army can manage more than 3 to 5 goals and priorities without becoming unfocused and ineffective. Pick the key challenges and attack them will all your resources, rather than stay spread so thin that every initiative is jeopardized. “Spray and pray” is not a winning strategy in any war.

  1. Capture territory the opposition does not yet own. In war, the smart general looks for territory that is undefended. Success there is assured, but the value of that position may also be low. In business, it’s always smart to look for new opportunities, or markets with few competitors, but beware of “solutions looking for a problem,” and lack of customers.

  1. Negotiate and leverage win-win alliances. Even in ancient times, creative diplomacy was a better solution than fighting to the death. Entrepreneurs need to learn that your toughest competitor may be your best strategic partner, leading to a win-win situation. This approach is called coopetition, and is too often overlooked as a key strategy.

  1. To win you have to take risks, but don’t be reckless. There is no safe position in business, or in war. In both cases, charging into battle with your eyes closed, is simply reckless, and will lead to destruction. Winning in either arena requires the skill and willingness to take smart risks, with trained resources, due diligence, and determination.

In fact, I now believe that all of Sun Tzu’s teachings are still relevant to entrepreneurs, who more than ever face fierce competition for customers, market share, and talent. Their very survival depends on strategy, positioning, planning, and leadership, just like it did for armies a thousand years ago.

With these lessons in hand, entrepreneurs today in startup companies can and do outsmart, outmaneuver, and overwhelm larger adversaries to capture market share, satisfy unmet needs, and emerge victorious in their chosen markets. That’s the challenge and the fun of being an entrepreneur. Believe me, it’s a lot more satisfying than the alternative.

Marty Zwilling

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Saturday, September 17, 2022

6 Mistakes Often Made Positioning Against Competition

positioning-competitionDon’t bash the competition. Every investor knows how vulnerable a new startup is to competitors, so investors always ask about your sustainable competitive advantage in the marketplace. How an entrepreneur answers this question speaks volumes about their knowledge of business realities, customers, confidence, and their ability to handle investor funding.

There is no perfect answer to the competitive advantage question, but investors are looking for how your offering will keep ahead of competition, not just at this moment, but throughout the life of their three to five-year investment. They are also seeking to find out how you handle one of the many tough questions that a new founder will get in today’s market.

A strong answer should be something like “Our product introduces a new lower-cost technology, which we have patented and trademarked, that makes us very attractive today, and will provide a wealth of additional products as we move forward.” That says you are competitive today, have a real barrier to entry, and the potential to remain ahead of the competition for a long time.

Based on my own experience as an angel investor, and feedback I get from many other investors, here are a collection of answers that we often hear instead, from the least credible to at least reasonable:

  1. Insist you have no competitors. Leading with this answer will likely terminate any further investment opportunity with this investor. He or she will assume your comment means there is no market for your product or service, or you haven’t looked. Neither speaks well for you or your startup. Even if you hedge by saying no direct competitors, we all know that existing cars are still big competition to your new flying automobile.
  1. Claim the first mover advantage. This is one of the most frequent responses I hear, and is rarely convincing. The problem is that startups have limited resources to keep them ahead of big companies. If your early traction highlights an opportunity they have missed, they can mobilize their huge resources and run over you. First mover advantages are only sustainable by large companies, or founders with deep pockets.
  1. Proclaim your solution as a paradigm shift. If you insist that your technology is so new and unique that it will disrupt your competitors and the whole market, investors will fear that neither they nor you can afford the time and marketing required to weather the change. They will likely decline on the basis that historically, pioneers get all the arrows.
  1. Highlight your world-class team as the secret sauce. Insisting that your team is better than any other, giving you a sustainable competitive advantage for the long term, will likely come across as naiveté or arrogance. Investors know that no startup has a lock on the best people and processes, and investors don’t deal with unrealistic founders.

  1. Declare that you will offer the product or service free. Free is a dirty word to investors, since they need a return on their investment. Perhaps you intend to collect money from advertisers, but this requires a large investment to get the audience you need before monetization can work. Facebook spent over $150 million before revenue.
  1. Intellectual property as barrier to entry. I like patents, trademarks, and trade secrets, so this answer is a better sustainable competitive advantage than the other five answers. Now all you have to do is defend your position, and we all know that patents can break a startup in court battles, and will have alternative implementations if the price is right.

Thus, there is no perfect answer to this question, so the best entrepreneurs see it as an opportunity to highlight their own advantages, rather than put down a competitor. Being negative is never the answer. For example, it’s tempting to say that your worst competitor has poor quality products, requiring costly maintenance, but it’s much better to say that you provide a five-year free warranty that no competitor can match.

After highlighting your best competitive features and your intellectual property barriers to entry, I encourage you to put on your humble face, and proclaim your determination to never stop improving your products and processes to out-distance competitors. You want investors to believe that you are a realist, but have the confidence and determination to win.

Investors know that winning in today’s highly competitive environment is more a mindset than a product feature. Competitor bashing is not a skill that you need to hone. I look for entrepreneurs that can sell themselves and their offering to discerning customers. Money from customers and investors is the same color.

Martin Zwilling

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Friday, September 16, 2022

10 Remote Staffing Blunders That Will Cost You Dearly

Outsourcing_TeamThese days, it is almost impossible to find a small business where everything is done by full-time employees, in the office or at home. We are in the age of outsourcing, by any of many popular names, including subcontracting, freelancing, and virtual assistants. These approaches allow your startup to grow more rapidly, save costs, but costly mistakes can lead to business failure.

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

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

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

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

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

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

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

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

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

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

Marty Zwilling

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Wednesday, September 14, 2022

6 Risks For Taking A Side Door Into A Public Exchange

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

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

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

  1. It takes real money to get into the game. The cost of the shell, plus the cost of navigating the process, can approach a half-million dollars, depending on the shell company, according to Hamilton & Associates Law Group, a law firm based in Boca Raton, Florida. This approach is thus not viable for entrepreneurs already out of money.

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

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

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

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

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

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

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

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

Marty Zwilling

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Monday, September 12, 2022

10 Keys To Surviving Startup Cash Flow Requirements

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

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

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

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

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

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

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

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

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

Marty Zwilling

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Sunday, September 11, 2022

8 Key Principles Applied By The Best Business Leaders

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Marty Zwilling

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Saturday, September 10, 2022

7 Personal Priorities Reveal Your Business Readiness

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

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

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

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

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

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

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

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

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

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

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

Marty Zwilling

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Friday, September 9, 2022

7 Strategies To Prepare For Tough Business Challenges

business-crisisProviding business leadership is a challenge under the best of circumstances, but it is especially difficult in times of market and customer crises. That’s when you most need your team to be engaged and supportive, at a time when they may not fully understand the issues, and fear for their own future and well-being. Every case is a new one where prior experience won’t help you.

For example, the COVID-19 pandemic caught every company, large and small, off guard, and at least a third of small businesses did not survive. For most of the others, it was a crisis where business leaders were challenged like never before to rethink their business model, redefine their organizations, and reconnect with customers. Yet, we all know a few leaders who surged ahead.

I believe these are the ones who had the best handle on their value proposition, the best support from their team, and followed their moral compass, as outlined in a new book, “True North: Emerging Leader Edition,” by Bill George and Zach Clayton. Both authors have managed their own companies through multiple crises, and are graduates of the Harvard Business School.

Here are their recommendations, as well as my added insights, for developing your skills as a leader, in anticipation of the next business crisis coming your way:

  1. Face reality, starting with your own contribution. Unfortunately, despite our best efforts, we all have weaknesses and biases. How long has it been since you looked in the mirror, and assessed how your actions may have contributed to a crisis? Do you take full responsibility, or did you tend to blame others or external factors for previous crises?

    I always recommend that you start by counting your positives. Make a list of your strengths, the things you are good at, the values that you hold, and the accomplishments you've achieved. This will in turn will help you improve your focus on where to improve.

  2. Always dig deep first for the real root cause. In my experience, many aspiring leaders are quick to attack the symptoms of a problem, rather than take the time to find the root cause. Fixing symptoms may be a quick fix, but it fails in the long run. You get to the root cause by collecting data, and continually asking “why” before implementing a solution.

    Feedback from the field is that it usually takes five "whys" to get to the real root cause. No matter how much you think you know about a situation, you will be surprised by the added insights you can get by asking questions of your team and other constituents.

  3. Engage frontline teams to decide on a solution. It’s amazing what you can learn from customer-facing teams in anticipating a crisis, and looking at solution alternatives. After all, they have to roll out and support any solution, and you all have to communicate the same message to the customer and marketplace. Make sure your team trusts you today.

  4. Be proactive in responding to the next crisis. By being proactive in response rather than defensive, your leadership is confirmed rather than questioned. The actual crisis may potentially be minimized, and certainly should be leveraged into making your business and your leadership more effective and more visible in serving your customers.

  5. Treat every crisis as a long-term change flag. In my experience, too many leaders start by treating every crisis as a momentary blip. The result is a minimal reaction by you, and things get worse. I recommend that you set out to over-react to even a small crisis and look for long-term implications that may lead you to a better response and presence.

  6. In the spotlight, always follow your true values. Every crisis is an opportunity to highlight personal and company values that go beyond financial returns, and show that you are trustworthy and sensitive to customer and higher-level needs. Don’t be hesitant to admit mistakes, but show a real willingness to correct mistakes and improve the result.

  7. Focus on winning now, and creating a long-term edge. Crises reveal your courage to your team and customers, in taking the bold steps needed to win. Courageous leaders don’t worry about looking good – they just want to incent the team to a win-win. Great leaders make every case a long-term win, rather than just mitigating short-term damage.

If you see yourself as an emerging business leader, I encourage you to test yourself in lower-stake situations to prepare for the greater challenges of a crisis. Practice the strategies outlined here to be better prepared not only to lead your team, but also have the courage to make the bold moves that will enable you to emerge as a winner when the time comes.

Marty Zwilling

*** First published on Inc.com on 8/26/2022 ***

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Wednesday, September 7, 2022

6 Keys To Selecting The Right Business Future For You

Free close up of two people hands, signing documents with laptop on table in office image, public domain CC0 photo.Most of you business professionals that I know have at least thought about or talked about starting their own business, to get more control, make more money, or to get more satisfaction out of their life. The challenge is when and how to make the switch to the entrepreneur lifestyle. As a mentor to young aspiring entrepreneurs, I often get asked for tips on a strategy to get started.

If you research the backgrounds on some of the most successful entrepreneurs, you will find some, like Mark Cuban, espouse the “go for it” risk everything approach to give you the motivation to keep going, while others recommend a more measured approach. I favor the more cautious approach, and would offer the following insights to help you make the right decisions:

  1. Join a startup or take a role in an existing business. In my view, no amount of academic education can prepare you for the challenges of running a business, but real experience will quickly open your eyes to some of the challenges, and let you know how much you enjoy responding to these on a day-to-day basis. You must feel satisfaction.

    Learning in school is primarily based on history, and fixed processes. Working in a business, especially a startup, is all about predicting the future, and responding to unanticipated changes, or new entrants. The ability to pivot quickly is a key to success.

  2. Check out local sources for coaching and assistance. Don’t be shy about networking for advisors with business experience for coaching and mentoring. Sources should include local startup incubators, blog owners, and government support organizations, such as SCORE. At this stage, good relationships are more important than knowledge.

    Every industry organization has regular local meetings and annual conferences for education purposes and bringing the right people together. Even if you are an introvert, you will find peers and experts in these groups to help, and your confidence will grow.

  3. Acquire and get familiar with required business tools. You can’t start and run a business these days with a working knowledge and access to online and standalone tools, including a word processor, spreadsheet editing, and presentation software. You will also need business management tools, such as Quickbooks, Zoom, and Hubspot.

    Traditionally, business software products have been specialized and focused toward a given task, but I see a trend these days to highly functional “all-in-one” business tools. Consolidated tools tend to be easier to use and cheaper than the old standbys.

  4. Assess potential for funding or bootstrapping. If you will need to supplement your own funds and assets for your business, don’t wait for a crisis to enlist family, friends, angel investors, or start a crowdfunding campaign. Raising money is difficult, even with the best idea, so don’t assume any entitlement to loans, grants, or seed funding.

    I don’t advise pitching to famous Silicon Valley venture capitalists for major funding until well after your business is a proven hit, and you are looking to scale it up across the country or world-wide. Remember that investors tend to fund entrepreneurs, not ideas.

  5. Write a business plan for your desired new business. Many of you will argue that business plans are no longer required for funding, but I assure you that there is no better way to quantify your own analysis of your value proposition, market size, business model, competition, required marketing, and strategy. You can’t keep all these in your head.

    In my experience, a good business plan should not be a book, or a one-pager. The best ones I have seen are about twenty pages, and cover all the key business issues, as well as your own background and experience, as well as co-founders and key team members.

  6. Establish a legal presence and intent via the Internet. Test your own willingness and ability to create a new business by creating a website, acquiring a domain name, and an LLC name that projects the right message. Make sure you can get consistent names on Twitter, Facebook, and other key social media sites. No presence gives you no credibility.

Remember too, that new businesses come in all shapes, sizes, and locations, from a single person service organization operating out of your home, to a small pre-defined franchise, all the way up to the next innovative world-wide unicorn. In my view, the tips listed here apply to all, so now is the time to test your fit for you own business, or just staying where you are. We need you to get busy and be happy.

Marty Zwilling

*** First published on Inc.com on 8/24/2022 ***

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Monday, September 5, 2022

8 Tactics For Leading Your Business Through Adversity

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

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

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

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

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

Marty Zwilling

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Sunday, September 4, 2022

10 New Venture Myths To Avoid Despite The Temptations

get-rich-quickStarting a new business is a serious undertaking. Yet many aspiring entrepreneurs I know approach it as a fun project, get-rich quick scheme, or perhaps an expensive hobby. Others quit their day jobs and commit everything to their new passion, without regard for their own well-being, or the welfare of others around them. Neither of these approaches bodes well for success.

As an entrepreneur, you need to start early to implement the discipline and business practices that will lead to success. Even though everyone has an opinion on good early stage practices, I was impressed with the actionable blueprint in the classic book by Scott Duffy, “Launch! The Critical 90 Days From Idea To Market,” on the first steps that determine long-term success.

Duffy emphasizes the often overlooked personal side of entrepreneurship, including balancing finances, relationships, and your health. I will paraphrase here, based on his book, ten of the top failure myths we both see in the early stages of entrepreneurship, followed immediately by recommendations to mitigate losses from each of these items:

  1. Take the largest risk to get the biggest return. Startups always involve risk, but should not be risky. Every business move should be planned and well thought out, with milestones set in advance. Processes should be in place to ensure that even if something does not go as planned, you, your family, and even your job are secure.
  1. Let your passion drive your cash flow projections. Moderate your optimism. That means coming up with revenue and expense assumptions that balance your natural optimism and determine how much cash the business will really need. Then take your revenue projections and cut them in half. Now take your expenses and double them.

  1. Your idea will attract the funding you need. Assume that raising money from investors to get started will be difficult, unless you have a track record in business, or friends with deep pockets. Will key funding be your family’s entire nest egg, or just half? Are you going to bootstrap, or borrow from personal assets?

  1. Pretend your family doesn’t matter. Discuss the plan and the costs with your spouse or significant other. It’s essential that the two of you be in agreement on key milestones and how much to put on the line. It is better to risk less and be on the same page than to risk more and have your spouse worried and resentful day after day.

  1. Mix personal and business funds. Put your risk capital into a separate checking account before you start. Once you see it moved from your savings account to an account tied to risk, it becomes real. You now have a clear financial framework to help you make better decisions, and you will act more strategically, less impulsively.

  1. Use personal credit cards for business. Keep your personal credit cards separate from the business. You need to do this as a way of tracking, accounting, and leveraging business payments and expenses for tax purposes. Never commingle personal and business funds. Remember that credit card cash advances are very expensive loans.

  1. Keep business expenses in the bottom desk drawer. Hire a bookkeeper or setup a QuickBooks chart of accounts on your first day in business. If you don’t set up a system early, you will spend tremendous amounts of time and energy going back trying to reconstruct business transactions, for you, your investors, and tax preparers.

  1. Don’t formalize the business until you get revenue. Have an attorney set your business up as a Corporation, by the books, before the first transaction. We live in a very litigious society, so you need to at least protect yourself from liability. Set aside money to create a proper legal entity and get business insurance. It is not just about you.
  1. Strive for success before thinking about your own payback. Being unprepared for success is the fastest way to lose your first million. It is important to constantly expand your understanding of how investments work, so that as your business grows and spills off cash, you are able to manage personal profits.

  1. Hedge your bets by starting several initiatives or products. Decide to launch one business or product at a time. The best route to success is not to spread your energy and focus on ten things, hoping one will work. Give that one focus everything you’ve got, or you will likely not have the resources to anything well.

Obviously, avoiding all of these errors won’t guarantee success and won’t save you if you don’t have a viable offering or a viable business model. Being an entrepreneur may start with passion and an idea, but turning that idea into a great business is all about smart execution. Don’t let a million dollar idea turn into a million dollar loss, for lack of proper discipline, personal balance, and business execution.

Marty Zwilling

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Saturday, September 3, 2022

10 Ways To Move From “Thinking Different” To Success

thinking-differentlyEvery culture and community puts pressure on its members to follow the norms. Even young people who start out wanting to be different are called “freaks,” and most are slowly bent back into the norm by the time they “grow up.” Maybe that’s why so many entrepreneurs struggle with building a disruptive new business, where breaks from the norm are the key to success.

I suspect that there are really a lot of “grown-up closet freaks” out there who could be great entrepreneurs. We should really be enticing them to overcome their fears of thinking differently. Chris Brogan, in his classic book, “The Freaks Shall Inherit the Earth,” offers some great steps of encouragement for them on how to come out of the closet, some of which I will paraphrase here:

  1. Declare your differences (even if only to yourself). Get comfortable with your difference in thinking, and commit to run your business your way. You will be the best entrepreneur when you make your new startup personal, and keep your heart in mind along the way.

  1. Define the parameters of your own success. Whatever will make your success yours, list it out on paper on in your favorite note-taking software. Try to list a success criteria for each role that’s important in your life and for your success. Know your strengths, and learn some new skills. Start working on your weaknesses.

  1. Establish a daily framework for action. You will build discipline and get much more accomplished if you build a self-imposed schedule, and commit yourself to following that framework. This will lead to you defining your path, knowing what matters most to where you are at this moment, and facilitate planning where you are going next.

  1. Get comfortable with not knowing. Learn to be okay with the unknown, and learn how to really appreciate what comes next in the universe. Don’t be afraid of being dumb; always be willing to ask questions. You should be afraid of being stupid; being stupid means that you think you know everything and don’t ever ask questions.

  1. Appreciate obstacles and challenges. One way to overcome obstacles is to set a new challenge for yourself every day. The more challenges you face daily, the stronger you will feel about doing more with your business and your life. Obstacles and challenges help you to grow your intestinal fortitude and your skill sets.

  1. Create work processes that get things done. Similar to the framework step, you have to build systems that get the right work done. For example, you might block your working day into half-hour segments, and never allow any activity or meeting to take too much of your time. Reserve time for tasks important to you, rather than just urgent to someone.

  1. Expand your communication media world. Start wherever you can to grow beyond the phone, texts, and email, to a blog, photos on Instagram /Pinterest, or YouTube. Build your world up a little at a time. This is a big benefit others won’t likely copy and it’s where you can get ahead.

  1. Connect with all the freaks like you. The more you communicate to find the people you seek to serve, the better your opportunities. Also connect with people you can help. Connect two people who might benefit from knowing each other. Do everything you can to extend your network, and keep it alive and well.

  1. Expect to encounter some bad times. Remember that you can hit bumps in the road at any time. Be ready. Know how and when to apologize. Be ready to assess what needs to get done when there are issues. Know whether or not you have to pull the plug. Keep your mind open to how your ideas might have to shift.

  1. Take action, any action. The biggest difference between you and other closet freaks, who will just accept what life and work brings them, is that you’ve chosen to take action. The big opportunity for you is to do something based on ideas you have had lingering in your mind for a long time. Where do you start? Anywhere.

My conclusion is that you don’t have to be a freak to be a good entrepreneur, but you do have to be willing to think differently, to get beyond the norms of business today, define a platform for real change, and make it happen. If you are a freak in your own mind, relish that thought, and take action to turn your passion into a successful new business. We need more of you!

Marty Zwilling

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Friday, September 2, 2022

7 Strategies To Cultivate Next Generation Leadership

young-business-leadersMillennials have come a long way in business since I started writing about them over ten years ago. They started out as that spoiled generation of kids, born between about 1982 and 2004, who had everything, and could care less about business. Today they are in every business and will likely comprise 75 percent of the workforce by 2025. Their success is now vital to our success.

Like all of us, they have matured tremendously in the last decade, weathering a pandemic where there were few jobs waiting as they emerged from school, to finding that living with their parents was no longer a panacea for all problems. What they need now is some coaching from more experienced business leaders, to catch up and overcome some unique qualms and challenges.

As a partially-retired baby-boomer in business, I’ve spent much of the last few years mentoring aspiring millennial entrepreneurs, and I’m always looking for more insights into how to help them. I defer to a classic book on this subject, “Millennials Matter,” by Danita Bye, which helped me to solidify some jointly recommended strategies for building millennials into next-gen leaders:

  1. Help them strengthen character by finding balance. This balance of character and courage is fundamental to a leader’s confidence, and is the key to getting results. Millennials need our coaching and mentoring to build confidence, to improve how they handle business relationships, tackle new responsibilities, and handle leadership roles.

  1. Build more determination by capitalizing on values. Determination is the character quality needed to fuel resoluteness and resiliency as millennials face business realities. They generally have strong values, around a higher purpose, and these need to be supported and honed to improve emotional stamina and guide business decisions.

  1. Activate a broader awareness of real-world drivers. In addition to the normal hurdles of growing up, millennials have had to deal with a media-saturated world of conflicting messages, celebrity excesses, and viral distractions. We can help them focus thinking inward to their strengths and personality, and outward to real forces in the marketplace.

  1. Provide deeper knowledge to solidify moral fiber. A better understanding of how things works will boost moral fiber. Lack of knowledge can prevent it. A strong moral fiber is the key to acting responsibly, reacting to ethical dilemmas, predicting the intended and unintended consequences of any business decision, and guide toward wiser actions.

  1. Nurture a realistic optimism for overcoming obstacles. Many millennials have grown discouraged or fatalistic about all the uncontrollable issues in our world, such as debt, terrorism, global warming, and a rocky political landscape. We need to focus their attention on what they can control to improve morale, creativity, and a positive mindset.

  1. Be a role model for integrity to validate trustworthiness. Millennials are slow to trust business leaders, since many trust scandals hit during their impressionable years. Thus it is critical that trustworthiness and truthfulness be demonstrated for and nurtured in young leaders. A driving force in trust is showing integrity and concern beyond yourself.

  1. Demonstrate positive action and accountability. Accountability means having the emotional maturity and internal backbone to take responsibility for your own actions and choices, and not shift blame to external factors. Business leaders and mentors must highlight their own focus on positive leadership actions, instead of defensive reactions.

Think of these strategies as an investment in your own future, as well as theirs. The end goal is to inspire them to invest in others, and to make a positive difference as well as a lasting impact. Each of us must us must use our wisdom and life experiences to show millennials, as our next-gen leaders, that they also have enormous wealth to share that goes far beyond monetary value.

Marty Zwilling

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Wednesday, August 31, 2022

10 Ways To Prepare Your Team For Business Leadership

leaderThe largest and most successful businesses of the past have been traditionally driven by autocratic and powerful leaders who managed a highly structured organization of subordinates. I see that model changing today to one of team collaboration and decision making, per companies such as Amazon, Google, and Zoom. Where do you see your fit in this leadership transformation?

In my role as a business mentor and advisor, I now always look for a culture and recommend team roles that nurture collaboration rather than contention, communities rather than silos, and transparent communication at all levels. If you are interested in advancing your leadership, and achieving more success in this new Internet age, here are some principles to guide your focus:

  1. Foster the trend to flat teams versus vertical organizations. With the multiple technologies of team videos, smartphones, email, and the pervasive Internet facilitating total communication, there is no need for the delay and information loss of multiple hierarchy levels in business. Horizontal teams are more effective as well as satisfying.

  2. Let collaborative leadership mitigate individual biases. Traditional command leadership allowed individual biases and ego to reduce team engagement and miss market changes and new competitors. Create a collaborative team agenda for every meeting, and make sure everyone contributes. I suggest a greater focus on relationships and listening.

  3. Reward innovation rather than “follow-the-process.” Modern companies like Amazon credit much of their growth and success to rewarding of change innovations, including failures. Jeff Bezos believes that if you double the number of innovation experiments you do per year, you’re going to double your agility, and thus outpace your competitors.

  4. Discourage internal team competition and silos. It is up to you as a leader to define and communicate the company shared values that pull a team together and allow them to disagree without fighting. This starts with instituting a hiring and training program that emphasizes collaboration, and rewards individual expression and empowerment.

  5. Capitalize on diversity to anticipate and meet change. Team members from different backgrounds and cultures will see the need for business change earlier, will make better decisions collaboratively, and you can learn new things from each of them. In this age of world-wide markets, you need all the help you can get to attract loyal customers.

  6. Simplify the feedback sharing process for you and them. Feedback is so critical for any business leader, both in how to give and receive it. Make feedback positive and informal, and not just about pointing out mistakes. You need to be a mentor and coach on a regular basis, rather than follow a formal appraisal process that everyone dreads.

  7. Look for opportunities to highlight individual strengths. We all have strengths and weaknesses, and we can’t work collaboratively if we don’t know how to capitalize on the strengths around us. Also, team members become unmotivated if their unique set of skills aren't being used. Don’t be hesitant to highlight the strengths and contributions of peers.

  8. Be a role model for leadership integrity and trust. You will find that team members also only collaborate with people they trust. If they see you as the competition or the enemy, you will never get winning results. I recommend that you start by getting to know every key team member in your realm on a personal level and find a common basis for sharing.

  9. Change team roles frequently to broaden perspectives. Don’t let your team members get tunnel vision by only seeing a tiny portion of the whole business. Let them learn from new challenges, which also will keep your business agile and the team collaborative in the face of constant change. You will find improved morale and satisfaction all around as well.

  10. Show respect in dealing with team member changes. Gone are the days when you could treat all employees as inanimate “assets.” Make sure each is a good cultural fit for your company and provide individual consideration for their needs in time off and training. Make changes for a better job fit often and quickly, but with empathy and a personal touch.

In my experience, more and more startups, as well as mature organizations, are relying on the team collaboration model for leadership, and are seeing more growth, agility, and long-term success. No matter where you are in your current organization, I recommend that you practice these principles to achieve an advantage in your current role, and prepare you for the future.

Marty Zwilling

*** First published on Inc.com on 8/17/2022 ***

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